26th Parliament · 1st Session
Mr SPEAKER (Hon. W. J. Aston) took the chair at 2.30 p.m., and read prayers.
– On 23rd August I issued a writ for the election of a member to serve for the electoral Division of Capricornia in the State of Queensland to fill the vacancy caused by the death of Mr George Henry Gray. I have received a return to the writ and by the endorsement thereon it is certified that Douglas Nixon Everingham has been elected.
Dr Douglas Nixon Everingham was introduced and made an affirmation of allegiance as member for the Division of Capricornia, Queensland.
– Mr Speaker, I desire to inform the House of ministerial changes and arrangements. The Right Honourable C. F. Adermann has retired from the Ministry and has been succeeded as Minister for Primary Industry by the Honourable J. D. Anthony, formerly the Minister for the Interior. The Honourable Peter Nixon has been appointed as Minister for the Interior, while the Honourable Ian Sinclair has been included in the Cabinet, retaining his present responsibilities as Minister for Social Services.
I am sure that the House will permit me to make this public acknowledgment - which I do very gladly - of the valuable service which my former colleague Mr Adermann rendered to the Cabinet, as indeed previously, through so many years he rendered service to this House as its Chairman of Committees. He enjoys the respect and good wishes of us all. I hope that with some lightening of his load he will find his parliamentary service a little more agreeable, even if less well paid.
I also wish to announce that Senator Henty has retired from the office of Leader of the Government in the Senate and that Senator Gorton has taken over that duty. As a consequence of the change in Senate leadership, Senator Gorton will represent me in that chamber. Otherwise the representational arrangements remain unchanged.
Mr J. R. FRASER presented a petition from certain electors of the Commonwealth requesting the Government to prohibit the advertising of cigarettes on broadcasting and television stations and to require that a suitable warning of the health hazard of cigarette smoking be displayed on cigarette packets and wherever cigarettes are advertised.
Petition received and read.
Similar petitions were presented by Mr Cleaver, Mr Gibson, Mr Robinson and Mr Donald Cameron.
Petitions severally received.
Mr FOX presented a petition from certain electors of the Commonwealth praying that the well-being of the aged, the infirm, the widowed, the deserted wives and the dependent children, and the service pensioner be improved to parity with the national general living standard of the Australian people.
Petition received and read.
A similar petition was presented by Mr Courtnay.
Mr J. R. FRASER presented a petition from certain residents of the Australian Capital Territory praying that action be taken to prevent the closure of Blarney Crescent as now planned by certain authorities and that opportunity be afforded a deputation of residents to discuss the matter with the Minister.
Petition received and read.
– I direct a question to the Minister for Health. Has the honourable gentleman’s attention been directed to evidence before the Senate Select Committee on the Container Method of Handling Cargoes about medical clearances of foreign ships entering Australian ports? Has the Committee been told that Australian practices in this matter are the laughing stock of the world and are geared to the sailing ship era? Is it a fact that officers of his Department will not examine crews at night although most overseas ports have 24-hour medical clearances? Is the Department of Trade and Industry dissatisfied with the . practices of the Minister’s Department regarding medical clearances of foreign ships? Will the Minister take immediate steps to bring Australian practice in this matter into line with the demands of the 20th century and the container shipping era?
– I have seen Press reports relating to this matter but I have not seen a transcript of the evidence which was given. Therefore I think it would be appropriate for me to wait until I have seen the transcript before making any comment on the matter. I should point out that this alleged statement was made in the environment of the Senate Select Committee on containerisation. If these remarks were made, no doubt the Committee will seek the opportunity to hear from officers of my Department the difficulties and dangers which are involved in quarantine. However, it would be completely premature for me to answer a question on the basis of a Press report that this officer made a statement. When I have had the opportunity to read what he actually said I shall be prepared to give consideration to answering any points he may have made.
– Has the Minister for Air seen comments made by Sir Frederick Scherger on the recent accidents to Mirage fighters? If so, is he prepared to comment on this and make a statement to the House?
– Before dealing with the question two matters need to be raised. The first is the crash that took place near Williamtown on 25th September. Unfortunately, although a search of the area has been carried out, we have been unable to find the aircraft. Therefore it is not possible to have a complete assessment of what occurred. A court of inquiry has reported that to the best of its ability it believes the accident was caused as a direct result of an engine flame-out caused by a technical defect in the engine reduction gearbox, the most likely cause of the defect being a failure of the mating splines in the reduction gearbox drive shaft and the compressor coupling shaft. Until we find the wreck of the aircraft we will know no more than has been found by the court of inquiry.
That deals with that accident. But the question relates to a wider matter, that is, the other accidents which have occurred to Mirage aircraft over the last 3 years. It is wise to look at this matter in perspective. There has been now a total of six accidents, but none of them has been related to another, except possibly the last one and the second one. The first accident was due to a pilot error in getting out of a difficult spin situation. The third one was due to a servicing error by an airman who has since been disciplined at a court martial. The fourth and fifth accidents were due to pilot errors, one medically and the other in flying. So the only two that could possibly be related are the second and the last. 1 think it would be helpful, in answering the question asked by the honourable member for Robertson, to state that the second accident revealed that there was a structural failure of the forward spline drive shaft. As a result, French and Australian engineers devised a modification that produced extra lubrication for this shaft. This modification, which was carried out by the Commonwealth Aircraft Corporation of which Sir Frederick Scherger is a director, has been incorporated in all Mirage engines. I am not aware whether Sir Frederick Scherger knows it or not, but certainly this modification has been gradually incorporated in engines over the past twelve months. Similar problems have been found in the jet engines of French aircraft, and they, too, are incorporating the same modification. Since the modification was introduced, we have had no further trouble with those engines. I believe that we have learned a great deal from the accidents that have occurred. The air staff, the pilots concerned and I can say that we have great confidence in the future employment of Mirage aircraft, which to my mind are now behaving extremely satisfactorily.
– Can the PostmasterGeneral give me any information regarding the establishment of a permanent television station in the Cairns district? Where will it be located? When will the matter be submitted to the Standing Committee on Public Works, if need be? If not, when will work commence ofl this project?
– The establishment of high-powered television in the Cairns area has been delayed because of the difficulty of determining an economic site. At first it was thought that a transmitter could be erected at Mount Bartle Frere which, as the honourable member knows, is the highest mountain -in Queensland. The Department of Works investigated this site and determined that the cost was out of all proportion to the advantages, and then gave consideration to Mount Bellenden Ker. The investigations in relation to that site have been completed, but more recently it has been suggested that a number of lowpowered transmitters might be substituted for a high-powered one. When all details are collated in relation to each of the lowpowered transmitter systems, an investigation will be made to determine the most appropriate method - a high-powered or a low-powered transmitter system - for the Cairns district.
– My question is directed to the Prime Minister. 1 refer to a question that was asked on 17th August by the honourable member for Wimmera. Has the Victorian Government asked the Commonwealth Government for assistance in providing financial aid to farmers affected by the drought? If so, can the Prime Minister indicate whether the Commonwealth will provide such assistance? Has the Victorian Government specified the extent and type of aid required? ls there a similar situation in South Australia?
– I have received requests from the Governments of Victoria and South Australia, and I am sure the House generally will be interested in the situation as we see it. Both Premiers have advised me that a serious drought situation exists in their States. Last August the Premier of South Australia made his request for Commonwealth assistance and, at my suggestion, be sent me earlier this month a detailed and documented case. This is now being examined, but it is clear that it will be necessary for Commonwealth assistance to be given to South Australia, lt will be given within the terms of the policy that the Commonwealth has adopted for such disasters. Last August the Premier of Victoria mentioned that he might need to seek Commonwealth assistance. Ten days ago he advised me that as no satisfactory winter or early spring rains had fallen, he now wished to make a formal application. I have assured the Premier of Victoria that any request he makes for specific assistance will be given sympathetic and speedy attention. I have also suggested that Commonwealth and State Treasury officials consult to establish the detailed facts, so far as that is practicable at this stage.
I have assured the Premier of Victoria that the Commonwealth’s general policy towards natural disaster relief will apply to his request. The policy is that where State governments, which have the primary responsibility for natural disaster relief, do not have sufficient financial resources to provide the assistance required following any natural disaster, the Commonwealth is normally prepared to assist in meeting the cost of such relief measures as appear to be appropriate in the circumstances. I have also advised the Premier that, if his Government decides that measures similar to those adopted by New South Wales and Queensland some time ago when those States were meeting a drought situation are appropriate, we will be prepared to consider his approach on that basis. I assure all honourable members that both requests are being treated with urgency and that the Commonwealth Government, as always, stands ready to assist when natural disasters of major proportions have occurred.
– I ask a question of the the Prime Minister as the representative of the Acting Minister for External Affairs as well as leader of the Government. In view of visits and statements by several members of the Government Parties in recent weeks, will the right honourable gentleman unequivocally reaffirm that his Government continues to support the efforts of the British Government to achieve a settlement in Rhodesia - I quote from the Governor-General’s Speech at the opening of the Parliament - which would allow for orderly political change on a basis of justice and equal opportunity in the future to all sections of the Rhodesian community’, and that his Government continues to support the decision of the Security Council calling for economic sanctions against Rhodesia?
– The Leader of the Opposition, I take it, bases his question on the statement in the Governor-General’s Speech, which gives the general attitude of the Government. That has been a consistent attitude. Our policy has not varied and the measures outlined in the Speech are currently in force.
– I ask the Prime Minister: Has the Government proposed any new talks with the United Kingdom Government concerning that Government’s application for membership of the European Economic Community? Will the suggestion made by the Australian High Commissioner in the United Kingdom, Sir Alex Downer, urging an alternative to United Kingdom entry be given further strength by an official statement made on behalf of the Australian Government?
– My colleague, the Minister for Trade and Industry, has been very closely following developments flowing from the British application to join the European Economic Community and has kept Cabinet fully informed of them. I understand that the High Commissioner, as is his practice, has sent me the text of the speech he made in London. He usually does this when he is making a speech of some significance. I have not yet had an opportunity to read the full text, but I shall do so. Subject to that, no special action has been taken by the Commonwealth Government in relation to this subject.
– My question is directed to the Prime Minister. Is he aware that Australia is now exporting aluminium to Communist China? As this material now joins the list of vital goods such as wool, wheat and steel being exported to Communist China and as aluminium is used extensively in the aircraft industry, how does he recon cile this action with the Government’s intention to increase our commitment in Vietnam to fight the Communists?
– The Government’s position in relation to trade with China has been clearly stated in this House. Question time is not an appropriate time for a restatement of policy. However, if the honourable gentleman cares to study the statements made by my colleague, the Minister for Trade and Industry, myself and others, he will have a full and clear account of our policy and the reasons for it. He will see that we trade with China except in respect of a limited range of items, the quality and significance of which has been stated previously. I do not fully appreciate whether the honourable gentleman is critical of our policy of trading with China. I have always understood that his Party supported that. Therefore what is occurring should meet with his support.
– I wish to ask the Minister for Trade and Industry a question. On 5th October, in reply to a question by the honourable member for Indi related to his meeting with the Tariff Board, the Minister mentioned correspondence between himself and the Chairman of the Board related to a reference to the Board. Would the Minister be prepared to release this correspondence?
– When answering the question of the honourable member for Indi, I think I said that I had requested the Chairman of the Tariff Board to publish the correspondence. Certainly I had requested him to publish that part of the correspondence which was relevant to an interpretation of the Tariff Board reference. I have no intention of preventing a full publication of the correspondence. I accept the honourable member’s suggestion and I will table the full correspondence between me and the Chairman of the Tariff Board on this subject.
– I direct my question to the Prime Minister. Has his attention been drawn to a statement by Democratic Party Senator Hartke in which he stated that the possibility of invading North Vietnam was being seriously considered by the Johnson Administration, as President Johnson is under increasing pressure to do so and there is no question but that an invasion is being seriously considered? If this is so, in view of this disturbing and alarming statement, will the Prime Minister state whether or not President Johnson’s request for more troops for Vietnam and the Australian Government’s decision to meet his wishes are due to the fact that President Johnson may decide to invade North Vietnam irrespective of the consequences to Australia and the rest of the world?
– I have not seen the particular statement of the senator to which the honourable gentleman refers. It is not easy to keep up with all the statements of senators in the United Stales of America. It is difficult enough to keep up with the statements of senators in this country. However, President Johnson has at all times made it clear that American action in South Vietnam is directed against aggression from the north. He has made it clear that be is not seeking a wider conflict, to destroy the economy of North Vietnam or to interfere with the conduct of the government of that country. What has been sought - and we join in this objective - is to resist aggression and keep South Vietnam secure. He has also sought to enable the people of South Vietnam to proceed with the conduct of the Government of their own country and its economic development without harassment, terrorism and subversion inspired and directed from the Communists to its north. We remain in the closest direct consultation with the President of the United States and his Administration. We would be fully consulted if any significant change in policy were to occur and Australia would have an opportunity of coming to its own decisions in relation to that policy. We will be making an increased contribution towards the allied force strength in South Vietnam. I shall be explaining this in more detail later. We are doing this for the purposes that I have mentioned and as part of a joint effort by the South Vietnamese themselves and other allied forces to resist aggression and bring this conflict to as speedy a conclusion as we can contrive.
– In view of the fact that the Leader of the Opposition seems to be so disturbed by the visit of certain honourable members to Rhodesia, will the Prime Minister inform the Leader of the Opposition that two members of the British Labour Party were in Rhodesia when I was there? Surely if they were entitled to go to Rhodesia to ascertain the situation there, so were Australian members of Parliament.
– I think it is of value to the Parliament to have members well informed on conditions that exist in various parts of the world. I do not know of anybody having offered any criticism of the former Leader of the Opposition who has recently been paying an extensive visit to Communist China. I do not imagine that from that visit he has gone Communist or decided in favour of Communist philosophies.
– Is the Prime Minister sure of his facts?
– If I am mistaken about the honourable member’s colleague
– I asked whether the Prime Minister was sure of his facts. He referred to Communist China.
– I am sorry; I meant Communist Russia.
– That is different.
– I do not know whether honourable members opposite see the position as different. It is difficult to know just where they stand in relation to the policies of those two countries. I thought they regarded them on very much the same terms.
– Does the Prime Minister know what he is talking about?
-Order! The honourable member for Reid will cease interjecting?
– Yes, I do know what I am talking about. Members of the Parliament are free to go to other countries and even to offer their opinions there. I recall the honourable member for Yarra having gone to the United States of
America and recommended to the people of that country that they should not vote for President Johnson. That was within his democratic right. I have already made clear to the Leader of the Opposition the official policy of this Government.
– I ask the Prime Minister whether it is a fact that at an American-Australian Association dinner in New York yesterday our distinguished Treasurer said of this country’s relations with the United States: ‘Wherever you go we will go’, ‘We are an unconditional ally of the United States’, and ‘We will try to make our contribution to Vietnam more commensurate with yours’. Do these remarkable - indeed, rather startling - statements express the philosophy, content and purpose, or lack of purpose, behind Australian foreign policy? If not, will the Prime Minister repudiate these statements by the Treasurer and d:clare the conditions under which we are an ally of the United States or any other country so that this sort of embarrassing statement will not be repeated by any other Government spokesman?
– 1 heard on the Australian Broadcasting Commission’s midday news an account of the speech by my colleague at the American-Australian Association luncheon yesterday. I thought it was a very good statement and, as I heard it over the air, it seemed to me to be much more in balance than the abbreviated account which the honourable gentleman has chosen to give us. The United States Administration is under no illusion as to the policy attitudes of the Australian Government. These are frankly and forthrightly expressed whenever we believe occasion requires it. What my colleague was pointing out, as 1 heard the report of his speech, was that in this area of the world the interests of the United States and of Australia are very close. We have an interest in the peace, stability and security of the area. We have an interest in maintaining the freedom of free peoples, and we have an interest in contributing together to the orderly economic development of the region. These were the points that my colleague was stressing. Indeed, if the honourable member were quoting him genuinely he would have pointed out that the Treasurer expressed some critical remarks about Australia’s trade relations with the United States and complained that he did not feel we were receiving a fair deal in trade matters. That is an independent viewpoint which I also have expressed and which the Minister for Trade and Industry has expressed. This is the sort of relationship we enjoy with the United States at this time.
– I direct to the Acting Treasurer a question relating to certain statements by the Chairman of the Australian Loan Council about the loan of $22.3m raised in Germany. Can the Minister indicate to the House the significance in world financial circles of this move by Australia and its wider implications in respect of the availability of more money for this country?
– For some time the Government has been continuously seeking borrowing opportunities in international markets so that our resources may be developed more quickly. This particular opportunity arose largely because at present Western Germany has a quite favourable balance of payments position and is in a position to make international loans. It also happens that the loan in question is the cheapest one available to us at the present time. It is interesting also that the German market has now been opened to us for the first time. We have been hoping for some time to widen the scope of our borrowing opportunities in Western Europe, particularly in view of developments that may lie ahead. We have now borrowed in Britain, Switzerland and Germany. This particular loan represents quite a milestone in our. transactions with Western Germany. It is a move that we hope to repeat in the future.
– Will the Prime Minister take positive steps to put an end to the intolerable delaying tactics which are preventing funds being made available to the Queensland Government to enable it to carry out immediately urgent water development projects which have been investigated thoroughly in areas susceptible to drought devastation? If the Government continues to persist in a policy which denies Queensland any money for water development projects is the Prime Minister prepared to accept this unjust discrimination as a major issue in the forthcoming Senate election? If be is not, will he guarantee to make funds available to Queensland before the Senate election?
– Thanks to the team work of this Government and the Government of Queensland, that State is going through a period of economic growth and development unparalleled in its history. The honourable gentleman persists in bringing forward a series of political propaganda questions. He knows that more is being done for the development of Queensland by this Government than was ever done by any previous Government - certainly more than was ever done by any Labor Government which has held office in this place. The honourable member can see, as others who go around his State are so ready to acknowledge, growing development throughout Queensland - not only in the field of water conservation. This Government has taken positive steps to assist on particular projects in various fields, but of equal importance is the fact that it has created an economic environment favourable to investment of capital on a large scale which has greatly speeded up the economic development of Queensland.
– I have pleasure in addressing a question to the Minister for the Interior, whom I wish every success. Can the Minister give the House any information regarding the programme to be followed to bring about the redistribution of electoral boundaries throughout Australia?
– I have like pleasure in answering the question asked by the honourable member for Indi. No new information is available about the redistribution proposals. I know that this is a subject very close to the heart of not only the honourable member for Indi but also every other member of this House. In point of fact, the Distribution Commissioners are yet to be appointed. When they are appointed it is expected they will take 8 or 9 months to complete their work. It will then lake another 6 or 8 months to have the new electoral rolls prepared and printed.
But I can assure the honourable member that this will be done, as the Prime Minister has said, before the next general election.
– I ask a supplementary question of the Minister for the Interior and in doing so I also, on behalf of my Party, congratulate him on his appointment. Does the honourable gentleman remember his speech of 1st April 1965 in which he said:
To prove my sincerity, and that of the Australian Country Party, on this question of gerrymandering I suggest that a judge should act as redistribution commissioner … I do not think it is fair that paid employees of the Commonwealth should, as redistribution commissioners, make decisions of this type.
I ask the honourable gentleman whether he adheres to this point of view and whether, pursuant to it, he will appoint a judge - as the Commonwealth Electoral Act permits him to do - as one of the three commissioners from each of the States?
– Mr Speaker, whatever I may have said as a backbencher is one thing. Since becoming a Minister I have found that the appointment of commissioners is a matter for Cabinet and not only for the Minister for the Interior.
Mr BURY (Wentworth - Minister for
Labour and National Service) - I present the following papers:
Forty-sixth Report of the Commissioner of Taxation dated 1st October 1967.
Taxation Statistics 1965-66.
As a result of proceedings in the High Court of Australia in the Magrath case it is not desirable that copies of the report be made available to honourable members or published until Parliament has given the necessary authorisation. I have mentioned this matter to the Leader of the Opposition (Mr Whitlam) and he has agreed not to oppose the motion in order that thereport may be circulated as soon as possible.
Question resolved in the affirmative.
– In accordance with the provisions of section 18 of the Tariff
Board Act 1921-1966 I lay on the table of the House the Tariff Board’s Annual Report for the year ended 30th June 1967, together with a summary of recommendations. The Report is accompanied by an annexure which summarises the recommendations made by the Board and shows the action taken in respect of each of them. It is not proposed to print the annexure.
Ordered that the report be printed.
– I seek leave to make a statement in connection with the report.
– There being no objection, leave is granted.
– In the report, the Board has set out in detail its view on how a progressive and systematic review ofthe Tariff should be carried out. In the first instance it proposes an internal examination by the Board of the structure and levels of protection in the Tariff to identify the main areas of local production where there has been no recent public inquiry and where the levels of protection are in the medium to high range. The Board contemplates that the Government would send to it a series of wide-ranging references to enable it to carry out a systematic review. From the preliminary work, which has already been done, the Board has advised that there would be advantages in conducting an inquiry into sections of Chapter 84 of the Tariff, which covers machinery and mechanical appliances.
The underlying concept is not inconsistent with work which has been going on for some time in the Department of Trade and Industry at my direction, on the development of references, so worded as to cover the whole of the integrated operations of an industry rather than particular items. References already madeby me to the Tariff Board on industrial chemicals, plastic products, aluminium and aluminium products, photographic materials, tractors, and earth moving machinery, have been in that category. References of this kind arising both from requests for a review of protection, and from the desirability of reviewing tariff areas not recently examined, embody the dual aims of a more effective and satisfactory examination of the question of protection for the industry and a systematic review of the Tariff as a whole. This is the approach supported by the Board in its annual reports for 1964-65 and 1965-66, when it recommended continuation and extension of industry wide references to achieve both those purposes.
The Board’s recommendation for a reference on sections of Chapter 84 of the Tariff will be fully examined. Honourable members will appreciate the desirability of ensuring that Tariff Board inquiries and reports relating to pressing current questions are not impaired by very wide references of an inevitably time consuming nature covering broad and complex areas of the Tariff. An example of the importance of avoiding references of that kind has been the experience with the so-called general textiles reference’, sent to the Board by me on 5th October 1960 and on which the final report reached me only last week.
The Board proposes to classify industries into those having, in its words, high protection, medium protection and low protection and to publish this classification in its next annual report. This will need to be approached with great caution. As honourable members know, the Government grants protection to an industry after inquiry and report by the Tariff Board and a finding that the industry is economic and efficient. After the level of protection has been determined, the industry itself then decides, on the basis of its commercial judgment, the direction and extent of the expansion that it will undertake. It would be a matter of justifiable concern if a preliminary judgment of the Board, without the benefit of the Board’s normal detailed and careful inquiry, were to be taken as a guide to the future prospects of the industries involved. I present the following paper:
Tariff Board Act- Tariff Board- Report for year 1966-1967, together with summary of recommendations.
Motion (by Mr Snedden) proposed:
That the House take note of the paper.
– by leaveThe Opposition welcomes this brief statement by the Minister for Trade and Industry (Mr McEwen) in which a great deal is said. It can almost be taken, 1 think, as a statement of policy by the Government, the first that has been made on this matter for 5 or 6 years. A great deal is involved in the statement. With the end of the session in sight I do no more at this stage than express the desire of the Opposition for a debate on this subject before the end of the session.
– There is no new policy.
– No, but there is much significance in the statement.
Debate (on motion by Dr J. F. Cairns) adjourned.
– by leave - There have been, as honourable members know, two major political and military matters in South East Asia before the Cabinet in recent months. They are the British decision to limit its role east of Suez and the situation in Vietnam. The Government has had these great and serious matters under continuous review and has been having a close exchange of views with our allies and friends. I have today to inform the House of certain decisions the Government has taken on the most immediate and the most pressing of these two issues; that is, the situation in Vietnam.
Before dealing with this in some detail, may I refer briefly to the British Government’s plans to reduce in stages, Britain’s military presence in Malaysia-Singapore. This has to be seen against the background of our own judgment that security and stability in South East Asia are of first importance for Australia and we recognise the need to act positively to maintain that security and stability and also to assist in the development of the region.
Consultations with our allies and friends in South East Asia on these matters are continuing. My colleagues and I have just had the benefit of discussions here in Canberra with the New Zealand Prime Minister, Mr Holyoake. I am happy to say there is a close identity of views with New Zealand on our common strategic interests in South East Asia. There is much still to be done, however, to shape a long-term programme, in concert with friendly and interested governments, to the changes which will follow from the British land withdrawal from the Malaysia-Singapore region. This will take some time, because the pace is set not by one nation alone, but by several each with a different set of problems.
In the meantime, our immediate preoccupation is with Vietnam. This is the most urgent of our current external problems, and it is basic to all our aspirations for security in Asia. It is in Vietnam that aggressive Communist pressure - the greatest political danger in Asia today - is most severe and direct,, and it is in this area that we must, for the time being, concentrate much of our defence effort and resources. There the tide of Communist expansion is being checked and turned. But, with no sign as yet emerging that the North Vietnamese are ready to negotiate, it is the view of our allies and ourselves that the military pressure must be sustained and indeed increased if we are to secure even more decisive results in the field - results which might lead North Vietnam to negotiations.
There have been recent visits by Ministers to Vietnam and to the United States, including my own visit to Washington last June when I had detailed discussions with President Johnson, Mr McNamara, Mr Rusk and various military authorities, on the outlook in Vietnam. The President sent two special envoys to this country - Mr Clifford and General Maxwell Taylor - who gave us a valuable survey of progress being made and of likely trends. Theirs was a range of visits to other countries allied in Vietnam.
As I said earlier, Mr Holyoake has been here for on the spot talks. Since then, the Minister for External Affairs (Mr Hasluck) has had discussions with President Johnson and other senior members of the Administration in Washington in the last week or so. From all these exchanges the Government has had the best information and the most considered assessments to add to its own. These have strengthened the Government’s confidence that its decisions on our commitment in Vietnam have been soundly based, and they have confirmed that we are making significant progress. There can be no question of our determination to pursue our efforts through to the end until we have achieved our objective - peace and security for South Vietnam and South East Asia. I am confident the majority of the Australian people will continue to give their support to this policy and will want us to make a measured contribution which will give effective support to the allied effort.
The public debate on Vietnam goes on in various forms here and abroad and, because it does, I want to re-state very briefly why we are there and why we must continue to honour our commitment to support South Vietnam. Let me repeat, in simple terms, why we are in Vietnam. We are there because we believe in the right of people to be free. We are there because we responded to an appeal for aid against aggression. We are there because security and stability in South East Asia are vital to our own security and stability. We are there because we want peace, not war, aud independence, not serfdom, to be the lot of the peoples of Asia. We are there because we do not believe- that our great Pacific partner, the United States, should stand alone for freedom. We will continue to be there while the aggression persists because, as a free and independent nation, we cannot honourably do otherwise.
There are, from time to time, charges - all unwarranted and quite baseless - that the Government seeks only a military solution, that it is determined to win in the firingline and that this is our only objective. I say this: We are determined, and so are our allies, that we will not be defeated in the firing-line. Fortunately there is no real risk that we can be. The military situation has been improving steadily, and if we sustain our progress we are daily securing the time and enlarging the opportunity for a response by Hanoi to the repeated offers to negotiate for peace, free of conditions, with honour and regard for the rights of the South Vietnamese people.
In Manila last year, South Vietnam and its allies, including Australia, pledged themselves to continue to resist aggression until it ceased and, at the same time, to seek earnestly, by every means, a just and lasting peace. This has been the consistent position of the United States, the Australian Government and the other allies in Vietnam, and it remains our hope that a political rather than a military solution will be found. We remain, as we have been at all times, flexible so that even the faintest prospect of peace talks can be encouraged. We have on several occasions suggested that the Geneva Agreement of 1954 might provide a suitable basis. There may be other ways. The allies are ready to talk about them if they open up and to keep on taking initiatives themselves.
But the North Vietnamese leaders have turned down every approach, public and private. They have done no more than declare that talks ‘could be’ or ‘might be’ held if the United States stopped bombing North Vietnam unconditionally, unilaterally and permanently. But having said that, the North Vietnamese leaders have not said that they would then enter into talks. But they have made it clear that even if talks did begin they would keep up their own military effort. So we must press on with our action in Vietnam to ensure that the people of South Vietnam shall not be conquered by aggression and shall have the right to choose their own way of life and their own form of government. This was our first and only military objective; it remains our only military objective.
It is easy to suggest that allied strategy in this area is dominated by an exaggerated fear of Communism, but there is no evidence that Communist forces in South East Asia have given up their revolutionary drive. The South Vietnamese people could not stand on their own against a coordinated Communist penetration. Our recent assessments confirm our judgment that if South Vietnam fell to a Communist system of government, Communist pressures against the neighbouring States would continue, and in all probability would increase. North Vietnamese regular forces have already been identified in Laos and guerillas trained in North Vietnam are already operating in North East Thailand. The independence and achievements of the countries of this region would be at risk if aggression succeeded in South Vietnam.
I do not think we should ever lose sight of the fact that this war in Vietnam is a limited war - it is not being fought on the pattern of declared wars of the past, where all the stops were out and a patriotic fervour and a face to face challenge of survival were like battalions in action on the home front. It is far away in personal terms, but not nearly as far as the battlefields of the Middle East or Europe. It is ugly - what war isn’t? - and it is prolonged. Yet Australian forces fighting there are achieving two immediate results. They are helping to hold the aggressor in check and they are giving the South Vietnamese security and specific aid for the betterment of their country. They are also manning a front line of freedom for all of South East Asia.
The recent elections bear witness to South Vietnam’s constitutional and political advancement. The economic and social progress under the South Vietnamese Government’s Revolutionary Development Programme is good. Australia has contributed more than $12m in non-military aid and is spending $2. 2m more this financial year. Our civilian training programme, under which more than 300 Vietnamese have come to Australia, will continue. We are assisting in other major projects in Vietnam, including water supply and technical aid for schools. Our three surgical teams continue to do splendid work. None of this could be permanent if the military shield were not wide and strong, and the wider and Stronger it is, the better the progress of the military campaign and the civil programmes will be.
To that end, therefore - with increasing progress in mind - the Republic of Vietnam and its allies have been conferring on what the situation may require. Each government, with the benefit of the discussions which have taken place, will make its individual decision. Already some of us have decided to commit additional forces at this time so that effort may be increased and so that the military initiative that has been won can be sustained and the pace of political, economic and other development quickened. The United States has already announced that it will add some 45,000 men - nineteen battalions - to the total of 460,000 it has deployed in Vietnam. Today the New Zealand Prime Minister has announced on behalf of his Government New Zealand’s increase - in the form of an additional infantry company. Other allied governments are considering what more they can do. For their part the South Vietnamese are to increase their forces by some 60,000 men.
The Australian Government has therefore decided, after consultation with our allies, to increase the Australian forces in Vietnam, and I now set out for the information of the House how this will be done. An additional battalion group with helicopter support will be provided from Australia for the Task Force. This third battalion group, which will be made avail able in November/ December, will have the effect of almost doubling the offensive capability of the force and adding considerably to its operational effectiveness. A tank squadron - about 250 men of all ranks - will be made available. With their mobility and powerful sustained fire power, our medium Centurion tanks will provide better support and protection for the force. Additional helicopters with crews and servicing personnel will be added to the Iroquois squadron to provide the Task Force with more tactical mobility. A small number of Skyhawk pilots and a maintenance element will be made available on loan for operational service with the United States Marines in South Vietnam. An additional engineer construction unit will be provided to undertake, for a limited period, specific works in the Task Force area. The establishments of headquarters and units will be increased by some 125 all ranks because of operational needs in the area.
These additions will raise the numbers of the Australian force in Vietnam from 6,300 to over 8,000 men, and will make them much more effective as a balanced force. The Government has been able to do this because of the steady expansion in the defence forces over the last few years by increased recruiting and by national service. Australia has now the most powerful and effective defence forces it has ever had short of war-time mobilisation. The Government is able to undertake these additional commitments in Vietnam without detracting from the strength and readiness of the forces deployed elsewhere in South East Asia. Our forces already in Vietnam have acquitted themselves superbly well. We have units from all three Services in the theatre and they have earned the highest praise from our United States, South Vietnamese and other allies.
In Phuoc Tuy province, for instance, which has been a Vietcong stronghold for many years, the Australian Task Force has been confronted with a highly mobile infantry force, well trained and equipped with good quality weapons. Since our forces were deployed in this area in June 1966, they have established a high degree of security in the province, and have opened up strategic coomunication routes. Altogether this force has been in over sixty major operations since June 1966. In addition, our air and naval units have played a very useful role in support of overall allied operations. 1 believe that those who have served, and are. serving, including their parents and families, are keenly aware of the issues at stake in Vietnam and know that Australia has “to be there’, with the same high courage, as Australia has been in other and wider wars, in the cause of freedom. The young national servicemen, who have responded magnificently to the grave tasks that have fallen to them, have identified themselves so completely with our regular soldiers that there is no discernible difference. They have clearly shown their recognition that they are performing a national duty. They are Australian soldiers, and I am sure they would not have it otherwise. I am sure, too, that this House will be ready to pay all our fighting men, regulars and national servicemen alike - the soldiers, sailors and airmen of Australia, serving in Vietnam - the honour that is their due, and that this House will support the additional contribution to their strength that I have now announced on behalf of the Government. I present the following paper:
Vietnam - Commitment of additional Australian Forces- Ministerial Statement, 17 October 1967.
Motion (by Mr Snedden) agreed to:
That the House take note of the paper.
– by leave - For the information of honourable members I present the following paper:
Report of Chairman of Board of Accident Inquiry on accident which occurred near Winton, in the Stale of Queensland, on the 22nd of September 1966, to Viscount aircraft VH-RMI, operated by Ansett Transport Industries (Operations) Pty Ltd, trading as Ansett-A.N.A.
I ask for leave to make a short statement in connection with this report:
– There being no objection, leave is granted.
– In submitting to Parliament the report of chairman of the board appointed by me to inquire into the accident to Viscount aircraft VH-RMI near Winton, Queensland, on 22nd September 1966, I should first of all state that, on behalf of the Government, I have already expressed to the Honourable Sir John Spicer, and to his assessors, appreciation for the painstaking task they have now completed in carrying out such a detailed and searching examination into the circumstances of this accident.
We are indeed fortunate in Australia that, over a period of some 15 years, our domestic regular public transport air services have had only three accidents resulting in the death of passengers. This excellent record must, in a large measure, be attributable to the generally high standards of operation and maintenance achieved by the airline operators, to the undoubted high quality of our professional pilots, and to the high standards set and maintained by officers of my department.
Rare as these accidents may be, we can still profit, in an air safety sense, from critical examination of the circumstances of each accident. In the first instance this task falls on officers of the Air Safety Investigation Branch, who investigate all aircraft accidents, but there is also provision for the constitution of a board of accident inquiry in those circumstances where it would seem that the public interest would best be served by adoption of this additional process. I considered that this situation existed with respect to the accident involving Viscount VH-RMI and I accordingly appointed a board of accident inquiry. The report of the chairman of the appointed board is now before the House and 1 have one or two comments which I would like to make.
The chairman of the board has concluded that the aircraft crashed following an upward failure of the port wing and that this failure of the port wing arose from weakening of the wing spar, when a fire occurred in a port fuel tank. The board also concluded that the fire originated in the cabin blower driven by the No. 2 engine and that this fire occurred as a result of a rotor break-up and subsequent operation of the blower in an out-of-balance condition, leading to separation of the oil metering unit from the rear end cover of the blower. The chairman was not able to determine the cause of the rotor break-up, but he has specifically excluded incorrect assembly by Ansett-A.N.A.
It is particularly interesting to note that the main conclusions, which I have just summarised, and the other findings contained in the report, confirm in all respects the conclusions reached from the investigation conducted by the Air Safety Investigation Branch of my department. I think it is proper that I should express my appreciation of the excellent report presented by the Air Safety Investigation Branch and the complete confirmation of its conclusions, by a separate judicial inquiry, reflects credit on all concerned.
I think it is also appropriate that I should make particular mention of the fact, that the chairman found no reason to criticise any action taken by the crew of VH-RMI and that he has specifically endorsed Captain Cooper’s decision to divert to Winton, and to continue with his attempt to reach Winton in preference to carrying out a forced landing.
The chairman was naturally very concerned with considerations affecting the safety of future operations, and such concern is obviously shared by this Parliament. The board has concluded that the decision to install this particular type of cabin blower in Viscount aircraft was, and still is, a proper one. As a result of this accident, however, my department has required a number of modifications to the blower and adjacent installations, and I have already informed the House of these. These modifications and precautionary requirements were devised as soon as attention was drawn to their need by the investigating officers, and they were immediately implemented. Their details were also advised to other airworthiness authorities, and to the aircraft and component manufacturers. Again it is interesting to note that the chairman has endorsed the need for the principal blower modifications implemented by the department, and has concluded that the steps already taken provide adequately for the safe operation of this component in the future.
The chairman has made some observations and recommendations, principally in regard to the presentation and handling of technical data and records, the exchange of information on accidents, incidents and component modifications and the future testing of failed rotors. I accept these recommendations and they are now being examined in detail. They will be implemented so far as is practicable, and to the extent that our powers permit. In this regard it is pertinent to observe that certain of the observations and recommendations involve organisations and authorities over which we have no jurisdiction. This report, however, will be widely circulated, and 1 am sure that the valuable guidance given will be duly noted and acted upon by those concerned, outside Australia.
I would like also to refer very briefly to the comments and suggestions of the chairman at pages 63 and 64 of the report. The inference could be drawn from these comments that the investigating officers involved kept no detailed record of the strip examination of the No. 2 blower. In fact, a very comprehensive and detailed stepbystep record was compiled by the investigators but, circumstantially, this record was not called into evidence before the board and so the board did not have the opportunity to examine its scope. I do not suggest, however, that this situation was detrimental to the ultimate deliberations of the board.
The record of investigations of major aircraft accidents around the world illustrates the growing difficulty of this task, in the face of increasing aircraft speeds and engineering complexities. We can derive a great deal of satisfaction therefore, that this investigation has enabled the chairman to define confidently the source of the accident and to set out, in some detail, the sequence of events leading to the accident. The benefits that derive for the safety of further Viscount operations in this country, and overseas, are therefore quite significant, and I am sure that many of the lessons already learned will benefit safety levels throughout our airline industry. The result has been well worth the effort involved in a long and painstaking inquiry and I commend the chairman’s report to the House.
Motion (by Mr Snedden) agreed to:
That the House take note of the paper.
– I have received a letter from the honourable member for Wilmot (Mr Duthie) proposing that a matter of definite public importance be submitted to the House for discussion, namely:
The need for the Commonwealth to indemnify fruit growers immediately for the losses they have suffered in the Suez Canal through circumstances beyond their control.
I call upon those members who approve of the proposed discussion to rise in their places. (More than the number of members required by the Standing Orders having risen in their places)
– This is the first time in the history of the Commonwealth Parliament that a discussion of a matter of public importance has been proposed for these precise reasons. The Opposition’s action results from a unique and completely unprecedented situation in international trade, in that fifteen ships of eight nations not involved in the war between Israel and Egypt have been made virtual prisoners of war in a no-man’s land once known as the Suez Canal. I have been honoured by being given the opportunity to introduce this matter on behalf of the Federal Opposition. I have the full support of the Leader of the Opposition (Mr Whitlam), the Parliamentary Executive of the Australian Labor Party and the Opposition Members Rural Committee, of which the honourable member for Bendigo (Mr Beaton) is chairman. The Deputy Leader of the Opposition, the honourable member for Bass (Mr Barnard), will support me and I am grateful to him for permitting me to precede him in this debate.
None of us realised that the war between Israel and Egypt which lasted for six days, would result in fifteen ships being trapped in the Great Bitter Lake section of the Suez Canal, nor did we realise that four of these ships would contain such perishable goods as apples and pears. President Nasser has not only closed the Suez Canal but he has also refused to open it until Israel retreats to its former frontiers. We are very concerned that one man can hold all these ships to ransom with cargoes valued at millions of dollars. The ships belong to eight nations, including Britain, Japan, America, Greece, Italy and Sweden. The United Nations has failed to find a solution, and I have been critical of the Commonwealth Government for not pressing harder at the United Nations level to find an answer to this unique and unprecedented situation. The Government says in its defence that none of the ships is Australian owned. That is the fault of the Australian Government itself. The fruit is contained in four ships and totals 379,000 cases of apples and pears from five Australian States. Nearly 200,000 cases are from Tasmania. The ‘Scottish Star’ has 182,000 cases of apples and 42,000 cases of pears from northern Tasmania, Adelaide, Albany and Fremantle. The ‘Port Invercargill’ has 103,000 cases of apples and 39,000 cases of pears from Port Huon in Tasmania and Melbourne. The ‘Munster Mand’ has 13,000 cases of pears from Melbourne. The Killara’ has 21,000 cases of apples and 7,000 cases of pears, mainly from mainland ports.
Because of the seriousness of the situation, I first raised the matter with the Prime Minister (Mr Harold Holt) on 4th July in a long telegram in which I said:
Can the Government at the diplomatic level assist in freeing ships trapped in the Great Bitter Lake section of the Suez Canal.
I then listed the ships and quantities of fruit and went on to say in my telegram:
Ships trapped about a month. Tasmanian growers deeply concerned. Grave doubts exist among growers and shipping agents re insurance and compensation. Apple and Pear Board working on problem. Would Federal Government meet financial loss to growers if no solution is found and the fruit ruined?
A fortnight later 1 sent another telegram to the Prime Minister and informed him that President Nasser had sealed the radios of the ships trapped in the Canal and placed armed guards on board. This information had come to me through a shipping firm in London and from an extract from a Cairo newspaper. The information is factual. The Prime Minister replied to my first representations on 17th July in a long telegram. He pointed out that Australian growers and exporters and overseas importers were in close touch with their respective insurers in an effort to resolve the whole problem of possible loss and insurance. He told me that the Australian Apple and Pear Board was seeking legal advice on behalf of the exporters and finally pointed out that there was little the Government could do at the diplomatic level at that stage, as President Nasser insisted on an Israeli withdrawal from the Suez Canal before he would open it.
My representations continued through July and August. Here in the Parliament 1 asked four questions and made two speeches on the problem. I emphasised the urgency of a solution being found by the Federal Government if insurance is finally refused. The fruit has now been in the ships in the Canal for 132 days, but it has been 153 days since it left the Australian ports. No fruit has ever been delayed for as long as this. Last week Mr A. F. Chesterman, Chairman of the Marine Underwriters and Salvage Association in Victoria, made a statement in which he said in effect that the companies would not accept liability for the fruit lost in the Canal. The honourable member for Bass will deal with this aspect in more detail. On Friday, the honourable member for Bendigo and I separately sent telegrams to the Minister for Primary Industry, who was then the honourable member for Fisher (Mr Adermann) - they were probably the last he received as Minister - stressing the urgency now that the insurance companies had decided not to accept liability and urging the Government to come to the aid of the growers.
We. are not the only ones deeply concerned with this problem. The Tasmanian Farmers Federation has been working on the matter and has been in touch with ,ne and other honourable members for at least 2 months. The Federal Fruit and Vegetable Committee of the Australian Primary Producers Union in early September discussed the need for urgent action in respect of this fruit. In its newspaper, The Producer’, for 13th September, it reported:
Delegates decided to seek political action to free the ships, urge the Australian Apple and Pear Board to ensure that adequate insurance arrangements applied to the fruit, and that in the event of this being unobtainable, seek Federal Government financial assistance for the growers affected.
The State fruit boards - especially the Tasmanian board - have also been working on the problem and the Australian Apple and Pear Board, the official board for the fruit growers of Australia, has been examining the legal aspects for several months. It has made two approaches to the Commonwealth Government for immediate relief. About 4 weeks ago the Board made its original request to the Minister for Primary Industry for an interim grant to the growers of no fixed amount, but last week in its second approach, which was made before the decision of the insurance companies was known, the Board asked for an interest free loan of $3.65 per case to be paid to all growers involved until such time as the legal position was clarified. This would cover freight of $2 a case and presentation costs of $1.65. I inform the House that a Labor government if in office would definitely indemnify the fruit growers immediately for the losses they have suffered through circumstances beyond their control. We urge the Commonwealth Government to do nothing less.
There are three ways of selling fruit to overseas importers. One method is to sell fruit forward outright, with the importers overseas taking all the risks. The second method is to have the fruit free-consigned by growers. This is a purely speculative method and all the risks are taken by the growers. The third method is the guaranteed advance, in which again the growers take all the risks. About 80% of all apples and pears exported from Australia are sold under the second and third methods. Therefore, about 80% of” the fruit written off in the Suez Canal- that is, about 304,000 cases- has been free-consigned. This is trusting to the vagaries of the market in the United Kingdom and Europe when the fruit arrives to be sold. In the past season the market was buoyant.
As I have said, 379,000 cases of fruit from five States are held in the Canal and have been written off. As near as I have been able to ascertain from contact with the Australian Apple and Pear Board, about 700 growers are involved. Of these, nearly 400 are in Tasmania. The next hardest hit State is South Australia, which has 80,000 cases in the ‘Scottish Star’. About 20% of the State’s total export of apples and pears has been written off. It is easy to imagine the hardship that will be suffered by South Australian growers if the Federal Government does not come to their aid. Growers in Queensland, New South Wales, Victoria and Western Australia all have some fruit trapped in the Canal. This is not only a Tasmanian loss but is a loss shared by five Australian States. It is, therefore, not a State disaster - it is a national disaster. This is why I have raised this matter today - in the interests of 700 growers.
Hundreds of growers got their fruit to the market before the Israel-Egyptian war, and a few got it there afterwards via the Cape. All secured wonderful prices, ranging from $5 to $7.50 per case. But those who have their fruit trapped in the Canal missed this buoyant market Which was the best for years. May I stress that last season was a bad season for Australian apple and pear growers. Their fruit arrived safely at the destination, but prices were tragically low. averaging about $2.50 per case. Hundreds of growers therefore did not receive lc profit. In fact, they went further back financially, as the $2.50 did not cover freight, cost of presentation and cost of production. To cover these three types of cost and make a profit, the fruit growers must receive at least $4 a case. Though last year’s export price story was disheartening and disastrous for hundreds of growers who went further into debt, the story of this year’s write-off in the Suez Canal is that nearly 700 growers involved suffered a crippling experience, especially as most of them suffered a below cost of production return last year. For these men we are fighting today. For them it is loss piled upon loss and hopelessness heaped upon hopelessness. It is a disaster spread over 2 years.
Let us be fair and factual about this. Only a small proportion of the nearly 700 growers involved’ in the Suez crisis have their entire apple crop or pear crop written off. But for those who do have their entire crop on these ships, it is a major catastrophe. One man in my electorate has 10,000 cases - his entire crop - on one of these ships. The percentage therefore varies from 100% of their crop in the doomed ships down to as low as 10%. The fact that a number of growers did get high prices for some of their fruit should not side-track any humanitarian and responsible government from giving proportional aid to every grower in the five States who has completely lost a proportion of his fruit in the Canal. This fruit is a complete writeoff. It is irrecoverable and a total loss. Added to the burden of losing the return from their fruit is the fact that freight accounts are coming into the growers now, even though the fruit has not yet reached its destination. One big grower - a friend of mine and a member of the fruit board - has received an account for $4,280 for freight on this fruit. This has been debited in respect of fruit that he did sell on the United Kingdom market. It is outrageous.
The Opposition therefore believe that the Federal Government should indemnify the growers who have lost fruit in the Canal to such an extent that they will be able to meet their freight and production costs and have something left to help them plan and produce the coming season’s fruit crop already in blossom on trees in all the States I have mentioned. The suggestion by the Government that they go to the Development Bank for loans is a callous way to treat them. We reject this entirely, for these loans cost 6% interest. Most carton suppliers will give discount if growers order early, but without adequate finance to do this how can they take advantage of this discount offer for the coming season? The feeling of growers in Tasmania at least can be gauged from the fact that a big protest meeting will be held at Exeter on the West Tamar in my electorate tomorrow night, organised by the Tasmanian Farmers Federation. This is how they are thinking at the moment. Some of us hope to be at that meeting.
In putting this urgent plea for help today, I have tried to be reasonable. 1 am not being political in any way but purely factual and sincere in what I am trying to put on behalf of the Australian Labor Party. I have done this in the most rational way possible. The Opposition is actually speaking on behalf of every one of nearly 700 fruit growers desperately concerned in the Suez crisis who have had at least part of their year’s work wiped out in a flash. They have received no return at the other end and many no insurance. Where do they go from here? Only this Federal Government can now help them as it has helped many other producers in times of similar crisis. However, no crisis has ever been the same as this. This crisis is unprecedented in the history of the Commonwealth. An unprecedented crisis deserves an unprecedented answer. That is what we are asking for today.
– The text of the subject before us for discussion is as follows:
The need for the Commonwealth to indemnify fruitgrowers immediately for the losses they have suffered in the Suez Canal through circumstances beyond their control.
I think all members of the House would like to think that this could be done simply and easily. But it is not a simple or an easy matter. This is an extremely complex and involved question, requiring the sorting out of the difficulties in getting fruitgrowers paid for the fruit that has been caught in the Suez Canal. This problem has been complicated by a number of factors. One is that the fruit is on a number of vessels. Also, the fruit comes from five different States. Some of the fruit is consigned to the United Kingdom and some to Europe. There are different forms of sales - some on advanced payments and guaranteed advances and some on consignment. Problems of insurance also arise. Some of the insurance is with Australian companies and some is with overseas companies. We also have the uncertainty of whether the ships will be released together with all the legal problems superimposed on those 1 have mentioned.
I am well aware of the representations that the honourable member for Wilmot (Mr Duthie) has made to my predecessor, the distinguished member for Fisher (Mr Adermann) when he was Minister for Primary Industry. Not only did he receive representation from the honourable member for Wilmot but he also had representations either in the form of questions or correspondence from the Deputy Leader of the Opposition (Mr Barnard). Also the honourable member for Bendigo (Mr Beaton) has written and the honourable member for Franklin (Mr Pearsall) and the honourable member for Denison (Mr Gibson) have both been involved in representations stating the growers’ point of view to the Government. In another place Senator Henty has been very vocal in stating the circumstances and difficulties in which fruitgrowers in Tasmania are involved.
I should now like to give a brief account of the facts of the situation and then inform the House of the action proposed by the Government to ensure that just compensation is obtained by the growers concerned. As a result of the conflict between Israel and the Arab nations and the subsequent closure of the Suez Canal, sixteen vessels were blockaded and four of these vessels were carrying Australian goods. These vessels are the ‘Port Invercargill’, the Munster Mand’, the ‘Killara’ and the Scottish Star’. These four vessels contain Australian apples and pears and have been stranded in the Suez Canal for many months. 1 think the honourable member for Wilmot mentioned the exact number of days. The ships are unable to move either north or south. The total quantity of fruit involved is 306,366 bushels of apples and 70,241 bushels of pears. Most of the apples come from Tasmania, but significant quantities come from Victoria, South Australia, Western Australia and Queensland. The bulk of the pears come from Victoria, but 14,297 bushels are from Tasmania. The fruit is consigned either to the United Kingdom or to Europe. A quantity of 91,200 bushels of apples and 25,500 bushels of pears was sold forward, and the ownership has passed to the European buyers. In respect of that fruit the Australian growers have suffered no losses.
The remainder of the fruit was sold either on consignment or on guaranteed advance and as the ownership remains with the growers, losses are possible. I emphasise the words Mosses are possible’; we do not know at this stage. The quantity of fruit in this category is 210,500 bushels of apples and 43,500 bushels of pears. Many proposals have been considered for disposing of the fruit, but none of these has been found to be practicable. It has been suggested, for example, that the fruit should be trans-shipped in the Canal or that it should be sold in the Canal area. Both of these courses of action have insuperable difficulties. Although refrigeration facilities are understood to have been maintained, it is doubtful whether the fruit, particularly the pears, has maintained its quality. It is almost certain that deterioration will set in quickly when the fruit is unloaded, even if early on-shipment proves possible.
Honourable members will appreciate that in the present international situation it is unlikely that the Canal will be opened in the near future. In conformity with the conditions required by the Australian Apple and Pear Board all the fruit is insured and all the policies contain a war risk clause. However, insurance companies have not admitted liability, and payment of insurance may entail the determination of complex problems of maritime law, possibly by litigation. On legal advice most owners of fruit have, to protect their insurance position, given notice of an abandonment to their insurance companies. A recent development is that the underwriters have rejected these notices, but this does not exhaust the insurance question and negotiations are continuing. These, then, are the brief facts.
What has the Government been doing, and what does it intend to do? During the past few months representations have been made to the Government, by honourable members, by the Orchardists and Fruit Cool Stores Association of Victoria, by the Northern Victorian Fruitgrowers Association and by the Tasmanian State Fruit Board. Most of these representations have raised the question of Commonwealth financial assistance to the growers for losses incurred in the event of the insurance liability question being determined against the growers. As I have already indicated, the insurance question is still open. The Government has adopted the attitude that it would be premature to consider financial compensation until the very complex questions surrounding the insurance issues are resolved. The Government has felt that to compensate growers at this stage could tend to compromise their insurance claims. Moreover, it would be extremely difficult to determine a level of compensation in a situation where the exact extent of the losses, if any, is completely unknown.
Another point worth mentioning, and which has tended to delay Government action in this matter, is that attempts to obtain from the State fruit boards concerned the names of growers involved, the exact quantities of fruit which each has in the Canal, and the percentage this represents of the growers’ total 1967 shipments, have been unsuccessful. Apparently there is difficulty in providing this precise information, and the Government is not yet able to determine the level of possible loss of each of the growers concerned, lt is worth mentioning, too, that neither the Government nor the Apple and Pear Board, which is the statutory authority charged with regulating the export of Australian apples and pears, is a party to the insurance question, but the good offices of the Board have been available in the dispute.
Recently some growers have been asked by their agents to pay the costs of packing and transport which amount to as much as $3.60 per carton of fruit. The Government has suggested that, pending a determination of the insurance question, these growers should seek temporary financial accommodation from the Development Bank or tn% Rural Bank in the States. If cases of extreme hardship were brought to the attention of the Government it would be prepared to intercede with these organisations with a view to having suitable temporary financial accommodation made available. Although the Government believes that the attitude it had adopted in this matter has been correct, it has become extremely concerned with the delay that is occurring in the finalising of the insurance question. It appreciates that growers could shortly become affected regarding their plans for next season’s crop. In the circumstances the Government has decided that it would be appropriate for it to try to speed up the processes involved. The Government has decided, therefore, that myself, the Minister for Trade and Industry (Mr McEwen) and the Attorney-General (Mr Bowen) should consult with the shipping companies and the insurance companies to try to resolve the outstanding issues as quickly as possible. These consultations are to be arranged at the earliest possible moment. Immediately their outcome is known and the question of insurance is finally resolved one way or the other the question of indemnification will be taken up by the Government as a matter of extreme urgency.
What I have said is a clear indication of the concern and sympathy that the Government has for the fruit growers involved. It ls an extremely complex problem which has been closely examined and sympathetically looked at in the past months during which the question has remained unresolved. I assure honourable members that the Government is doing everything possible to see that the growers are fairly and justly paid.
– I rise to support my colleague, the honourable member for Wilmot (Mr Duthie), who proposed the discussion of this urgent matter which has affected so many people. As a result of the Israeli-Egyptian war in June of this year many growers have fruit on ships that are being held in the Suez Canal. I listened with great interest to the Minister for Primary Industry (Mr Anthony) who confirmed what I hope is the Government’s view, that it is not unsympathetic. I think it ought to be pointed out to the House that the honourable member for Wilmot has interested himself in this matter since it became known that there would be difficulty for those growers whose fruit was held in the Suez Canal. He has repeatedly raised the matter in the House. I believe he acted quite properly in bringing forward this discussion today on behalf of the Opposition to secure from the Government some forthright statement of its intentions about the losses, which now appear almost inevitable, to those growers whose fruit is being held in the Suez Canal. This is a serious problem.
The honourable member for Wilmot dealt with statistics. He referred to the number of growers who are involved. We are not concerned simply with what will happen in one State; fruitgrowers in five States of the Commonwealth are affected. This is a crisis which has developed because of circumstances beyond the control of the people who export their fruit each year to European and other countries. They have consistently accepted the proposition that they should insure against loss, and they have done so. No one could have foreseen the kind of difficulty that has arisen. These growers, who do not enjoy the benefits of stabilised marketing or guaranteed prices, . took the only course available to protect them in an emergency such as this: they took out insurance.
The Minister for Primary Industry makes a distinction between compensation and abandonment. It is perfectly clear that the insurance companies are not prepared to meet the losses incurred on this occasion. In the ‘Mercury’ of 13th October an article appeared headed ‘Insurance will not pay on Suez fruit’. It read in part:
Tasmanian growers will not get insurance for fruit worth an estimated $800,000 locked in the Suez Canal since the outbreak of the Arab-Israeli war early in June.
A Tasmanian company representative confirmed this yesterday after he had been told of a similar announcement by a Victorian insurance group spokesman.
The Chairman of the Victorian Marine Underwriters and Salvage Association (Mr. A. F. Chesterman) said underwriters in Australia and Britain had declined to accept notices of abandonment given by growers’ agents in Australia and Britain.
It is perfectly clear from this statement that no insurance will be paid. Yet the Minister for Primary Industry suggests that the only course open to growers until a decision has been made on insurance is to approach the Commonwealth Development Bank and ask for loans. As the honourable member for Wilmot has pointed out, they can no doubt obtain this kind of assistance at an interest rate of 6%, but we believe they are entitled to much more consideration than this.
The Opposition deplores the failure of underwriters in Australia and Britain to pay insurance for fruit locked in the Suez Canal since the outbreak of the ArabIsraeli war in June. The decision of the underwriters means that substantial personal losses will be suffered by fruitgrowers in all fruit growing States. This means that fruitgrowers will face an immense write-off, and it must be remembered that theirs is one of the few major primary industries without a marketing scheme or guaranteed prices.
The five States concerned - and 1 think the Minister for Primary Industry appreciates this - are unable to offer special financial assistance to the extent required in such an emergency. If the Commonwealth Government agreed to provide assistance to growers in all States to meet this disaster it would not establish a precedent. The Government has already accepted responsibility for national disasters. The House will remember that last year the Commonwealth made a grant of $50m to New South Wales and Queensland for drought relief, because the drought was accepted as a national disaster. In that case the Commonwealth Government quite properly assumed responsibility. In the situation we are now discussing all that the growers in the five fruit growing States are asking for is about $2m. Not very much is involved. It is about one twenty-fifth of the amount the Commonwealth granted last year to assist those who had been affected by drought in New South Wales and Queensland. The amount involved, I repeat, is only about $2m, and this amount would not have to be granted immediately but could be spread over a period of 5 years.
The Marine Underwriters and Salvage Association, despite what the Minister has said, has found a loophole in the insurance agreements. There is a clause which provides that if anything happens to the fruit as a result of war the insurance companies have the right to disclaim liability, and this is what they have done in the case we are now discussing. It is all very well for the Minister to talk about further representations being made to the insurance companies; the fact is they they have found a loophole and they intend to use it. If the growers go to ‘ the courts they will undoubtedly become involved in litigation which may last for anything from 1 to 5 years. Undoubtedly the insurance companies have already had the advantage of expert legal advice and have decided not to pay the insurance. The fruitgrowers realise that the insurance companies have made this decision and I believe the Minister also must realise it. The growers face the prospect of litigation extending for up to 5 years, at the end of which time they will be in the same position as they are in now. The insurance companies have already taken 4 months to reach their decision. The honourable member for Wilmot raised this question in July, and I repeat that it has taken the insurance companies 4 months to make their decision. Having this in mind one can readily foresee the amount of time that would be taken up if the growers decided to test their case before the courts. There appears little likelihood of such a challenge being made.
The growers have paid out thousands of dollars in premiums over many years, but very little insurance money has been paid out by marine insurance companies. When insurance payments are claimed the com panies decline to accept responsibility and the growers are abandoned. This points up the fact that fruitgrowers assume all the risks. Again I believe the Minister appreciates this. Growers face considerable hazards and their running costs are high. They are at the mercy of the freight rate fixers overseas to whom the Minister has referred.
Mr DEPUTY SPEAKER (Mr Lucock)Order! The honourable member’s time has expired.
– If this matter of public importance had been proposed in the form of a motion I would have preferred it to be worded in such a way as to have the Commonwealth make interim payments to growers rather than indemnify them. I appreciate the work that the honourable member for Wilmot (Mr Duthie) has been doing, representing as he does one of the areas worst affected by the holding up of this fruit. It is true that five of the States are affected, but in Tasmania only six vessels in each year are provided to transport the fruit from the north of the island, and one of these vessels with its entire cargo from northern Tasmania is trapped in the Canal. As the honourable member quite rightly says, one of his electors could have 10,000 bushels on that ship. Unless tangible assistance can be given to these people I am afraid that some of them will be confronted with financial ruin. I point out also that amongst growers affected are some in the southern parts of Tasmania who only a few months ago had their orchards substantially damaged by bush fires, as a result of which, despite the higher prices being offered in England, they have been able to ship very reduced quantities of fruit.
The effects of this development are of great significance for our State, and T. sincerely hope that the offer of the Minister for Primary Industry (Mr Anthony) will be accepted with alacrity by the House. I am glad to know that he proposes to look more closely into the insurance policies and the manner in which they have been underwritten in past years because the growers have been under the impression that they have been covered against almost every contingency from the time fruit is loaded on vessels in Tasmania until it reaches its destination in the United Kingdom or the
Continental markets. As the Deputy Leader of the Opposition (Mr Barnard) has said, growers have paid thousands and thousands of dollars for insurance only to find now that the insurance companies are ready to use the frustration clause. This is one of the clauses that appear in very small print on the back of the insurance policies, but it gives the companies an escape, and probably years of litigation will result before a satisfactory outcome can be found. 1 think it is true to say that on a previous occasion - and the only other occasion - when it was necessary to take some action against the shipping companies for insurance recovery, about 6 years elapsed before the position was finally resolved and it cost a tremendous amount in terms of time and money. The growers are not able to wait for this length of time. That is why I have been working in close collaboration with the Tasmanian Apple and Pear Board. The Board has been vitally concerned with this matter and with the interests of the Tasmanian growers. I have been working with the Board in a hope that an interim payment can be made. Then, when a final settlement is reached, whether through the courts or, preferably, by negotiation between the Minister and the Board, the Commonwealth can be recouped for any interim grant that it may have made. It is essential at this stage that grants be made to some growers at least, otherwise they will be unable to continue growing their crops for the next season. This will be serious. The marketing difficulties in 1966 were followed by the reduced crops in 1967 and now this fiasco has developed with fruit in the Suez Canal. lt is not unreasonable to expect that some degree of responsibility will be accepted by the Australian Apple and Pear Board because the Board has approved the conditions under which fruit. is exported. One would expect that in giving this approval it has taken the interests of the growers, on whose behalf it acts, into account and that it will be ready, willing and able to assist when something of this description occurs. This is one of the duties with which this Board is charged. If it has failed to recognise the weakness in the insurance policies covering export fruit I believe that some responsibility devolves upon it. The argument is advanced that the ships are safe and sound; that no-one is restraining them. But they cannot go anywhere. It is true that up to date the refrigeration has been working in these vessels and that the matter so far has not been of great concern to the Board. The honourable member for Wilmot (Mr Duthie) probably was a little prophetic when he started sending his telegrams on 4th July. Perhaps we could go back a little further to February of this year when a deputation asked the then Minister - ‘for different reasons, of course - for an interim grant to be made available to the growers to cover the entire cost of overseas freight.
That was when there was a reluctance on the part of the growers to forward sell and it appeared that if the growers could not make other financial arrangements they would be denied the opportunity to use the system of free consignment. As the season has progressed it has proved to be a wonderful one for those who were able to raise the capital to do this. Regrettably many were unable to use the free consignment system. Some were forced to sell portion of their crop and consign it f.o.b.; others had to resort to the pool system of export. The few fortunate ones who were able to consign their entire crops have been well rewarded. But unfortunately it simply means that while some growers have enjoyed the benefit of a reasonably good season others have not. The people about whom we are speaking in this debate are the ones who, unfortunately, will miss out most seriously. 1 welcome the offer that has been made by the Minister. Many of us have been working on this for some time. I wrote numerous letters to the former Minister for Primary Industry, Mr Adermann. On 25th September I wrote a letter expressing the concern of the Board and of the growers in Tasmania when the growers were receiving their accounts for freight and for presentation costs. That letter was acknowledged on 27th September. It was followed by questions asked in this House on 10th and 1 1th October. I sent to the Minister for this information two editorials concerning this very question which have appeared in the leading Press of Tasmania of this month. The last editorial appeared on 13th October. Finally there was the cutting that the Deputy Leader of the Opposition quoted indicating that the insurance companies had ultimately found a frustration clause in the insurance policies which would enable them to escape their obligations.
I believe that this reveals, if nothing else, an essential need for the AttorneyGeneral’s Department or some responsible authority to look closely into the extent to which fruit can be covered by insurance in future. I hope that the Minister’s approach with his colleagues and the Board to the insurance companies will be rewarded, but if this fails and it appears that protracted negotiation or litigation is inevitable, I would urge in the interests of the industry that an interim grant be made payable to the growers to enable them to carry on. Without assistance some will inevitably face bankruptcy. For that reason I wholeheartedly support the proposition put to the Minister by the honourable member for Wilmot.
-The discussion is concluded.
Bill presented by Mr McEwen, and read a first time.
– I move:
That the Bill be now read a second time.
The purpose of this Bill is to seek the approval of the Parliament for the signature and acceptance by Australia of the International Grains Arrangement 1967. Some six months ago, on the eve of my departure for Geneva to attend the closing and critical stages of the Kennedy Round negotiations, I reminded honourable members of Australia’s objectives in those negotiations. I emphasised that Australia’s chief interest in the Kennedy Round lay in the negotiations on agricultural commodities that earn the bulk of our export income. I also emphasised the great importance which the Government attached to the negotiations on wheat. Wheat is this country’s second most important export, earning us some $300m in foreign exchange in normal years. What we wanted and what we had been fighting for over a long series of international talks and negotiations - even before the Kennedy Round began in 1963 - was a better deal for our wheat in the world’s markets.
As the initiator of the Kennedy Round, the United States had made it clear from the outset that a satisfactory outcome of the negotiations would have to embrace a satisfactory result for agricultural trade as well as for manufactures. So far as wheat was concerned the Kennedy Round provided a unique opportunity for wheat exporting countries to seek greater benefits from a new world arrangement for wheat than had been achieved under earlier wheat agreements.
In almost the final hours of the Kennedy Round a general policy agreement was reached on the basic elements of a new arrangement for the international wheat trade. These basic elements were set out in a Memorandum of Agreement signed at Geneva on 30th June 1967 by twelve countries including Australia. It was then necessary to translate the elements of this general policy agreement into a formal international agreement. Negotiations were carried out in Rome from 12th July to 18th August this year at a conference held under the auspices of the International Wheat Council. Fifty-three countries including Australia were represented at that conference. The outcome was the International Grains Arrangement 1967 with which this Bill is concerned. Copies of the new Arrangement have been distributed to honourable members. It is a technical document and I do not propose at this time to go over its provisions in detail. However, I have had prepared and am circulating for the benefit of honourable members a statement which comments on the detail of the Arrangement.
The International Grains Arrangement contains two parts, a Wheat Trade Convention and a Food Aid Convention, and these two parts are linked together by a preamble. The Wheat Trade Convention takes the place of the 1962 International Wheat Agreement and continues the orderly marketing arrangements developed under earlier wheat agreements. The Convention maintains the existing administrative and institutional framework and, as in previous wheat agreements, the International Wheat Council will be the administering body. In addition, the Wheat Trade Convention contains a number of new features of importance to Australia.
One important part of International Wheat Agreements has been concerned with prices of wheat. Under the various wheat agreements a ‘price range’ has been established with a declared minimum and maximum price. Member countries agree to trade within the price range. That concept has been retained and improved in the new Wheat Trade Convention. The new minimum prices established in the Convention are some 19 cents American a bushel higher than under the International Wheat Agreement of 1962. In addition, whereas the old agreement specified a minimum price for only one ‘base’ wheat - Canadian No. 1 Manitoba Northern, one of the highest quality wheats in the world but a wheat which enters world trade in relatively small quantities - the new Arrangement specifies in addition to a ‘base’ wheat, minimum and maximum prices for several major wheats including a number of United States and Canadian wheats as well as Australian f.a.q. and Argentine Plate wheat. Moreover, in the new Arrangement the base wheat United States No. 2 Hard Red Winter Wheat Ordinary Protein, is a medium-grade wheat which figures largely in world trade. The minimum price for this base wheat has been established at SUS1.73 per bushel at the Gulf of Mexico, and the equivalent minimum price for Australian f.a.q. has been set at 5 cents below this figure.
The fact that in the Wheat Trade Convention there will be several price benchmarks should make the price mechanism of the Arrangement more effective. However, an effective price mechanism could become too rigid if it were not kept under review. An important new Price Review Committee has been established for the purpose of carrying out, on a continuous basis, a review of market prices in relation to the minimum and maximum prices under the new Wheat Trade Convention. This Committee will have important functions in relation to the action necessary to restore market stability whenever prices are at or near the minimum.
The whole technique of establishing minimum and maximum prices at any point of time has been improved in the new Arrangement. The method of calculating these prices is a technical matter involving allowances for differences in wheat qualities and ocean freights from various geographical basing points. For Australian f.a.q. wheat the United Kingdom will be one of the geographical bases for the calculation of the minimum and maximum prices for our wheat f.o.b. Australian ports. This preserves a position recognised in a series of International Wheat Agreements and a position in keeping with almost a century of international trading in Australian wheat. The Wheat Trade Convention also contains a provision that members shall conduct any concessional, transactions in grains in such a way as to avoid harmful interference with normal international commercial trade. This provision is of obvious interest to Australia exporting a large percentage of its wheat to developing countries, most of which are receiving some wheat on concessional terms of one kind or another.
The Food Aid Convention, the second part of the International Grains Arrangement, incorporates the commitment agreed to at Geneva in the Kennedy Round, under which a number of countries, including both importing and exporting countries, agreed that in each of the 3 years of the Arrangement, they would provide developing countries with food aid to a total of 4.5 million metric tons of grains for human consumption. This new programme is an important step forward in the tremendous task of feeding the hungry people of the world. The United States contribution will be 42% of the programme, or 1.89 million metric tons, the European Economic Community 23%, or 1.035 million metric tons, and Canada 11%, or 495,000 tons. Australia will contribute 5% of the total, or 225,000 tons, the same as the United Kingdom and Japan.
This is the first time that such a provision has been included in an international agreement on wheat. Honourable members will see in this development tangible recognition of an important principle long advocated by me in this Parliament and in international consultations. We have maintained that the only equitable way of providing food aid to developing countries is for all affluent countries to contribute their fair share in meeting these food needs. Participating countries may make their contributions in either grains or cash. Cash would, of course, be used to purchase grains. The International Grains Arrangement 1967 is to enter into force on 1st July 1968, following ratification by signatory governments. In the meantime the 1962 International Wheat Agreement will continue. However, the regulatory provisions of the International Wheat Agreement, including those relating to minimum and maximum prices, have been inoperative since 1st August this year. There will therefore be no formal price floor under world wheat prices until the new grains Arrangement comes into force on 1st July 1968.
The decision to continue the International Wheat Agreement without its regulatory provisions was taken at a meeting of the International Wheat Council in April this year. At that time the Kennedy Round was approaching a climax and wheat exporting countries, particularly the United States and Canada, made the judgment that to agree to a continuation of the 1962 International Wheat Agreement with its existing low minimum prices could well prejudice the effort exporters were mounting in the Kennedy Round to negotiate a higher minimum. Exporting countries took the view that the minimum prices of the International Wheat Agreement were so low in relation to current market prices and so imprecise in relation to wheats other than the base wheat that they could face up to the risk involved in operating for a period without a price floor in an international agreement. By way of illustration, the current asking price in London for Australian f.a.q. wheat is £Stg25 15s c.i.f. a ton. It is calculated that on current freight rates Australia could sell below £Stg23 a ton c.i.f. the United Kingdom before the minimum under the 1962 International Wheat Agreement would be reached. The figures are quoted to illustrate that we are well above that old floor price.
I mentioned earlier that fifty-three countries were represented at the negotiations in Rome which resulted in the new International Grains Arrangement. The Union of Soviet Socialist Republics was not, however, one of those fifty-three countries. The Rome Conference was held under the auspices of the International Wheat Council. The Union of Soviet Socialist Republics took the view that the negotiations should have been conducted by the United Nations Conference on Trade and Development - the United Nations body set up with the main purpose of examining the special needs of developing countries. However, the Union of Soviet Socialist Republics was a member of the 1962 International Wheat Agreement. Australia shares the hope, with a number of other countries, that the Union of Soviet Socialist Republics, the world’s largest wheat producer and potentially a great wheat exporter, will join the Arrangement and accept the disciplines and benefits of membership.
The negotiation of this new Arrangement was a long and difficult process. Throughout the four years of negotiations in the Kennedy Round wheat has been at the centre of the agricultural negotiations. Throughout that time close co-operation has been maintained between the Government and the Australian wheat industry. Representatives from the Australian Wheat industry were members of the Austraiian team at all major negotiations and made valuable contributions to the work of Australian delegations.
As I have stated, the International Grains Arrangement is in several respects an improvement on earlier wheat agreements. No one can predict with certainty the likely improvement in actual market prices that will result from an increase of 19 cents American in the price range. However, during the final negotiations in Geneva, experts from the major wheat exporting and wheat importing countries were of the view that over a reasonable period the average improvement in world wheat prices above what otherwise might be expected could be somewhere between 8 cents American and 16 cents American per bushel. With possible future Australian wheat exports averaging 300 million bushels annually, this would mean increases in foreign exchange earnings for Australia of between $22m and $44m. The 1967 International Grains Arrangement should be of great benefit not only to the Australian wheat producer but to the Australian economy as a whole. I commend the Bill to the House.
Debate (on motion by Mr Beaton) adjourned.
Bill presented by Mr McEwen, and read a first time.
– I move:
The purpose of this Bill is to seek the approval of the Parliament for the signature and acceptance by Australia of the 1967 Protocol to the International Wheat Agreement, 1962. I have already explained to honourable members, during my statement on the new International Grains Arrangement, that it was agreed at a meeting of the International Wheat Council in April this year that the International Wheat Agreement 1962 would be extended for a further year to 31st July 1968 with certain regulatory provisions inoperative, including the provisions on prices. The International Wheat Agreement of 1962 would otherwise have expired on 31st July 1967. Australia supported the adoption of the Protocol drawn up by the Council to extend and modify the Agreement and has signed the Protocol. I commend the Bill to the House.
Debate (on motion by Mr Beaton) adjourned.
– For the information of honourable members I present the following papers:
Treaties - Texts of -
International Grains Arrangement 1967.
Memorandum of agreement on basic elements for the negotiation of a World Grains Arrangement.
Protocol for the further extension of the 1962 Internationa] Wheat Agreement, signed 15 May 1967.
Bill presented by Mr Howson, and read a first time.
– -1 move:
That the Bill be now read a second time.
This is the first of three Tariff Bills I propose to introduce. This Bill deals with matters introduced originally on 22nd February, 14th March, 16th March, 4th April, 13th April and 20th April, and which were consolidated into a Tariff Proposal introduced on 2nd May last. The Bill also includes the matter introduced on 10th and 18th May by Tariff Proposal.
The tariff changes in the main implement the Government’s decision following recommendations by the Tariff Board in respect of air-cooled engines not exceeding 10 brake horsepower, augers and bits, cycle saddles, drums, electrical capacitors, glass fibre yarns, fabrics, etc., and plastic corrugated plates, sheet or strip; and following recommendations by the Special Advisory Authority in respect of synthetic resin monofilaments for brushware, man-made fibres and yarns, tyre cord and tyre cord fabric, domestic tableware, soda ash and hogskin leather. A summary of all the amendments is at present being circulated to honourable members for their information.
At the time I introduced the Tariff Proposals 1 gave honourable members, in some detail, the background and reasons for each change. At the risk of reiteration it may nevertheless be convenient for the House if I again deal with these matters in the same way. The Tariff Board report on air cooled engines mainly concerned lawnmower engines but also covered air cooled petrol engines under 10 brake horsepower.
In view of the divergent views and majority and minority recommendations by the Board contained in this report the Government made its own assessment of the level of protection which should be accorded to this industry, and under which it should be expected to meet import competition and consolidate and develop. The majority recommendation was for increased protection at rates of 75% ad valorem or if higher, $13 per engine (General) with the Preferential rate at the minimum level in accordance with commitments. The minority recommendation was for ad valorem duties of 55% (General) and 35% (Preferential) which represents a decrease in the existing duties.
The Government decided that protection should be given in the following ways: Firstly, where the value of an engine exceeds $20 - at a rate of 65% of its value (General Tariff) and 32i% (Preferential Tariff); and secondly, where the value of an engine is $20 or less - at a rate of $13 per engine (General Tariff) and $13 per engine reduced by 32£% of the value of the engine (Preferential Tariff).
The Government in reaching this decision took particular note of the undertaking given by the industry during the inquiry, that it would not take advantage of any increase ir. protection to raise prices, but that it sought the protection to enable it to expand its market, consolidate its position and would anticipate price reductions as this occurs. On augers and bits the Board found that local industry has established efficient manufacture of a wide and generally adequate range of these goods.
Most of the goods covered by this report are subject to protective duties. The Board considered these duties adequate. However, it found’ that a major part of the local industry had been unable to obtain a satisfactory level of profit and the Board considered that this had been due to its failure to achieve broad market penetration owing to the restriction of the area of protection. No change was proposed, therefore, in the present protective levels of duties, but as recommended by the Board they would apply to all products of the type made locally or which are competitive with the Australian products. Duties on boring or drilling bits of the machine tool type are increased from 7i% ad valorem, general, and free, preferential, to 35% ad valorem, general, and 27i% ad valorem, preferential.
On cycle saddles the Board found that since 1963 the local manufacturer of cycle saddles had expanded production. This resulted in reduced costs, stable prices, increased sales together with reasonable profits. The Board considered that the company had achieved relative stability and was worthy of continued assistance so long as it could operate within the existing level of protection. Accordingly, the Board recommended no change in duties on saddles for motor cycles and adult bicycles which are the main lines of production. However, the Board recommended an extension of assistance to cover the local manufacturer’s entire range of production of cycle saddles. Saddles for children’s bicycles and wheeled toys have been made dutiable at ad valorem rates of 40%, general, and 30%, preferential. These rates involved some increases and some reductions in the previous duties but the Board believed that any consequent reduction in protection would be offset by the extension of the range of goods protected.
Concerning drums, the Board last reported on this Australian industry in 1963.
Since then, the principal local manufacturer has reorganised his operations and has improved his marketing in the southern States. The Tariff Board considered that the local drum industry had good prospects of success in the medium and high priced section of the market under a reasonable level of assistance. The Board recommended that the duties be increased by 10% ad valorem to 40% ad valorem general tariff and 30% ad valorem preferential tariff.
I refer now to the Tariff Board Report on electrical capacitors. The duties on power factor correction capacitors at the time of the Board’s inquiry were 50% ad valorem, general, and 22i% ad valorem, preferential. Other capacitors covered by the report were dutiable at ad valorem rates of 100%, general, and 90%, preferential. This level of protection was imposed following reports by the Board in 1962. With power factor correction capacitors, the Board found that electricity supply authorities have been changing from the large size capacitors made locally to imported banks of small units. This has been made possible by technological advances. The local industry’s price disability is now high, but the Board considered that if production were geared to the new type unit, the disability would be reduced.
Capacitors are an important cost element for electricity supply authorities. The Tariff Board considered that there was no justification for recommending duties of the order requested which could detrimentally affect the cost structure of electricity distribution in Australia. The Board concluded that duties of 45% ad valorem, general, and 27i% ad valorem, preferential, should provide a reasonable level of assistance to efficient local manufacture of the new type capacitor and recommended these rates for power factor correction capacitors generally. These duties are in line with the tariff treatment accorded similar electrical equipment.
In 1962, a high level of protection was accorded other capacitors in order to give the industry an opportunity to reorganise production and reduce costs. In its latest report the Board pointed out there was still scope for cost economies. However, in the Board’s opinion, the local industry has been given ample opportunity to rationalise and consolidate its position behind a high level of protection. The Board considered local manufacturers should be now given an opportunity to demonstrate whether they are economically viable under a reasonable level of assistance. It recommended that the duties of 100%, general, and 90%, preferential, be reduced to the rates recommended for power factor correction capacitors.
On glass fibre, yarns, and fabrics the Board found that the industry overall had expanded rapidly since its last review in 1962. It is now well established in most areas and generally, production costs have been reduced. However, local selling prices of a number of lines have been forced down through reductions in overseas prices and there are areas where the Board considered that profitability was less than satisfactory. On glass fibre rovings the Board considered that the local industry could improve its competitive position by producing its raw materials locally. The Board considered the industry to be worthy of continued assistance. It recommended that the duties on glass fibre cords, cordage and braids be increased by 10% to 40% ad valorem, general, and 30% ad volorem, preferential. The same level of assistance was recommended by the Board for certain glass fibre fabrics which at the time were subject to temporary duties. This represented a reduction of 5% in the combined level of the existing normal and temporaryduties.
On glass fibre rovings, chopped strand and chopped strand mat. the Board recommended a specific minimum rate of 12c per lb as an alternative to the existing ad valorem rates of 30%, general, and 20%, preferential. These rates were also recommended for sliver. The Board suggested that the duties on rovings, chopped strand, chopped strand mat and sliver should be reviewed after 3 years. The Board considered that there should be no change in the existing level of protection on other goods covered by the report, including glass fibre wool, yarns and insect screening.
The remaining Tariff P>ard report in this Bill concerns plastic corrugated plates, sheets or strip. The inquiry covered all types of plastic corrugated plates, sheet, and strip, but representations were only made on polyvinyl products. No sustained request for protection was made on other types of plastic corrugated plates, sheets or strip and the Board recommended no change in the existing duties on these products. Most corrugated polyvinyl chloride sheets were dutiable at rates of 40% ad valorem, general, and 25% ad valorem, preferential. The Tariff Board found that the only local firm operated efficiently and had the capacity to meet local demand with material of good quality. Further, it was considered an important outlet for local polyvinyl chloride resin producers. However, similar imported products are considerably cheaper than the local product. This is due, in part, to smaller production runs but mainly to the higher Australian cost of polyvinyl chloride resin.
The Board concluded that the industry was worthy of assistance provided it could achieve capacity or near-capacity production and recommended that the duty rates for corrugated polyvinyl chloride sheets be 14c per lb, general, and 14c per lb less 15% ad valorem, preferential. The ad valorem equivalents of the general rate are in the vicinity of 70% to 80% on the cheapest imported sheet but considerably less on the better quality grades which are more comparable to the local product. The goods covered in this report are also covered by a current general inquiry into the plastics industry. The Board has said that it may review the recommendations made in the present report in the light of the evidence presented at the later inquiry. 1 turn now to the Special Advisory Authority reports. These tariff changes were introduced on 22nd February, 14th March, 4th April, 13th April and 18th May 1967. When introducing the tariff proposals I detailed the nature of the temporary duties and the industry background. As some months have elapsed. I will again give the details of the changes. The first of these concerns the temporary duties which arise from recommendations by the Authority in respect of synthetic resin monofilaments for brushware.
The Special Advisory Authority found that urgent action was necessary to protect the local industry against imports. The Authority reported that the local manufacturers of certain poly-propylene, poly-styrene and poly-vinyl chloride monofilaments used in brushware manufacture were at a considerable price disadvantage compared with monofilaments made overseas. This price disadvantage had resulted in an appreciable increase in imports.
To provide urgent protection against increasing imports, the Special Advisory Authority recommended temporary ad valorem duties of 32±%, general, and 30%, preferential, on poly-propylene monofilaments, exceeding 1 millimetre cross-sectional dimension, for use in the manufacture of brushware. The temporary duties are in addition to the existing ad valorem duties of H%, general, and freepreferential. On poly-styrene and poly-vinyl chloride monofils, not exceeding 1 millimetre cross-sectional dimension, used in brushware manufacture, the temporary duties imposed were at the rate of 20%, general, and 17i%, preferential. These were in addition to the existing ordinary duties of 15%, general, and 7i%, preferential.
The temporary duties recommended by the Special Advisory Authority on certain man-made staple fibre, tow, yarns, tyre cord and tyre cord fabric followed from a reference to the Authority made necessary by the rejection by the Government in March last of the Tariff Board’s report on man-made fibres and yarns. The Special Advisory Authority found that urgent action was necessary to protect the local industry against imports. He found that prices of imported products had been progressively reduced to the detriment of local industry.
To provide protection against imports, the Authority recommended varying temporary duties for the goods under reference. In the case of nylon staple fibre, tow and raw nylon yarns, the Special Advisory Authority found that recently, overseas prices had been reduced substantially and there was more than a possibility that further reductions could be made in the near future. Consequently, he recommended additional temporary sliding scale duties to take account of this possibility.
The Authority considered that urgent action was necessary to protect the local industry producing earthenware domestic tableware against imports. He found that the local industry was directing its efforts to making low-priced lines. In this area imports of comparable goods had been increasing and had caused a significant drop in sales of the local products. To provide urgent protection for the Australian manufacturers’ range of products, the Special Advisory Authority recommended tem porary duties based on the weight of the product subject to a reduction based on the value of the product. On dinner sets or services, utility sets or services, flat plates deep plates the temporary duty imposed was 15c per lb less 100% of the free on board price. On tea sets or services, coffee sets or services, cups and saucers the temporary duty imposed was 30c per lb less 100% of the free on board price.
Turning to soda ash the Special Advisory Authority found that unless some support value was determined, supplies of soda ash could be obtained in the near future at prices and at freight rates which would be disruptive to the Australian industry. He considered that a temporary duty based on an appropriate support value should be determined for bulk shipments of soda ash. Accordingly, the Authority recommended temporary duties of 90% of the amount by which the landed duty paid price of the goods is less than $60 per ton.
Next the Special Advisory Authority considered that urgent action was necessary to protect the local industry producing sheepskin leather against increasing imports of hogskin leather. He found that, although hogskin leather is not produced in Australia, imported hogskin leather which can be substituted for sheepskin leather in the manufacture of linings for boots and shoes, was causing detriment to the local industry. To provide urgent protection against increasing imports of hogskin leather for use as linings in footwear and to take account of minor price variations, the Special Advisory Authority recommended a temporary duty of 6c per sq ft on hogskin leather having a free on board price not exceeding 14c per sq ft. Above 14c the duty falls by the amount of the excess until at 20c no temporary duty is payable. Having regard to the average price of leather coming within this price area, the 6c per sq ft represents an ad valorem duty of about 50%.
Also included in the Bill are matters concerning firstly, the Government’s decision to extend the scope of Australia’s system of tariff preferences for selected products of less-developed countries; secondly, the completion of international negotiations which will enable certain fertilisers to be admitted duty free in accordance with the recommendations of the Tariff Board in its report on industrial chemicals and synthetic resins, and thirdly, administrative changes concerning containers and changes to restore duty situations at 30th June 1965, the Brussels changeover date.
Honourable members will recall that, last year, the Government introduced a system of preferential duties for a range of manufactured and semi-manufactured products of export interest to less-developed countries. The purpose was to assist those countries in a positive way to overcome their trade and development problems. The Government has extended quite substantially the range of products covered by the system. Brief descriptions of the goods concerned, the level of the quotas and the preferential rates of duty proposed are set out in the summary to those schedules.
As a further measure of assistance to the less-developed countries the annual quota for preferential entry of hand-made carpets has been increased from $lm to $2m. An administrative amendment is proposed to item 12 of the second schedule to the Customs Tariff1 966- 1967 to make that item subject to by-law prescription. It has been traditional for Australia for many years to accord free entry to outside packages in which goods have ordinarily been imported. These packages have in the past been mainly disposable types. However, with the advent of containerisation and the continued use and reuse of these bulk containers it is desirable that different procedures be adopted.
Containers and pallets of the reusable type are currently under examination at international level and it is most likely that an international convention governing the import and export of these goods will eventuate. In order to safeguard the opportunities of Australian manufacturers to engage in the supply of these containers for local and overseas trade, it has been necessary to take administrative control of the item by making its use subject to by-law prescription. The practical effect is that the reusable container and pallet will no longer be entitled to automatic free entry but will nevertheless be entitled to free entry provided that, after it has been emptied it will be exported, normally, I should expect, as a container for Australia’s exports. I commend the Bill to honourable members.
Debate (on motion by Dr J. F. Cairns) adjourned.
CUSTOMS TARIFF BELL (No. 4) 1967 Bill presented by Mr Howson, and read a first time.
– I move:
That the Bill be now read a second time. This is the second of the three tariff Bills I am introducing. This Bill is of administrative origin and no changes in the level of duties are involved. It is a measure that will simplify the work of customs agents and importers as well as departmental officers. The Bill presents in consolidated form, in the new fifth schedule now proposed to be added to the principal Act, the special preferential rate of duty that Australia accords to certain countries. This in itself is a useful consolidation but in addition this change means there will now be more than 500 fewer tariff classifications required to be used by importers. As Australia’s international commitments increase, as undoubtedly they will, the new form of presentation will enable the changes to be made without unnecessarily complicating the Australian Tariff. I commend the Bill to honourable members.
Debate (on motion by Dr J. F. Cairns) adjourned.
Bill presented by Mr Howson, and read a first time.
– I move:
That the Bill be now read a second time. This is the last of the three Tariff Bills to come before the House and deals with changes introduced into Parliament as tariff proposals on 17th August 1967. A summary of all the amendments contained in the Bill is being circulated to honourable members. The changes previously introduced as tariff proposals stem mainly from Tariff Board reports on:
Alumina, unwrought aluminium and aluminium products, and
Aluminium powders, flakes, pastes, etc., and reports by the Special Advisory Authority on:
Certain man-made fibres, staple, tow, waste and yarns, and on
Sodium dichromate and chromic acid.
The Board found that the aluminium industry, including that of bauxite mining and the production of alumina, has an impressive record of growth in recent years, is already making a useful contribution to the national income and export earnings and this contribution is expected to increase substantially in the near future. It is becoming an important basic industry whose price disadvantages, modest at current levels of output, should be negligible when operating at capacity. In all, the Board considers that the local aluminium industry is economic and efficient and worthy of assistance.
In respect of unwrought aluminium and aluminium alloys, the Board found that a continuation of important restrictions was the only means whereby effective protection could be given to the local industry. Assistance in this manner will enable the industry to complete its current development plans and consolidate its position in the market. Subject to the developments in the industry being along the lines foreseen by the Board, the restrictions will, as recommended, be terminated on 31st December 1971.
Turning to other aluminium products covered by the reports, the Board found that the local industry producing aluminium wire and aluminium semi-fabrications - for example, bars, rods and tubes - is in a reasonable position and does not have a high price disadvantage when compared with imports. Ad valorem duties of 30% general and 20% preferential were recommended by the Board. These are approximately equal to the existing rates.
Tn respect of aluminium products the local industry constitutes an important outlet for locally produced aluminium. The industry has, in general, been operating profitably and warrants continued protection. The Board recommended ad valorem duties of 35% general and 25% preferential for products other than diecastings. It considered that for these products the rates recommended would adequately protect economic and efficient local manufacture.
The duty rates on most aluminium diecastings are generally as high or higher than this level. This sector of the local industry is significant in terms of production, employment and funds employed and the Board concluded that the present level of duties should bc maintained to protect the local industry.
Aluminium powders, flakes and pastes were, prior to the adoption of the Board’s report, admissible free of duty. However, production of these products is proposed for the near future. This would, in the Board’s opinion, contribute to the development and diversification of the aluminium industry. The Board considered that the proposed industry would warrant protection if the duty requirements were reasonable. Evidence before the Board indicated that’ ad valorem duties of 30% general and 20% preferential would be adequate. The Government has accepted these recommendations by the Tariff Board.
On polyester raw yarns, other than high tenacity yarns, the Special Advisory Authority found that urgent action was necessary to protect the Australian industry against low-priced imports. A temporary duty of 15c per lb was recommended in addition to the existing duties of 12*% ad valorem general and free preferential. On the most important deniers of raw yarns, the temporary duty is equivalent to approximately 15% ad valorem. A further sliding scale temporary duty was also recommended by the Authority to take account of possible future price reductions in the overseas product. However, on current free on board prices, these sliding scale duties would not apply.
The Special Advisory Authority recommended similar action in respect of polyester staple fibre and tow. These goods are normally admitted free of duty. The temporary duty recommended was 35% ad valorem. On high tenacity, industrial, yarns of man-made fibres and man-made fibre waste, the Authority recommended that urgent action was not necessary to protect the local industry.
The final report by the Special Advisory Authority concerns sodium dichromate and chromic acid. The Special Advisory
Authority recommended temporary duties of $35 per ton on sodium dichromate and $80 per ton on chromic acid. These duties are in addition to the normal ad valorem duties of 25% general and 15% preferential. Based on current prices of goods from Germany and Japan, the main exporting countries of these goods to Australia, the temporary duties represent an ad valorem equivalent of approximately 20% for both products. The Authority found that imports had adversely affected sales and profits of the local manufacturer to such an extent that he considered temporary protection was required.
The recommendations of the Special Advisory Authority have been adopted and in accordance with statute these commodities have been referred to the Tariff Board for inquiry and report. The temporary duties will operate pending report by the Tariff Board.
There are several other changes included in this Bill. Extensions have been made to the list of hand-made traditional products of cottage industries that may be admitted free of duty and without quota limitation from less-developed countries. This is complementary to the changes to the system of preferences for less-developed countries which I referred to earlier this day when tabling the Customs Tariff (No. 3) Bill 1967. The remaining changes are of administrative origin and continue, in the main, existing duty situations or restore duty situations at 30th June 1965, the Brussels changeover date.
As 1 mentioned earlier these three Bills are in fact one Bill divided for simplification of debate and drafting. I suggest that when the debate is resumed it may be appropriate for the House to consider a motion that the second reading stages of the three Bills be taken together. I commend the Bill to honourable members.
Debate (on motion by Dr J. F. Cairns) adjourned.
Debate resumed from 20 September (vide page 1143), on motion by Mr Howson;
That the Bill be now read a second time.
-Is it the wish of the House to adopt the course suggested by the Minister? There being no objection, that course will be followed.
– I move:
The Bills that we are discussing deal with the imposing of income tax on individuals, on partnerships, on trusts and on the incorporated form of companies, both private and public. I think it is estimated according to the forecasts in the Budget that in the year 1967-68 the net pay as you earn collections will be $ 1,484m. lt is also estimated that other collections from people who pay income tax and arc nos subject to weekly deductions will amount to $648m; collections from companies will amount to S825m; and dividend withholding tax will amount to $22m. This gives a total of over $2,900m. This is a substantial sum in whatever way we like to look at it.
If we use the gross national product as a barometer, we fmd that 1% of it is about $230m, and the sum of $2,900m is 12% to 13% of the gross national product. If honourable members will observe the terms of the amendment they will see that it is our belief that we cannot examine direct taxation, which includes income tax and company tax, properly unless we look at the whole structure of taxation in Australia. We have three levels at least of taxation in Australia. We have taxation imposed with the authority of this Parliament. We have taxation imposed by the authority of the various State Parliaments. Further, we have a third level of taxation which is imposed by local authorities who are able to issue rate assessments based for the most part on valuations of property.
All of these things are interrelated. What I have talked about as direct taxation is about 121% to 13% of the gross national product. The figure for indirect taxation is at least as much again. When we take all the levels of taxing bodies our total tax levies are over one-quarter of the gross national product. It would seem to me that the impact of taxation is fairly clearly set out in the terms of reference that were recently given to a Canadian Royal Commission. The Minister for Air and Minister assisting the Treasurer (Mr Howson) was good enough some time ago to supply me with a digest of the findings of the Canadian Royal Commission. I shall quote the terms of examination as they were set out for that body. The report stated:
The Commissioner shall consider and report upon -
the distribution of burdens among taxpayers resulting from existing rates, exemptions, reliefs and allowances provided in the personal and corporation income taxes, estate taxes and sales ‘and excise taxes, taking into account also the jurisdiction and practices of the provinces and municipalities;
In other words, the first term of reference recognised that we could not look at taxation only from the level of the central government, which in our case is the Federal Parliament. It indicated that we also had to take into account the impact of taxation on provinces as they are called in Canada, or States as we know them here, and the impact on municipal bodies as they are called in both cases. I would suggest that that is true here. We are foolish to suggest that we can lay down a budget with certain principles by which the Treasurer is sometimes prepared to stand or fall. No sooner are these principles set when they are upset by the separate actions of various States. We have had the curious example this year of several States, including my own State of Victoria imposing something which is of the nature of income tax but is not precisely income tax. So far it has not clearly been defined.
On the other hand we get complaints every time there is a meeting of representatives of local governing “bodies. They complain that the existing system of taxation, particularly the reliance on the property rate alone is inadequate and in many respects inequitable to do the sort of things they want to do. It was pointed out in this place recently that the majority of people in Australia, rightly or wrongly, still live in the cities Also, the cities are expanding rightly or wrongly, and I would suggest that they are expanding wrongly because of the wrong policies being pursued by the Government. The sort of course that is being followed here makes it inevitable that there shall be a drain of population from the country into the cities. So, it would seem to me that the first term of reference is well based. It recognises that taxation is not just three separate kinds of paying. It ought to have a carefully considered line of principle in the hope that the practice will lead to the greatest welfare of the citizens whether they happen to be taxed as nationals or as State people or as members of particular localities. The second term of reference was:
In other words, the implications again are clear enough. Taxation is not just something taken from people with no effect. Taxation is taken for a particular purpose and often taken in particular fields for very good social reasons. Again, it is intended that it should be taken from here and applied, perhaps, somewhere else. It can effect the private side of the economy as well as the public side. The third term of reference was:
Again, there is no doubt that it is a constant battle between those who make the tax laws and try to get within the net what they think ought to be brought within the net, and those accountants and tax lawyers who try to drive coaches and horses through the letter of the law. At a recent gathering of accountants in Melbourne someone pointed out that whereas some years ago people wanted to buy private companies with losses, nowadays they want to buy private companies with undistributed profits. Perhaps this is a more satisfactory sort of purchase, but what is determining the purchase is not that the company is a going concern or a going down concern but that it will give some taxation advantage to the person purchasing it. The next term of reference was:
I understand that in a day or two we will have introduced in this House other taxation legislation dealing with double tax agreements - that is, Australia’s overseas trade relations - and also with what is known as the dividend withholding tax. In Australia, as in Canada, these matters are important. The next term of reference was:
My colleague, the honourable member for Scullin (Mr Peters), would no doubt suggest that that kind of examination is as necessary in Australia as it is in Canada. The next term of reference was: (0 the changes that may be made to achieve greater clarity, simplicity and effectiveness in the tax laws or their administration.
I doubt whether anyone who looks at the lovely orange-coloured document, our Income Tax Assessment Act 1936-66, will suggest that it is notable for its clarity or simplicity. It would be the last document that I would want to precis or turn into basic English. Neverthless it is indicative of the haphazard evolution of our income tax legislation. The next term of reference was:
I cite these things simply to show that the same sort of problems arise in our sister Dominion of Canada, which is a federation similar to Australia but which has a population about half as great again as ours, and which is faced with difficulties in relation to tax sharing between the central Government and the provincial or State governments and municipalities. ft is interesting to note that both the major Australian political parties are convening conferences over what they regard as inequities and unsatisfactory aspects of Commonwealth-State financial relationships. I am sure that they will bring within that ambit what is called local taxation. I suggest that we have reached a situation in Australia where, in view of the fact that taxation represents about one-quarter of the gross national product, we cannot continue haphazardly each year to pick out one or two aspects that we consider are anomalous or that represent inequities,, or one or two matters that we think ought to be marked down for concessions. This has been the pattern in Australia in recent years.
In the remainder of the time at my disposal I want to look at the income tax structure as it applies to individuals, because income tax is still the greatest single source of revenue in Australia, representing over $2,000m this year. We are looking at income tax and determining what the rate shall be in the next 12 months. It is claimed that income tax is equitable and that it is the best way of levying taxation because it is raised according to the capacity or ability of people to pay. But virtually the same progression rate operates now as operated 10 years ago, although there has been a decline in the real value of money in this period so that $3 now has only about the same purchasing power as $2 had 10 or 11 years ago. If honourable members examine the consumer price index they will see this for themselves. If ever the structure of progression were thought to be equitable, it certainly cannot be regarded as equitable now. After all, progression is supposed to be based on a mathematical curve that takes progressively, and with a sort of precision, more from each succeeding dollar earned. Coupled with the inequity in progression there is inequity also in the structure of concessional deductions. Family deductions, until the introduction of this legislation, remained almost unchanged for a number of years. Those honourable members interested in details may find them in a reply to a question I asked on 15th September 1965. The reply indicates the history of concessional deductions for wives and children from time of the introduction of income tax up to and prior to the legislation before us which increases each of the concessions by $26. What has happened, of course, can be ascertained from an examination of income as related to prices. I draw attention to two statements contained in that admirable publication, ‘The Taxpayers’ Bulletin’, Volume 10, Number 18 of 29th August 1967. In an editorial headed ‘The Family Taxpayer’ the following appears:
Ten years ago, an average family of man, wife and two children paid $19 per week in Commonwealth and State taxes … in 1965-66 (the latest year for which complete figures are available) the same family paid more than $32 per week.
This is relevant to what is called progressive taxation. The editorial continues:
Based on the average earnings of employed males published by the Commonwealth Statistician, an ‘average’ man ten years ago worked 5i weeks to pay his income tax. Now eight weeks’ wages are absorbed by tax.
Ten years ago the family taxpayer would deduct $260 for his wife - now he can deduct $312; he was allowed $156 for his first child - now $208; for other children $104 - now $156.
The additional deduction of $26 for each dependant will mean a tax saving of only 24c per week for a man with wife and two children on a taxable income of $1,500 a year or 5dc a week if the taxable income is $4,000 per annum.
This, of course, highlights the difficulty we have when part of what is called the progression is eroded away, as it were, by reasons of concessions which are imposed in lump sums. These lump sums affect what is really the marginal rate of tax payable by the taxpayer concerned.
This sort of anomaly is shown very clearly in the statistics published annually by the Commissioner of Taxation, which are tabled here. The latest one is available now, but there is a small summation of them included in the Budget papers. It gives Commonwealth income tax statistics. From it I have prepared two tables which, with the concurrence of the House, I shall have incorporated in Hansard.
The figures in these tables have been taken directly from the Budget documents. They highlight the inequity of the present approach to the taxation situation. I suggest that the time has come for us to look more closely at the implications of these figures.
Honourable members will find that approximately 4,600,000 people paid income tax in the year ended 30th June 1965. Their incomes totalled $12,214m. This original tax base, if we want to call it that, was reduced to $9,800m, or by something like a fifth, because of the allowance of about $2,300m worth of concessions. The effect of allowing those concessions - and I am sure this can be checked by the gentlemen of the Treasury - was to reduce the possible taxation field by between $5 80m and $650m, or by an amount getting on to the order of onehalf of the total amount of income tax collected in that year. The total tax collected was $ 1,447m. It could have been more than $2,000m if no concessions had been allowed. That alone pinpoints the implications of this kind of practice, but when we look at where the real advantage of these concessions is derived we see quite starkly just how inequitable the system is.
In the table I have prepared I have divided income earners into three groups. 1 have commenced with actual incomes. After all, the individual’s starting point is his actual income, which is reduced according to various concessions to which he is entitled. My first group includes all those who earned between $417 and $1,800 for the year. The first figure is the minimum income subject to tax, and the highest income in this group represents about $34 or $35 a week. I know the statistics can be distorted by the large number of single females and males in this group, which represents 24.6% of the total number of taxpayers.
– A lot of those would be juniors.
– That is right. I concede the difficulty of being too sweeping in one’s statistical enumeration. The fact is, however,, that these 24.6% of all taxpayers received only 8.5% of total tax concessions. The next income group includes those receiving between $1,801 a year and $3,200, which is about $62 or $63 a week, now about the average wage. This group com prised 40.7% of total taxpayers but they derived only 22% of the concessions that were granted. The final group includes all above the average wage level. They numbered 24.7% of taxpayers and they received 49.5% of the taxation concessions granted.
To begin with, the nominal value is twice as much for one-quarter of the population, but when we take into account the rate of tax as well the sin, if you like to use that word, is compounded, because the marginal rate of tax is so much greater. For instance, if a person’s taxable income is in the range up to $1,800 the maximum rate of tax that can be paid is 16c in the $1. When one gets to $3,200 the marginal rate of tax is 27.1c in the $1, and at the higher levels it rises to as much as 66.7c in the $1. If we apply the kind of argumentation I have used earlier, the concessions to the one-quarter of the taxpayers with the highest incomes is probably worth about three times, in money value, that which goes to the remaining three-quarters.
I cannot see this as anything but very socially inequitable. As I pointed out on a previous occasion, in many respects it runs counter to what we claim we are doing by way of the social service system. Suppose, for argument’s sake, child endowment payments are satisfactory. I am not suggesting that they are satisfactory and I believe they could have been doubled for all children, but when it is suggested that they be doubled the question is immediately asked: Where is the money coming from?’ All I am suggesting is that income tax concessions represent a potential loss of revenue of at least $600m which is 60% of the federal bill of the Department of Social Services.
Nobody who looks at such a situation critically and with a sense of equity can be happy at the way in which this amount of $600m or so is distributed amongst the various groups in the community. The concession for wives and children, for instance, gives the greatest advantage to the person whose income is the highest. Perhaps if a man has an extravagant income he also has an extravagant wife. I do not know whether one automatically follows the other. But if we consider all wives on the same basis why should he whose income is $1,700 receive a concession which in money terms is only one-third that received by him whose income is three times as great? I for one cannot see either logic or justice in that. Nor can I see logic or justice in our approach to concessions for children. The real worth to the taxpayer of concessions for a wife and children is a multiple, which depends on the level of income, of the face value of the concession. The real value of the concession is determined by the marginal rate of tax, not the average rate, and that marginal rate can be as high as 66c in the $1 or as low as next to nothing. 1 am suggesting that this is not a very satisfactory situation. It may not have mattered much when the rates of taxation were much lower than they are now, but surely it matters at a time when, as I have suggested before, most of our arguments in this Parliament are about marginal sums of $100m or $200m or $300m for this purpose rather than that purpose. I suggest that in the light of these circumstances it is time we re-examined some of the concepts upon which this loss of revenue of $600m to $650m is suffered.
Sitting suspended from 6 to 8 p.m.
– Before the suspension of the sitting I had endeavoured to show how the Australian tax system had in many respects become ossified or crystallised simply because what had been done historically was being continued even though the original circumstances had changed. J had pointed out that while we regarded or tended to regard income tax as the brightest jewel in the taxing crown because it was a progressive tax, we had not altered the scales of progression for ten years despite the fact that in that time the value of money bad altered greatly, the structure of income tax had changed, and the system had become modified within itself because of certain concessions allowed in reduction of the amount that is ultimately taxed. All these things are running together. In addition, income tax is still only onehalf of the total tax pattern. We live under a federal system - a system under which some of the taxes paid are allowed as deductions in computing the final taxable income. This leads to the rather absurd situation that businesses, particularly proprietary firms are being subsidised by the Commonwealth Government, without acknowledgment to an extent that I do not think is realised.
In the legislation before us we have what 1 regard as one of the most crass tax proposals that 1 have seen for a long time. I refer to the decision to increase the amount allowable as a tax deduction for life assurance and superannuation from $800 per annum to $1,200 per annum. If we put those figures in weekly terms, which most people understand, we find that whereas at present the maximum benefit is enjoyed by those who are able to save nearly $16 a week in the future the maximum benefit will be enjoyed by those who are able to save nearly $24 a week. The greater incomes will attract the greater bonuses. Again 1 do not know on what standards of logic or equity this kind of thing is sustainable. In the last year for which statistics are available - I have had this table incorporated in Hansard - concessional claims in respect of life assurance premiums totalled $420m in round figures. Of that sum $31m was claimed by those in the $417 to $1,800 income group; $139m was claimed by those in the $1,801 to $3,200 income group; and $248m - or $2 out of $3 - was allowed on individual incomes in excess of $3,201 per annum. In essence this means that the concession cost the revenue of the Commonwealth of Australia something like $105m to $125m. The situation is made even worse by the fact that tax deductions are also allowable to companies that make contributions to superannuation funds. 1 think the statistics show that the face value of these allowances to public and private companies was over $80m. This in turn would have meant a loss in tax revenue of between $35m and $40m per annum.
– The honourable member never looks at what happens to the money that is invested.
– If the Minister will be patient, I will argue this point. All that I am suggesting is that on the one hand there is a loss of $160m to revenue to induce people to contribute to life assurance and superannuation funds. On the other hand approximately one-third of the total investments of life assurance companies - which is about $4,000m, from memory - are in Government securities. I hope to argue this matter in more detail tomorrow when we are debating the superannuation legislation. Sometimes I think that there should be a little bit of cross calculation. Here is the kind of categorical question that I think should be asked occasionally: Would the community as a whole be at an advantage or a disadvantage if life assurance premiums were not tax deductible? All I am saying is that these deductions cost the Australian revenue at least Si 50m per annum, or enough to increase the age pension by $3 or $4 a week.
– What about the additional pensions that would have to be paid if there were no superannuation schemes?
– I am not trying to suggest categorical answers at this stage. All I am saying is that taxation in both its forms, direct and indirect, has a severe impact on indiviudals. Most State taxes, because they are indirect taxes, are allowed as deductions for income tax purposes and I do not think that the Minister assisting the Treasurer would disagree that this should be so. Local rating is a tax deduction for businesses and even for individuals. To my mind all of these things added up at the moment amount not, as was once thought, to equity and commonsense but to a pretty great mess.
I suggest that we in Australia should do what Canada decided to do. It is now being said that whether a taxation system is equitable or inequitable is determined not so much by the rate of taxation as by the distribution of income in the community. In Australia certain assumptions that are sometimes made are, in my view, made quite wrongly. It would astonish most people to know that the so-called average wageearner in Australia - a married man with two children earning $60 to $66 a week, which is not a great fortune when all is said and done - pays about 10% of that sum in income tax. I would think, although again this is one of the things that cannot be computed, that he pays about an equal amount in indirect taxes. Certainly if a person does not drink or smoke he can evade a certain part of the indirect taxation burden. That is possibly a question of social justice and social wisdom.
If honourable members look at the annual tabulation of Australia’s national income they will find - I have argued this before - that what is called the gross national product at factor cost is the total of goods and services produced in the community, minus indirect taxation. The final gross national product is 10% greater than that because over $2,000m per annum is added by way of indirect taxes. I do not think anybody in Australia knows the impact of this indirect taxation on incomes. This is one of its great deficiencies. I suggest it is about time that we in Australia thought along the lines that are being followed in other countries. Recently the Labour Government in Great Britain introduced a new tax called a special employment tax which was designed to impose more indirect tax on certain kinds of labour- which in the opinion of that Government was inefficiently used. I do not necessarily support such a tax. I point out, however, that when the Labour Government in Great Britain investigated the imposition of this tax it was astonished to find that the major burden of indirect tax, when scaled down and counted back, touched most of all the manufacturing industries of Great Britain. I suggest the same thing applies in Australia. One of the greatest cost burdens on industry in Australia is the effects not of tariffs but of the haphazard system of indirect taxing that has been allowed to develop. It is time that we began to think these things out. The longer it is left as it is, the worse the mess will become. I am endeavouring in this debate to criticise the pattern of taxation that has developed in Australia. Why should there be sales taxes at all? I agree to some extent to sales tax on motor cars, but why should there be sales tax on cosmetics for ladies.
– What about fur coats?
– I shall not go into that.
– What about motor cars?
– They are at least a fairly substantial component of expenditure. Certainly it would be rather foolish economically to reduce all the duties on alcoholic liquors and cigarettes. If people are foolish enough to consume them in excessive quantities, they ought to pay some penalty for their excess. The Canadian example shows that even in so limited a field as estate and death duties, though it involves substantial sums, there can be improvements. In that country the method of taxing the entire estate of a deceased person has been varied so that the only tax applied is on the distribution of the estate outside the interest of the widow and the family. I suggest these things are worthy of contemplation. I read in that worthy journal, Muster’, that the Country Party wants to revise probate and death duties in Australia. That is fair enough, but why is it done in a hole-in-corner way instead of being subject to public scrutiny? The same comment applies to the whole of our taxation pattern. If as a community we are prepared to pay tax on our goods and services up to a quarter of their value - it is a little more than that when we consider taxes in all their forms - we should at least scrutinise the totality of the pattern, the division of levels of taxation between the governments, the impact upon persons and things, and above all, the incidence and rates of taxation, particularly as they apply to the lower income and family groups in the community. All of these things are implicit in the tax structure as I see it and I hope that some day this Government - or the next - will look at the pattern as a whole rather than take isolated exotics that are thought to be politically popular at the time. Though justice might be done in one direction, anomalies will remain in another.
– Order! The honourable member’s time has expired. Is the amendment seconded?
– Yes; I second the amendment.
– Three taxation Bills are before the House, together with the amendment moved by the honourable member for Melbourne Ports (Mi Crean) in relation to the Income Tax Bill 1967. The wording of the amendment does not appeal to me at all and I shall point out why as a member of the House I am not happy to support it. I reject it because I cannot follow the reasoning of the honourable member for Melbourne Ports and the wording he has chosen for the amendment. I know of no public outcry that would justify an overall review of taxation legislation at this stage. I have raised taxation anomalies in this House, and I suggest that taxation legislation will from time to time give rise to anomalies of some kind or other to which legislators must give their attention. However, no grave anomalies presently exercise the minds of members of the House. One would think from the wording of the proposed amendment that the people of Australia are excessively and unfairly taxed. Though the honourable member referred to the tax rate in the United Kingdom, it is my understanding that on a true and comparative analysis the Australian people do not complain about heavy and unfair tax. Therefore, I cannot support the amendment, which is couched in terms that this House should immediately begin a comprehensive examination of taxation methods with a view to the earliest possible introduction of legislation which will be consistent with present economic conditions.
If there is any vestige of truth in what I have said, the proposed amendment must fall to the ground as being unfair and not applicable. For this reason I believe that the honourable member has moved the motton with some motive that I would not normally attribute to him. Though I have every respect for his analytical mind, I part company with him on this amendment. As a Government member I do not blindly support the Bill and disregard the amendment, but I feel its wording is unjustified and unacceptable. Before moving to the Income Tax Bill to which the amendment has been moved, let me deal with the Income Tax Assessment Bill which contains several amendments which I believe the taxpaying public will receive with gladness. Clauses 9 and 10 of the Income Tax Assessment Bill (No. 3) provide for an increase in the allowable deductions in respect of dependants. Some of my colleagues who worked with me on the Government Members Taxation Committee over the years will heave a sigh of relief that at last we have achieved this slight increase, an increase which Opposition members are too ready to criticise as being trifling and without much value. I would point out that the cost to revenue of this increase in the allowance for dependants will be $20.2m in a full year. Before wc advocate large increases in allowances for dependants we must evaluate the cost to taxation revenue. If you reduce taxation revenue at one point, in order to maintain our expanding economy and provide taxation revenue for 1,001 commendable projects you will have to increase taxation revenue at another point.
The allowance for dependants has remained unchanged for a number of years. The increase provided in this Bill of $26 a year means that the allowance for a taxpayer’s spouse will increase from $286 to $312. The allowance for the first child will increase from $182 to $208 and that for other dependent children will increase from $130 to $156. I do not think we should decry this increase as being trifling. Again I remind honourable members that the cost to revenue in a full year will be $20.2m.
Opposition members have been quick during the debate on the Budget to criticise the Government’s decision to increase the allowable deduction in respect of insurance and superannuation payments from $800 to $1,200. I know that my friend, the honourable member for Melbourne Ports, who has spoken with me about this matter, does not support the increase. It is so easy in this House for critics on the Opposition side to say that the Government is simply increasing an allowance for those in the higher income bracket. Let us analyse this claim for a moment. It is most interesting to find that it is not just the professional organisations which have made representations for this deduction to be increased. I suggest to some of my friends opposite that they discuss this matter with some of the industrial leaders who have made strong representations to the Government for this deduction to be increased. There is a necessity today for the Government to try to equate the position of the self employed man and the fellow who is making heavy superannuation payments whether he be an industrial leader, an organiser or a professional man, with the position of those who are already contributing heavily for their later years. This is only an equation measure which the Government has seen fit to recognise after receiving the strongest of representations not from one quarter of the community but from many quarters. Another point of interest is that the insurance companies and the superannuation funds affected by this increase are required under the 30/20 rule to invest in Government securities. So there is a pay back to the Government; the Government gets the benefit of the increase under the 30/20 rule.
I move on quickly to another point that is of particular interest not only to members of the Country Party but also to those of my colleagues who represent rural electorates. They surely will be pleased with the decision that expenditure on internal sub-divisional fencing of properties shall be allowed in full as a deduction in the year in which the expenditure is incurred. I have inquired as to the source of the recommendation which led to this provision. I wondered whether the provision resulted from agitation by my friends of the Country Party or my colleagues who represent rural electorates. I find that the recommendation emanated from the Australian Export Council, which told the Government that every property sensibly sub-divided becomes a better producer and this in turn has a beneficial effect on our exports. So here was a sound recommendation from a body which the Government respects and which it set up.
I said that I would move on to an analysis of one particular feature of the legislation. We find in the explanatory memorandum which has been circulated an explanation of the age allowance. I want to dwell on this matter because it is not many months since I referred to it in another debate. At that stage we did not have the Government’s agreement to our recommendations. I look amongst my colleagues on the Government side for those critics who have said that the private member in this Parliament is not worth his salt, that he is but a rubber stamp of the Government. I wish those critics were present now. Over a period of years private members have endeavoured to influence the Government to extend the provisions of the age allowance, but to date we have failed. I will demonstrate to what extent we have failed. We did not get our story across. But in this amending legislation we find that at long last the Government has accepted the theory that we advanced. I for one will not accept that as private members we are here to little purpose. Looking back over 12 years of experience as a member of this House one recalls fortunately those points of success where representations that have been made generally have been accepted; where a speech with some fire has been heard and noted. It is within the Party room, where, after all, the in-fighting occurs rather than in the House, that we have had many of our views accepted. Dealing with the age allowance, I well remember a senior member of the Cabinet saying: ‘You ask for too much. You have been talking about this for years. Frankly I do not follow you. I do not understand this.’ We found that we were getting nowhere. We had not convinced that senior member of the Cabinet that right was on our side. But as from last June we have convinced him and here in the legislation before us tonight we see provided the very thing for which we have been fighting. So this is a victory for those private members who over the years put forward their views and spoke so keenly and consistently about them in the House.
I can understand to some extent why that senior member of the Cabinet said: This is a bit complicated. I do not understand your argument.’ In the income tax return under the heading ‘Age allowance* we find !n small print the words in brackets ‘i.e., Limitation of tax payable’ and then:
Applicable to a taxpayer who was a resident of Australia during the whole of the year . . . and who was aged 65 (if a man) or aged 60 (if a woman) on or before that date, as follows: -
Individuals - If income not more than $1,040 - no tax is payable. If income exceeds $1,040 but was not more than $1,221 - tax payable shall not exceed 9/20ths of the excess over $1,040 plus 24% of the amount thus calculated, less any rebate or credit allowable.
Then there is the example of how it applies to married couples and the figures are stepped up accordingly. But there is a note at the bottom of the explanation which states, in respect of the age allowance:
Income means the amount shown in item 18, plus exempt income-
We in this House know that exempt income does not have to appear in the tax form, but here it must be written back in as part of a calculation. This situation has applied for years. The note continues: and exempt pensions, and less expenses incurred in deriving that income.
If this allowance is claimed the statement on page 1 must be completed and that calls for the first time for a statement of the taxpayer’s date of birth. Then the total income has to be listed, the exempt pensions and exempt income. We are told that this is a calculation not for the purpose of giving an allowance but as a device to enable the limitation of tax payable to be worked out. It is complex. I want to say publicly again that many bewildered and misled elderly people have made representations to me as their member and I have had to argue on the basis of this correspondence with the Treasurer of the Commonwealth and officers of the Taxation Branch over a number of years. These elderly people found that if they had made a reasonable provision for their old age the impact of taxation, even when it fell upon them, fell too suddenly. Example after example was presented which showed that the assessment, when it was received, required a substantial payment when they had felt that because of their age they were going to receive the benefit of an age allowance.
What is the history of this age allowance? I found that it was introduced by Act No. 45 of 1951 which first applied to the tax year ending 30th June 1952. Until 1963 both the taxpayer and the spouse were required to have reached pensionable age. From 1964 onwards no limit was specified in respect of the age of a spouse. This adjustment followed a recommendation in 1961 of the Commonwealth Committee on Taxation, which was known as the Ligertwood Committee. This was one point of that Committee’s recommendation which was accepted at the time, but other excellent recommendations in respect of the age allowance put forward by that same Committee were left unattended and were not adopted by the Government until now. As I want to prove, one of the key recommendations has now been adopted with this amendment to the legislation.
Dealing further with the history of the age allowance, let me point out that the purpose of the allowance was to exempt from tax a person who satisfied those tests and whose income did not exceed the sum of the age pension and the maximum permissible income for age pension purposes. Prior to this amendment the age allowance has conferred freedom from tax where the net income of the person has not exceeded $1,070. In the case of a married taxpayer, qualified by age and residence, who contributes to the maintenance of a spouse, an exemption is at present authorised if the combined net income of the husband and wife does not exceed $1,980, provided that the spouse is a resident of Australia throughout the year of income. The age allowance provisions were introduced in 1951 to remove the anomaly whereby persons of pensionable age were subject to taxation on the receipt of superannuation and other income which did not exceed amounts received by age pensioners upon which, of course, no tax was payable.
Because this was the basic object of the allowance, the amount exempted from tax has always been correlated with the sum of the full age pension and the permissible income to which I have referred. A measure of tax relief today is provided for a person who satisfies the age and residence tests but whose net income is somewhat in excess of the exemption limits. This relief is authorised if the net income is between $1,070 and $1,264 for a single person and between $1,980 and $2,958 for a married couple. In this case where the net income falls between the limits that I have mentioned the amount of tax payable is limited to nine-twentieths of the excess of the net income over the exemption limit. So there has been a shading in of provisions of the age allowance. If a person’s tax on an ordinary assessment basis is less than ninetwentieths of this excess, he is required to pay only the lesser amount. So this also is part of the history of this allowance for elderly people.
I have mentioned that my experience as a member, like so many others in this House, has included the receipt of letters from elderly people who have felt that these provisions have been unjust so far as they were concerned. What happened when the Ligertwood Committee put forward its report? The Committee recommended that the net income which was written into the provision which I have just outlined was basically wrong and that it should be the taxable income which ought to apply to these elderly people. It was this recommendation that the Government did not find it possible to accept until now. The taxable income philosophy has been rejected until now and my colleagues and I, as well as many others in the community, have been pressing for its adoption. Now the taxable income basis is written into the Bill which is before the House.
I propose to give a clear illustration of what we have achieved. The proposed substitution in the age allowance provisions of a taxable income basis in place of the net income basis will benefit eligible aged persons in two ways. Firstly, income which is not taxable, such as repatriation or social service pensions, will no longer be taken into account in determining eligibility for exemption of tax payable where the income marginally exceeds the exemption level. The second prong of this benefit is in this respect, that concessional allowances, such as those for medical expenses, maintenance of dependants and so on, will now be deductible from the taxpayer’s income in making those determinations. So we have achieved the taxable income concept and the reinstitution of concessional allowances for elderly people. But how does it work out? I made my inquiries and I have been informed that the advantages to aged persons of the proposed change as now indicated in this Bill are illustrated in the following example of a single aged person whose 1967-68 income consists of, say, $1,300 by way of wages and $400 repatriation pension and who may be incurring $200 medical expenses. This individual under the existing net income basis would not receive any benefit from the age allowance, his net income being $1,700. I ask honourable members to note that he would have to pay tax of $67.65 on his taxable income of $1,100. Under the proposed taxable income basis provided by this legislation this same individual will be exempt, his taxable income of $1,100 being less than the proposed exemption level of $1,196.
Let us consider the case of a married couple where the man contributes to the maintenance of his wife. He has an income in 1967-68 consisting of, say $1,900 wages and $400 repatriation pension and again incurs, say, $200 medical expenses. His wife has a small income of $300. Under the existing age allowance provisions this couple would have a combined net income of $2,600 and this would be far in excess of the exemption level of $2,106 foi a married couple. In this case the existing legislation provides that the taxpayer will receive no benefit from the age allowance. His tax would be $160.20 because his taxable income would be $1,700. The Bill before us provides that the same taxpayer will be exempt, because the combined taxable income of the couple will be $2,000, which will fall below the exemption point of $2,106. Without a shadow of doubt the arguments that my colleagues and I have advanced in earlier debates have been proved correct. This very example shows that we have been applying an age allowance, complicated and complex, worrisome indeed to elderly people and not even easy for a man experienced in taxation law to interpret. An analysis of the amendment inherent in this legislation shows that we have achieved an exemption for many of these people, an exemption which I am sure they will not easily forget when they see how it applies to their individual assessments.
I conclude by returning to the amendment that was moved by the honourable member for Melbourne Ports. I well remember that in earlier years I was an advocate for a committee of investigation. I have had my views about the inequities of. the payroll tax and I have raised my voice about various concession deductions, but I have always returned to this question: How do the people of Australia react to their assessments under the Commonwealth Income Tax law? As one who has been associated, as a tax agent, with the preparation of returns, I am well aware of the anomalies that trouble some individual taxpayers. With all the sincerity of my being I can reaffirm, as I endeavoured to do when I opened my remarks this evening, that in Australia people are not excessively taxed, and our economy is expanding and developing to the very great satisfaction of the Government and, I believe, with the approval of the taxpaying public - certainly of those who support the Government and from whom we have had a vote of confidence. If we were as excessively taxed as this amendment would indicate, I am sure that this vote of confidence for the Government would not have been sustained over the years. I am sure that my- colleagues will not hesitate to cast out the proposal and to express the wish again to the honourable member for Melbourne Ports that he may not have been so extreme in his choice of words - words which do not find any foundation in our tax experience in this country.
– 1 wish to deal briefly with the Income Tax Bill, particularly in relation to section 44a, of the principal Act, as it indirectly and directly affects income earned ‘by companies incorporated in the Territory of Papua and New Guinea. The income tax laws of the Territory of Papua and New Guinea and of the Commonwealth make provision to encourage the investment of capital, particularly Australian capital, in secondary industries in the Territory. In itself, this concept is admirable, and I believe it has resulted in a substantial increase in seconday industries in the area. I am mostly concerned, however, about the relevance of the principle of this legislation to the remoter areas of Australia, particularly northern Australia. Under the present income tax law the same rate of taxation applies throughout Australia. This means that because wages, salaries and living costs in the north and the remoter areas are of necessity higher and living costs are not a general income, tax deduction, the real burden of taxation is higher in these areas than in places where wages, salaries and living costs are lower.
This particular point was recognised by the Committee of Investigation into Transportation Costs in Northern Australia, generally known as the Loder Committee, in its recommendations in relation to taxation. In addition to the higher taxation burden, the level of costs of production in primary and secondary industry in northern Australia is also relatively higher, particularly with respect to freight rates. The overall effect of these disabilities is to inhibit the establishment of smaller secondary industries in northern Australia unless large reserves of capital are available, as is so with the major mining ventures in the north. Given this double disadvantage - the higher incidence of taxation in .real terms as affecting the residents in the north or people earning their income in the north and the higher level of costs of production in that area - there is definitely a disadvantage for people earning their income in such areas.
In section 44a of the principal Act and under the ordinance in New Guinea dealing with pioneer industries, it is clear that this disability is recognised by the Commonwealth. Indeed, investors in New Guinea, particularly Australians, are granted a taxation concession which in effect, amounts to freedom from taxation for the first year of commercial production and the five years immediately following. In itself, this is a tremendous incentive to people investing money in an industry that is classified as a pioneering industry. Provided that the Administrator classifies in the Gazette this particular pioneering industry, it then becomes eligible for this taxation concession. There is another major advantage with respect to losses. Any losses incurred in the pioneering industry in the first year of operation and the 5 years following can be carried forward against profits in the years in which income tax is applicable - that is, after the 5 years immediately following the first year of commercial production. This also is a major benefit for investors or people wishing to invest in secondary industry or a servicing industry in New Guinea. These losses can be carried forward for a period of 12 years. Although the Government recognised the disability in New Guinea, it has refused to recognise the disabilities experienced by investors in secondary industry in the remote areas of Australia, particularly in northern Australia, because it allows exactly the same level of income tax in those areas as it does in the more favourably located parts of southern Australia, particularly the metropolitan areas.
Certainly it can be argued that there is the zone allowance, but that is not the basic point of this issue. Zone allowances will not attract investors to a remote area; they look for direct concessions in the income tax they pay. I do not mean that we should adopt the policy that was once in vogue in the Northern Territory. It allowed certain cattle interests to be free from income tax and it was abused. Overseas interests were able to put up a brass plate at a place they called the company’s headquarters in the Territory and to hold two or three meetings a year there. This fulfilled the taxation requirements and all the dividends were free of income tax. Most of the dividends went overseas. I do not believe in such a policy. The whole objective of the provision relating to New Guinea is to encourage investors to put their money in secondary industries.
A special taxation concession for new industries established in the northern parts of Australia and in rural and remote areas would be a powerful incentive and would encourage investors to divert their funds to industries in those areas. Such a concession would also promote decentralisation and would halt the octopus-like growth that is being generated in the capital cities. We must somehow create the climate that will induce people to invest their money in areas other than metropolitan areas. Perhaps the best method is to grant direct taxation concessions to industries, particularly in the early development period, which is the period most crucial to the establishment of a new industry or the expansion of an existing one. We know this from our experience with primary industries in the north. Unfortunately sugar producers, who accepted the Government’s forecast that the overseas price of sugar would remain stable for long periods and who invested large sums of money in clearing land, in growing cane and in expanding existing holdings, are now suffering badly. This may apply also to other people who intend to start new industries in the north. If they had the incentive and knew that any profits they made in the development period would not be taxed and could be ploughed back into their own industry or any losses they made in the development period could be set off against profits in subsequent years when income tax was payable, they would be encouraged to invest their money in industries in northern areas. But the Government’s refusal to grant taxation concessions to people in northern areas is another example of its discrimination against the north. It is another example of major benefits being given to people in the more favourable areas. This in turn must mean the generation of industry in areas that are now being strangled by self-generating growth.
No doubt honourable members opposite will argue that differential rates of taxation are unconstitutional and that it would be unconstitutional to grant industries in northern Australia freedom from income tax in the period of their development or to write off losses made in this period against income earned in later years. But zone allowances, as everybody knows, are unconstitutional. It is unconstitutional for the Commonwealth to enter into an agreement to fix the price of sugar. This is known. I could list many actions of this and previous governments that are strictly unconstitutional. But who will challenge these acts? The point is that, if the Government acts for the benefit of the country, provided no hardship is inflicted on others, it will not in most instances be challenged. Section 44a, which relates to dividends earned by companies in New Guinea, could be applied equally to industries in parts of northern Australia and in remote areas by simply specifying boundaries within which pioneering industries could be located. These pioneering industries could be given exactly the same rights as the pioneering industries in New Guinea have.
The Ordinance in New Guinea has been effective. As I said before, it has certainly promoted industry in the Territory. I have here a document in which the Chief Collector of Taxes, Mr White, advises that certain industries have been declared pioneering industries under section 6 (1) of the Ordinance in New Guinea. The industries include the manufacture of industrial gases, assembly of metal louvre frames, the manufacture and reconditioning of drums and pails, the manufacture of soap, flour milling, wire fabric and wire working, liquified petroleum gas, cement roofing tiles and terrazzo manufacture. In addition, the Administrator has gazetted notice of intention to declare as pioneering industries such industries as the manufacture of peanut paste, the manufacture of wood preservatives, the manufacture of paper packaging and paper products, the manufacture of reconstituted milk and the assembly of steel and timber fireproof doors. All these industries have been started under this Ordinance and supported by the Income Tax Assessment Act. Australians who invest in these industries do not pay tax on the income they receive from them in the developing period. This is the method that we could use to encourage development in our more remote and northern areas. With such encouragement, people would look to these areas because profits from industries established there would be larger. They would be able to plough back into their businesses any profits they made and if the industries did not earn profits they would be able to set off the losses against income earned in later years.
I would like briefly to deal with some of the recommendations of the Loder Committee as they affect taxation. It is of interest to note that the Federated Taxpayers’ Association of Australia at various annual conferences has recommended acceleration of the development of northern Australia. The Loder Committee has recommended to the Government certain ways by which a judicious . granting of taxation concessions would accelerate the development of northern areas. The Committee considers that income tax, sales tax and pay roll tax concessions related to transport costs could significantly reduce the cost of production and freight rates in the north. The Committee also considers that, if the normal practice of levying taxation at the same rate in the north and the south continues, the north must have a higher real level of taxation. As I said before, the level of wages and salaries must of necessity be higher because of distance, climate and other reasons. At the same time the level of living costs must be higher. Because living costs are not generally allowable as deductions it certainly follows that in economic terms the real level of taxation must be higher.
This is brought out by the Loder Committee which as honourable members know consisted of Sir Louis Loder, who was the Chairman, Mr Peter Baillieu, Mr Gordon Blythe, Mr B. B. Callaghan, who is now Managing Director of the Commonwealth Banking Corporation, Mr G. R. Fisher who is Chairman of Mount Isa Mines Limited, and Captain J. P. Williams who I understand has recently been knighted. It can be seen that this was a very select committee to deal with these particular problems.
The Committee pointed out on the subject of income tax that the higher real level of taxation in the north is recognised to some extent. I dealt with this matter before in regard to the zone allowances. The Committee pointed out that there is no differential treatment in regard to payroll tax. Again, payroll tax per employee in the north is higher than elsewhere because wages and salaries must of necessity be higher to produce the same level of input for productivity. Some of the concessions recommended by the Loder Committee are of very real significance to the country areas of Australia. This is particularly so in areas in northern Australia which are a long way from the capital cities. The Committee recommended that to reduce some of the effect of high outward freight costs northern producers might be permitted to deduct for income tax purposes double the outward freight costs incurred in the transportation of their products. How do we isolate this? Some people would obviously argue that this would be unconstitutional. They would ask for example, how we would differentiate between producers in northern Australia and producers in Tasmania or Sydney. I say that we would differentiate exactly in the way that the Commonwealth today differentiates under the zone allowance system. We would in fact grant these concessions to producers earning ari income in particular zones.
The Loder Committee refers to zone A. Parts of zone B are just as remote in terms of costs as zone A. If this system were adopted it would be of benefit not only to those in the north but to those producers living in rural areas of the south providing that they were some distance from the capital cities which enjoy subsidised transport rates. This is one of the important concessions recommended by the Committee. Another important aspect of this matter is the depreciation of vehicles. Everyone knows that the roads in outback areas are rougher or in poorer condition than most of the roads in the metropolitan areas. Therefore the life of a rural vehicle is much less than the life of a vehicle in the metropolitan areas. The Loder report recommended that the generally allowable rate at which road transport vehicles used in zone A are depreciated should be trebled. I emphasise that it recommended that the rate should not be doubled but should be trebled. This was the Committee’s opinion of the life of a vehicle in the outback compared to capital cities.
The Committee also recommended that residents in zone A might be allowed a deduction for income tax purposes of the cost of a return trip by public transport for themselves and dependants incurred in obtaining medical attention. People living in Cape York, Arnhem Land, Mount Isa, Cloncurry, the Northern Territory, the Kimberleys and areas such as these, know what it costs, for example, to have to receive specialist treatment. This does not mean that doctors are not in these areas. Some of these areas do have doctors. However, if a person needs a specialist then in most cases he would have to journey to Townsville or, perhaps, Darwin, Adelaide or Brisbane. The Loder Committee recommended that particular deductions should be made for these cases. Then, of course, we have this iniquitous system of levying sales tax on freights. If there is one item that penalises people living in remote areas, particularly areas in north Queensland, the Northern Territory and northern parts of Western Australia, it is the levying of sales tax on freights. A spare part in Perth, for example, which may be flown to Wyndham, would incur a sales tax based, not only on the cost of the material, but also on the cost of the freight. This is certainly a most unfair burden to be borne by people living a long way from the origin of the particular product. The Committee refers to this and states:
The practice of collecting sales tax on freight and associated charges amounts to a penalty on the North. Wholesalers told the Committee they would have technical difficulties in calculating sales tax on a transaction if freight costs in Australia were deductable from the sales value for sales tax purposes.
This practice, in many instances, is abused. It is a racket. In fact, it is becoming a favourite pastime of some firms in the north never to have anything in stock. They always have to make an urgent phone call to Brisbane or Sydney to get a spare part or material air freighted to the unfortunate person who wants it. In many cases the particular part is in the back room, lt works out that the person wanting the article pays sales tax on the freight. I regret to say that in many cases the firms pocket the difference between sales tax on the item and sales tax on the item plus freight. Of course, this is naturally hard to prove. But this is the sort of thing that can go on if a person is entitled to levy sales tax on freight. Many questions have been asked in this House about this and I have yet to see a satisfactory answer from the Treasurer as to why this disability cannot be overcome.
In conclusion. I wish to refer again to the main point I made with respect to the principle involved in section 44a of the Income Tax Assessment Act and dividends earned by residents of Australia from pioneer industries in New Guinea. The whole principle embodied in section 44a could apply with equal force to the rural areas of Australia affected by high freight rates. Industries in such areas could well be allowed the concessions which are available to Australian industries in New Guinea. Why should Australian investors who invest in New Guinea industries be able to have freedom from income tax in a developing period when people in Alice Springs, the Gulf of Carpentaria or Cape York cannot receive the concession? Surely the answer that it is unconstitutional is not good enough. As I said before, if we went through all our Acts and cut out important provisions that strictly are unconstitutional, we would have many problems today.
It is most important that we should be able to give benefits where they are justified to industries - as an aid to decentralisation. The Government maintains that it wants to promote decentralisation. I know of no better way to attract investors or their funds to localities outside the metropolitan area than to give them taxation concessions. This has been proved time and time again in other countries. This procedure apparently has been successful in New Guinea and I can see no reason why it could not be implemented under a zone system in northern Australia and applied to specific industries located in those zones. I realise, of course, that it may be argued that on strictly technical grounds this may be unconstitutional, but if it is unconstitutional, so are zone allowances and other regulations.
– Does the honourable member want the zone allowances changed?
– No, I want them increased. The zone allowances principle should ‘be used to enable the principle of pioneering industries to be implemented, particularly in the northern areas of Australia.
– Income tax affects most people personally, but in its implementation it is extremely impersonal. For some reason, income tax legislation is traditionally complex. Its purpose is to raise revenue. I know that it is intended to be equitable, and within the limits permitted to them by legislation the officers of the Taxation Branch are impartial and, I believe, sympathetic to the taxpayers. In its practical application the legislation does not always work out impartially, and I think it contains a number of anomalies, or apparent anomalies. I want to refer to some of them.
In his second reading speech the Minister assisting the Treasurer (Mr Howson) referred to the allowance for a housekeeper being increased from $286 to $312. If a taxpayer is unfortunate enough to lose his wife and he has young children and has to employ a housekeeper full time he is entitled to a deduction of $312 a year. But if he cannot afford to pay a housekeeper full time and can afford her services for only 2 days a week he gets no deduction whatever. This to me seems to be extremely unfair. A second anomaly is that it is not possible for taxpayers to carry forward concessional deductions. Concessional deductions are allowances which are made for a taxpayer’s wife, his children, medical expenses, rates and taxes, contributions to hospital benefit funds and so on. Let us consider the case of a man in business who is going through a tough time and whose business is losing money. He is enabled to carry forward the business losses for a number of years - I think for 5 years. However, because he has earned no money during a particular year he gets no benefit from the concessional deductions. The official argument is: ‘Well, you have no income; therefore you do not need any deductions’. I believe that when he needs help most is when his income is down. It does not matter whether he is a business man who is going through a tough time or a worker who through illness has lost his wages. The fact is, a man can carry forward his business losses but not the concessional deductions. This is an apparent anomaly that ought to be considered.
I want now to refer to primary producers. I do not represent a farming electorate but I note that primary producers are given a right of election in respect of many taxation claims. As a matter of fact the Minister announced that in future in respect of sub-divisional fences the primary producer will have the right to write off the whole cost of the fence during the year in which the expenditure is incurred instead of over a S-year period. I am all in favour of this. If he has to have two wool clips in the one year because of unseasonal conditions, instead of his having to pay income tax on the two clips in the one year he is given the right to elect to spread it over 2 years. If he has to sell stock because of drought, flood or fire, and so builds up his income in a particular year he is given the right to elect to spread this income. Again, I am completely in favour of this provision. But against that, if he buys plant or equipment - say a tractor - he is compelled to write off the cost over a 5-year period, in five equal payments. I do not think it would always suit the primary producer to claim 20% in a particular year. He ought to be given the right of electing whether to claim the 20% depreciation or not.
Another category of person is unfairly dealt with in our taxation legislation. I instance a man - and he may be working in the Taxation Branch - who is transferred from Canberra to Melbourne. He owns a home in Canberra and he has to rent a home in Melbourne. He decides to let his home in Canberra to gain the money to pay rent for his place in Melbourne. Whereas he has to count as income the rent he receives for bis Canberra home, he is nol allowed to offset against it the rent he has to pay in Melbourne. Conversely, if he does not want to rent his Canberra home but seeks to sell it and avoid that taxation complexity, he may not be able to find a cash buyer and so has to sell on terms. Because he does not receive cash for the home, he is not able to pay cash for the home he is buying in Melbourne. He must pay income tax on the interest he receives from the money owing to him from the sale of his home, but he is not allowed to offset against that the interest he has to pay on the purchase price of another home. This seems to me to be anomalous and unfair.
Parents are able to claim as a deduction educational expenses in respect of student children up to the age of 21 years. It is claimed that Australia is short of professional people and that we need them. If this is so then we ought to permit an educational deduction in respect of students up to the age of 25 years. I know of an instance where a student over 21 years of age cannot claim his educational expenses as a deduction. His father cannot claim them either. This student is aged 23 years. He is a student at a university in New South Wales. He is paying his own way without any assistance from his father and without a government scholarship. He was employed by a government department for a period from July to February and he earned about $2,000. This has enabled him to pay his university fees. He has been advised by the Taxation Branch that he cannot claim his university fees or the cost of his books as a deduction from his income. His father gets no deduction and he is not allowed a deduction. I emphasise that this young man is attending university to obtain a degree in a profession, and we claim that we need professional men.
– Will he not get value from having obtained a degree? He will earn a greater income.
– Yes. but the point is that had he not been over 21 years of age someone could have obtained a taxation deduction for his education expenses. I received a letter some time ago from a constituent who is also employed by a government department. In order to improve his income he attended a series of lectures for which he had to pay money. To recover the cost of these lectures he, in turn, gave lectures elsewhere and he earned enough money to offset the cost of the lectures he attended. He had to pay income tax on the amount he received but he could not offset that income against the amount he paid out for the lectures he attended because this was regarded as expenditure of a capital nature. We know that technically this is quite correct, but 1 believe it does not always work out to the best advantage of the taxpayer. In the case of university students particularly, if we are, as we say we are, looking for more skilled professional men, for scientists, doctors and others, we ought to be giving them more encouragement than we are giving them.
I now want to refer to certain legal expenses for which provision is made in. I think, section 64a of the Income Tax Act. This permits the deduction of legal expenses incurred, even if they happen to be of a capital .nature, to the extent of up to $50 a year if no deduction has been claimed for legal expenses under section 51 of the Income Tax Act. It is a strange paradox, if 1 may put it that way, that in some instances the taxpayer cannot obtain a deduction even for legal expenses which are incurred in the course of earning income - which do not happen to be of a capital nature but which are incurred in earning income. I am thinking, as an example, of legal expenses incurred in purchasing a property for letting purposes, on the rent income from which the taxpayer will have to pay tax. In such a case he cannot claim a deduction for the legal expenses incurred.
I have recently had sent to me a photostat copy of an extract from an article which appeared in the London “limes’ of Monday, 15th May 1967. This article referred to the brain drain. It was headed How taxes cut top people down to size’, and it said:
Anyone who has ever collected » pay packet or paid in a monthly salary cheque knows full welt that there is a world of difference between the remuneration an employer agrees to pay and what the employee actually receives.
The article referred to the fact that Britain is losing top men to the United States. It gave the instance of a man who admittedly would be on a very high salary, if he earns £Stg50,000, in Britain he is left with a little over £Stg 10,000. If he earns a like amount in the United States he is left with the equivalent of more than £Stg25,000. The article cited the case of a senior executive and his second in command. The senior man might be receiving £Stg50,000 a year and the junior man £Stg30,000, but in actual fact it costs the employer £Stg20,000- $A50,000- -to pay the senior man £Stg2,500 more than the junior man receives. 1 mention this particularly because the article in question contains graphs showing income tax rates in the United Kingdom, United States, France, Germany, The Netherlands, Australia, New Zealand and South Africa. 1 was rather staggered to find that in the great bulk of cases the taxation rates for middle income earners are higher in Australia than in other places. I have always believed that Australians were among the most lightly taxed peoples of the world. This certainly does not apply to income tax. It may have applied at one time, but not today.
– How does it apply in the case of your man on £Stg50,000?
– Unfortunately 1 do not think my table goes that far, but let me have a look al it. lt goes as high as £Stg90 a week. The man earning that amount of money is much better off in Australia than in the United Kingdom. But the point I was getting at is that the single man earning up to about $A7,500 is far better off in Australia than in the United Kingdom, but once he passes the $A8,000 mark - and we are not talking about the £Stg50,000 man but about the great bulk of income earners in Australia - he is then much better off in the United Kingdom. The advantage cuts out at the level of about $150 a week.
A married man with two children is better off in Australia provided his net income does not exceed $6,250. 1 am talking about net taxable income and not gross earnings. After his income reaches $7,000 a year he is far better off in the United Kingdom. Surely if the brain drain is affecting the United Kingdom for reasons connected with income tax, then it would bc reasonable to assume that Australia is being similarly affected. 1 think it would do the officers of tin: Taxation Branch good to have a look at these graphs. They may realise that we are fooling ourselves when we contend that Australia is one of the lowest taxed countries in the world. As I have said, this claim cannot be made in respect of income tax paid by the great bulk of income earners in Australia.
Another set of figures I have here relates to the pay-as-you-earn system of income taxation. At the beginning of each financial year an employee is asked to fill in a form which is printed in green and on which he can claim deductions for his dependent wife, children and so on. The employer is provided with quite a complicated sheet setting out the amount of income tax he is to deduct from the salary or wages of the employee. In the first place, I think there is a terrific amount of wasted space on this form. It gives a graduated scale up to $100 a week, with graduations of 50c a week. The Department could save 46 lines in each of two pages of this document by marking it in graduations of $1 instead of 50c. Even for a man without dependants and on the maximum salary shown on the sheet of $100 a week the weekly tax is only 20c more than for a man on $99.50. For a married man with a number of dependants the weekly difference is only 10c. The greatest amount by which the tax could be increased or reduced by marking this form in graduations of $1 instead of 50c would be $10.40 a year. That is for the single man receiving $100 a week. For the man on $50 a week the difference in tax would be only 5c or 10c weekly, or $2.60 or $5.20 a year. I do not think it is worth while putting in all these additional lines in this document for the sake of this kind of money.
The main grouch I have over this payasyouearn scheme is that I believe it works adversely against the lower wage earners. I have worked out some tables and I have also a method to suggest which I believe would correct this anomaly. Taking a taxpayer with no dependants and wages ranging from $26 to $60 a week, my figures show that he obtains a refund from the Taxation Branch after he has sumbitted his return ranging from 48c to $23.47. Every taxpayer without dependants receiving up to $60 a week gets a refund. Above $60 I have taken out figures for $70 a week, $100, $120 and $140. These are selected wage groups and perhaps there would be some isolated instances in between these figures to which my argument would not apply. The figures show that the man without dependants earning $70 a week is paying the Taxation Branch $39.26. At the level of $140 he is paying $103.41. This indicates something to me. It indicates that concessional deductions are built into the calculations for the man on the higher wages. Take the case of the man with a wife and two children, for whom there is a concessional allowance of $676. In the in come range from $26 to $70 a week - apart from the man on $30 who has to pay the Taxation Branch 39c - refunds are granted ranging from 66c to $5.24c. On a weekly salary of $100, $120 and $140 such a person has to pay $87.83, $97.90 and $120.27 respectively in taxation. So without any concessional deductions at all other than those for his wife and children, the man on the high salary or wage receives what I believe to be an unfair advantage. Let us take this further. Most taxpayers have concessional deductions other than for a wife and children. I have a letter from a friend stating that he claimed $800 a year for life assurance. Actually he paid $1,200 but he could claim only $800. He will now be able to claim $1,200. I think most members of Parliament or all members of Parliament are paying $1,200 or more in superannuation.
– That is right. If the honourable member has a look at what be is contributing I think he will find that he is paying that amount. This man pays $200 in rates and land taxes. He asks me: ‘What person owning a home can pay less than $70?’ In Victoria a property owner not only pays council rates but has to pay to the Board of Works a sum based on the council’s valuation. This man pays $200. He has three children going to a private school. Again this is his choice but it costs him quite a bit of money. He pays $56 to a hospital benefits fund. He points out that Commonwealth legislation makes it mandatory for him to belong to a hospital benefits fund in order that he may obtain the maximum refund of his expenses. He also pays fees to his union or to his professional body. This man’s concessional deductions - admittedly not” everyone can afford deductions like this - amount to $1,729 a year or $33 a week. This is a lot of money.
Let us examine the case of a person with deductions as low as $200 a year. That is not very much when we take into consideration hospital benefit contributions, council rates, assurance fees, medical expenses and so on. I will take the man on a fairly average income of $60- a week. I think that is actually lower than the average income paid in Australia. If that person claims $200 a year for concessional deductions he will receive a rebate of $50.58. This means that he is paying $1 a week in tax more than he need pay. Not only has he to pay $200 out of a fairly low salary for family expenses but he has to pay taxation on that sum as well. Admittedly he does receive a refund at the end of the year, but I think a little bit of thought could make this burden a lot easier on the taxpayer. If that same person who is earning $60 a week has concessional deductions amounting to $300 a year, he will receive a refund of $72.78; for concessional deductions amounting to $400 a year he will receive a refund of $94.86; and if his concessional deductions amount to $500, which is not an unreasonable amount for a married man with two children, he will receive a refund of $1 15.68. In other words, he is paying in tax $2 a week more than he need pay. I think that he would be better off having that in his pay envelope. If he is one of those individuals who elect to use the Taxation Branch as a savings bank and so allow more taxation to be deducted than is necessary then that is all right. But I do not think that we should be compulsorily deducting from middle group income earners tax on concessional expenses which are regular.
As I have pointed out, the Government tells a man that if he wants to receive the maximum help to meet hospital and medical expenses he should join a benefits fund. His contributions to such a fund are regular. His council rates are regular. In most cases he makes regular contributions to life assurance. As long as his children are at school he incurs regular school fees and if he belongs to a union or a professional body he has to pay fixed dues. A man paying provisional taxation is given the right to reassess himself. If he does not like the provisional taxation that he is asked to pay he can reassess himself and have his taxation adjusted accordingly. Why should not the man who is earning wages or a salary and who is able to prove to the Taxation Department that he will incur certain expenses during the ensuing financial year be able to claim concessional deductions and so pay a reduced rate of income tax? I suggest this would also save the Taxation Department quite a lot of money.
Although the figures I have seen are not precise on the point, one can infer certain things and I would say that the Government refunds personal income tax in excess of SI 00m a year. In fact the figure could be well in excess of $100m a year and I believe that personal income tax represents a substantial proportion of the total tax collected. It would not be very difficult to alter the declaration that is made by an employee when claiming a concessional allowance in respect of dependants so that it would include other allowable deductions. Lines could be provided in the form for medical and hospital expenses, life assurance payments, superannuation payments, education expenses, subscriptions to unions, and rates and land taxes. All this could be set out in the form and the total amount could be divided by fifty-two. In this way a person’s taxable income could be reduced accordingly and his tax assessed on the lower amount.
I am not suggesting something new to the Taxation Branch. I have pointed out that on pages 2 and 3 of the instruction to employers on the collection of income tax there are long tables of deductions relating to wages up to $99.99 a week in graduations of 50c. It is not possible to include in these pages sufficient columns for all types of concessional deductions. A taxpayer is allowed concessions for a spouse, daughter, housekeeper, parents, father-in-law, invalid relatives, children and so on. Because there is insufficient space to provide enough columns for these concessions the employer has to do quite a deal of work for the Taxation Branch in respect of employees earning less than $100 a week. He has to do additions and subtractions and arrive at a sum. However, on page 4 of this instruction to employers concerning employees whose earnings are in excess of $100 per week, the graduations are of $1, and only one calculation has to be made by the employer. The employer divides the concessional deductions in respect of dependants by fifty-two and arrives at the net income. The employer has only one figure to read. I do not see why this could not be done with equal facility with wages under $100 a week. This would save the Taxation Branch quite a deal of work and it would save the employer quite a deal of work also. I hope that I have made some constructive suggestions ‘ for the Taxation Branch and that they merit consideration.
– The propositions before the Parliament involve income tax and its incidence. The Commonwealth Government raises money by means of direct taxes - income tax - and indirect taxes such as sales tax, excise duty, payroll tax and company tax, to pay for the services provided by the Government. Those services include defence and all the facilities that promote the development of Australia. The Commonwealth Government collects income tax from incomes earned in this country allegedly in proportion to ability to pay. The honourable member for Melbourne Ports (Mr Crean) and others have on many occasions shown that taxation allowances are inequitable and contrary to the principles of graded taxation and the ability of people to pay. I was astonished this evening to hear the honourable member for Henty (Mr Fox) talk of taxation in Australia as though it were the most desirable method of paying for the defence and services of this country. He referred in particular to taxation allowances on investments and sought to justify the methods by which they are granted. He said that a friend of his, with allowable taxation deductions of $1,700 annually, has difficulty in paying for his children’s education at some select school in Melbourne. How does that man’s position compare with that of another person who gets $60 a week and has allowable deductions of only $200? Because of his low income with tax of 20c or less in the $1, at the end of the year that person’s deductions would be worth $50 at the outside by way of rebate, but the taxation allowances of the other man, paying tax of 50c or even 66c in the $1, would be worth anything between $800 and $1,100 a year. In spite of this the honourable member for Henty says that the allowance method is equitable. Deductions for the wife and children of a worker in my electorate should be equal in value to those of the friend of the honourable member for Henty. The method of assessing allowances against taxation is utterly inequitable and unjust.
The honourable member for Henty said that every member of this House will get an advantage from the extra allowance of $400 a year for insurance and superannuation. If all members received the same benefit it would be inequitable and unjust, compared with benefits to those on small incomes but they will not. I pay $800 a year in superannuation and insurance but I collect by way of taxation rebate no more than 25c in the $1 for that outlay of $800. The honourable gentleman’s friend, and every member of the Ministry and members who sit behind them will get full advantage from this increased allowance of superannuation of $400. Having bigger incomes than members who get the basic allowance, they will receive by way of taxation rebate $800 or thereabouts from the Government, the tax collector of this country, for their outlay of $1,200, whereas the ordinary member will receive but $200. In my opinion even the ordinary member gets more than he is entitled to when compared with the man on the basic wage or the ordinary artisan or public servant who contributes $60 a year for superannuation and collects by way of rebate from the Commissioner of Taxation only $12 a year in respect of that outlay, which is a far cry from $800 garnered by honourable members opposite and members of the Ministry. Is that equitable and just? The honourable member for Melbourne Ports was correct in saying that this sorry legislation should be torn up and replaced by something more equitable, and that a committee should be set up to consider comprehensively the whole question of taxation and how it should be applied fairly to the people of this country.
Let me now show how another taxation allowance or concession operates. I refer to double taxation agreements in relation to dividends earned in this country by investors in the United Kingdom, Canada and the United States of America. I shall show the effect of these double taxation agreements. The Treasurer, in reply to my question on notice, said that on a taxable income of $5,000 a resident of Australia pays $1,140 tax, a person living in a country outside Australia with which we have no double taxation agreement pays $1,500, and a person who lives in New York or London, where the agreement operates, pays $750. The table submitted by the Treasurer shows that on an income of $20,000 in Australia the Australian pays about $9,300 tax, a person living in a country with which there is no double taxation agreement pays S6.000, and a person living in New York or London pays $3,000. On incomes of $100,000 in Australia, a person living in Australia pays $63,741, a person living in one of the countries with which there is no double taxation agreement pays $30,000, and a person living in New York or London pays $15,000.
– What does he pay in his own country?
– Does his own country provide him with defences for the assets that are earning his income? Does his own country provide him with all the facilities to promote the development of his investment? Or course not.
– Does it provide him with an Fill?
– Of course not. It does not provide him with an Fill to protect his interests in Australia. His interests in Australia have the same protection as is afforded the interests of every other Australian, no more and no less. Of course, if this agreement was, as is alleged, a reciprocal agreement there would be nothing wrong with it because what you lost on the roundabouts you would pick up on the swings. That is, there would be as much coming to this country as a result of remissions of tax as was going out. But this is not the position. The amount of money invested in Australia by people from overseas is fabulous compared with the amount which Australians have invested in other countries.
I also asked the Treasurer how much income tax was payable to the Commonwealth by an artist who came to Australia from the United States of America or England and who stayed here for not longer than 183 days. The Treasurer replied that such an artist would not pay anything. It does not matter how much he collects. He may collect $100,000, $50,000 or any other amount for his performances, as Tony Hancock did the other night in Melbourne; he pays no income tax to the Government of Australia so long as he does no stay here for more than 183 days, and these people do not stay here for more than that length of time. They fly back to America or England, and later return to Australia. In this way they do not become liable to pay income tax to the Government of this country which provides the setting for them to earn their income.
– Is the honourable member sure of this?
– I am quite sure. I have the written statement of the Treasurer. If the honourable member for Barton peruses Hansard he will see that the Treasurer answered directly the question that I put to him on this matter. Of course, this concession is reciprocal, but the point is that Australians overseas earn very little compared with the amount earned in this country by overseas artists.
– What about Joan Sutherland?
– What about Johnny Ray and Tony Hancock and a dozen others.
– What about Tobin Bronze?
– I will tell the honourable member about Tobin Bronze. The Americans were not allowed to lake all of their earnings out of this country. They must do something with it. What did they do? They provided the money to buy Tobin Bronze. These people buy other assets in this country and by this means seek to transfer abroad the untaxed incomes earned in this country.
At present the Prime Minister (Mr Harold Holt) is endeavouring by public statements to soften the people of Australia so that they will not object to Japan being granted the concessions that are now granted to America. The Japanese are not the only one who want these concessions. Investors of West Germany want concessions. Representatives of that country have already suggested to the Government that West German investors arc entitled to these concessions. They say: ‘We are buying from Australia’. Japan says: ‘We are a better customer of Australia than is any other country and we buy more from Australia than Australia buys from us. Why do you not treat us as generously as you treat the investors of the United States?’ How can that argument be answered?
– The honourable gentleman complains that these concessions have been granted. They have not yet been granted; they have only been sought.
– It will be too late for me to object when the concessions have been granted. I objected to the signing of a double taxation agreement with America, but mine was a voice crying in the wilderness.
– Hear, hear!
– The warning pen shall write in vain; the warning voice cried hoarse. Today there are people who are issuing warnings to Australia. The Menzies Government established a committee of inquiry called the Vernon Committee. That Committee was made up of men like Ken Myer, Sir John Crawford and other people who would not have been appointed had they not been very safe for the Government. The Committee reported:
These arrangements (double .taxation agreements) contrast strongly with the moves in Canada to discriminate by way of withholding tax and depreciation allowances against companies having less than 25% Canadian equity. We do not think that the problems posed by overseas investment in Australia as yet warrant adoption of the Canadian approach. Moreover, we cannot be sure that the imposition of a differential tax along Canadian lines would not have the effect of reducing capital inflow to an undesirable extent. There may, of course, be grounds for considering the renegotiation of the double tax agreements from the point of view of the cost to the Commonwealth revenue resulting from the much greater flow of investment income from than to Australia . . .
As already indicated, there will be for many years a continuing need for overseas investment . . . Some degree of reliance on capital inflow for balance of payments purposes also seems unavoidable, although we have warned in this chapter and elsewhere in our report against the dangers of allowing this process to go too far. We must ask what the Australian attitude should be if the amount of investment seeking to come to Australia continues to grow as fast as it has in the past.
Over the last 15 years it increased from £800m to more than £5,000m. The report of the Vernon Committee continued:
In our view there is no longer justification, on the basis of the experience of recent years, for general promotion of overseas investment either by the Commonwealth or State Governments . . .
A continuation of the recent level of new overseas investment of about £150m a year would not be sufficient to prevent a worsening of the balance of payment position, possibly to an extent that could not be tolerated. On the other hand, it would be sufficient to produce a gradual increase in the proportion of Australian company assets owned overseas, perhaps to something like 46% by 1974-75 . . .
That suggestion made by the Vernon Committee was very moderate. If I interpret correctly what the Committee said, it was recommending that we should not enter into any more double taxation agreements but should re-negotiate the existing ones and allow only $300m to come into Australia each year. Last year the capital inflow to Australia was $664m, which was more than twice as much as the Vernon Committee suggested should be permitted.
Last year the amount of interest payable overseas to investors was S395m, which was about half as much as had come into Australia in investments. Of course, some of the $395m was not an outflow from Australia because it remained here as undistributed profits. That brings me to another point, the undistributed profits which are permitted to remain in Australia. Some honourable members opposite may suggest that it is left here to develop this country, but that is the money which the petrol companies use to purchase every street corner garage, the money that Alcoa of Australia Pty Ltd used in order to take over Dowell Industries (Aust.) Pty Ltd at a price which was higher than the market price of shares. That capital was subject to no taxation because the funds are taxed only when they are paid out as dividends to investors. Companies have been formed overseas to take advantage of the provisions relating to the transfer of capital from Australia to other countries. These companies employ artists and others at fixed salaries. The income earned by these people while they are in Australia then goes into the company which has been formed for this purpose. In this way people like Ray who are employed by the companies do not receive a large income which would be taxable here. The companies collect the amount earned and use it to buy racehorses, to invest in Australia or for any one of a dozen purposes.
– Who is this fellow Ray?
– He is Johnny Ray.
– The honourable member is right; he is Johnny Ray.
– Then why not call him Johnny?
– I suggest to the honourable member that if he wants to be fair in taxing Australians he should not be a party to the promotion of agreements which have the effect of reducing taxes payable by overseas interests. Let us consider MacRobertson Pty Ltd as an example. The shareholders in that company are all within Australia. They pay anything from 20% to 66% of their incomes to the Australian Government in taxation. The remaining 40% passes from hand to hand within this country and helps to develop it. As it passes from hand to hand it becomes liable to taxation and provides the Government with finance for defence and development. But what would be the situation if that company were taken over by Unilever Pty Ltd or some other overseas interest? No longer would the shareholders be paying between 20% and 66% of their income in taxation; no longer would the 40% be passed from hand to hand and become liable for further taxation which would benefit our finances; the dividends would go overseas after having paid 15% in taxation. The remaining amount would be utilised by other countries, perhaps permanently or perhaps only temporarily. Some of it may come back.
– What would have been the situation if the company had not been taken over?
– The situation would be as 1 mentioned - the dividends would have been paid to people living in Australia and on those amounts they would have paid between 20% and 66% in taxation, compared with the 15% that would be paid by the investors in New York or elsewhere. With Australian ownership of the company the vast majority of the continuous earning power is of direct benefit to the Australian Government. Between 20% and 66% would be paid in taxation and the remainder would be used within Australia. On the other hand, with overseas ownership, 85% of it could go overseas. Is that advantageous to Australia? Of course it is not. It inevitably happens as a result of this kind of situation that Australians are required to pay more in taxation or the Government is able to provide less in the way of facilities.
Government supporters stand up in this place, as the Treasurer (Mr McMahon) has done, and say that we have to defend Australia and protect the investments of overseas interests. They say that we cannot pay anything to age pensioners, but that is because we are losing millions and millions in concessions to overseas investors. In the very near future we will be extending the same benefit to people in Japan. Once people in Japan have it then investors in West Germany will want it and then the people of Holland also will want it. All these other countries will receive advantages which flow from the double taxation agreements. Countries with the greatest investment in Australia will receive the greatest benefit.
– We have a net advantage from this.
– I cannot possibly understand what the honourable member means when he talks in tennis terms. I have done my best to make the position clear. I thought that even he would be able to understand what I have been saying. I suggest that although the present generation may derive some temporary advantages from utilising resources from overseas, ultimately, as a result of the burden of interest becoming greater and the outflow of interest increasing at a greater rate than the inflow of capital, as the years go on the result of this unlimited and unrestricted inflow of capital will prove to be disastrous. It is time that the people in Australia heeded the only independent expert body which has investigated the matter, that is, the Vernon Committee.
– I support the Bill. I propose to refer to that part of the measure which deals with age pensions. But first I should say that I wonder why the honourable member for Scullin (Mr Peters) sought to dismiss completely the suggestion being made by the honourable member for Lilley (Mr Kevin Cairns) who pointed out the overall net advantage to Australia of these financial arrangements. Surely the honourable member for Scullin is not prepared to ignore completely the enormous value of the amount of capital that has come into Australia because of our policy of permitting a good measure of overseas investment. Tonight we have had some very lucid speeches, one from the honourable member for Swan (Mr Cleaver), and one, in particular, from the honourable member for Henty (Mr Fox). Also, the honourable member for Melbourne Ports (Mr Crean) has moved an amendment. I thought it an extravagant amendment for him because as a rule he takes a very rational approach to economics in this forum. I cannot see myself going along with him, and I could not help wondering at the extent of the ramifications of the amendment. Like the honourable member for Swan, I fail to hear a general outcry from the Australian people about the high incidence of taxation in this country. It is complex but we know that it has to be complex to fit in with the ramifications of society and with the variety of means of obtaining income. This legislation contains an example of how the Government makes allowance for this variation.
Insofar as the application of the exemptions to aged persons or persons over the statautory retiring age is concerned, although this Bill is not listed as being social welfare legislation, it is indeed part of the fabric of this Government’s policy in relation to social welfare and social service legislation. Before elaborating on this point, I should like to observe that this Bill has its basis in legislation that was introduced in 1951 by the Treasurer of the day, Sir Arthur Fadden. I understand that it was an original piece of legislation - an innovation in this field of assistance to persons in the statutory retired group. As I say, it has really become part of the fabric of our social welfare legislation.
While we attempt to maintain in the Australian society and, in fact, try to improve the egalitarian State for which we are known throughout the world, nevertheless we make provision for the desire of the individual to have freedom of action - or at least the people on this side of the House endeavour to do so. A big section of the community thinks in terms of a Commonwealth pension. Indeed, it is questionable whether it has any alternative to thinking in these terms, and this is acknowledged. Others think in terms of a pension or a part pension superimposed on some savings and their own home. Again, others consider life assurance. Yet another group - an everwidening group - places its faith and effort in superannuation schemes. It might involve investment or straight out accumulation of wealth, but the community at large directs its attention to providing for the years in retirement that confront everybody. At all events, people have a freedom of choice in this field and they are actuated or motivated by their own initiative and capacity.
Over the whole canvas of these endeavours, the Government encourages enterprise and it lends a hand where necessary or when it considers this prudent. I believe that it does so by encouraging improvements in the wage structure, in long service leave, and in superannuation funds. In this regard, it not only gives a lead with its own Commonwealth fund, the Defence Forces Retirement Benefits Fund and its own schemes for its own utilities, but it also encourages private enterprise to undertake these types of superannuation funds. It does so through the medium of taxation exemptions. We have heard something about this from some of the members who have spoken on this Bill. Some people prefer to take up life assurance policies. This group is receiving consideration in the Bill by the extension from $800 to $1,200 of the amount which may be deducted from taxable income on account of insurance contributions. At all times, the Government has endeavoured to encourage participation by individuals in the various schemes. It is endeavouring to encourage the establishment of them by individuals, and by private enterprise as corporate bodies. Again the Government gives a lead with its policy of reviewing its own retirement benefits at regular intervals to ensure that Commonwealth servants who have retired are brought within reasonable measure of present retirement benefits. It looks to private enterprise to adopt a similar attitude.
As I mentioned earlier, when considering this problem of the aged person who has already attained the retiring age, the Government’s policy has an inbuilt resolution to provide for the less fortunate in the community and to make concessions to the aged and infirm as their waning capacity prevents them from maintaining their productive effort. I shall elaborate on this point by commenting briefly on the fact that we commence in the social welfare or social service field with a base rate pension for single persons. Then come persons in difficult circumstances who receive supplementary assistance. After that comes the married couples rate, which is followed by part pensions. We are now moving into a shaded area where there are those who have a little more in assets or income. Provision has been made for fringe benefits but then we move into the field of the legislation to which I am referring now - tax exemption or part tax exemption. In the final field are the people who are able to sustain themselves and to continue to take their part in the community as they have done all their life.
It has often been said, but I suppose it stands repeating, that the pension may well be the answer for the less fortunate who have not been able to obtain all the material things they want in life, to maintain themselves in retirement. It is for these people that the Government has framed the legislation to which I have referred which falls primarily under the administration of the Minister for Social Services (Mr Sinclair) and partly under the Minister for Health (Dr Forbes) and the Minister for Repatriation (Senator McKellar). Other Ministers, including the Postmaster-General (Mr Hulme), play a small but significant part in this social welfare legislation.
Over the years there has been great agitation for the lifting of the means test and the introduction of an overall superannuation scheme. Although it might appear to have the appearance of a simple push button system to solve our social welfareaged persons problem, it is not the answer for a society in which there is such a variety of ideas and principles in relation to methods of obtaining income. A large segment of the community still has a desire to retain its independence and the Government wishes to accommodate this group as far as possible. As I say, a wide variety of ideas on this matter is held by an extremely large segment of the Australian population, especially by those who have acquired special skills or who have been engaged in professional employment during their lifetime. They have developed this desire to sustain themselves in retirement.
Only in recent years has the generosity of the means test become so apparent that some people have cast envious eyes in this direction, not necessarily to obtain the direct financial support of the pension, but primarily to obtain fringe benefits, particularly medical attention. I am sure we all agree that this is not an insignificant cost in today’s society. Access to these types of benefits by all aged persons could well be the subject of a lengthy debate on some future occasion, but certainly not during the debate on this Bill. But the persons outside the general compass of the social service legislation to which I referred earlier are the ones for whom the Government has decided to implement a variety of legislative actions that will extend to them some measure of financial and welfare recognition. This will enable them to maintain their positions and they will feel that their contribution to the management and administration of Australia in the past has been appreciated and is recognised. The Bill to which I have referred contains some of these legislative actions. The taxation burden will be completely removed from those who are already in the shaded areas and relief will be extended to others. A still larger group will come closer to the time when they will receive benefits. The taxpayer will pay no more than 9/20ths of the amount by which his income exceeds the base statutory figure. This will be 81,196 for a single man when this legislation is passed and $2,106 for a married man. The upper limits are $1,451 for a single man and $3,287 for a married man.
As I mentioned earlier, the age allowance was introduced by the Government in 1951. It was considered to be quite a useful innovation and was certainly well accepted. But as I have pointed out in passing in my earlier comments, the generous expansion of standard social service benefits has created a situation in which the benefits given by the 1951 legislation have now become somewhat outmoded and need revision. The honourable member for Swan referred to this earlier and it was well debated in April of this year when minor amendments were made to the legislation. A submission was put to the Government through the Treasurer (Mr
McMahon), it was considered and the provision we now have before us is the result of the consideration of the submission. Let us consider the results of the present amendment. Previously, ‘net income’, as it was termed, was used to determine the persons who could claim the age allowance, lt would be fair to say that ‘net income’ was a euphemism for income which might have been called ‘gross income’, lt finished in item 10 of the return and all other types of income were added. The taxpayer was not allowed any of the normal deductions shown on a taxpayer’s return in determining taxable income.
The burden thrust on the average taxpayer by this approach was highlighted in the discussions in the House in April of this year. It was shown then that the taxpayer in this category, particularly the single taxpayer and to a lesser degree the married taxpayer, was at a disadvantage compared with persons who qualified for social service benefits and who were exempt from taxation. In that debate it was shown that, using reasonable figures, the taxpayer could have been as much as $154 a year worse off than a person who enjoyed even part social services. Now in this legislation all this has been rectified and the aged taxpayer is treated in the same way as other people in the community are when taxable income is being determined.
When the benefit of this measure is taken with the recent easing of the means test and with the increase of the allowance for dependants, many people in the community will have cause to be extremely satisfied. lt could mean that the taxable income of a married man will drop by at least $156 and possibly by as much as $200 to $300. This could remove him altogether from the incidence of taxation. Again it could bring many others into the shaded area, as I termed h. That is the area between the bottom and upper limits where the formula of nine-twentieths is applied. It will certainly bring others closer to the time when they will receive benefits and they may even be in line for benefits when the legislation is next varied. I will round off my remarks on this aspect by giving an example. Before the introduction of the legislation, a person with an income of $3,287 would pay some $550 in taxation for the year. After this legislation is passed, an amount of about $714 will be deducted from the $3,287, after allowing a deduction for his spouse, the variation in the means test and the increase in the family allowance announced in the Budget. When we take nine-twentieths of the amount by which this exceeds the base rate of income we arrive at an amount of $315 for taxation. Therefore, a man in this position will save some $235 in a year.
Some people in the category to which I have referred may be criticised. But unquestionably the vast majority of them are people who have rendered signal service to this country in many ways. Many have served in the Public Service and in other similar fields of activity. They have been the very essence of the development of this country and they are entitled to respect and to an acknowledgment of their efforts. The Government is giving this acknowledgment in the legislation. It recognises the part that they have played and does not regard them as a rich section of society that is not entitled to any relief. I commend the Minister for Air (Mr Howson), who is now at the table, and his colleagues for the graphic changes they have made. This amendment and the improvements in the Defence Forces Retirement Benefits Fund and the Commonwealth Superannuation Fund have all been well received in the community. Together they rebut the assertion that the Government does not care for the retired people and does not consider the needs of the superannuitants and pensioners. The Government has come in for some criticism because it was not able to find the funds to increase the age and invalid pensions at this stage. But I ask the critics of the Government to inspect the full range of benefits granted in the Budget this year. If they are fair they will agree that the Government has adopted the proper approach on this occasion.
– I propose to use my time in this debate to draw attention to what I consider are anomalies in the determination of allowable deductions for the purposes of income tax. The matter was drawn to my attention by a constituent whose daughter is employed as a student nurse in a Sydney hospital and whose application for the allowance of a deduction in respect of text books and reference material that she had to purchase was rejected. The mother, in putting the case to me, pointed out that her daughter who was then a third year nurse had had to pay as much as $18 for two books alone. These were books that she was required to have. The mother had sought an opinion from a senior assistant commissioner. Being dissatisfied with the reply, she wrote to me and I made representations to the Treasurer (Mr McMahon). 1 can best illustrate the point by referring to the letters. I wrote to the Treasurer on 6th August and said:
Ti seems to me quite extraordinary and considerably anomalous that qualified nurses are allowed to claim as taxation deductions the cost of text books or reference material purchased for use in their work while no such deduction is allowable for the cost of text books purchased and used by student nurses.
Possibly the decision arises from the use of the term student nurses to describe nurses in training in their first, second and third years in employment in hospitals. Surely these girls are in a different category from university students and students at technical colleges undertaking courses to further their careers.
The position has been drawn to my attention by a constituent who had sought an opinion from a senior assistant commissioner in the Taxation Branch.
Hie Senior Assistant Commissioner advised as follows:
Payments by a person engaged in a skilled occupation for such items as text books or reference material, where relevant to his or her occupation and in order to maintain the standard of skill and knowledge required for that occupation, are generally accepted as having been incurred in the production of assessable income. Consequently, these taxpayers, who would include qualified nurses, are able to claim a deduction, by way of annual depreciation allowance, on the cost of their libraries. Where the amount of expenditure on text books, etc., is relatively small, however, it is the practice to allow an outright deduction for the full cost in the year of expenditure.
As 1 pointed out to the Treasurer in my letter this covered the situation of qualified nurses. I went on to state in my letter:
With reference to the position of student nurses, the Senior Assistant Commissioner wrote:
Deductions for the costs of text books and other reference materials are allowable to taxpayers only where it is clearly established that these costs are necessarily incurred m the course of gaining or producing assessable income and are not of a capital, private or domestic nature. In this connection, it is well established in law, as a consequence of the decision of the Taxation Boards of Review, that expenditure for the purpose of acquiring additional or academic qualifications, or a higher occupational position, does not qualify for deductions, lt is necessary, therefore, to confirm your understanding that no deduction is allowable for the cost of text books used by student nurses.
My letter to the Treasurer went on:
May I say that I think this is utterly ridiculous and if this is the situation permitted by the Income Tax Act and its regulations then it should bc altered.
Student nurses are people who are employed in hospitals. They are actually working in the care of the sick and they receive their training at the same time. They are, in fact, I should think, actually receiving assessable income, at least in their second and third years.
Are the text books purchased by a student nurse, any less than those purchased by the qualified nurse, relevant to her occupation a?d acquired to maintain the standard of skill and knowledge required for that occupation? Are the text books purchased by a qualified nurse, any less than those purchased by a student nurse, for the purpose of acquiring additional or academic qualifications or a higher occupational position?
Surely it could be held that the text books required to be purchased by. a student nurse involve a cost which has been incurred in the production of assessable income.
My constituent in her letter has pointed out that so far as skill and responsibility are concerned student nurses in their third year, or even in second year, are often on duty in the ward alone as a senior nurse, on many occasions having great responsibility for life or death considerably greater than almost any other profession employing people of similar age.
May I ask that you will have this position most carefully examined? I really do feel that we are doing the student nurses less than justice in refusing to allow them to claim as a deduction the cost of the text books they must have not only to pursue their present employment but also to gain the qualifications which will enable them to continue receiving assessable income in future years.
It seemed to me that qualified nurses might well purchase the same books as are being purchased by the student nurses. In the case of student nurses no taxation deduction would be allowable but in the case of qualified nurses a total deduction would be allowable for the year. The argument is that the student nurse is purchasing books and other reference material in order to improve her qualifications and gain a higher assessable income. When a student nurse qualifies after her 3 years of training as it is now - it used to be 4 years - she then becomes a qualified nurse. However, surely many qualified nurses purchase books or other reference material which they will use to improve their knowledge and to gain higher qualifications. They may be studying to become tutor sisters, deputy matrons or matrons. 1 think the argument used by the Taxation Branch is fallacious. The decision of this Government seems to be that it is prepared to allow a deduction to people on higher incomes but is not prepared to allow a deduction to the person who probably needs that assistance more.
I finally received a reply to my letter from the Minister assisting the Treasurer (Mr Howson) on 25th August 1967. In this letter he stated:
I have been asked by the Treasurer to reply to your recent representations concerning the position under the present provisions of the income la* law whereby qualified nurses are allowed certain taxation deductions for the cost of text books or reference material purchased for use in their work, while no such deductions arc allowable for the cost of text books purchased and used by student nurses.
As you know, the Commissioner of Taxation is responsible for the administration of the income tax law and 1 therefore asked him to comment on the matter. He confirms that the advice of the Senior Assistant Commissioner, which you mentioned in your representations, correctly outlines the position of the law as it stands at present. The Commissioner emphasised that decisions of the Taxation Boards of Review, to which he is, of course, obliged to have regard, have established that expenditure incurred for the purpose of acquiring professional or academic qualifications, or a higher occupational position, is an outgoing of a capital or private natureDeductions for expenditure of a capital or private nature are, as you may be aware, specifically excluded by the genera! provision of the income tax legislation relating to deductions.
In these circumstances, you will appreciate that an amendment to the law would have to be passed by Parliament before the deductions sought by student nurses could be allowed. In this connection, It is pointed out that the required amendment could hardly be confined to student nurses and the question of self-education expenses incurred by other taxpayers would also have to be considered.
I can see no reason why it should not be considered. The argument I am using here could well apply to apprentices in certain trades and cadets in certain professions such as engineering. I believe that there is a very reasonable case for the Government to have another look at the income tax law and to remove what appears to me to be a very serious anomaly. The letter from the Minister Assisting the Treasurer went on:
Nevertheless, the possibility of an amendment to the income tax law to permit deductions for the cost of text books purchased by student nurses was one of the taxation proposals considered by the Government during the recent Budget deliberations. However, the Government did not find it practicable to amend the law in this direction, the taxation concessions being limited to the extent announced by Mr McMahon in his Budget Speech.
The Minister assisting the Treasurer does not give any of the arguments that prevailed against the proposal for the allowance of the cost of text books and other material as deductions for income tax purposes by student nurses and other people in that category. I would ask the Minister assisting the Treasurer, who is at the table, to have another look at this question because I cannot help feeling that the practice in relation to deductions has grown up, probably without any designed plan. It has been decided piecemeal to allow a deduction here or to disallow a deduction there. So a practice has grown up which seems to me to be quite unjust in its application.
I conveyed the Minister’s reply to my constituent who is the mother of this trainee nurse. She replied that she was pretty disgusted with the answer which I obtained from official sources although she could not say she was surprised. She went on to say in her letter:
If the nurses withdrew the ‘tender loving care’ with which they tend their patients and instead treated them like so many office files, then maybe people would realise that this is a unique profession . . . they are consistently denied a decent hearing on their wage claims or are offered terms which are unacceptable to them. And officialdom gambles, or even stands, on the knowledge that no matter how hard-pressed they will never actually take strike action. It will simply mean that more and more girls will drop out or simply not apply. Of my own daughter’s group, now in 3rd year, they are 50% fewer than when the group first entered the hospital - a very high dropout rate.
I do not doubt that the policy of the Government expressed by the Taxation Branch is one that irks these student nurses and encourages them to move out into other avenues of employment offering better conditions and probably better emoluments. I simply ask the Minister assisting the Treasurer to have this matter examined again not only in relation to student nurses, which I have quoted as an example, but also in relation to apprentices in certain trades and to cadet engineers or cadets generally in the professions, to see whether a more realistic system of determining allowable deductions can be devised. I stress that in the case I have quoted we are saying that the qualified nurse buying the same book as is being bought by the student nurse is allowed a deduction but the student nurse is refused a deduction. This seems cockeyed and I hope the Minister will have a look at it.
Mi COLLARD (Kalgoorlie) [10.21]- In introducing the Bill to amend the Income Tax Assessment Act the Minister assisting the Treasurer (Mr Howson) commenced his remarks by saying:
The proposal affecting most taxpayers is, of course, the increase of $26 in the amounts of the concessional deductions allowable for maintenance of dependants.
I intend to spend a little time on that particular proposal. While it may be the one which affects most taxpayers there certainly can be no doubt that the effect will be different depending on the financial situation of the taxpayer. The higher his income, the greater the effect. I do not believe that this is the proper way of determining what the effect should be. Division 3 of the Income Tax Assessment Act is that part of the Act which determines the effect of concessional deductions on income. As I see it, this has always operated, under this Government, in such a way as to be quite unfair to taxpayers in the lower income groups. Perhaps it would be more correct to say that it acts most favourably towards people in the higher income groups. There are both general and concessional deductions, and it is the latter - those relating to dependants and to medical and education expenses and so forth - that I am more concerned about, for it is in this particular field that we can see so clearly how favourably the higher income groups are treated as compared to those on lower incomes. They are all entitled to the same amount of deduction, but the way in which the deductions are made causes a considerable difference in value. Section 48 of the principal Act states:
In calculating the taxable income of a taxpayer, the total assessable income derived by him during the year of income shall be taken as a basis, and from it there shall be deducted all allowable deductions.
This is the section which determines how deductions will be made. It is this section which causes the situation where one group of taxpayers is treated far more favourably than another section and, as I have indicated, it allows the deductions to have a completely different value, the deductions are made not from the actual tax, as I suggest they should be, but from the assessable or gross income. As the section states, assessable income is the basis. After all deductions are made, after the assessable income has been reduced by the amount of the total deductions, then we arrive at the taxable income. This is where the fault lies, as I see it, because it simply means that the taxpayer with deductions totalling $800 is treated more favourably and receives greater value from the deductions if he has an income of $20,000 than if he has an income of $3,000. For the life of me 1 cannot see where this is fair or proper.
The taxpayer with an assessable income of $8,000 and total deductions amounting to $800 would, under the existing tax rates, enjoy a taxation saving pf $370, or near enough to it. A taxpayer with the same total deductions, having an assessable income of only $3,000, would save only $200. The taxpayer with a gross income of $20,000, with the same deductions, would enjoy a tax saving of about $480. In other words he would enjoy a saving almost 2i times that enjoyed by the man with an income of only $3,000. Not only would the amount of deductions be the same but it could have been obtained for exactly the same reasons. Both taxpayers could have exactly the same number of dependants. So, in such an instance we find one taxpayer being allowed a greater amount to maintain his family than another man is allowed. Surely there is no justice in that.
What are the reasons for allowing deductions? From an examination of the several items it would seem clear that in the main they are related to the additional costs that a family man has to measure up to. For instance the deductions allowed for dependants are referred to in the Act as being related to the maintenance of certain people by the taxpayer. We have deductions for education expenses and for medical and hospital expenses, not only for the taxpayer but also for his spouse and his children.
Most of the deductions are in fields of costs to which married taxpayers are always subjected.
If the deductions were related in any way to the ability of the taxpayer to provide for his wife and children, then the taxpayer on the high income would be in a much better position than the man on the low income and he would not receive as much in deductions, but the way it works at present, of course, is that we have the absolute opposite situation. I do not see why this should be so. If the deductions were related to any form of encouragement to marriage and the rearing of families it would be the man on the lower income who would deserve the greatest assistance. If there is to be any difference in the value of deductions, surely we should have the reverse position to what we have at present. I am not saying that it should be reversed, but I do say that all taxpayers, irrespective of their incomes, should be placed on an equal footing in relation to concessional allowances and deductions. Why, for instance, should the allowable deductions for a wife and child carry a different, and in some cases a substantially different, value for one taxpayer as compared with another? Why should a contribution to a medical fund result in a far greater tax reduction for one person than it does for another, particularly if the amount of contribution is the same in both instances? It seems to me to be a crazy sort of system to continue.
As far as I can gather there is no reason why deductions should not be made from the actual tax itself instead of from the gross income. If this were done everybody would be treated equally and the value of the deductions would be the same in all cases. I do not suggest that the existing amounts of deduction should necessarily be the same under the different system, nor do I suggest what the amounts should be. This would require some examination to arrive at a formula, but I do not see that it would be any more difficult to arrive at what the deductions should be under that system than it is to arrive at what the deductions should be under the present system, particularly if they were determined properly and not haphazardly as they are at present. If the deductions were made as I suggest, the overall amount of tax relief - if that is the proper term to use - would not need to be any different from what it is now, but it could be distributed more fairly and it could help those who are in the greatest need of assistance instead of allowing a higher tax saving by those who do not require it but who receive it under the present system.
If the Minister assisting the Treasurer indicates that the Government prefers the present system then I should like him to take the time to explain why it prefers it. It was rather unfortunate that the Minister, when he introduced the Bill, failed to indicate how the Government was able to arrive at the conclusion that $26 was an adequate or proper amount by which the allowances should be increased. One would have thought that if, as he said, he considered that most taxpayers would be affected by the proposals, he would have spent some time explaining why the amount is only $26 and not $52, or $39 or some other figure. I was very interested in this aspect and in an attempt to find out how the amount may have been arrived at I took the trouble to go back over the records for several years to see whether in previous debates on increases of this nature the method or system that was used to fix the increases had been explained. As far as I can find out, there has never been - certainly not since this Government took office - any reference to any table or formula which should be followed in fixing the allowances at any given time.
Failing to find any such references in the records of debates I took the trouble to measure the allowances fixed at various times against the basic wage rates then prevailing, in order to see the relationship of the allowances to the cost of living. After all, at least some concessional allowances are for the purpose of assisting with the maintenance of the dependants of a taxpayer, so surely the cost of living at a given time would be a governing factor. My study of the relationship between increases in allowances and the cost of living has shown that the Government adopts mere hit or miss methods in fixing the amounts of these increases. If this is not so, then the Government has deliberately brought about a reduction, and a considerable reduction, in the actual value of the allowances.
Section 82b of the Income Tax Assessment Act is the section which deals with concessional deductions. It says:
Where, during the year of income, a taxpayer contributes to the maintenance of a person (in this section referred to as a dependant) specified in the second column of the table set out in the next succeeding sub-section, and that person is a resident, the taxpayer shall be entitled to a deduction in accordance with this section.
I suggest that to carry out properly the intention of that section the allowances should be firmly related to the cost of maintenance of the dependants, which, of course, is closely related to the cost of living. Therefore not only should there be a proper formula or scale to follow in the determination of the allowances, but also the adjustments should be made at more frequent intervals than they are at present. There should be adjustments at least once in each taxation year or whenever there are any substantial alterations in the cost of living.
As I have said, I went back over a period of over 20 years in my examination of the history of these allowances and it is quite clear that when alterations have been made either there has been no attempt to relate them to living costs or the value of the allowances has been allowed to fall off. When this Government took office a taxpayer with a wife and two children was not required to pay any income tax if his income did not exceed about 94.5% of the basic wage. As a matter of fact in the previous tax year he was exempt from tax if he earned the full amount of the basic wage. In 1950 this Government introduced a Bill which the Treasurer of the day, Mr Fadden - now Sir Arthur Fadden - said was the first instalment of the Government’s scheme for the progressive simplification of Commonwealth taxation laws. He also said that the value of deductions would be increased. Having that statement in mind it will do no harm to go over what has happened to concessional allowances during this Government’s period of office, because not only has the Government failed to increase the value of deductions, it has in fact allowed the value to decline very considerably.
The 1950 amendment to which 1 have referred meant that the taxpayer with a wife and two children had exemption from taxation on income of up to 91.3% of the basic wage. However, an increase in the basic wage about a month later reduced the proportion to about 80.2%. The next alteration was made in the 1953-54 year, when the only increase in deductions was in the deduction for a spouse. This went from £104 to £130, but as a result of an increase in the basic wage the total amount of allowable deductions was then just over 59% of the basic wage. This rate of concessional allowance continued until the 1957-58 taxation year, by which time there had been a further increase in the cost of living. On that occasion a small increase, totalling £39, was made in the allowances for a wife and two children. The taxpayer’s total exemption was then equal to about 60.5% of the basic wage. In the taxation year 1963-64 the taxpayer’s basic exemption was doubled but there was no increase in the allowances for the wife and children, and as the basic wage had increased considerably the taxpayer’s total exemption remained at just over 63% of the basic wage. The proposal we now have before us, which increases the concessional allowance for a taxpayer’s wife and children, means that the total exemption, taking into account further increases in the cost of living, will still be about 64% of the basic wage. This means that the present allowances, considered as a proportion of the basic wage, will still be 16.2% less than the allowances were in 1951 under an amendment introduced by this Government, and about 30% less than they were in 1948-49.
The alterations made by this Government to the amounts of concessional deductions may indicate an intention on the part of the Government to set a figure at about 60% to 65% of the basic wage for a family of four, but if this is so surely we are entitled to know why the substantial reduction has taken place since 1950, particularly when the Government of that day told us that its amendments would result in an increase in the value of the deductions. However, I suggest that the matter goes further than this, because section 82b of the Act refers to allowances to a taxpayer for the maintenance of dependants, and if we look at the proposals now before the House we find that the allowances for a wife and two children are only 39.6% or so of the basic wage, whereas in 1950 they were equal to about 55.5% of the then basic wage and in the year before this Government took office they were worth about 63% of the basic wage. While this Government may have kept the taxpayer’s basic exemption at a figure close to the value it held in 1950, it has allowed the value of concessions for dependants to fall off very considerably. lt may be, and no doubt it is, difficult to determine with anything like accuracy what it would cost to maintain a wife and two children, but it would be a pretty safe bet that one would have very little left out of 60% of the basic wage at any given time. To give the allowances the same value today as they had in 1950 the amounts of concessional deductions should be $421 for the spouse, $317 for the first child and $172 for the second child. In total this would be $134 more than what the Government proposes under the Bill now before us. I remind the Government that, while in previous debates of this nature it has referred to child endowment as a form of family assistance to be considered in relation to or together with tax concessions, the increases recently made to child endowment rates do not affect a taxpayer with fewer than four children, and so they cannot be considered in this case.
The Act makes provision in section 82b for deductions for dependants. The intention is certainly to assist in the maintenance of these dependants. I want to point out that the Government has done nothing to increase zone allowances since 1958. Those allowances must surely be considered together with allowances under section 82b because under that section the allowances for dependants give a blanket coverage no matter where a taxpayer lives or what it costs him to live. As you will know, Mr Speaker, I have on numerous occasions in this House suggested increased zone allowances and an extension of zone boundaries. While on earlier occasions Treasurers have said that this matter required a complete review of boundaries the reply given in more recent times is that the whole procedure would be unconstitutional. Even if it were unconstitutional, this certainly did not prevent the Labor Government from introducing zone allowances; nor has it prevented the present Government from granting increases when it considered it was politically wise to do so.
I know that the present Prime Minister (Mr Harold Holt) and his predecessor both strongly opposed the measure when it was introduced in 1945 by the Australian Labor Party, but it seems to me that the Government has been using the plea of unconstitutionality in more recent years hoping that it would prevent honourable members from raising the matter in this House. However, if zone allowances are unconstitutional I suggest that there is another way in which the same effect could be achieved and which would be constitutional. If this is so then I suggest that the Government should do something about it because undoubtedly taxpayers, and particularly those with dependants, are being treated less favourably in some areas than in others. The Constitution provides that Parliament has the power to make taxation laws but not so as to discriminate between States or parts of States. It seems to be this reference to discrimination upon which various Treasurers have rested their arguments in relation to zone allowances. But there is no argument regarding section 82b of the Act. That section is accepted as being completely constitutional. It provides for tax deductions in the way of allowances for dependants to offset the cost of maintaining those dependants. This being so, surely it would also be constitutional to grant some extra allowance for taxpayers living in high cost areas simply because the taxpayers in those areas naturally pay more - and much more in some places - to maintain their families than do taxpayers maintaining a similar number of dependants in areas where the cost of living is much cheaper. In fact, I suggest that if some additional allowance is not provided then this could be said to be unconstitutional because there is then a distinct discrimination between States and parts of States; people living in some parts of Australia are being treated more favourably than those in other parts in relation to maintaining dependants.
If an allowance granted under section 82b of the Act for a wife and two children is sufficient to meet, say, 60% of the actual cost of maintaining that family in Sydney hut is only 30% of what it costs to maintain the same family in Darwin or Wyndham, then surely there is a discrimination. The same thing applies in relation to exemption of the taxpayer himself. He should receive a higher exemption in a high cost area. The Constitution does not say how the taxation laws should be drawn up provided there is no discrimination. It seems to me that as the zone allowances are only granted in high cost areas then it is simply another method - and quite within the Constitution - by which the law will provide that as near as possible the taxpayer will receive an exemption and deduction allowance to make his position equal to that of taxpayers elsewhere.
I thought the Government had accepted this as being so when it amended the zone provisions of the Act to provide an allowance for the taxpayer plus one half or one twelfth of the dependant’s allowance, depending upon the area of residence. Personally I think this is quite proper. But if zone allowances are not constitutional then surely it would be constitutional to draw up section 82b in such a way that the higher or greater concessional allowance could be provided in the areas such as those covered at present. It seems to me that the proper wording of the section could overcome any existing doubts or problems. I would like to see the deductions as an amount deducted from the actual tax and not the assessable income because this way is surely much fairer. Surely the existing system whereby some taxpayers obtain greater benefit from deductions than other taxpayers is discriminating between taxpayers, even thought it may not be between States or parts of States. Certainly one section is being treated more favourably than another.
If the present method is to be continued then I think that by altering the wording of section 82b so as to make it clear without any doubt that the allowances are to offset the cost of maintenance of dependants it would be quite proper to write in different amounts for different areas. If we cannot do it this way and we cannot do it by zone allowances it simply means that while the Constitution remains as it is the taxpayers in some areas will be treated very much less favourably than those in other areas. I point out that there has been no increase of zone allowances since 1958. If the amounts today were raised to the value they had in 1958 it would mean an increase of about $140 in Zone A and about $20 in Zone B. But the relationship of zone allowances to the cost of living shows that very little, if any, examination has been made of the actual position. I have frequently suggested extensions and alterations of existing zone boundaries but I now feel we have reached the situation where it may be better to take in an extra zone altogether and have three zones instead of two.
Under the proposed increases of dependants’ allowances and with the existing amounts of zone allowances, the difference between the capital cities and Zone B is $146 or $2.80 a week in the case of a man with a wife and two children. Anyone who imagines that a man can maintain a wife and two children in any part of Zone B on $2.80 a week more than it would cost in Perth has no idea at all of conditions in the areas within Zone B. Of course the further one goes into Zone B or the closer one gets to the boundary of Zone A the greater the difference in costs. It is quite obvious that the amount of allowance in Zone B should be much higher that it is at the present time and not only in relation to what it was in 1958 because the amount in 1958 was less than it should have been in view of the cost of living in those areas.
It may be an appropriate time for me to read the amendment which my colleague the honourable member for Melbourne Ports (Mr Crean) moved earlier. The amendment is as follows:
That all words after ‘that’ be omitted with a view to inserting the following words in place thereof: ‘as the existing structure of tax rates and concessions has failed to keep pace with the distortion of the economy and the tax system caused by inflation, this House is of the opinion that a comprehensive examination of taxation methods, both direct and indirect, should be commenced immediately with a view to the earliest possible introduction of legislation which will be consistent with present day economic conditions.’
That amendment surely should receive the support of the House. If the Government does accept it and takes the action it calls for, it could be the means of overcoming at least most of the anomalies and injustices that 1 have referred to.
Another proposal in the Bill is one to increase the amount of allowable concessional deductions for life insurance premiums, superannuation contributions and the like that are made by a taxpayer for the benefit of himself or his family. I had a few words to say on this matter during the Budget debate and therefore I do not intend to cover the ground again except to say that it is a shocking proposal to make, particularly at a time when the Government has said it could not see its way clear to grant any increased pensions. The proposal is a gift to the top brass because only those on high incomes will receive any benefit. The maximum amount a taxpayer can claim as a deduction at the present time is $800 a year or a little more than $ 1 5 a week. That deduction is pretty generous when you consider those people who can afford to pay $15 a week. But the proposal is to increase this amount to $1,200 or over $21 a week. There are very few people other than the tall poppies who can see their way clear to contribute $21 a week towards superannuation or insurance. Certainly people who can afford to contribute that amount do not require any assistance by way of tax reduction. Apparently the Government can see its way clear to give these people some taxation relief - these people who do not require it - and yet it is not able to see its way clear to give the poor pensioners even lc towards meeting their increased cost of living. Here again under our existing method of taxation the man with the highest income will receive the greatest tax reduction under this particular proposal. If a person is receiving a high income then this increase of $400 will mean a lot more to him as a taxation reduction than it will to a man on a lesser income. The Government would go some distance along the road to ironing out injustices if it accepted our amendment.
– in reply - This has been an interesting debate covering a wide field of income tax matters. As I have not the time to deal with all the detailed matters that have been raised, it might be better if 1 dealt with some of them in the form of a letter to some honourable members. The honourable member for Henty (Mr Fox) raised a number of specific matters which 1 think it might be better to deal with in detail by letter rather than to answer in general form in this debate. I congratulate the honourable members for St George (Mr Bosman) and Swan (Mr Cleaver) who were two of the few members who dealt with the actual substance of the Bills, though one or two others at least came back to the subject from time to time.
The honourable member for Dawson (Dr Patterson) referred to sales tax on freight. I wonder whether he has studied the report of the first Commonwealth Committee on Taxation in 1953. Perhaps the honourable member for Dawson will read that report in detail if he wants further information on this matter. He will see that the Committee studied the matter in great detail and will ascertain the reasons why it was found impracticable to deal with the matters he has raised.
The honourable member for the Australian Capital Territory (Mr J. R. Fraser) and I do not seem to be able to come to agreement on the matter of deductions for students books. I think there is a clear definition that people endeavouring to raise their income by getting higher degrees and qualifications thereby incur costs of a capital nature which are not deductible. On the other hand the qualified nurse is merely maintaining her standing and qualifications so as not to slip back; she does not get a higher income by means of the books she has bought. To my mind there is a clear definition of principle in this, but it does not seem that further correspondence on this matter will bring the honourable member and me closer together. As 1 told him, the Government having considered and tested this matter, is confident that the principles it has adopted are logical, fair, and in the best interests of the community as a whole.
The main reason for my rising in reply is to deal with the amendment moved by the honourable member for Melbourne Ports (Mr Crean). As a matter of interest, this amendment was not referred to by the Opposition until the honourable member for Kalgoorlie (Mr Collard) mentioned it in the last 2 or 3 minutes of his speech. Let me say here and now that the Government does not accept the amendment for reasons that I shall give, first in rather general terms. The honourable member for Melbourne Ports suggested that there should be a complete review of the whole tax system. We as a government have in fact kept the taxation system under continuous examination and review, and each year we have dealt with a number of anomalies. Indeed, we have considered taxation matters from time to time. By way of example, the Government has dealt with anomalies in the sales tax law, and in income tax matters it has dealt with the basis of the age allowance, the withholding of tax on interest, and increased concessional deductions, which were referred to by the honourable member for Melbourne Ports, and later in the week it will deal with double taxation agreements. The honourable member for Melbourne Ports suggested that the general level of deductions was too high, but almost every other member suggested that the deductions should be increased for one purpose or another. There seems to be a certain illogicality among the members of the Opposition.
Taxation committees have been set up during the regime of this Government. The most recent was the Ligertwood Committee in 1961 and there was another, to which I have referred, in 1953. The honourable member for Melbourne Ports suggested that far-reaching changes were needed in the whole taxation system. Further, he said that a radical change in the method of taxation was practicable and would be favoured by the vast majority of taxpayers. We join issue with him on this. Is it really in the interests of the taxpayers, the people of Australia, to have a complete and radical change of the whole taxation system, or would it be better to look at these matters regularly from time to time and to make any changes gradually? We certainly differ on this. The honourable member has from time to time drawn attention to Government expenditure. He realises that the Government is committed to a level of Commonwealth expenditure which must be found by means of taxation in one form or another. In the debate last week on the Loan Bill he suggested that the gap between income and expenditure could be financed by various means in what he referred to as a ‘fairly elastic system*. We join issue on the meaning of ‘fairly elastic’. Though this is dealing with another subject, I think it is right to point out that the Government and the Opposition have different views on this problem. The honourable member for Melbourne Ports seemed to consider within some hundreds of millions of dollars as a fairly elastic range, but we feel that such a degree of elasticity would not enable the Government to control prices and inflation as it has succeeded in doing over the years. Possibly I am now getting away from the subject of taxation.
What the honourable member for Melbourne Ports is really saying, I think, is that there should be a significant reduction in the rate of taxation on lower income groups and an increase in the rate of taxation on people in higher income groups. Last year people with taxable incomes of $10,000 a year and over paid $272m in tax, but the tax they paid on that part of their incomes exceeding $10,000 amounted to only $94m. An increase of even 20% tax on the income in excess of that amount would yield only an extra $ 18.8m, which is rather small in a budget of $5,000m. The honourable member says that tax on the higher income ranges should be raised and that on the lower ranges lowered, but he should take the arithmetic into account. We have explained the general thesis from time to time. He has referred in detail to the Canadian Royal Commission’s report. I know that the authorities spent many years in producing the report, but as I understand it not one recommendation has been implemented. Certainly the Canadian Government has decided that a number of the recommendations will not be implemented.
– Canada must have a government like our own.
– Well, there may be agreement with that theory, but when you come to put it into practice you find that there are some difficulties. It is rather nice to be in opposition and to be able to put these theories forward from year to year without having the responsibility of seeing where they lead.
The honourable member for Melbourne Ports said that it now takes 8 weeks on average for a man to earn his year’s income tax whereas at one time it used to take only 5i weeks. Here we must take into account that in the last 10 or 12 years there has been a substantial increase in the real take home pay of the average wage and salary earner. Since 1954-55, for instance, average earnings have risen from $1,782 to $3,156. This is equivalent to an increase, in real terms, of 30.9% or 2.3% per annum on the basis of figures deflated by the consumer price index. The after-tax equivalents to these figures for a man with a wife and two children was $1,695 in 1954-55 and $2,810 in 1966-67. Again, after deflating the figures by the consumer price index, this is equivalent to an increase, in real terms, of 22.5% or 1.7% per annum. Again, I think figures can be made to show the point of view that you are trying to demonstrate. There has been a very real rise in the standard of living of the average wage earner over this time.
The honourable member for Melbourne Ports and the honourable member for Kalgoorlie raised the matter of concessional deductions. I think the honourable member for Kalgoorlie referred to what in effect was a rebate system which existed at one time in this country. The honourable member will remember that before the last war we had a system of concessional deductions. During the war years a rebate system was introduced. This system was rather complex. It was examined by the Committee on Taxation between 1950 and 1954 in the course of its consideration of the question of whether the concessional allowances should be changed to remove anomalies and to simplify procedures associated with the allowances. Following upon the Committee’s consideration of this question the Government introduced the present system of concessional deductions as part of its scheme to simplify progressively the taxation laws for the majority of taxpayers. There had been a constant demand from all quarters for a reversion to concessional deductions instead of the more complex rebate system. One of the features of the reversion to concessional deductions was the abolition of maximum rebates for dependants. It is arguable whether the limitation of the rebates to maximum amounts was sound in principle. Concessional allowances are designed to confer on the taxpayer freedom from tax on part of his income which he is obliged to apply in the maintentnce of his dependants. Irrespective of the amount of income, the requirements of maintenance remain constant. The principle of ability to pay according to income is observed in the progressive tax rate and not in the curtailment of concessional allowances.
In general I think we can say that the simplicity achieved under the concessional deduction system has provided significant advantages for taxpayers generally and for salary and wage earners in particular. Most salary and wage earners lodging returns - there are more than three million of these taxpayers - correctly assess their tax and their refunds. These taxpayers would not, I am sure, support a return to the complex rebate system that previously existed and which the honourable member for Kalgoorlie now seeks.
I feel that I should deal also with the reasons for increasing from $800 to $1,200 the maximum allowable deduction in respect of life assurance and superannuation contributions. The main purpose is to stimulate savings and to encourage taxpayers to provide for their retirement. The honourable member for Melbourne Ports will remember that the last increase in this deduction was made in the Budget for 1959-60. Since that increase was made average earnings have increased by approximately 50%, which is the percentage increase in the deduction. One cannot take just one deduction, such as the deduction for life assurance premiums, and not pay regard to the wide range of provisions in this Bill. The Bill provides not only increases in deductions for life assurance and superannuation contributions but also increases in allowances for dependants. This Government believes in encouraging people to save for their old age rather than decide, as a benevolent socialist government would, exactly what is good for the people all the time.
– But the Government has encouraged very few to save.
– The honourable member for Yarra would say that in theory people do not save for their old age. In fact they do. The percentage of people who in 10 years time will be dependent on pensions is likely to be much lower than it was 10 or 20 years ago. Part of this will be due to the encouragement we have given to people to save by way of life assurance or superannuation.
The Government believes in reviewing the tax schedules from time to time rather than making a radical change, as is recommended by the Opposition and particularly the honourable member for Melbourne Ports. I am confident that Australian taxpayers generally would not welcome radical and fundamental changes in a tax structure to which they have become accustomed over their lifetimes. Such changes would inevitably cause a great deal of uncertainty and confusion. Taxpayers do, however, readily accept and adapt themselves to progressive changes and improvements to a law with which they are familiar. This is the course followed by the Government. As honourable members know, the Government has, over recent years, made many changes in the tax laws for the purpose of removing anomalies and assisting the family man, primary producers and industry generally. These changes have included measures adopted in the light of recommendations of two Committees on Taxation and representations received from organisations representing the interests of commerce, industry employees and taxpayers generally and also, of course, members of this Parliament. This review of the tax laws is continuing. I can assure the honourable member for Melbourne Ports that this review will extend to the graduated rate system. That, I think, is the major matter with which he dealt. We feel that it is better to look at this rate system as one thing and not to have a completely radical change as he recommended. We will look at the graduated rate system. All relevant factors raised in the course of this debate will be examined carefully by the Government.
Original question resolved in the affirmative.
Bill read a second time.
– I want briefly to refer to clause 8 which, as honourable members know, deals with the age allowance. Historically, the age allowance was introduced to avoid the anomaly that a person in receipt of an income up to the amount of the pension, and even including the pension plus permissible income, was subject to tax whereas a person could have a similar total income from social services and a permissible income and not pay tax. It was to avoid that kind of anomaly that the age allowance provisions were introduced. They have been modified from time to time and are now modified to the extent of allowing also concessions to be taken into account in determining the income finally subject to tax. I should like to point out that in my view an anomaly still exists with respect to people who are drawing the invalid pension as distinct from the age pension. By way of example I shall quote from a letter which was written to me by a lady whose husband is an invalid. She wrote:
Firstly I am married, my huspand has had polio, and is receiving a part invalid pension. To this is added a fixed income from a property I own on which I have to pay income tax.
Although the tax is only about $48 per year . . . which may be relatively small compared to tax paid by others, it is intolerably heavy on a fixed income like ours.
You will see by the following points I will make how living is so much more expensive for a person with a disability like my husband’s.
Apart from the part pension our income is derived from property which is over 40 years old and needs constant maintenance. This costs, as you well know, a great deal of money for labour alone these days.
My husband’s clothes cost more as they have to be specially made - for example, trousers have to be lined to prevent wear, special shoes and splints are needed and the cost of these is enormous, plus the cost of maintenance on them.
We have to run and maintain a car as my husband cannot walk very far and is unable to travel on public transport. If we have to go to the city for business we have to park the car and take a taxi, all of which costs a lot of money.
As my husband is unable to do any form of work we have to pay for such things as wood chopping, garden digging, lawn mowing and any maintenance on our home. I am unable to do any form of heavy work owing to a disability accepted by Repatriation for medical treatment but not for a pension.
As people with like income to ours who qualify regarding age are exempt from income tax, I feel that an anomaly exists regarding invalid pensioners in similar positions to ours.
I know that there are some difficulties with invalid pensioners where the other party is in receipt of an income, but I would ask the Minister to consider sympathetically whether it would not be possible with some safeguards to make applicable to certain persons in receipt of invalid pensions a provision similar to that applying to the age allowance. I ask that he take this kind of case into account and discuss it with departmental officers to see whether a concession can be extended to other recipients of social service benefits, namely, invalid pensioners and perhaps, in some instances, repatriation cases.
– I shall look at this question and possibly write to the honourable member on the subject.
Bill agreed to.
Bill reported without amendment; report adopted.
Bill (on motion by Mr Howson)- by leave - read a third time.
Motion (by Mr Howson) - by leaveagreed to:
That so much of the Standing Orders be suspended as would prevent orders of the day Nos 2, 3 and 4, Government business, being called on.
Consideration resumed from 20 September (vide page 1144), on motion by Mr Howson:
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr Howson) read a third time.
Consideration resumed from 20 September (vide page 1145), on motion by Mr Howson:
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr Howson) read a third time.
Debate resumed from 29 August (vide page 509), on motion by Mr Howson:
That the Bill be now read a second time.
– This is a short Bill that should not long delay the
House. It is supported by the Opposition. It is a Bill to impose an excise tariff on canned apricots, peaches and mixtures of the two which will vary the existing duty of 20c up to 30c per dozen 29-oz cans. Proportionately, for cans of less weight, the rate will vary with an increase from 2.5c up to 3.75c for cans not exceeding 5 oz with proportional variations for weights between the smallest ones and the largest ones which are over 24 oz. The Australian Canned Fruits Board, representing the producers, has agreed to the imposition of this increased excise duty on canned fruits and on 16th March 1967 Excise Tariff Proposal No. 1 was introduced into the House bringing these new excise duties into operation.
Of course it means that there will probably be an increase in the price of canned fruits by an amount at least equal to the duty. I say ‘at least equal to the duty’ because it is more than likely that the normal gross profit mark up will be increased in proportion to the. duty so that the actual increase may be more than the duty. This means that the Australian consumer will be paying this excise duty in Australia. On the face of it, there may not be any reason why the producer should not agree nor why the Australian Canned Fruits Board should not agree. The money that is received by the Government from this excise duty is to be used to encourage, assist and promote the exportation of canned fruits from Australia, and the consumption and sale of those fruits outside Australia.
This is another one of the many devices adopted by the Government by means of which the Australian consumer pays for assistance to the Australian primary producer. Money is raised in Australia so that it may bc spent overseas to help the sale overseas of the produce of the Australian primary producer. Of course the Australian producer, the farmer who is so often concerned to say that he is the backbone of the country, should remember the intricate system of duties and taxes, home price schemes and so forth by means of which he is assisted by the Australian consumer, who largely, of course, is the person who lives in the large towns and cities of Australia. The record of the sale of canned fruits overseas is an interesting one. For a number of years the main consumer of Australian canned fruits was the United Kingdom, but in recent years there has been a rather erratic course of sales in that country. The last figure I have - for 1965- 1966 - at 198 million lb is less than the corresponding figure for 1963-64 when it was 239 million lb, but more than it was in 1961-62 when it was approximately 173 million lb.
– Was that total consumption?
– They were total exports by Australia to the United Kingdom. I am quoting these figures from the Commonwealth Statistician. Although this has been the record in respect of the United Kingdom, there has been quite a significant increase in sales to other countries. Canada and West Germany might be the most remarkable to note. In 1961-62, exports to Canada were 6,968,000 lb but by 1965-66 they had become 33,637,000 lb. In the case of West Germany, the increase was from 506,000 lb in 1961-62 to 36,324,000 lb in 1965-66. Increases have occurred not only in respect of those two countries; they have occurred also in respect of a number of other European countries. For example, in respect of Denmark, the increase in the two years 1 have mentioned was from 52,000 lb to 4,483,000 lb. For Ireland, imports rose from 467,000 lb to 4,189,000 lb. For the Netherlands, the figure rose from 193,000 lb to 5,859,000 lb. For Norway, imports rose from 43,000 lb to 2,244,000 lb. For Sweden canned fruit imports rose from 10,000 lb in 1962-63 to 6,743,000 lb in 1965-66. These quite significant increases in sales to European countries as well as to Canada may well have saved the Australian exporters of canned fruits from considerable difficulties because the pattern of sales to the UK either has failed to rise or has moved erratically, and is likely to continue to follow this course. This means that the countries I have mentioned, along with some others, are becoming especially important for the Australian exporter of canned fruits.
What the Minister for Air (Mr Houson) did not tell members is how valuable this scheme of encouraging, assisting and promoting the exportation of Australian canned fruits has been in the markets in the countries I have mentioned. The Minister’s speech mentions Canada and Germany, and presumably efforts to sell have been made in those countries. However, I understand that in West Germany in particular there have been complaints about the dumping of Australian canned fruits. Although West German newspapers have contained reports to this effect, the Minister’s speech gives no indication of what kind of future we can expect for the sale of Australian canned fruits on a number of the European markets. What is the resistance to these sales? What are the prospects of maintaining existing levels? The Minister’s speech gives no information on these points.
I found it very interesting to compare the prices that we are apparently obtaining in these countries. Comparing the total weights that the Commonwealth Statistician gives us with the total proceeds of sale it would appear that the price per lb in cents varies quite a deal. For example, I think the Canadian figure is about 134c per lb, for Denmark it is about 1 lc, for West Germany a little over 10c, for Ireland 121c, for the Netherlands Iiic, for Norway 101c, for Sweden life and for the United Kingdom 12ic. The average price for our 37,763,000 lb of canned fruits exported in 1965-66 was about 12 te per lb. Several things concerning these returns require some explanation. The first of them is the considerable variation. The return from the United States of America was just over 14c per lb for a limited export. In Canada it was 134c per lb whereas in West Germany it was just a fraction over 10c. This seems to be quite a low price. If this is so, are we dumping in West Germany, and what will be the reaction of the West Germany market to this policy later? It seems to be rather odd that we should be getting a return of Iiic per lb from Sweden and 101c per lb from Norway. These are straws in the wind, inconsistencies or reasons for questioning what is happening, but the Minister has told us very little on this point. On the face of it, there seems to have been very significant and valuable increase in the sale of canned fruits to the European market in the period I have surveyed - from 1961-62 to 1965-66 - but we have not been told about future prospects. When we are assisting by a general duty, tax or levy imposed upon the community at large, a certain sector of the community - certain producers such as those of canned fruits - we ought to know quite accurately, if we can, what the future holds. It is not much good encouraging production or increasing the acreage in use, as has been done with sugar, if we will not be able to maintain the kind of increase, to which producers have become accustomed. Are we creating problems in the canned fruit industry? I do not know whether the Government has considered this aspect. The Minister did not give any indication in his second reading speech as to whether the Government can give an assurance in its planning or whether it has any planning at all.
We are raising money - I think more than $lm last year - to promote the sales of Australian canned fruit and we will get more money now because we have increased duty by 50%. We will have more money to spend, but what are the prospects for the future? I have mentioned the variable prices and the comparatively low prices in significant markets such as West Germany. What is the future? The Opposition supports the Bill. But we cannot get the information upon which we can feel assured. That is the job of the Government. We are not in a position to know what is happening in West Germany, Sweden, Norway or Canada. Does the Government know? What does it think of the future? These are questions that the Opposition would want answered, if it were the government. As the Opposition, we must tell the Government that we expect it to take an adequate view of the problems that I have mentioned, even though it may not be prepared to make its view public. There is no indication that the Government has taken into account the difficulties i have mentioned, such as the reaction in West Germany, if this is true.
Although the Opposition has been left in some doubt, it supports the Bill. I dc not intend to take any more time, but I hope that the Minister can tell me whether the points I have put before the House are a cause for concern and whether he can give the House more information than he has so far.
– in reply - I will answer the honourable member for Yarra (Dr J. F. Cairns) briefly. I thank him for giving the
Bill a speedy passage at this late hour. I want to make only one or two points. The increased excise was absorbed by the canners and did not result in an increase in the domestic price. The canners absorbed the increase to try to get extra funds for market development.
– The price of canned fruit has gone up in the shops.
– I have the notes here from the department.
– The price may have gone up for other reasons.
– The canners certainly absorbed this increase in excise. However, as the honourable member has said, the main markets have been fluctuating. It is important that we should try to examine every new market. We have found that every new market has highly individual characteristics and these account for price fluctuations from area to area. The Board has been setting prices in various markets that take into account the individual characteristics. Certainly there have been some problems in relation to matters that the honourable member has raised - in regard to West Germany, for instance - and they have been examined by the Government. With the fluctuations in the United Kingdom market the present prospects of the industry are not good but the main thing is to try to examine every possible individual market in order to spread the risks over as wide a number of markets as possible and not to have all of our fruit in one basket, or market, as we had in the past. That, I think, is the general answer to the honourable member for Yarra. To go into details of each market at this stage would be a little difficul;. We can see that the prospect is not good but at least !.he aim of this Bill is to try to improve the situation which without this Bill would become very much worse. One hopes that as the probing for new markets continues the conditions may improve in the future. Certainly if we had not done this there would have been no hope of that occurring.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr Howson) read a third time.
House adjourned at 11.57 p.m.
The following answers to questions upon notice were circulated:
asked the Prime Minister, upon notice:
– The answer to the honourable member’s questions is as follows:
My reply to the honourable member for Gwydir was not meant to imply that the Government does not intend any further consideration of the report of the Joint Committee on Constitutional Review. It is not correct to infer that proposed amendments on which the Government has not taken action have been rejected by the Government.
The report covered a large area of constitutional reform. No action has been taken which would prejudice the submission of any further amendments at future dates should the Government decide to do so.
Snowy Mountains Hydro-electric Authority (Question No. 339)
asked the Minister for National Development, upon notice:
– The answers to the honourable member’s questions are as follows:
asked the Prime Minister, upon notice:
Will he take steps to arrange for a conference of State Ministers to consider uniform legislation to prevent the sale of products, such as children’s night attire, made from highly inflammable material?
– The answer to the honourable member’s question is as follows:
As I explained to the honourable member last year, except within its own Territories and except in relation to articles intended for export, the Commonwealth has no power to make laws regulating the manufacture of articles of clothing. However, as my colleague the Minister for Customs and Excise has said, the Commonwealth would be prepared to support State legislation controlling the manufacture and sale of inflammable textiles and clothing by introducing similar controls over imports.
The general question of legislation of the kind mentioned by the honourable member is therefore a matter for the State governments and the initiative behind any conference would lie with them.
I might add, however, that I understand State Ministers for Labour have discussed the question of the dangers of inflammable clothing and following a conference in February 1967, it was announced that the respective Stale Health Ministers would be asked whether the incidence of burns to children from clothing warranted consideration of the need for legislation to provide for the labelling of children’s clothing made from inflammable material.
Imports of Cement from Japan (Question No. 435)
asked the Minister for Trade and Industry, upon notice:
– The answers to the honourable member’s questions are as follows:
Imports of Portland cement from Japan in each of last three years were: 3. (a) The price of Japanese cement ex store in Darwin is $38 per long ton.
– The answers to the honourable member’s questions are as follows:
asked the Minister for Territories, upon notice:
– The answer to the honourable member’s questions is as follows:
asked the Minister for Civil Aviation, upon notice:
asked the Prime Minister, upon notice:
– The answer to the honourable member’s questions is as follows:
As I said on 4th May 1967, in answer to a similar question by the honourable member (Hansard, pages 1837 and 1838), it is not customary to make public the details of correspondence which passes between State Premiers and me without the consent of the Premiers concerned.
However, I would draw the honourable member’s attention to a statement made to the Press on 1st June 1967 by my colleague the Minister for National Development about the future of the Snowy Mountains Authority.
This statement outlines the negotiations that have taken place with the State governments, lt also refers to the Commonwealth Government’s decision which establishes the basis for a new, continuing and important role for certain of the collective skills in which the Authority has attained pre-eminence.
asked the Minister for Trade and Industry, upon notice:
– The answers to the honourable member’s questions are as follows:
Financial assistance has been extended by the Commonwealth in respect of three shipping services in the course of the last three years:
South America Service - Kawasaki Kisen Kaisha Ltd
Papua and New Guinea Service - Burns Philp & Co. Ltd
Libya Service - Holland Australia Line (first sailing); North German Lloyd Joint Service (second sailing)
asked the Minister for Shipping and Transport, upon notice:
Will he arrange for the next Transport Ministers and Railway Commissioner? Conference to consider granting concessions for pensioners wishing to travel interstate?
– The answer to the honourable member’s question is as follows:
At a conference held in 1963 the Australian Railways Commissioners agreed that the accepted practice of restricting concessions to intrastate travel by pensioners should noi be. altered.
The matter was again considered at a meeting of Ministers comprising the Australian Transport Advisory Council, held in July 1966, when it was agreed that the proposal related to a social service concession rather than a transport problem and as such was not the concern of the’ council.
In these circumstances I do not consider any good purpose would be served by raising the matter again with these authorities at this juncture.
asked the Minister for Immigration, upon notice:
– The answers to the honourable member’s questions are as follows:
Discrimination Against Women (Question No. 626)
asked the Minister for External Affairs, on notice -
– The Acting Minister for External Affairs has provided the following answers to the honourable member’s questions:
– On 29th August the honourable member for Reid (Mr Uren) asked me a question without notice about taxation deductions allowed for advertising by cigarette retailers.
The primary purpose of the income tax law is to raise revenue for the Commonwealth. It is a well established principle of the law that expenses which are incurred in gaining or producing assessable income or which are necessarily incurred in carrying on a business to produce such income and which are not of a capital nature, shall be allowed as deductions for income tax purposes. It is not considered appropriate to depart from those principles for a purpose which is quite unrelated to the taxation of income.
Payments to Dependants of Servicemen
– On 10th May 1967, the honourable member for Bass (Mr Barnard) asked me a question without notice concerning compensation paid to widows of servicemen killed in Vietnam as compared with compensation to widows of victims of the ‘Voyager’ disaster.
Amounts varying from $15,000 to $48,000 were paid to widows of members of the crew of the ‘Voyager’ following settlement of damages claims lodged under the normal processes of common law. These figures include amounts due under the Commonwealth Employees Compensation Act. In addition, amounts between $900 and $3,000 were paid for claims in respect of partial dependency. Dependants of men killed in Vietnam are not paid lump sums because Parliament has provided benefits for them under the Repatriation Act, which did not apply in respect of the ‘Voyager’ disaster. Such benefits include a lifetime pension for widows (subject to review in relation to living costs from time to time), pensions for children under 16 years and student children, free medical and dental treatment and education allowances. Dependants of single servicemen, such as widowed mothers who were wholly or partially dependent on the serviceman, are also eligible under certain circumstances for pension. It is difficult to compare these benefits with the once-for-all lump sums awarded to dependants of the victims of the Voyager’ disaster. The rates of repatriation pensions and the value of other benefits are increased from time to time but it is not possible to forecast the value of these increases. It is also difficult to assess the value of such items as medical treatment which vary from case to case but which are of considerable value.
– On 26th September the honourable member for Macquarie (Mr Luchetti) asked a question without notice regarding possible Commonwealth financial assistance towards a college of advanced education at Bathurst. I undertook to refer the honourable member’s question to the Minister for Education and Science, who has provided me with the following information.
One of the recommendations of the Committee on the Future of Tertiary Education in Australia was that the Commonwealth and States support on a $1 for $1 basis interim capital grants for 1965 and 1966 to certain specified colleges of advanced education including a college at Bathurst. In dealing with this recommendation, the former Prime Minister said the Commonwealth would be prepared to consider making such interim grants to the colleges specified if proposals were put forward by the States concerned. No proposal for an interim grant for a college at Bathurst was received from the New South Wales Government.
Should a proposal be received it would be accorded full consideration on the basis that any financial assistance needed during the current triennium would be within the limits of the capital grants already authorised to the State by the Parliament in the States Grants (Advanced Education) Act 1967.
Cite as: Australia, House of Representatives, Debates, 17 October 1967, viewed 22 October 2017, <http://historichansard.net/hofreps/1967/19671017_reps_26_hor57/>.