23rd Parliament · 3rd Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
Mr. J. R. FRASER presented a petition from certain citizens of the Australian Capital Territory praying that the Government will take immediate action to defer the implementation of rental increases of government-owned dwellings in Canberra and conduct an inquiry into Canberra rentals at which evidence may be taken both from individuals and from community organizations.
– My question is directed to the Treasurer. Has the attention of the right honourable gentleman been directed to the remarks of the Victorian Liberal Minister for Housing, Mr. Petty, that he was sick and tired of being presented with statistics designed to prove that Australian housing requirements were being catered for adequately, and that he wished some of the people who used such statistics would come down from their ivory castles and learn at first hand of the hardship and heartbreak being experienced by home-seekers? Were Mr. Petty’s views taken into consideration when Cabinet recently discussed the present housing position?
– All that I have learnt of Mr. Petty’s views on this matter apparently has come from the same press report as that referred to me by the honorable member. I am quite certain that a full account of what Mr. Petty said would give a rather more balanced and temperate version of the views that he and his colleagues in the Victorian Government hold on this matter. In point of fact, the statistics reveal that Victoria last year experienced the sharpest rise in building activity. I think it is correct to say that at one point there were eight vacancies for skilled building tradesmen for every skilled tradesman offering for employment in his trade. Some of the pressure of demand on resources and labour was necessarily reduced in that section of industry.
The Government has recently completed an examination of the economy as a whole, and the housing situation was closely examined by us. Of course, I have known of Mr. Petty’s views generally, but we considered a variety of aspects of this matter. As a result of that review, it was decided that some stimulus to the housing activity should be achieved in the near future. Departmental officers are currently examining how this may be done in a practical and prompt way.
– Has the attention of the Treasurer been directed to a report by the New South Wales Commissioner for Main Roads concerning the limitation on the use of Commonwealth aid road funds? Does he realize that New South Wales has the highest percentage of main roads of any State and that because of the necessity to spend 40 per cent, of Commonwealth funds on country roads an extraordinary position has been reached in at least 50 cases in which bitumen country roads meet main highways of gravel, which will not be completely sealed for at least another 25 years? Does he feel that this position calls for a review of the percentage of funds that has to be used on country roads, or could New South Wales review its classification of main roads?
– I am not aware of the details of the observations of the New South Wales Commissioner for Main Roads. The arrangement under which 40 per cent, of Commonwealth aid road funds is to be applied to rural roads was reached by agreement with the various State governments when this matter was last reviewed - I think in 1959, but certainly in the life of this Parliament. If there is a feel in: amongst the representatives of the State governments that that percentage should be reviewed because of problems which have developed due to some lack of balance between expenditure on metropolitan roads or main roads and on rural roads, I am sure that the Government would be willing to consider any views that the States may hold on this matter. To the best of my knowledge, however, no State
Premier, so far, has brought that question to our notice. If any Premier has done so, the matter could be usefully reviewed either at the next Premiers’ Conference or at the next meeting of the Australian Loan Council later this year.
– Has the Prime Minister any information that he can convey to the House concerning the present troubled position in Laos, particularly in regard to the possibility that the rival parties in that country are willing to negotiate a cease-fire agreement at an early date?
– We are, in common with the honorable member and, I think, with all other people, anxious to see a cease fire in Laos. The latest information that I have does not disclose that a meeting to arrange a cease fire has yet been effected. That is not the responsibility, I may say, of anybody but the leader of the Pathet Lao. There may be some difficulty with communication. We still hope that there will be a cease fire because that is the precondition of a civilized settlement. What will happen if the cease fire does not eventuate is obviously a matter of immense delicacy. We have had a great deal of discussion about it ourselves and we are in constant communication with governments elsewhere. For obvious reasons, it would not be appropriate to say anything about that at this stage.
– Can the Minister for Trade say when it is proposed to release the Tariff Board’s report on the vegetable oils inquiry which was commenced in January, 1960? The delay in releasing the report is a matter of concern for linseed and safflower growers as any further delay could have a serious effect on plantings in the forthcoming season.
– I am aware, from representations of the honorable member and other honorable members, that there is an urgency about this matter. The report on it is complex and has taken a great deal of study. I am now, happily, in a position to advise the honorable member that the Tariff Board report and the accompany ing decision of the Government will be tabled in the House next week.
– Is the Treasurer aware that it is reported that in the week ended 26th April our overseas reserves increased by £9,800,000, of which £5,000,000 was an instalment of an overseas loan raised in January last? As the right honorable gentleman has asserted that overseas investment funds are coming to Australia in greater amounts than, previously, and as in 1958-59 they came in at the rate of over £2,000,000 a week-
– Order! The honorable member ought to ask his question. He is now giving information to the Treasurer.
– Will the right honorable gentleman inform me of the extent to which our overseas funds are being replenished by overseas investments? Are both overseas loans and overseas investment moneys liabilities upon the future production of this country, and therefore cannot be considered as making permanent improvements to our balance-of-payments position?
– Overseas loans and overseas investment do, of course, create some obligations. In the case of overseas loans, there are obligations in relation to the final repayment of the principal amount and the payment of interest. In the case of overseas investment here, if the investment is successful - as, fortunately, most overseas investment in Australia has been in recent years - there is involved in some cases the payment of dividends and in some instances the remission of capital payments. However, we generally find that overseas investors, once they are established here, invest in Australia a good deal of their profits, by way of expansion of their undertakings. Overseas investment has been a great source of strength to Australia, particularly in the post-war period. The Government has watched this process quite closely, because we certainly do not want it to reach unmanageable or undesirable proportions. The cost of servicing our obligations, as a proportion of our export income, is now only a fraction of what it was in the 1930’s. It is of quite comfortable dimensions at the present time. The degree of influence of overseas investment on the Australian economy is so small as to be of no great consequence to us. Indeed, 90 per cent, of the investment in Australia is still investment from Australian sources. The purpose of the honorable gentleman’s question is not entirely clear to me. In fact, the attitude of the Labour Party on this matter is not clear to me because while criticisms come from the Leader of the Opposition and others with him, the Treasurer of the Labour Government of New South Wales is currently overseas trying to arouse interest among overseas investors in investment in the State of New South Wales.
– My question is directed to the Postmaster-General. In view of the great opportunity for television to educate, as well as amuse and debase, what plans has the Postal Department to use this medium in order to pass on improved farming techniques to farmers, as is done in the United Kingdom, where first-class farmers’ educational sessions are in operation?
– 1 agree with the implication of the question asked by the honorable member for Wakefield that the medium of television offers a very great opportunity for education in various fields, particularly in the passing on to rural industries of the latest developments in the agricultural techniques. I would say that television offers very great prospects in the field of general education. For some time, the Australian Broadcasting Commission and the education authorities have been holding discussions in order to see how these possibilities can best be exploited. I suggest to the honorable member for Wakefield that the appreciation by the commission of the value which this medium of television may have in rural matters can best be assessed by reference to the service which the commission has given in the field of agricultural development and rural instruction by means of radio broadcasts. I think the honorable member will agree with me that the commission has already rendered great service to rural people by means of the various programmes which it makes available over the radio to the rural community. The commission, having established that it realizes fully the value of radio broadcasting in this field, will, I am sure, continue its policy through the medium of television. I conclude by saying that the development of television services in country areas which is now being undertaken will enable the Australian Broadcasting Commission to maintain this policy and to extend its application.
– 1 ask the PostmasterGeneral a question, which I preface by stating that during parliamentary sessions, usually in the company of the honorable member for St. George and the honorable member for Lyne, I catch the train scheduled to depart from Yass Junction for Sydney at 1.33 a.m. on Fridays. If the train happens to be running late, these honorable members and I assist the guard to load air mail letters on to the train in order to make up time. I ask the Minister: Is it a fact that the practice of sending first-class mail by train is not in keeping with the promise given when postal charges were increased some time ago?
– The undertaking given some time ago that all first-class mail would be sent by air mail included a qualification that that practice would be followed when, obviously, it would provide a faster means of delivery than would carriage of the mail train. There are times when carriage by rail gives a faster service than carriage by air, and I think that in the case mentioned by the honorable member for Watson this qualification would apply. I appreciate very much indeed the honorable member’s advice that he and others have been prepared to assist the PostmasterGeneral’s Department in the loading of mail on to the train mentioned. I am sure that this arises from a desire by the honorable member for Watson to assist our communications rather than from any thought that he might himself obtain any advantage.
I advised the House some time ago that we were making very careful investigations into the time taken to deliver air mail in order to see how the present methods were working out. I have not yet received the final report on those investigations, but I expect to have it soon and I shall let the House know the contents as soon as possible. We are constantly watching the development of this new service in order to ensure that the objectives which the department set out to achieve are in fact being achieved.
– My question, which, also, is addressed to the Postmaster-General, is in a sense supplementary to that asked by the honorable member for Wakefield. As experiments are taking place in the United States of America in the use of stratovision television for educational purposes, I ask the Minister: What technical advances have been made in Australia in this regard, and is the use of this educational medium contemplated? Reports indicate that a DC6 aircraft circling at 23,000 feet would enable an educational programme to cover an area with a diameter of 300 miles, and I should think that Australia would be an early user of this system.
– The honorable member’s question relates to a new development in communications - the possibility of using the stratosphere for improving communications. The department is well aware of experiments in the United States of America and is keeping abreast of developments. These experiments involve the use of balloons and other means to improve telecommunication services throughout the world, for educational purposes as well as general purposes. Recently in Sydney an eminent United States engineer, Dr. Kompfner, gave an address on developments in the use of these means by the Bell Telephone organization. I assure the honorable member for Balaclava that we are in very close touch with these developments and, although we are not in a position at present to expend a great deal of money ourselves on experiments, as soon as it is possible to use the results of these developments - they are still in the embryonic stage - I have no doubt that the Post Office will do so.
– I should like to ask the Treasurer a question. Is the Government determined to put small timber mills out of existence by its credit squeeze? In Victoria,
New South Wales and Tasmania, nearly 70 mills have closed altogether. By insisting, that credit will not be released to bring home building to the high level of last year, is the Government just as determined to see that these saw-mills do not start again?
– The honorable gentleman appears to me to be quite wilfully misrepresenting the attitude of the Government. In the first place, it has not been the intention of the Government to put small saw-mills out of business, nor has it been the intention of the Government to deny credit for housing purposes. Indeed, at the outset, I advised the Governor of the Reserve Bank, and he in turn issued a directive, that a social service such as housing was not to be regarded as one of the fields in which credit should be restricted at the present time. In addition to what the trading banks may be disposed to do, we as a government have taken action to assist the savings banks - the State savings banks as well as the Commonwealth Savings Bank - to increase their rate of lending over the present and future months.
As the House was earlier informed, the Government has quite recently had before it this whole question of housing and its relationship to the timber industry. It is quite obvious from factors inside the timber industry that there are aspects which are not directly related to the Government’s recent credit policies and that the industry has a process of adjustment to go through. To the extent that we can assist by ensuring that an adequate level of home construction is maintained throughout the Commonwealth, our efforts will be directed to that end.
– My question is addressed to the Treasurer. Is it a fact that the present hire-purchase terms available to the people of Australia are playing a big part in the over-expansion of many industries, creating a misleading balance between supply and demand and in addition encouraging individuals to incur debts that are too heavy a burden upon their financial resources? Will the Treasurer consider calling a special meeting of State Premiers to ask them to introduce Australia-wide uniformity at least for minimum deposits and maximum repayment terms for articles purchased under hire-purchase agreements? Alternatively, is it possible for the Commonwealth Government to introduce measures which would achieve this object?
– Hire purchase, of course, plays a valuable and important part in the economy of this country. However, owing to the rather excessive level of expansion in hire-purchase activities over recent years, we felt it necessary in our November measures to moderate that expansion to some degree and the level of total lending on hire purchase has shown some reduction over recent months. As to the constitutional position, power over hire purchase, except in Commonwealth Territories, is vested in the States. I think honorable members are aware that in recent years there have been some conferences between State government representatives and representatives of the Commonwealth Government at which endeavours have been made to secure greater uniformity of treatment of such hire-purchase matters as those referred to by the honorable member. I understand that some progress was made at those talks, but I am not in a position to advise him in more detail at the moment.
– I preface a question to the Minister for Defence by stating that some time ago I asked the Minister for particulars of the proposed sale of Cockatoo Dockyard to the overseas firm that now has a lease of that dockyard. I understand that the lease will soon expire. The Minister did promise to make a statement on the matter. I now ask him whether he is ready to explain to honorable members why this dockyard is being sold; or whether he is waiting until Parliament goes into recess before releasing these particulars so that he may escape criticism for his action.
– The learned honorable member for Kingsford-Smith has once again raised something which is in the nature of a scare. There is no possibility of Cockatoo Dockyard being sold at the present time. At this stage, there is no proposition whatever before the Government for anything other than the lease held by the Cockatoo Dock and Engineering Company, which does not expire until 1974.
The other question which the honorable member asked should properly have gone to the Minister for the Navy, who has told me that at present the Cockatoo Dock and Engineering Company is fitting out H.M.A.S. “ Parramatta “, which is due to be completed in July, 1961, and H.M.A.S. “ Stuart “, due to be completed in January, 1963. It is also refitting the submarine H.M.S. “Tabard”, and that work is due to be completed in January, 1962. He also informs me that the submarine refitting programme provides for one submarine of the 4th Submarine Division to refit at Cockatoo Dockyard each year. On completion of work on H.M.S. “ Tabard “, it is expected that a second submarine will be under refit until approximately January, 1963, and that a third will then follow. In addition to work undertaken for the Navy, the Cockatoo Dock and Engineering Company also carries out commercial work
– I ask the Acting Attorney* General whether he is in a position to inform the House when an appointment of a Justice to the Supreme Court of the Northern Territory is likely to be made. Is difficulty being experienced in obtaining a suitable occupant for the position? Does he believe that the existing arrangement is in the public interest and is satisfactory to litigants?
– I am sorry to have to state that, due to quite unavoidable circumstances, the Acting Justice of the Supreme Court of the Northern Territory has had to return to Melbourne and will not be able to go back to the Northern Territory. As soon as the Northern Territory Supreme Court Bill, which was passed by this House recently, becomes law, an additional judge will be appointed for a temporary period and the Crown Law officers will take action with a view to recommending to the Government that a regular appointment to the Supreme Court of the Northern Territory be made.
– My question is directed to the Treasurer. Is it a fact that in order to obtain the recent loans of £78,000,000 and £45,000,000 from the International Monetary Fund it has been necessary for the Australian Government to undertake to apply an economic policy of a very restrictive type in Australia in order to safeguard the balance of payments? If this is so, does it not mean that the credit squeeze and the wage freeze policies which are doing so much harm to Australia will have to continue, whether the Government likes it or not, in the interests of these overseas banking interests?
– I can assure the honorable gentleman that the Government has not accepted any obligations which in the judgment of this Government it would not be entirely necessary and desirable to pursue in the interests of Australia. I shall be glad to see what information I can provide for honorable members to allay their concern in this matter.
– I ask the Minister for Primary Industry: In view of the fact that the wool market is subject to fluctuations, thereby creating confusion among the growers and throughout the industry generally, will he arrange with his department to make available to those people who are interested a monthly statement showing the average monthly prices compared with those of the previous wool-selling season, somewhat similar to the statements put out by the various wool-selling firms and the Australian Wool-growers and Graziers Council?
– The National Council of Wool Selling Brokers issues a monthly statement of the average sales of greasy wool, and the statistical service of the Australian Wool Bureau issues a weekly statement on the clean-scoured basis. Both of these statements of averages are freely available. I do not know that my department could add to that service; and in any case we would probably have to depend upon the brokers for the information upon which averages would be worked out. However, I will look at the honorable member’s question in order to see whether there is anything further I can do for him.
– My question is addressed to the Prime Minister. Was he completely satisfied with the conduct and questions of the members of the panel which interviewed him on television last Sunday night? Did each member of the panel show sufficient respect and deference? Did he notice that one of his questioners appeared to have a sneer on his face when asking questions? If so, will this unworthy individual be debarred from any future interviewing panel? Finally, was a list of questions submitted to the Prime Minister prior to the interview?
– I am grateful to the honorable member for his natural solicitude on my behalf. As he knows, if he has appeared on television, no list of questions was produced; that is one of the rules of the game. The questioners have it all typed out, but the questionee does not have a clue as to what it is all about until the question comes. That has always applied in my case. I thought that the questioners set a high example of courtesy to some others I know of.
– I ask the Minister for Primary Industry: In view of the fact that the Wool Committee of Inquiry has now been operating for some time, can he say whether it is yet possible to determine when it will complete its deliberations?
– The honorable member has asked for a forecast that I would not undertake to give at this juncture because the committee is proceeding overseas to make certain investigations and, upon its return, will complete hearings in the States which it has not yet visited. To date it has visited Sydney and Melbourne, and this week is in Brisbane. It intends to visit the other States in turn, but that will be after the committee’s return from overseas.
– My question to the Acting Attorney-General is supplementary to that which was asked by the honorable member for Warringah about the appointment of a permanent judge to the
Northern Territory Supreme Court, ls il a fact that although Mr. Acting Justice Dunn dealt with a considerable number of criminal matters he had to leave the civil list virtually untouched? In view of the fact that a permanent appointment is urgent, and in view of the apparently unsuccessful attempts that have been made to fill the vacancy, will the Minister consider appointing an officer of the Crown Law Department? I am sure that many such officers could fill the position with credit and distinction.
– 1 am unable to inform the honorable gentleman what the position is regarding the civil list, but I shall obtain the information and let him have it. I think it is out of the question to appoint an officer of the Crown Law department, but I assure the honorable gentleman that an acting justice will be appointed as soon as this is practicable, and shortly after that a permanent judge will be appointed to the position.
– Can the Minister for Health state when the report of the committee which inquired into the control and eradication of cattle tick in New South Wales will be released? As the report was presented some time ago to both the Commonwealth and State governments, can the Minister state the reason for the delay in releasing it to the public, as people who are employed by the Tick Control Board, and farmers who may be affected by an alteration of the present policy, are concerned?
– I must explain to the honorable gentleman that for several years the Commonwealth Government, in conjunction with the Government of New South Wales, has been spending very large sums of money in an attempt to eradicate the tick infestation in that State. Some time ago both governments reviewed the position and set up a committee to report on the matter. The report, which was subsequently submitted to the Cattle Tick Control Commission, was to the effect that at present our efforts should be concentrated on control rather than eradication. Thereupon the Commonwealth Government notified the New South Wales Government that it would complete the present year’s eradication programme, in accordance with the recommendation of the committee. We stated the amount of money that would be available next year, and pointed out that it would be desirable to review the problem in eighteen months in the light of further scientific investigation.
The committee’s report was addressed to both governments. When the report was received, and when these decisions were made by the Commonwealth Government, J issued a press statement which had the endorsement of the New South Wales Government. In fact, the Minister for Agriculture in New South Wales specifically asked me to incorporate in the statement the fact that the Commonwealth Government’s course of action was approved by the State Government.
I would not feel at liberty to make the report public until I had the consent of the New South Wales Government, which jointly set up the committee with the Commonwealth Government, and which jointly received the report. When the New South Wales Government has decided upon its future action, and when it agrees to the release of the report, I shall then make it public.
– I address a question to the Treasurer. A few minutes ago, in answer to a question by the honorable member for Yarra, the right honorable gentleman implied that Australia had given some undertakings to the International Monetary Fund with regard to the loan recently negotiated with the fund. What were those undertakings?
– When replying to the honorable member for Yarra I said that I would make available such information as I could. I think it is desirable that my statement should be sufficiently precise to afford the Parliament specific information, and I do not consider it desirable to attempt to give such information out of my head in answer to questions without notice.
– Will you give us the information before the House rises?
– I will certainly try to do so.
– My question, which is addressed to the Minister for Primary Industry, is to some extent supplementary to the question asked by the honorable member for Barker. As certain persons interested in wool said, at the time the committee was established to inquire into the industry, that full evidence would not be taken by the committee, and as those persons are now saying that the inquiry is being held up because the large number of people wishing to give evidence are being allowed to do so, can the Minister suggest how he and the committee are going to please all?
– The committee is conducting an open inquiry. Any section of the community interested in the wool industry can present evidence. I think I can discount any suggestion that there has been a hold-up, because the committee is working assiduously and expeditiously. It is trying to meet the wishes of everybody, but, of course, it cannot please everybody.
– Can the Minister for the Interior say whether the vacant premises at Rathmines formerly used by the Royal Australian Air Force are now to be used to relieve the acute housing shortage in the surrounding districts? If they are not to be so used, what does the Government intend to do with them?
– 1 have not in mind exactly what the proposals are for the disposal of the Rathmines base, but I will undertake to find out and let the honorable member know.
– Is the Treasurer aware that the Annual Bulletin of Overseas Investment published by the department under his administration discloses that the new capital inflow from the United States of America in the period from 1953 to 1959 amounted to £61,000,000. while the outflow to that country was £83,000,000, giving an adverse balance for Australia of £22,000,000? Also, is he aware that during the same period United States of America investors in Australia were saved £20,000,000 by the double taxation agreement entered into by this Go vernment? If the right honorable gentleman is not aware of these facts, will he obtain the figures from his department and arrange for a review of the double taxation agreement between Australia and the United States of America, so that this country may obtain a better deal than it is getting at present?
– I am afraid I have not followed the honorable member’s question in all its detail. In fact, I am not quite clear on the point that the honorable gentleman is seeking to establish.
– Do you want me to cite the figures again?
– I think it might save the time of the House if the honorable member were to put his question on the notice-paper.
– I address a question to the Treasurer. When the Budget is being prepared, will the right honorable gentleman give further earnest consideration to the abolition of sales tax on all foodstuffs containing dried vine fruits? The driedfruits industry is not subsidized, nor is it in any way stabilized, and I ask the Treasurer to consider this suggestion favorably.
– The honorable member is aware, no doubt, that the dried fruits to which he refers represent important ingredients in the manufacture of quite a number of commodities which are subject to sales tax. Cakes and buns are two notable examples of the kind of products to which I refer. For this reason, the adoption of the honorable member’s suggestion would have a considerable impact upon the revenue. I can assure him, however, that what he has put forward will not be overlooked. The honorable gentleman can be assured that the powerful representations he has made, with his persuasive advocacy, in the interests of this important industry will be fully weighed.
Messages from the Administrator reported transmitting (a) Additional Estimates of
Expenditure for the year ending 30th June, 1961; and (b) Additional Estimates of Expenditure for Additions, New Works and Other Services involving capital expenditure for the year ending 30th June, 1961, and recommending appropriations accordingly.
Ordered to be referred to the Committee of Supply forthwith.
Motions (by Mr. Harold Holt) agreed to -
That there be granted to Her Majesty an additional sum not exceeding £57,143,000 for the services of the year 1960-61, viz.: -
Part 1. - Departments and Services - Other than Business Undertakings and Territories of the Commonwealth.
Part 3. - Territories of the Commonwealth.
That there be granted to Her Majesty an additional sum not exceeding £2,953,000 for the services of the year 1960-61 for additions, new works and other services involving capital expenditure, viz.: -
Part 1. - Departments and Services - Other Than Business Undertakings and Territories of the Commonwealth.
Part 3. - Territories of the Commonwealth.
Standing Orders suspended: resolutions adopted.
Resolutions of Ways and Means, founded on resolutions of Supply, reported and adopted.
That Mr. Harold Holt and Mr. Osborne do prepare and bring in bills to carry out the foregoing resolutions.
Bill presented by Mr. Harold Holt, and read a first time.
– f move -
That the bill be now read a second time.
The purpose of this bill and of the associated Appropriation (Works and Services) Bill is to obtain parliamentary authority for certain expenditure for which provision was not made in the 1960-61 Estimates. The various items contained in the Additional Estimates can be considered in detail in committee and I propose at this time to refer only to some of the major provisions. Some re-allocation has been made within the total defence appropriation of £198,153,000, with consequential increases and decreases in individual votes. The increases result in additional appropriations being sought for £4,415,000.
Provision is made for additional expenditure of £2,400,000 on departmental and miscellaneous items. Savings on other items, however, are expected to limit net additional expenditure to about £800.000. Included in the provision is an amount of £269,038 for cattle tick eradication and control in New South Wales; grants towards the building of homes for the aged, £300.000; Commonwealth scholarship scheme. £144.000; a contribution towards the cost of the United Nations force in the Congo, £193,644; a contribution to the United Nations Fund for the Congo. £334.932; and a supplementary grant for the running expenses of the Australian National University, £262,800. The sum of £743.048 is provided for remission of duty under special circumstances. This refers almost entirely to duty remitted under a co-operative Australia-United States agreement for the establishment and operation in Australia of facilities for space vehicle tracking and communications.
An amount of £612,460 is sought for repatriation services, including £343,000 for medical treatment. Under Business Under takings, it is necessary to seek additional appropriations of £2,030,000 for the PostmasterGeneral’s Department, but the increase in overall Post Office expenditure is not expected to exceed the Budget provision by more than £1,200,000. The major item in the increase is increased payments for the carriage of overseas mail. The additional £166,000 sought for Commonwealth Railways mainly results from increased traffic and will be balanced by higher revenue. The Australian Broadcasting Commission needs of £115,000 are mainly to meet salary increases.
The amount sought for the Territories is £593,000, comprising Northern Territory £305.860, Australian Capital Territory £138,990, Papua and New Guinea £146,300 and other Territories £1,850. There will be compensating savings totalling £265,000.
When the Budget was prepared, it was estimated that receipts of the Consolidated Revenue Fund would exceed expenditures from that fund by £125,700,000. Accordingly, provision was made in the Appropriation Act for the payment of this amount to the Loan Consolidation and Investment Reserve, whence it would be available to supplement loan proceeds available for State works and housing programmes and to finance other Commonwealth commitments.
At this stage, it appears likely that receipts of the Consolidated Revenue Fund could exceed expenditures from the fund by more than the £125,700.000 originally estimated. An additional appropriation is therefore sought for payment to the Loan Consolidation and Investment Reserve of an amount up to £40,000.000 over and above the £125,700,000 provided for in the Budget. There are still many elements of uncertainty as to the outcome of Consolidated Revenue Fund transactions for the year and this additional authority should be sufficient to meet all contingencies. It would provide against the most favorable outcome of Consolidated Revenue Fund transactions which could at present be envisaged but should not be taken as meaning that an improvement of this magnitude is expected. I must add that, so far as the overall Budget result for the year is concerned, any improvement on Consolidated Revenue Fund operations might well be offset by increased requirements for commitments outside the Consolidated Revenue Fund.
Debate (on motion by Mr. Crean) adjourned.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the bill be now read a second time.
The purpose of this bill is to obtain parliamentary authority for additional expenditure in 1960-61 on certain items of Capital Works and Services. Additional appropriations totalling £2,955,000 are sought. However, as a result of savings on other items it is expected that the total expenditure on Capital Works and Services will not exceed the Budget estimate of £139,921.000.
An additional sum of £1,680,000 is sought for the additional capital requirements of Qantas Empire Airways Limited and Trans-Australia Airlines. For the former, £1,650,000 is provided, and for the latter, £30,000. In the case of Qantas, the funds are needed to enable agreed progress payments to be made against the purchase of three new Boeing 707-1 38b aircraft and the conversion of the existing fleet of seven Boeings to turbofan operation. This project, which is costing more than £18,000,000, was approved early in 1960 on the basis that some 75 per cent. would be covered by a dollar loan, as has been the case with other recent purchases of aircraft by Qantas.
Subsequently, a loan of 30,000,000 dollars was arranged through the United States Export-Import Bank. The terms of this loan, which were approved by the Loan (Qantas Empire Airways Limited) Act 1960, assented to on 9th December, 1960, include a provision requiring the borrower to meet the first 20 per cent. of all expenditure on the project. Although this requirement was known at the time of the 1960-61 Budget, precise details were not then available of the incidence of payments during 1960-61 to the many suppliers involved, or of the extent to which the loan moneys would be drawn by 30th June, 1961. On such information as was available it was anticipated that other resources accessible to Qantas, including local loans, would be sufficient to cover the temporary lag in loan drawings to the end of the year. However, later information showed that the lag would be somewhat larger than originally thought, and that other Qantas resources would fall considerably short of estimates. These two factors have combined to produce the requirement of extra funds of £1,650,000 as at 30th June, 1961.
It will be noted that £500,000 of the £1,650,000 is to be provided as an advance, which it is intended should be repaid during 1961-62, the balance of £1,150,000 being in the form of permanent capital for which shares will be issued.
– Does that mean that those shares will be issued to the public?
-I do not think so. I will check that. The provision of £1,100,000 in the 1960-61 Budget for Trans-Australia Airways, included £600,000 to allow payment to Qantas for its New Guinea assets transferred during the year to Trans-Australia Airways. This amount was insufficient by £100,000 to meet the subsequently agreed transfer figure, but it has now been ascertained that the domestic airline can meet a substantial part of this excess from its existing provision and that its need for extra funds reduces to £30,000, the amount now sought.
An amount of £393,000 is included for the Department of Civil Aviation mainly for further acquisitions of land for the development of the Tullamarine airport. A further £1 15,000 is sought for the Australian National University to make good fire damage in the Cockroft Building of the Research School of Physical Sciences and for additional equipment and furnishings. It has been found that, due to an increasing volume and higher cost of stores, an additional working advance is necessary for the operations of the Commonwealth Stores Suspense Trust Account and £120,000 is included for this purpose. For the Department of the Interior, £60,650 is included for the purchase of homes vacated by officers transferred from Melbourne to Canberra in the movement of the Defence Departments. An increase in the average number of migrants occupying migrant hostels has made it necessary for Commonwealth Hostels Limited to purchase additional furniture and equipment, and £53,000 is included for this purpose.
Under the heading Business Undertakings, an amount of £135,000 is sought for miscellaneous plant and equipment for the PostmasterGeneral’s Department. This results from an adjustment of the Post Office works programme and will be offset by equivalent savings in the other items of the Post Office capital works vote.
The sum of £35,000 is included under “ Broadcasting and Television Services “ for buildings, works, fittings and furniture for television transmission, arising from the Government’s decision to extend television to provincial and country areas.
A better rate of progress on the construction of water supplies, roads and stock routes in the Northern Territory results in an additional provision being sought of £69,000.
As a result of the decision of the Government to form a company to operate the Canberra brickworks, a working capital advance of £65,000 is sought for Canberra Brickworks (Canberra) Limited. The previous operations of the brickworks were financed through the Australian Capital Territory Brickworks Trust Account. I commend the bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Messages recommending appropriation reported.
Motions (by Mr. Harold Holt) agreed to -
That there be granted to Her Majesty a sura not exceeding £275,970,000 for or towards the services of the year 1961-62.
Supply (Works and Services).
That there be granted to Her Majesty a sum not exceeding £54,988,000 for or towards the services of the year 1961-62, for Additions, New Works and other Services involving Capital Expenditure.
Standing Orders suspended; resolutions adopted.
Resolutions of Ways and Means, founded on resolutions of Supply, reported and adopted.
That Mr. Harold Holt and Mr. Opperman do prepare and bring in bills to carry out the foregoing resolutions.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the bill be now read a second time.
The purpose of this bill is to appropriate £275,970,000 to carry on the necessary normal services of government, other than capital works and services, during the first five months of the financial year 1961-62. These are services placed before the Parliament in the Appropriation Acts 1960-61. The several amounts provided for ordinary services are -
With minor exceptions these amounts represent approximately five-twelfths of the 1960-61 appropriations. The amount of £83,530,000 for Defence Services provides for expenditure on the existing programme and the amount of £41,885,000 for War and Repatriation Services provides for expenditure on war pensions and repatriation and rehabilitation services. There is no provision for new services except in the defence section. However, an amount of £16,000,000 is sought for an advance to the Treasurer to make advances which will be recovered within the financial year, and to make moneys available to meet expenditure particulars of which will afterwards be submitted to the Parliament.
Honorable members will observe that the bill no longer makes separate provision for miscellaneous services. It has been decided to adopt the recommendation made in the 49th report of the Joint Committee of Public Accounts and, with the commencement of the new financial year on 1st July next expenditures previously shown under the heading of miscellaneous services will be presented with the administrative expenditure of the departments concerned. Within each department’s expenditures the distinction between annual running costs and those special payments which arise from its responsibilities will be continued. I believe that the new form will represent a clearer presentation of the relevant part of the Estimates and that it will assist the Parliamentary examination of the annual appropriation measures. I commend the bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Bill presented by Mr. Harold Holt, and read a first time.
– I move -
That the bill be now read a second time.
The purpose of this bill is to appropriate £54,988,000 to carry on the necessary normal capital works and services of government for the first five months of the financial year 1961-62. This will enable Commonwealth works to be continued until the 1961-62 Budget has been considered by the Parliament. The bill will provide funds for Commonwealth works in progress at 30th June, 1961. In addition, it is the practice to programme the capital works and services in the major Commonwealth departments, including the Department of Works, the Postmaster-General’s Department and the Department of Civil Aviation. The appropriation will provide funds to ensure the orderly continuation of those programmes of work and to continue daytoday puarchases of minor plant and equipment.
Debate (on motion by Mr. Crean) adjourned.
Debate resumed from 27th April (vide page 1246), on motion by Mr. Harold Holt-
That the bill be now read a second time.
.- Mr. Speaker, when this bill was last discussed, the honorable member for Bradfield (Mr. Turner) made no bones about the fact that he opposed the Government’s thinking in relation to this measure. He said, if I recall his words correctly and if 1 may quote him without quoting verbatim, that what the honorable member for Reid (Mr. Uren) had said ought to be remembered - that this was a point at which socialism could make an entry into the plannings of the Liberal Party of Australia. I beg to remind the honorable member for Bradfield and the House that the point at which socialism could make such an entry has long since been passed. As a matter of fact, were it not for the socialist moves that the present Government makes, it would not be able to stagger along at the present time. We see another instance of its staggering in this measure. After chopping and changing and deciding on one thing after another, the Government has at last brought in its measure to deal with the investment of moneys by insurance companies and superannuation funds, and the magic 30/20 per cent, formula comes up. It is neither so savage nor so predatory as had been expected. We on this side of the House approve it because, as the honorable member for Melbourne Ports (Mr. Crean) has said, it provides some sort of a method by which these matters can be adjusted.
The Government, by this measure, places itself in an extremely invidious position. That position is hypocritical as well, as has been pointed out by the honorable member for Bradfield. On the one hand, this Government is never done with denouncing socialism but, like the secret drinker, it does not mind having a swig from the bottle when the going gets tough. And for this Government the going has got very tough indeed, particularly in matters of investment. So we have a tiny little dose of controls - just a wee deoch and doris before we gang awa’. And this Government will certainly gang awa’ in November or December of this year, or perhaps in March of next year. I say to all Caesars of finance who are concerned about this measure: “ Remember what Shakespeare had to say, Beware the Ides of March ‘ “.
The Government goes on with its proposals in relation to this matter, and so before us we have a curious melange of force and persuasion aimed at the insurance companies. The introduction of this measure represents an eleventh-hour attempt to restore the popularity of government stocks and bonds as an investment. This measure represents an attempt to bring the investment companies, including insurance companies, into line and to get the people, by example, back to gilt-edged investment. That is quite a reasonable thing to do, but it is not attempted very courageously in this bill so far as we on the Opposition side of the House can see. To change the metaphor, the Government has not the moral guts to grasp the nettle firmly.
This measure and its implications were explained to the House by the honorable member for Melbourne Ports with what seemed to me to be flawless logic in an impeccable argument which was stated in one of the best speeches on economics that we have heard in this House. The honorable member must have been listened to with avid interest by the honorable member for Bradfield - a Government supporter - w’ho, at a later stage, as I said in my opening remarks, smote the Government hip and thigh for what he called its incursions into socialism. His speech is there in “ Hansard “ for us all to read. He made it clear that he did not agree with the Government. He did not agree with talented amateurs like the Treasurer (Mr. Harold Holt) trying to teach the Australian Labour Party how to implement a section of its own policy. He agreed with the Labour Party - at least by implication - that the Treasurer’s formula contained in this bill was too little too late. Because of the troubles about us in every aspect of the economy, the Government’s contribution to the solution of our problems in terms of this measure which we are now discussing is pathetic. It does not solve the big problem.
Labour’s policy on insurance, with particular reference to the question of how much insurance money goes into investment - government and other investment - was declared by the late Mr. Chifley when he introduced the Life Insurance Bill 1945. We have watched this policy very carefully, because it is ancillary to banking policy, and there are very cogent reasons why it should be watched. This policy has been supplemented from time to time by decisions of the federal conference of the Australian Labour Party and decisions of our Economic Planning Council, which is in almost continuous session.
Labour’s point with respect to this measure is clear, and we are able to advise the Government as to how far it has fallen short of what should be done. The point that we make here is that this trifling bill does not get to the heart of the insurance and superannuation problem. Many millions of pound’s worth of investment funds - the amount is increasing yearly - are floating about the country and making some very peculiar landings indeed, to say the least of it. When wrongly invested, these funds add to inflation. The Treasurer tries to mend the leak in the pipeline of government investment by plugging the hole with soap - soft soap. As a result, he is being criticized by his own side; he has disturbed the insurance companies and he is getting ironic cheers from members of the Australian Labour Party. We say to him: “You do not know how to handle this matter. You ought to turn it over to us. If you do, we shall show you how it ought to be dealt with.” And our time will come.
– I do not forecast the date, but our time will assuredly come.
I return now to the Treasurer. When he is not whipping out his magic formula, he threatens the insurance companies or cajoles them or bribes them with tax rebates and a lot of hyperbole about insurance generally. As I have already said, we believe that this- measure leaves the problem unsolved. The Government’s policy is weak. This bill, the purpose of which, technically, is to amend the Income Tax and Social Services Contribution Assessment Act, has a wider scope because it extends to insurance and permits the discussion of that matter. But the bill leaves the big question of investment still in the dark and still not properly declared. What are the reasons for this lack of investment in government securities? Figures have been given and we have had poured on our defenceless heads statistics about the amounts that used to be put into government securities and bonds and the like. Statistics have been used to show that, despite increased earnings and greater capital gains, money is no longer being invested in government securities.
The Opposition’s point is that, under this Government’s weak policy, the insurance companies have been able to do very much as they like. The fringe organizations which are fed by them and by the trading banks do not come under the control of the Reserve Bank of Australia or under the provisions of the Banking Act. I think that there is a great need for some form of control over the insurance companies throughout Australia. Indeed, by their actions, they are crying out for some sort of control to-day. Of course, anybody who is interested in what I am saying, or who reads my speech in “ Hansard “ later, may say, “ Would the Australian Labour Party resort to nationalization? “ We know what happened to the Chifley Government’s banking legislation, of course, and we know that there is a parallel here between the insurance companies and the banks; so we do not speak in terms of nationalization. But we do think that control by competition is a very good thing.
I shall tell honorable members why this has much relevance to the issue now before us. Surely every reasonable Australian will agree that there is plenty of room for reform in the insurance field. I believe that the Australian nation should have its own federal insurance authority. Circumstances are literally crying out for such an authority. T believe that we should compete with the private insurance companies for life, fire, marine, accident and other insurance. And we should plough the profits back into the national economy. If we established an authority of the kind that I suggest, we would not have to go cap-in-hand to the insurance companies and ask them for a share in their investment portfolio. We would have earned that investment ourselves on behalf of the people and have made a contribution to the welfare of the national economy by balancing investments. We would have contributed to the investment portfolio, not of private business or of the insurance bloc or the banking bloc, but of the people’s government and thereby of the people themselves. If we had our own federal insurance authority, we would not. like Oliver Twist, be asking for another serving of investment porridge. We would be running the country instead of handing it over to the financial houses, the insurance bloc, the banking bloc, and the fringe banking bloc.
We have to do something about the situation, and the government of the day, especially, has to do something about it instead of faltering in its handling of the problem and seeming content to deal with it merely by proposing a trifling amendment of the Income Tax and Social Services Contribution Assessment Act and uttering a few pious platitudes in this House. The Government must face up to the problem as we face up to it. I believe also that we should have our own export insurance corporation to insure cargoes and so on and so save the millions of pounds we lose every year in the payment of invisibles. There is no more badgering problem, no more anxious problem for the Government, and no more newsworthy problem than the problem of the balance of payments. The barometer of the balance of payments goes up and down. I am no economist; I am merely a humble student. However, I can say that if we undertook our own insurance and the ancillaries that go with it we would be able to save many millions of pounds and we would keep the barometer steady by controlling its feverish activity. Much of our exporting and importing is done at set times of the year. If we undertook our own insurance, we would have money available to see us through the flat period and we would not be engaged in the futile activity of paying for invisibles, which wreck a common-sense and planned balance-of-payments scheme.
– There is a lovely new one now, called re-insurance.
– Yes. Here we go from strength to strength; it is insurance and reinsurance, which is like taking in other people’s washing. The suggestion 1 have made is one way of solving the badgering problem of balance of payments, which has the Government run ragged. We have not at any time heard anything in this House of any formula that the Government may have to effect some stability in this sphere for the sake of the nation.
Let us look at insurance broadly, because the bill does allow us to consider investments made by insurance companies and superannuation funds. As the honorable member for Melbourne Ports traversed this subject in his speech, I shall follow in his footsteps. The insurance companies today have to be examined in relation not only to their investments but to the whole operation of insurance. If we are to have a modern, intelligent economic plan for the whole of Australia, let us look at the insurance companies and how they operate. Their tariffs are the same, with the exception of some small, quite insignificant companies. The rates for life, fire, accident and other insurance covers are the same. There is no competition, except by State insurance companies.
Here is the tragedy for the Australian workers, in whom I am interested. The solid £1 put into life insurance policies years ago is now paid in inflated money and the policy-holders suffer. The rich insurance companies get richer by this device and the policy-holders get poorer. The citizen who tries to provide for his old age is robbed by inflation. As a result, the Government, milling around seeking some sort of surcease, introduced an amended means test, of which we approved. But these measures are only patches on the whole pattern of finance at the moment, and they should go deeper.
The capital gains of insurance companies, which were mentioned by the honorable member for Melbourne Ports and other honorable members, are not only enormous but notorious. Every second big building in Sydney is owned by an insurance company. These companies are building and so amassing assets from which they make capita] gains. One wonders at how far the Government is getting away from the reality of the situation. As the statistics given by the honorable members for Reid, Melbourne Ports and Blaxland (Mr.
There are many reputable and wellconducted insurance houses in Australia, particularly in the field of life insurance, but we should examine the lunatic fringe of insurance. Has this not been one of the causes of our troubles? The Government has not been game to touch the fringe financial institutions because they are the illegitimate offspring of banks, which openly used them as their stoolies to obtain higher interest rates, and of the insurance companies, which have made immense deposits with the trading banks. Between them the banks and the insurance companies control the activities of these so-called fringe organizations. What has been the result of this mad loss of trusteeship principle and sense and this flight from gilt-edged securities about which the Treasurer spoke? The gilt-edged market should be the field of investment for trustees, insurance companies and others who hold money in trust. The insurance companies, of course, must provide for life policies that are falling due. for payments on accident policies and so on. These are the commitments of insurance companies.
But what happens? We might ask ourselves a question, and it is a pretty valid question. What has happened to the stability of the business of insurance companies? What happened to the Standard Insurance Company Limited, which collapsed after 80 years of business? The life insurance side was sound because it was protected by forward-looking legislation introduced in the days of Chifley and the guarantees associated with it. But this company failed in the investment field. It went after big dividends, and the money thai could have gone into Commonwealth securities as the Government desires was invested by the company in lunatic adventures. The “ Delfino “ sheep ship was one such venture. One American alone raked in £70,000 for telling the company how to get a shipload of sheep to the United States. How completely stupid! The other activities of this company also failed. Other small groups that have been financed by insurance companies are also collapsing. That is why this bill, weak though it is, is long overdue. The headlines in the press tell the story.
The honorable member for Wide Bay, who is curiously named Bandidt and who is now interjecting, reminds me that I want to talk about the bandits of big business known as the fringe banking organizations. On the question of superannuation, there is another matter to be decided and a few questions to be asked. Why has the drift been away from the old trusteeship idea of putting money into gilt-edged securities and so discharging the obligation to workers whose insurance investments aggregate enormous funds? I asked a question some weeks ago about the very solidly founded and very financial Commonwealth Superannuation Fund. So far J have not been answered. I shall ask my question again. Why did the Commonwealth Superannuation Fund lend £1,000,000 to David Jones Limited at 8 per cent, while thousands of contributors to the fund were seeking money for homes? The contributors have a gnawing need for money for homes; yet £1,000,000 can be taken by the trustees of the fund and lent to a company in Sydney to build a workshop out in the western suburbs! I asked that question and I have not received an answer. As is common in the House, when a relevant question is asked of the Treasurer, honorable members are fobbed off with a little farrago of words. When the answer is examined, we find there is nothing in it. I want to know and the Australian Labour Party wants to know how a superannuation fund of the stability and strength of the Commonwealth Superannuation Fund was trapped into such a phony deal. We have had no answer, but when we get the answer people may be amazed at the circumstances it will reveal.
Wherever we go we find the same story. Small shypoo insurance companies, a number of which are operating in Sydney, are lending money for wildcat ventures and are wrecking the economy. They lend money at 18 per cent., 17 per cent, flat, or anything they like, and are pushing the economy downhill. These companies are formed because of the possibility of obtaining high interest rates on investments. I do not refer to life assurance offices, but to the little companies that are bankrupting themselves as did the Standard Insurance Company Limited in this mad race for money, while more sober business concerns cannot get a penny. The position to-day is such that repercussions are felt in the economy when anybody seeks to channel finance off to his own uses. Because of these things men fall out of work, and the ugly word “ depression “ comes marching grimly into our consciousness. You cannot describe it in any other way. In the meantime, there are before us indications that the Government has created its own problem by allowing the unrestricted growth of the fringe banking institutions which, as I have said, are the offshoots of banking and insurance, because their directorates are interlocked and their investments are interlocked. Everybody says, “ But, it is only this “, and, “ It is only that “. Do not believe it! Capitalism is a very big set-up and when these fringe banking organizations get going, they have the blessing of the capitalist system. The trading banks piously tell us over television that, “You can bank anywhere and you will get the same splendid service “. Perhaps you do, but what about these little brigands of the fringe banks begging in the street for every penny that comes along, and they make enormous profits which flow back to them. For instance, the time-payment system is owned by the banks and the insurance companies as are the companies that finance the purchase of motor cars. As the honorable member for Melbourne Ports (Mr. Crean) pointed out, that is where the Treasurer (Mr. Harold Holt) wants to look for the cause of the trouble.
One result of the credit squeeze is that finance, denied normal outlets, oozes out from unofficial and unethical sources while the real founts of money are dried up at their source. Trading and finance take a speculative trend, the Government loses money, loans are under-subscribed and the public cease to invest in government securities. Because of inflation, the members of the public, too, are chasing the mirage of high interest returns. Insurance companies that have money to invest have held out to them the tempting bait to tread the primrose path of dalliance with propositions they would not normally entertain. In addition, the ordinary investor deserts the gilt-edged fields, and sometimes, too, the trustee. It is here that the fringe banker works his nefarious worst on the Government and the community. Security, which should be the keynote of investment, is subverted to greed for the fast buck, the quick quid.
By this means, we get a situation in which, either by persuasion or statute, the Government requires those concerned to do the right thing. It has moved in with this bill, which attempts, in a rather feeble and weak way, to do something about the matter. Under this legislation which we are discussing, certain insurance companies are properly targets for to-day in this matter of financial adjustment. And so are the superannuation funds which are misused for investment purposes, a trend which should be corrected. This is indeed a deep abiding perplexity to the Government, but the Government can remedy the situation if it will only take more vigorous action.
To the Labour Party, it presents no problem. Our policy on insurance is defined. We cannot nationalize the insurance companies at this stage, but they must assuredly submit to some form of control, if only for the reason that the people have made the insurance companies rich, and they are now being financially crucified by their own money. The investment of money by the people in life assurance, in accident insurance premiums and in insurance on motor vehicles and other things has made the companies rich, but, by a curious and most astounding anomaly, the people are now being financially crucified by their own money. The money invested by insurance companies, which aggregates £600.000,000, comes mostly from those who labour, small businessmen and others, and it has never been used for the benefit of the worker or the small businessman. In these days of credit squeeze and other things, control of their own funds has long since passed out of the hands of the people who subscribe these funds to insurance companies. Curiously enough, £20,000,000 is paid by the Commonwealth Savings Bank in interest on the people’s money, yet, because of the credit squeeze, banking legislation and bank directives, nothing is being done to provide homes for the people or to bolster small businesses. Money for housing, home improvement or the development of small businesses, finance for the builder, a thousand or so for the struggling trader or manufacturer, cannot be supplied. The primary cause is the credit squeeze, but the investment policies of some insurance companies at least must share the blame.
I know that once this speech appears in “ Hansard “ the public relations officers of the insurance companies will smother me with statistics about the millions of pounds lent for homes, businesses and so on. Even so, that may not alter the general principle, for it gets back to the old homely phrase - how much have you got? How much will you give? After all, to whom do we owe the first responsibility? Surely to our own country? Is it good business in the long run to say to a man wanting to build or buy a house: “ You are one of the lucky ones? We have some money for housing. You may have a loan at 8 per cent, interest flat” - it is 17 per cent, in effect - “ but you have also to insure your life with our company in Order to get that house.” That is a fantastic position. A married man of 40 years of age, who has children, and who is struggling to get himself out of the rat race for a home, is told by the insurance company: “ You are lucky this week. We are releasing a little money for housing.” Then the insurance companies impose this condition of a flat rate of 8 per cent, interest, or, as I have said, an effective 17 per cent, interest.
Such a disgusting state of affairs is deserving of the deep social scorn of the nation. It is disgusting to think that these luckless people who are seeking a home have imposed upon them a double liability. A man seeking a home is loaded with an extraordinarily high rate of insurance premium also because of his dire need. You may be sure that the insurance companies do not encourage the young man to do business with them. He is cared for in other ways. They seek the business of the man approaching middle age who is thinking in terms of his responsibility. What a burden to place on a decent citizen who. above all things, is looking for a home for his family! I think that is one of the worst features of the whole system. Members of the Country Party may smile at what I say because they have become so buried in their own egotistical concern about how they can get a quid out of the country that they cannot imagine that there are tragedies in the city. They cannot imagine that these unfortunates who happen to be looking for money, who happen to be battling, become the victims of the sharks. I do not care how high the reputation of the insurance company may be, there is room for a great deal of improvement and reform in the direction I have mentioned. Why. Ned Kelly himself would not get a living in the holdup business in Sydney these days when we see what is happening, when we see such things as the imposition of double charges on a man who wants to build a home!
I come now to the fringe bankers. Dr. Coombs has pointed out in his annual report for 1960 that these fringe institutions are not subject to supervision of their standards of liquidity. We do not know how they are fixed! They are not backed by central bank guarantees of support in the event of a run developing. But they are, nevertheless, encouraged by the trading banks which, in turn, are encouraged by the deposits of insurance companies. So far as the citizen is concerned, these companies are all in the racket. These fringe organizations flout the Banking Act and Reserve Bank control. I do not know whether they can be taken care of under the Banking Act. Recently, T read some reference to this matter in the financial column of the “ Sydney Morning Herald “. The “ Sydney Morning Herald “ is not even sure of the position. These institutions create their own interest rates. They pay 4 per cent, on current accounts while the trading banks pay nothing. These people say they are acknowledging the market. It is in reality only another dirty word - “ black market “ - made to look legal. But that is merely in passing.
Let me revert now to insurance and the bill before us. Let me deal with the insurance companies which team up with hire-purchase firms in insuring motor cars purchased on terms. To gain some idea of the effects of their business methods, let me quote the case of a young man in my electorate who bought a motor car on hire purchase. He did not read the small print on the contract and went off with his new car only to wake up later to the fact that his insurance premium was fantastically high. Sometimes the insurance premium is nearly twice or three times as high as that fixed by a reputable concern like the National Roads and Motorists Association, which readily comes to mind because of its decency in trading methods. I would like to show honorable members a contract which I have in my possession, under which a young constituent of mine paid a £59 insurance premium on a £700 policy for his car, with little or no rebate for an accident-free year, when the rate around the town for that was about £22 10s.
– Order! The honorable member’s time has expired.
.- We have been treated to a treatise on fringe banking and associated matters. I suggest that those matters were not associated with the bill except when the honorable member for Parkes (Mr. Haylen) mentioned two things in particular. The first thing was that he did not like life assurance companies, and he conveyed to the House that the Opposition would treat them rough. Next he told us that these companies, in effect, were sharks, and he said that the Commonwealth Government should start a life assurance company of its own. Surely the honorable member knows that some of the biggest life assurance companies in Australia are purely mutual and that all their benefits are shared by their beneficiaries. If the honorable member were also to make inquiries regarding one particular State insurance company he would find that the benefits given by that company are not as good as those paid by one of the big mutual life assurance companies which operates in that State. It is sufficient to say that the life assurance companies, in particular, have rendered a great service in Australia, and especially to the policy holders, to whom, of course, they owe primary allegiance.
One can dwell too long on what the honorable member for Parkes has said. I prefer to discuss statements made by the honorable member for Melbourne Ports (Mr. Crean) and the honorable member for Bradfield (Mr. Turner). Those two honorable members are at variance, and I think it would be worth while to examine in what way they are at variance. In the first place, the honorable member for Melbourne Ports had this to say -
This Government claims not to believe in controls. It claims to support something that it calls free enterprise. Its action now serves to highlight the fact that it is impossible always to hold such pure theories. Sometimes one must choose between the private interest and the public good.
On the other hand, the honorable member for Bradfield considered that this bill was the first step on the Government’s part to perdition. What the honorable member for Melbourne Ports has overlooked is that there is a dividing line between complete freedom and anarchy; that it is essential to have order in a community rather than disorder. I suggest that we can believe in freedom of action by the individual and, at the same time, acknowledge that we must have laws which say, for instance, that we shall not drive on a certain side of the road. We should not give the individual freedom to drive, willy-nilly, on whichever side of the road he wishes to use; and so we have laws to regulate our freedom. Neither should we have freedom to do completely what we like. In fact, it is a well-established principle of our common law that we have freedom to do what we like, provided that we do not injure others; and so we have checks and balances on the freedom that every one looks to enjoy. Similarly, in the case of insurance, the Government has found it necessary to introduce checks and balances on the extent to which life assurance companies may invest in outside investments rather than help the Government along.
The honorable member for Bradfield raised one strange argument in support of his various contentions. He said that the bill is so complex that one may fail to understand it; and I take it that he implied by that that because the bill is complicated it is no good I direct the honorable member’s attention to the fact that the income tax assessment legislation, as it already stands, is a very long and very complicated act.
– And it is very difficult to understand.
– lt may be difficult to understand, but it has been drawn and amended from time to time for a definite purpose, lt stands there as our law dealing with income tax, and the fact that it is very long and very complicated does not mean that the law is no good; it does not mean that we should get rid of income tax in our country. It means nothing of the sort. So the fact that this amending bill has necessarily to be complicated does not, in itself, make the measure either good or bad. In fact, the bill is a good one because it restores to the Government a fair measure of the money which the life assurance companies and superannuation funds were diverting to other channels.
I propose now to read what the honorable member for Bradfield said when he remarked that this measure was a step towards perdition. He said, as reported at page 1244 of “ Hansard “-
What is repugnant to me about this measure is that citizens will be compelled to invest their savings, not in what brings in a good return or even a fair return, but at sub-economic and unfair rates in what the planners consider to be socially desirable projects. This is entirely repugnant to me.
What the honorable member has overlooked is that this bill does not introduce an element of compulsion. What it does, purely and simply, is to give these companies a choice; and I would like to remind the honorable member that the extensive privileges of relief from taxation and the extensive benefits which have been given to the life assurance companies in the past were not given as a right. They were given as a privilege to those companies, for a purpose, and that purpose was necessarily the desirability of having as many people as possible save money and save it in a form which proves very useful and desirable.
There are many advantages regarding life assurance, and I do not need to go into them in detail. It is surely unnecessary at this time for any one to have to argue for very long to prove that life assurance is a good thing. But I suggest, in brief, that life assurance directly encourages saving. It helps families at a critical time - for example, when a breadwinner dies. It creates a reserve fund, and even if a policyholder takes out a whole-of-life insurance policy he can still borrow against it in time of need. To a degree, life assurance saves the Government social service payments, because if a man insures himself for sufficient coverage, perhaps by means of an endowment policy, when he reaches retiring age he receives enough from that endowment and thus does not have to draw on social service funds for a pension, or, at least, not to a great extent.
Finally, life assurance creates an estate for a deceased person and so yields revenue to the Government. So from many points of view life assurance is very desirable. The Treasurer stated in his second-reading speech -
Over the last ten years, more than 60 per cent, of Commonwealth and State capital works expenditure has had to be financed ultimately from Commonwealth taxation revenue. For this financial year, the proportion looks like being nearly two-thirds.
Surely it is obvious that our country needs a great deal of capital. The Treasurer then went on to say -
The life companies increased their total assets by £562,000,000 between 1949 and 1959. They increased their holdings of public authority securities by £81,000,000 but only £4,000,000 of this increase was applied to Commonwealth securities during that period. lt is no reflection on the life assurance companies to say that they invested their money in that manner because they have a duty to do the best that they can for their beneficiaries. The only trouble is that from the Government’s point of view they have not invested enough in Commonwealth securities and the Government, therefore, has found it necessary to introduce a measure which will encourage, not force, them to invest in this direction.
The honorable member for Melbourne Ports stated that it costs Commonwealth revenue £44,000,000 a year for an investment of £100,000,000 a year in life assurance. He stated also that it costs the companies £25,000,000 a year to administer their affairs, but the honorable member foi Swan (Mr. Cleaver) pointed out that those companies administered over £1 ,000,000,000 worth of insurance. If the honorable member for Melbourne Ports looks at any authoritative figures he will find that the great life assurance companies, in particular, pride themselves on the fact that their expense rate - the cost of running their offices each year - is very low. They handle a tremendous amount of business. But it must not be overlooked also that in addition to receiving £100,000,000 a year these companies also are creating an asset which, as I have stated previously, is of tremendous benefit to the people of this country. lt is sufficient for me to say in conclusion that in view of the fact that life assurance companies and the policy holders of those companies receive a tremendous benefit by way of taxation concessions, the time has come when the national interest must be considered and when something that was previously a privilege must be reviewed. That is exactly what the Government has done.
The honorable member for Bradfield has overlooked the fact that the life assurance companies are entirely free to invest their money in any way they wish, even to the extent of investing in the fringe organizations to which the honorable member for Parkes referred. They are entitled to invest their money in what they consider to be the best interests of their policy holders. If, under this legislation, the result is that it is better for the companies to invest 30 per cent, of their funds in public securities, then we may be sure that the companies, being quite capable of handling their own affairs, will invest in that direction. In fact, if they find it best to invest more than the 30 per cent, in government securities, they will do so.
I see nothing compulsive in the bill, nor do I see anything repugnant to Liberal or Country Party principles. I cannot agree with the honorable member for Melbourne Ports who stated that it has become necessary to force life assurance companies to invest in any direction. This bill does not force them to do so. In fact, it encourages them to do so in an admirable manner
.- The purpose of this bill is to provide encouragement or incentives to superannuation funds and life assurance companies to invest a greater proportion of their funds in public securities. The policy of this Government, which has been so successful over the last twelve years, has been to bring about a high rate of development, a high intake of migrants and a high level of employment. In maintaining those three important principles a very great strain has been imposed upon the capital of the community and from time to time the Government has taken measures to encourage saving.
On many occasions in the past when it has been felt that an objective was nationally desirable, the Government has given incentives to encourage that nationally desirable objective. The concessions that are given to superannuation funds and life assurance companies is the clearest evidence of that policy. Persons contributing to superannuation funds or to life assurance companies are entitled to a deduction of up to £400 a year from their assessable income for taxation purposes. That is a tremendous concession to people who contribute to those organizations and it has been availed of to a very great extent with the result that the amount of savings going into superannuation funds and life assurance companies has increased very rapidly. Those people who claim that it is improper to use the tax machine to provide incentives for a nationally desirable objective are opening their mouths rather late in the day because for many years governments of every kind have introduced incentives for one desirable purpose or another. For example, not only are payments to superannuation funds and life assurance companies permissible deductions, but also the superannuation funds themselves have been exempted from taxation on their income and life companies have been given very valuable concessions. Further, provision has been made that the first 2s. in the £1 interest on government bonds is tax free. To attract money into Commonwealth bonds governments of the past have provided tax concessions. Australian governments have long realized that, in the national interest, all forms of primary production must be encouraged, and they have provided many tax concessions for primary producers which are not available to other sections of the community. Tax concessions are granted, for instance, to farmers who build homes for their workmen, or who clear land or build dams on their properties. Various other items of capital expenditure have been allowed as deductions for purposes of taxation, simply because the government responsible for those concessions has realized that in the national interest the primary industries involved must be encouraged. I am amazed, therefore, at the number of persons in the community who are holding up their hands in professed horror because it is proposed, by means of this legislation, to grant tax concessions to life assurance companies and superannuation funds that are prepared to invest in a direction that is considered nationally desirable.
The Treasurer (Mr. Harold Holt) has directed attention to the decline in savings that has been noticeable in this country for some years. He has told us that between 60 and 66 per cent, of all moneys required for public works have now to be provided from revenue, because the savings of the community have declined, or because the savings that are available are not being directed into public channels.
I mentioned previously that the policy of this Government is one of rapid development, an extensive immigration programme and a high rate of employment. To achieve these objectives we must have a high level of savings, and a large proportion of those savings must go into public investment. It would be completely useless to encourage overseas industries to establish themselves here if we did not have schools in which to teach the children of the employees in those industries, if we did not have hospitals in which those employees and their families could be cared for when they became sick, or if we did not provide electricity and water services for the industries themselves and for the homes of their employees. It is just as important from the point of view of the private sector of the economy as it is from the stand-point of the public sector that enough money should go into the public sector of investment to provide the essential services of the community.
Every honorable member of this House receives great numbers of requests from electors which would involve the increase of money available for expenditure in the public sector of the economy. People come to us asking that we expedite the installation of telephones for them, or asking us when they can have sewerage or water services connected to their homes, or when is another school going to be built in a particular district. In other words, the private citizens, those who rightly support private enterprise, would like to see enough money provided for the public sector of the economy, so that public services can keep pace with the development of private industries.
I believe, therefore, Sir, that it is essential in the present circumstances not only to increase the volume of community savings, but also to ensure that a larger and larger proportion of those savings is channelled into the public sector of the economy, so that public services can catch up with private enterprise throughout the country. 1 believe experience in the post-war years has shown that while production by private enterprise has caught up with demand, public services are still lagging behind to a considerable extent. Whether we are strong believers in private enterprise or strong believers in socialism, if we are realists and are willing to face facts we must support a policy which will ensure that our public services will always be adequate for the requirements of private industry, or at least that they will not lag too far behind.
For these reasons 1 see nothing wrong with this bill, the purpose of which is to grant incentives, by way of tax concessions, to superannuation funds and life assurance companies that are prepared to assist the nation by investing a specified proportion of their funds in public securities. I believe that this is a principle that is wholeheartedly supported by the people of Australia, having been followed for many years in respect of a variety of Australian industries.
Let us now consider the actual provisions of the bill before us. In the past, contributions to superannuation funds by private individuals have been allowable deductions for income tax purposes. Contributions by employers on behalf of employees, to the extent of £200 a year in each case, have also been allowable deductions for taxation purposes. The incomes of the superannuation funds themselves have been free from tax. This bill will not operate retrospectively so far as the superannuation funds are concerned. If they prefer not to take advantage of these legislative provisions they may disregard them. It is a purely voluntary scheme. If a fund remains outside the scheme, contributions to it will still be exempt from taxation. Contributions by employers will remain exempt. The income of the fund from its past investments will remain free from taxation. The only difference is that additional income from in vestment will become taxable, just as investment income by other organizations is taxable, if the fund does not invest to the specified extent in public securities.
This is, of course, an income tax act, and the Government does not and cannot deal with capital funds. It has therefore decided to use the income of the superannuation funds for the year ending 30th June, 1961, as a basis. The Government then says: “ If a fund does not come into the scheme, its yearly income will remain free of taxation until it reaches the level of its income for the year ended 30th June. 1961. Income in excess of that amount will become taxable if the fund does not invest according to the prescribed pattern.” It further provides that if insurance companies invest in the required manner, which is believed to be in the national interest, the whole of their incomes will remain free of taxation.
Trustees will still have an absolutely free choice in the interests of their beneficiaries. Personally, I believe that in the past some of them have acted most unwisely. They have departed from the common law principle of investing their money in trustee securities. One major superannuation fund recently lent £60.000 to a land company that subsequently went bankrupt. I believe it was about time, Mr. Deputy Speaker, that some of these superannuation funds and life assurance companies were asked to stop and consider whether they have not been acting unwisely bv investing so much of their funds in speculative securities.
But the purpose of this bill is not to restrict the trustees in that way although I believe it will have the effect of making many of them think. The purpose of this bill is to give an incentive. In future, the trustees of a superannuation fund will have to sit down with pencil and paper and compare the return they will get from government bonds or local government securities with the return they are likely to receive from ordinary shares or other avenues of investment. They will have to take into account the tax concessions which are offered if 30 per cent, of their funds are invested in public securities. I do not regard that as a difficult thing for the trustees to have to do. I think it is very proper that they should do it. Their decisions will be accepted or rejected by their beneficiaries according to whether the beneficiaries believe their trustees have acted in their best interests. So, Sir, although I would most strenuously oppose a bill providing for compulsory control of insurance companies or superannuation funds, I can wholeheartedly support this bill because it is voluntary, and it is not retrospective.
– Is there not an element of squeeze in it?
– There is an incentive, and I suppose every time you offer an incentive you can say there is an element of squeeze. The fact that we offer incentives to primary producers if they clear their land or make dams or build houses for their employees could be regarded as a squeeze in a certain direction. They are not spending that money perhaps on luxury motor cars and other things. So there is a very fine distinction between an incentive and a direction, but there is a difference. The trustees of these superannuation funds will remain absolutely free to make their decisions in the light of the concessions and advantages that are available under the alternative proposals.
When we come to the life assurance companies, we find that under this bill they will benefit tremendously. In the past, their superannuation funds have always been liable to taxation. In future, if they keep accounts of their superannuation funds separate from their ordinary life business, the income from those superannuation funds will be free from income tax provided they conform to the set pattern of investment. They are not bound to do it, but if they do. they will receive this concession which is one that they have never had before. Then another concession is provided which also has never been available before. This will enable the life companies to make themselves entirely free from taxation if they increase their public holdings up to a certain figure. So I feel sure that all life assurance companies will give wholehearted support to this bill when they understand it thoroughly.
It is true that there are in the bill what the Treasurer chose to describe as “ disincentives” or penalties. In other words, if a life company does not comply with the pattern of investment by investing 30 per cent, of its funds in public securities within a reasonable time, the life company will lose some of the benefits that it now derives. But when it is realized that these benefits are concessions that other companies do not have and that they are given to life assurance companies only because it is realized that they are carrying on a nationally desirable activity, I feel sure that the life assurance companies will say, “ Although we will suffer if we do not comply with this pattern, if we choose not to comply it is only reasonable that we should lose some of the concessions we have had in the past “.
I believe that there is nothing contrary to Liberal principles or national principles in this bill. It is simply offering a pattern that has been adopted by various governments in Australia over quite a term of years, and I feel sure that when it is thoroughly and fully understood by the people of Australia, they will say it is a jolly good bill. Therefore, I commend the bill to the House. I say again that I would have been vehemently opposed to it had it been compulsory or retrospective in its operation. But as it leaves a free choice to the trustees of the funds or the directors of the insurance companies, and as it deals with a matter by incentives, I believe it is a bill that should receive the wholehearted support of members of this House and of the general public. It has been pleasing to note that of all the speakers who have spoken in the debate, only one has been against the bill. It has received the wholehearted support of all members of the Liberal Party who have spoken except one, and of all members of the Australian Country Party who have spoken. It is pleasing to note, too, that for once we have received the support also of members of the Australian Labour Party.
.- I must say at the outset that I cannot support the criticism that has been offered by the honorable member for Wide Bay (Mr. Bandidt) in the comments he made against my colleague, the honorable member for Bradfield (Mr. Turner). I think the honorable member for Bradfield made his observations in a fair and forthright manner. He stated his case on a matter of principle,. and it is well established that on this side of the House, at any rate, any honorable member is entitled to express his views on what he believes to be his own personal principles. The honorable member for Bradfield displayed some courage in producing the arguments he did during the debate last week.
If 1 disagree with the honorable member for Wide Bay in his criticism, I must say that I envy him his mental capacity and his willingness to accept this bill regardless of its complicated aspects. For I believe, Mr. Deputy Speaker, that if there was ever such a thing as a political Oscar, it should be awarded to the member of the Parliament who is brave enough to say that he understands the bill. The bill itself comprises 23 pages, and as if that were not enough, it has an accompanying explanatory memorandum covering 33 pages.
This is a most complex piece of legislation. It will be some time before the implications reveal themselves. I do not know any of my colleagues who has established a reputation as an actuary, especially as an insurance company actuary, skilled in assessing the probabilities of human life upon which life insurance contracts depend. This bill goes deeply into the field of actuarial calculations and here the limitations of the House must be manifest. Therefore, in the main, one’s observations must be restricted to broad outlines of the purposes of the bill.
It is all very well to say that the bill touches only on the investments of life insurance companies and superannuation bodies, but these funds only emerged from the complicated result of actuarial investigations and calculations. It is significant that the Commonwealth Actuary has been in attendance in the House during the greater part of this debate taking, as is the custom of his calling, a morbid interest in the proceedings. A great deal of the difficulties in debating this bill come more from what went before the actual presentation of the bill than from what is in it now.
The original proposal for compulsory loans was unacceptable to me, as it was to a large number of the Australian people. The idea now adopted that tax concessions should depend on support for government loans may not be objectionable in itself, but objections spring from the idea that it may be classified as compulsion in disguise. The question, therefore, may be asked, how did the Liberal Party, in the first place, become involved in such a dubious proposal as compulsory loans?
The answer is, in my opinion, that we inherited from a previous Labour administration the socialistic fallacy that money must be cheap at all times. I have often protested against this idea in the House and outside it. It seems obvious that money, like anything else, is only cheap when it is not in great demand. In times of great expansion, when we need a lot of savings to finance capital expenditure, we must pay a good rate of interest to reward those people who have saved money. In other words, it is necessary to make saving attractive enough to encourage people to put some of their earnings aside. It is as simple as that. If the reward is not sufficient, there is no purpose in saving.
The Treasury, in its attempt to defy this elementary principle, heaped folly on folly for twenty years and brought the country to the brink of ruinous inflation. Instead of dealing with causes, it relied on controls to curb the effects. First, it put the banking system into a strait-jacket to prevent it from competing for what money was available. The result was the growth of an unofficial banking system, much less scrupulous and more aggressive, which financed a great deal of the community’s activities at high, and sometimes ruinous, rates of interest. Naturally, these cheap money loans did not provide what was needed. So, the Treasury tried, as a logical sequence, the principle of compulsion.
Under the pressure of a difficult situation, it seemed that the Government was disposed, in November, 1960, to accept the proposal of compulsory loans being applied to assurance companies and superannuation funds. It is fortunate, indeed, that the Government changed its mind. Once the principle of compulsion was accepted, I am sure that its advocates would have kept on pressing for its extension to wider fields of operation. Before very long it would have been applied to individuals. It was noticeable that the Labour Opposition preserved a delighted and expectant silence when the compulsory principle was proposed. There was no opposition from Labour and there is very little doubt that if ever Labour comes back to this side of the House compulsion will come back in a big way.
Yet the very fact that a form of compulsory investment was proposed did have one good result. It forced some realistic thinking about investment rates, with a consequent rise in the rate offered on Government loans. As a matter of fact, one of the leaders of the insurance world, Sir Harry Manning, chairman of the Mutual Life and Citizens Assurance Company Limited, seems to think that, with the bond rate of 5i per cent, operating at the moment, this present bill is no longer necessary. He forecasts that bonds will attract a lot more of insurance money on their merits without any inducement by way of taxation reductions and without the veiled threat of compulsion.
It must not be overlooked, however, Mr. Speaker, that if ever the idea of compulsory investment is accepted, as it will be if Labour gains control of the Treasury bench, there will be no more Treasury loans at 51 per cent, interest. The socialist idea, as shown over the years, seems to be that the bond rate should be about 3 per cent, at which figure the insurance companies would face the bankruptcy court because it has been established in the past that they are unable to live on such a low rate.
Returning to the present proposal, as the rate now offered for government loans is in line with the rates that insurance companies are earning on their overall funds, it does not seem that they will suffer any adverse effects, especially as they are to be given some additional taxation concessions. It is true that some of their funds were previously invested in equities in which there was a chance of capital appreciation, whereas there is no chance of appreciation with bonds. However, the very great demand for equities in recent years has forced their prices up to a point at which they are not nearly so attractive as they were. By securing a sizeable investment in public loans by insurance and superannuation funds, the Government will relieve the pressure on the share and property market and the insurance companies will be able to get better value for part of their money which will eventually go into equities.
Also, the difference in principle between the original compulsion and this present tax incentive scheme is very important. Whereas the compulsion principle, in the future, could have been extended to practically anything, the tax incentive scheme carries no such danger. The pressure can only be put on that very restricted class that gets substantial tax concessions. I must confess, however, that I do not like the principle even now. I would like loans to have their interest rates pitched at a point in line with the market at the time so that they would sell on their own merits without the inducements provided in the bill.
Turning now to private superannuation funds, it appears that these have been given an important concession in that the measure will apply only to their new funds. However, there is a point I should like the Treasurer to clear up for me. Much of the money in private superannuation funds is invested in equities, and it seems that the capital accretion which will come from these existing investments, in the form of increased dividends and so forth, will be treated as new money and may come within the requirements for controlled investment. I think that, morally, the Treasurer’s undertaking to make the tax incentive scheme apply to new funds should mean that this accretion from old funds will be excluded.
There is another point also. It seems that life assurance companies are to have the benefit of a graduated tax exemption scheme. If they fall below the level of 30 per cent, investment in government loans, their tax concessions will simply be reduced in like proportion. With private superannuation funds, however, it seems to be a case of all or nothing. If they fall below the 30 per cent, level, they lose the tax concession. If this is so - and I seek guidance on the matter - I should like the Treasurer to consider giving them the benefit of the same graduated scheme as the assurance companies will enjoy.
There is another aspect of the legislation to which I should like to direct attention. It may happen that, as a general consequence of the legislation, assurance companies will be obliged to alter their investment programmes in order to conform with the percentage requirement which carries with it the tax concession. 1 hope that in the re-arrangement of investment portfolios, advances by assurance companies for home-building purposes will not be disturbed, but I believe that this is a very grave risk inherent in the bill.
I said earlier that this is a complex bill, and its effects are difficult to predict. The difficulties do not reveal themselves immediately, and we do not know what will be the bill’s effect on general investment throughout the whole economic structure of Australia. The bill is designed initially to affect assurance companies and superannuation funds; but I am aware that, for instance, public utilities such as privately owned gas and electricity suppliers - when 1 say privately owned, that relates to public companies in which there has been investment by shareholders - may not come within the definition of statutory bodies, to which assurance companies may advance money and in doing so, conform with the 30 per cent, requirement. Those privately owned companies give a service in maintaining and extending gas and electricity supplies. There are not many such privately owned undertakings left, but there are some in New South Wales, Queensland, South Australia and elsewhere in the Commonwealth. Favorable consideration should be given to including them among the statutory bodies to which assurance companies may advance money and in doing so conform with the 30 per cent, requirement. To deny these private companies access to moneys lent by assurance companies would, I believe, be to retard progress in quite a number of places in Australia. So I hope that some consideration will be given to bringing them into the class of statutory bodies under the act so that they may continue to borrow from assurance companies.
I cannot overlook, Mr. Speaker, the circumstances of the original announcement regarding this measure, which was made last November. I hope only that if the Government were badly advised in November and were not fully aware of the circumstances surrounding this matter of attracting money from superannuation funds and assurance companies into loan investment, it has taken sufficient precautions to rectify that lack of knowledge and lack of appreciation. I hope that it has taken pains to see that the practical issues involved are covered in the bill. I look forward to further enlightenment on this measure at the committee stage.
.- As I rise to speak to-day I am conscious that this is virtually the first real speech to be delivered by me in this House because, as other honorable members will agree, the maiden speech that one delivers here is inevitably delivered in a semi-conscious or fully unconscious state, and one hardly knows what one has said. 1 am very pleased to make my first real speech on this particular subject, which I regard as vitally important. Indeed, there could be nothing more important to the future development of our country - which is something that this bill aims at in a very practical and direct fashion.
So far, this debate has been remarkable because our friends on the benches opposite have expressed general agreement with the principles of the bill, with one main qualification - that it does not go far enough. This leads one to ask: How far is far enough for the Labour Party? One comes to the inevitable conclusion that the only distance far enough for the Labour Party is the complete nationalization of insurance and other industries.
In the short time I have been a member of this House a feature of the debates on almost all the subjects introduced has been the plea by members of the Labour Party for the early nationalization of this nation’s industries. This surprises me, because 1 would have imagined that, being able to observe the results of the tragic socialist experiments in the United Kingdom, New Zealand and other places, our friends opposite would have been more temperate in their claims for the complete nationalization of industry. In my early days here - in fact, on the second day after my arrival - the honorable member for Melbourne Ports (Mr. Crean), a gentleman whom 1 admire very much and whose speeches are always well worth listening to, very clearly expressed the socialist policy when saying that there was a basic cleavage between the philosophies of the various parties in the Parliament. I could not agree more. There is a great cleavage between the philosophies that we on this side hold - of freedom and choice of business for the individual, indeed, of freedom of living itself - and the Labour philosophy of compulsion, confiscation, and confining controls. I have noted sadly this unbridgeable gulf which lies between us.
I have noted also that another feature of debates since I have been here - and I say this rather sadly and perhaps in a naive sort of a way - is the manner in which some honorable members opposite attempt to make political capital out of all issues introduced in the House. I know that this is an election year, and we have heard the rumour that our friends opposite have been advised accordingly to be political all the time. Trying to be a political realist, I cannot in all conscience blame them for attempting to gain political victories in this House on appropriate matters; but on a bill such as this, whose basic principles they say they approve, we should not see such a deterioration of debate as we have seen in speeches such as that of the honorable member for Reid (Mr. Uren), who delivered a eulogy of the Soviet Union, and that of the honorable member for Blaxland (Mr. E. James Harrison), who alleged with doubtful taste that the excellent speech delivered by my friend from Swan (Mr. Cleaver) was written by a Treasury official.
In summing up, one might well say that in general terms the members of the Opposition agree with the principles of the bill, with the qualification that it does not go as far as they would like. The only voices that I have so far heard raised in disagreement have been the voices of two honorable members on this side of the House - the honorable member for Bradfield (Mr. Turner) and the honorable member for Mitchell (Mr. Wheeler). Although I admired the thoughtful and very sincere way in which both of these honorable gentlemen delivered their speeches, I must say that I find myself in complete disagreement with their conclusions. Indeed, one of the refreshing influences in this place - and they are said to be few, Sir - is the freedom of speech and the freedom of criticism which are open to honorable members on this side of the House. I now take upon myself the privilege of being critical of my very good friends, the honorable member for Bradfield and the honorable member for Mitchell - I hope in a constructive way.
The main objection by the honorable member for Bradfield to the bill seemed to be that he believed that a principle of compulsion had been established. He concedes that the compulsion is very mild in form. His main fear - and the great point of his remarks - was that this precedent would make it easier for a future socialist government to nationalize and to interfere with the rights of individual companies. I cannot agree with this conclusion for two reasons. First, I do not see in this measure any compulsion in the real sense. I feel that it is based on gentle persuasion - a very clever and ingenious form of persuasion - by the use of the tax instrument to divert funds into the very sadly neglected public sector of the economy. If one wanted to go on and make an analogy about compulsion, one could say that a civilized society should be organized, and if one pursued that to its logical conclusion one could say that there is a form of compulsion in traffic regulations and the like. As a precedent for the use of the tax instrument to divert funds for a specific purpose, one might well cite the provision in the tax laws which affords certain concessions to primary producers.
The second reason why I cannot agree that this bill is a dangerous precedent is that I cannot believe, in all my naivete, that the Australian Labour Party or its representatives who sit opposite would need a precedent for the nationalization of an industry, and especially of insurance.
My main criticism of the speech made by the honorable member for Bradfield is that I believe he ignored the chief reason for this bill. That reason is the tremendous need for the diversion of funds into the public sector of the economy for the development of this country. We all know that private enterprise and the private sector cannot expand unless there is, on the other hand, an expansion of public works. Industries cannot be established or progress and new towns cannot be built without corresponding development of roads and the other public amenities that are so necessary to development in the private sector. The honorable member for Bradfield said -
I know, of course, that we have a special problem of development, and I do not overlook it. . . .
Later, he devoted a small portion of his time to dealing with it, but in my opinion he really did overlook this basic question of development and rather criticized per se the precedent created by this measure.
What alternatives have been given by the critics of this bill? We all recognize the need for the diversion of funds into the public sector. When we think of taxation, we all see ourselves as paying a tremendous price in this generation on behalf of posterity. More than 60 per cent, of our capital works are financed out of tax revenue. Does anybody suggest that this percentage is too low?
What is the reaction to this bill by the insurance companies, for which my honorable friends fear so greatly? There has been no violent reaction. I believe, as the honorable member for Sturt (Mr. Wilson) stated so clearly, that this bill will greatly assist the life companies. Indeed, why should there be any reaction? The provisions relating to people who wish to take out life insurance and the provisions relating to the companies themselves are more favorable than is the law in any other country, according to the manager of a Birtish life company with whom I talked the other day.
Let us look at the position of the life insurance companies briefly. In the ten years to 1959, the total assets of the life companies increased, as we know, by £562,000,000, of which only £81,000.000, or 14 per cent., was invested in public securities, and only £4,000,000, or less than 1 per cent., in government securities. This Government’s measures over past years in providing for the deduction up to certain limits of insurance premiums paid by individuals have encouraged thrift. I believe that this Government has encouraged people to think in terms of their old age and to put away something for it. This encouragement and the provision of opportunities for the deduction of premiums have increased the prospertity of the life insurance companies. We must always remember that, for these reasons, they are custodians of public funds.
What is this pernicious thing that the honorable member for Bradfield suggests we are doing to these companies? As the honorable member for Sturt has explained, this bill will be of great benefit to the life companies. Nobody has suggested - and in my interpretation of the repeated statements made by the Treasurer (Mr. Harold Holt) on this question I have never implied that he suggested - that the life companies were guilty of any wickedness or had been doing the wrong thing. Being free agents, they have invested in the ways which they consider best for their policy-holders and for themselves the wealth that they have acquired over the years as a result of this Government’s policies.
Some people - and notably the honorable member for Mitchell, who mentioned it very briefly - have suggested that one alternative might be the use of the bond rate to solve this problem. History makes it very clear that increases in the bond rate as such can by no means be assumed to increase institutional investment in Commonwealth securities. For example, since 1949 the bond rate has been increased in steps from 3i per cent, to 5% per cent. In about the same period, the total assets of the life companies increased by £562,000,000, of which only 14 per cent, found its way into government securities and less than 1 per cent, into Commonwealth Government securities.
The counter argument which has been put, of course, is that the bond rate has not been raised high enough. Despite the increasing publicity which has been given recently to the value of the 2s. in the £1 income tax rebate on interest obtained from Commonwealth loans, there seems to be no general realization that even though the rates offered in the current loan range from 5i and 5i per cent, they are the equivalent of interest rates ranging from 6 per cent, to lh per cent, on fully taxable securities. Thus, a life company paying tax of 7s. in the £1 would need to obtain a yield of 6.2 per cent, from a fully taxable security in order to obtain a net yield the same as that obtainable from the new 5f per cent, securities maturing in 1981. There are not many countries in which governmentguaranteed investments with yields of this sort are available. It is good to remember the point of view of the borrower. Who are the main borrowers? A 1 per cent, increase in interest rates would cost the various State governments more than £4,000,000 this year and if continued into the future could cost, say, £8,000,000 next year and £12,000,000 the year after, as more loans mature and more money is raised.
I find this bill to be an extremely clever and ingenious piece of legislation which will benefit the life offices, be of long-term and lasting beneficial interest to policy holders and will divert vital funds into those channels which provide the life blood of our nation’s continuing development.
.- I congratulate my friend the honorable member for Higinbotham (Mr. Chipp), on the wellreasoned case that he has made out in support of this legislation, although I am bound to say that I disagree with him. I find myself in the company of the honorable members for Bradfield (Mr. Turner) and Mitchell (Mr. Wheeler). Despite what the cynics may say, I find that company quite respectable and it does not distress me in the least.
At this point of our consideration of the bill, I should like to make an appeal to the Government to abandon it. I make the appeal on what I hope will be found to be respectable arguments and I hope that, as the appeal unfolds, it will become intelligible at least to some. The House does well to have a consciousness of the fact that the bill does not merely affect a few life offices and a few superannuation funds; it affects some millions of people. In his last report, the Insurance Commissioner declared that there were in force 3,549,000 ordinary business insurance policies and in addition 3,433,000 industrial policies. So in round figures we have about 7,000,000 policy holders. No doubt this figure would possibly fine down to 5,000,000 or 6,000,000. Life assurance represents the largest business activity of any kind in Australia. It is my view that the institution of life assurance has been of immense benefit to the Australian nation and to the Australian people. The view is held on my side of politics that taxation concessions were given to encourage life assurance and superannuation. A typical display of that attitude may be found in the speech of the Treasurer (Mr. Harold Holt) when he presented the last Budget which increased the maximum deduction from £300 to £400, to use his words, “ to encourage savings and thrift “.
For my part, I confess support of the free enterprise economy, and it is no narrow doctrinaire approach that drives me to describe the proposals as a regrettable departure from previous practice, holding within them the beginning of a growth that may well become quite unwanted. It is to no avail any one of us saying, “This does not go very far; it is not very revolutionary “. I think it is useful to heed the fact that the nursery of to-day can indeed become the forestry of to-morrow. I do not waste time by examining the policy of the Opposition with respect to insurance, which briefly and accurately may be described as the complete nationalization of all insurance. I do, however, pause to observe that the Government’s example will not, to use language of the Treasurer that has arrested my imagination, act as any disincentive to future socialist governments.
On the question of principle I do not say very much. I remain, politically speaking, a protestant. I do not assume the role of adjudicator on our principles, but just as I am reluctant to assume the dogma of political infallibility, so too am I reluctant to concede its existence in the hands of any one. I believe that the great strength of free enterprise politics has been found in the fact that its supporters speak with frankness, and I hope we will never abandon that trait.
The proposals are complex and extremely technical, but the basic principle of them is quite clear. Providing there is an investment of assets in government or semigovernment bonds, taxation concessions will continue or will fluctuate, depending on what the life offices and superannuation funds do. The prime argument of the Treasury is to be found in a statement made by the Treasurer on 23rd March of this year. Referring to life offices and superannuation funds, he said -
Because of this special status and the recognition by governments that these institutions have been traditional sources of substantial investment in securities offered by the Governments of the Commonwealth and the States, successive Commonwealth Governments have accorded the life companies specially favorable taxation treatment.
I have been unable to find any historical evidence whatsoever to support that argument. It has been contended - I am aware of the contention - that even though governments in the past gave concessions to life offices, they did not raise their voice about it; they preferred not to state the real reason, which was that the giving of concessions was to act as a stimulus. The contention is completely impossible to accept on two grounds. First, governments irrespective of their persuasion have no notoriety whatsoever on the count of lack of articulation when tax concessions are given. Very properly, the reason is stated plainly and for all to see. Secondly, the contention is at best hearsay and the Parliament legislating in 1961 should not be influenced by any unrecorded consideration of previous governments.
A great deal of emphasis has been placed by my colleagues on the concessional argument. It could be argued with equal force of logic that any other tax concession was given originally in order to act as a stimulus for investment in government bonds. The widely understood view has been that the concessions were given to encourage thrift and saving. That understanding is open to modification, but it can only be modified by recourse to the record. On the other hand, the argument of concessions to life offices is a two-edged sword. What if life assurance and superannuation as an institution did not exist? There would be no demand to grant tax concessions either to the companies or to individuals, and that would represent a saving against revenue. There would be no contribution to revenue from life offices by way of the taxation they pay. There would be a profound increase in government responsibility in the social service sector. On this last aspect, this tentative situation emerges: The number of people, by virtue of age, eligible to-day for age pension is 1,075,000. The number of people excluded from the age pension by virtue of property and income equals 500,000. An estimated 80 per cent, of that exclusion has a relationship of sorts to either life assurance or superannuation. If you take those factors into consideration and carry the concessional argument right through so far as life assurance is concerned, the estimated total increase in yearly expenditure for age pensions alone would be £104,000,000. Having said that, I suggest that we should not lose sight of the fundamental point that the more people who become dependent upon the State - that is, dependent upon the government - the more power the State exercises, and the aggregation of State authority can never come into being save by diminution of individual liberty. So life assurance and superannuation funds have been the means whereby many thousands of people have been able to save, to cultivate industry and exercise thrift, and this has meant less dependency upon the Government.
In a secondary sense, if not a primary sense, life offices and superannuation funds have been not only the conservators of funds, but also the conservators of initiative and free choice. 1 oppose this legislation not on the ground that I am opposed to change, but because I am unable to find any parallel where a tax concession rests upon a declared percentage of an asset being invested in government securities. The 2s. rebate of tax on money invested in bonds is a direct incentive. It rests solely upon the fact that a person has bonds. But these proposals are not comparable because they postulate that the tax concession will run only if a stated amount is invested. The principle behind this proposal stirs one’s imagination. What of the future? To-day, the concession rests upon the investment of 30 per cent of funds in government or semi-government securities. Plainly, in the future, the concession could rest upon the investment of 100 per cent. This mechanism, in the hands of a socialist government, could mean control over every life assurance office and every superannuation fund in the country. Certainly, as far as this Government is concerned, that anxiety does not arise, but I return to the point that 1 made when I began. Our action will not, to use the Treasurer’s language, be any “ disincentive “ to a future socialist government. There is a mass of eminently respectable authority to suggest that the proposals, which I hope will be abandoned by the Government, will be declared invalid if they do become law and are challenged. Hitherto, the Constitution has been a barrier against socialization. But if you say to an individual, “ You will continue to get this tax concession if you do something “, if you stipulate some condition and circumstance in which he must involve himself, it would seem as though the taxing power of the Commonwealth becomes in fact the supreme power of the Commonwealth.
It is interesting to recall that this exercise has been tried already. I think it was tried in 1908, and reference to it is to be found in the High Court judgment in what is known as Barger’s case. I refer to an attempt made by the government of the day to impose excise duty on the basis of a particular manufacturer’s employing people at a particular wage standard. The High Court ruled that this was not an act connected with excise, but an act relating to wages and hours obtaining in a State. That authority in Barger’s case has never disappeared. It is still there to-day. Indeed, one High Court judge did use language to the effect that the long shadow of Barger’s case stands out as a solemn reminder to governments not to go too far in using the taxing power, the defence power and the external affairs power. Many people have taken the view that the old doctrine that influenced the High Court in Barger’s case died with the Engineers’ case. That is not the position at all because, as late as 1947, the Melbourne corporation challenged the validity of the then Labour Government’s action in compelling every local government authority to bank with the Commonwealth Bank. The old doctrine of implied prohibition came to light again on that occasion.
Let me put one point to the House, and particularly, let me put it earnestly to my colleagues on this side. It is one thing to use the taxing weapon, but how it is used is another thing. I ask honorable members what would be their reactions if they were told in an amendment of the Income Tax Assessment Act that the concessions allowed for their wives and families would run provided they contributed 30 per cent, of their assets for the purchase of government bonds. To take a ludicrous example, what would be their reaction if the concession were to run only so long as they contributed £10 a year to the Australian Labour Party? The principle is the same. We are imposing a condition beyond the physical circumstances. There is no knowing where this sort of thing could end. If this proposal is valid, then it means that the taxing power of the Commonwealth is supreme, and the Australian Constitution, with its prediction of a federalist system of government, becomes absolutely worthless. In the past, it has been established that the taxing power is not unlimited, and if these proposals are persisted with, I can only hope that some enterprising soul will challenge their validity so that at least we may know where the High Court stands on the matter now.
– What effect would it have on the insurance business if there were no concessions allowed for annual subscriptions to government securities?
– I appreciate the honorable member’s inquiry, and I shall examine the effect on insurance business later if I have the time, but I do say that I would much prefer that the taxing concession be abolished altogether to telling a person that he will get the concession only so long as he does something.
I come now to the attitude of the Opposition towards the proposal. I think the Leader of the Opposition (Mr. Calwell) put the Opposition’s view fairly plainly in Brisbane a short time ago when he was asked what was the Labour Party’s view of the proposal. At that time, he said -
Well, we haven’t made a decision on that yet as a party. But, if I can interpret the feeling as I have heard it expressed by party members, they would favour it.
He was then asked, “ Don’t you feel that it is interfering with private investment?” His answer was -
No. I have said that if the Government does this sort of thing then there is a very good case for asking some of the big concerns like Ford’s and Broken Hill and these other people to voluntarily subscribe to Government loans because they use power, they use the roads, and so on, and if they won’t help to fill up the loans they either go without or they will have to be told that they must make some contribution.
That is fairly clear. One of the ancillary arguments that has been used by the Treasurer (Mr. Harold Holt) with respect to this legislation was the failure of life assurance offices to support government and semi-government loans. He said that, in 1939, 50 per cent, of life assurance funds were invested in government bonds. That is perfectly true. It is also true that, in 1939, there was no inflation. And when we come to 1949 and see that at that time 68 per cent, of the life offices’ funds had been invested in government bonds, it must also be recognized that there was an extremely limited form of investment available to the life offices. I am a policyholder, as I think most honorable members are; there are some 7,000,000 policyholders throughout Australia. The responsibility devolves upon those who preside over life offices to protect the investment of their policy holders. That responsibility runs to taking into consideration inflation in the currency, and I believe that that has been the practice in the past.
I remain to be convinced that the present percentage of life office funds in equity shares is high; I do not believe it is. I refer now to the Insurance Commissioner’s report for 1959, the latest that is available. The total assets of the life offices for that year were £1,120,811,062. Share investments totalled £64,161,078, government securities totalled £268,433,674, and semi-government securities £154,269,714. One of the features of the proposal contained in this measure is that to qualify for the maximum benefit - that is the benefit to be gained from holding Commonwealth securities in excess of 20 per cent. - the amount of semigovernment securities held on 1st March, 1961, must be retained. There is an element of retrospectivity here which is not at all fair. I cite to the House the case of the Temperance and General Mutual Life Assurance Society Limited, which, in 1959, held 15.5 per cent, of its assets in government bonds and 33 per cent, of its assets in semi-government bonds. That ratio has not been disturbed very greatly. To qualify for the maximum benefit the T. and G. must, first, hold its existing investment in semi-government bonds; and secondly, it must increase its holding in government securities to over 20 per cent. In other words, an increase of approximately 4.5 per cent, must be made. The assets of the T. and G. in 1959 amounted to £152,600,000, and accordingly £6,800,000 or £7,000,000 must be diverted. This company has remarkably little room for manoeuvre. It holds £39,500,000-odd of loans on mortgages and £6,400,000-odd of loans on policies and debentures and unsecured notes amounting to £10,600,000. This element of retrospectivity is completely undesirable and I would hope that, even if my general appeal to the Government is rejected, at least some consideration will be given to an amendment of this provision at the committee stage.
I come now to the question raised by the honorable member for Melbourne Ports (Mr. Crean). If the proposals contained in the bill amounted to amending the Income Tax Assessment Act to remove concessions, I would have no quarrel whatever with it. But making concessions contingent upon a settled form of investment must give rise to anxiety. What of the proposals? What has prompted them? My friend, the honorable member for Higinbotham (Mr. Chipp), put his finger right on the cause when he said the proposals were promoted by the terrific rate of development going on throughout Australia. It is perfectly true that that terrific rate of development has been going on unabated; and in the last ten years some £2,000,000,000 worth of works has been undertaken out of revenue. It is the settled policy of all political parties in Australia that we should maintain this terrific rate of development, but plainly we should inquire how it can in equity be carried on by the entire community. 1 have reached a number of conclusions, and 1 pray for the patience of the House while I recite them. First, if the volume of works is too great for the volume of loan funds available, the alternatives are to reduce the volume of works, which on the most comprehensive grounds we do not want to do, or increase the volume of loan funds, which can only be done by making this investment more attractive in relation to other forms of investment. Secondly, to increase the rebate on Commonwealth loans would impose an extra burden on yearly revenue, but it would unquestionably increase investment in government securities, and would in the ultimate reduce the expenditure from revenue on works. Thirdly, I believe the Government should give consideration to following the United Kingdom practice of stimulating bond investment by the lottery scheme. Fourthly, no doubt there is scope for adjustment of taxation concessions now given to insurance companies. This adjustment should be made on a direct basis and not on a conditional basis. Fifthly, there is abundant evidence that the conduct of works throughout Australia is done without much relevance to priorities. A Commonwealth-States works commission representative of the Commonwealth and States to act at least in an advisory capacity could produce beneficial results. Every government throughout Australia and every person in Australia must realize that we, as a nation, cannot go on indefinitely doing too much too quickly with too little resources. For the reasons that 1 have stated I find the proposals unwelcome. They represent, in my judgment, an abandonment of the concept that when a concession is given it is given for a reason and not on the basis of a condition.
Sitting suspended from 5.52 to 8 p.m.
, - A rather remarkable situation has developed in the Parliament, Mr. Speaker, in connexion with the measure now before us. The Minister introduced the bill and gave a lengthy explanation of it, and what do we find? Quite contrary to the usual procedure, according to which honorable members on this side of the House criticize measures introduced by the Government, the only opposition to the bill has been voiced by Government supporters. This leads me to remark on the fact that we frequently find this Government finally accepting policies that have been espoused and advocated by the Labour Party for years. Time after time, the Government produces legislation along the lines of policies put forward by the Opposition.
– When did you put this forward?
– I remind the honorable member for Canning that the Labour Government, which was in office until 1949, enacted legislation limiting interest rates on loans and limiting the amount of money that insurance companies could invest in new companies or new shares. As a result of the Labour Party’s legislation the proportion of the assets of insurance companies invested in government or semi-government securities was 68 per cent. That was a most satisfactory position, and it was brought about by the overall legislative policy of the Labour Government. What is the position now? The Treasurer (Mr. Harold Holt) told us in his second-reading speech that although actual figures were not available the proportion of the investment of these organizations in government securities would be only about 33 per cent. This shows how the position can deteriorate under a government that is all for private enterprise, a government that says that you can do as you like with your money, and make as much as you can out of it, without worrying about who will pay the piper.
This Government does not care how high interest rates go. We have complained time and time again about hire-purchase companies offering interest rates of 9 and 10 per cent., and that people are investing their money in those companies instead of in government securities at 54 per cent., but all that this Government says is, “ We cannot do anything; it is the job of the States to control hire purchase “. I suggest that this is not entirely the position, and that this Government could take action to limit interest rates and to prevent an undue volume of capital being invested in undesirable directions.
I have been rather interested, since this measure has been before the Parliament, to see how outside bodies have tried to influence the general public, claiming that the bill is inequitable, and that it represents an attempt to deprive superannuation funds and life assurance companies of the right to invest their money as they desire. It has been suggested that this legislation will rob such organizations of large profits that they could make on investments. It makes me smile a little to hear the Treasurer saying to these bodies, “ Invest 30 per cent, of your money and we will give you 51 per cent, interest on it as a long-term rate “. The rate of 51 per cent, is offered almost apologetically. Is it not a reasonable rate of interest? I say it is more than reasonable. I would reduce the rate if I had my way. Yet it is suggested that we are trying to prevent these organizations from earning as much as they can on their capital.
How much do we want them to earn? Should we say that instead of 51 per cent, they ought to be able to get 8 per cent.? Is that what is wanted? If there are persons who want that, why do they not say so straight out? I have had letters of complaint about this legislation from various individuals, and practically every one of those letters has come from some person working in one of the private banks. The persons writing the letters give their addresses and the names of the banks for which they are working. I would suggest that these people have been influenced in large measure by the propaganda that has been disseminated, suggesting that the legislation is inequitable.
Some few years ago, legislation was introduced in this Parliament to increase to £300 a year the maximum amount of life assurance premiums or superannuation fund payments deductible for income tax purposes. I was sharing an office in Adelaide with the honorable member for Hindmarsh (Mr. Clyde Cameron), whom I do not see in the House at the moment. A man called to see us and said: “ You can now invest £300 a year in an annuity or a superannuation fund and claim that amount as deduction from your income for purposes of taxation. It will pay you to do so.” Let me give the House a few relevant figures in this connexion. In the case of a man whose income was between £2,000 and £2,400, the rate of tax would be 7s. Id. in the £1, so that he would save 7s. Id. on each £1 of the £300 that he paid to a superannuation fund or a life assurance company. A nominal payment of £1 represented, therefore, an actual payment of only 12s. lid., and the Government was losing 7s. Id. on every £1 paid. If a man took out more life assurance and contracted to pay an extra £200 a year in premiums, the loss to the Government would have been quite considerable.
The honorable member for Melbourne Ports (Mr. Crean) cited statistics, and I shall not reiterate them. They showed that the Government is losing £35,000,000 a year in income tax because of this concession alone. He also showed that the life companies are saving another £9,000,000 in other taxation concessions. This makes £44,000,000 a year that the Government is losing by granting concessions to persons who are paying for superannuation benefits or life assurance policies. The total amount that is paid in premiums each year is about £150,000,000. About £50,000,000 is paid out again because of the maturing of policies or the death of policy holders. This means that the assets of superannuation funds and life assurance companies are increasing by about £100,000,000 a year, while the Government is losing £44,000,000 a year. Now the Treasurer is saying to these companies, “Out of that £100,000,000 that you are getting every year we want you to put £30,000,000 into government loans; at least £20,000,000 in Commonwealth loans and £10,000,000 in loans floated by State and semi-government instrumentalities, such as municipal authorities. We are not asking you to make a gift to the Government.
We are not going to take a compulsory loan without interest, but we want you to invest £30,000,000 of that £100,000,000 at 5* per cent.”. In the light of that proposition, I am amazed at the statements that have been made in this debate.
The honorable member for Bradfield (Mr. Turner) was cited as a bitter opponent of the bill on the Government side. My view is that the Government, in this measure, is going only a little way in the right direction. I would go further than the Government proposes to do, as all honorable members know very well. But if I did so, I would be accused of interfering with the rights of the individual. Supporters of the Government say that the private individual should be able to do what he likes. At the same time, if my wife wants to buy a dozen eggs she has to pay the price that is set by a government egg board. According to the supporters of the Government, that is not interference with the rights of the individual. If I keep more than 30 fowls, I have to register as a poultry keeper. I have to get permission to sell the eggs that are produced, and I cannot sell them below a certain price. Is that freedom for the individual?
I recall that years ago when the Minister for Social Services (Mr. Roberton) was a back bencher on the Government side, he complained bitterly because producers of dried fruits and other primary products were compelled to sell a proportion of their production under conditions that were laid down by the Government. Of course, the honorable member is a Minister now and he does not object to such practices. I have not heard any member of the Australian Country Party object to egg boards or the fixing of the price of eggs. I have not heard one of them object to a fixed price for the wheat they sell for flour. They agree with those practices, and I am not going to argue with them on that point. My argument is this: If supporters of the Government are prepared to condone interference with the rights of the individual when it suits their pockets, they should not harp continually on the freedom and the rights of the individual. If members of the Opposition advocate controls of that kind, we are told that we are socialists. Indeed, correspondents of some of the newspapers, commenting on this bill, are saying that the
Government is carrying out some aspects of the Opposition’s policy; and they object. That is why some of the hard-crusted supporters of the Government object so strongly to this measure. If they do not say it in so many words, they say it by their actions. They are saying in effect -
To him that hath shall be given.
Let us turn now to the net gain of £100,000,000. That is not simply a figure that has been supplied by the honorable member for Melbourne Ports. The Treasurer in his speech said that the accumulated funds of the companies concerned were increasing by about 10 per cent, each year and would soon reach £100,000,000. Most of it is coming from the pockets of the taxpayers. Honorable members on the Government side have said, “ Let them have their money and build up their funds. Then they can make loans to young people who want to get married.” Critics of the bill have suggested that the Government will take money from the insurance companies and make it harder for them to lend money for housing. I would like to see more money for housing made available through government instrumentalities. A person who gets a loan from a government authority gets it at a lower rate of interest than that charged by the insurance companies. I defy any opponent of the bill on the Government side to cite any case in which a private company or an insurance company will lend money for housing at a cheaper rate than is charged by the Commonwealth Savings Bank, the War Service Homes Division or by State instrumentalities which get their funds from the Commonwealth Government. Any of those government authorities will lend money at an interest rate lower than that charged by the insurance companies. I am not decrying the insurance companies. What I am decrying is the implication that less money will be made available for housing loans if the insurance companies have to invest in government funds. It is about time the people woke up.
I have told the House about an insurance agent who approached some honorable members, and I have referred to the tax concessions that can be claimed by a person with an income exceeding £2,000 a year. That is not an average case. Let us consider the position of the more ordinary person receiving a little over £1,000 a year. A person with an income of more than £1,000 but less than £1,200 will get a tax concession of 4s. 4d. in the £1 for every £1 he invests in life assurance. But what about the man on a higher income? The honorable member for Mackellar (Mr. Wentworth) spoke of persons who could save £500 a year and would be prepared to invest the amount in tax concession bonds. A man would have to get a pretty big salary to be able to do that. I do not propose to speak on the amendment foreshadowed by the honorable member for Mackellar or on his second-reading speech.
I propose to refer to the case of a man who has an income exceeding £4,000 but less than £4,400. If he invested that £400 by which his income exceeds £4,000, in life assurance or superannuation, he would get a tax concession of 9s. 3d. in the £1. Therefore, actually he would pay only 10s. 9d. for every £1 he paid by way of premiums. These are official figures. That man would benefit by total income tax concessions amounting to 9s. 3d. in the £1. That is where the companies come into it. They are not concerned so much about Bill Smith who pays £400 in premiums and gets a tax concession of 9s. 3d. in the £1. The premiums go into their funds. Although the Government is contributing nearly half of the maximum deduction of £400 that is paid to the insurance companies in premiums, these companies do not want to lend money to the Government at 51 per cent. They want to be able to invest it in huge buildings. Honorable members opposite may argue that insurance companies put their money into housing, but I invite them to look out of the window of my office in Adelaide. They would see the Australian Mutual Provident Society building, the Australian Mutual Life Insurance Company building, and similarly impressive buildings belonging to other insurance companies.
– The insurance companies occupy the buildings.
– The buildings belong to them. They invest their money in the buildings. This bill is designed to limit the amounts invested by insurance companies in huge buildings and to encourage them to place 30 per cent, of their investments in Commonwealth loans. Buildings such as those built by the insurance companies require a tremendous amount of money. Let any one try to borrow £20,000 from a bank and see how much security is needed! One honorable member who is interjecting is a banker and he may know a lot about these things, but I know a little about what the banks do. I know the amounts they are lending and the profits that they are making. Generally speaking, our banks are fine institutions, but they require substantial security before they will make a loan. For a loan of £20,000 a customer may need security of £50,000, or perhaps even more. Honorable members opposite who borrow in big sums will know that. In view of the fact that security required by the banks for a loan may be two and a half or three times the amount of the loan, one may well ask how the insurance companies can finance the construction for themselves of huge city buildings costing £1,000,000 or £2,000,000. They say that they invest their own money in these buildings and of course they get a handsome return by letting office space. The return from these buildings is tremendous. Certainly it is more than the 5i per cent, payable on Commonwealth loans. Indeed, if the insurance companies could not get more than 5$ per cent., they would not bother to build office accommodation. They would simply invest their money in government bonds and collect a cheque every half year.
The objection that this measure may prevent insurance companies from helping people to purchase homes is only eye wash. If these institutions invest 30 per cent, of their money in Commonwealth bonds, the Government will be able to impose lower taxation than would otherwise be necessary. It is rather a sore point with some people that they have to pay taxation because loan money cannot be raised on the market. Therefore, I cannot understand the objections of some Government supporters to this measure. The States are clamouring for loan money and the Commonwealth is clamouring for loan money. We are bringing over 100,000 migrants a year to this country and a house is required for an average of every four of them. That means that immigrants alone need between 25,000 and 30,000 houses a year. We have to get the money to build those houses. Private enterprise is not able to provide them. How can we get the money? Honorable members opposite say, “ The Government should not try to get money in this way “. The honorable member for Moreton (Mr. Killen) said that he would go part of the way or the whole of the way with the honorable member for Melbourne Ports (Mr. Crean) if he wanted to do away with these taxation concessions altogether. But clearly if we cannot get sufficient loan money then people will have to pay more in taxation. We all know that. In effect, we are now saying to the insurance companies, “ Lend back to the Government at 51 per cent, the contributions made to you by the taxpayers - and of course by the Commonwealth Government in the form of tax concessions - or we shall have to obtain by taxation whatever amount we do not raise in loan funds. That amount will then not be available for contribution to your companies “.
In reply to those who maintain that we should not interfere with people’s right of investment 1 say that the world to-day is not like the world of 50 years ago. Poor countries such as Indonesia which have gained their independence are tending to take over foreign-owned investments and to run their own affairs. They simply say, “ Sorry, old boy, but we cannot pay you “. A few months ago I heard a broadcast by a medical man who had come to Australia from north Africa, where he had established himself on the land and done very well. He had got on very well with the natives, but he said that in a few years all the white people would be out of Africa; the black people would have their own country back. That is the general trend to-day, not because people are Communists and not because they are dishonest, but because they realize that they are all God’s creatures. They realize that He did not grow the trees and provide the land and everything else for a select few; He did that for all the people of the world. We all have an obligation to the whole of the people, to all God’s creatures, to the poorest child born in the slums as to the child born in the mansion with riches.
To-night, one of my colleagues read out to me that somebody had died in Sydney and left £840,000. I said, “What was he?” He said, “ He was a company director “. But the child of a company director should not have every opportunity in life while the child of the poor woman whose husband is an invalid goes without. I know that we cannot make everybody alike. I do not propose that we should attempt to do so. But I say that the wealthy have an obligation to the community in general. That is one justification for legislation such as this.
I hope that I have not riled anybody. I have no personal animosities. I have a great love for everybody, the rich and the poor, but particularly the people right down at the bottom. Much could be done by way of taxation to provide a better balance in the community. There should not be any beggars in the streets depending on their more fortunate fellows to throw coins to them. I do not like that. Give them all a fair and reasonable opportunity!
.- I wish to make a few general remarks on the bill without going into all the minute detail which has been very well covered by speakers on both sides. As we all agree on the bill there is no need to get hot under the collar about it. However, this is a most remarkable measure introduced in a most remarkable situation, because we have the spectacle of a private enterprise government, so-called, introducing a socialist measure. Tt has been remarkable to listen to members on the other side of the House trying to justify the measure within the framework of their political philosophy. Three members of the Government parties could not stomach this bill for the very reason that it is contrary to their political philosophy, lt will be interesting to see how those three members vote if the House divides on the bill later. I am referring to the honorable member for Bradfield (Mr. Turner), who spoke last Thursday, the honorable member for Mitchell (Mr. Wheeler) and the honorable member for Moreton (Mr. Killen). Those three members were quite definite that they would not have a bar of the bill because of its socialist tendencies, but all the other members on the Government side have stood behind the Treasurer (Mr. Harold Holt), patted him on the back and told him that he has done a great job in bringing down the measure.
The honorable member for Higinbotham (Mr. Chipp) chided us for our belief in socialism. Does the honorable member not realize that this bill is a great big chunk of socialism? Yet he is attacking socialism here for all he is worth. If honorable members opposite intend to attack socialism I should like them to be consistent. This Government’s policy is riddled with socialism. The Government is responsible for the introduction of many socialistic measures since it has been in office. There is evidence of socialism right throughout the country because, as I have said before, capitalism on its own cannot run any country, and never has been able to do so.
– Do you not believe in free enterprise?
– Honorable members opposite are always talking about freedom. I call them freedom fighters, but with a small “ f “. They get round at election times saying they are against any interference with the rights of the individual. We are sick and tired of hearing this kind of talk over the last twenty years. What are honorable gentlemen opposite like, in practice? They are often better socialists than we are. It is a pity that the people outside do not wake up to honorable gentlemen opposite, who do not act as they talk. This measure is a good example of that.
Among the many examples of socialism which are accepted by honorable gentlemen opposite as normal are egg-marketing boards, wheat boards, barley boards, dried fruits boards, the dairy industry equalization scheme, the move for a reserve floor price for wool within the auction system, the apple and pear marketing boards, publicly owned electricity supplies, road systems, railways and the Postmaster-General’s Department, our defence services, social services, health services, public hospitals, marine boards, housing schemes directed by co-operatives, and the war service homes scheme, which is a Commonwealth responsibility.
There is Treasury control of the economy. We have never had more vicious economic control than we now have under this socalled free enterprise government. The Government’s credit squeeze is as vicious as anything, that has obtained since the great economic depression, and it is producing results just as bad as the depression produced.
The Government prates about being a free enterprise government that believes in individual freedom. What sort of freedom is the Government giving to people? There are 100,000 men and women out of work. That is the kind of freedom that the Government believes in. That policy is a vicious interference with the freedom of the individual. It believes in freedom to collect the dole of £6 2s. 6d. a week. Honorable members opposite are interjecting now. They do not like to hear the truth. You gentlemen on the Government side are complete hypocrites when you talk about freedom. You want the freedom of dole queues. You prate about the evils of socialism, although you are the best socialists this country has seen for years, and you are doing it all under the guise of free enterprise. You are freedom fighters, all right - freedom fighters of clay. You are limiting freedom all round Australia, and you have the nerve to criticize us for our belief in socialism.
– They are just undercover socialists, that is all they are.
– Yes, and well down, too. The Reserve Bank is a completely socialist institution, and the Government has strengthened it since it came into office. The honorable member for Higinbotham got all worked up during the debate, and his words have led me to deal with nationalization and socialization. The Government proposes to socialize assurance companies and superannuation schemes, in effect, by forcing them, by a very clever trick, in the form of tax concessions, to invest 30 per cent, of their funds in government securities.
– But you are supporting the legislation.
– I know, but we believe in handling the matter another way. We believe in going further than this. But you are the people who talk about governments keeping their hands off the rights of the individual, and of letting people have complete freedom, yet you are bringing in a bill like this to restrict freedom. You are actually trying to bribe insurance companies into lending money to the Government, because that is all this proposed tax concession really is. The honorable member for Moreton was right in what he said about it to-day.
There are pages and pages of this bill. The number of words in the bill is staggering. There is also a 34 page document which the Treasurer had to issue to explain the bill to us, so involved and complex is it. After the draftsmen have burned the midnight oil to prepare this bill, after all the speeches have ended in this place and another place, and after the bill becomes law, what then? In spite of the fanfare of trumpets, the life assurance companies and the superannuation funds may still refuse to invest one extra penny in government securities. I wonder what the results of the bill will be in actual investments, because these organizations can still refuse, and in their present mood I think many of them will refuse, to invest in government securities. It seems to me that this bill and all it involves - all these words and the long explanation, are like using a bull-dozer to move a matchbox or, to employ another analogy, let me say that the birth pangs of the bill may be long and painful, yet the child may be stunted, weak and anaemic.
The Government backed down on this legislation. Originally it was to be a coldblooded provision for a 30 per cent, forced loan from insurance companies and superannuation funds. But there was so much criticism of the Government by life assurance companies that the Government backed down and produced instead this measure with its conciliatory provision of a tax concession for assurance companies and superannuation funds which invest 30 per cent, of their funds in Commonwealth securities. In other words, those big firms and superannuation funds are offered a bunch of carrots on the end of a stick, as it were, to persuade them to invest in government securities. There are to be tax rebates in respect of investments in government securities. The Government has watered down the bill, which is no longer in the form in which it was first proposed.
We on this side of the House agree that the insurance companies and the superannuation funds in Australia have become great vested interests. They have been very backward in helping the wider activities of the national government, and have come to regard the national interest almost as being something in another world. Indeed, investment has got right out of balance in this country. Australia’s national needs have often been by-passed by investment made purely in order to get higher and ever higher rates of interest. These investments have not taken account of the national interest. We believe that, in that respect, this bill is a move in the right direction. We believe that a re-direction of investment is urgently necessary in Australia, and in that respect, this bill has brought the whole matter to a head.
There has been much talk about fringe banking institutions. These were hardly heard of a few years ago. Fringe banking is actually by-passing Treasury direction. Here again, we have a big slab of socialism. The Treasurer says, “ We have stated a financial and economic policy for Australia “. But we have this fringe banking by-passing the Treasurer’s direction and the control of the Reserve Bank of Australia and actually forcing the Government into measures of this kind in order to get control of the country’s finances again. Yet we are told that private enterprise must be left alone. On this point, the Government and its supporters have shown themselves to be hypocrites.
The private banks have established hirepurchase branches and thereby encouraged the development of a huge secondary banking system in this country - a development which has reached serious proportions. The banks have their representatives in hirepurchase companies, land-trust companies and insurance companies, and this great subsidiary banking system is almost completely beyond the control of governments, either State or Federal. We on this side of the House believe that this Government has handled the problem with kid gloves over the last few years and is not prepared to grapple with this secondary banking system that is by-passing the direction of the Reserve Bank and the Treasury.
This measure is a sort of belated effort by the Government to tackle inflation, which is the Achilles heel of this coalition Administration. It has allowed the fringe banking empire to grow unchecked until it has become a threat to the Commonwealth’s whole financial structure. Even in this measure, the Government is handling the problem with kid gloves, because, as I said before, Mr. Speaker, the insurance companies and the superannuation funds need not invest Id. in Commonwealth securities even when this bill becomes law. If they say that they do not want to make such investments, the Government cannot force them. It has offered additional tax rebates in respect of investments in government securities, but this bill will not require such investments to be made. As a result, the passage of this measure could be a waste of time and could bring back only a very small trickle of investment in government securities, although we need so much investment in these securities in order to undertake housing and national development programmes.
For these reasons, I consider that this bill does not measure up to what is required. It represents only a flash in the pan and, as I have said, amounts to handling inflation with kid gloves. In every respect, this Administration is a government of fits and starts and half measures. It never takes hold of a problem with both hands and fights it to a finish. That is one of our criticisms of the Government’s economic measures, of which this bill represents a part. So we support the bill, but only because it is a step in the right direction, for it represents a move to get these big financial empires to invest some of their money in Commonwealth securities and in the national interest.
.- Mr. Speaker, this measure is a consequence of inflation. This afternoon, one after another of the Government’s back-benchers quoted one statistic or another in justification of this bill in complete ignorance of the tremendous force with which each particular fact cited struck at the Government’s prestige. Government supporters have directed our attention to the fact that although the investible funds of the insurance companies have increased by £562.000,000 over the last ten years, only £4,000,000 of this has been invested in Commonwealth securities. Surely that indicates that the people who make the decisions under a system of free enterprise in which they have the power of free choice have looked soberly at the current investment value of Commonwealth bonds which were quite a good investment in the days of the Chifley Government. The people who make the choice under the system of free enterprise now condemn Commonwealth bonds.
– That is a little different from what we have been told.
– That is the decision made by the insurance companies. In the last ten years, they have not considered Commonwealth bonds to be a desirable investment. Does the honorable member dispute that? The fact that in ten years the insurance companies have invested only £4,000,000 of £562,000,000 of investible funds in Commonwealth securities indicates that these companies do not consider those securities to be a good investment.
– That is because higher interest rates can be obtained from other investments.
– No. There are many reasons other than that, and the honorable member knows it.
– What other reasons are there?
– Here is one. If you lent £100 to the Commonwealth Government in 1945, you lent about 24 weeks of the basic wage of £4 5s. What do you get back now - sixteen years later - when those bonds fall due? You get back about seven weeks of the present basic wage. Do Government supporters think that any intelligent investor will go on investing funds subscribed to insurance companies in Commonwealth securities if the Government does not arrest inflation? Of course, he will not. Commonwealth securities are not maintaining their face value. But let us forget about their face value. The process of inflation means that the Government has dishonoured its pledge to the people who have invested in Commonwealth bonds, and therefore such investment is no longer sensible.
Earlier speakers - I refer particularly to the honorable member for Higinbotham (Mr. Chipp) - spoke about the position prewar, when the insurance companies invested up to 50 per cent, of their investible funds in Commonwealth bonds. By 1949, the proportion had reached 68 per cent., but I leave out that year, because war-time controls and other factors operated in the intervening years. Commonwealth bonds were the only thing in which insurance companies could invest during World War
There is a great suspicion that all governments throughout the world use inflation as a device for getting out of debt. Whether or not they have that intention, in point of fact they pay their debts by inflationary methods, and have done so in the immediate post-war years.
The original proposals foreshadowed by the Government were proposals of compulsion on the insurance companies. Had the Government carried through those proposals, we would have had a form of capital issues control applying only to the insurance companies, lt would have been very interesting to have seen the Government do this, because the Commonwealth has constitutional power to legislate with respect to insurance; it has not normally the constitutional power to effect capital issues control. If the Government had applied capital issues control to insurance companies, it would have admitted in principle that this ought to be done in other sectors - of the economy. The Government has stepped back from applying these controls and instead is offering the inducement of tax rebates to insurance companies which invest in Commonwealth bonds.
It is not a question of supporting or opposing this legislation. It is a question of honestly facing what has caused it. If the Government is honest, it will admit that the cause of this legislation is the failure over ten or twelve years to arrest the processes of inflation.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 - by leave - taken together, and agreed to.
Clause 3 (Definitions).
– I move-
At the end of the clause, add the following paragraph: - “ (c) securities issued in respect of a loan to a company the principal business of which is the supply and distribution, by a system of reticulation, in Australia or a Territory of the Commonwealth, of water, gas or electricity; “.
This amendment is suggested because cases have come to our notice in which organizations would be compelled, unless this amendment were adopted, to offer rates of interest which could have an undesirable effect upon the bond market generally. Unless the organizations were prepared to offer those rates of interest, they may not be able to secure the funds necessary to carry on their operations at a satisfactory level. If they were compelled to offer rates of interest well in excess of those normally required to raise funds for these purposes, the organizations would have to raise their charges against the consumers of these basic community services - water, gas and electricity.
I think honorable gentlemen will regard the amendment as both reasonable and desirable. I am convinced that in the absence of such a provision, long-term borrowing by these organizations would not be practicable unless they were prepared to go on the market and offer rates well in excess of those which would normally apply to this class of borrowing. If they did not do so, they would no longer be attractive to the principal lenders, the superannuation funds and the life assurance societies which normally lend on long term.
.- The Opposition adheres to its principle that public utilities ought essentially to be publicly owned and that distinct anomalies exist if a few remaining utilities are not publicly owned. Privately owned utilities are a declining race. I know in my own State of Victoria what were normally private undertakings in the gas and electricity fields have become public undertakings, but there are still a few residual examples in some of the other States. The North Shore Gas Company Limited, in Sydney, which corresponds largely with the Gas and Fuel Corporation of Victoria, is still privately owned, and from the point of view of the people of Sydney they ought not to be placed in a less favorable position than are the people of Melbourne merely because one organization is styled a public authority statutorily and the other, whilst a public utility, in some respects is still privately owned. Therefore, at this stage we would offer no objection to the amendment.
.- The amendment refers to water, gas and electricity. I ask the Treasurer (Mr. Harold Holt) whether under the definition of water, money lent to State governments for irrigation schemes would be accepted by the Government when making a rebate to the insurance companies or superannuation funds. In other words, could insurance companies or superannuation funds assist with State irrigation schemes and still qualify for the tax rebate?
– If this were money raised by a State government, I think the honorable gentleman would find that it would be adequately covered by the legislation as it stood before this amendment was proposed.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 4 to 6 - by leave - taken together.
.- I ask the Treasurer (Mr. Harold Holt) whether he can give the committee an assurance that the full consequences of the element of retrospectivity which resides within clause 6 have been considered. If I may, I would without impertinence direct the right honorable gentleman’s attention to the circumstance in which some life offices find themselves regarding the date of 1st March, which is in the bill in a number of places. The fact of the matter is that, in order to qualify for the maximum concessional allowance, some major life offices have remarkably little room for manoeuvre.
The percentages that I have are for the year 1959. They may have chanced last year, but I do not think they would have changed very much. An examination of the percentages shows a distinct contrast relatively between one life office and another. I cite in particular the Temperance and Genera] Mutual Life Assurance Society Limited. In 1959. it held 15.5 ner cent, of its assets in government securities and 33 per cent, of its assets in semi-government securities. Going to the other extreme, in a sense, the City Mutual Life Assurance Society Limited held 32.3 per cent, of its assets in government securities and 2.8 per cent, in semi-government securities. I am sure the Treasurer will appreciate the point. To qualify for the maximum benefit, the Temperance and General Mutual Life Assurance Society Limited must, as it were, hug the percentage of its funds that it held as at 1st March and must build up the 15.5 per cent, in government securities to 20 per cent. That 4.5 per cent, overall may not be very much, but in relation to its existing portfolio distribution, it means a great deal and the company has very little room in which to manoeuvre.
I simply ask the right honorable gentleman whether he can give the committee an assurance that this aspect has been considered. If it has not been considered in all its ramifications, I would ask the right honorable gentleman whether the Government would consider the ramifications of this element of retrospectivity before the bill reaches another place.
– I can assure the honorable member for Moreton (Mr. Killen) that not only has this whole subject been exhaustively examined by the Government, and by very senior and experienced officers of the Treasury, but we have also had the advantage of a good deal of discussion with representatives of the life offices themselves. I think I might almost say that, with the exception of the adoption of the general principle of the 30/20 ratio, which is a convenient way of describing the basic element in this legislation, the life offices have found the Government about as considerate as any government could ever be expected to be in seeking to make the transition as painless as is practicable under the circumstances. The spread of years which is referred to in the legislation is an indication of that. It might seem to the honorable member that these percentages require some fairly painful adjustment. I do not need to go back to 1939 or 1949 to show the remarkable change which has occurred in percentage investment, because even last year there was a very sharp movement in investment in company equities. These things do reveal that the life offices have rather more flexibility In this matter than perhaps some honorable members have expected up to this point. 1 assure the honorable member for Moreton that, whilst shaping the measure and conducting our discussions with the object of achieving substantially the result that the Government set out to achieve in what we believe to be the national interests, we have paid what we consider to be proper and sensible regard to the interest of the companies affected.
.- When the honorable member for Moreton (Mr. Killen) spoke this afternoon, he instanced the fact that whilst some of the insurance companies had the right in total as to the 30 per cent., there was some difficulty arising out of the 2 to 1 differential in favour of the Commonwealth as against a State. I think this simply highlights the difficulty the Government must encounter when it attempts to tinker with one thing without considering some of the other things involved.
There are two reasons why the insurance companies have invested in local government securities in preference to Commonwealth securities. To begin with, there is a differential of one half per cent, in favour of the semi-governmental securities arising out of the fact that a tax concession of 2s. in the £1 is granted to investors in Commonwealth securities. In order to be able to raise money in the face of that concession, the semi-governmental rate has always been approximately one half per cent, above the Commonwealth rate.
– Can I tell my honorable friend that that argument does not apply over all?
– It does not apply as a rule, but it does apply to some extent. The point I am making is that when you begin to tinker with one thing without looking at some of the others, you are likely to get into difficulties. Another reason why some of the insurance companies have preferred local government securities to Commonwealth Government securities is that they have found, when taking into account the overall tax position as against the one half per cent, differential in favour of semigovernmental securities, that it has paid them to invest in semi-governmental rather than Commonwealth securities. Here again it has been purely a matter of tax calculations.
A third reason is that the activities of some insurance companies are more heavily concentrated in some States than in others. Foi instance, the activities of the Australian Mutual Provident Society are more heavily concentrated in Victoria while those of some of the other companies are more heavily concentrated in New South Wales. Because of this, the companies concerned have felt a sense of patriotism about subscribing to local government rather than to Commonwealth securities over the years. I should think that on that point at least the Government ought to give some consideration to reviewing the question with a view to deciding whether, in the light of changes that are being made, this one half per cent, differential should continue and whether the 2s. rebate which applies to income from Government securities ought to be extended to future issues of semi-governmental loans also. I merely make that comment to the Government. It is time that some of these things which have existed for a very long time and for which there may have been very good reason some years ago were examined with a view to deciding whether, with the change of circumstances, the reason that existed originally still exists to-day with very much force, if any. I have not had time to consider the matter in great detail, but I throw out the suggestion to the Treasurer. No doubt this is something that would have to be taken up with the Loan Council which will be meeting shortly. I know that the members of the Loan Council have said on some occasions that they would prefer to borrow at one half per cent, less, but what stops them is that certain investors get a rebate of 2s. in the £1 if they invest in Commonwealth securities whereas they do not enjoy that cor.cession when investing in semi-governmental loans. Does that concession any longer serve as a useful barrier? In my view, if the 2s. rebate were extended to semi-governmental loans it might at least force down the semigovernmental rate by one half per cent., and that would be a desirable move. At least, the suggestion is worth considering.
Mr. HAROLD HOLT (Higgins- what I said earlier. I now have before me figures which I think honorable members will find illuminating. Perhaps I should have stressed the actual time which is available for this process of adjustment, lt runs from 1961 to 1971 provided the Commissioner is satisfied that a bona fide attempt is being made to meet the requirements of the legislation. There is a good deal of flexibility in point of time. 1 think the honorable member for Moreton was concerned whether there was enough flexibility in point of space - whether they had the resources for this purpose. He may be a little comforted by the figures which I am about to quote. They exclude the assets of the Queensland and New South Wales State Government life offices and relate to the estimated holdings at ten-yearly intervals of ordinary preference shares by life offices. 1 shall also quote the figures relating to 1960. In 1939 the total holdings out of Australian assets estimated at £224,000,000 were £3,000,000, or 1.3 per cent. In 1949, the total holdings were £18,000,000 out of total Australian assets of £404,000,000. The ratio then was 4.5 per cent. By 1959, the figure had risen to £69,000,000, or 7.3 per cent, of total Australian assets worth £926,000,000. In 1960, the figure rose sharply to £99,000,000, or 9.9 per cent, of total Australian assets estimated at £1,000,000,000. If, in the one year, there can be that sort of movement in company investment, it should give the honorable member some idea of the scope which exists for this business of adjustment. I am not going to say that it is as easy in the case of one company as in that of another, but I am quite confident that the survey made by my officers and the discussions they have had with representatives of the life offices make this a quite practicable approach to this whole problem. The only other point I might make on this aspect of the measure is that it tends to reveal the rather freakish effect - certainly not intended by any section of this Parliament when the legislation was originally passed - which the inbuilt discrimination in favour of investment in company shares, as I described it in my second-reading speech, has had on the investment policies of the life offices, and the figures which
I have given for 1959 and 1960 confirm that fact.
Clauses agreed to.
After section one hundred and twelve of the Principal Act the following section is inserted: - “ 112a. - (1.) The assessable income of a life assurance company, being a company in relation to which section one hundred and ten a of this Act applies, shall not include so much of each amount of income derived during the year of income from the assets included in an Australian statutory fund of the company or in any other fund maintained by the company in respect of the life assurance business of the company as is ascertained by applying to that amount the proportion ascertained in accordance with the formulaa/b , where - a is so much of the calculated liabilities of the company at the end of the year of income as, in the opinion of the Commissioner, is referable to superannuation policies included in that fund; and b is so much of those calculated liabilities as, in the opinion of the Commissioner, is referable to all policies included in that fund. “ (2.) For the purposes of the last preceding sub-section, a policy shall be taken to be included in a fund if, in the opinion of the Commissioner, liabilities under that policy would be payable from that fund.”.
– I move -
Omit sub-section (2.) of proposed section 112a, insert the following sub-sections: - “ ‘ (2.) In the application of the last preceding sub-section, in relation to the year of income, in relation to a fund maintained by a life assurance company that has made an election that this subsection shall apply in relation to the company, being an election that has effect in relation to that year of income, the expressions “ superannuation policies “ and “ policies “ shall be taken not to include policies that are not Australian policies. “ ‘ (3.) The last preceding sub-section does not apply in relation to a fund in relation to which the Commissioner is of opinion that less than onethird of the value of b, as ascertained for the purposes of sub-section (1.) of this section in relation to the year of income, is referable to Australian policies. “ ‘ (4.) For the purposes of this section, a policy shall be taken to’ be included in a fund if, in the opinion of the Commissioner, liabilities under that policy would be payable from that fund.’.”.
This amendment also follows as the result of some further discussions which we have had with representatives of the life offices. In my second-reading speech I outlined the general principles of this legislation. Among these were provisions that superannuation income could be made tax free and that the present deductions under section 115 could be increased on a sliding scale based on the extent to which public authority securities were held in excess of what has been called the 30/20 per cent. ratio. The amendment to clause 7 will enable companies which do not set up separate superannuation funds to make a more accurate determination of the amount of income relating to their superannuation business in order to determine the amount of income which will be exempt from taxation.
Companies which set up separate superannuation statutory funds will be able to receive the fullest possible benefit from the revised section 115 by holding no more than the 30/20 per cent. ratio in their superannuation fund and applying additional holdings of public authority securities to their ordinary life statutory fund. Companies which do not decide to set up separate funds will have the adjustment to the section 115 deductions based on the proportion of their holdings of public authority securities to their total assets referable to their Australian business, including the assets held in relation to their superannuation business. The amendment to clause 9 - and I will come to that in a moment but I thought it might be convenient to forecast it now - is designed to allow those companies the same benefits in relation to their section 115 deductions for which they could qualify otherwise if they decide to set up a separate superannuation statutory fund. This will give all companies the maximum incentive to build up their holdings of public authority securities. The precise nature of both amendments is set out in the supplementary memorandum which has been circulated to honorable members.
– Whilst accepting the assurance of the Treasurer (Mr. Harold Holt) with regard to the amendment that he has moved, I think it merely serves to indicate the inadequacy of this Parliament as a committee in dealing with this sort of thing. We are here facing a very comprehensive adjustment to certain sections of the Income Tax Act as it has operated for many years. I have not had the opportunity to see these amendments until a very few moments ago.I have not had the opportunity, like the Treasurer has had, to have a departmental expianation, but I am sure that those members of the committee who have just listened to the explanation might be pardoned for saying, honestly, that they do not quite understand what is involved. I only want to note that point.
– Nothing is involved which detracts from the measure.
– I am prepared to accept the assurance that nothing is involved which detracts from the measure, but it does serve to show how complicated this measure is; and even with all the deliberations which have taken place in the last two or three months since the matter was first mooted - and between last week when this bill was introduced and to-night when it has reached the committee stage - we still have an amendment to make this thing more mechanically simple than previously.
On behalf of the Opposition, I do not offer any objection to this amendment. We have accepted the principle that there ought to be a direction of insurance investment into more socially useful channels. We suggested, earlier, that rather than tie it indirectly to the taxation powers it should have been done directly some other way; and because the Government has chosen to do it this way, it has got into the sort of tangle in which it now is. I will enlarge on that point later, because the next clause which we are to consider to my mind must surely be the most peculiar clause in any act in Australia. I refer to Clause 9. I simply make the point, now, that we do not object to the amendment which we are now contemplating, because I accept the assurance that it clarifies what is intended to be done. It serves to show the inadequacy of the way in which we do things in Parliament at times.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 8 agreed to.
Section one hundred and fifteen of the Principal Act is repealed and the following sections are inserted in its stead: - 115a.- (1.) “ (3.) In any calculation for the purposes of the last preceding section in relation to a year of income in relation to which an election by a com pany under sub-section (1.) of this section has effect, the values of k,l, m and n shall, in relation to the company, be ascertained without reference to the cost of any public securities or Commonwealth securities issued in respect of a loan raised outside Australia and the Territories of the Commonwealth.
– I move -
Omit sub-section (3.) of proposed section 115a, insert the following sub-sections: - “ ‘ (3.) In any calculation for the purposes of the last preceding section in relation to a year of income in relation to which an election by a company under sub-section (1.) of this section has effect -
the values of k,l, m and n shall, in relation to the company, be ascertained without reference to the cost of any public securities or Commonwealth securities issued in respect of a loan raised outside Australia and the Territories of the Commonwealth; and
the values of d, e andf shall, in the application of sub-section (1.) of the last preceding section in relation to the company, be multiplied bya/b, where - a is so much of the calculated liabilities of the company as, in the opinion of the Commissioner, is referable to Australian policies (other than policies included in a superannuation statutory fund); and b is so much of the calculated liabilities of the company as, in the opinion of the Commissioner, is referable to Australian policies (other than policies included in a superannuation statutory fund) that are not superannuation policies. “ ‘ (3a.) For the purposes of the last preceding sub-section, a policy shall be taken to be included in a superannuation statutory fund if, in the opinion of the Commissioner, liabilities under that policy would be payable from that fund.”.
I have already given a brief explanation of this amendment, but in view of what my friend from Melbourne Ports (Mr. Crean) has said I think I had better hear what he wishes to address to this clause before I discuss it further.
.- Again, for the same reasons as previously, we offer no objection to the amendment, which is intended to clarify what is not very clear. But I ask the committee to look at this clause which begins on page 11 of the amendments that we are contemplating and continues on to page 16.
– Can I ask my friend if he understands it? I confessI do not. I think we should have an examination.
– I do not understand it, and I said so during the debate on the second reading. I do not know whether any one else was quite as modest. But at least I ask honorable members whether in all their experience they have ever seen a formula similar to that appearing on pages 12 and 13 of the bill. On the night it was introduced somebody asked, “ Have you been brushing up your algebra?” I was trying to follow the syntax of the speech and had not had time to look at the clause; but I can understand what was meant by that question because this peculiar formula begins on page 12 and continues on page 13. Consider, for example, the provision in proposed section 115(1.) (a) for a deduction in accordance with the formula
or the formula
whichever produces the greater amount. It is very difficult to determine, to begin with, an amount at all. This simply shows the peculiar position you get into if you try to do indirectly what you ought to be doing directly.
Earlier in the debate on this measure we had a little bit of what I was going to call breast-baring, but which I shall refer to as expression of personal opinion by three honorable members, whose courage did not take them to the point of dividing on the matter. However, they showed that they thought the Government was moving in the wrong direction. For our part, we do not say it is moving in the wrong direction, but simply that it is going about things in the wrong way. If the Treasurer (Mr. Harold Holt) were really honest about this matter he would admit that what the Government is trying to do is to induce insurance companies to put 30 per cent. of their investments after 30th June into government securities, either Commonwealth loans or loans of State or semi-government instrumentalities. But instead of saying so straight out, the Government has tied in the income tax formula so that it can indulge in the luxury of saying that there is no compulsion connected with the provi sion, and that the scheme is a purely voluntary one. In my view, this is simply a piece of polite hypocrisy, which has resulted in these peculiar legislative difficulties. I ask honorable members to consider seriously where we are getting to with legislation of this kind. Look closely at these two or three pages of formulae in clause 9.
As I have said, we have an amendment brought forward this evening to clarify what certainly is not very clear. I am prepared to accept the assurance of the Treasurer that it does clarify the position to an extent, but I suggest that it still leaves the position very obscure, because of the subterfuge that the Government has indulged in. Let me suggest a kind of competition. I ask honorable members who have been in this Parliament for many years to look through all the statutes of the Commonwealth and see whether they can produce a provision that resembles in any way the one that the committee is now discussing. There will be no prize for success in this quiz, but at least it should lead to some salutary examination of the procedures of this Parliament In my view it is absurd to ask the members of this committee, after the little time they have had to consider the measure, to say seriously that they understand what this paraphernalia means. I contend that it is only paraphernalia, that the actuary is usurping the rights of the Parliament and that something should be said against such a practice.
.- I am bound to say to the committee, and particularly to the Treasurer (Mr. Harold Holt), that when I first saw this clause I thought it was an absolute shocker. I went to my friend, the honorable member for Fawkner (Mr. Howson), who mastered in mathematics at Cambridge, and he was able to assure me that it was quite intelligible to him. But when I found that my friend, the honorable member for Farrer (Mr. Fairbairn), was a little bewildered by it - and he has some claim to be able to understand the intricacies of the quadratic equation - I was still disturbed.
Surely there is some way of getting around this problem without putting such formulae as this into legislation. Lord only knows, I frequently inveigh against forms of administrative legislation, but I would infinitely prefer regulations to be made under an act than to have this kind of mathematical mumbo-jumbo put into an act. Really and truly, this is quite pathetic. The bureaucrat, bless him - and I do not mean a blessing in any ecclesiastical sense - regards the Parliament as something of a rubber stamp, but here is the mathematician rampant and the Parliament couchant. From here on it is the mathematician who will make the decision with regard to these provisions.
– Couchant, but not dormant or silent.
– Well, I have known some people in such a position who have complained. Be that as it may, the fact of the matter is that if every member of this Parliament were to be set a problem based on the formula that we are now considering, I think it would be long odds on that the failure rate would be remarkably high. I hear many honorable members trying to suggest, by interjection, that I am wrong. Of course there are some people who find difficulty in fighting their modesty on questions like this. I know of one, two, or possibly three or four honorable members who may be able to solve problems that could be expected to arise under this legislation. In any case I would ask the Treasurer whether the administrative procedure which might be adopted under this section of the legislation has been considered. Would it not be preferable to achieve the result by regulation! I also ask, if I may do so without impertinence, whether the actuaries of the life offices were consulted in the preparation of these provisions. I have been informed that the intricacies of actuarial work are very great, and I would hate to have us put into an act something that would lead to endless disputation between the life offices and the Treasury.
– I would not have bothered to rise had I not felt impelled, first, to refer to a point raised by my friend, the honorable member for Melbourne Ports (Mr. Crean) and, more particularly, to deal with one of the remarks made by the honorable member for Moreton (Mr. Killen). The honorable member complained about the mumbo-jumbo that has been inserted in the bill,, and he proceeded to blame the bureaucrats, as he was pleased to describe them, for this kind of mumbo-jumbo.
– What impertinence!
– I agree. Every one knows, including the honorable member for Moreton, that it is not because of any fault on the part of the bureaucrats, as he calls them, that we are considering what I think is an almost outrageous piece of legislation. I give it this description because nobody, apart from a very few mathematicians, will ever understand it. I marvel that even an Einstein could work out these formulas. I must admit that most of my mathematics was learned counting sheep, but when I hear such a learned gentleman as the honorable member for Moreton frankly admit that he looks upon this clause as nothing but mumbo-jumbo, I do not feel so bad about my failure to understand it. In any case I think it was most unfair of the honorable member to blame the bureaucrats. He knows very well that the persons who should be blamed are those occupying the back benches on the Government side of this chamber - and probably including the honorable member himself - who brought pressure to bear upon the Treasurer (Mr. Harold Holt), who never intended, when these provisions were first contemplated, that such mumbo-jumbo should be used. When the right honorable gentleman said that he proposed to bring in legislation of this kind he made it clear, at any rate to me, that he intended to do so in a straightforward manner, that the legislation would be easily understood, and that he was going to come straight to the point and show clearly what he wanted. It is people like the honorable member for Moreton - if he, personally, was not involved - who brought pressure to bear upon the Treasurer, who was forced to go to the bureaucrats and ask them to produce a provision to give effect, not to his wishes and not to their wishes, but to the wishes of the pressure groups in various electorates on whose behalf representations were made by their parliamentary representatives. I can well imagine that the bureaucrats would not be very happy about the Treasurer’s request to get round what should have been a simple straightforward proposition in this indirect, politely hypocritical way. I venture to wager that the bureaucrats were none too pleased over this.
To suggest that it was their baby, and that they virtually forced the Parliament to accept this stupid piece of legislation is quite unfair, and completely opposed to the facts. Nobody knows better than do the honorable member for Moreton and the other glum-faced people who sit behind him and at his side that the people really responsible for this are not the bureaucrats but those, including the honorable member himself, who now criticize the bureaucrats for it. Before 1 vote for this measure - I might have to vote against it or even abstain - I should like the Treasurer to explain to my satisfaction what he means by this formula -
I should like the right honorable gentleman to explain in simple, easily understood terms what that means so that I can explain it simply to any of my constituents who are caught up in this legislation and have to pay taxes accordingly. No member of the Parliament has the right to vote on any proposal unless he can walk out of the House and explain in simple terms to the people who elected him what the legislation he voted for really means.
Then, I would like the Treasurer to explain these paragraphs -
I am certain to have constituents come to me with questions about this measure, and I want to be in a position to tell them that I understand it. I do not want to admit that I voted for something I did not understand. The Treasurer has a duty not only to me but also to the other 121 members who can vote on this bill to explain simply how this measure will work out. I should like the right honorable gentleman to explain this also (2.) In the application of the last preceding subsection in relation to a life assurance company in relation to a year of income - a is the calculated liabilities of the company as at the end of the year of income;
That is simple. Then it goes on - b is the value, as at the end of the year of income, of the assets included in the insurance funds of the company, being assets from which the company derives assessable income;
That also is simple. Then it goes on - c is the value, as at the end of the year of income, of all the assets included in the insurance funds of the company;
The succeeding lines are not quite so simple -
The next part is very simple because it states - i is, subject to the next succeeding section, the cost of the assets of all the Australian statutory funds of the company; / is, subject to the next succeeding section, the cost of the assets of all the Australian statutory funds of the company other than superannuation statutory funds; k is the cost of the public securities included in the assets of all the Australian statutory funds of the company; / is the cost of the public securities included in the assets of all the Australian statutory funds of the company other than superannuation statutory funds; m is the cost of the Commonwealth securities included in the assets of all the Australian statutory funds of the company; and n is the cost of the Commonwealth securities included in the assets of all the Australian statutory funds of the company other than superannuation statutory funds.
Will the Treasurer, for the benefit of all honorable members, elucidate what that means? He should be able to explain in simple, clear, easily understood terms what it means, because when this bill becomes law I shall have to tell my constituents what their liabilities are under these provisions.
.- It is easy for honorable members to throw cheap gibes at the Parliamentary Draftsman and his officers for the way in which this clause has been drawn. Honorable members who adopt that attitude show their own ignorance. If honorable members read this part of the bill, they will see that it applies only to life assurance companies. The only ones who will be concerned are the life assurance companies and the Commissioner of Taxation. All life assurance companies have their own actuaries who are mathematicians. Similarly, the Commissioner of Taxation has actuaries on his staff. Therefore, if an algebraic formula is the simplest way of expressing something that has to be expressed in legislation, why not express it as an algebraic formula? What do we learn algebra for? Apparently, a large number of honorable members either never learnt algebra or have forgotten it.
It is well known that many arithmetical problems are extremely difficult to work’ out and even more difficult to express in English in any way other than by an algebraic formula. Therefore, although the layman may have difficulty in understanding it, those who have to apply these provisionswill not have such difficulty. They are expressed in the way in which such a complicated matter is most easily expressed. If we are going to tax or give exemptions from taxation to life assurance companies who carry on one of the most complicated and mathematical of all businesses, obviously any tax formula in relation to their income or any exemptions from taxation must of necessity be expressed in a complicated mathematical formula.
– You have said that ten times.
– If I said it 100 times, J doubt whether the honorable member would have the brains to understand it. The honorable member for East Sydney simply does not want to understand it, no matter how simply it is explained. So far as this part of the bill is concerned, the Treasurer (Mr. Harold Holt) has told us that he has conferred with the life assurance companies on it. The draftsman obviously would have conferred with the actuaries or mathematicians of the Taxation Branch, and as long as they understand it, that is all that matters. The honorable member for Hindmarsh (Mr. Clyde Cameron) tried to make the provision appear very complicated by referring to the algebraic formula without giving the definitions of each item in that formula. Because of the way in which he delivered his speech, the provision was difficult to understand. If he had given the definitions first, any schoolboy who had learned elementary algebra would have been able to follow the simple algebraic formulas which are set out in this clause.
.- I should like to congratulate the Treasurer (Mr. Harold Holt) on getting a Chinese laundry bill into a parliamentary document. Einstein himself would be unable to analyse this. If honorable members agree with the argument of the honorable member for Sturt (Mr. Wilson), he should make his next speech in albegra. We would all be in the chamber to listen to him. I rose, Mr. Chairman, to speak on a more serious matter. I think there is a printer’s error in the equation “ / equals / minus 1 01 plus 1 On over 20/ “. Should not that be “ / equals / plus 10/1 plus 10/, plus 20/ over 10n”? I am sure it should. The more I look at this the more it becomes crystal clear that there has been a grievous error.
If this is not the professor’s note to his wife to put the milk out and lock up the cat something serious has been done to d equals 10/ minus 3/ over 10/. It is the recurring 10/ to which I take exception. I think that if this formula is not examined under the microscope there will be a lot of trouble. It would have been much simpler for the Treasurer to have stood up and said, “ The insurance companies are bloated with funds. We want 30 per cent, of them invested in the loans of this country and tn hell with 1 m over 5* over 10m minus eb.”
Mr. CLEAVER (Swan) r9.421- - It is to be regretted that the honorable member for Hindmarsh (Mr. Clyde Cameron) has tried to bring ridicule upon the Treasurer (Mr. Harold Holt) and ‘hose associated with the drafting of the bill. It is rather significant that the honorable member for Hindmarsh did not participate in the debate on the second reading of the bill. He has used the committee for this purpose. He was most political in his remarks, which were contrary to the general presentation of the views of the Opposition by the Leader of the Opposition (Mr. Calwell).
In the contribution which I endeavoured to make to the second-reading debate, I referred to these provisions as among the most complex in the income tax legislation. As an aside, 1 admitted that they were complex, even to students of taxation law, of whom there are many, I am sure, on the Opposition benches as well as on this side of the chamber. Perhaps my comment reminds them of the many hours that they devoted to trying to understand, in their student days, section 115 of the principal act, which deals with the income tax upon life assurance companies. T said that it seemed inevitable that there should be some complexity in a law of this kind. Of course, we have to make provision for the legal eagle, the taxation consultant, and others who have to seek a living in trying to interpret laws of this kind. I suppose that we just have to accept the fact that there are aspects of ‘ such laws which cannot be put into simple every-day terms or even simple formulas. I have Keen amused, as have members of the Opposition, by some of the comments which have been made. Many and varied have been the comments from my colleagues behind me. There is a reminder, surely, in this formula that our days of algebraic knowledge seem to be getting very far distant.
Let me remind the committee that the Opposition, at one stage in the debate, said that these amendments to the income tax legislation represented a massive reorganization of the income tax law as it related to the life assurance companies. That has been denied,’ and that denial should be underlined in this committee debate. This is not a re-enactment of section 115. It should be recognized that the formula, complicated as it is, has been part and parcel of the section since this provision was instituted, I think, in 1933. An amendment which is proposed to the formula is now before us.
I think that we have to recognize, as a committee, that this formula could have been criticized, as it has been criticized in this debate, on many occasions in other years. I do not think that it has been criticized in that way. We have to accept it as part and parcel of existing income tax law. Clause 9 deals with deductions in relation to the calculated liabilities of life assurance companies. As the honorable member for Sturt (Mr. Wilson) said, an actuary is associated with every life assurance company and he is trained to take in his stride a formula of this kind.
This formula originally provided for a 4 per cent, deduction in relation to calculated liabilities. It was later amended to 3 per cent., which exists under the law to-day. Now, a bonus plan has been introduced. In conclusion, I suggest to the committee that in bringing in this incentive or bonus plan relating to section 115 of the act, we are bringing in a further complication to a section which is already complicated, as I have said, even to students of taxation law. I have underlined, I trust, reasonably successfully, the fact that this is not a new scheme. It is only an amended formula. It is a complication of what we can rightly term an already complicated piece of legislation.
.- I remain unimpressed and uninformed by the orations delivered by the honorable members for Swan (Mr. Cleaver) and Sturt (Mr. Wilson). The honorable member for Swan said that he hoped that he had been reasonably successful in explaining the intricate details of this clause to the committee. For my part, I am reasonably unimpressed by certain comments of the honorable member. We are still as uninformed on this clause as we were when the honorable member for Hindmarsh (Mr. Clyde Cameron) spoke. I do not intend to go into all the figures again but to-night we have heard about the relationship between a, b and c. Even the honorable member for Moreton (Mr. Killen), who is recognized, at least by himself, as one of the brightest intellects in the Parliament, said that this was all mumbojumbo. I think that that is quite clear from the two speeches that have just been made.
It is necessary to turn to the expert for details of the matters incorporated in this bill. How do we know that the hidden meaning of the algebraic expressions in this clause is not contrary to what the Government intends? For instance, I ask whether any honorable member is competent to understand the following sub-paragraph which appears on page 12 of the bill: -
I suppose that if that formula does not suit we can use the
formula, if it pro duces the greater amount. Will any one say that the honorable member for Sturt (Mr. Wilson) or the honorable member for Swan (Mr. Cleaver) explained to our satisfaction what that provision means? Then we drop down the scale to paragraphs (b) and (c) which read -
or the formula
whichever produces the greater amount.
At schoolI was a keen student of algebra, but I say quite frankly that this provision is beyond my comprehension. I do not know what this clause is intended to convey to the Parliament. I know that it is necessary to rely on experts in these matters, but could any member of the Government explain to the satisfaction of electors or of any member of the Parliament just what that provision means in terms of pounds shillings and pence to the life assurance companies or others who will be affected by the legislation? I suppose that this is one of the most remarkable documents ever presented to the Parliament. It is written in such a way - no doubt deliberately - as to make it incomprehensible to honorable members, and I defy the Treasurer, who has failed to explain satisfactorily much less complicated financial problems, to explain what the clause really means. As the honorable member for Hindmarsh (Mr. Clyde Cameron) asked, how can any member go back and lucidly, explain to his electorate the meaning of the items on pages 12 and 13 of the printed copy of the bill?
I believe that such matters should be written into the bill so that they are capable of interpretation by members of the Parliament. When the Treasurer explained this rather complicated legislation in broad detail in his second-reading speech, honorable members never thought for one moment that the bill would be more like an algebra textbook for use in high schools than anything else. I do not know what the Treasurer intends to do about it, or whether or not he can alter it now, but certainly a lot of things in the bill need explaining, and we have not had them satisfactorily explained by the Government back-bench supporters. It is of no use saying that there is no need for us to understand exactly what
I do not want to put any sinister interpretation on the intentions of the Treasurer, but is the Government, in some way or other, trying to put over on the insurance companies something that it is not game to announce that it is doing? The Treasurer is a man well versed and well skilled in the art of politics, although in recent times he has slipped in his approach to a few things. He may be getting his own back on the insurance companies through this legislation, and what better way is there to do it than under a formula like
better way could there be of doing this than by using the formula
What hidden meaning is behind that? How much is it going to amount to in terms of pounds, shillings and pence?
If there is no sinister intention by the Government, why are not these provisions written in plain English instead of in algebra? These matters are well worth investigating. I hope that the Treasurer will enlighten the Parliament, if he can, by showing that there is no sinister intention in this clause. Why should this provision be in algebra? I suppose that this is the first time in the history of the Parliament that such a thing has been done. With other honorable members on this side, as well as Government supporters, I am concerned about the approach taken in the legislation. The Government’s intentions in any measure should be plain so that honorable members may discuss them. They should not be shrouded in an algebraic formula, as they are in this bill. The Minister for Social Services-
The CHAIRMAN (Mr. Lucock).Order! I remind the honorable member that the Minister for Social Services is not concerned with this bill.
– I was only making a passing reference to the fact that he might write some such formulas into social services legislation so that the Government would be able to reduce pensions, or something of that sort. I ask the Treasurer to explain the whole of the figures shown in the clause in a way that will enable honorable members to explain them to their electors, to people in life assurance companies and to others who will be affected by the legislation. We should be able to explain to them that this is not the implementation of a gross socialistic plot by the Government to take more than it wants people to know it is taking. We should be able to satisfy the people that this is not an effort by the Treasurer to disguise the real meaning of the bill by using algebraic formulas instead of plain English. We should be able to satisfy ourselves and our electors that this legislation does not mean something entirely different from what is intended.
– It is obvious that some members of the committee, particularly some members of the Opposition, are getting a little good, clean fun at my expense and also, I regret to say, at the expense of a very hard-worked and able body of officers who have been assisting the Parliament in the presentation of this very difficult legislation. The taxation law which applies to the life assurance companies is, as a colleague has pointed out, one of the most complicated parts of the taxation legislation. There is nothing new about that. Indeed, that position obtained during the years when honorable gentlemen opposite occupied the treasury bench.
– Do you understand the bill?
– Well, I think I get the general drift of it, which I doubt that the honorable gentleman opposite has attempted to get. The really significant thing about the rather slap-happy discussion of this clause is that, with the exception of the honorable member for Moreton (Mr. Killen), whom I exclude, those members who have been most vocal on the clause are, I believe, the members who paid the least attention to what was going on during the second-reading stage. It is quite obvious, Sir, that these airy and, I know, humorouslyintended references to what are somewhat slightingly termed “ the bureaucrats “ behind us, were only flippant. I hope that the gentlemen referred to will not take seriously what was, I think, intended to be flippancy only. We all have reason to be grateful for the labour and the skill which these men bring to the task of assisting the Parliament with such problems. But I say that those who have engaged in this somewhat flippant behaviour have quite obviously not done the bill or the officers concerned the justice of reading the explanatory memorandum which was produced at some pains to assist honorable members to understand the difficult and complicated provisions of the legislation. I have in my hand an explanatory memorandum on the bill and it runs to 33 closely printed pages. Obviously clause 9 is one of the most complex of all the clauses, because the explanatory memorandum on it runs to eight pages. If there is a genuine desire for information on what the algebraic formulas set out in the bill signify, that information can be found in the pages of the explanatory memorandum.
Honorable members may ask why it is necessary to put a bill into this form. As my colleague, the honorable member for Sturt (Mr. Wilson), pointed out, the people directly concerned with this legislation are taxpayers - in this instance the life assurance companies - and the Commissioner of Taxation. I can assure the committee that the actuaries of the life offices have been in consultation with the officers of the Treasury, the Life Offices Commissioner and the Taxation Branch, on the details of the legislation. Had the provisions been spelt out in words the bill would have run to several more pages. These people are accustomed to dealing with problems of this kind expressed in the manner in which they are expressed in the bill. I have had no complaints from them as to the manner of the drafting of these provisions.
The amendment which I have proposed is designed not so much to clarify drafting as to increase, without the need to establish a separate statutory fund, the opportunities for obtaining the tax concessions for which the bill provides. I am not surprised that honorable gentlemen find the detailed provisions difficult to follow, but, after all, we are concerned, both as a parliament and, at this stage, as a committee,principally with the substance of what the bill sets out to achieve and with ensuring that the measure produces that result. I have not heard anybody argue seriously that this measure does not produce the result which honorable members, voting as the House of Representatives, have already endorsed without a division. Having given an assurance which I do not believe any honorable member opposite will seriously challenge, I hope that we can proceed with the remaining clauses of the bill, Sir.
– Mr. Chairman, I think that at least it ought to be noted that this clause, which, as I indicated earlier, begins at the lower part of page eleven and extends to about one-quarter of the way down page sixteen of the bill, replaces a very simple section in the Income Tax and Social Services Contribution Assessment Act. That is section 115, which has stood in its present form since 1942. It begins -
An amount equal to three per centum of that part of the calculated liabilities of a life assurance company. . . .
Honorable members who know arithmetic only and not algebra will see that at least the proportion of3/100 still exists in the new formula contained in sub-section (1.) of proposed new section 115 of the act. The reason for the complication - and I think this should be reiterated - is that in future the benefit that existing section 115 of the act simply confers on all insurance companies will not be obtained unless the insurance companies do certain things. One of the things required of them is that they shall in future invest a minimum of 30 per cent. of their investible funds in government securities - 20 per cent. to be in Commonwealth securities and 10 per cent. in local government securities. If that intention were stated simply as a proposition, there would be no need to amend the principal act. Whatever effect such a proposition may have had on actuaries and experts in insurance offices, at least it would have been a proposition intelligible to the community. And I take it that a parliament is supposed to represent intelligibly the community at large when it passes legislation.
I can accept the Treasurer’s proposition that because he seeks to do clandestinely what he ought to do openly he has to have a formula of this kind. But there is no gainsaying the fact that the Government wants so to control the investment of insurance funds as to ensure that the insurance companies will find the tax situation unprofitable unless they devote at least the percentage of investment which I have mentioned to government securities. Why not simply say that honestly? There will then be no need to alter the provisions of the principal act and we shall not be faced with these absurd formulas. I say that they are absurd, and the discussion that has taken place this evening has highlighted the absurdity of this sort of procedure. When a parliament does something absurd, the principles of government are in very grave danger indeed.
.- Mr. Chairman, I support the honorable member for
Melbourne Ports (Mr. Crean) and my colleagues on this side of the chamber. If the honorable member for Sturt (Mr. Wilson) suggests that his education in algebra is superior to that of anybody on this side of the committee, I suggest that he substantiate that claim later by appropriate measures. The English language is the vehicle of expression used by honorable members on this side of the chamber, and we are accustomed to use the language in a way which makes our meaning clear. As the honorable member for Melbourne Ports has said, if the Government’s intention is to do a certain thing, let it say so explicitly. I want an explanation from the Treasurer. If this formula is so completely explicit and so selfexplanatory to an expert in algebra like the honorable member for Sturt, why is sub-section (5.) of proposed new section 115 necessary? I shall read that sub-section, although I do not expect anybody to understand what it means. It states -
Where, in relation to a life assurance company in relation to a year of income, the Commissioner
This undermines the accuracy of the preceding sub-sections, so far as I can see - is of the opinion that the value of i, /”, k, I, in or n is abnormally high or abnormally low. having regard to all the circumstances and in particular to that value at any time or times during the period of twelve months ending six months after the end of the year of income, the Commissioner may determine the value of i. ;’, k, I, m or n as the case may be, that shall have effect in relation to the company in relation to that year of income having regard to that value on such days during that period as are, in his opinion, appropriate in the circumstances.
Let me now examine the idea that this is a vehicle of great accuracy. The Commissioner of Taxation, it appears to me, has conferred on him by this sub-section the right to decide in what way this provision shall be applied or even to interpret the exact meaning of the letters used in the formula in sub-section (2.) of proposed new section 1 1 5. Despite all the claims about the accuracy and the explicit nature of this proposed new section, sub-section (5.) contains phrases such as “ the Commissioner is of opinion “ as the case may be “ and “ the Commissioner may “. Obviously, this is a let-out provision because the Government has found it impossible to draft some clause which requires the insurance companies to do what it wants them to do. If this is not an escape provision, what is it? I shall be happy to have it explained to me if the Treasurer can put it in simple terms.
– The honorable member should read the explanatory memorandum.
– That is all very well, but the explanatory memorandum, as everybody knows, is not the law enacted by this Parliament.
– Has the honorable member read it? I suggest that he has not.
– I am not concerned with explanatory memorandums or memoranda. The word preferred, I presume, depends on the university which one attended. The fact is that the laws as applied by the courts are the laws that are passed by this Parliament, and the intentions of the Minister, the Parliament, parliamentarians or the people whom the Minister so lovingly refers to as bureaucrats are not valid in courts of law. What is valid in courts of law is the bill as we pass it, and I believe that the draftsman and the people responsible for the measure ought to see that it is clear at least to the law-makers. The point that I make is not so much what the clause means as what it does not mean. In fact, is not sub-section (5.) of proposed new section 115 an escape provision under which the Commissioner of Taxation may determine all these things for himself if, in his opinion, the circumstances of the case make the investment by any particular insurance company abnormally high or abnormally low? If, as the Treasurer claims, this clause is explicit and the formulas are accurate, why use phrases such as “ abnormally high or abnormally low “, “ as the case may be “ and “ the Commissioner is of opinion “? In the classic words which the Minister’s leader so often uses, you cannot have it both ways.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 10 to 13 - by leave - taken together, and agreed to.
Proposed new clause.
– Mr. Chairman, I move -
That the following new clause be inserted in the bill:- “ 4a. After section eighty-two j of the Principal Act the following section is inserted: - 82k. - (1.) This section shall come into operation upon a date to be proclaimed. (2.) The Treasurer may cause Tax Concession Bonds to be issued under the authority of this section. Such Bonds -
As I intimated when I foreshadowed this amendment at the second-reading stage, it is mainly a machinery amendment which is calculated to give effect to the purposes which I endeavoured to explain at that stage. The purpose of the first part of the pro-posed new section is to allow a taxpayer to deposit up to £500 with the Treasury for any term which he desires, such a deposit to be a deduction from the depositor’s taxable income in the financial year in which the deposit is made and to be an addition to his taxable income in the financial year in which it is withdrawn. The other part of the proposed new section contains purely machinery provisions ancillary to the main purpose. My objective in including it is to show that this can be done easily and without involving any great expenditure on administration or other matters of that character.
One important point I was hoping to make is that in case of marriage a taxpayer can withdraw up to £1,500 free of accretion and in the case of the birth of a child, £1,000 free of accretion to his taxable income. The machinery I have provided would be of great value to the person starting out in life, who very often is somebody
– Order! I have examined the new clause moved by the honorable member for Mackellar and I consider that, insofar as it proposes the issue of bonds, which is in effect the raising of loans, it goes beyond the scope of the bill and the principal act which relate only to the imposition, assessment and collection of a tax upon incomes. On the ground, therefore, that the new clause proposes to introduce matters outside the scope of the bill and the principal act, I have to rule that the proposed new clause moved by the honorable member for Mackellar is out of order.
– I bow to your ruling, Mr. Chairman. As I explained, the main matters to which your objection-. relates are matters of machinery only. I would, therefore, like to move the clause in another form, which I think would not be susceptible to the objections in your ruling. The redrafted clause carries out in substance the objectives of the clause as originally drafted but does not contain the full machinery matters. I move -
That the following new clause be inserted in the bill:- “ 4a. After section eighty-two j of the Principal Act the following section is inserted: - 82k. - (1.) This section shall come into operation upon a date to be proclaimed. (2.) Any Australian citizen may claim as a deduction from his taxable income for any yea the face value of up to £500 of Tax Concession Bonds purchased by him during that year in accordance with any Act providing for the issue of such Bonds. (3.) The proceeds of any Tax Concession Bond which is redeemed shall be deemed to be an accretion to the taxable income of the holder for the year in which such redemption takes place; provided, however, that within twelve months after marriage a holder may obtain redemption of Bonds to a value of £1,500 free of accretion, and also that within twelve months after the birth of a child a holder may obtain the redemption of Bonds to a value of £1,000 free of accretion. (4.) Interest deemed to be credited upon Tax Concession Bonds shall not be deemed to be income for the purposes of this Act, except for the purposes of sub-section three of this section.’.”.
I think you will see, Sir, that although the clause is stripped of the detailed machinery contained in my original draft, it nevertheless carries out the purpose of the clause as originally drafted. This proposed new clause, which will not come into operation until a date to be proclaimed, is contingent upon the issue of bonds, and the provisions for the issue of the bonds in detail are severable from my main purpose, being mainly machinery, and could be provided in the drafting of a separate bill dealing with the issue of the bonds. That I think gets rid of the objection in respect of form to which you drew attention, Sir.
I believe that this is an important provision. I again stress that the great weakness of the Australian economy, the weakness that occasions the necessity for the bill we have before us, is the chronic deficiency of savings. The clause as I have moved it is designed to increase the facility of saving, particularly among the junior members of the community who may be expected to save in anticipation of marriage. They will obtain great benefits from so doing, if this provision be accepted, but I make no apology for that. I believe that we should be doing whatever will help young people to save and whatever will give them a corresponding benefit from saving.
They are not, however, the only beneficiaries. Although the young people may obtain the greatest benefit, they will not be the only ones to obtain benefit. This will particularly help those who desire to save in their years of higher income in preparation for retirement. It is not suggested that in this case, or indeed in any case except subsequent marriage or the birth of a child, those savings should be simply a deduction from tax. lt is suggested that the tax be deferred and that the benefit be given in that way.
– Would the honorable member expect many young people to take a small amount of bonds?
– Yes . The upper limit is put at £500, but it is not suggested that smaller amounts annually could not be subscribed under the provisions of this clause. The upper limit of £500 is suggested because this is not meant to be anything but a clause to help people on the lower ranges of income. I suggest that many people in the younger age group who are enjoying high earnings but have little responsibility at that stage may be very glad of the opportunity to save, perhaps not the full £500 but some £100 or so each year so that they will be able to deduct it from their income for taxation purposes and to draw it to set themselves up in a house or to meet the inevitable expenses that follow the birth of a child.
This amendment breaks new ground. However, I believe it is an amendment of quite considerable sociological and economic importance, and I commend it to the committee.
– I am sure that the Treasurer (Mr. Harold Holt) would like to hear my remarks before deciding what attitude the Government will take on this matter. I have given careful thought to this amendment. Whilst in some respects I think there is something to be said for the proposition, I see a very serious weakness in it. When I explain it
I am sure that the honorable member for Mackellar (Mr. Wentworth) will seek leave to withdraw the amendment because of the absurdity of it.
When the honorable member remembers that the rate of tax of some taxpayers is as great as 13s. 4d. in the £1 - they are the taxpayers who need concessions least of all - he will realize that the benefit to them will be a saving in tax of £336 6s. 8d. a year. However, a working man would need to go without many things if he were to save £10 a week. The benefit even to a married man with a wife and family, whose tax rate may be only 3s. in the £1, would be infinitesimal when compared to the benefit obtained by the well-to-day person who could set aside £500 out of an income of, say, £20,000 or £30,000. I do not dismiss this proposition as being silly. I do not dismiss it as being devoid of merit. Had the proposition suggested some figure and debarred the rich man from getting more benefit per £1 than the poor man would get, then, speaking personally - this has not been considered by our party yet - I would see very little wrong with it, as at present advised. Indeed, if it were possible to provide for a flat rate, I would see great merit in it.
To the extent that the idea is something new, I congratulate the honorable member for thinking it out. This is one of those occasions when, taken away from communism, the honorable member is capable of lifting himself out of the rut and putting forward quite worthwhile ideas. However, this idea falls to the ground for the reasons that I have stated. Personally, I shall have to vote against it, irrespective of what the Treasurer does.
.- Recently I heard the honorable member for Mackellar (Mr. Wentworth) speaking in a television interview about the problem in the community of teenage spending. The amendment now proposed by him might have some merit in that regard, because there is no doubt that a great deal of money is being squandered by some teenagers. But we must get down to earth in our thinking on this matter. Doubtless some teenagers earn good money but, particularly in my electorate, I do not think there would bc many who would be able to save up to £500 a year. The Treasurer (Mr. Harold Holt) has pointed out that the allowable deduction of up to £400 for insurance payments and superannuation contributions is already costing the Government £44,000,000 a year. The tax rebates to ordinary taxpayers - policy holders and contributors to superannuation schemes - are costing £35,000,000 and those made to companies contributing to employees’ superannuation are costing £9,000,000 - a total of £44,000,000. When the Chifley Government left office, the maximum amount allowable was £100. Actually, this proposal suggests a hand out to the wealthy section of the community. The man who is earning £l,000 a year and sacrifies a great deal in order to invest £400 in an insurance policy enjoys a rebate of only 400 times 3s., whereas a man in the top income bracket enjoys the benefit of a rebate of 400 times 13s. 4d. The difference there is great enough, but if we add to the £400 the £500 proposed by the honorable member for Mackellar, then, assuming that the person on the lower income was able to save £500 in a year, his total benefit would be only 900 times 3s., whereas the man in the tOT income bracket would benefit to the tune of 900 times 13s. 4d. In other words, it would cost us, the taxpayers, £600 to subsidize the wealthy, on the present rebate of £400 plus the rebates on the £500 proposed by the honorable member for Mackellar.
I do not ridicule the suggestion put forward by the honorable member for Mackellar. We do have a problem with our teenagers. We do know that certain sections of teenagers who have a great deal of surplus money spend it on non-essentials. The honorable member for Mackellar is to be commended for at least having given some thought to what is a very serious problem in the community. Some members on the Government side may snigger and sneer at the amendment proposed by the honorable member for Mackellar, but it must be admitted that the honorable member has given a great deal of thought to the problem. I do not accept his suggestion because I feel that it would give the wealthy another opportunity for tax evasion, and, frankly, I feel that tax evasion by wealthy sections of the community under the existing laws already merits serious investigation. If the Labour Party were in office, it would tighten up the tax laws because we feel they are far too loose now in that regard. Personally, I shall oppose the amendment that has been proposed. As a matter of fact - and I say this frankly to the Treasurer - I am very critical indeed of the present allowance of £400 to holders of insurance policies because I feel that £400 is far too high a sum. It should be reduced greatly. I agree with the honorable member for Hindmarsh (Mr. Clyde Cameron), who has suggested that if the proposed amendment provided a flat figure, giving an equal benefit to rich and poor alike, it would be more equitable and more in line with the Labour Party’s thinking.
.- This committee should recognize that the honorable member for Mackellar (Mr. Wentworth) has brought to us at least some original thinking. It does not surprise me that honorable members opposite, who show such great animosity towards the honorable member for Mackellar, are not very impressed with what he has presented, but we ought to take a moment or two to recognize some of the very sound basic thinking which the honorable member for Mackellar has presented. If, because of the limitation of time and the limitation of assistance available to him in drafting his amendment, the proposal is not sustained by the committee, let me express the hope that this basic thinking, this original think;ng which comes before us through the initiative of the honorable member, will not be discouraged. In the past we have had other instances in which, in all sincerity, the honorable member has submitted proposals worthy of serious consideration by this chamber. I do urge that this committee recognize that on this occasion the honorable member has brought forward a proposal which contains some very good points.
Those honorable members opposite who have just spoken have entirely overlooked that this proposal would provide for the Commonwealth Government a loan fund, an amount of money which could be used to offset any loss which might accrue through a reduction in taxation revenue. I am impressed with the fact that the honorable member suggests bonds of a face value of only £20. In reply to a question I addressed to him, he was emphatic in his insistence that in his estimation bonds of such a small face value would prove an attractive investment to many young people. As their incomes increased in the early days of their working lives, their savings would enable them to take up still more bonds of a face value of £20. One honorable member opposite referred to the advantages that would accrue to men on higher incomes. He failed to take into account the provision which the honorable member for Mackellar included in his proposal, and under which, whilst an investor obtains the benefit of a reduction of his taxable income by £500 if he invests that amount or more in one year, when he cashes those bonds, if the money so derived by him is not used for certain specific purposes, he will have to face the taxation that will be levied as the result of including the cash so obtained in his assessable income. I repeat that this point is entirely overlooked.
– But why benefit the rich man who gets married, as against the poor man who gets married?
– That is a point that might well be looked at. And this is the point upon which the proposal may fail. Let me not forget to remind the committee again that the basic idea of this amendment holds a great amount of merit, which I am sure should attract the attention of the honorable member for Hindmarsh (Mr. Clyde Cameron) and other members.
– I agreed with it.
– On this occasion, with an encouraging smile, we should say to the honorable member, “ We admire your tenacity of purpose “. We appreciate the fact that he had to prepare this amendment with his own pen. Honorable members do not always find it possible to get experienced assistance when an amendment of this kind needs to be drafted. I for one will support the honorable member for Mackellar (Mr. Wentworth), and I hope he will persevere with this idea. I know that the Treasurer (Mr. Harold Holt) has already had this matter investigated; and he will advise us in a moment of the points he has clear in his mind in regard to it.
I hope the basic idea will be looked at on another occasion so we can get the benefit of it.
.- The honorable member for Mackellar (Mr. Wentworth) is to be commended for the idea he has put forward to-night because it is designed for one purpose only, and that is to encourage savings. The honorable member for Hindmarsh (Mr. Clyde Cameron) and the honorable member for Reid (Mr. Uren) misrepresented - I do not say maliciously - the proposition put forward by the honorable member for Mackellar. The actual cost of the proposition would be very little. The honorable member for Hindmarsh said that the rich man who pays tax at the rate of 13s. 4d. in the £1 would gain two-thirds of the amount, which is limited in any one year to £500; but that would apply only to the year in which the investment was made. When the investor withdrew the amount it would have to be brought in as income.
Although the honorable member for Mackellar did not say so, I realize that if the rich man invests over a period of years and then dies, his estate will have to bear the tax on that amount; so there would be no ultimate cost to the community. The honorable member for Hindmarsh ‘said, in all sincerity, that if the rich man marries he would gain 13s. 4d. in the £1, which is a greater amount than the small man would gain. Without trying to assume a halo. I sincerely believe that in a case like that it is better that some of the undeserving should get the benefit than that the deserving should miss out altogether; and the fact that we might help the few who are favorably placed is no reason why the proposition should be knocked on the head, because it would benefit many less fortunate individuals as well. Under the scheme envisaged by the honorable member for Mackellar the real gainers would be young couples, because they would certainly want to cash their bonds. They would gain in the year in which they married and also in the year in which they had a child. For these reasons - even though there may be some corners to be knocked off - I believe the scheme is worthy of commendation and I would like the committee to consider it favorably.
.- I congratulate the honorable member for Mackellar (Mr. Wentworth) on the thought he has put into his amendment. One of the weaknesses of the bill before the committee is that it does nothing to increase the general savings of the community. Its effect is to transfer savings and capital from the private sector to the public sector; and most of us feel that that is essential because the public sector undertakings are lagging behind the production of the private sector. The honorable member for Mackellar feels, as many of us do, that what is clearly needed is something to increase the total savings. I feel that the Treasury has not shown sufficient imagination in the last few years in meeting the market needs of the investing public. Bonds, generally, have remained in the same form and pattern over the last ten years and they do not meet the needs of the investing public. The one exception to that was the special bond issue. It was something entirely new. It met the needs of a certain section of the community and has been highly successful.
The proposal of the honorable member for Mackellar is also new, and it is designed to meet the needs of another section of the community. I believe every thinking person in the community realizes that one of the greatest inflationary pressures exists among the young members of the community, who, unfortunately, do not save enough to provide for the necessaries that are consequent upon marriage. As young people with high wages they fail to provide for the future and unfortunately do not save a large enough proportion of their wages to enable them to purchase homes or furniture on marriage. Consequently they have then to borrow large sums, very often at high rates of interest, and thus saddle themselves for many years, if not for the rest of their lives, because they do not save sufficient during their younger years. The suggestion of the honorable member for Mackellar is that we should give some encouragement and some prize to the young people of the community who are prepared to save and receive a benefit as the result of their savings, either on marriage or on the birth of a child. So we find that the theme behind the proposal of the honorable member for Mackellar is that if people save they are entitled for tax purposes to deduct the amount of the special bonds in the year of purchase, and they have to pay tax on the same amount in the year in which they withdraw the money, except in the case of marriage, when they get something in the nature of a marriage advantage, and, after marriage, on the birth of a child, when they will receive an additional advantage.
I have not had time to study the full implications of the amendment and, therefore, I cannot say at this stage whether I support it in every detail.
– Did you not congratulate him on his amendment?
– I congratulated him on the thought behind the amendment, and I repeat that congratulation. If we could get a little more original thinking in this Parliament, particularly on the part of members of the Labour Party, Australia would benefit more than it does to-day. It is therefore welcome and refreshing to find an honorable member putting forward a new thought, and I trust that the Treasurer (Mr. Harold Holt) and the Government will not simply dismiss this idea without further consideration.
A very strong case exists for more imagination to be shown in the issue of bonds. On several occasions in this chamber I have put forward suggestions for the issue of special bonds that would have a tremendous attraction to certain sections of the community. Private enterprise has been able to get the money in the past at the expense of the Government because it has shown imagination and initiative. Private enterprise has provided the kind of securities and investments that sections of the people want. Now that the Government is in active competition with private enterprise to obtain the scarce capital that is available in the community, the Government must show the same degree of imagination in the types of public securities it issues as has been shown by private enterprise. If the Government issues securities that meet the needs of the investing public, it will get the money. What we need, Mr. Chairman, is more savings in the community and not simply a transfer of savings from one sector to another. Therefore, I ask the Treasurer and the Government to consider seriously the principle and the thought that are behind this amendment even though the Government, like myself, may not have had time to consider all of its implications.
– Mr. Chairman, the amendment that has been moved by the honorable member for Mackellar (Mr. Wentworth) has rightly gained from all parts of the committee commendation for the spirit behind it and the objective which the honorable member seeks to attain. I believe we all are agreed that the topic which he has raised - the giving of sufficient inducement to young people who, in a period of high employment, are able to obtain relatively high wages and to enjoy opportunities that are available at a stage of their lives when responsibilities do not rest so heavily upon them - brings before us an objective to which we all should subscribe. There may be differences of opinion about the best methods to be adopted, but I do not think any of us can fairly claim to have given this important subject as much thought as it deserves. We all have been aware over recent years - we have been glad to see such a state of affairs - that, to a degree not known by us in our adolescent or teenage years, the younger people in the community have been able to enjoy good earnings and regular employment and at the same time have an opportunity which is by no means so readily open at a later stage of life to put aside a big proportion, relatively speaking, of their weekly earnings in the form of savings.
Unfortunately, many of them do not take advantage of that opportunity. Perhaps it is because they do not realize - I do not blame them; it is a fault of youth and inexperience rather than because of any lack of character on their part - that it will not be so easy at a later stage of their lives to set aside funds which may be applied to the responsibilities they will have to assume. A challenge is presented to us all to find some way to give adequate encouragement to young people to put aside what they can afford in the early stage of their lives so that they shall be able to assist themselves more effectively during some of the more difficult, but perhaps more rewarding times, ahead of them.
The honorable member for Mackellar has produced a particular method of obtaining this result. Members on’ both sides of the chamber have directed attention to what they believe to be weaknesses in his proposal. There may be some force in the objection that apparently the proposal would give not only a greater incentive but also a greater return to a person in receipt of a higher income than to a person on a lower income. How far does the committee or do honorable gentlemen opposite wish to take that line of argument? There are other elements in our taxation provisions which in net terms give a better return for savings or from taxation deductions to people who are in receipt of higher incomes. Do honorable gentlemen opposite propose, for example, the abolition or a modification of the present form of deduction for a wife and children because it has the direct effect of giving a greater cash benefit to the person who receives a higher income than to the person who receives a lower income? I prefer to believe that we have worked out a taxation scale which, although it bears more heavily in terms of the cost per £1 of income on the person who enjoys a higher rate of income, provides, when it comes to the matter of deductions, a proportionately greater benefit. Over the whole period the process averages out in a way which I believe accords with the sense of social and economic justice that exists in the community. At any rate, the policies which we have adopted in that regard have been endorsed, we claim, by the electorate during our period of office. 1 do not dismiss out of hand the scheme that has been proposed by the honorable member for Mackellar because that objection to it has been raised. As the honorable gentleman himself has acknowledged, the proposal has important economic and sociological effects. Some one said that it breaks new ground. Whilst some study has been given by the Treasury to the outline of the proposal that the honorable gentleman gave to me earlier, I do not claim that our ideas have become sufficiently clarified for me to be willing to adopt the amendment in its present form at this stage. But I assure the honorable gentleman that further study will be given to it, and I share the sense of indebtedness to him that has been expressed by honorable members for having stimulated some further thought on this very important subject.
– I had not intended to say anything upon this socialist measure. I read this morning’s “ Sydney Morning Herald “ and I am indebted to the writer of the leading article for the description of the measure that I have just used. The secondreading debate was very interesting, but now we are dealing with a proposition which certainly has novelty but is only a variant of a proposal that the Australian Labour Party has advanced over the years in respect of marriage loans which could be extinguished upon the birth of children so that ultimately young people may be helped to establish their homes and be relieved of the burden of debt which they have to incur to-day when they enter upon the marriage state.
I do not accept the descriptions of young people which some honorable members of advanced years have uttered to-night. I do not believe that our young people are purseproud. I do no believe they have very much money to throw away or that they are as irresponsible as some honorable members depict them. In my opinion, most young people have to save very hard before they can put a deposit on a home. They have to strive very hard before they can even think of accepting the responsibility of marriage. When we think of the activities of the land speculators, the house-builders and all the other exploiters and legalized thieves there are in the community, it is a wonder that any young people are able to marry at all.
The honorable member for Mackellar has tried to help his Government out of a difficult situation - and the situation in which young people find themselves to-day is indeed difficult. The Minister has promised to consider the matter. I hope the promise is not merely a formal one. I hope it was not given merely as an act of courtesy or with the hope that the honorable member would later forget all about his proposition.
I do not think the committee could possibly adopt this proposal in its present form. It is sketchy, I suggest, although admittedly many may say that it is fundamentally sound. A good deal of thought would have to be given to such questions as what would happen in the case of a person who had subscribed to a loan and perhaps had died before the date of maturity of the loan or after some claim had been made. The honorable member would not expect the Treasurer to give a definite acceptance to-night, nor could he expect the Government to accept the proposition even during the lifetime of this Parliament - and, of course, the Government will not be here to accept anything after next December. On behalf of the Opposition of to-day, I am happy to tell the honorable member that if he manages to survive the wrath of the electors, as few of his colleagues will, the incoming government will doubtless give some consideration to what he has put forward.
The honorable member for Mackellar will not mind my saying that we very often agree with some of his propositions. We admire his tremendous energy. We think he does produce ideas and propositions that merit consideration. On other occasions, however, we think of him as merely a brilliant eccentric. We disagree with the manner in which he flogs the issue of communism and unity tickets and similar issues. To-night, however, he seems to have contributed something that contains at least the germ of an idea. The Treasury officials and taxation officials will no doubt examine it in some detail.
.- The committee was having a helpful and quite an amiably conducted discussion on this proposal until the Leader of the Opposition (Mr. Calwell) pushed his lugubrious frame into the debate and endeavoured to belittle the honorable member for Mackellar (Mr. Wentworth). The Leader of the Opposition should take into account what was said by his own followers during the debate on the amendment proposed by the honorable member for Mackellar. The honorable member for Reid (Mr. Uren), in the most explicit language, agreed with the honorable member for Mackellar that there were many young people in the community to-day with a good deal of money that they did not put to the kind of use to which it could and should be put. Then the Leader of the
Opposition came in, crying poor in his usual fashion. Dearie me, it is a pity he cannot speak in more cheerful vein once in a while.
The fact of the matter is that the honorable member for Mackellar put forward a proposal that met with generous support on both sides of the committee. Then the Leader of the Opposition came in and wanted to pare a bit off here and a bit off there. He tried to make out that the honorable member had pinched his idea. Well, although some of the ill-informed critics have suggested that we are hard up for ideas, let me assure the Parliament that we are not so hard up that we have to turn to the Labour Party ro find ideas to pinch.
Let me suggest to the Treasurer that between now and the time when the Budget is prepared the proposal put forward by the honorable member for Mackellar (Mr. Wentworth) should be seriously considered, having in mind that there are many honorable members on the Government side who earnestly support it.
.- I watched the honorable member for Mackellar (Mr. Wentworth) on a television programme a few weeks ago and heard him outlining this scheme. However, I do not think it is fair to ask the House to consider an amendment of this kind at such short notice. I believe the Opposition should have been given copies of the amendment some time last week, at the latest, so that we could have given it proper consideration. There are many aspects to be considered. First, what would be the cost to the Treasury? Approximate figures could have been obtained by the honorable member for the information of members of the Parliament, and could have been cited at the time the amendment was proposed. If the honorable member’s amendment involves additional cost to the Treasury, will the extra amount be found by way of indirect or direct taxation? These are questions that must be answered.
There is another point that should be considered. It is quite true, I suppose, that some young people spend their money indiscriminately on non-essentials. On the other hand, there are many who spend their money on actual necessaries. One must always realize, too, that if spending in the community is curtailed, there will be fewer essentials bought, and this will cause unemployment, which is a problem that we are trying to overcome at the present time. It may be said that young people are spending too much on beer, or that they are buying too many milk shakes. To curtail expenditure in either of these directions would mean a loss of revenue to the Government on the one hand, by means of reduced excise collections, or on the other hand a loss of income to the dairying industry. All these questions must be considered before we jump in and accept a proposal of this kind.
What would be the cost to the Treasury? That is one question. What would be the cost to the Australian economy generally? That is another question. Would it mean further unemployment? Let me remind the committee that the young people involved in this proposal are the ones who keep industry going. Do not let anybody kid you that they are not. These young people are mainly responsible for keeping industry going. They are the ones who are spending the money at the present time, and if their spending is significantly reduced we will see a great deal more unemployment in Australia.
In any case, I believe that before presenting an amendment of this kind the members of this Parliament should have had more notice of it. We should have been told what the cost would be. If the acceptance of this proposal were to result in considerable cost to the Treasury, where would the extra money come from? Would taxation be resorted to in other directions? These are the matters that should be explained. If we cannot have adequate notice of an amendment of this kind it is of little use to ask for Opposition support.
– It appears to me that some honorable members have been carried away by the speech of the honorable member for Mackellar (Mr. Wentworth). He spoke about young people being able to save money, and what could be done by the judicious use of this money, but I can see that his proposal goes a little further. Proposed new sub-section (3.) of the amendment says: -
The proceeds of any tax concession bond which is redeemed shall be deemed to be an accretion to the taxable income of the holder for the year in which such redemption takes place.
Then he goes on with certain provisions regarding a bondholder wMo marries. Consider the case of a man earning £5,000 a year. He may say: “ I am to retire at the end of June and I will be taxed this year on £5,000. I will take up £500 worth of bonds and will then be taxed on only £4,500. Next year I will have very little income. I have my capital and the interest that will come from it. My income may be only £1,000 a year. I can then redeem my £500 worth of bonds, and I will be taxed on £1,500 for the year. This, however, will be better than paying tax on the total income of £5,000 in the previous year.” I think the honorable member can follow my reasoning on that. It seems to me that this amendment would be an open invitation to any person on a fairly high salary, who will be retiring on a lower income, to say, “ 1 will subscribe up to £500 now, and next year 1 shall draw it, while paying a lower rate “. That is an instance of what can happen when a matter like this is put before us before we can give full consideration to its implications. I agree with the Treasurer that this is a case where consideration would have to be given and an investigation made.
The honorable member proposes that subscribers be issued with a bond. I do not know whether it is intended that that be an interminable bond, to go on forever or for the life of a subscriber, or whether after a certain period it would cease to have value. If it applied only for a period of five years and the subscriber did not marry for seven years, he would be out of luck, because the amount would accrue to his income after five years. The converse of the case of the man on a big income who reverted to a low income would be the case of a man who had a higher income at the end of five years. If there was an accretion to that income, instead of making a gain he would be penalized. In all the circumstances, I do not think that the committee can accept the proposition without further information.
The honorable member for Mackellar gave no idea of the cost in taxation revenue in any year. When a budget is presented, the Treasurer describes a certain measure, saying that it will return a certain amount for the remainder of the year and perhaps an additional amount in a full year. We then have some idea of where we are going. The honorable member has put a proposition that is designed to help young people to save. It could have an opposite effect to that which he desires in the case of persons on big salaries.
– I thank the House sincerely for the consideration that has been given to this amendment. I thank the Treasurer (Mr. Harold Holt), particularly, for his promise, which I do not regard at all as an empty promise, that consideration will be given to this proposal at the proper time. 1 also thank the Leader of the Opposition (Mr. Calwell) for some of the things which he said. May I just deal with one or two of the matters raised. I shall deal first with those raised by the honorable member for Watson (Mr. Cope). This amendment was circulated last week. It was foreshadowed in my speech at the second-reading stage, and a copy of the amendment was put on every honorable member’s desk last Thursday.
– Somebody pinched mine.
– I am sorry. I do not sit on the Labour side and I cannot be held responsible for what happens on that side. I agree that this is a matter which breaks new ground and that further consideration of it may well be desirable. I am grateful indeed that the committee has given consideration to this new principle, which, I believe, will in some form or other eventually be embodied in our taxation legislation.
The honorable member for Watson and the honorable member for Port Adelaide (Mr. Thompson) asked what the cost would be. If they will look at the “Hansard” report of the second-reading debate, they will see that I explained that as we are now finding about £300,000,000 a year from revenue for loan works, and as the amount of cash subscriptions must, ex hypothesi, be many times larger than any tax rebate - probably four or five times larger - there will not be any charge on revenue. There will be a gain and it will be possible either to remit tax or alternatively to carry out additional public works without calling on the taxpayer to finance them. I think that this answers the main points raised by the honorable member for Watson and the honorable member for Port Adelaide.
I was a little surprised at the line taken by the honorable member for Hindmarsh (Mr. Clyde Cameron) and the honorable member for Reid (Mr. Uren) that this would be worth more to the rich man than to the poor man. As the Treasurer said, we already have a provision in our taxation law - this has been approved by the Labour Party in the past, although apparently some members of that party do not approve of it now - for concessional deductions for a wife and children, which are worth a great deal more to somebody on a high income than to somebody on a low income. I must be fair and say that the honorable member for Reid and the honorable member for Hindmarsh said that they were speaking without any caucus endorsement, simply giving their own private opinions and not the opinion of the party, but apparently some members of the Labour Party are in favour of withdrawing the concessions given for wives and children under the taxation law. This is against the policy which that party as a whole has endorsed in the past. I do not think that in the lower age brackets there are many people receiving very high incomes. There may be one or two, but why, just because we may be conferring a big benefit on one or two, should we avoid conferring a considerable benefit on many hundreds of thousands? The Labour Party’s attitude in this respect is one of - what is the phrase - envy, hatred, malice and all uncharitableness. I do not think that the committee should take these criticisms particularly seriously, because the kind of case that these honorable members mentioned is very exceptional indeed.
The point made by the honorable member for Port Adelaide, in regard to people in the higher age groups, may have some substance and may bear looking into in greater detail. I make no apology whatsoever for suggesting that people in the lower age groups, people who are engaged or about to be married and married couples beginning their families, should be entitled to save, and to save with the help of a deduction from their taxable incomes. It may be that the upper limit of £500 that I suggested will be considered toy some honorable members to be too high. That is a matter of detail. It may be, perhaps, that we should think in terms of £250, £300 or £400. Personally, I think that £500 is about the right figure, but this is a matter on which detailed argument could well be put forward with justification on both sides.
May I say, finally, that this is an attempt to meet two grave problems. The first is a sociological problem. It is not right that the teenager should enjoy a standard of life which is higher than he can expect for the major part of his life. It is not a good thing that a man should, on marriage, and on the birth of his family, face a lowering of his material standards. I have long felt that we are not giving enough to the married man and that he should be getting a larger part of the national income. This is one small step towards achieving that major sociological objective. I shall not weary the committee by arguing at length the moral implications. I know that many churchmen, social workers and parents are worried about this kind of thing and that we should be doing something to help the worthy objectives of these big, very important groups in the community. I suggest that we should range ourselves on side on this moral issue.
The second thing which is perhaps more germane to this debate, although it is not perhaps of greater importance, is that this is something which can confer a major economic benefit upon the whole community if it can increase our savings rate. It will make possible, for example, the maintenance of a high volume of employment without inflation. I heard the honorable member for Fremantle (Mr. Beazley) refer to-day to the loss of value to bond-holders through inflation. This is one means of endeavouring to meet that kind of problem by increasing the savings rate. We have to do something towards this end if we are to get rid of the economic problems which are bedevilling us all. This is, I hope, a constructive suggestion.
As I have said, I am very grateful to the House for the debate. I am grateful to the Treasurer for the assurances he has given. I believe this is a good amendment. I am not prepared to press it to a division at this moment because of those assurances, but I do hope something along those lines will be incorporated in our income tax law before very long.
.- I rise to answer the criticism expressed by the honrable member for Mackellar (Mr. Wentworth) of the honorable member for Hindmarsh (Mr. Clyde Cameron) and myself in relation to tax rebates for a wife and children. The Australian Labour Party has not stated any opposition to tax rebates. We say that we want to see tax rebates spread more equitably. We do not want a big piece of the cake to go to the wealthy and only a small piece to the workers as is happening now. The 70 per cent. of the taxpayers on £1,000 a year or less, receive only 30 per cent. of the tax rebates each year, but the 30 per cent. who earn more than £1,000 receive 70 per cent. of the tax rebates; and 5 per cent. of the latter who are represented by the Menzies Government receive 21 per cent. of all tax rebates. The Labour Party would do something to divide the national wealth more equitably among the taxpayers. I rise to make it clear to the committee, particularly the honorable member for Mackellar, that we do not want at any time to cut out the tax rebates for a wife and children. We want to make sure that the worker and the battler on a low income with a wife and three or four children who are finding life difficult shall get a better deal, whereas now those in the top income brackets are getting it easy.
Title agreed to.
Bill reported with amendments; report - by leave - adopted.
Bill - by leave - read a third time.
Bill returned from the Senate without amendment.
House adjourned at 11.16 p.m.
The following answers to questions were circulated:-
s asked the Minister for Territories, upon notice -
– The answers to the honorable members questions are as follows: -
s asked the Minister for Territories, upon notice -
– The answers to the honorable member’s questions are -
m asked the Minister for External Affairs, upon notice -
What action has been taken on the report which the Joint Committee on Foreign Affairs made in October, 1956, relating to extradition?
– The answer to the honorable member’s question is as follows: -
After careful consideration, and after an exchange of views and experiences with the ‘governments of some other countries, including those of the United Kingdom and United States, the Government decided against the termination of the treaties mentioned in the committee’s report. It felt that safeguards existed to provide adequate protection to individuals, and it also had very much in mind its declared policy that it would not entertain a request for extradition, unless it were thoroughly satisfied that such a move was not being sought for political purposes. I take this opportunity to reassert this policy and to assure all former residents of the Eastern European countries concerned living in Australia that they are now under the protection of the Australian Government and Australian law in this respect.
No extradition treaties have been concluded by Australia since the committee’s report was made.
As to the committee’s recommendations that in certain cases the onus of proof should be altered by amendment of the Extradition Act, the AttorneyGeneral has decided that a review should be made of the act, and the committee’s recommendations are under consideration in this connexion.
a asked the Postmaster-General, upon notice -
How many applications for telephones are outstanding in the electoral division of Banks in each of the following exchange areas: - (a) Peakhurst, (b) Revesby, (c) Bankstown and (d) Hurstville?
– The answer to the honorable member’s question is as follows: -
z asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
z asked the Minister representing the Minister for Civil Aviation, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for Trade, upon notice -
– The following information was supplied by the Commonwealth Statistician in reply to the honorable member’s questions: -
Separate details of oversea trade relating to steel items as distinct from iron are not available and the figures below refer to the total of the group: -
Total value of steel and iron imported into Australia during each of the last five years and the seven months ended 31st January, 1961.
Total value of steel and iron exported from Australia during each of the last five years and the seven months ended 31st January, 1961 -
d asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
r asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
The question of freight on Western Australian timber and the possibility of a freight subsidy to assist the Western Australian industry was investigated by an interdepartmental committee in 1958. The committee’s investigation followed the Tariff Board’s report dated 22nd April, 1958, which drew attention to the question. The committee reported that a freight subsidy was not justified, for two main reasons:
A Commonwealth subsidy on Western Australian timber shipments would discriminate against timber industries in other States.
It would be difficult to justify a subsidy limited to timber and not extended to other products shipped interstate.
The Government accepted the committee’s findings. A careful re-examination of the whole matter in the light of the Tariff Board’s latest report on the industry has not shown that there are any new factors in the situation that would warrant a change in the Government’s earlier decision.
d asked the Minister for Trade, upon notice -
– The answer to the honorable member’s questions is as follows: -
The United Kingdom is at present engaged in what it has described as exploratory talks to ascertain if a basis can be found for what it could regard as a satisfactory form of association with the E.E.C. countries. The United Kingdom has emphasized that these talks are exploratory only and in no way constitute negotiations. As I said in reply to a question on 13th April - “ This Government has always said that we believe that it would be desirable, in the interests of greater political cohesion in Europe, that the United Kingdom should be joined with the great western European industrial and trading countries; but we have added that we believe this should be done only on terms that would not impair the vital interests of Australia.”
We have at all times emphasized to the United Kingdom Government the importance which we attach to being kept informed and consulted. I refer the honorable member to the statement which the Prime Minister made in the House on 11th April and to my own reply to the question on 13th April. I mentioned then that there would be a meeting of senior officials in May to explore the situation.
d asked the Minister for the Interior, upon notice -
– The answer to the honorable member’s questions is as follows: - 1 and 2.-
s asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
son asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
y asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
I understand that the Australian and New Zealand Passenger Conference last year reminded those travel agents who were signatories to an agreement with that Conference of the existence of a clause in the agreement which requires agents accepting these appointments to concentrate their efforts on securing passengers for member lines of the Conference. Prior notification to Conference is stipulated before a non-Conference line agency could be accepted by an agent signatory to the agreement. Upon such notification, the appointment of that agent as a Conference agent could be reviewed if necessary. Agents who are nonsignatories to that agreement are not affected. I have no knowledge of the way in which the shipping companies concerned carry out their agency arrangements.
y asked the Minister for Trade, upon notice -
When may I expect answers to the questions relating to the Greek-Australian Line ship “Patris” which I originally placed upon the notice-paper on 29th November, 1960, during the last session, and repeated on 9th March last?
– The answers to the honorable members questions have now been made.
Cite as: Australia, House of Representatives, Debates, 2 May 1961, viewed 22 October 2017, <http://historichansard.net/hofreps/1961/19610502_reps_23_hor31/>.