23rd Parliament · 1st Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
Mr. CLAY presented a petition from certain electors of New South Wales praying that the House will take action to provide relief for nearby residents from the excessive noise of large aircraft using the Kingsford-Smith airport.
Petition received and read.
– I ask the Minister for Trade whether, in any future modification of import restrictions, he will give consideration to allowing exporters who develop new markets to have added to their quotas a portion at least of the value of those exports, provided that the goods they wish to import are of an essential nature. In the event of any future modification of the import restrictions will the Minister also consider referring to the Tariff Board the question of protecting essential industries such as the boot industry which, at the present time, is complaining about unfair competition arising out of what it calls a flooding of the Australian market with goods manufactured in various Asian countries?
– Let me deal first with the latter part of the honorable member’s question. I and other spokesmen for the Government in recent years have constantly been suggesting to Australian manufacturers that if they fear that their industry may be exposed to sharper or unbearable competition in the event of a relaxation of import licensing, then they ought to apply for a hearing by the Tariff Board so that an appropriate tariff shall be fixed. This warning has been given constantly by me for the Government, and a number of industries have acted accordingly. Some industries have not acted, however, and by their own neglect have exposed themselves to a danger where that danger does exist.
The Government has taken extraordinary action to protect the Australian footwear industry, and this, I think, is only the second time it has been taken. Some months ago a total ceiling limit was placed on the importation of footwear into Australia. That action was taken under Article XIX. of the General Agreement on Tariffs and Trade, which provides that a member nation of Gatt may in an emergency condition of an industry apply a quantitative restriction. This is not continued indefinitely. It is retained only until the Government has followed the normal course of investigation and tariff making. All this is being done, and the action taken illustrates the careful watch which the Government is maintaining to safeguard the legitimate interests of Australian industry.
With regard to the first part of the honorable member’s question, that is, the issue of special import licences where the exporter may have achieved, or claimed to have achieved, a new or an additional market: This proposition has been considered over the years, but for a variety of reasons which I will not take up the time of the House in enumerating, it has not been found to be a practical or valuable expedient.
” A.B.C. WEEKLY”.
– Is the Postmaster General aware that there has been a good deal of criticism from sensible people of the discontinuance of the “ A.B.C. Weekly? “ Is he aware that many people, whose time is limited, prefer to take their programmes, as it were, a la carte, rather than table d’hote? In the circumstances, will the Minister take prompt action to ensure that by some satisfactory means listeners receive adequate - that is, detailed - information regarding programmes and that the more important radio talks are disseminated through the printed word as well as by being broadcast vocally?
– The publication known as the “ A.B.C. Weekly “, issued by the Australian Broadcasting Commission, has been discontinued. That arises from the fact that for a considerable period this publication was losing increasing sums of money each year. For a time it was published throughout the various eastern States, then it became necessary to confine its publication for a while to New South Wales and Queensland. Despite all attempts to build up its circulation and reduce losses, the losses continued, and therefore it was finally decided that the support for this publication was not sufficient to warrant its continuance. However, Mr. Speaker, as an alternative, after the development of television the Australian Broadcasting Commission issued a publication now known as the “ T.V. Times “. This magazine, published so far only in Melbourne and Sydney, has been very successful in its initial stages. Its publication is therefore being extended to the other States in which national television has commenced. It is the intention of the Australian Broadcasting Commission - an intention at present being put into actual practice - to include in the “ T.V. Times “ as much information as possible regarding broadcasting programmes. At present it is not possible to include as much general information in the “ T.V. Times “ as was included in the “ A.B.C. Weekly “. For instance, various articles of interest to those who bought the “ A.B.C. Weekly” will not appear, as yet, in the “T.V. Times”, but it is the intention of the commission to proceed steadily to the building up of a journal which will be of considerable value not only to television viewers but also to broadcast listeners. The ultimate objective, if it can be realized - and I believe it can - is to publish, in addition to the “ T.V. Times “, a journal somewhat on the lines of the “British Listener”. It will give wider information and, I have no doubt, will fulfil the requirements of the people of whom the honorable member for Bradfield has spoken.
– I ask the Minister for Primary Industry: Is there a valuable dollar market for the fish known as tuna?Aretuna available in large quantity off thecoastal shelf of the south coast of New South Vales? Is the Australian industry beingparalysed by lack of efficient canning and cold storage facilities to deal with the very large quantities of tuna being brought in by the trawlers? Are Australians for this reason going out of the tuna fishing industry whilst Japanese boats are increasing their fishing in the areas mentioned? Have requests been made for Commonwealth backing for borrowing money to provide the facilities necessary to put the Australian industry on its feet as an effective competitor in the dollarearning area of this industry?
– Since the honorable member has asked for a lot of detailed information I shall endeavour to secure it for him and let him have an answer.
– My question is directedto the Minister for Air. Do the Australian and overseas air forces exchange information about the frequent sightings throughout the world of unidentified flying objects, usually known as U.F.O.’s? Further, have Royal Australian Air Force intelligence officers investigated reports of recent sightings of mysterious objects in the skies over Papua and New Guinea?
– The Department of Air does exchange with other air forces information about unidentified flying objects. It exchanges information with the Royal Air Force and, particularly, with the United States Air Force which maintains a study research group on this subject. All well-reported sightings in Australia and its Territories are investigated by the Department of Air. The objects generally turn out to be weather balloons, high flying aircraft, stars, comets and things of that sort. The statistics on this subject show that only a very small percentage - something like 3 per cent. - of reported sightings of flying objects cannot be explained. I realize that in this age of technological mysteries it does not do to be sceptical about anything, but the honorable member may be interested to know that on the last occasion that I can recall on which a full-scale investigation was carried out into a sighting, which had taken place west of the Blue Mountains and had been reported by a number of people, the object in question was found to be the planet Venus setting.
– I direct a question to the Postmaster-General. Is it a fact that sponsors seeking to show Australian play programmes on television are told by the television licensees that they cannot have their own choice of Australian plays or other material, but must select from a list of American materials available, with special audience ratings which allegedly give them top viewing popularity? Has the Minister seen the report of the Victorian Branch of Actors Equity, to the effect that 80 extensive Australian advertisers and advertising agents were quizzed on this matter, and that almost all of them said that they were sick of Yankee cowboys and wisecracking private eyes, but that the television stations would not let them choose their own Australian programmes because of the rating system which kept the overseas films in a monopoly pool? Will the Minister examine the so-called rating system, and if it is found to be working to the detriment of Australian talent, will he ask the Australian Broadcasting Control Board to take some action to relieve sponsors and the public of the effects of this incubus on television entertainment, and will he live up to his own declared promise that Australian talent would get a fair go on television?
– I have seen reports of the kind referred by the honorable member for Parkes. I have also considered the results of a conference that took place some little time ago between Actors Equity, some of the film-producing representatives in Australia and the Australian Broadcasting Control Board. As I have told this House before, the question of the Australian content of programmes is one to which the board is constantly applying itself, and in relation to which it is keeping in very close touch with the licensees. At the conference referred to, which took place not very long ago, it was apparent that Actors Equity was adopting a different approach to the problem from what it had adopted twelve months ago. Certain proposals were put forward by Actors Equity. Certain proposals were also suggested by people like the Crawfords and other film producers. I recently received a lengthy report from the Broadcasting Control Board on the whole matter and I am at present considering it to see whether something useful can be done. Now that television is expanding, the market open to the licensees will also be expanded, I am taking certain action which I do not propose to detail at the moment. I can tell the honorable member, however, that this is a matter which is under constant consideration and is not being neglected.
– I address a question to the Minister for Air. The Minister will recall discussions I have had with him, in company with the honorable member for Newcastle and the honorable member for Shortland, concerning complaints from residents in the Morna Point area with regard to the Royal Australian Air Force bombing range. I now ask the honorable gentleman whether investigations have been made and what action is contemplated.
– Investigations are being made into this difficult matter at the present time. A small team of experts from the Department of Air is visiting the area to look into the possibility of moving the range. I would remind the honorable member, however, that an effective bombing and gunnery range near Williamtown base is absolutely essential for the effective working of the base. Unless we can find another suitable area close to the base, it will not be practicable to close the range now being used.
– My question is directed to the Minister for Territories. Has the Minister’s attention been directed to a report that Territory Rice Limited, an overseas company which holds large concessions over Northern Territory rice lands, intends to export its first shipment of rice, consisting of processed and paddy rice, to Hong Kong later this year? The report also states that future shipments to Hong Kong will consist of paddy rice only, and that a mill will be erected on an island adjacent to Hong Kong to process the paddy rice. If this report is correct, does it not mean that advantage is to be taken of cheap labour conditions existing in that part of the world, to the disadvantage of Australian labour and the detriment of the interests of the Northern Territory? As much Australian taxpayers’ money has been spent on this project in the provision of all-weather roads, electricity and technical assistance, will the Minister undertake to guarantee that all benefits arising out of rice production in the Northern Territory will be retained, in the interests of the Territory and the Australian economy?
– I am aware that this year a shipment of rice is being made overseas. This is the first considerable marketing of the produce of Territory Rice Limited in the Northern Territory. The shipment this year is, of course, a comparatively small one and will recoup only to a small extent the expenditure that the company has incurred in developing the property. This expenditure far outweighs any expenditure of public money in the venture. The private investment is immeasurably greater than the public investment and would probably be of the order of £750,000 to £100,000 of public money. I would riot attempt to predict or make any statement about the future marketing policy of Territory Rice Limited. The only point I would like honorable members to bear in mirid is that, for this industry to succeed at all, it must be developed on a sound economic basis. The rice has to be marketed iri Asia, not on the mainland of Australia, and will have to be marketed in competition with rice grown in Asia. Although the advantages that would accrue to the Northern Territory from having the complete and final processing of rice done there would be great - and we hope that this can be achieved - if the choice is between having no rice and rice exported in paddy, then I am sure that most people in Australia, particularly those in the Northern Territory, would rather have an industry that exported paddy than have no industry at all.
– My question is directed to the Treasurer. What is the effect of the recent decision of the Commissioner of Taxation on income earned by medical practitioners in New South Wales who have formed themselves into companies for taxation expediency? As a result of the decision of the Commissioner of Taxation, is the income earned by these companies taxable as though earned by the doctor as an individual?
– I understand that what the honorable gentleman wants to know is, broadly, the effect of the decision taken by the Commissioner of Taxation. It appears that some hundreds of medical practitioners in New South Wales have formed themselves and their practices into companies. Sometimes this was done when* doctors were in partnership, but moregenerally it occurred when they were in individual practice, and the shares in the company were held by themselves or, in some instances, by members of their families. In most instances, the practice has been adopted of the company paying a salary to the medical practitioner, the remainder of the income, subject to whatever expenses may be claimed, being distributed to the various shareholders of the company. It would appear from such information as I have gathered on the point that the attitude of the Commissioner of Taxation has been affected by his reading of the New South Wales Medical Practitioners Act, which provides that only a registered medical practitioner can engage in the practice of medicine and surgery, collect fees, treat diseases and so on. The interpretation of the Commissioner is that the companies do not qualify for registration in the terms of that act. My information is that New South Wales is the only State in which this practice of company formation has been followed.
Honorable members will be aware that the Commissioner of Taxation, in carrying out what he understands to be the duties entrusted to him under legislation passed by this Parliament, must try to interpret the will of Parliament as expressed in that legislation. If his interpretation of the provisions of legislation is not accepted, it is open to any person affected to make legal challenge. I gather from press accounts I have read concerning this particular matter that some legal challenge is already in train.
– I ask the Prime Minister whether he has given consideration to the dreadful waste of life and widespread unhappiness occurring in Australia as a result of the high accident rate on our roads - a tragedy which is reaching national proportions. Is it a fact that in New South Wales alone some 753 deaths have occurred so far this year, and with the holiday season approaching the grim toll could easily result in a total of 1,000 lives being lost? Will the Prime Minister favorably consider convening a conference of all State governments with a view to designing common laws, including the imposition of a speed limit on vehicles by mechanical means, to reduce the number of people killed and maimed on our roads?
– As the honorable member realizes, this problem is, to a very large extent at least, a problem for the States, because it falls within their jurisdiction. We have, in the Department of Shipping and Transport, taken some part in having discussions with the States in the past, and at the present time there is a committee of the Senate investigating this matter. As for the honorable member’s particular proposal, I will convey that to my colleague, the Minister for Shipping and Transport, so that he may consider it.
King’s Hall Floor
– My question is directed to you, Mr. Speaker, and is supplementary to a question I asked some time ago about the re-flooring of King’s Hall. Can you inform the House what stage this matter has reached? Have tenders been called, and, if so, has the use of jarrah in the reflooring been specified?
– I will look at the question asked by the honorable member and give him a positive reply. I am under the impression that tenders have been called and that the timber he mentions has been specified.
Dress of Members
– My question is also addressed to you, Mr. Speaker. Will you consider permitting honorable members to remove their coats in the chamber while the House is in session? I understand that this is permitted in most countries.
– All I can say is that I hope the honorable member will not pursue his proposal.
– I ask the Prime Minister a question without notice. As the State Premiers concerned should by now have received a reply from the right honorable gentleman regarding a meeting to discuss the building of the proposed Marraboor weir near Swan Hill, will he reply to the question on this subject that I addressed to him last Tuesday?
– The honorable member did ask me a question about this matter on 17th November. At that time I did not feel able to answer the question for the reasons that he has referred to. I have received requests from both the Premier of Victoria and the Premier of New South Wales to call a conference of Ministers representing the contracting governments to the River Murray Waters Agreement - that is to say, the Commonwealth, South Australia, New South Wales and Victoria - to discuss this matter of the Marraboor weir. I have now written to the Premiers of New South Wales and Victoria informing them that the building of the Marraboor weir would be of direct benefit to their States only. The River Murray Waters Agreement contemplates that work for the benefit of two States would be carried out under clause 30 of the agreement and would be paid for by those two States. I informed the Premiers that I was unable to agree to their proposal that the work should be carried out under clause 20 of the agreement, because that would mean that the Commonwealth and South Australia would also contribute. I have suggested to the Premiers that when their investigations have been completed they should then submit a detailed proposal to the commission for consideration under clause 30 of the agreement.
– I direct my question to the Minister for the Interior. In view of the fact that Parliament House is at all times the venue for Public Service staff and parliamentary employees, and at many times the venue for some hundreds of senators, members and visitors, will he promote the safety of pedestrians approaching the building from the hotels, public offices and parking places by having cross-walks painted on the roads? In explanation of my question I should like to say that recently I have seen two near accidents involving pedestrians because there are no pedestrian crosswalks leading to this building.
– I shall have the honorable member’s request considered by the appropriate authority.
– I ask the PostmasterGeneral whether there is any evidence of the existence in Australia of a racket which in America is, I understand, called payola by which record companies pay disc jockeys various sums of money so that certain recorded trash will feature prominently on radio programmes. Would the annual convention of Australian disc jockeys in a place called Surfers Paradise, which, I think, is in Victoria, have any significance in relation to this racket?
– I am sure that no State in Australia would try to take away from Queensland the honour of having a place called Surfers Paradise. I have seen some reference in the press, not only to the racket to which the honorable member has referred, but also to other practices that are developing in television in other countries. Only a week or so ago I asked unofficially for some information regarding these matters. I have not yet received it, but when I do I shall let the honorable member have it if it is of any interest to him.
– Does the Prime Minister expect to be able to make a statement soon on the report of three British Privy Counsellors on telephone tapping? I understand that he intended to make a statement on this matter before the end of this year.
– I regret to say that I see little prospect of doing that before the House rises.
– Will the Minister for Health consider directing that pharmacists, who are required to submit certain returns under the recently amended National Health Act, shall submit a separate return to cover persons entitled to benefits under the pensioner medical scheme as is done in the case of repatriation beneficiaries?
– I am not quite clear just what the honorable gentleman wants me to do, but if he will let me have the details I will consider his request.
– Did the PostmasterGeneral see the statement to the effect that his department is making telephone services available without delay for bookmakers at Randwick race-course so that stay-at-home bettors can telephone and lay bets estimated at millions of pounds annually? Does the Minister think that it is sensible to make telephones available to gambling interests in preference to essential industries? Is the Postmaster-General aware that 903 applicants at Revesby, New South Wales, and 300 applicants at Peakhurst, New South Wales, are awaiting telephone services? Both of these suburbs are developing rapidly-
– Order! I think that the honorable gentleman is giving information.
– Will the Minister ensure that the same special attention is given to the suburbs to which I have referred as is given to Randwick? His last reply to me was to the effect that it would be three years before telephone services were available to these important areas.
– This matter was referred to me by way of a report by mv central office some little time ago. It has been given some publicity, I know, in the New South Wales newspapers, but I can assure the honorable member for Banks and the House that the whole position was very carefully investigated before any action was taken to provide the telephone connexions to which he refers. The position is that the Postmaster-General’s Department, in respect of any applications such as this, is guided by the recommendation, and the opinion expressed to it when asked for, of the State authorities - both the
State legal authorities and the State police authorities. We were informed that the action which the Australian Jockey Club proposed to take in this instance was in no way in conflict with State law and that the installations could therefore be proceeded with. But there was another point which the department looked into before these connexions were made. That was whether there were outstanding applications of another nature in the same area which would be adversely affected by the proposed connexions. It was found that, in the cables supplying this area, there were more spare pairs than were needed to satisfy any other requirements of the district.
– That is not true. I have 26 outstanding applications.
– I have been challenged by an assertion that my statement is not true. I resent that, because I took particular care to look into the matter, and I know that what I have told the House is correct.
– I desire to ask the Minister for Primary Industry a question. As the wheat harvest in northern districts of New South Wales is now well under way, can the Minister say when he will be in a position to announce the terms of the first advance payment on this year’s crop?
– I can appreciate the honorable member’s interest in this matter because of the level of production of wheat in his own electorate. I hope to be able to make a statement on this all-important matter in the very near future.
– I address my question to the Postmaster-General. Will the Minister outline to the House the principles upon which the Postmaster-General’s Department works in determining priorities for the laying of telephone cables, since the priorities obviously allow spare cables in a race-course area, whereas in my electorate, in an area which has been thickly populated for 100 years, no cables are available for the residents?
– In the first place, the priorities for the installation of telephones are determined by the essentiality of the service. I think the honorable member knows full well that an applicant for a telephone installation must state on his application whether he requires a business service or a residential service. If he requires a business service, he must state the nature of his business. Hospitals and people such as doctors and nurses receive priority.
– And bookmakers.
– If the honorable member does not want me to answer the question, I shall not bother. The priorities which I have indicated are strictly followed. As to the availability of cables, from time to time, as the cables serving a particular area are almost fully in use, plans for the laying of further cables to serve the area are prepared; so that, at a particular time, there will be one area in which the cables are fully taken up in servicing the existing subscribers, whereas, in another area, there will be available cables in which the pairs have not been fully taken up. The situation in a particular area varies from time to time. Some of the spare capacity is provided simply as part and parcel of the task of satisfying the rapidly expanding demands of the nation.
– Will the Minister for Defence be making a statement on future defence policy this week? If so, will honorable members have an opportunity to debate it before the House rises?
– The Government has been considering the next three-year defence programme for some time. It has made a careful and close examination. The programme has not yet been completed in all respects, but it is proposed to present it in the House on Thursday and I shall ask leave to make a statement then.
– I ask the Minister for Health a question: When the National Health Bill is proclaimed and chemists are required to collect 5s. towards the cost of every national health scheme prescription, will they be permitted to refuse to supply a prescription if they believe that they will not be paid, or is it mandatory for them to supply a prescription, the cost of which may legally be regarded as a Government contribution to the needs of the person requiring it?
– The chemist will be able to do precisely what he does now - either refuse it or supply it.
– I ask the Minister for the Army whether it is a fact that the Menzies Government has spent over £140,000,000 on national service training since 1950. Is it a fact that the Menzies Government now intends to discontinue this expensive experiment from 1st January, 1960?
– I thought that the honorable member would have heard the answer that the Minister for Defence gave a minute or two ago. A statement will be made on this matter on Thursday next by the Minister for Defence.
– Last week, the Minister for Labour and National Service, when tabling the reports of the delegates to the 1959 International Labour Conference, said that he would later make a statement on the action taken or proposed to be taken in respect of the convention and recommendations adopted by the conference. When he gives the House this information on the 1959 conference and on the 1957 and 1958 conferences about which he has still to make statements, will he bring up to date the statements made by his predecessor in 1953, 1956 and last year, on the conferences between 1951 and 1956? Will he thus help members and the public to understand why Australia has so far ratified only 23 of the 114 conventions adopted by the International Labour Organization?
– Naturally, I shall prepare a statement and convey the contents to the honorable gentleman. Already, he has asked me in writing to give him an explanation of the reasons for ratifying some of the conventions. I have done that and I think that the information conveyed to him is reasonably complete. Nonethe less, I shall have another look at the matter and if I believe that there is any additional information that I can give to him I shall be only too happy to do so.
– In accordance with the provisions of the Public Works Committee Act 1913-1953, 1 bring up the report relating to the following work: -
Proposed construction of the Edison Telephone Exchange at Brisbane, Queensland.
The proposal to build a new telephone exchange under the style of the “ Edison Telephone Exchange “ in Brisbane follows naturally from the growth of Brisbane and the consequent increase in the commercial population of the city, because much of Brisbane’s growth, these days, is vertical rather than horizontal. The project, which is a fairly straight forward one, calls for the erection of a seven-floor building fronting Elizabeth-street between Edward and Creek streets. It will have approximately 14,000 square feet of floor area per floor. If the building is not provided in the reasonably near future it seems clear that, in the course of the next four or five years, the ability of the Post Office to provide new telephone services will be severely curtailed. For that reason, there is some urgency. Following the general practice of telephone exchanges in northern regions, the building will be air-conditioned on the technical floors. The rest of the building will be mechanically ventilated. This proposal leads to a windowless facade to Elizabeth -street and, in order to produce a pleasing architectural appearance, the building has a patterned front which I am sure will be very satisfactory.
The building has all needed amenities including a cafeteria which will provide light meals and this will work in conjunction with the cafeteria in the post office building itself, which provides a more extensive meal service, including hot meals. In considering the adequacy of the provisions made here, the committee was informed that the general public has access to the cafeteria service, although its use by the general public is not encouraged. Although this may be to some extent a policy matter, the committee feels that it should draw attention to it. The committee urges that the practice of allowing the public access to what is, in fact, a staff dining room should be reviewed.
The estimated cost of the building is £776,000. The estimated time for the completion of drawings, preparation of specifications, and calling of tenders and the construction itself is four years. The project is very closely tied in with one on which I hope to present a report later in the week, dealing with establishment of a mail exchange building at Roma-street. At the present time, the old building on the site planned for the Edison telephone exchange is very heavily occupied by mail handling equipment. It will, therefore, be necessary, if the proposal is not acceptable to the House, to proceed with the Romastreet mail-handling centre or some suitable alternative before the Edison exchange site can be cleared and the building proceeded with. As I have pointed out, I hope to present the committee’s report on the Romastreet mail exchange before the end of the current week. I commend the proposal to the House as a thoroughly workable proposition.
Ordered to be printed.
Assent to the following bills reported: -
International Wheat Agreement Bill 1959.
Income Tax and Social Services Contribution Assessment Bill (No. 2) 1959.
Income Tax and Social Services Contribution Bill 1959.
The following bills were returned from the Senate without amendment: -
States Grants Bill 1959.
States Grants (Special Assistance) Bill 1959.
Science and Industry Research Bill 1959.
Nationality and Citizenship Bill 1959.
Debate resumed from 17th November (vide page 2732), on motion by Mr. Harold Holt-
That the bill be now read a second time.
– For the convenience of the House, may I suggest, Mr. Speaker, that this bill and the Income Tax and Social Services Contribution Bill (No. 2) 1959 and the Income Tax (International Agreements) Bill 1959, which are cognate measures, be debated together. The major matter is the imposition of a withholding tax in respect of dividends. There are one or two other matters, but that is the principal one.
Mr. SPEAKER (Hon. John McLeay).Honorable members are agreeable to that course being followed.
– A memorandum relating to these measures has been circulated by the Treasurer (Mr. Harold Holt) in which he indicates that they embody three principal matters. Two of them do not appear to honorable members on this side of the House to be controversial, but the third contains matters of some deep significance and has implications which I will endeavour to show are not to the benefit of the Australian economy generally. The first of the two matters is the provision which makes taxable the increment which arises from the new seasonal security recently introduced by the Government. The first of these securities is on sale at the moment. In the press during last week an advertisement appeared indicating that people could tenderfor these particular bills at a certain amount and if they held them until maturity they would receive an increment. One of the purposes of this measure is to make that increment taxable because it is an interest payment and, as such, ought to be subject to income tax. The second smaller matter deals with the premiums payable on the new type of special bond. This bond was rather belatedly introduced by this Government, despite the fact that members on this side of the House many years ago indicated the need for it. It is a security which ensures to its holder, provided he holds it for a minimum period of about six months, that he cannot lose the amount of capital and that he will get a steady rate of interest returned.
One of the essential pieces of machinerv to guarantee the capital integrity, as it were, is to make the premium to be payable on this bond at maturity. Again, because it apparently comes within the province of a capital gain, there would seem to be some possibility that it would be subject to tax, although that was not the intention. The purpose of this particular amendment is therefore to secure that the capital gain or the premium payable on redemption of these bonds will not be subject to tax. As I say, they are matters of comparatively small moment, really.
But the other matter with which I propose to deal at some length is the proposal to institute what is called a withholding tax in respect of dividends which are paid by companies in Australia to shareholders, whether they be individuals or other companies, who have some equity in those companies. This measure proposes that where a dividend is so paid, the person to whom payment will ultimately go can opt, if he so desires, to have a certain amount taken out and so obviate having to lodge a taxation return. That sounds simple enough, if it were not for some of the implications that are not really very definitely brought out in the Treasurer’s speech. There is contained here the whole question of taxation on dividends derived by non-residents, or foreigners if we like to use the term, from companies which operate or secure their profit by selling goods in Australia. Linked with that is the whole question of what we broadly describe as foreign investment.
From time to time this Government has endeavoured to take great credit to itself for the amount of foreign investment which is flowing into this country. It presumes that it is a very good thing for the Australian community that that is taking place. But when we subject some of the statistics which are available to critical examination, it is seen that the benefits are not quite of the kind that is made out. They were certainly not very definitely underlined by the Treasurer when he introduced this measure a few days ago. It is true that when he brought down his Budget he indicated that this legislation would come before Parliament. Apparently, certain people in other parts of the world realized the implications of it but it was not really realized by everybody here. For the information of honorable members, I should like to quote from an article which appeared in the London “Times” as recently as 17th August, 1959. It is headed, “Australian Shares After Budget Tax Option”.
I would suggest that there are one or two matters here which are of quite a degree of interest for the Australian taxpaying community. The article begins -
The Australian Budget proposal to introduce an optional withholding tax- that is the matter we are discussing now - on dividends seems likely to have distinct advantages for United Kingdom investors. Large institutional investors who place part of their portfolios in Australia in pursuance of geographical diversification policies should find it especially helpful.
These investors are not primarily interested in helping the Australian economy but from their own profit point of view. The article continues -
Investors drawing only a small dividend income from Australia will not be greatly affected. But the large investor in Australian Ordinary shares will benefit substantially by opting for the withholding tax. . . . For him there is a double benefit. First he is saved the inconvenience and cost of an Australian income tax return, while reclaiming Australian tax payments under double tax relief is simplified and expedited. Secondly, insofar as the withholding tax is at a lower rate than his present levels of direct income tax on Australian income, he will pay less Australian tax.
Then the article goes on to give some examples of how this will work, which, again, I think ought to be of interest to honorable members. It reads -
However much the United Kingdom investor draws on ordinary Australian dividends in any year, direct Australian income tax need not exceed 15s. per cent.
That is 3s. in the £1. Whether he derives dividends as low as £1,000 or as high as £100,000, he will not pay anything more than 3s. in the £1, after the passage of this particular piece of legislation. That is, if he takes the option of withholding tax. Then the article gives this kind of example -
As most Australian companies pay company income tax at about 7s. 6d. in the £, the ordinary shareholder in the United Kingdom is credited with having paid that tax-
That is. the ordinary tax of 7s. 6d. in the £1- as well as the 15 per cent. For every £A.5,000-
So they are not talking about small people. The article continues - of Australian ordinary dividends he will pay £A.750 withholding tax and receive credit against United Kingdom tax of £A.750, plus £A.3,000 company tax paid. Thus, his yield on Australian shares is raised by £A.3,000 in effect, provided his United Kingdom tax on the £A,8,000 gross income amounts to at least £A.3,750 - i.e., his average rate is at least 9s. 6d. in the £.
The article continues -
Even if his United Kingdom rate is only 7s. 9d. he will receive credit for most of this extra £A.3,000.
The article publishes a table based on the assumption that the legislation we are now considering has been passed, and indicating how beneficial it will be for individuals in the United Kingdom not to put their money into new investment in Australia, but to put it into old, well-established firms operating here. The article lists these particular companies. They include Australian Paper Manufacturers Limited, which has been established here for many years, British Australasian Tobacco Company Proprietary Limited, Broken Hill Proprietary Company Limited, Colonial Sugar Refining Company Limited, E.Z. Industries, G. J. Coles and Company Limited and Imperial Chemical Industries of Australia and New Zealand Limited. None of those is pioneering new fields in Australia at the moment, and all that these people are endeavouring to do is to buy on the Australian stock exchange shares that are being turned over on the market from day to day. This is the effect that this proposition has - that in August, 1959, an Australian investor investing in Australian Paper Manufacturers could expect to get what is called the market yield of 6.1 per cent.; but the United Kingdom investor, because of the effect of this legislation coupled with the tax advantages in his own country, where he will be paying the standard rate of 9s. 6d. in the £1, instead of getting a yield of 6.1 per cent, will get a yield of 9.8 per cent. Where the Australian investor in the British Australasian Tobacco Company can look for a yield of 5 per cent, the British investor will get a yield of 8 per cent. B.H.P. will yield the low percentage of 2.7 to the Australian investor, but this will be enhanced to 4.3 per cent, for the United Kingdom investor. The Colonial Sugar Refining Company Limited yield of 2.6 per cent, to the Australian investor rises to 4.2 per cent, for the United Kingdom investor. The E.Z. Industries yield of 5.2 in Australia is inflated to 8.3 per cent, for the British investor. The G. J. Coles yield of 2.7 in Australia rises to 4.4 per cent, for the
United Kingdom investor. I.C.I.A.N.Z., 2.7 per cent, in Australia, yields 4.3 per cent, for the United Kingdom investor.
Now, that is one of the effects that this legislation will have. I submit that there is a great confusion on the part of the Government between what it is prepared to call foreign investment and what is really after all only the net position of Australian overseas exchange at the end of the year - and apparently that is the only factor that seems to disturb the Government. There seems to be no feeling on the part of this Government that there is anything wrong in the fact that already well-established industries in Australia which we believe to be either wholly or mainly Australian-owned should, by this process of tax concession, be able to become foreign companies. There seems to be no consideration of that aspect at all. The only thing in the mind of the Government seems to be that if somebody in Great Britain spends £100,000 on shares in Australia, well, £100,000 is added to the Australian exchange position. I submit that that is the whole approach of this Government. So long as the London fund position looks good it gives no scrutiny whatsoever to what is taking place in the structure and the fabric of Australian industry as a consequence. I submit that these matters are of distinct concern to the Australian community.
One of the ironies of this particular kind of concession is that the more concession you give in Australia to the United Kingdom investor - and that means the more revenue you lose on the dividend, also ironically enough - the more does the United Kingdom collect at the other end. We are giving a kind of indirect subsidy to the United Kingdom Treasury. The net position of the United Kingdom investor is still better after taking the two taxes into account. He is paying less Australian tax and more United Kingdom tax. Yet we are told that this is a good thing from the Australian point of view. I suggest that the word “ fantastic “ used by the Prime Minister the other day with regard to capital inflow is a very appropriate word. The situation is fantastic. It is fantastic when you find applause for this kind of thing. I have not seen an article anywhere in the Australian press indicating that this is the effect of this particular proposition on the finances of Australia or on the investment fate of United Kingdom investors in Australia. Why do we not have a little more clarity and a little more honesty as to what is involved?
– May I ask the honorable gentleman a question, Mr. Speaker?
– It would be in order.
– Does the British taxpayer pay from his income at home and his income abroad the full British tax, and then deduct what has been deducted abroad?
– There is in the United Kingdom a fairly complicated system. I think that if afterwards you will do as I have done, and consult the article in the London “ Times “, you will find the example well illustrated there. They have a system of what they call “ grossing up “, where they presume that if £1 of dividend from Australia pays the Australian tax of 7s. 6d. in the £1, the £1 that the British investor gets is really only 12s. 6d. They add 7s. 6d. back and then allow the concession off that. In fact, honorable members may have seen a very patriotic example the other day of one company trying to have the same amount grossed up twice. Fortunately, the company lost in the court. That is the kind of complication that can enter into these apparently simple matters.
I suggest that any one who has endeavoured to wade through this document on the double taxation agreement, which is intended to be a simplified document, may not have been aware - as I was not aware until I made some inquiries - what the position would be. We are told in the measure that the withholding tax is going to be 6s. in the £1 except in relation to countries covered by the double taxation agreement. The countries covered by that agreement are the United Kingdom, the United States of America and Canada. If you exempt those three countries from the provision, then to whom is the provision going to apply? We have very little direct investment in this country from any countries other than the United Kingdom, Canada and the United States of America. As I shall show in a moment, the real effect of this seems to me that it is now apparently recognized that the individual shareholder in Great Britain, as distinct from the company shareholder in Great Britain, is at a distinct disadvantage by reason of the double tax agreement as it operates between Australia and the United Kingdom compared to the way it operates between Australia and the United States. When honorable members consider the examples that I will give in a moment, I believe they will agree that it is time Australia had a second look at these double-tax agreements, because their implications have not been realized.
Under the double-tax agreement operating at present between Australia and the United Kingdom, a company in Great Britain holding shares in an Australian company pays no tax on dividends derived from that company. An individual shareholder in an Australian company, who is resident in Great Britain, pays tax on his dividends at half the rate that an Australian resident would pay. The effect of the legislation now before us is this: If we establish a rate of 6s. in the £1 applicable to everybody in Australia, the United Kingdom shareholder will pay only half that rate. His maximum rate of tax in the future will be 3s. in the £1. I have no doubt that there are some individuals resident in the United Kingdom who receive incomes of £50,000 or £60,000 directly from Australia. With our maximum rate of income tax at 13s. 4d. in the £1, such persons would pay 6s. 8d. in the £1 under the present arrangement. It would be a distinct advantage to them to choose the withholding tax basis and gain 3s. 8d. in the £1 thereby. This is apparently the kind of computation that has been worked out by the financial pundits in London as showing the effects of the proposition before us.
By contrast, the double-tax agreement operating between Australia and the United States of America provides that a resident of the United States holding shares in an Australian company shall pay Australian income tax on dividends received from that company at a maximum rate of 3s. in the £1. This applies whether the shareholder is an individual or a company. Under the old arrangement the American company investor in Australia was not so advantageously placed as the United Kingdom company investor in Australia. The individual investor in America could, in some circumstances, be better off than his counterpart in the United Kingdom, but in a number of instances he would be worse off. His comparative position depended on the total amount of income that he received. There is no doubt, however, that there are institutional investors and others in the United Kingdom who Will be at a distinct advantage after the passage of this legislation, taking into account the rate of tax payable in their own country.
I do not think that these are circumstances that should be permitted to arise by a government of this country, simply because it wishes to encourage foreign investment. Foreign investment should at least stand on its own feet and should be directed to a particular field. Here we have, as it were, a kind of induced investment. You do not get people to invest directly in some industry that needs development; you induce them, by means of a tax concession, to invest in oldestablished industries, and then the extra capital on the exchange is regarded by the government as being available for the development of this country.
When we look at the other country with which Australia’s relations are important, we can see more clearly the kind of thing that has been happening, because I think that in many respects the American investor has been in a somewhat better position under the double-tax agreement over the last two or three years than the United Kingdom investor. Again I am indebted for some of my information to a publication of the United States Government. It is entitled, “ Survey of Current Business “. I refer to the issue of August, 1959, and to an article headed, “Capital Flow to Foreign Countries Slackens “. It contains quite an extensive analysis of foreign investment - and, of course, Australia is a foreign country from the point of view of the United States. Apparently in the last year under consideration, 1958, American investments in other parts of the world slackened off, but mainly because there was less investment in petroleum, and apparently one of the reasons tor this was that the Americans had already bought up most of the good petrol concessions in which they were interested, and they do not have to invest quite as much. But another significant trend is shown in the increase in the amount of American investment in two other fields, both of which are significant from Australia’s point of view. One is the field of manufacturing, and the other the field of trade and distribution. This significant passage appears on page 27 of the publication I have mentioned -
The flow of investment to expand trade and distribution facilities abroad rose moderately in 1958. A need for improved access to expanding foreign markets was probably a factor in the growth of this type of investment by United States companies in many countries.
Australia is one of such countries. Why there should be any need for American investment at all in the field of trade and distribution is rather beyond most of us here. I would suggest that there may be, merely on a know-how basis, some advantage in the field of manufacturing, but when we consider the kind of thing that has been happening, I think it is time we began to ask ourselves some serious questions. One of them, which I hope will be considered by the proposed committee on taxation, is: What is the effect on the control of Australian industry of the double-tax agreements? On pages 30 and 31 of the publication I have just mentioned there are some quite extensive statistics. They are certainly more extensive than any I have seen in Australia on this subject, the main reason for their absence in this country being a lack of statistical information from the United Kingdom with regard to Australian investment. In any case, the United States Department of Commerce endeavours to keep track of the amount of American investment in other countries, and also of the effect of foreign investment in the United States. I suggest that we shall have to begin to collate similar information in Australia.
In 1950 the total amount of American investment in Australia, according to this publication, was 201,000,000 dollars. In 1952, two years later, it had risen to 310,000,000 dollars. In 1955 it was 498,000,000 dollars. In 1956 it had increased to 552,000,000 dollars. In 1957 it was 601,000,000 dollars and in 1958 it had risen to 673,000,000 dollars. It is significant to note that of the increase of 49,000,000 dollars between 1956 and 1957, only 2,000,000 dollars was new capital, the other 47,000,000 dollars being undistributed subsidiary earnings. Of the increase of 72,000,000 dollars from 1957 to 1958, only 17,000,000 dollars was new capital in the year, while the other 55,000,000 dollars - about three out of every four dollars of the increase - was undistributed profits ploughed back. That has increased American equity in Australian undertakings. Apparently, there have been phases in American investment. In certain years, American investors were prepared to plough back profits rather than pay dividends. At the time the double tax agreement was talked about, and when it was obvious that it was about to become law, there was a decline in the payment of dividends because some advantage was lost if they were paid before the agreement became effective. But since the agreement has operated, the tendency has been, apparently, for not very much new investment to be made, for dividends to be paid and for anything added to the equity in undertakings to come out of undistributed profits which had accumulaed here at the expense of the Australian consumers.
The same kind of thing in the strategic significance of these movements can be seen in the statistics published from time to time by our Department of Trade. I quote from the most recent issue of “ Developments in Australian Manufacturing Industry 1958- 1959 “, made available within the last few days. It shows that the new capital expenditure in manufacturing industries expected for 1958-59 was £201,000,000, of which £83,000,000 would be in the field of engineering and vehicles and £26,000,000 in the field of chemicals and oil refining. The document added -
It is estimated that over one-third of expenditure in 1958-59 on the projects scheduled was made oy firms linked financially with overseas companies.
That indicates that overseas capital investment has an important effect on the economic life of a community. The October, 1 959. issue of the “ Survey of Current Business “, at page 20, contains a table showing the plant and equipment expenditures abroad by United States companies in 1957 and 1958. In 1957, American companies operating in Australia invested in plant and equipment 64,000,000 dollars or about £28,000,000, and in 1958, 62,000,000 dollars or about £27,000,000. Of course, we are not told how much of that investment came from within Australia, but the suggestion is that most of it came from outside. At least, it adds to the equity and control by outside companies in strategic Australian industries. The investment of American companies in plant and equipment was a significant part of the total investment in manufacturing industries of £201,000,000.
Another matter of concern is the rate of return that is apparently obtained by some of these American companies operating in Australia. The table on page 31 of the August, 1959, issue of the “ Survey of Current Business” shows that in 1957 the total investment in Australia by American firms, including original capital outflow and profits ploughed back, aggregated 601,000,000 dollars, of which 302,000,000 dollars, or a little over half, was in the field of manufacturing. In 1958, the total had increased to 673,000,000 dollars, and 55,000,000 dollars of the increase of 72,000,000 dollars came from profits ploughed back and only 17,000,000 dollars from new capital. The manufacturing component had risen to 354,000,000 dollars, an increase of 52,000,000 dollars in one year in the one field. The other significant feature is that the total earnings of American companies in Australia in 1958 were 94,000,000 dollars, of which 67,000,000 dollars came from the manufacturing field. Although only half of the total investment is in the manufacturing field, two-thirds of the total profits came from that field.
If total earnings of 67,000,000 dollars are related to total investments, original and ploughed back, of 354,000,000 dollars, we see that a pretty good rate of return has been obtained on both. Even after deducting an amount for taxation and for undistributed profits that are left here, 33,000,000 dollars were remitted in the field of manufacturing, which is a return, after the payment of expenses, in the region of 10 per cent, on all capital employed. It looks as though the American companies, like the British taxpayers, do not look at these propositions at all from the viewpoint of the welfare of the Australian economy; their concern is whether the investment will give them a net return of about 20 per cent. Occasionally, the interest of the investor and the general interest of the community may coincide, but that is not necessarily so. Not only do these overseas investors get a very good return, but, because of these doubletax agreements, we also give them concessions over and above those available to our own taxpayers. Why should a United Kingdom investor, investing in an established company such as Australian Paper Manufacturers Limited, get a return, after taking taxation in both countries into account, 50 per cent, better than does his Australian counterpart? How can this be said in any way to promote the good of the Australian economy? I think it is time that there was a re-appraisal of the whole position. The only thing I can agree with the Prime Minister upon is that it is fantastic, but I see this as being a little bit fatal as well as being a fantasy, if nothing is done to remedy it.
After imposing import restrictions, which in many ways stifle Australian industry, the Government has no objection to an overseas aircraft company investing in one or two aeroplanes that can wreck the whole of the Australian air transport industry. All that seems to concern the Government at the end of the year is whether, if our imports exceed our exports, the London funds are all right. The Government, after looking at the London funds, says that there must have been a net capital inflow of £100,000,000 or £200,000,000. But I suggest that we need a better barometer of capital inflow than the position of the London funds at the end of the year. There is need for something of the documentation and the serious approach of the United States Department of Commerce, which in many ways corresponds to our Department of Trade. The Government should look at how much of the income of Australian industry is owned by foreigners to-day, whether they be from the United States of America, Canada, the United Kingdom or Switzerland. I hope that honorable members, having listened to only a few of the statistics that I have given, will read the article to which I have referred. It is contained in the August. 1959, issue of the “ Survey of Current Business “, which may be obtained from the Library. That article illustrates the impact of American economic policy on the destiny of Australia.
If American investors wanted to withdraw some of their profits from this country, or decided not to go ahead with certain undertakings, that would have disastrous effects on the Australian economy. At the moment it is ironical that apparently American investment is Australia is able to earn higher returns in some fields than it can in America because the effects of the recession have been felt in America. Apparently one of the reasons why there has been a decline in the amount of net return to the United States from the petroleum industry is because the Government of Venezuela jacked up and said: “ This is our oil after all and we think you should pay a little more for it “. The Government of Venezuela placed a tax on the investing country and the net return to the investing country was not as good as formerly, but still good enough for the investing country not to want to repatriate its capital. We should do something similar. Why should the American investor in certain fields receive a better return than the local investor?
The article in the August, 1959. issue of “ Survey of Current Business “ states -
Although direct-investment earnings abroad were weak in some industries in 1958, on the whole they were stronger than domestic corporate profits. While manufacturing earnings abroad gained slightly, leading manufacturing corporations in the United States (excluding petroleum production and refining), reported a reduction of some 17 per cent.
They were worse off at home but better off in the rest of the world. The article continues -
Although the drop in petroleum earnings was about 20 per cent, in both domestic and foreign operations, the latter were severely affected by rising taxes.
That is, taxes in the countries that were being exploited. The article continues -
Mining earnings were down by over 20 per cent, both here and abroad, but trade and distribution earnings abroad increased substantially while they declined in the United States.
And finally, indicating what is happening in this country, the article states -
Earnings of direct investments in other industries held up well in 19S8. Manufacturing earnings increased slightly overall, as reductions in Canada and a number of Latin-American countries were more than matched by notable increases in Germany and Australia . . .
So Australia apparently was one of the good milking cows for manufacturing, trade and distribution. Australia was apparently a good proposition, and overseas companies have been aided by taxation concessions granted to them by this Government. I submit that the time has arrived when we should reconsider the operations of these agreements. There may have been some injustice to the United Kingdom investor by reason of his being worse off than American investors. At least that situation will be remedied, but all foreign investors are better off than they should be, and it is time that this matter was looked into.
.- At least I can agree with the honorable member for Melbourne Ports (Mr. Crean) when he states that we would be better off if we had more information. Our documentation at the moment is quite insufficient to enable us to follow all the trends in detail. If it were better my own feeling is that far from discouraging this process of foreign investment in Australia we would go even further perhaps in some direction to increase it. Of course, there can be no meeting point between one side which wishes to discourage foreign investment in Australia and a government which wishes to promote it.
The honorable member for Melbourne Ports has stressed some objections to foreign ownership of Australian industry. Let us take the motor industry. The motor industry in Australia is very largely owned and certainly controlled by overseas companies. This has been very largely a postwar growth, although it has its origins in earlier times. Does the honorable member for Melbourne Ports want a big motor industry in Australia or not? If he does he must pay for it. If he does not, let him be frank and say that he wants to be socialistic and stay in the backwoods. Where do you get a motor industry - out of some socialistic text-book? You get a motor industry built up by the people who know all about itv by investors who are acquainted with its operations. Over the years, by its efforts, by making big profits and by ploughing them back, not only has the American motor industry grown in this country, but also a whole train of Australian industry has followed in its wake. Where would we be in the motor industry without foreign control and foreign ownership? The motor industry is probably the one industry above all others that is owned overseas and controlled overseas. But does that hurt us? What does the American manufacturer do in Australia? He employs large resources and large numbers of Australians. In every direction he makes the Australian economy more efficient. If he is to bring his capital and know-how from his own country, where he runs naturally much less risk, to an overseas country, he naturally wants a higher return.
The honorable member for Melbourne Ports resents the process of ploughing back of profits - building up of capital. It is true, of course, that it would be better if more new money came into the country. But it is only as a result of this ploughing back process indulged in by the General Motors organization in Australia since the war that we have our present large motor industry. If we move away from the motor industry and look at other industries it will be seen that almost every sector of industry in Australia is dependent on know-how coming in from overseas companies. Why should these companies be a threat to us? By investing in a foreign country they give hostages to fortune. They are in the position where a hostile government in this country could take action highly dangerous to them. Such action could at any time destroy their investment. One reason why they have come to Australia in preference to other countries is that here there is a firm foundation where they can expect right and proper treatment over the years.
I agree with the honorable member for Melbourne Ports that we would all like to see more of these companies owned and controlled by Australians. We would like to see more Australians on the boards of these overseas companies. We would like to see as many Australian shareholders as possible sharing in the capital assets and profits of these companies. But you cannot control this process in detail, because if you fiddle around with regulations and restrictions you take away the inducement for overseas investors to come to Australia and develop our industries. In the long run the way to keep Australia independent in the field of industry is to improve our educational facilities, our training methods and the general standard of our population. That is the way in which we shall be able to maintain our independence. We are much more likely to be able to do that if we have a large sector of foreign investment and a continual process of development - which can come only if foreign interests invest in Australia and develop our country - than if we try to live within our own means and resources and so retard the whole process of our development.
Apart from the general progress of Australian industry which is so highly dependent on overseas investment, we have to consider the funds which will become available. The honorable member for Melbourne Forts dismissed the idea of a great increase in receipts and higher overseas funds as an unimportant consideration. Does the honorable member suggest that we can continue our present rate of development and that we can maintain our present high standard of living without this capital inflow? He spoke about our current level of import restrictions, but he does not seem to realize that without the continual inflow of raw materials from overseas and other items that are indispensable to Australian industry, we would not be able to continue operations. We have been able to continue our present rate of development, not only because of the direct effect on our industries of the import of raw materials but also because of the additional financial resources that have been made available to us. Although the honorable member for Melbourne Ports did not say it in so many words, presumably he is opposed to this capital inflow. If overseas investment were cut off our immigration programme would suffer, our general development would suffer, and the high standard of living which we currently enjoy would suffer.
The honorable member quoted at length from the London “ Times “ and pointed out how advantageous this new withholding tax arrangement would make investment in
Australia. I hope that is the reason why he read those extracts from the London “ Times “ because the obvious aim of this legislation is to facilitate and increase the capital inflow to Australia by making this country a still more attractive place for overseas investors. Far from deploring the arrangement we should applaud it because, unless we can make Australian investment more attractive for the foreign investor than corresponding investment in his own country, there will be no inducement for him to send his capital to Australia.
The honorable member for Melbourne Ports referred to the danger of take-overs - a subject to which we referred a few days ago. It is possible for foreign investors, by weight of their capital investment, to obtain a dominant interest in existing Australian industries. I agree with the honorable member that this is something which needs watching. But, in many cases, it will have beneficial results because local companies will be forced to publicize their accounts to a greater extent than previously and this eventually must lead to a revision of our company law. In many States, and particularly in New South Wales, the company law is obsolete but the threat of a take-over has, in one or two cases, forced the directors of Australian industries, who like to keep their shareholders in the outer darkness so far as company affairs are concerned, to publish statements showing their true assets and earning powers. Unfortunately this Government has not control of the situation, but I am quite sure that if it had the final say company laws would be brought up to date very quickly. Do not let us foist on to this Government the blame for the very backward state of company law in many States.
In the end there can be nothing to reconcile the viewpoint of honorable gentlemen opposite with the viewpoint of honorable members on this side of the chamber. We agree that more information should be made available. We should know more precisely what the proposal will cost and what effects it will have upon us. The more facts that are published and the more comprehensive the analysis that is made, the more sensibly can we debate these matters because we cannot possibly debate them fully and sensibly unless we are in possession of the full facts.
However, we must not overlook the very powerful and continuing benefits which result from this huge flow of overseas investment. If we are to go ahead, it is quite apparent that we must do what other countries have done. The introduction of the withholding tax system is not new, in fact, we have copied it from Canada, the United States and other countries. The system is simple in operation and has advantages for the foreign investor. It has attracted him to other countries, and we can only hope that it will attract him to invest in increasing measure in Australia.
.- I am sure that the honorable member for Wentworth (Mr. Bury) is not clear about capital inflow into this country. He has misrepresented the honorable member for Melbourne Ports (Mr. Crean), and I should like to set him right about certain facts and figures. Apparently he has not even availed himself of the information that is contained in a Government publication known as the “Annual Bulletin of Overseas Investment” which is issued by the Commonwealth Bureau of Census and Statistics. Reference to that document will show that the Labour government did not want to discourage overseas investment in Australia to the extent that the honorable member for Wentworth tried to indicate. I should like to cite some of the figures that are contained in the bulletin which was issued only a few weeks ago. In 1949-50, the last year that the Chifley Labour Government was in office, £6,100,000 of American capital was invested in Australia. In 1957-58, the last year for which the figures are available, the amount of American investment was only £5,800,000. In 1949-50, £42,100,000 came from the United Kingdom but in 1957-58 we received only £41,300,000 from that source. The honorable member for Wentworth should do some deep thinking. I think that all honorable members will agree that the £42,100,000 which was invested in 1949 is worth double that amount to-day, so that on to-day’s values about £80,000,000 came from the United Kingdom in the last year in which the Chifley Government was in office as against £41,300,000 in 1957-58 under the administration of the Menzies Government.
The Government is misleading the people when it talks about capital inflow. The honorable member for Wentworth does not seem to be particularly interested in the facts. He mentioned the motor industry. The Chifley Government introduced the motor car manufacturing industry into this country. But when General Motors-Holden’s Limited established their undertaking here, it was well aware of the taxes that it would be called upon to meet. However, in 1953 the Menzies Government entered into a taxation agreement with the United States of America which placed General Motors in a much more advantageous position. Prior to that agreement, company tax paid on dividends by American companies investing in Australia was 5s. in the £1 for the first £5,000 of income and 7s. in the £1 for everything above £5,000. Individual Americans who invested money in Australia paid Id. in the £1 for the first £100 of dividends and 15s. in the £1 on £8,000 and above. The present Australian Government entered into a new agreement in 1953, under which the maximum rate of tax for companies and individuals is 3s. in the £1. This has meant a great saving to Americans who have invested capital in Australia. I have estimated that American companies and shareholders have been saved more than £25,000,000 in tax since 1953.
New capital inflow into Australia from the United States since 1953 has amounted to only £48,000,000. I have estimated - I can only estimate, because it is impossible to give an exact figure1 - that, as I have indicated, American investors in this country have been saved £25,000,000 since 1953 in tax concessions. This means that the net capital inflow from the United States has amounted to only £23,000,000.
The honorable member for Wentworth criticized the honorable member for Melbourne Ports, and said that he did not oppose capital inflow from the United States. We on this side of the House do not oppose capital inflow from that country, or from any other country. What we oppose is the indiscriminate inward flow of capital from overseas. We believe that, at times, in specific instances, capital from overseas may be needed for the provision of capital equipment which is not available within Australia. For example, we may need some technical know-how. We do not support the fallacious reasoning of this Government which led recently to the farce of a proposal for an overseas loan to renew the Mount lsa-Townsville railway line. I pointed outin this House last April that such a loan was not necessary for this purpose, and I showed how the project could be financed. I am glad to see that the Government has come to realize what can be done.
Honorable members on this side of the House want to bring to the notice of the Government the true position in relation to these international tax agreements entered into between Australia, on the one hand, and the United States of America, Canada and the United Kingdom, respectively, on the other. We know that, in 1946, the Labour Government entered into a tax agreement with the United Kingdom Government. I think that, before that agreement was entered into, United Kingdom companies investing in this country paid company tax at a flat rate of something like 7s. in £1. United Kingdom companies with investments in Australia do not pay any tax now. A great many United Kingdom taxpayers have been paying 6s. 8d. in the £1 on investments in Australia, but they will now pay a maximum of 3s. in the £1 - a further saving to them of 3s. 8d. in the £1.
Since 1947, the capital inflow from the United Kingdom has been £386,000,000, and the capital outflow from Australia to that country has totalled £172,100,000. I think it would be found, if we could estimate the tax payable, that a great deal of that £386,000,000 flowing in was actually our own money and not United Kingdom money because it represented investments made in order to avoid tax. The inflow of capital from the United States and Canada since 1947 has amounted to £81,900.000. It is interesting to note that the capital outflow to those two countries over the same period has totalled £82,600.000. This means that £700,000 more has gone out than has come in since 1947. There has been a capital inflow from New Zealand, since 1947, of £25,200,000, and a capital outflow to that country of £14,200,000. The Treasurer (Mr. Harold Holt), in his Budget speech made on 11th August, 1959, and reported at page 41 of “ Hansard “, of this House, said, referring to the proposed withholding tax -
For this and other reasons, its introduction could be expected to encourage overseas investment in Australia.
From countries other than those which I have already mentioned, there has been, since 1947, a capital inflow of £46,800,000, and the capital outflow has amounted to £8,900,000. An interesting comparison can be made on these figures. The capital outflow to the United Kingdom was almost 50 per cent. of the capital inflow. In respect of the United States of America, the two practically broke even. The capital outflow to New Zealand represented more than 50 per cent. of the capital inflow, and the capital outflow to other countries only about 20 per cent. of the capital inflow. This matter must be looked at. Not many Government supporters have clear ideas on it. Even the Prime Minister (Mr. Menzies) is a little bit hazy about it. The “ Sydney Morning Herald “ of 17th November reported that he told delegates to the fourteenth annual meeting of the Federal Council of the Liberal Party of Australia, which was held at the Albert Hall, Canberra, that the flow of foreign capital into Australia was growing at an almost fantastic rate. I emphasize the word “ growing “. American investment amounted to £23,700,000 in the financial year 1954-55. It dropped to £12,200,000 in 1955-56, and still further to £6,800,000 in 1956-57. In 1957-58, it dropped yet again to £5,800,000. Does any honorable member agree that this represents growing American investment? I think that Government supporters should take stock of the position. As the honorable member for Melbourne Ports has said, they have not very clear ideas about foreign investment in this country.
Under the Government’s present proposals, individual taxpayers in the United Kingdom, Canada and the United States of America will pay a maximum of 3s. in the £1 on dividends from investments in Australia. It is ironical that taxpayers in the higher income groups in this country, whom Government supporters represent, pay up to 13s. 4d. in the £1.
Let us decide what foreign capital is necessary for this country. Wherever possible, we should use our own capital, but if foreign capital is introduced, an equitable and fair tax should be paid on the returns on it. An honorable member has spoken of the great wealth made by some foreign companies in Australia. This Government is encouraging and helping them and has no faith in the ability of Australian capital to develop this country. Time and time again, honorable members on this side of the House asked why a foreign loan was considered by the Government to be necessary for the construction of the Mount Isa to Townsville railway. We have the men and we have the material necessary for this work. We have the Commonwealth Bank to provide the money. We can develop from our own resources not only the Mount Isa railway line, but many other great projects in this country. We do not need foreign capital for these enterprises. The honorable member for Melbourne Ports made it quite clear and I reiterate that, whilst we need foreign capital for the purchase of capital equipment, we do not need foreign capital in order to build a hotel in Bourke-street, Melbourne.
– There is only one point concerning which I should like to ask the Minister a question. I agree with the honorable member for Wentworth (Mr. Bury) that the Government’s action in bringing about an agreement to avoid double taxation has brought an inflow of capital to Australia for the establishment of new businesses, and has conferred other benefits of that nature which have been of great value to us. Of course, everybody wants to avoid double taxation, which is the payment of full taxation both in Australia and in the country from which capital comes. But is it wise or equitable that we should set the rate of 30 per cent, for taxation payable on the earnings of capital from countries with which we do not have this agreement? The flat rate of tax in relation to countries with which we have no agreement is 30 per cent., and it is 15 per cent, in relation to those countries with which the agreement exists.
The position as I understand it is this: If an Australian has an investment in the
United Kingdom, or the United States of America, he pays the non-resident alien taxation, less 50 per cent. If the maximum flat rate of tax is 30 per cent:-6s. in the £1- sunder the double taxation agreement he pays only 3s. in the £1. In Australia, however, the investor is assessed on the full amount of income which he drew in Australia plus the income that he earned overseas. The amount of taxation paid overseas is then deducted from the full taxation that he would have had to pay on that amount in Australia.
I do not suppose that many Australians have money invested in Canada, the United Kingdom or the United States of America because, at the beginning of the war, all our overseas investments were taken over by the Commonwealth Government. On the other hand, we have a very large amount of overseas investment here. Instead of drawing the 30 per cent, tax on the nonresident alien dividends here, the Government receives only 15 per cent, as far as United Kingdom and United States of America investors are concerned. Therefore, we must lose a large amount. I can see no reason why the tax of 30 per cent., or 6s. in the £1, should not be imposed on dividends in respect of all countries concerned. The avoidance of double taxation under the agreement could continue. In other words, Australians should not have to pay tax in Australia and in other countries. I suppose that, under the circumstances, other countries would not agree with this, but it seems to me that we are paying a high price to bring overseas capital into Australia. As the honorable member for Reid pointed out, at present, the amount of money that goes out each year as a result of this payment of only 3s. in the £1 practically balances the capital that is coming in and if the capital ceases to come in we will still have large amounts going out. I think that the Government should look at the problem from that point of view.
.- This legislation represents part of the Government’s policy of encouraging overseas investment in Australia. In introducing the measure, the Treasurer (Mr. Harold Holt) pointed out that this legislation had three features. The Opposition makes ho comment about two of them. We accept the second and third proposals - exemption from tax of premiums paid by the Commonwealth on -special bonds, and the establishment of a basis for taxing income from seasonal securities to be issued by the Commonwealth.
The Opposition did not approve the introduction of seasonal securities, but, as they have come into existence, there is no reason why they should not be put in the same position as other securities. We direct the attention of the House, however, to the first and main provision in this legislation. This is the introduction of a dividend withholding tax to be deducted from dividends paid by Australian companies to shareholders not residing in Australia. Prior to this legislation those shareholders paid their tax at the end of a period at the rate which then prevailed. This legislation has two effects: It allows them to withhold the tax on the income as it is being earned at a flat rate. Secondly, it reduces the amount of tax that they will actually pay. This represents part of the pattern of encouraging foreign investment in Australia. It is in relation to that encouragement that the Opposition mainly bases its opposition to this provision.
I think it is time that the House and the people gave serious consideration to the policy of the Menzies Government in encouraging foreign capital. It has been pointed out in this debate by the honorable member for Melbourne Ports (Mr. Crean) and the honorable member for Reid (Mr. Uren) that the Government - or its leader at any rate; - does not appear to understand the position completely. The Prime Minister was recently reported as saying that the inflow of overseas investment had risen in an almost fantastic way. The only thing fantastic about this is the unfairness of it. As the honorable member for Melbourne Ports has pointed out, the actual rise has not been fantastic. The Prime Minister modified his remarks a couple of days later when be stated that it was truly remarkable. So, on one occasion, it had risen in an almost fantastic way and, two days later, it was truly remarkable!
But what has happened with regard to this? That is the question the House has to answer. We have to go back to the balance of payments to find out what is happening. Our balance of payments position has in recent years become very unsatisfactory. The White Paper on National Income shows that there has been a deficit in the current account in each of the last five years with one exception, and the total now stands at £771,000,000. In the year 1956-57 there was a surplus of £90,000,000. The deficit in 1958-59 was £187,000,000. In 1957-58 it was £177,000,000; in 1955-56 it was £238,000,000 and in 1954-55, £259,000,000. That is a total deficit of £771,000,000 In five years. This means that the amount of payments which Australia has made overseas for imports, foreign travel and other transactions has exceeded the payments made to us by £771,000,000 in five years.
It is on that basically weak situation in our balance of payments that the Government bases its policy of encouraging overseas investment by every conceivable means. When the country is facing a serious situation such as that, the first thing the Government does is to reduce its overseas funds. I want to point out to the House what happens with regard to overseas funds. Here again is a basic weakness. When the Government came into office there was an accumulation of £800,000,000 in our overseas funds. It was not long before the inrush of imports in 1952-53 reduced that sum to about £355,000,000. In other words, in the first three years of this Government’s life it reduced that accumulation left by the previous government by that amount. Then there was a rise in overseas funds, and in 1954 the figure stood at £570,000,000. That is a characteristic feature. A windfall increase occurs in a particular year and the funds go up, but then they are run down over a period of three or four years. They were run down to £355,000,000 in 1955-56. The year 1957 saw another windfall increase and the funds rose to £565,000,000. They reached £589,000,000 by the end of 1957. But ever since the end of 1957 overseas funds have been running down until according to the latest figures I have, for December last year, the fund stood at £500,000,000. That figure was slightly higher than the figure of £480,000,000 for the previous month. This underlying weakness in our balance of payments position causes this Government to encourage overseas investments in every conceivable way.
The question arises as to how successful this policy has been. The figures which have been provided for us, as previous speakers on this side have pointed out, are certainly far from adequate. I want to point out to the House that what is shown as the actual inflow of private investment in the Annual Bulletin of Overseas Investment, has, in addition to the actual amounts of investment, a residual or bookkeeping item which might be quite considerable. It is interesting to see the totals and to ask whether this is the fantastic increase of which the Prime Minister spoke. I will take the figures published in the official publication compiled by the Commonwealth Bureau of Census and Statistics and then ask whether these are fantastic figures. In the last year of the Chifley Government, 1949-50, the figure stood at £67,500,000. That represented income from all sources. In the next year it was £66,800,000; the next year it was £86,400,000 and in 1 952-53, it was £19,600,000. Then in the next year it rose to £64,300,000; in 1954-55 it rose to £100,800,000, and in 1955-56 to £113,500,000. Then it fell in 1956-57 to £96,500,000, and rose in 1957-58 to £97,000,000. Is that a fantastic increase? When we consider that the Government has accumulated a deficit of £771,000,000 over the last five years, is this a fantastic increase in overseas investment? The figure rose from £67,500,000 in 1949-50 to £97,000,000 in the most recent year. Again I ask: Is that a fantastic increase? We must not forget that in 1949-50, prices were about 75 per cent, lower than they are to-day, so that the £67,500,000 would buy at least two-thirds as much as the corresponding figure would buy to-day. Therefore, the real value in goods and services which these investments could command is less to-day than it was in 1949-50.
Now let us look at the fluctuation that has taken place. The figure was as low as £19,600,000 in 1952-53. We must look also at a point which the Prime Minister seems to be completely unaware of. In the course of his speech I think he quoted a figure of £100,000,000. The overseas funds stood at £100,800,000 in 1954-55 and rose to £113,500,000 in 1955-56. The Prime Minister called that figure an inflow of capital. He was giving the impression that this was the amount of capital which had come into Australia from overseas. That is completely incorrect because that figure is the amount of investment in Australian industry which is owned by foreign investors; and it includes two kinds of money - new money and profits that have been made here and been re-invested. That is the point which the Prime Minister appears to have missed completely. At any rate, he ignored it or gave the impression that it was all new money coming in.
Let us look at the actual amounts broken up into new money and undistributed income that has been re-invested, and see how they compare. In the most recent year, out of a total of £97,000,000 only £58,000,000 was new money and £39,700,000 represented profit made in Australia and re-invested. In the year before, of £96,000,000, £53,000,000 was new money and £43,000,000 was reinvested Australian money. In the previous year, the £113,000,000 was made up of £77,000,000 new money and £36,000,000 Australian money re-invested. In the year previous to that again the total of £100,000,000 was made up of £70,000,000 new money and £30,000,000 Australian money re-invested.
It is interesting to observe the proportion of Australian money re-invested by those who have come to own it - the foreign investors - and see how that proportion has risen. The proportion of Australian money as a component part of the total in 1954-55 was 29 per cent., in 1955-56 it was- 36 per cent., in 1956-57 it was 41 per cent, and in 1957-58 it was 40 per cent. What the Prime Minister failed to understand or point out is that the total that he dealt with is made up substantially of Australian money re-invested by foreign owners and that that proportion is rising continuously. In other words what is happening is that there is an inflow of new money by foreign investors who gain control of a company in Australia and then that company is used to make fantastically high profits. From those profits investment takes place and so the actual holding, the ownership, the economic power of the foreign investor grows only partly as a result of new money.
Some of the characteristic companies, such as General Motors-Holden’s Proprietary Limited have only a very small proportion of new money coming in - perhaps only 5 per cent, of the total of the value of General Motors-Holden’s in Australia. The remaining 95 per cent, of that capital value represents profit made in Australia by General Motors-Holden’s and reinvested in that industry. It is not new money; it is Australian money.
The Government is arguing that the value of foreign investment is that it brings new money to Australia and so helps with the balance of payments problem. I am saying that an increasing proportion of what is regarded as foreign investment is not new money at all, and does not assist the balance of payments one fraction. In fact, I will point out later that it does nothing but injure our balance of payments situation. What is happening is that a great deal of what appears to be the foreign investment about which the Prime Minster spoke is nothing more than a case of the foreign holder in a company acquiring the economic means in Australia to charge high prices for products, like motor cars, which are in demand. He can sell those products at prices which allow him to obtain profits which he does not distribute, but re-invests them in order to expand the company. That is not really new money at all. It is not foreign investment in any real sense of the term. It is Australian investment under the control of people from overseas.
The second point I want to examine is what is happening in relation to tax concessions. In recent years, the Government has set out to give the overseas investor special concessions. In some cases, certainly in the case of some British investors, no secondary tax is paid by the investor. He pays only the primary tax in Australia. What effect is this having? I say it is having this effect: It is causing the proportion of investments made from undistributed profits to rise, and the proportion of new money invested to fall. In other words, this concession is having exactly the opposite effect from that which the Government wants it to have. Why does it have this effect? I think it is for this reason: When the overseas investor in an Australian company wants funds to invest he will look in two places - overseas and his earning capacity in Australia. If he increases his earning capacity in Australia by reducing his tax, that gives him the additional funds for investment in Australia, and so he will need to bring less money from overseas. That means that instead of paying taxation in Australia with that money he is investing it in the industries he controls. So, instead of the money going to the Commonwealth Treasury in the form of taxation, it is going into investment in the company controlled by the investor. That is to say, we give the foreign investor money which he would otherwise have to pay in taxes if he were an Australian taxpayer, and he can invest that money in the company, in his own name. The effect is very largely to do nothing more than transfer money from the Commonwealth Treasury to the company concerned. That means that the overseas investor is investing in the company that he controls in Australia money that he has obtained from the Australian Government in the form of a tax concession. It seems to me that the effect of this is the very opposite of encouraging investment in Australia from overseas. Instead of having the effect of encouraging investment it tends to enable the foreign investor to use funds already in Australia in order to enlarge his shareholdings instead of bringing new money from overseas for the same purpose.
Let us look at some of the points made in relation to this measure, for instance those made by the honorable member for Wentworth (Mr. Bury). In an attempt to answer the case made by the honorable member for Melbourne Ports the honorable member for Wentworth began his speech by asking, “Does the honorable member for Melbourne Ports want a big modern motor car industry in Australia? “ He said that, if so, we had to pay for it. Now, I think that the answer to that is that the honorable member for Melbourne Ports does not want a big modern motor car industry in Australia if we have to pay 700 per cent, or 800 per cent, profits to that industry. We want a motor car industry that makes reasonable profits and not one that makes the kind of profits that General Motors-Holden’s Limited has been able to extract from this country. Speaking for myself, I think that we would be better off with fewer Holdens if we could have the same amount of money invested in the neglected and much more essential fields of housing, schools and public facilities, which require such urgent attention. The great majority of the Australian people of the working class are travelling in 1914- model trains and 1920-model trams, while the fortunate few are able to travel in 1959- model motor cars.
– And our shipping is on a level with the T-model Ford.
– Yes, our shipping is even more outdated than our other means of transport. It seems to me that when we are deciding what we are going to do about a great modern motor car industry in Australia those are some of the things we ought to take into account. The honorable member for Wentworth went on to ask, “ Does it hurt to have such an industry controlled from overseas? “ I want to suggest, for the consideration of the House, four ways in which it can, and does, hurt to have this particular industry controlled from overseas. The first is that the output, the methods and the production of this industry are determined by decisions made in the United States of America and not by decisions made in Australia. The conditions that determine the making of those decisions by General Motors-Holden’s Limited originate in the United States, and are American decisions based on the interests of the parent company there. If it is in the interests of the American company to contract the activities of the Australian industry, then the activities of the Australian industry will be contracted, depending on the overall pattern of the world-wide General Motors’ interests, with which the Australian pattern is very small indeed in comparison. General Motors has a world interest, not just an Australian interest, and the company will be concerned with considerations that arise in that world pattern, and not with the small situation here in Australia.
Every government in the world has had this particular problem to deal with.
Recently, Cuba and Venezuela have had to lay down, in a dictatorial manner, conditions about the prices that were going to be paid for their oil, because the pattern of prices had been laid down by the international oil cartel without regard to Cuban and Venezuelan interests. Similarly, the pattern of production and methods and the general outlook of General Motors-Holden’s Limited is determined by American, not Australian, considerations. Of course, we all know that the supporters of this Government were once more British than Australian. Now, with the decline of the British Commonwealth as a world power, they are becoming more American than Australian. We on this side of the House say that the prime consideration in these matters must be for Australia, and the prime loyalty must be to Australia. We want Australian people in control of our Australian industries, even if they are Australian capitalists, rather than having our industries under the control of American capitalists, because the interests of American capitalists are not always the same as our interests. That is a point which I think even the loyal Americans on the other side of the House will have to take into account some time. They will have to realize that the decisions regarding General Motors-Holden’s Limited are made in accordance with the overall world pattern of the interests of the General Motors company, and not in accordance with the Australian pattern.
What Australia needs from the motor car industry is not more elaborate Holdens. The Holdens we now have are good enough for the majority of the Australian people. We want a 2-ton or 3-ton utility truck to serve Australians. The company could proceed with the production of such a vehicle instead of ploughing back its profits into the production of more elaborate Holdens and into the opening of overseas markets for Holdens. If the profits were put into the production of such a truck, Australia would benefit, but there is no sign that General Motors-Holden’s Limited will do this. Probably the rate of profit on such a truck would be less than the rate on the more expensive and more advertisingworthy Holden. So, there is one way in which the control of the industry from overseas can be harmful to Australia.
When are we going to get a utility truck manufactured in Australia to meet Australians conditions? I believe that General Motors-Holden’s Limited ought to be told that this is one of the things it should be making plans for. Of course, there is no sign of their doing that, because they are interested in making the most profit and not in producing the most useful motor vehicle.
The third factor I want to mention is the limitation of exports. Over a period there has been accumulating evidence that international cartels divide the world markets up between them and produce in the most convenient place goods for sale in other parts of the world market. It appears that the Australian product is to be used to supply certain markets. The Minister for Defence (Mr. Townley), who is now at the table, knows that in the production of aircraft for war purposes we have been tied hand and foot. We have not been allowed to produce them for sale overseas, but only for use by Australia. This has never been denied, and the Minister has avoided, from time to time, giving a direct answer to questions on the subject. We have been similarly tied down in the production of the Holden motor car, and also of many other products the manufacture of which is controlled by international cartels.
It is useless for the Prime Minister (Mr. Menzies) to say that this great growth in overseas investment, which he said was fantastic, is soon going to make Australia a great exporter of manufactured goods for sale in overseas markets. The Prime Minister will sooner or later have to concern himself with the problems posed by internationally controlled manufacturing corporations, which divide up the markets of the world so as to give industries in the United States of America and Japan, foi instance, a major share, while excluding Australian industries. We all know that restrictions are imposed on the export of practically every Australian product the manufacture of which is under international control.
Now I come to the fourth way in which it may be disadvantageous to have Australian companies controlled from overseas. This brings me to the basic alleged justification for the legislation before us. The Government says, “ We will give these tax concessions so that overseas companies will invest more money in Australia “. We have already pointed out that there has been no fantastic increase of overseas investment in Australia, and, in fact, no real increase at all, in the last ten years. The increase that has taken place has been to a very large extent the result of undistributed profits remaining in Australia, and new capital has contributed only to a very limited extent. Of course, the fundamental difficulty is that the larger the volume of investment in Australia, the larger the outflow necessary to service that investment. As the amount of foreign investment grows, the amount paid out to service it increases in the same proportion, and it is not long before the outflow in this way begins to exceed the amount of new capital. In those circumstances our balance of payments position must deteriorate, because the net movement of capital shows an outflow.
In this connexion let me give the House some figures. In 1949-50 the total inflow, including undistributed profits, which constitute no contribution at all towards the balance of payments, was £67,500,000. The amount of profit that was withdrawn overseas in the same year was £16,000,000, representing 24 per cent, of the total inflow of overseas investment. But in the last year for which we have a record the inflow was £96,500,000, and the withdrawn profits £34,000,000. In other words, the withdrawn profits had risen from 24 per cent, to 35 per cent, of the annual inflow in nine years. This proportion is increasing year by year, and it will not be more than seven or eight years before we will find the annual outflow of distributed profits equalling the inflow of investment.
If we add the undistributed profits to the distributed profits, we find that in 1949-50 the total represented 45 per cent., or almost half, of the inflow, while in 1956-57 it had risen to 70 per cent, of the inflow. If a situation arose in which overseas investors encountered difficulties and decided they needed more funds, these undistributed profits could be drawn upon, and the amount withdrawn in a particular year could vastly exceed the amount that came in. This did, in fact, occur, causing very special difficulties for us, in 1952-53, when the inflow of capital was only £19,600,000, the undistributed profits totalled £32,000,000 and the distributed profits £28,000,000. In that year of crisis the amount that was withdrawn and undistributed profits were considerably more than double the total that came in. Here is seen the fourth difficulty in allowing the big business corporations to be controlled by foreign investors. The outflow of funds necessary to service overseas investment is growing continuously, becoming a bigger and bigger proportion of the inflow of investment, and possibly, in periods of crisis such as 1952-53, greatly exceeding it. This, in fact, was the main cause of the depression coming to Australia in 1929. We could not borrow overseas, but we still had to pay interest, dividends and other charges on the amount we had previously borrowed.
– Order! The honorable member’s time has expired.
Question resolved in the affirmative.
Bill read a second time, and committed pro forma; progress reported.
Message recommending appropriation reported.
In committee (Consideration of GovernorGeneral’s message):
Motion (by Mr. Townley) agreed to -
That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to amend the law relating to income tax.
Resolution reported and adopted.
In committee: Consideration resumed.
Bill - by leave - taken as a whole.
.- I rise to point out to the committee that at no time has the Treasurer (Mr. Harold Holt) been in this chamber to listen to the debate on this important bill. Of course, we all know that this legislation is designed to give an even bigger handout to overseas capital, and I feel that in justice the Treasurer should have been in the chamber.
– Order! This appears to be entirely irrelevant to the clauses of the bill.
– I feel that it is quite relevant.
Order! I have ruled that it is irrelevant.
– I have raised this matter because I am sure that Government members are foggy on this issue. They have not an answer to the criticism offered by the Opposition and, with all due respect tothe Minister for Defence (Mr. Townley), who is now at the table, I am sure that he is not aware that misleading statementshave been made by the Prime Minister (Mr. Menzies) and by the Treasurer. They havesaid that these investments are growing at a fantastic rate. But it has been pointed out repeatedly that they are declining. Since 1949-50, the last year of office of the Chifley Government, investments from the United Kingdom have fallen from £42,100,000 to £41,300,000, and from the United States of America from £6,100,000- to £5,800,000. Those are conclusive facts. The Treasurer should come into the chamber and answer the criticisms that we have offered.
.- I direct the attention of the committee to clause 7. The Opposition is not opposed to the principle contained in this clause, but honorable members should realize that the minimum value of these seasonal securities that will be issued is £5,000, and that the rate of tax on income from them is 2s. in the £1. The securities will be acquired only by very wealthy people with extensive assets. They will be issued in minimum lots of £5,000, and the rate of tax on them will be the very small amount of 2s. in the £1. This is the tax that normally would be paid by a person with an income of £15 or £16 a week. Now, however, it will be levied also on the very wealthy people who buy these securities.
The second point I want to make is that these seasonal securities will replace treasury-bills, which were previously held by the Commonwealth Bank, and on which the Government paid about 1 per cent. The financial institutions will receive the seasonal securities, so that fluctuations in the central bank holdings of securities can be transferred from the central bank to these financial institutions. In other words, the Commonwealth will pay 4 per cent, on the securities, which will total about £100,000,000 a year, instead of the 1 per cent, it previously paid on treasury-bills. In addition, the income of the financial institutions from the securities will be taxed at the rate of only 2s. in the £1.
It seems that, although the principle of bringing the rate of tax on these securities into line with the rate of tax on other securities must be accepted, the fact is that treasury-bills which cost the Government 1 per cent. will be replaced by special securities which will cost the Government an average of 4 per cent. This would justify a higher rate of tax than will be levied when the rebate of 2s. in the £1 on earnings from the securities is taken into account. I think that this is one point that the Treasurer (Mr. Harold Holt) should have been in the chamber to answer.
.- The honorable member for Yarra (Mr. Cairns) either has not read the bill or does not understand it. The interest is taxed at the ordinary rate, and not at the rate of 2s. in the £1. This bill provides for a rebate of 2s. in the £1, which is the same as the rebate allowed on interest from all other government securities. I rose only to correct the honorable member for Yarra, and to prevent honorable members from being misled. [Quorum formed.]
Bill agreed to.
Bill reported without amendment; report adopted.
Bill - by leave - read a third time.
In Committee of Ways and Means: Consideration resumed (vide page 2733), on motion by Mr. Harold Holt -
That, in this Resolution . . . (vide page 2732).
– Although this is a formal stage, I want to indicate that a rate of 6s. in the £1 withholding tax will apply to everybody except residents of the United States of America, Canada and the United Kingdom. This has little effect on investment from those three countries, because they are at present covered by the double taxation agreement. However, the non-resident who lives in the United Kingdom will now enjoy a maximum rate of only 3s. in the £1, whereas he could previously be taxed, if his income were sufficient, at a maximum rate equal to half the highest rate applicable to Australian residents on any income. At the moment, this is 13s. 4d. in the £1, less 5 per cent. So, in effect, it gives a considerable concession to those residents of the United Kingdom drawing dividends from Australia where those dividends are of a high order - say £3,000 or £4,000. The maximum amount of tax those persons will now pay will be only 3s. in the £1.
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Mr. Townley and Mr. Cramer do prepare and bring in a bill to carry out the foregoing resolution.
Bill presented by Mr. Townley, and passed through all stages without amendment or debate.
Consideration resumed from 17th November (vide page 2733), on motion by Mr. Harold Holt-
That the bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Consideration resumed from 17th November (vide page 2734), on motion by Mr. Harold Holt-
That the bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Debate resumed from 17th November (vide page 2735), on motion by Mr. Harold Holt-
That the bill be now read a second time.
.- The Opposition opposes this bill. When we listened to the speech of the Treasurer (Mr. Harold Holt) we could have been pardoned for believing that this was an innocuous measure designed to stop a certain amount of tax evasion because of some devices resorted to by manufacturers in the way they turned out certain motor vehicles. But the Opposition looks beyond what the Government regards as tax evasion. The Opposition is concerned with the principle of whether this Government or any government should be levying such a very high amount of indirect tax on the community at this time if the country is only one-half as prosperous as the Government says it is.
When the Chifley Government was in power it levied taxes only in what it regarded as a right and proper way. We threw on those who made big incomes, whether they were companies or individuals, the responsibility of helping to maintain the services out of which they were able to do so very well. We believe in the principle of direct taxation rather than that of indirect taxation. Since the Chifley Government was defeated this Government has over the years changed the pattern of taxation. It has reduced income tax, including company tax, and has increased the burden of indirect taxation, including sales tax, excise and customs duties and other forms of indirect taxation. The result is that the burden of maintaining this country and the services that are carried on to the advantage of everybody in the community is now being borne not by those best able to bear it, but by those least able to bear it.
In this instance the Government complains that station wagons are being sold carrying sales tax of 16$ per cent. The. Government says that it intended in its legislation of a few years ago - in the days of the little horror Budget of March, 1956 - to impose sales tax of 30 per cent, on such vehicles. The Treasurer said -
The existing law requires payment of tax at the rate of 30 per cent, in respect of motor cars designed primarily and principally for the transport of persons, including station wagons, estate cars, but not including delivery vans. The latter bear tax at the rate of I6i per cent., which applies to commercial type vehicles.
To paraphrase the Minister’s subsequent remarks, it appears to the Government that a number of manufacturers have adopted a device of selling a vehicle which is usually described as a station wagon or an estate van, ostensibly for commercial use as if it were a delivery van. However, a conversion kit is sold separately and these vehicles are then easily fitted up and converted to station wagons. The Government has said that 85 per cent of the vehicles in this class are taxed at only 16$ per cent, whereas it wishes them to be taxed at 30 per cent.
We of the Australian Labour Party believe that the Government should not tax the station wagons because, even if they are being used for private purposes, who buys them?
– Mostly country people buy them.
– The average suburban housekeeper does not buy them but, as the honorable member for Watson has said, mostly primary producers and people living in the outback and in the far north and far west of this continent, who have no other means of conveyance or transport, buy them.
– And they are bought by self-employed people.
– And by the small businessman.
– As my honorable friends have said, these station wagons are bought by self-employed people, by small businessmen and by men with young families. They are the only way, in many cases, in which men with young families can give their children an outing. They cannot afford to buy the more expensive cars. Even the Holden is now in price beyond the reach of quite a number of people. Station wagons can be used for a variety of purposes. If the Government were really concerned about the primary producers, about people who live in the outback and about the family man, it would not introduce this particular piece of legislation.
The Government has said that if this bill does not become law it may lose £3,000,000 this year in revenue. Every time the Prime Minister (Mr. Menzies) speaks he refers to the fantastic development that is proceeding in this country. The Treasurer has gone so far as to say that this nation is enjoying permanent prosperity. If all those things be true, the Government should not want to take £3,000,000 from the little people and from the primary producers.
– But you do not agree that we are enjoying prosperity.
– The honorable member for Mallee can make his speech later. The Opposition intends to divide the House on this bill. We intend to separate the sheep from the goats. We do not expect to find too many sheep in the ranks of the Australian Country Party, but no doubt it will have something to say for itself later. Our point is that £3,000,000 is better in the pockets of the people who own station wagons than in the accounts of the Treasury. This year the Government has given back £20,000,000 to those people who pay income tax. That tax was remitted most unfairly and improperly because a person with an income of £4,000 a year received a tax rebate of £200, whereas the man on the basic wage who has a wife and two children to support benefited to the extent of 9d. a week. The Government now says to the low income earner, “You must pay more sales tax on the station wagon that you buy for the use of your family or for use in your business “.
Sales tax was introduced into our Treasury practice in 1930 during the depression. The Scullin Government introduced the tax, but even in the dark days of the depression it never reached more than 2i per cent, although it was progressively increased in the ensuing years. I can remember the abuse to which the Scullin Government was subjected for having introduced a sales tax of even 2i per cent, on luxury goods. In the midst of the war the Chifley Government never increased sales tax beyond 25 per cent., although we did increase income tax up to 18s. 6d. in the £1 on all taxable income of £5,000 a year and over. This Government, which now proposes to take another £3,000,000 in increased sales tax, boasts that a man with an income of £16,000 a year has had his tax reduced from 13s. 4d. in the £1 to 12s. 8d. in the £1 in the present Budget. That is what this Government calls good government.
It was only when the Chifley Government was defeated that this country began to realize just how high sales tax could be taken. In the days of the horror budget of 1952 the Government not only imposed a rate of 33J per cent, in the third schedule, as against 25 per cent, which was sufficient to assist in raising revenue in the darkest days of the war, but it also introduced a fourth schedule which included goods on which 50 per cent, sales tax was imposed, and then a sixth schedule which applied a 66f per cent, tax on certain goods. Of course, there have been reductions since then. If you look at the record of this Government in relation to the imposition of sales tax and see how it fluctuates, you would almost think that you were looking at a chart showing the temperature reading of a typhoid fever patient.
That is the story of sales tax until the little horror Budget of 1956 by which the Government again increased sales tax on a number of items, and on motor vehicles up to 30 per cent.
– The Government even promised to review it.
– Yes, the Government said that it was merely a temporary expedient. I am grateful to my honoured and distinguished friend from Macquarie for that interjection. This Government’s promise to review sales tax is similar to its promise to put value back into the £1, a promise that once made was to be forgotten. By the little horror Budget of 1956 the Government took an additional £15,000,000 by way of sales tax, but of course there were other large increases in indirect taxes and excise duties.
– On beer.
– On beer, spirits, cigars and cigarettes. Not one penny of those exactions has been remitted, even in the Budget which the Government introduced recently which returned £20,000,000 by way of reduced income tax to those who do not need one penny of it whereas the people on the lower incomes receive practically nothing.
– And the Government gets back that amount by increased postal charges.
– As the honorable member for Watson has said, this Government gives with one hand and takes back with two hands. The Government has taken back all that it has given to the little people but, like Oliver Twist, it is asking for more. We of the Australian Labour Party have been complaining for years not only about the high rate of sales tax but also about the range of goods upon which sales tax is being levied. The honorable member for Mallee (Mr. Turnbull), who is certainly very electorate minded, occasionally protests about the sales tax on raisin bread. “But, beyond that, he seems to have no interest in sales tax. In this Parliament over the years, I have put forward a proposal that the sales tax on motor cars used by doctors and clergymen ought to be lower than that paid by people whose main concern in owning a car is to use it for pleasure or luxury purposes. I have argued that -church notices should no longer bear the burden of sales tax. But the Government turns a deaf ear to all these proposals. As I have said, it gives something away in income tax concessions, but it keeps taking from the people by means of sales tax.
We have made our protests. But we are not the only ones who have protested over the years. Sir Arthur Fadden, the former Treasurer, when in opposition, on 20th October, 1948, discussing the Sales Tax (Exemptions and Classifications) Bill 1948, : said -
The bill should be withdrawn and re-drafted on : a sensible basis having regard to our economic requirements and the indispensable need for an improvement of the home life and health of the community.
If that was a legitimate view when sales tax was only 25 per cent., it has much greater force at the present time, when sales tax is still inordinately high and the actual rates go beyond 25 per cent.
Let no honorable member reach the conclusion that indirect taxation, including sales tax, is not very high in this country. The White Paper on National Income and Expenditure 1958-59, which was circulated with the Budget documents, shows that, in the financial year 1958-59, the Government received by way of indirect taxation no less than £701,000,000 out of a national income of £5,021,000,000, the gross national product being £6,197,000,000. In other words, the Government is taking approximately one-seventh of the national income in indirect taxes. And the proportion is increasing all the time. I revert to my first argument: If the country is prosperous, the Government should not need to take so much from those who are least able to pay.
– Is the country prosperous?
– Does the honorable gentleman think that it is prosperous?
– I do.
– If he thinks it is prosperous, he should not vote for this bill, and I hope that he will back his opinion with his vote.
In 1956, shortly after the general election in December, 1955, eight professors called on the Government to introduce a new Budget. They recommended that direct taxes should be increased, and they turned their faces completely against indirect taxation. The Government took their advice about skimming off the surplus spending power of the people, as they described it, but did it by increasing indirect taxation. We think that the time has arrived when all this sort of thing should stop.
Let me now say something about the differential treatment accorded to station wagons in the various States and by the Commonwealth. I am indebted to my honorable, learned and gallant friend, the honorable member for Werriwa (Mr. Whitlam), who, on 12th November, 1957, asked Sir Arthur Fadden, who was then Treasurer, a question concerning taxation imposed on these vehicles. The story, as I have extracted it from the report in “ Hansard “ of both the question and the answer to it, is: The Commonwealth has always regarded station wagons as passenger vehicles, presumably for no better reason than that a higher sales tax is paid to the Commonwealth on passenger vehicles than on commercial vehicles. That appears to be the only reason. In New South Wales on the other hand, station wagons are invariably classed as commercial vehicles - again, presumably, for no better reason than that, in that State, a higher registration fee is paid on commercial vehicles than on passenger machines. There is no uniformity of approach to this problem in the several States and the Commonwealth, Mr. Speaker.
– Are station wagons registered as commercial vehicles in New South Wales?
– Yes. In three of the States, station wagons are registered principally as private passenger vehicles and are subject to imposts lighter than those applied to commercial vehicles. However, if station wagons are in fact vehicles designed for commercial use, they may be registered as commercial vehicles, and are subject to the higher fee. In one State - I think it is South Australia - no distinction is made between private motor vehicles and commercial vehicles in respect of the charge to be paid. In New South Wales in all circumstances, and in most other States in some circumstances, station wagons are subject to the higher rate of indirect tax payable on motor vehicles. Station wagons suffer from the worst of both worlds. In fact, the only advantage which the owner of a station wagon enjoys is that, in some capital cities, he is allowed to park his vehicle in a loading and unloading zone provided that he leaves the rear of the vehicle open while it is parked. That is most interesting.
– That is a concession.
– It is a great concession. He will not be in trouble for parking in a prohibited place if he leaves the ~ar of A. vehicle open while it is parked in a loading or unloading zone.
– What happens to the goods inside it?
– There may be no goods.
– It pays to unload, but not to load.
– That is right. If the owner leaves the rear of the vehicle open, he is not loaded up with unnecessary debt.
We say that the Commonwealth should take the initiative at a Premiers’ Conference in securing uniformity of fiscal policy between the Commonwealth and the States in respect of station wagons. We consider, therefore, that the Government should drop this measure until such a conference has been held.
I could go back over the years and point out, further, how this Government has always discriminated against the little people and in favour of its friends. In 1953, it made certain decisions which exempted airlines from the payment of sales tax on purchases of aircraft and aircraft parts. That was designed to benefit Australian National Airways Proprietary Limited, of course. The Government isstill moved with the same spirit which has motivated that action and all its other actions in regard to privately owned airlines, and it is still giving to private airline operators advantages to which they are not entitled.
I think that the figures concerning the amount of sales tax levied by this Government compared with the Labour government ought to go into the record. In the financial year 1949-50, under the last Budget brought down by the Chifley Government, sales tax levied amounted to £42,458,000 out of a total tax revenue of £504,000,000.
– There was nothing to buy in those days.
– There was plenty tO’ buy in those days. If the honorable gentleman thinks that there was not much to buy then, let him listen to the figures for thefinancial year 1950-51, the first financial year in which this country suffered to the full the blight of the Government which he supports. In that financial year, the Government raised in sales tax £57,173,000’ out. of a total tax revenue of £718,600,000. The honorable member for Hume (Mr. Anderson) said that in 1949-50 people could not buy anything. When this Government came in, presumably, the people could buy things, if his argument is correct. But the amount of sales tax paid in that year was £57,173,000, and it has grown progressively since. In 1951-52 it was £95,459,000. Then it dropped to £89,067,000. Then it rose to £95,689,000, and it has been rising ever since. The amount collected last year in sales tax was no less than £143,617,000 out of a total taxation revenue of £1,126,000,000.
– That is prosperity.
– The Minister for the Army says that that indicates prosperity but there has not been an increase of 300 per cent. in prosperity between 1949-50 and 1958-59. Yet the amount that this Government collected in sales tax last year was three times as much as the Chifley Government collected in 1949-50! Not satisfied with that, the Government estimates that it will collect £150,000,000 this year out of a total taxation revenue of £1,204,000,000. The percentage is now rising. If the Government will get £7,000,000 more in sales tax revenue this year than it received last year, why is there a need to take the additional £3,000,000 for which this bill will provide?
With the concurrence of the House, I shall have the following figures incorporated in “ Hansard “:-
The Opposition believes in reducing sales tax before income tax is reduced. In any case, we believe in shifting the burden of taxation back on to the. shoulders of those best able to bear it. We will oppose this bill as we have opposed, every other sales tax bill that this Government has introduced. I hope that the honorable member for Mallee will say a word or two in regard to the sales tax on raisin bread, pastry and ice cream. I hope that he will speak on the other iniquitous forms of sales tax to which he objects in private but against which he will not vote in public.
– What about reducing the rate of 30 per cent, on motor cars to 16$ per cent.?
– The best thing that could happen would be that the sales tax on station, wagons should remain at 16$ per cent, and that the tax on all other motor vehicles should be brought down to the same rate. We should have a maximum tax of 16$ per cent, on all kinds of motor vehicles.
Debate (on motion by Sir Wilfrid Kent Hughes) adjourned.
Sitting suspended from 5.55 to 8 p.m.
Motion (by Mr. Harold Holt) - by leave - agreed to -
That leave be given to bring in a bill for an act to amend the Commonwealth Employees’ Compensation Act 1930-1956.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
The principal purpose of this bill is to increase the benefits provided by the Commonwealth Employees’ Compensation Act 1930-1956 and to introduce a provision for the payment by the Commonwealth of certain ambulance and travelling expenses. The amendments result from a review of the legislation carried out by the Government and an examination of the comparable legislation of the States. In summary, the increased benefits are: -
Lump sum benefit upon death: Increased from £2,350 to £3,000.
Lump sum benefits for specified injuries: The present maximum is increased’ from £2,350 to £3,000 with proportionate increases for other specified injuries.
Increased weekly payments in respect of incapacity for work: Employee, from £8’ 15s. to £10; wife, from £2 5s. to £2 10s.; dependent child under sixteen, from £1 to £1 2s. 6d’.; and employee who is a minor, from £6 10s. to £7 5s.
Maximum compensation: Increased from £2,350 to £3,000.
Limit on medical expenses: Raised from £200 to £350. The maximum of £350 applies to the aggregate of medical expenses and the new benefits of ambulance and travelling expenses. The Commissioner for Employees’ Compensation will retain the discretionary power already provided in the act to authorize payments in excess of the £350.
Provision is being made for the payment of certain ambulance and travelling expenses. The weekly payment in respect of incapacity is sufficient to include the normal fares that are incurred in consulting a physician, obtaining medicines at a chemist or attending at a hospital. On the other hand, there are occasions on which much heavier payments may be involved and the provision is designed to give some assistance towards these extra payments.
Those employees who are retired on superannuation pension as a result of their incapacity; are now required to accept a lump sum benefit in redemption for the liability to make weekly payments. The act will be amended to give to the employee a choice between a lump sum payment and continuing weekly payments. Another amendment will’ extend the time within which an appeal may be made against a determination. The existing provision requires the notice of appeal to be given within 30 days from the date of the determination. This will be altered to 30 days from the date of receipt of the determination by the employee. There is specific provision in the act at the present time for the giving of notice of an injury by accident and the making of a consequential claim for compensation. The bill extends the same provisions to. disease.
The increased benefits will be paid not only in respect of future incidents; they will apply also to those who are now receiving weekly payments. They will also be payable to those who are incapacitated hereafter by injuries or disease occurring prior to the date of the legislation and for which liability is accepted. The remainder of the amendments are of a drafting and consequential nature. I commend the bill to the House.
Debate (on. motion by Mr. Allan Fraser) adjourned.
Motion (by Mr. Harold Holt) - by leave - agreed to -
That leave be given to bring in a. bill for an act to amend the Seamen’s Compensation Act 1911-1954.
Bill’ presented, and read a first time.
Second Reading. Mr. HAROLD HOLT (Higgins- Trea surer) [8.6]. - by leave - I move -
That the bill be now read a second time.
Since the Seamen’s Compensation Act 1911 came into operation the act has been amended five times, thelast occasion being in 1954. This bill is for the purpose of raising the monetary benefits under that act in. parallel with the increases proposed under the Commonwealth Employees’ Compensation Bill which has just been before this House, it being the practice to maintain the benefits under the two acts at a similar level.
In the matter of compensation, the Commonwealth Government legislates for two sections of; employees, namely, Commonwealth employees, to whom, the Commonwealth Employees’ Compensation. Act applies, and seamen engaged in interstate trade who are covered by the Seamen’s Compensation Act. Masters, mates, engineers and radio officers, however, are eligible for compensation benefits under their own awards: State Workmen’s Compensation Acts cover seamen engaged in intranstate trade.
The weekly and lump sum payments, &c., prescribed by the Seamen’s Compensation Act might be grouped into three categories, namely, incapacity payments, death payments and medical expenses, with which I shall- deal in that order. As to incapacity payments, it is proposed that the existing weekly compensation payment of £8 15s. be increased to £10. The additional weekly payment of £2 5s. in respect of a wife will be increased to £2 10s. and the weekly payments in respect of a child from £1 to £1 2s. 6d.
Lump sum payments are prescribed for certain specified injuries, the maximum at present being £2,350. This maximum, which is payable in respect of such cases as loss of sight or of both hands or both feet, will be increased to £3,000, with proportionate increases in the amounts of lump sum payments for other injuries specified in the third schedule to the act.
The maximum amount payable in respect of any one accident is to be raised from £2,350 to £3,000. In cases of total and permanent incapacity, however, this sum will not be the maximum, as in such cases the amount payable is not so limited. Also, in the case of an injury that results in death or in one of the major specified injuries, any weekly payments made are disregarded in determining the amount of the lump sum payments to be made.
The amount of compensation at present payable in death cases is £2,350 if the seaman leaves dependants. This amount is being increased to £3,000. The amount that may be paid in respect of medical expenses is to be raised from £200 to £350. Such payments are additional to compensation and in exceptional cases the Minister may approve payment of a higher amount.
Certain administrative amendments to the Commonwealth Employees’ Compensation Act are also to be made and it is proposed to effect certain corresponding amendments to the Seamen’s Compensation Act, together with certain administrative amendments desirable in respect of that act alone. There has always been some doubt regarding the application of the provisions of the act providing for notice of accident and time within which a claim may be made in the case of a claim where the seaman has contracted a disease. An amendment is included in the bill setting out more clearly the requirements which relate to notification and claims in such casse
Another amendment makes provision for the taking of depositions in respect of in- jured seamen at an overseas port in a foreign country before a diplomatic or consular representative of Australia or of the United Kingdom instead of before a British representative as hitherto. Because of the growing complexity of modern medical treatment an amendment is to be made allowing fees payable to medical referees to be determined according to the circumstances with the advice of medical authorities, instead of being prescribed. Also, an amendment is being made to enable a seaman who had lodged a claim for compensation to be required to undergo medical examination as well as a seaman who had given notice of accident or who was in receipt of compensation payments.
The bill includes the usual provisions, as in the Commonwealth Employees’ Compensation Bill, regarding the application of the higher benefits to cases where the injury, accident or disease occurred or was contracted prior to the date of effect of the new legislation. The bill is recommended for the favorable consideration of all honorable members.
Debate (on motion by Mr. Allan Fraser) adjourned.
Motion (by Mr. Harold Holt) - by leave agreed to -
That leave be given to bring in a bill for an act relating to Superannuation.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
Under the Superannuation Act the Commonwealth has for almost 40 years provided a contributory scheme of retirement benefits for its employees and their dependants. Originally, the act provided pension benefits only which were payable on the retirement of a contributor on reaching the maximum age or on his prior invalidity or death. In addition, pensions to widows and children under sixteen years of age were paid on the death of a pensioner. These conditions have remained unchanged, but over the years there has been a number of changes in the maximum pension payable, the value of the unit of pension and the basis of financing the scheme. Most of these changes have resulted from economic changes since the last war, and perhaps the most significant is the basis of financing the scheme. Until 1947 the employee and the Commonwealth met the cost of pensions in equal shares, but currently the Commonwealth provides five-sevenths of each pension and the employee the remaining twosevenths.
In 1937 the scope of the act was widened to include a provident account, the main aim being to provide some cover to employees who were medically unfit for pension benefits. Contributors to the provident account pay contributions amounting to ls. in each £1 of salary received by them and receive retirement benefits in the form of a lump sum. Here, too, the Commonwealth supplement has increased in the post-war years.
The act provides that the fund shall be actuarially controlled and that an investigation as to the State and sufficiency of the fund shall be made at the expiration of each period of five years. The actuary is required to report to the Superannuation Board the result of his investigation and to state whether any reduction or increase is necessary in the rates of contributions payable to the fund or in the proportion of benefits payable by the Commonwealth. Where his investigation discloses a surplus he is required to state what additional benefits, if any, could be provided out of the surplus. Past investigations have resulted in some increased benefits. For example, the additional pension payable to a contributor who continues to work beyond his normal retiring age, and on one occasion, in 1942, a small increase in rates of contributions. The Commonwealth Actuary has recently concluded the seventh quinquennial investigation of the fund, which disclosed a surplus the disposition of which will be referred to later in this speech.
The principal purpose of this bill is to provide a new table of pension entitlement for contributors to the superannuation fund. The proposals are designed to restore the basis of pension entitlement adopted by the Government in the 1954 legislation when it was decided that the pension entitlement of officers on lower and middle salary ranges should be stabilized at 70 per cent, of salary, of which the Commonwealth would meet an amount equal to 50 per cent, of salary, and that for those on higher salaries the proportion of pension to salary should reduce to a limit which, in relation to the scale of pension units, was 40.9 per cent, of salary for those whose salary was £4,000 per annum.
Since the 1954 amendment there have been substantial changes in salaries. While these salary increases have automatically entitled many employees to contribute for a higher money pension, the percentage of pension entitlement to salary over a significant range of positions has declined. Thus, those officers the salary of whose positions was at the end of the range entitled to a pension of 70 per cent, of salary in 1954 are to-day able to contribute for a pension which represents only 59.6 per cent, of salary. More senior officers have been more severely affected, and at the upper limit the pension entitlement has deteriorated from 40.9 per cent, of salary to 27.3 per cent, of salary.
It is proposed to restore the 1954 position by applying the principles laid down at that time to present-day salaries. This results in an increase in the scale of units of pension from 36 to 54 providing a new maximum pension of £2,457 per annum, representing 40.9 per cent, of a salary of £6,000 per annum, which is the salary payable to officers who in 1954 received £4,000 per annum.
An adjustment is also proposed in the salary level up to which the maximum percentage of pension entitlement to salary - 70 per cent. - is available, so that additional units of pension will be available to all existing contributors whose salaries exceed £1,365 per annum. The pension value of each unit will remain unchanged.
There will be no alteration to the present basis of financing pensions. Contributions are calculated to provide two-sevenths of the total cost of benefits, the remaining five-sevenths being met by the Commonwealth. Therefore, in respect of the new entitlement, contributors will be required to pay in contributions sufficient to meet two-sevenths of the increase in the benefits.
All contributors pay the same total amount of money towards each unit of pension. However, those with fewer years to serve until reaching the retiring age must pay a greater rate of fortnightly contribution. Thus, in a change such as ‘that now proposed, existing contributors who are nearing retirement will be required to pay a much higher fortnightly rate of contribution for each additional unit than contributors who still have, say, fifteen or twenty years to serve. To assist older contributors to take up the additional units available to them, the bill provides for those who are within eight years of retirement, and whose fortnightly contributions would otherwise be excessive, to defer portion or all of the additional contributions until retirement, when many will be entitled to a lump sum in respect of furlough, from which they can pay the outstanding amount. This provision is consistent with the recommendation made by the Allison committee in its review of the ‘Defence Forces Retirement Benefits Act, to permit those contributors who are approaching retirement to meet portion of their contributions in a lump sum on retirement.
In conjunction with the introduction of the new scale of 54 units, it is proposed to introduce a principle which, while new to the Superannuation .Act, is a .feature of many similar schemes. This is to make the pension entitlement of a contributor dependent, to some extent, upon the length of service of that contributor. At present, a contributor who has given a lifetime of service to the Commonwealth receives no greater benefit that a contributor on the same .salary at retirement who has completed less than ten years’ service.
Future entrants to the fund will be ^permitted to contribute only on the basis of the 54-unit scale if their prospective service exceeds twenty years. Those whose prospective service is less than ten years will contribute on the basis of the existing “36-unit scale, and those who will serve “between ten and twenty years will have a greater -entitlement proportional to service “in excess of ten years. I emphasize that this provision has no application to any existing contributors to the fund, and is related solely to those who will become contributors in the future.
Another major change is in relation to the widow’s pension, which is at present one-half of the pension payable to the contributor.
As mentioned Jin my Budget speech .the Government : has carefully considered the position of pensioners ;and .has decided that, in respect of all existing pensions, the benefit for widows should be increased from one-half to five-eighths of the full pension. The cost of this increase will be met by the Commonwealth, but the bill provides that the portion of any surplus revealed at the seventh quinquennial investigation of the fund which is attributable to married contributors who have retired or died will be applied towards the cost of the increase.
The five-eighths widow’s pension will be a basic feature of the superannuation scheme “for all future contributors who will be required to pay contributions at an increased rate in order to provide this new benefit. Those who are now contributing to the fund will have an option to take up the additional widow’s pension provided they meet their proportion of the additional cost in extra contributions.
In calculating future contributions to the fund, both for the new .entrants and for new units of pension for the existing contributors, revised rates of contribution have been compiled by the Commonwealth Actuary following >the completion of his seventh quinquennial investigation. The rates to be paid by those existing contributors who decide to take .up the additional widow’s pension in respect of ;their existing units take into account the portion of the surplus revealed by the valuation which is attributable to those contributors.
As honorable members are aware, there is provision in the Superannuation Act 1922-1958 for contributions to a provident account providing lump sum ‘benefits. “The contributions of employees are accumulated at interest and supplemented by the Commonwealth. The rate of interest at which contributions are accumulated is being increased from 3 per cent, to 3’f per cent, per annum. This will increase the ultimate benefit to contributors to the Provident Account by three times the increase resulting from the higher rate of interest as the lump sum payable from the Provident Account is equal to three times the amount of contributions paid by the contributor plus interest thereon. Of this amount the Commonwealth contributes two-thirds.
Other amendments are proposed in the provisions relating to the Provident
Account. At the present time contributions are based on the actual salary of the contributor, whereas contributions to the Superannuation Fund are based on the maximum of the salary range of the contributor. This provision was introduced for contributors to the Superannuation Fund several years ago in order to avoid a number of successive adjustments as a contributor advanced through his salary range by annual increments. It has resulted in considerable administrative savings and, in addition, provides a slightly better benefit to the contributor who dies or retires before he reaches the maximum of his range. It is now proposed that similar conditions should apply to contributors to the Provident Account.
There are occasions on which a person becomes entitled to contribute but before actually commencing contributions suffers death or invalidity. At the moment potential contributors to the superannuation fund have the benefits of the act extended to them in these circumstances but potential contributors to the provident account do not. The bill makes similar provision for the potential provident account contributor.
There is also a number of minor amendments contained in the bill. Provision is being made to admit, as contributors to the fund, married women whose husbands are incurably insane. The Government felt that these women were in no better position than widows. As widows may already contribute to the fund it was decided that these married women should be permitted to contribute on a similar basis.
The superannuation board includes as a member a representative of the contributors whose term of office, in common with other members of the board, is seven years. In response to many representations by and on behalf of contributors, provision is made in the bill to reduce the term of office of the contributors’ representative to five years.
The act also permits contributors to take up reserve units of pension at the rate appropriate to their age next birthday when they make such an election. These reserve units are not effective for pension purposes until such time as the contributor elects to transfer his reserve units instead of paying additional contributions to take up additional units. Thus, contributors can pay for units from an early age at a low fortnightly rate in advance of their future entitlement, when the rate will be substantially higher. This provision, which has been a part of the act since 1947, has provided some solution to the problem of a contributor becoming entitled to take up a number of additional units late in life when he receives a substantial promotion. It has been widely used, particularly by younger contributors, and in view of the larger number of units now available it has been decided that the permissible number of reserve units should be increased from four to eight.
A widow who is receiving a pension under the act may become a permanent employee of the Commonwealth and therefore become entitled to contribute under the act in her own right. At present she would lose the whole of the Commonwealth share of her pension on becoming an employee. As a male pensioner who is re-employed by the Commonwealth has his pension reduced to £500 10s. per annum or half of his pension, whichever is the greater, it is proposed that a comparable restriction should be applied to widows who become employees. Thus, instead of losing the whole of the Commonwealth share of her pension a widow who becomes an employee, and is in receipt of a pension on a fiveeighths basis, will have her pension reduced to £312 16s. 3d. per annum, or half pension, whichever is the greater, and a widow whose pension is on a one-half basis will have her pension reduced to £250 5s. per annum or half pension, whichever is the greater.
Consistently with the Government’s policy of providing uniform superannuation rights for as many Commonwealth employees as possible, the bill also provides for the provisions of the act to be extended to members of the police force of the Australian Capital Territory whose benefits were previously provided under a separate ordinance. At present certain ex-members of the forces, who, immediately following their discharge from the forces, become permanent civilian employees of the Commonwealth, are permitted to transfer their rights under the Defence Forces Retirement Benefits Act to the superannuation fund. The bill extends this right to similar exmembers of the forces who are unable to gain permanent Commonwealth employment as civilians but who are engaged in a temporary capacity by the Commonwealth in circumstances in which they will be likely to serve for at least a further seven years.
The other amendments are of an administrative or consequential nature.
Before I conclude, I feel that I should make one or two comments to the House with respect to this bill, and also the kindred bill which I shall introduce in a few minutes. Both of these bills, as the bare recital which I have given of this measure and will give of the next bill show, are clearly highly technical. Honorable members have a general idea, and some, perhaps, a more detailed awareness, of the Commonwealth Public Service superannuation scheme and of the proposals which are to be brought forward in respect of our defence forces; but these are bills which run to great length.
– Is that why you have brought them in late?
– No, that is not why I have brought them in late. I am trying to tell the honorable gentleman the reason why they are being presented at this late stage, and also the reason why I, personally, regret, as I know my colleagues of the Government do, that the Parliament will not have a great deal of time on this occasion to study the details of the legislation.
– That is your fault!
– The loquacious gentleman opposite says it is my fault. It is nobody’s fault. Indeed, I have been assured by the Parliamentary Draftsman that he and his colleagues have never had two more difficult bills to draft than the two that I am bringing before the House at this stage. I can assure the honorable gentleman who interjects that there are those of us on this side of the House, and certainly in the Government service, who have given very much more thought to this matter over the last twelve months than he will be required, or, indeed, is likely, to give. In any case, the bills have been brought forward at this time, which is the earliest that the draftsman could submit them to us. The Government had to decide whether to defer consideration of the legis lation until the autumn session. It was not a case of extending this session for another week or two, because this bill has 79 pages and another bill that I shall be introducing has 58 pages. It would take literally weeks of consideration if the committee stage were to be followed through for both bills, with all their detail and all their complexity. If the legislation had been deferred for that kind of treatment in the autumn session, the very substantial benefits contained in the bills would have been denied to members of the Commonwealth Public Service and of the defence forces, who will be affected by their provisions. I have no doubt that honorable members from all parts of the House would wish these benefits to apply as soon as possible.
I again express my regret that it has been necessary to adopt this course, but I am sure that on balance it will be found to be the more satisfactory course. I suggest that, over the period of recess between now and the next session, honorable members from both sides of the House give such study as they can to the more technical and detailed provisions of the bill. For my part, I shall make myself, and the officers of the Treasury, available in the New Year for discussions with honorable members, who may be interested, to see whether, out of our consideration of the legislation together, there are improvements which can usefully be adopted.
– Are you hoping to have 58 amendments?
– I am not necessarily expecting amendments, but I hope that, in the consideration they give to it, members will be able to make up their minds whether amendments are appropriate - not necessarily to the substance of the bill, because that is an expression of Government policy. We have not brought forward this bill with the idea that it should be amended so as to increase the charge on the Commonwealth revenues or on the taxpayer for a scheme which we think is the expression of a fair-minded employer wishing to deal reasonably with his employees. The Commonwealth Government is, of course, the biggest employer, in point of numbers, in Australia.
I offer that word of explanation knowing that, when honorable members have in mind the choice that was open to the Government, they will agree that it is better to give the bills legislative expression and apply their benefits to the thousands of people to be affected by them. If there is some tidying up to be done, we can do it together when we meet again early next year. I commend the bill to the House.
Debate (on motion by Mr. Calwell) adjourned.
Motion (by Mr. Harold Holt) - by leave - agreed to -
That leave be given to bring in a bill for an act relating to retirement benefits for members of the Defence Forces of the Commonwealth.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now read a second time.
The bill which I have pleasure in introducing brings into being a comprehensive revision of the retirement benefits for members of the defence forces. It arises from the decision of the Government in 1957 to establish a committee to review the entire pay and retirement benefit conditions of the services. The committee was formed under the chairmanship of Sir John Allison, and I pay a tribute to Sir John Allison and his colleagues. The Government is greatly indebted to him and to his fellow members of the committee for the time and thought that they have given to the examination and resolution of all the difficult problems involved in these matters.
The present Defence Forces Retirement Benefits Act, which came into force in 1948, was designed to meet the special conditions relating to service in the forces, such as lower retiring ages, varying ranks, the need to maintain a high standard of medical fitness and the differing conditions of service applicable to officers and other ranks. This act introduced a scale of pensions for officers which increased in amount with rank and which were based primarily upon the maximum pensions available at age 60 to a member of similar salary in the Public Service, reduced to allow for the earlier retiring ages. For other ranks, the pension was based on a period of twenty years’ service after age twenty and provided for additional amounts of pension for longer service.
Where the officer or other rank did not qualify for pension by reason of his length of service, he was entitled to a gratuity according to the scales laid down in the legislation. In addition, a comprehensive system of invalidity benefits was provided as well as a half pension for a widow. The contributions paid under this act by members of the services were precisely the same as in the case of the Commonwealth Public Service for retirement at age 60, and related to the member’s rate of pay and the age at which he became a contributor or obtained a pay increase.
Since 1948, amendments have been made from time to time to meet changing conditions and to maintain an alinement between pensions and pay, but the basic principles which I have briefly outlined had not been re-examined prior to the appointment of the Allison Committee.
The problems facing the Allison Committee were difficult. On the one hand, it was necessary to have regard to the needs of the services and, on the other hand, it was necessary to examine the alinement of any variations in benefits which might be proposed with the benefits available in other spheres. In addition, at the time when the original scheme was introduced, the lack of experience as to the rates at which exits occurred from the post-war services as a result of death, invalidity or withdrawal, rendered it impossible to adopt a firm contribution basis.
The report of the committee has produced a satisfactory answer to these main problems. New rates of pensions are proposed. These pensions have been calculated by taking the pensions which are appropriate in the Civil Service at the age of 60 years and applying a scale of percentages to determine amounts appropriate to the earlier retiring ages of the services. The Civil Service pensions to which I have referred are those contained in the Superannuation Bill which is before the House.
These pensions are at the rate of 70 per cent, of salary at the lower and middle salary ranges, decreasing to approximately 40 per cent, of salary at the highest level. For the information of honorable members, the scale of percentages used to determine the earlier retirement pensions for the services is that which was adopted for the purpose of the 1948 act.
As regards the increased benefits which will flow to existing contributors from this billy both in their present ranks and on subsequent promotion, additional fortnightly contributions are provided for in the bill. These contribtuions are designed so that, over the remaining service of the members, the same proportion of the cost of the increases in benefits will be met as will be met by future members.
A special problem arises in connexion with those serving officers and other ranks who are approaching the time when they would normally retire from the services. For these members the additional contributions payable in their short remaining period of service may be substantial. The bill provides that if a member is within eight years of retirement he has the right to elect as to whether or not he takes up the whole of or part of his increase in pension. In addition, if he elects to take up any part of his increase and his total contributions would exceed 10 per cent, of his present salary, if an officer, or 5 per cent, if an other rank, he may enter into an arrangement with the Defence Forces Retirement Benefits Board to defer payment of his additional contributions until retirement.
The further problem, to which I referred earlier, has been to lay down a proper basis upon which the contributions payable by members of the Defence forces should be determined. As I have explained, the original contribution basis was not founded on any actuarial assessment of the various risks- of mortality, &c, experienced by the forces. The committee has recommended that the time is now opportune, in view of the knowledge gained under the present legislation, to place contributions on a proper footing.
The bill provides, therefore, that future entrants to the scheme will pay contributions designed to meet, on the average, 22i per- cent, of the cost of their pension bene- fits in place of the 15 per cent, that has prevailed in the past. The proportion of the cost of benefits met by contributors to the superannuation fund is 29 per cent., but the committee adopted the view that a lower average proportion was justified in the case of the services on account of the earlier ages at which service personnel retire.
For existing contributors to the scheme, the committee accepted the principle that accrued rights should be preserved. These members will, therefore, continue to pay their current rates of contribution for the benefits provided by the existing act for their present ranks.
The options available to serving members with long service have caused some problems in denning their future pension entitlements. However, the basic principles adopted are straightforward. Thus the member who is not promoted will be entitled to the pension provided under the present act, plus the proportion of the increase proposed by this bill for which he has elected to pay additional contributions. If he should be subsequently promoted he pays further contributions for, and receives further benefits in respect of, that promotion. The Allison committee recommended that on promotion this officer should be allowed to contribute, at his election, for all or part of the pension rights he had previously declined subject to a satisfactory medical examination. The bill provides accordingly. Honorable members will realize, of course, that these special concessions are restricted to a small sector only of serving contributors. For the majority of contributors the benefits will be the pensions contained in the schedules in the bill.
The Government indicated in my budget speech that it was proposed to allow superannuation contributors the opportunity of contributing for an increased rate of pension for their widows. As I have said earlier, the present rate of widow’s pension is one-half the pension payable to the member. This will be increased in future, on a contributory basis, to five-eighths of the member’s pension. A similar extension of benefit has been granted contributors to the Defence Forces Retirement Benefits Fund. However, whilst future entrants to the forces will be required, as a matter of course, to pay the appropriate contribution for a fiveeighths widow’s pension, existing contributors will be given the right to elect whether or not they wish to contribute for the increase. The Government has also decided that the increased widow’s pension will be available to existing widows and to widows of existing pensioners. The cost of this increase will be met by the Commonwealth.
The bill also gives effect to a number of other changes. Existing pensions are now related to the rank held at retirement and ignore, except in a few special cases, the actual age at which an officer retires. The Allison committee decided that this principle could not be supported as it was inequitable to require one officer with a late retiring age to pay much more in contributions for the same pension as is available to another officer of equivalent rank, but with an early retiring age. The Government has adopted the recommendation of the Allison committee that future service pensions should be related to the actual retiring age for the rank, in addition to the rank held.
Provision has also been introduced to meet the service problem that it is not always possible, for manning reasons, to retire an officer at his retiring age. Increments to the pension will now be granted for service up to two years beyond the retiring age for the rank held. In addition, such an officer will be covered for invalidity benefits during this period of extended service.
As I have mentioned previously, gratuity benefits are provided under the existing act for members who retire before having sufficient service to qualify them for pension. Under the present act these gratuities are based upon years of service, and range from £20 a year for six years’ service for other rank members, to a gratuity of one and one-half times the contributions paid by an officer, or an other rank, with more than twelve years’ service. The Allison committee considered the present basis of gratuity payments. The committee considered that a system of gratuities which was based on a stated amount for each year of service was, with some upward adjustment, preferable to a system based on the various levels of contributions paid by different contributors. This conclusion is undoubtedly a proper one as the present system under which the older entrant to the services received an inflated gratuity, compared with the younger entrant, merely because of the larger contributions which he has paid, is not sound.
The bill provides that all gratuities, in future, will be calculated as a set amount, dependent upon class of member, for each year of service. It also provides, as with pensions, that accrued rights under the existing act will be preserved for serving members. This principle has necessitated some technical provisions in the bill to ensure a smooth junction between the old and new rates of gratuity.
The bill also provides that a member who retires at his retiring age, or .on completion of his engagement, may commute up to one-third of the pension which he is normally entitled to receive. This is an >ex<tension of the provisions of the -existing act which allows a member to commute one-half of an amount of pension appropriate to his rank in the 1948 act. The change recognizes the fact that levels of retirement pension have steadily increased over the years, and will enable pensioners to obtain a reasonable lump sum, in lieu of part of their pension, for resettlement purposes. As in the present act, the commutation will be subject to the approval of the Defence Forces Retirement Benefits Board.
A further provision has been included in relation to pensioners who become reemployed by the Commonwealth. The provision is similar to that which is included in the Superannuation Bill which is now before honorable members for consideration. Briefly, a pensioner may now receive pension up to an amount of £500 10s. per annum and become employed by the Commonwealth, without suffering any reduction in his pension. The comparable pension for a widow is £31’2 16s. 3d. per annum.
Since 1948, the women’s services have been re-established, but the existing act provides benefits, similar to those for male members, only for the nursing services of the Army and Air Force. The opportunity is now being taken, therefore, of extending retiring benefits to women’s services generally. The members of the women’s services who will be permitted to contribute to the scheme will be all members who agree to service for a minimum period of six years. Special provisions are included to allow serving female members who become contributors to purchase past service which will count in determining their pension entitlement.
The committee also gave consideration to the serious problem which has arisen for the services from time to time in endeavouring to retain trained personnel who have completed an initial six-year engagement. As an incentive to serving other rank members to re-engage, the bill makes provision for a payment of £300 in cash to be made to all other rank members at the end of their initial six-year engagement, provided they have agreed to serve for a further six years. This payment is only an advance payment of their ultimate gratuity or pension and will be deducted from the benefit to which the member will become entitled except where he becomes an invalid, or dies in service leaving a widow.
At the present time, some Navy and Air Force personnel are not contributing for the full benefits provided by the existing act or, in some cases, are not contributing at all. Unlike other members with a deferred pay entitlement in 1948, they elected not to transfer their deferred pay to the Defence Forces Retirement Benefits Board in 1948 for paid up benefits under the act. The bill will give these members a further opportunity to elect to contribute to the scheme provided they now transfer their deferred pay entitlement to the board and pay the arrears of contributions which have arisen.
Also some Army personnel who entered the service before 1948 are not contributing to the fund, and are not entitled to deferred pay. The bill similarly provides a further election for them to become contributors.
The Superannuation Act has, since 1947, made provision for contributors who held unencumbered life insurance policies to apply to transfer them to the Superannuation Board. In these circumstances, the board, if it accepted transfer, would pay the premiums under the policies as they fell due. On maturity of the policies, the proceeds would be paid to the contributor, less the premiums paid by the board, accumulated at interest. A similar provision is included in this bill, to allow service personnel a similar concession. The provision should be particularly valuable in the case of existing contributors who may have heavy life insurance commitments, and who, consequently, may have difficulty in paying premiums, as well as the additional contributions under this bill.
I have outlined in some detail the main provisions of the bill. There are also a number of machinery adjustments which have been found to be necessary as a result of the changes now being introduced. The opportunity has also been taken to remove some sections which are now redundant.
In an important sense, the measure now before the House may be regarded as complementary to the new pay code which was introduced last year. While that code reestablished the standards of service pay and allowances which the uniformed services might expect during their careers, this bill brings forward an up-to-date system of retirement benefits which will be available to them at the end of their terms of service. The Government regards this bill as an essential part of its programme for an efficient and effective defence force for the Commonwealth. If it is true, as I am sure we all believe, that the efficiency of the defence force depends significantly on the quality of service personnel and on the readiness with which recruits of a high standard come forward for service in the forces, then I think a measure such as this forms a vital part of our defence programme.
I therefore commend the bill to the favorable consideration of honorable members.
Debate (on motion by Mr. Haylen) adjourned.
- Mr. Speaker, I desire to make a personal explanation. Prior to the suspension of the sitting I made some remarks to which the honorable member for Mallee (Mr. Turnbull) has taken exception. I think that I accused him of having thought in one way about certain matters and then having voted in the opposite direction.
– Not thought, spoken.
– Yes, I think I accused the honorable member of having spoken in one way and having voted in another. I unwittingly misrepresented him, and I am sorry.
Debate resumed (vide page 3020).
– This bill, which deals with sales tax on motor vehicles, is apparently a very simple measure, but I do not think that it is quite as simple as it appears to be at first glance because there are many complications involved in the alteration. The fifth schedule to the principal act is to be amended by the addition of the following item: -
Motor vehicles that are so constructed as to be capable of being readily converted (whether with or without the addition of seats or other fittings) into sedans, station waggons, estate cars or vehicles similar in design to station waggons or estate cars.
When the bill was introduced there seemed to be only two points at issue. The first was whether under the existing sales tax law certain firms or certain buyers were practising tax evasion, and secondly, whether the loss of revenue which would result if the existing system were allowed to continue was more important than permitting commercial vehicles to be changed into station wagons.
As the honorable member for Melbourne (Mr. Calwell) has pointed out, on 12th November, 1957, the then Treasurer, when replying to a question that was asked by the honorable member for Werriwa (Mr. Whitlam), more or less on notice, with regard to the classification of this kind of vehicle, stated -
Item 1 in the fifth schedule to the Sales Tax Ademptions and Classifications) Act specifically includes station wagons among the classes of passenger-carrying motor vehicles which are subject to tax at the rate of 30 per cent.
Now come the important words -
This classification is based on information to the effect that station wagons generally are designed primarily for the carriage of passengers, are built on a passenger car chassis with a view to providing the comfort of a passenger vehicle, and in some instances are more expensive than a sedan car of comparable power.
It will be seen, therefore, that on 12th November, 1957, station wagons were classified as passenger cars for the reasons that were stated by the then Treasurer. The point at issue which has not been brought out, either by the present Treasurer (Mr. Harold Holt) in introducing the bill, or by the honorable member for Melbourne in opening the debate for the Opposition, is that there are kinds of station wagons which are not built on a passenger vehicle chassis. These station wagons are converted from the ordinary commercial chassis - what we used to know as a 10 or 12 cwt. utility - and they are more expensive than comparable station wagons that are built on an ordinary sedan chassis. Therefore, they are not exactly the same kind of vehicle.
In this day and age we must look at this matter from the point of view of having, first, the ordinary passenger sedan, then the station wagon, which I call the family wagon, which is built on a sedan chassis, then the commercial van and then the real station wagon which has heavier front suspension, a different back axle from the other kind of vehicle, and very much heavier springing on the back axle so that it can carry the 10 or 12 cwt. for which it was designed. This is really a commercial van into which two extra seats can be fitted. But that is an expensive operation. Apparently no distinction has been made between what might be called the family wagon and the station wagon. The family wagon has a better finish. You cannot throw bits of old machinery into the back of it without doing a certain amount of damage. The station wagon which is built from a commercial vehicle can be, and is, used for commercial purposes by small traders, people engaged in building work and by all kinds of people, but particularly, as was mentioned by the honorable member for Melbourne, by primary producers. The small farmers are not able to afford an ordinary passenger sedan and a second vehicle known as a station wagon for general work around the farm. For that reason, quite a number of farmers buy the station wagons because they can be used for taking the children to school or to meet the school bus or, if the family is going for an outing, they can be used as a passenger vehicle. Honorable members should give this bill a good deal of thought because it Will’ impose a further tax on primary producers, small businessmen and many working-class people.
In the old days a motor car was considered to be a luxury. In these days, in many instances, it is a necessity. I think it was the honorable member for Melbourne who stated that although a doctor cannot manage his work without the use of a motor car, he has to pay 30 per cent, sales tax because his vehicle is always a sedan. Other people in other professions which require the constant use of a car also are -compelled to pay the 30 per cent, sales tax, because the vehicles that they use are not commercial vehicles. I should like to direct the attention of the Treasurer, or of the Attorney-General (Sir Garfield Barwick) who is at the table but who, apparently, is not much interested either, to fact that there is a very great difference between a passenger sedan and a station, wagon. I am Sure that, if the. Attorney-General were pleading this point in a court, of law, he would be most eloquent and would put the matter much better than I. can. I am sure he would state much better than I can how this, will affect the farmers, and that he would, put their case much more forcibly.
I ask the honorable gentleman to impress on. his colleagues in the Government the difference between the two classes of vehicles affected- by- the bill, and the fact that certain factors- in this measure have not been stated- and considered. This is not a Budget measure. It does not affect the- Budget for. the current financial year and there: is no great cause for hurry in putting it through. I seriously ask the Attorney-General to consult, with- the Treasure! on the- question of holding this bill over for th* reasons which- I have discussed: It is not as simple as- it seems. It will affect a lange, number of people. It will- not affect the Budget for the current financial year. I believe I am- right in stating: that it is. not lust a quest-ion, of our needing the cash. I think the Treasurer said that, at present,, this measure will bring- in £300,000 a year, but that the loss- to- revenue, could rise to £3,000,000- a year if it: is not passed. When we come to- deal with a- loan bill shortly,, we shall talk about stacking away cash and writing- off loan- debts at: the average rate of £3:0CO,000, a year. I do not think that £300,000 a year would make much differ ence- to the Budget. In any event, I do not think that this proposal was mentioned in conjunction with the Budget, although I speak subject to correction on that point.
If the vehicles with which this bill is concerned were under-selling comparable vehicles of other makes because they had the advantage of attracting sales tax at the rate of only 16 J per cent, rather than 30 per cent., perhaps the Government would have an argument to support its proposal. But it costs a certain amount of money to convert a commercial vehicle built on a commercial chassis into a station wagon. Ohe firm produces what I shall call a family car, or family wagon, selling at about £1,250. A comparable commercial vehicle of another make which has been converted into a station wagon sells at about £1,350 - approximately £80 or £100 more - although it has a four-cylinder engine compared with a six-cylinder motor in the family wagon. Nobody will pay £80 or £100 more for a vehicle with a fourcylinder motor unless it meets his special needs. The larger manufacturers, in the words of one of our well-known radio personalities, seem- to- be trying to cop the lot. There may be other firms which, also, are converting sedans into family wagons using sedan chassis. If that is being done, that sort of thing is in a. different category and. should be treated differently.
I do not know how you would classify a vehicle like the Volkswagen Kombi - I have to name it because it is a special vehicle in a category of its own - which can be used as a bus, as a family vehicle on the farm, or as a commercial van. Whether that class of vehicle, also, will be classified as attracting 30 per cent, sales tax and not as a commercial1 vehicle, I do not know. Very, very few people will buy such vehicles purely for use as passenger-carrying machines. Therefore, as I have said, I should like the Government to give this matter consideration. It does not seem to be giving it much- at the moment. From time to time, a different Minister takes charge at the table, and nobody in the Government seems to be interested in the matter. Nevertheless, I shall go on with the case..
Another point which I should like to mention is that, last financial year, the sales tax on motor cars brought in revenue of £.60,000,000- £19,000*000 on, commercial vehicles at 16$ per cent, and £41,000,000 on passenger sedan cars at 30 per cent. I think it has already been pointed out that the sales tax was increased to 30 per cent, in the little Budget in March, 1956. I ask the Government to consider whether the time for the removal of the extra sales tax has arrived. Why should the motorist be charged sales tax at 30 per cent, on an article which, I think every one will admit, is no longer a luxury, but rather very largely a necessity for a great many people to-day? I would far rather have seen the rate of sales tax on passenger vehicles reduced to a level which would have returned £23,000,000 instead of £41,000,000- a reduction of £18,000,000. I think, Mr. Speaker, that this would have been a great deal fairer than the reduction of income tax by 5 per cent. - a reduction which has saved the taxpayers overall £20,000,000 a year. In the meantime, however, this heavy sales tax continues to be imposed on motorists. The people have to buy motor vehicles for both commercial and other purposes. As I have indicated, the motor car to-day is as much a necessity, almost, as is a refrigerator.
I shall summarize my points briefly: We do not need the cash. The amount involved is very small compared with a big budget. There may be some tax evasion going on at present by the production of family wagons on ordinary sedan chassis. On the other hand, I do not see why you should have to pay sales tax at 30 per cent, on a station wagon which is a converted utility of 10 or 12 cwt. capacity and which sells at a higher price because it is converted from a commercial vehicle. I have one of them and it does not concern me now whether the rate of sales tax is altered or not. I purchased this vehicle because I take it down to the family farm and like to be able to throw into it anything I wish. One cannot do that with a Holden family wagon. It is so well finished inside that the interior is damaged if old bits of machinery are thrown into it. In addition, it does not have the heavier springing that is needed for this sort of use. Therefore, as I say, the converted commercial vehicle is a different vehicle.
Apparently, to judge from the Treasurer’s second-reading speech, the larger manufac turers have threatened to use the device adopted by some other manufacturers in order to attract the lower rate of tax. As I have suggested, I do not think that anybody has considered the difference between a sedan with the hood extended over where the boot is in the normal car and a vehicle that is really a commercial vehicle built on a commercial chassis. The Treasurer said -
The existing law requires payment of tax at the rate of 30 per cent, in respect of motor cars, designed primarily and principally for the transport of persons, including station wagons, estate cars and vehicles similar in design to station wagons . .
I do not mind if the Government says to somebody like myself, “ You are using your vehicle principally as a passenger vehicle if it is registered in the city “. But I think that the position of the primary producer and others should be considered. Some people want a station wagon, as distinct from a family wagon. They want what is, in effect, a commercial vehicle. The Treasurer said, also -
It was found necessary to acknowledge that, at the time of the sale upon which the sales tax liability arises, these “ station vans “ are not within the categories to which the rate of 30 per cent, applies.
In other words, it was admitted by the taxation authorities that tax at the rate of more than 16$ per cent, should not be charged on these vehicles. I should like to know whether the large manufacturers are going to convert vans of 10 or 12 cwt. capacity into station wagons or whether they will manufacture them, as they have been doing in the past, as family wagons on ordinary sedan chassis.
From this point of view, as I say, I feel that the whole of the bill ought to be looked at again because we do not want to carry on any element of interference. Nobody wants to do that. We do not need the cash. Is it really going to achieve what it is supposed to achieve or will it merely mean that more motorists will pay more cash? If that is so I think it is high time that we reduced the rate of 30 per cent, to 16$ per cent, instead of reducing income tax.
– The Labour Party opposes this bill because it is opposed to the extension of an anomaly that was created three and a half years ago in this Parliament when sales tax on motor cars used as passenger vehicles was increased from 16i per cent, to 30 per cent. Since that date we have been unwavering in our viewpoint that under no circumstances will we agree to any increase in sales tax. The Labour Party is fundamentally opposed to sales tax and we are certainly opposed to any extension of the sales tax schedule. We believe that sales tax is a particularly unfair form of taxation at any time. It is ironical that the Government, to-night, is proposing an increase in sales tax on certain motor vehicles from 16f per cent, to 30 per cent, because this is in direct contrast to the attitude of Government supporters when in Opposition.
One has only to turn to “Hansard” before 1949 to find numerous instances in which the then Opposition was particularly antagonistic to the Labour Government imposing sales tax of any description, even at a very low rate. Therefore, this bill provides indisputable evidence of the difference in the attitude of Government supporters before and after assuming office. When honorable members opposite were in Opposition they were opposed to all forms of indirect taxation. They claimed that it was inconsistent with the canons of fair taxation policy. On every occasion in the Chifley budget debates, when the incidence of sales tax was discussed, the then Opposition said quite categorically that sales tax was the very antithesis of fair taxation principles. Therefore, it is very interesting for members on this side of the House to notice the difference between the theory advanced before 1949 and the practice that has operated since 1949.
According to the latest report of the Commissioner of Taxation, sales tax represented 9.5 per cent, of total taxation in 1949 - the last year of office of the Chifley Government. In the next year it represented 13.5 per cent. The figure went down to 12.6 per cent, in the following year but from then onwards it increased regularly. In 1953-54 it was 14.1 per cent. Then it jumped to 13.6 per cent., then to 14.8 per cent, and, in 1 956-5 7 - the last year covered by the report - it was 15.5 per cent. Those figures make very strange reading when we consider them in the light of the periodical outbursts that were heard in this Parliament from members of the Liberal Party prior to 1949. This shows, of course, that they were prepared, when in Opposition, to advance anything that they thought would gain public favour. But since 1949 they have done things totally contrary to the principles that they enunciated before 1949. The facts are incontrovertible.
When the Deputy Leader of the Opposition (Mr. Calwell) spoke on lines similar to these before the suspensoin of the sitting, the honorable member for Hume (Mr. Anderson), I think, said, “That is a sign of prosperity “. But surely increased taxation returns as a result of prosperity should apply equally all round. I am sorry, Mr. Speaker. I have just been reminded that it was the honorable member for Mallee (Mr. Turnbull) who made the interjection to which I have referred. Of course, the honorable member for Hume and the honorable member for Mallee are like Siamese twins. They have the same ideas on everything. The only difference between them and the Siamese twins is that they are not joined together. On every subject that we discuss in this House, their views run parallel. It is safe to say that they are the two most reactionary men in Parliament although I must admit, in fairness, that they are two very nice men.
When Labour was defeated in 1949, the general sales tax rate was 8) per cent. After having heard the protestations which honorable members opposite made before 1949, one would have thought that when they were returned to office they would have reduced the rate of sales tax to 2i per cent. But what do we find? In 1951, the general rate was increased to 12i per cent.! I do not know what the honorable member for Mallee said in the party room when that was proposed, but he was most vociferous in his opposition to the general rate of 8* per cent, before 1949. In “ Hansard “ we find that the honorable member was always talking about the iniquity of the Chifley Government in imposing a sales tax of 8$ per cent. I would like him to make a public utterance on what he thinks now of the general rate of 12i per cent. Confession is good for the soul, and I am waiting to-night with great interest for the honorable member for Mallee to get up and say that, after all, he spoke a lot of humbug in 1949.
A very strong case can be presented against sales tax in any form whatsoever. Even if it was the Labour Party that introduced sales tax in 1930, it contravenes every sound principle of taxation. The Chifley Government recognized that fact and, after the war, progressively decreased the sales tax. Reference to the Budgets of 1947, 1948 and 1949 will show that what I am saying is absolutely true. But, after 1949, when this so-called anti-taxation Government was elected - the Government which had promised the sun, the moon and the stars in 1949, and which had contracted to solve every problem that was facing the Australian public, including that of taxation - it failed to proceed with the progressive policy implemented by the Chifley Government from 1947 until 1949. Although the Opposition of those years had promised to reduce taxation, particularly indirect taxation, it increased taxation when it came to office. There was a steep increase in sales tax. It is to be regretted that supporters of the present Government who waxed vociferous, as the honorable member for Mallee did, before 1949, have not since made their voices heard in the party room and have not insisted that the present Prime Minister (Mr. Menzies) should carry out the promise that he made when he was Leader of the Opposition, that indirect taxation would be reduced when a Liberal government got into power.
Let us look at sales tax. I know that honorable members can say that it was a Labour government that brought it in. That is true. A Labour government introduced sales tax in 1930. But that action was taken as a temporary measure in order to provide desperately needed revenue. The position in 1930 was totally different to the present position. In 1930, hundreds of thousands of taxpayers were out of employment, which meant that the Commonwealth Government was not receiving the usual amount of income tax. Consequently, the Government had to look about for alternative revenue. It decided to tax sales on the same basis as they were taxed in Canada for the purpose of obtaining money from those people who had it.
This tax was introduced in 1930 as a temporary measure, at the very, very low rate of 2i per cent. In 1930 the Liberal Party, which at that time was known as the United Australia Party, was very critical of that proposition of the Scullin Government. They denounced it up hill and down dale and said it was an unfair burden. When that party took office in December, 1933, as the Lyons Government, one would have thought that sales tax would have been immediately removed in view of its utterances in the 1931 debate. But what happened? The Scullin Government’s sales tax of 21 per cent, was raised by the Lyons Government in 1933 to 6 per cent. Then it rose from 6 per cent, in 1940 to 8$ per cent.
The Liberal Party in those years was prepared to advocate one thing and practise another. To-day we find the same policy operating. When the Liberal Party was in opposition it said that this and that should happen, but when it assumed the responsibility of office it was prepared to look at this matter through an entirely different pair of spectacles.
– Order! I wonder if the honorable member realizes that this measure is related purely to motor cars?
– I am pointing out the iniquity of the sales tax in any circumstances, whether it applies to motor cars or anything else. When the sales tax on cars was raised in 1956 to 30 per cent., members of the Opposition pointed out during the debate on that occasion that it was wrong in policy. To-day we are still pointing out that it is wrong in policy, and even worse, to extend sales tax to other motor vehicles at the maximum rate. To increase the sales tax on station vans from 16$ per cent, to 30 per cent, runs counter to all fair canons of taxation and levies the heaviest burdens on those who are least able to bear them.
Sales tax is uniform to all buyers. It ignores the principle of taxation being levied in accordance with ability to pay. The Australian Labour Party has nailed its colours to the mast on this matter. We believe in income tax because it can be levied according to the ability of the individual to pay.
I regret that this bill perpetuates a discrimination against the motor car industry. For some reason or other, in 1956 the Government singled out this industry for a particularly -heavy impost. It increased the rate of sales tax on motor cars from 161 to 30 per cent. I remind honorable members that with the extension of industries of all kinds throughout Australia to-day, motor transport is necessary, irrespective of its cost. Motor transport plays a very important part in the ramifications of Australian industry, whether it be primary or secondary. I have been particularly surprised to notice the marked silence of members -of <the Australian Country Party -on this measure.
– We have not yet had a chance to speak.
– Members of the Country P.arty have had .equal opportunity with all other members, “but they have not yet taken ;it. All I can say is that the silence of Dean Maitland pales into insignificance compared with the silence of members of the Country Party on this matter. When it was stated in .the Budget -speech -that the sales tax on .these particular vehicles would be increased, I .did not hear any member of the Country Party express .opposition. The contemplated increase in sales tax on station vans has ‘been greeted with marked silence .on the part of the Country Party. Therefore, all I can say is that Country Party members have been remiss in the duty they owe to -their constituents.
When .all is said -and done .these vehicles will he purchased, in the main, .by constituents of country members. We are always .hearing about the rights of the man on the land. We are often told that he does mot receive -fair treatment from the city dweller. In this House we find the city dweller .sitting .alongside the representative from the -country. So far as the Labour Party is concerned we want to see fair play given to dwellers on the land. We do not want to see country dwellers facing the ‘heavy impost of this tax. We are opposed to the increase in sales .tax. We would be very .’happy to be ,on the same side of the House as honorable members of the Country Party when the vote is taken on this particular issue. df this measure is carried, sales tax at the rate of 30 per .cent, will apply to the ordinary station van which .plays a tremendous part in Australia’s development. The ordinary passenger vehicle is used for numerous purposes other ‘than pleasure, lt is -sufficient to say that it plays an essential and integral part in our mode of ‘life. If many -of our luxuries ‘to which we are accustomed to-day -should disappear, nobody would be very greatly inconvenienced; but if, ‘by waving a magician’s -wand, every motor car and every station van were to be immobilized .our whole system of existence would -be -thrown into complete chaos. Yet it is proposed to increase the tax on station vans from l’6f .per .cent, to 30 per .cent.
Station vans are essential .to our way of living and, ‘therefore, we should encourage people to buy them. This proposition will discourage the purchase of station vans because fewer people will ‘be able to pay the tax when it is increased from 16i per cent, to 30 per cent. I want to see ‘the standard of ‘living in this community maintained at its present level. This measure will not advance that standard but on the contrary will decrease it. The plain, unvarnished fact is that without motor cars or station vans, both private and commercial, our existence would be very drab and moribund. For some mysterious1 reason, yet unexplained, one -section of industry - the motor industry - has been singled out for special attack. It was singled out in 1956, and it is ‘being singled out again.
When we examine this proposition we find that station vans are to be brought into the fifth schedule which sets out the goods that are taxable at the rate of 30 per cent. They will be in the same category as motor cars, but station vans are not used primarily or principally for ‘the transport -of persons. Goods set out in the second schedule are taxed at the Tate, of 25 per cent. Surely, no ‘honorable member will contend that those .goods are more indispensable to the community than are motor cars, particularly -station vans, which will be subject to this impost. Goods in the second schedule include jewels, .plated ware, cut glassware, field glasses, ‘fancy goods. If we are to have orderly ‘development in this (country, people should be allowed to buy station vans at the lowest possible price.
I am pointing out as a result of that contention, therefore, that sales tax should be reduced to a very low rate indeed on these particular vehicles. After this bill becomes law they will be taxed at the rate of 30 per cent, instead of the present 161 per cent. Surely station wagons should not be taxed at a higher rate than jewels. Station vans are more important to the welfare and advancement of this country than is jewellery. Station vans are more important to this country’s progress than are articles of fur. What contribution to the advancement of Australia will be made by articles of fur? I contend that station vans can make an important contribution to this country’s progress.
Then there is the sales tax on cosmetics. Whilst 1 realize that the fair sex likes COSmetics, I regard station vans as more important to Australia than cosmetics are. Slot machines are to be in .the 25 per cent, sales tax category. Surely nobody will contend that a station van is less important to the community .than a slot machine. The contributions to national progress made by the .two articles simply cannot he compared. Totalisators are also in the 25 per cent, category. I should like some member on the Government side to tell .me what totalisators have done for the improvement and progress of this country.
The increase to 30 per cent, of the rate of tax on station vans .cannot be .justified when .one considers .the value of station vans to the .community compared with .the value ito the community of ,the other articles I have mentioned, which pay a lower rate .of tax. There are other articles which I could use to further the comparisons I have been matong, ‘but T shall not mention them now. They are listed on page 75 of the report of the Commissioner of Taxation.
All the canons .of fair play, as well as the -necessity ito devise measures to help this country to progress, demand that the tate of sales tax ion station vans should not be increased. I should dike to ‘direct the attention of honorable members to the statement Made by the Prime Minister in 1956 when the Government increased sales tax rates on motor vehicles to 30 per cent. - the percentage which will be paid -on station vans if this measure is passed. <On that occasion, when speaking to the bill which increased sales tax on motor vehicles used to carry passengers from 16$ per cent, to 30 per cent. He said -
We are well aware of the benefits which will ultimately flow from this industry.
He was referring to the motor car industry. He continued - but we are convinced that proper counterinflationary action requires that some temporary restraint should be laid upon it.
Some temporary restraint! All I can say is that this so-called temporary restraint has lasted for three and a half years, and the Government now proposes to put panel vans in the same category as that in which motor cars were put “in 1956 “ temporarily “. Now let us see what was the effect of increasing sales tax on motor cars to 30 per cent, in 1956. In 1955, the year prior to that action, new motor car registrations numbered 239,000. Three years later, in 1958, despite a substantial increase in Australia’s population, new registrations numbered only 23’8,000, or 1,000 less than in the year before the imposition of the 30 per cent. tax.
I put it to the House that if it ,is contended - as it was in 1956 - that motor cars were .placed in the 30 per cent, category in order to help to halt inflation, -there is no necessity to-day to increase the rate on station vans (to 30 per cent., because the Government claims that it has already halted inflation. That is why the Labour Party opposes this measure. We claim there is no necessity to increase sales tax on station vans, -because the reason that actuated the Government in increasing sales tax on other motor vehicles in 1956 has disappeared. This ‘bill simply means that the vicious tax rate imposed on general motor vehicles in 1956 is now to be imposed on another section of the motor car industry - that concerned with the production of station vans. The contemplated rate of 30 per .cent, on station vans is punitive, oppressive and distinctly unfair, and the Labour ‘Party is not prepared to perpetuate now the injustice that was meted out -to the motor .car industry in 1956. ‘We would be perfectly happy if this legislation, instead of increasing the rate on station vans to 30 per cent, decreased the rate on motor cars from 30 per cent, .to J.6.J per .cent.- in other words, reversed the process.
I repeat that the increase in 1956 of the rate for motor cars to 30 per cent, was designed not so much to produce more revenue as to reduce the demand for motor cars. According to Government spokesmen, that measure has served its purpose, because we no longer have inflation. So, now that the Government has beaten inflation, the general rate for motor cars should be reduced from 30 per cent, to 16! per cent., the rate which applied before 1956. With the increased production that we have to-day, and the increasing revenue that Government speakers are always telling us about in this chamber, ad nauseam, there could be no better time to bring those rates back to the pre-1956 level.
This measure seeks to turn back the clock. It is a measure which has one purpose and will have only one result - that is, to decrease the sale of station vans when we should be doing everything possible to increase their sale, because station vans have in the past, and will in the future, play their part in increasing the standard of living in this country. They help the primary producer more than they help the city dweller. For that reason I confidently expect that to-night members of the Australian Country Party will recognize the logic and intelligence of the Labour Party’s case on this measure and will support us in our opposition to this ill-conceived and ill-timed measure.
.- First, I should like to say that I think that members of the Opposition have been dealing with many matters that do not come within the ambit of the bill. I shall read to the House part of the Treasurer’s secondreading speech, because I believe it covers the position very adequately in a few paragraphs. He said -
The sole purpose of this bill is to take legislative action to prevent partial avoidance of sales tax which has arisen from a marketing procedure adopted by a number of manufacturers of the station wagon type of motor vehicle. The existing law requires payment of tax at the rate of 30 per cent, in respect of motor cars designed primarily and principally for the transport of persons, including station wagons, estate cars, and vehicles similar in design to station wagons or estate cars, but not including delivery vans. The latter bear tax at the rate of 16) per cent, which applies to commercial type vehicles.
Only some manufacturers are endeavouring to avoid partial payment of this sales tax.
It is unfair that some of them are being allowed to avoid sales tax while others are paying the full amount on station wagons and other vehicles that come into this category. I point out that although the existing law requires that these vehicles pay 30 per cent, the law is being evaded. The honorable member for Batman (Mr. Bird), the honorable member for Chisholm (Sir Wilfrid Kent Hughes) and the honorable member for Melbourne (Mr. Calwell) are against the rate being 30 per cent. I say good luck to them. They can advocate a reduction of the rate. But the purpose of this bill is simply to eliminate an anomaly, to prevent certain traders obtaining an unfair advantage. As a Country Party member I have been asked to explain my attitude to the measure. I believe this anomaly should be rectified. I have listened very carefully to certain taxation experts with whom I have had interviews on this subject. Do the members of the Labour Party who have spoken believe that all motor companies dealing in station wagons should adopt the same practice and sell them at the lower rate of sales tax, providing at the same time the means of converting them into passenger vehicles immediately?
This is a very simple bill, as the Treasurer has said, designed only to overcome an anomaly. It has nothing to do with the question whether tax is too high or too low - nothing whatever - and no one knows that better than the honorable members who have spoken. An anomaly has been found and it is being rectified by the bill. That is all there is to it.
– Well, sit down, if that is all there is to it.
– As far as the bill is concerned, that is all I want to say about it, but I want to say one or two things about honorable members who have sought to taunt the members of the Country Party. The honorable member for Batman (Mr. Bird) found fault with the Liberal Party collectively and with members of the Country Party individually.
– Where are they now?
– There is the honorable member for Hume (Mr. Anderson) and myself. He said that the Country
Party had been very silent on this measure, and that none of its members had spoken in the debate. No one knows better than the honorable member for Batman that members of the Country Party have not been able to get the call until now. The honorable member for Lalor (Mr. Pollard), who is interjecting, knows also that this is the first opportunity that a Country Party member has had to speak on the bill. The first speaker in the debate, after the Minister, was the Deputy Leader of the Opposition (Mr. Calwell). He was followed by the honorable member for Chisholm (Sir Wilfrid Kent Hughes) on behalf of the Liberal Party, and then the call went again to the Labour side, and the honorable member for Batman made his speech - and he realized quite well that he was flogging a very dead horse. Now it is the turn of the Country Party and I have got the call.
The honorable member for Batman appealed for fair play. Fancy the honorable member for Batman making such an appeal! He has demonstrated that he knows nothing about fair play, by the way he referred to the Country Party.
I now wish to say something about my attitude to sales tax when I was a member of the Opposition. I was in this House from February, 1946, until 1949 as an Opposition member. What was my attitude then? The honorable member for Batman, of course, was not here then, but he says that he has read in “ Hansard “ certain remarks of mine supporting some things and condemning others. Why did the honorable member not bring the copies of “ Hansard “ into the House and read the extracts to which he refers? If honorable members have definite evidence in “ Hansard “ to support a charge against another honorable member, they always substantiate the charge by reading the relevant passages from “ Hansard “. I challenge the Opposition to bring into the House the copies of “ Hansard “ that are alleged to contain these statements, and to read them.
As far as sales tax is concerned, I might just remind the House of my fight in this House, when I was a member of the Opposition, to have changes made in the provisions relating to sales tax on trailers. The honorable member for Lalor will remember that at the time sales tax, amounting to about £30 on the average, was payable on a trailer fitted with a drawbar, but no sales tax at all was payable on the same kind of trailer if it had a pair of shafts instead of a drawbar.
– I rise on a point of order, Mr. Deputy Speaker. I suggest that the honorable member’s remarks have no reference to the bill before the House.
-Order! The Chair is taking care of that.
– At least I am not talking about glassware and other things that were referred to by the honorable member for Batman. As I was saying, no sales tax was payable if the trailer was fitted with a pair of shafts. Week after week and month after month I fought this provision in the sales tax legislation until it was suggested that the honorable member tor Wimmera - which was my electorate at that time - did not understand the position regarding sales tax. I said at the time, “ You can buy a trailer, take off the shafts and throw them in the nearest dam, buy a drawbar for £2 10s. and fit it, and thereby save yourself £27 10s.” But the Labour Government could not see the force of my argument. We continued to fight, and finally we got the position rectified and the tax abolished. When the honorable member for Batman reads some of my remarks in “Hansard”, I suggest that he read all of them. When he has read some of the things I have said on the subject of sales tax he may have a clearer knowledge of what went on in this House before he was elected.
So far as the bill itself is concerned, the Minister has told the complete story in his second-reading speech. If I were to canvass that story it would simply amount to what is called tedious repetition. Labour supporters have said that the country people will buy most of these station wagons-
– Station vans.
– Or station vans, and will convert them and carry their children and other people about. Only the other day, a Labour member referred to the Jaguars and other big cars that the men on the land have. The Labour Party would have us believe that the man on the land is so prosperous that he would not need to buy a station wagon at a lower rate of sales tax and convert it for passenger use. The Labour Party, of course, changes its attitude to the question whether the country is prosperous or not. The Deputy Leader of the Opposition this afternoon suggested that if the country is prosperous and the Government does not need the extra money it should not bother about rectifying this anomaly. The honorable member for Lalor, however, contends that the country is in a very bad state, and, indeed, the Deputy Leader of the Opposition suggests that we are on the brink of a depression. That is their attitude when it suits them. They cannot have it both ways.
In any case, it does not matter, from the point of view of a consideration of this bill, whether the country is prosperous or not. If the Labour Party believes that sales tax is too high, let its supporters advocate a reduction. Let them fight for it. They might get more support than they think. But they will not get any support by opposing a bill the only purpose of which is to correct an anomaly. If the Government decides that 30 per cent., is the rate of sales tax that should be applied to these vehicles, then, whether the decision is right or wrong, that is the rate according to the law of the country, and the law must be upheld. The question is not whether the rate is too high or too low. The Labour Party is simply trying to follow the popular line of advocating lower taxes,, without concerning itself with upholding the law.
Let me make this statement, and the honorable member for Batman can read it in “ Hansard “ in the future: I support the bill. I believe the law of this land must be upheld. This does not mean that I am opposed to Labour members advocating lower sales, tax. The honorable member for Lalor is continually interjecting. If he would just keep quiet for a few minutes, he would look better and sound better. He would be given credit for possessing a bit more sense, and we would appreciate his presence in this House much more than we do at the moment.
This bill is merely a machinery measure designed to overcome an anomaly and to prevent a section of the motor trade taking an unfair advantage; The practice could spread to other dealers who are at present selling these vehicles- at the correct rate of tax. We are told that the loss of revenue at present amounts to £300,000 a year. If the change in the legislation is not made, the loss of revenue could, within the next few years* increase to £3,000,000 or £4,000,000 a year. The Government has made its financial arrangements for the current year; and it must rectify any anomalies’ that it finds, which may reduce the amount of revenue that it can expect to receive, and which it must obtain to cope with its very heavy commitments, such as in the field of social services.
I support the bill: I believe it is in the best interests of the country, because I believe it is designed to uphold the law.
.- The measure that is before the House should remind’ honorable members that sales tax is becoming a problem for the Administration, and that the Taxation Branch is compelled to employ a large number of civil servants in the capacity of sales tax experts. It appears that somebody omitted to include station vans and other types of vehicles amongst those that would attract a sales tax rate of 30 per cent. For this reason, the only substantial provision in the bill is that which provides for the following item to be added to the fifth schedule to the principal act: -
Motor vehicles that are so constructed as to be capable of being readily converted (whether with or without the addition of seats or other fittings) into sedans, station wagons, estate cars or vehicles similar in design to station wagons or estate cars.
The effect of the measure is to increase the sales tax on these vehicles from’ 16! per cent, to 30 per cent. Apart from an army of civil servants who must be employed as legal experts for sales tax, and this is a legal decision now being introduced, this level of sales tax for any motor vehicle is undesirable. It means that a £1,000 vehicle becomes a £1,300 vehicle, with £300 sales tax on it. If the argument is that sales tax is a desirable way for a government to get revenue, and that must be the philosophy of this Government because it is constantly increasing indirect taxes, we must recognize one thing that is happening in the community: This sales tax gravely affects the price, of all sorts of vehicles that carry no- sales, tax and prodace no revenue for the Government, and that is the great desideratum of the Government. If any name is to be given to the sales tax on motor vehicles, it ought to be “the second-hand car dealers’ charter”. The second-band car carries no sales tax, but its price is enormously increased, because the new car instead of costing £1,000 costs £1,300 when sales tax of £300 is imposed. This increases very greatly the price that can be commanded by the second-hand dealer, and this increased price does not produce any revenue for the Government, so that it becomes another item of straight inflation. Not only is sales tax directly inflationary, but it is also indirectly inflationary. If the honorable member for Mallee (Mr. Turnbull) can rejoice at this bill, his must be the most flimsy reason for which any one has rejoiced in this Parliament.
.- The House would do well to consider the facts that led the Government to bring in this bill. Any one who goes around motor showrooms or motor shows is immediately confronted with the fact that several makes of vehicles, which are in fact phoney passenger station wagons, are being offered. One can buy a car and separately buy the handles, the seat and a kind of very elementary do-it-yourself kit to turn what is legitimately a commercial vehicle into a passenger vehicle. I do not know what the practice is in country areas, but I know that large numbers of these vehicles are sold around the city, and they are mainly sold for passenger purposes, with this arrangement to dodge taxation.
In opposing the measure, the Opposition is really upholding the tax dodger. The successful opposition of this legislation would not alter the sales tax; all it would do would be to encourage a new line of phoney station wagons. General MotorsHolden’s Limited and the Ford Motor Company of Australia Proprietary Limited perhaps would turn out a line of vehicles for no other purpose than to provide easy conversion from one type to another. All this bill does is to correct a tax anomaly. The Deputy Leader of the Opposition (Mr. Calwell) and other Opposition speakers have ranged widely in their talk about direct taxation as against indirect taxation. At other times, Opposition speakers have suggested, with a certain degree of reason, that we spend too much on television sets and motor cars and too little on education. Sales tax is a tax on consumption, and with passenger vehicles it is to a large degree a tax on luxury consumption. How the honorable member for Fremantle (Mr. Beazley) could reasonably argue that this tax is inflationary is extremely difficult to follow.
What would happen if this measure were thrown out? The sales tax on motor vehicles would not be reduced. Of course, it is very popular to advocate that the sales tax on motor cars should be reduced. We would all like to see this done. There is not an honorable member in the House who buys a car or whose constituents buy cars from time to time who would not like to see sales tax reduced. But we should all try to prevent the infringement of sales tax laws, particularly when it is done by this basically dishonest practice. The Opposition is in effect underwriting sales tax evasion and dishonest practices in opposing this bill, and there is no other purpose in their opposition. I suggest that, instead of discussing the effect of direct and indirect taxes, we should stick to the substance of the bill and that is, within the existing framework, to stop tax evasion. It does the Opposition no credit to come out in favour of tax evasion in this way.
.- We have just heard the honorable member for Wentworth (Mr. Bury) raise a form of financial nonsense into a species of doctrine. What exactly is the objection that the Opposition takes to this measure? We say, first, that sales tax is progressive and extremely objectionable.
– We are not discussing sales tax in that sense.
– It may not be a point to honorable members opposite, because they have managed to live a pointless existence as a government for ten years, and it is a little late in the day to try to make them understand the finer points of financial policy. No matter how much the honorable member for Wentworth may deplore tax evasion, I would have thought that he in his profession as a species of accountant, more or less, would have sponsored it. In fact, a whole profession has been built around the business of tax evasion. He is now advocating an increase in sales tax on certain motor vehicles. I do not know how long it should take a Treasurer in this Commonwealth to wake up to the fact that this sort of thing is happening. It has been going on for some time and has been common knowledge to many people with whom [ associate. However, it gives me some pleasure to know that the people who will pay the increase will be mostly people in Liberal-held electorates, because they buy this type of vehicle and therefore will pay the extra tax. It will not be the workers of Wills who will be rushing in to buy station wagons and convert them to passengercarrying vehicles.
This is the imposition of a further tax on the sale of motor vehicles. We on this side of the House take every opportunity to make clear to the people of Australia what the financial policy of the Government is, particularly as it is exemplified by sales tax. It is interesting to note that the Treasurer (Mr. Harold Holt) has had to take these steps to try to overcome what was originally a deficiency of his own department by defining more fully the type of vehicle to which the higher tax is applied. The general principle upon which the whole structure of Liberal Party capitalism has been based is the avoidance of the payment of taxes and the use of all kinds of legal dodges to avoid taxes. But now he has had to bring down a special bill to make this amendment which will affect mainly his own supporters. Yet honorable members opposite, including the honorable member for Mallee (Mr. Turnbull), try to erect this into a system of high morality. Suggesting that those who have chosen to indulge in this practice have been very remiss and have acted illegally is an effort to build a system of bad law into a principle of high morality and is not a principle upon which the Parliament should act.
We say that sales tax is bad. It was imposed in this country originally in the 1930’s at a comparatively low level in proportion to the total national budget. During the war years full use was made of sales tax as a means of raising extra revenue, but the amount of revenue raised from this source was decreasing by 1 per cent, or 2 per cent, per annum from 1946 to 1949. But since the advent of this Government to the Treasury benches the impact of this tax - a consumption tax as the honorable member for Wentworth called it, falling equally on rich and poor - has been increasing in relation to the general level of taxes. We on this side of the House base our opposition to the bill on the general principle that sales tax is a bad tax. An increase in sales tax from 16i per cent, to 30 per cent., as in this case, on a particular line of vehicles, although it is only a small proportion of the total number of vehicles sold in Australia, is wrong. Honorable members opposite are simply espousing the Liberal Party doctrine as exemplified by the remarks of the honorable member for Mallee. As I remarked they are trying to turn bad law into high morality.
In line with our general attitude towards the Government’s taxation policies, we are opposed to this bill. Where does this sort of thing end? Take a person who buys parts of a motor car and builds a car himself, thus avoiding sales tax. Then we would have some new law, covering many pages, giving greater facilities to lawyers to earn more and employing great phalanxes of taxation officials to work out a new system. We on this side of the House heartily oppose the principles embodied in this bill.
Mr. BRIMBLECOMBE (Maranoa) [10.21. - The House should take into consideration the suggestion put forward by the honorable member for Chisholm (Sir Wilfrid Kent Hughes). The bill should be delayed and given further consideration for the reasons advanced by the honorable member. The impact of this increase in sales tax from 1 6f per cent, to 30 per cent, will fall mainly on the self-employed man in business. It will fall not particularly on the primary producer, but on the painter, the carpenter and the electrician. I admit that there is an anomaly in the act, but there is another way to approach this problem. The selfemployed man would not buy this type of vehicle, which is dearer than an ordinary car, unless he could use it as a business vehicle and, at the weekend, as a vehicle in which to take his family for an outing. I am speaking for the self-employed man tonight. The effect of the proposed increase in sales tax will be felt by those people, particularly those who are just stalling out in business.
I suggest, as a way out of the problem, that the 30 per cent, rate should be charged on all motor vehicles. Then the genuine person who is employed in business could sign a declaration stating he has no other vehicle and that he is using his vehicle for business purposes. In that way the struggling selfemployed person would not be penalized; but the Government would catch the person who tried to dodge tax by purchasing a station wagon for other than business purposes.
I do not believe that many people are evading the law. If they were, officials of the Taxation Department would be down on them quickly. I suggest, if my proposition is accepted, that people found attempting to evade tax on a vehicle should be dealt with more harshly than they are at present. I believe that in the sales tax field we are too prone to get over our troubles by throwing a blanket over the whole problem and penalizing the genuine person as well as the person who sets out to break the law. We should abandon that attitude. If the Treasurer (Mr. Harold Holt) will not give this bill further consideration along the lines I have suggested, I propose to vote against it.
– I do not rise to defend those in the community who seek to circumvent the laws of this country, but I raise my voice against an act such as this bill seeks to amend. However, this bill is manifestly unjust and unfair to a great number of people in the community, especially people in the Northern Territory who have no alternative means of transport and who must rely solely on vehicles of this type and other types to transport themselves and goods from place to place throughout the Territory where rail and air transport is limited. The people of the Northern Territory must rely mainly on motor vehicles for transport, not for pleasure but for business and for everyday requirements of themselves and their families.
The Treasurer (Mr. Harold Holt) rests his case on the abuse of the act by certain motor interests and certain members of the business community. Those people have been circumventing the spirit of the act and escaping payment of sales tax at a higher rate. The Treasurer in his speech stressed the point - it was the only point that he did stress - that business interests were getting around the provisions of the act and, in conjunction with certain traders, had profited thereby. To emphasize that point, I quote from the Treasurer’s speech. He said -
As I previously mentioned, the convertible vehicles are basically station wagons, and are of a type which does not lend itself to the carriage of goods generally. Thus there is no substantial demand for the vehicles for commercial use, and most people who desire vehicles for the delivery of goods find their needs much more satisfactorily met by the use of a commercial vehicle such as a panel van or delivery van, with its greater space and more utilitarian finish.
Here I point out that the whole tenor of the Treasurer’s speech was the abuse of this section of the act by business interests. No recognition was made of the fact that many other people in the community rely on this type of vehicle for the everyday activities of their profession. The Treasurer continued -
It is understood that production of the convertible type of station wagon will be discontinued by all except two of the current manufacturers when the bill becomes operative, but as suitable other types of delivery vehicles are readily available, it is not expected that any inconvenience will be suffered by the business community.
That is not a correct summing-up of the position. The whole conception of the bill is wrong. It is certainly silly at this stage to try to patch up an unworkable section of the act that is so unjust that even members of the Australian Country Party, as well as many other members of this Parliament, recognize it as such.
The station wagon is not a luxury vehicle in the generally accepted sense of the term. 1 do not say that vehicles in the £2,000 or £3,000 class which can be regarded as luxury vehicles should not be brought within the scope of this provision. I refer to those vehicles which are in the middle price bracket and are used by all sections of the community for essential services. These are not, and cannot be, classified as purely luxury vehicles or purely passenger vehicles.
In my electorate are many people who are not the station owners or the pastoralists who generally purchase luxury vehicles. They are men in professions, men in public life, men in business, miners and men who follow many other pursuits in the community and can be regarded as a general cross-section of the people. They are the persons who use this kind of vehicle. The Government would be wise to withdraw fms bill and review the legislation with a view to arriving at some better means of classifying those vehicles which may be deemed to be in the luxury class and those which may be deemed to be essential.
I remind the House that a utility was once considered to be a luxury, but nobody to-day would so regard such a vehicle. We then progressed to the stage at which the station wagons, or the estate cars, as they are called in many instances, were justly classed as luxury vehicles. But with the progress and the development of the station wagon, it has come to be regarded as something that fills the need of various people for a vehicle that is something between a utility and a passenger vehicle, but which cannot be classified as one or the other. We must adjust our thinking to meet the times, and accept the fact that in many respects and in many classifications station wagons are no longer regarded as vehicles to be used by millionaire pastoralists. In fact, they are in common use and are a necessity in the ordinary everyday life of the community. The Commissioner of Taxation should have the right to differentiate between vehicles in the luxury class and those which may be regarded as essential. I suggest that vehicles above a certain price range should be classified as luxury vehicles and those below that figure should be classified as essential vehicles, which indeed they are. The point of view is no longer held that station wagons are luxury vehicles which only the millionaire pastoralists can afford to own, and the sooner that we adjust our thinking to meet present-day conditions, the better it will be for the community.
If I had the right to vote on this measure, I should have no hesitation in recording my opposition to it. If this bill were defeated. it would be an instruction to the Government, not only to withdraw the measure but also to review the clause which seeks to classify vehicles, so that it can be brought more into line with the realities of the situation.
.- The Opposition, in opposing this measure, has dragged the whole question of sales tax into the debate. I agree with many of the views that have been expressed by honorable members opposite. I did not enjoy paying sales tax on the station wagon that I own. The Opposition has sought to classify station wagons and to pinpoint the uses to which they can be put, but that is not the point of the discussion. What is the purpose of this bill? This bill seeks merely to correct an anomaly. In his second-reading speech, the Treasurer (Mr. Harold Holt) said -
The sole purpose of this bill is to take legislative action to prevent partial avoidance of sales tax which has arisen from a marketing procedure adopted by .a number of manufacturers of the station wagon type -of motor vehicle.
Apparently the honorable member for Maranoa (Mr. Brimblecombe) will vote against the bill because he is convinced that the Taxation Branch is not aware of the tax evasion that is going on. The Taxation Branch certainly is aware of it, but at present has no legislative power to deal with it. This bill will give the branch that power. Therefore, on the argument of the honorable member for Maranoa, he should support this bill and not oppose it. After all, the station wagon is purely a passenger vehicle masquerading as a commercial vehicle because most of them are used for passenger carrying work. The law says that a passenger carrying vehicle, no matter how it is used, must bear the 30 per cent, sales tax. It makes no difference whether you are a doctor, a dentist or a primary producer, the 30 per cent, sales tax must be paid on the passenger carrying vehicle that you use. In this instance, a station wagon is purely a passenger carrying vehicle and, therefore, should carry the 30 per cent, sales tax.
I could argue at great length on whether passenger vehicles should carry such a high rate of .sales tax, but that is not the point of the bill. We have to decide only whether station wagons, some .of which are now masquerading as commercial vehicles, should carry the 30 per cent, sales- tax as. do other station wagons that are on the market. To hear some of the arguments that have been advanced by honorable members opposite, one would think that the Government was seeking to raise the tax on passenger vehicles from 16$ per cent, to 30 per cent. This is not a new tax. It has been in operation for a long time. The bill seeks merely to close a loophole by giving the Commissioner of Taxation the necessary legislative power to impose on station wagons the rate of sales tax that is now applicable to passenger vehicles. All honorable members must be aware that certain makes- of vehicles which are being converted into station wagons are carrying only 16$ per cent, sales tax. Why should the few people who own those particular makes of vehicle enjoy that privilege? Most station wagons, for better or for worse, carry the 30 per cent sales tax. If the Government had not introduced this bill, we would have been faced with the position that all manufacturers of station wagons would have said, “Let us all be in on this party. Let us produce a commercial vehicle which will carry only 16$ per cent, tax and then we can sell the conversion kits at a reasonable price and avoid the additional tax”. What would be the result? The Treasurer has said that if all the car manufacturers agreed to produce only a commercial vehicle the Treasury would lose about £3,000,000:
I am not in favour of the present high tax on passenger vehicles and I think that a good case can be made out for its reduction,, but the bill, now before us fills a very useful- purpose by closing an avenue by which a few people have been able to get under the guard of the Commissioner of Taxation. It is not often that I support him, but in this case I think that he should have the power that this bill seeks to give him.
Question put -
That the bill be. now read a. second time.
The House divided. (Mr. Deputy Speaker-Mr: B. M. Wight.)
Question so resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Debate resumed from 18th November (vide page 2798), on motion by Mr. Harold Holt-
That the bill be now read a second time:
– Mr. Deputy Speaker, this bill is concerned mainly with what may be termed technical amendments to the Life Insurance Act 1945- 1958. I think they could be equally well described as inflationary amendments, for they increase from £500 to £1,000 the limit up to which life insurance companies may pay claims without production of probate or letters of administration; increase from £200 to £500 the amount up to which a special policy may be issued in place of a lost policy without the expense of advertising the loss; and increase the minimum rates of surrender value provided for in the act, as a consequence of the higher interest rates currently being earned.
Here again, Mr. Deputy Speaker, honorable members are faced with the difficulty of properly assessing the purpose of these proposals. This bill was introduced last Wednesday. Before members of the Australian Labour Party have even had an opportunity to meet and form any opinion about it, the debate has been resumed. I suggest, with all respect, that, although the Government may claim that the matters with which this measure is concerned are merely technical, the Opposition should not be required to take the Government’s assurance on trust or on faith, particularly since we have little trust or faith in the Government which has sponsored these proposals. Tonight, we have another two bills, one covering about 70 pages and another 58, and we are told that if we do not pass them within a day or two we will be withholding benefits from certain sections of the community. I suggest that an Opposition is entitled, at least, to a little more courtesy in these matters.
– You cannot object to the size of this bill.
– I am not objecting to the size of the bill but to the fact that there are two or three significant amendments in it. A small bill is not necessarily unimportant. My colleague, the honorable member for Melbourne (Mr. Calwell) had some part in framing the original life assurance legislation. It is quite a significant act which deals with an important aspect of financial and investment operations in Australia. In view of the rate at which inflation continues one is sometimes a little astonished that the value of new insurance policies continues to rise year by year. Whilst, at one time, one might have been a little gratified at holding an insurance policy worth £200 or £300 on maturity, such a sum does not now appear to be very significant in itself.
Those of us who read the annual reports of the Insurance Commissioner as they are presented for the consideration of this Parliament can see that there have been considerable changes over the past several years in the way in which the assets of insurance companies are distributed. To-day, insurance companies are among the biggest institutional investors. At one time, the major part of insurance company assets consisted of government securities. Whether they were Commonwealth securities or local government and semi-government securities did not matter very much but there was very little other investment, apart from mortgages, in what have been called “ industrials “. That tendency has changed.
The change has come about largely because of the interest rate policy that has been pursued by this Government. Insurance companies, like individual investors, had unfortunate experiences with government securities. As organizations which are trustees, in a sense, for their policyholders, there is an obligation on them to see that they get as big a yield as is possible. But, as with other aspects of investment, how they dispose their assets does have significant implications for the developmental policy of the country as a whole. I suppose that the Labour Party has indicated in this Parliament for at least as long as I have been a member of it, which is nearly eight years, that it is necessary to have some kind of proper balance between what can be called public investment on one part and private investment on the other.
Traditionally, in the past, the great life assurance companies of Australia have been investors in the public field as distinct from the private field of investment. But latterly, a development has occurred in Australia and, to a greater degree, in Great Britain. The life insurance companies in Great Britain are showing a greater tendency to dispose their investments in industrials as distinct from gilt-edged securities. That trend has been followed in Australia, more so over the past four or five years and largely as a direct consequence of the financial operations of this Government.
Insurance, in many ways, is a form of investment by proxy. The small weekly savings of some millions of individual policy-holders, whether contributed weekly under the industrial form of policy or paid quarterly or annually, are aggregated ia the hands of insurance companies and then invested by the managers of those companies. Whether these funds are invested in gilt-edged government securities as in the past, in mortgages to encourage home building, directly in industrial undertakings or, in the new form of investment activity, the investment trust which is embraced in the very wide term “ people’s capitalism “. they are all significant as far as the investment pattern of the community is concerned.
I do not think that the proposed amendments go to the root of these great problems. Mostly. as I have said, they are inflation amendments. They simply cover the fact that when the act was drawn by my colleague, the honorable member tor Melbourne, he thought that the sum of £500 was fairly significant. Now, this Government says in effect that the present equivalent of £500, in 1949, is at least £1,000. In other words, this is the sum that has the same degree of purchasing power as £500 had in 1949.
– The year was 1946.
– That makes it even worse. Instead of £1,000 the sum should now be £2,000. I have looked at this bill in the limited amount of time that has been available between its introduction, and up to this late hour to-night when we are asked to pass it. The third matter for which it provides is a small increase in the minimum rate of surrender value laid down in the act. The surrender value was not in vogue, at any rate in some of the less reputable insurance companies, prior to the passage of the uniform act. We had an example of another uniform act a day or two ago. Life insurance was one of the first cases in which the Commonwealth Parliament legislated on a matter which is of common interest from one part of the Commonwealth to another. As a result of a number of committees of inquiry and, I think, even a royal commission, in Australia, it was realized that there was great injustice in the method that some of the insurance companies adopted towards the assessment of the value of policies when people, for one reason or another, after keeping up payments for a year or two, found that they could not continue. In some cases they lost the entire value of their policies. It was written into the law that if a person had been contributing to a policy for a period of two years, at least there was some equity in the undertaking as a whole on the part of the person who had been contributing. To-day a policy is deemed to have a surrender value in certain circumstances. According to the speech made by the Treasurer the other night, the effect of this measure is to provide a small increase in the minimum rates of surrender value laid down in the act. This is done by varying the rate of interest in computing the surrender value of the policy. This is another indication of the change in the financial circumstances of the community as a whole by reason of the financial policies pursued by this Government.
If we had been given more time to consider this measure, as I think members of the Opposition are entitled to have, we might have gone into some of the deficiencies which still exist in the operation of insurance companies in Australia, as we did on a previous occasion twelve months ago. I, as well as some of my colleagues pointed out approximately twelve months ago that there are quite significant differences in the ratio of expenses of operation to premiums between a number of insurance companies in Australia. Some of these companies operate more efficiently than others; some have a lower rate of overhead than others, and the lower the rate of overhead expenditure to income return the better is the position of the individual policy holders in such a company. There are still some companies in Australia which have a bad rate of performance in this respect.
The Commonwealth Government, which has overriding powers concerning the operation of life insurance companies, should pay a little more attention to this field. There is still the absurdity being perpetuated in Australia of the “ industrial policy “ as it is called. Small amounts are contributed weekly by policy holders to a collector who goes from door to door. In some industrial suburbs there may be something like half a dozen collectors calling in the one street, weekly or fortnightly, collecting small sums. It is still as true to-day as it was twenty years ago when committees of inquiry examined this matter, that there is a higher rate of overhead expenditure on the industrial side of life insurance than on the endowment side.
– It is twice as high.
– In many cases it is four times as high, according to the companies concerned. It is understandable that if, instead of having a man calling at places 26 or 52 times a year, a policy holder posted a cheque to the company annually, quarterly or monthly, the rate of overhead would be much lower. The insurance companies have recognized this and have carefully segregated the two types of business.
A few weeks ago we had an example of a new concession given to certain people in the community who have been able to afford £6 a week in life assurance premiums, which were allowed as income tax deduction, having that amount raised to nearly £8 a week, or £400 per annum. Any good insurance agent is able to tell an inquirer, in terms of his particular income and of the amount of insurance that he holds, what it is worth to him to invest in a policy which literally is scarcely a life policy at all. A person can take out an insurance policy for five, ten or fifteen years. If a taxpayer on a marginal rate of 10s. or 13s. in the £1 has not a full amount of life assurance which can be written off as a deduction for income tax purposes, and he has also a sum of £100 or £150 which he might otherwise have invested in another way, most insurance agents would tell him how he can to his own advantage put it into insurance.
This concession was given by the Government ostensibly in accordance with its great theory of encouraging saving. The fact that all that has happened has been that instead of the amounts which go to the insurance company being directly invested by the individual himself, they are invested for him by proxy - by the trustees or managers of the trustee company - in whatever form of investment they determine, has some significance in the pattern of Australian economic development. I recall from a previous examination of the report of the Commissioner of Taxation that over the past five years or so .there has been a considerable change in investment by insurance companies in Australia.
Honorable members who read that very important journal, “ Financial Review “, which now gives currency to the Labour point of view at least occasionally and has some very informed articles at times, might have read an article either in its current issue or the preceding issue by Mr. Bell of the Australian Mutual Provident Society. I think he is an economist attached to the A.M.P. organization which is one of the great insurance companies of Australia. He pointed out that it is the obligation of an insurance company to obtain the greatest possible yield for its shareholders or policy holders. The difference is purely nominal as policy holders in an insurance company are shareholders in it. Mr. Bell said it was the company’s obligation to secure the greatest possible return for its shareholders, and therefore there was a greater disposition to seek a yield and put the investment into equities as distinct from gilt-edged securities. He urged the exercise of caution in regard to these new theories on saving. The point can be reached where the balance between the market yield from particular securities is so close to the yield from gilt-edged securities that a move up or down of one or the other could have disastrous effects for the policy holders. It could have disastrous effects also for the community as a whole.
As I mentioned earlier, members of the Opposition have suggested that one of the errors in the Australian economy over the last ten years or so has been that the proportion of public investment to private investment has not been as great as it should be. It has been rather interesting to see some of the documents compiled, even recently, with a certain amount of Government authority. I refer particularly to a committee which inquired into secondary industry, or something of the kind, and recently produced a report that was circulated among honorable members. It indicated that there has to be proper balance between public investment on the one hand and private investment on the other. I refer to public investment as involving such unspectacular things as more secondary education or more universities. After all, if you want to produce more technicians you have to have them properly educated, so you have to provide facilities for them to secure education. To a degree there should be greater co-ordination between the public and the private sectors in - relation to the total amount of investment. Nobody can arrive at any exact theoretical figure as to what the proportions of public and private investment should be from time to time, but 1 think we need a better regulator than the current market rate of interest or what are called the “ market forces “, in determining these amounts. At least the field of life assurance is one point where some control - some public control, and I emphasize the word “ public “ - can be exercised.
In making such statements, Mr. Speaker, it is necessary .to be careful, because sinister implications are sometimes read into what one says, and are quoted against one in the years to come. When somebody states that there should be greater public control over the activities of life assurance companies we are sometimes .told that that amounts to interfering wim private enterprise. I do not regard life assurance as private enterprise. In fact, even with the shifting of the disposition of the assets of the insurance companies, I think their most significant form of investment is still in government securities - public investment rather than private investment. By “public investment “ I mean investment in semigovernment and local government, as well as direct Commonwealth, securities. It is of some significance in the overall pattern that occasionally we should impose some regulations in this field. One point at which I think more regulation should be exercised than has been the case is in this field of industrial insurance, where there are still too many people hawking policies down the same street, selling what are really inadequate policies to people - policies investment in which is not really the best way of securing savings by the community. All those things go to the root of our investment policy.
I come back, Mr. Speaker, to where I started - that I think that an Opposition is entitled to more notice in relation to such measures than we are given. My former colleague in the Victorian Parliament, the honorable member for Chisholm (Sir Wilfrid Kent Hughes) may remember, as I remember, that in the Victorian House no matter how insignificant a bill was brought in we insisted on being given a fortnight’s adjournment of the debate before that matter was dealt with. I suggest that a similar principle might well be adopted by this House. It is easy enough to say, as the Treasurer said to-night, that we have had committees looking at a bill for twelve months or eight months or five months, as the case may be; if it is good enough for a committee of experts to deliberate on a measure for eight months or twelve months, surely it would be mere courtesy to members of the Opposition to give them more than 24 hours to judge measures. I submit that the same is true about this bill as was true about the Superannuation Bill and the Defence Forces Retirement Benefits Bill, which also go to the root of the investment field, because the amounts taken weekly from Commonwealth public servants or members of the defence forces, or anybody else who participates in a superannuation scheme, are something that ought to be seriously looked at.
One thing that has developed in Australia over the last ten years is the .existence of many private superannuation funds which, in essence, are handled by some of the big life assurance companies. Again, contributions to superannuation funds are allowable deductions for tax purposes, both in respect of employers and employees. In many respects a great danger exists in the fact that somebody who has built up an equity as an employee of a firm finds that often the thing which is ostensibly designed to protect him in the years that he is not working is used as a barrier to prevent him from moving from one point of employment to another. I would suggest that just as the Commissioner of Taxation scrutinizes the conditions on which such funds may be established, there should equally be some authority which will provide for the integration of funds between one employer and another, so that if an employee threatens to go on strike he will not be told that he will thereby lose whatever equity he has in his firm’s superannuation fund. That is another matter of public control which also probably comes within 4he - field of life assurance.
There are probably other honorable members who have some views on this matter -who, like myself, lave not had the proper time to encompass all that they wish to say on it. Earlier to-day we had a bill that also went to the root of the matter, as it were, so far as investment is concerned. We had it at 4 o’clock to-day and now it is nearly 11 o’clock, and we have another bill before us, and we are again asked to give our views on something that is probably equally significant. So 1 want to reiterate my protest against the haste with which this Government is bringing legislation down in the dying hours of the session.
Mr. CALWELL (Melbourne) [10.571.- I desire to support what my colleague from Melbourne Ports (Mr. Crean) has said, and to make a few observations on some aspects of this legislation, which is being rushed through the Parliament. It could have been brought down at a much earlier period in this session. Surely if the experts were considering it for eight months it was not necessary for the Government to introduce it at this time, when the Parliament is about to rise. The bill does not do so very much for people.
– You would not have thought so to listen to the honorable member for Melbourne Ports, who was traversing the whole range of insurance.
– Exactly. I am suggesting that a bill which deals with life assurance for the first time in thirteen years should make more fundamental alterations than are proposed in this legislation.
– This is not the first time in thirteen years.
– It is the first time that the legislation passed in 1946 has been dealt with in regard to surrender values.
– There have been amendments in that period.
– In regard to the benefits paid to persons who insure their lives with those life assurance companies there “have been no really important alterations made since 1946.
– There have been opportunities given for debate since 1946, and honorable members have expressed their views on -occasions.
– Of a sort, and I have -expressed my views too. As a matter of fact, it was my duty as the Minister representing the Treasurer to put the first uniform insurance bill through this House in 1946.
That legislation merely gave effect to the Victorian legislation which was passed on the recommendation of a royal commission set up by the Dunstan Government in 1935. it was that commission that wrote the terms of the 1936 act in Victoria, and not the actuaries. There was an actuary on the commission - Mr. Oswald Gawler - who was then the Government Stastistician A majority vote of that committee determined the terms of the Life Assurance Act of 1936. There have been two censuses taken since 1946. Surely the 1954 census provided opportunities for the actuaries and the Treasury officials to decide just how much longer people are living. Surely they should know just how much greater the expectation of life really is. It ought to be possible for the government, at this point of time, to amend an act to provide not merely for small increases in the minimum rates of surrender value but for alterations with respect to value of paid-up policies, the premiums to be charged and the extent to which life expectancy has been increased. In other words, the time is ripe for an overhaul of this life insurance legislation. All legislation should be overhauled periodically.
Life insurance companies are setting up subsidiaries to engage in fire, burglary and marine insurance. Surely, we should have some legislation regulating the activities of subsidiaries established by life insurance companies to deal in these forms of insurance. We have no such legislation. Again, the trading banks are avoiding their responsibilities under the Banking Act by engaging in such things as hire purchase. Life insurance companies are straying from their primary functions and making money in other fields. If that is to be permitted, the Government ought to say just how much of the funds of insurance companies ought to be used in the public interest in the public sector of the economy.
I believe that insurance companies ought to be putting more money into housing and various other activities. I know the answer that will be forthcoming readily will be that the insurance companies are subscribing large sums to the various loan raisings of the Government, and are doing certain other things, but I submit they could also help in other ways.
– They are going out of bonds into housing. »
– That is only a recent development. They have created huge reserves over the years and are building huge structures in the centres of our cities without assistance from the banks. They do not need assistance from the banks, and the buildings they are erecting in competition with other enterprises might prove to be unprofitable later. I suggest that instead of erecting huge buildings in the centres of the cities, they ought to be helping industry and the Government by investing their money, to a greater extent than they are, in other parts of Australia.
The first two amendments proposed in the bill are of no real consequence. They are desirable and necessary, but they are also an almost silent tribute to the failure of this Government to control inflation. The reason why the companies are being permitted to pay claims without production of probate where the amount of cover does not exceed £1,000, instead of £500 as at present, represents some measure of the growth of inflation in this country. It has probably grown to twice the 1946 level, and perhaps the amount should be £2,000 as suggested by the honorable member for Melbourne Ports. In any case, no doubt £1,500 would be nearer the mark than £1,000.
The second proposal, which seeks to allow a special policy to be issued in place of one that has been lost without the expense of advertising the loss where the sum insured does not exceed £500, instead of £200 as at present, indicates just how inflation has proceeded in this country over the last thirteen years.
I hope that in the near future the Government will investigate the whole question of the operations of the act it now seeks to amend and eventually bring down a comprehensive act. I know that when the insurance companies were being asked to put money into government loans a few years ago the then Treasurer was so much in need of funds that he struck a bargain with them. He certainly took their money, but he also gave them the price they demanded - excision from the act of a provision under which the Commonwealth Government, at some time in the future, could set up a government office in competition with existing offices if it considered that action to be necessary. Many years ago in Queensland, the Ryan Government set up a State Government insurance office - it is still operating very successfully - in competition with the existing companies. That government office cut premiums by one-half. It went into business against the private companies to show what money could be made out of the business of life insurance.
I think that our own actuaries and the actuaries who work for the insurance companies are far too conservatively-minded, and the people who insure their lives are paying premiums that are at least somewhat higher than they ought to be. That is all the more reason for an investigation of these matters, not by experts alone, but by a joint committee of the Parliament, or an ad hoc committee on which the trade unions or the Opposition in this Parliament would be represented so that all questions affecting life insurance as of 1959 may be investigated and an up-to-date act drafted to deal with them.
.- There seems to be a remarkable conflict of opinion between the Deputy Leader of the Opposition (Mr. Calwell) and the honorable member for Melbourne Ports (Mr. Crean). On the one hand, the honorable member for Melbourne Ports complains bitterly that he has not had enough time to consider this most important piece of legislation. On the other hand, the Deputy Leader of the Opposition says there is nothing of great consequence in this piece of legislation and that the honorable member for Melbourne Ports quite properly surveyed the whole range of insurance because there was nothing else about which to speak. Their speeches were in open conflict, and it is obvious that the two honorable gentlemen have not resolved the matter between themselves.
There was another obvious point of conflict in their views. On the one hand the honorable member for Melbourne Ports has complained bitterly that the increased superannuation proposed by this bill is unfair in that it anchors a man to his employment and decreases his mobility; on the other hand, the Deputy Leader of the Opposition said that we ought to have an investigation by a joint committee of the Parliament, or by an ad hoc committee, on which- the trade unions should be represented, with, a view to increasing life insurance, superannuation and things of that nature. Again we had. open conflict..
The truth of the matter is that this bill is designed to- bring- about very necessary amendments to the act. The proposed amendments ought to be supported’ wholeheartedly by the Opposition. We- should not have been required) to> sit here and listen to- an exposition of the- whole- range of insurance- investments and other matters which are not germane’ to- this bill.. Of course, we- have- certainly come to expect conflicts, of opinion between members- on the- front bench of the Opposition-, but we do not expect to- have them portrayed to us so graphically during, the consideration of a bill of this nature-
Question resolved in the affirmative.
Bill’ read- a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Debate resumed from 19th November (vide page 2899), on motion by Sir Garfield Barwick -
That the bill be* now read a second; time.
Mc WHITLAM: (Werriwa) [11.10].- I believe that honorable members will take great satisfaction in the fact that the Commonwealth is now to accept the same responsibility for fatalities and personal injuries caused1 by its vehicles as all States long ago imposed on their citizens, and themselves accepted, under compulsory third party insurance acts, and as the Commonwealth itself imposed on residents of the Australian Capital Territory, and accepted for its own vehicles- in the Territory under the Motor Traffic Ordinance of 1947. Because the Commonwealth has been the only motor vehicle owner in Australia that was not automatically liable for injuries caused by the negligence of persons driving its vehicles, any person bereaved or injured by a Commonwealth vehicle had to establish that the vehicle was being driven by the Commonwealth’s employee in the course of his employment. Naturally the Common wealth cannot drive vehicles itself. All its vehicles have to be driven by its employees, and the onus which was cast on a bereaved or injured person- was- in many cases very difficult to discharge.
This is not an academic matter or one of slight importance. It is a highly relevant consideration, because the Commonwealth is the largest owner of motor vehicles in Australia. On 11th August last the Prime Minister (Mr. Menzies) told me that the Commonwealth, as at 31st March of this year, owned 31,636 vehicles.. At that time there were in Austrafia as a whole 2,639,281 vehicles. The Commonwealth, therefore, owned one in every 83 or 84 vehicles on the roads of this country. The number of accidents in Australia in 1957-58 was 39,473”, and as a result of those accidents 2,146 people were killed and 52,213 were injured. It would seem, therefore, that on the average it was likely that about 700 or 800 people a year would have been injured by Commonwealth vehicles. One does not know how much damage was caused by way of personal injury as a result of those accidents involving Commonwealth vehicles, but in Australia as a whole in 1957-58 an amount, of. £14,202,000 was paid out under compulsory third party insurance schemes. One would, imagine, therefore, that, pro rata,. Commonwealth vehicles might well have, done a couple, of hundred- thousand pounds worth of damage in that year. to. his speech introducing’ the bill the Attorney-General- (Sir Garfield. Barwick) said that in- cases in which- the Commonwealth has had the defence open to- it that drivers were not driving in the course of their employment, the procedure has been for the Treasurer (Mr. Harold Holt)- to examine the cases; and, if he thought fit, to- offer an injured- person an- ex gratia payment equal- to the amount that would have been payable had the Commonwealth been liable under the Commonwealth Employees Compensation Act for the injuries sustained. That would give very little comfort to. persons injured,, because the Prime Minister said, in. answer to- a question I put to> him on. 16th April last year -
If a driver is not able to pay the damages awarded- against him the Governments policy is to consider the circumstances to determine whether it should make a payment, as an act of grace, to- alleviate hardship.
I then asked the Treasurer, who at that time was Sir Arthur Fadden, the following question: -
In how many cases in each of the last five years has the Commonwealth made payments as an act of grace to persons who have been awarded damages against the driver of a Commonwealth motor vehicle but are unable to recover the damages from the driver?
The then Treasurer replied, on 15th May last year -
There have been no applications to the Commonwealth for ex gratia payments in these circumstances.
– And, indeed, many honorable gentlemen have made applications to the Commonwealth for ex gratia payments. I myself made some within the period to which the Treasurer referred in his reply, and I believe it is a common experience of honorable members. For many years they have been approached by people who have been injured by Commonwealth motor vehicles, and who have said that the Commonwealth has entered the defence that the driver was not driving in the course of his employment or was not a Commonwealth driver at all. The person injured or bereaved has then been unable to prove that the driver was a Commonwealth driver, or that he was a Commonwealth driver driving in the course of his employment, and has then been forced to sue the actual driver. If the driver in such cases was a Commonwealth employee he would be unlikely to be able to meet the verdict of the court. If he happened to be an unknown person, or a person who was not a Commonwealth employee, in most cases the chances of securing the amount of the verdict would be even slimmer. Honorable gentlemen who have applied for ex gratia payments in those circumstances have usually been rebuffed. I have heard of many rebuffs; I have never heard of a payment having been made.
I mentioned the satisfaction that honorable members in general will have derived from the fact that the Commonwealth is now accepting the same responsibility that has, for at least a decade, attached to every State and to every private motor vehicle owner in the country. I may be pardoned for taking some satisfaction in the bill myself, because I think it flows directly from a series of eight questions that I have put to the Prime Minister over the past two years, after I raised the general matter in the debate on the estimates for the Department of Works two years ago. On 10th October, 1957, I told honorable members of one particular case which, I think, illustrates the difficulty that has faced our fellow citizens when they have been injured by Commonwealth vehicles. One of my constituents was sitting in her husband’s car, which had been parked, properly lighted, off the side of a road. At about 7 o’clock a Commonwealth vehicle owned by the Department of Works ricocheted into the car and injured the woman sitting in it. The Commonwealth took the point that the driver was not driving in the course of his duty. He was, in fact, somewhat inebriated, and for that reason also the Commonwealth would not accept liability. The driver was a man of straw. There would have been no point in suing him, because one could not have recovered the amount of the verdict. I sought an ex gratia payment, but the Treasury refused it. I then asked the Prime Minister a question on 28th November, 1957 in the following terms: -
I ask the Prime Minister a question concerning the Commonwealth’s liability to pay damages for injuries caused by the drivers of its vehicles. The right honorable gentleman is aware that under compulsory third party legislation in all States the driver of a private or State motor vehicle is always presumed to be driving it with the authority of the owner, and that the owner is liable for the bodily injuries caused by the driver of his vehicle. Does the right honorable gentleman know, however, that the Commonwealth refuses to accept liability for bodily injuries caused by its drivers unless at the time they were driving in the course of duty? If the right honorable gentleman knows this to be the position, or if on inquiry he finds that the position is as I have stated it, will he give instructions to all his Ministers that the Commonwealth is not to take advantage of a defence that is no longer available to private employers and owners, and which the State governments have surrendered in respect of their own vehicles?
The Prime Minister replied -
I regret to say that I am not at all aware of the legal position on this point, either here or in the States, but I shall have a look at it, because the point raised is quite a significant one.
I asked the Prime Minister another question on 25th February, 1958, when he said -
I know that the matter has been examined, because it was put in hand. I cannot say at present what the result was.
He promised to give me an answer to the question that week if possible, or failing that in the very near future. Towards the end of that session, on 7th May, 1958, I asked the Prime Minister the following question -
Three weeks ago the Prime Minister told me that he had given instructions that work on the problem of answering my question should be speeded up as much as possible. I now ask the right honorable gentleman whether I can expect an answer to my question before the House rises next week.
The Prime Minister replied -
Yes, I think that can be done. I have a strong feeling that this matter has actually reached /me and, so, any delay is now at my table. I shall certainly endeavour to have the question answered next week.
– Would you like me to go out and get a few more volumes of “ Hansard “ for you?
– No. I am cutting this to the bare bones. I am not suggesting that the Prime Minister does not make correct decisions so much as that he takes his time about making them. On 6th August, 1958, he told me -
A submission on this matter will be made to Cabinet and will be considered at an early date.
On 27th August, 1958, he told me, in reply to a question -
The matter has had some consideration. There are some aspects of it, as the honorable member will realize, that are not without their complications and which have been investigated since. I do not undertake to give the honorable member an answer to-morrow, but I will give him the complete answer to his question on the next day of sitting.
Finally, on 9th September, he gave me the answer. That is the date that the AttorneyGeneral has embodied in this bill as the day upon which the act will come into operation.
The delay was due, I believe, to a conflict between the Attorney-General of the time and the Treasurer, or between their officers. The Attorney-General, Senator O’sullivan, was consistently in favour of the Commonwealth’s accepting the same obligations as State governments and citizens accept and have to undertake, respectively. But the Treasury continued in the obdurate attitude which it has taken in this matter all along. To the very last it resisted the Commonwealth’s accepting the same situation as other litigants accept or have to undertake. It was not until the Prime Minister himself came in and arbitrated between his Ministers that the correct decision was at last reached.
The only criticism I make of the bill is that it dates from 9th September, 1958. I should have thought that, more properly, the act and the Commonwealth’s liability should date from 28th November, 1957, when the Prime Minister was first asked to look into the matter, or from some time in May, 1958, when, in fact, Cabinet had already considered the matter and had reached a tentative decision. I do not know how many accidents were involved in the period of nine months or in the period of four months. Therefore, I do not propose to go to the extent of moving, in committee, an amendment to the relevant clause.
The bill takes the attitude that the Commonwealth should be in the same position in the courts of the States or the Territories as is any other defendant. That is a perfectly appropriate attitude. There are some anomalies between the States. The bill, fortunately, preserves the right of trial by jury in these matters, which the Prime Minister was not at first prepared to concede, because he told me that the Government had already decided that the liability of the Commonwealth should be determined by a judge sitting without a jury. I believe that certain anomalies were found in cases where other parties might have to be joined and the liability between the plaintiff and those other parties would be determined by a jury in some States, and the liability between the plaintiff and the Commonwealth, or between the other defendant and the Commonwealth, would be determined by a judge without a jury. I believe that the new Attorney-General has come to the correct decision in allowing the matter to be determined by a jury in those States where such matters are determined by a jury between private litigants or between private litigants and a State government, and without a jury in States where juries are not available in these matters.
There is one other difficulty, of course, that immediately occurs. The Commonwealth will be able to plead, in the State of New South Wales, where about half the running-down cases in Australia are litigated, the defence of contributory negligence, because it is an anomaly of which New South Wales should, 1 believe, be heartily ashamed that in that State, and in that State alone, it is possible for a defendant to plead that the plaintiff himself contributed to the accident by some degree of negligence, and the plaintiff can, in those circumstances, secure no damages at all. He bears all the damages himself. In the other States and in the Territories, the States and the Commonwealth have provided that where both the plaintiff and the defendant are negligent, the plaintiff will be compensated by the defendant in the proportion that the defendant was negligent. If the plaintiff is negligent he does not lose entirely the right to damages. He is penalized only by losing a proportion of the damages in relation to his own contributory negligence.
I shall conclude by a reference to the continuing weakness of third party insurance in cases of road accidents. The great fault of all litigation in this field is that it stems from a development of the old actions for negligence. As in all actions for tort, damages have to be given in a lump sum or not at all. It is a completely anomalous fact that if a person is injured in a road accident, or is bereaved as the result of a road accident, damages are given in a lump sum. It is quite inappropriate. 1 have said on earlier occasions, and in this House recently in the debate on the vote for the Attorney-General’s Department, that a more appropriate form of compensation would be by way of periodical payments. Further, I believe, as I said on that occasion, that litigation in these matters is unnecessarily dilatory, expensive and hazardous. The Social Services Department has the appropriate machinery for determining the amount of compensation that a person is entitled to receive to put him in the same position as he would have been in if the accident had not happened, and the petrol tax provides a ready and fair means for all road users to contribute in respect of accidents that occur on the roads. I pointed out at the time that I did not mean thereby that the whole compensation for injuries should be left to bureaucrats. In the Department of Social Services and a great many other departments that make decisions appeals should be available to some form of court, and I would think that a federal supreme court would be the appropriate body.
However, those are matters that can be dealt with at another time. At the present time we are quite rightly, though belatedly, seeing that the Commonwealth will be a model litigant where injuries or fatalities have been caused by the drivers of its vehicles in the same way as, for many years past, State governments have accepted that responsibility, and all private motor owners have had to insure against that responsibility.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. Hulme) proposed -
That the House do now adjourn.
.- This week I received a communication from an association in the new area of Elizabeth, in the Bonython electorate, expressing concern at the lack of telephone facilities in the area and at the inability of the PostmasterGeneral’s Department to keep pace with the development of the area. The time has come when we must speak in forthright fashion to the Postmaster-General (Mr. Davidson), because he sets the policy in regard to these matters. I do not question the ability of those who administer the affairs of the department in places such as Adelaide, because I know that they are faced with many problems. I know that there is a great demand for telephones throughout my electorate. In certain parts of it people have had to wait an inordinate length of time for a service. In many cases that wait has been caused by lack of materials, such as the necessary switchboard equipment. It is quite evident that those responsible for setting the policy of the department have been seriously at fault and have not had sufficient vision to forsee the needs of a growing community such as Elizabeth.
I am sure that the people in my electorate who have been waiting a long time for a telephone service will be incensed when they hear that a bookmaker at Randwick has been able to obtain three telephones for use in his business, whereas people in places like Elizabeth, who may require urgent medical attention or may need to summon a vehicle to take a maternity case to hospital, must wait a great length of time for a telephone with consequent inconvenience and even danger. The residents of my electorate have asked me to bring this matter to the notice of the Parliament so that their representations may be adequately and fully ventilated in this House. They feel that the House will not be satisfied with some palming-off explanation by the Postmaster-General, such as he gives in answer to questions. The honorable gentleman must realize that this kind of thing cannot continue indefinitely. We need some long-range plan to deal with this matter. Perhaps we could have a joint policy formulated by both parties in an endeavour to solve the problem. I hope that those who are responsible for planning within the Postmaster-General’s Department will exercise greater vision than they have exercised in the past. I trust that the Government will make the necessary finance available so that essential equipment may be obtained in order to provide the community very speedily with the service that it desires.
As I have said, I cast no reflection on those officers of the department who are labouring under great disabilities in administering the affairs of the department; but I ask that some effort be made on the part of the Government to meet the needs of the people who require telephone services.
.- Last week I asked a question in this Parliament of the Postmaster General (Mr. Davidson) regarding the use by some broadcasting companies of what is known as video tape. I do not know much about the technical side of television, but I understand that some television companies, particularly Channel 9 in Melbourne, use what is known as video tape in all cases where the telecast is re-broadcast from other capital cities. I have a very keen television critic in my home circle who tells me that the companies that use video tapes for the rebroadcasting of pictures from other cities broadcast pictures which are infinitely superior to those broadcast by the national stations. I make these remarks reluctantly, because I am a 100 per cent, supporter of the national stations. Their programmes are not all that they should be in some respects, but they are as good as, if not better than, the programmes of the private stations, and one does not have to look at a lot of objectionable advertising material such as is presented by the private television stations.
In response to my question, the PostmasterGeneral indicated that he did not know much about the subject in relation to which I was inquiring, and he intimated that he would make some inquiries to find out the position. Subsequently, in the course of a short personal conversation, I understood him to say that if the national T.V. stations used video tape - the use of which is, I understand, the reason for the superior pictures broadcast by at least one of the private T.V. stations - it would involve an additional cost of about £50,000.
– Is that for Melbourne only?
– It may be for the national station in Melbourne only, or it may be for all of them - I do not know. However, if all that is required to put the national stations on an equal basis in this regard with the privately conducted stations is the expenditure of an additional £50,000, it is time that something was done about the matter. I do not know anything about the technical aspects, but I understand that video tape is a material of some kind used for the reproduction of pictures taken in, say, Sydney and shown in Melbourne. I do not care what type of material the national stations use for this type of work as long as it is the best available and will give to the Australian people, who really own the stations, the best reproduction of pictures that can be given.
I leave the matter there. I hope that the Minister at the table will convey my representations to the Postmaster-General. Surely, it is a reflection on the national stations that other stations, with fewer resources than are available to the Commonwealth, can broadcast superior television pictures.
Mr. WARD (East Sydney) [11.441.- Although this is a rather inappropriate hour at which to raise the matters that I shall bring to the attention of the House, I am obliged to raise them now because the Government intends that the Parliament shall go into recess at the end of this week for some months. The matters that I have in mind are of sufficient importance to warrant the attention of the Parliament before that long recess begins.
I am pleased to see the Treasurer (Mr. Harold Holt) in his place in the House, because he will be able to listen to what I have to say and perhaps cause an appropriate investigation to be made. I refer first to a racket which the Government has an opportunity to curb or prevent. It concerns the National Bank of Australasia Limited and its interest in Custom Credit Corporation. I have been given to understand that a watchmaker and jeweller in Tasmania advertised that he would sell certain articles on hire-purchase without requiring a deposit. A young lady, responding to the advertisement, sought to purchase a watch valued at £20. She was then referred to Custom Credit Corporation, which granted her a personal loan of £20. There was an interest charge of £1 and a documentation fee of £1, making a total of £22. Before the transaction was completed, however, she was referred to Customlife Assurance Limited, and she was obliged to take out a nonparticipating life policy for which she had to pay the premium of £6. This brought the total sum involved to £28, and she had to repay it in four-monthly instalments of £7. Working on the basis of an interest charge of £8, it appears that an interest rate of about 120 per cent, was charged on the personal loan to this young lady. It seems that the banking institutions, which can be controlled under powers possessed by this Parliament, are using this method to avoid that control and to get an exorbitant return on moneys which they are providing for investment in different fields. I understand that Custom Credit Corporation has offices in the bank’s premises. You arrange a loan through Custom Credit Corporation, but actually it is done in the premises of the National
Bank. I think it is about time that the Government took notice of this activity and! did something about it.
The other matter to which I wish torefer concerns the Minister for Labour and National Service (Mr. McMahon). He is not in the House, but that is not unusual. On a number of occasions, in referring to the number of registered unemployed, he has tried to give the impression that there has been a considerable reduction of the number of people seeking employment. I have frequently contested that view, and I have said that the figures supplied have been faked figures. Recently I put on the noticepaper several questions, with the purpose of showing clearly that the Minister was not revealing the actual unemployment position in Australia. I asked -
I think the House will agree that I covered the whole field of employment. I will not read the whole of the reply by the Minister, but I will give the figures which he supplied. In the five years from 30th June, 1954, to 30th June of this year there were, on the Minister’s own figures, additions to the work force totalling 357,000. With regard to employment, I was advised that in manufacturing industries, commerce, transport, Commonwealth and State Public Services and local government activities there were additions totalling 206,300. No reference was made to the figures relating to primary industries. In order that I should be able to state the position accurately to the House, I sought those figures. They, too, came from Government records. 1 could not get the figures for the year ending 30th June, 1959, but I was told that during the four-year period from 1954 to 1958 the number of persons employed in primary industries actually fell by 2,500. So it will be seen that during the period I have mentioned there was an increase of employment over the whole of the field of industry to the extent of 204,000, compared with an increase in the work force, on the Minister’s own figures, of 357,000. That leaves 153,000 people not accounted for. It may be that a few of them went into the services and that a few are selfemployed, but it would be difficult to account for 153,000 people on that basis. Let us assume, although it would be a wrong assumption, that no people were unemployed at 30th June, 1954. How does the Minister account for the discrepancy of 153,000 on his own figures, between the additions to the work force and the increase in the number of people employed? It is clear that all the Minister does is to guess at the figure, and he arranges it in such a way that the Government can then use it for propaganda purposes to try to convince the Australian people, who know that the situation is altogether different, that the number of actual unemployed in the community is being reduced. I admit quite frankly that the number registered with the department and the number receiving unemployment benefit may have been reduced, but everybody knows the method adopted by the Government to bring about a reduction of these figures. What the Minister has declared from time to time to be the situation is at complete variance with the figures that he now furnishes, and I think I have proved beyond doubt that what the Minister has said is not in accordance with fact.
– I think I should say immediately to the honorable gentleman from East Sydney (Mr. Ward) that he has proved absolutely nothing. The figures that he has given show quite clearly, first, that there has been a continuous reduction in the number of people seeking employment. They show, secondly, that there has been a continuous reduction in the number of people receiving unemployment benefit. The last point is just as important as the others, although the honorable member for East Sydney has not the good grace or the good manners to stay and listen to the answer to his criticism. He is now walking out of the House.
– I have not been out of the House at all.
– You have come back, but you were ducking out pretty quickly. Finally, I point out that the number of job vacancies that are there and ready to be filled, provided that people of the requisite technical capacity are available, is constantly rising. I point that out because if all those figures are taken together, they indicate that the employment position in Australia to-day could not be very much better. We are gradually getting to a position of over-full employment. I will get a complete analysis of the figures for the honorable member for East Sydney; but he confuses two things and confuses them very badly. The work force comprises not only people in industry and in agriculture, but also people engaged in various other activities. The figures are totally different from those quoted by the honorable gentleman. In other words, a reconciliation can be made. It is quite simple to prove the reconciliation, and I will be the happiest person in the world to write a letter to the honorable gentleman so that he may have not only the precise figures but also the accurate explanation. I go further. If he is incapable of understanding or does not want to understand the figures, I will either personally try to give him the explanation-
– I will try to get the figures for you just as soon as I can.
– This week?
– I will try to get them for you this week. I will certainly try to have them for you before the House rises on Thursday night. Having said that, I want to make it clear that the honorable gentleman must draw a distinction between the two sets of figures - the actual number of persons in industrial employment and the number engaged in the work force. Once that reconciliation is made, all the figures fit into a pattern, and I think that this will be found to emerge from it: We are getting to a state of over-full employment. It is very difficult in many walks of life to find the appropriate employee to fit into the expanded industrial programme.
Question resolved in the affirmative.
House adjourned at 11.55 p.m.
The following answers to questions were circulated: -
s asked the Attorney-General, upon notice -
– The answers to the honorable member’s questions are as follows: -
Education of Sub-normal Children.
y asked the Minister for Social
Services, upon notice -
In view of the longer periods and greater expense involved in educating sub-normal children and the heavy additional burdens which fall upon the parents of these children in equipping them to play some useful part in adult life, will he give urgent consideration to extending the benefits of the Aged Persons Homes Act to organizations which have been formed for the special purpose of educating sub-normal children so that their education may be continued beyond the age of sixteen years in special boarding schools erected for that purpose?
– The answer to the honorable member’s question is as follows: -
The valuable work being done by voluntary organizations which cater for the needs of mentally retarded children is fully appreciated. This field of welfare, embracing as it does both the education and care of sub-normal children, is, however, traditionally and constitutionally a matter for the-, respective State governments. The Commonwealthalready provides financial aid to States for mental hygiene purposes, through the State Grants (Mental Institutions) Act. It is not proposed to extend the benefits of the Aged Persons Homes Act to voluntary organizations interested in this work.
n asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows: - 1. (a) Percentage of the population in each State in receipt of an age pension at or above the maximum general rate (then £4 7s. 6d. per week) on 30lh June, 1959-
m asked the Minister for External Affairs, upon notice -
– The answers to the honorable member’s questions are as follows: - 1. (a) Australia does not propose to accede to the Agreement for Facilitating International Circulation of Visual and Auditory Materials of an Educational, Scientific or Cultural Character, the substance of which is dealt with in the wider Agreement which is the subject of the following paragraph (b).
Australia does not propose to become a party to the Convention on the Recovery Abroad of Maintenance. As the Minister explained when replying to a similar question on this subject on 29th May, 1956, the negotiation of bi-lateral agreements on this question is considered more appropriate than its regulation on a multilateral basis.
Circulation of Visual and Auditory Materials of an Educational, Scientific and Cultural Character- Cambodia, Canada, Denmark, El Salvador, Greece, Haiti, Iraq, Norway, Pakistan, Philippines, Syria, Yugoslavia.
Scientific and Cultural Materials - Afghanistan, Austria, Belgium, Cambodia, Ceylon, Cuba, El Salvador, Egypt, Federal Republic of Germany, Finland, France, Ghana, Greece, Haiti, Jordan, Israel, Laos, Luxembourg, Monaco, Netherlands, Norway, Pakistan, Philippines, Spain, Sweden, Switzerland, Thailand, United Kingdom, Viet Nam, Yugoslavia.
Persons - Denmark, Israel, Norway.
Maintenance - Ceylon, China, Czechoslovakia, Denmark, Federal Republic of Germany, Guatemala, Haiti, Hungary, Israel, Italy, Morocco, Norway, Pakistan, Sweden, Yugoslavia.
s asked the Minister for External Affairs, upon notice -
– The answers to the honorable member’s questions are as follows: -
Customs and Excise under the Customs (Prohibition Exports) Regulations. The Minister for External Affairs is responsible for policy aspects.
Df these lists was explained by the Minister for Trade in reply to a question upon notice by the honorable member for Yarra on 23rd September, 1959.
Cite as: Australia, House of Representatives, Debates, 24 November 1959, viewed 22 October 2017, <http://historichansard.net/hofreps/1959/19591124_reps_23_hor25/>.