6th Parliament · 1st Session
The President took the chair at 3 p.m., and read prayers.
The PRESIDENT announced that he had received from the Governor-General the following communication: -
Commonwealth of Australia. Governor-General’s Office,
Melbourne, 10th August, 1915.
Memorandum from the Governor-General.
To the Honorable,
The President of the Senate.
The Governor-General transmits herewith copy of a cablegram which has been received from His Majesty the King, in reply to the resolution adopted by the Senate on the 4th instant.
Decode of cablegram from Secretary of State. for the Colonies, dated London, 7th August; 1915, 3.20 p.m.-
His Majesty the King was much moved by your telegram 5th August conveying the resolution passed by both Houses of the Common- ‘ wealth Parliament recording their determination to continue to a victorious -end the struggle for the ideals animating the allied nations.
I am commanded by His Majesty the Kingto desire you to express to the Senate and House of Representatives his warm appreciation of the generous support which the Parliament and people of the Commonwealth have given to the common cause, of the sacrifices’ they have made and are making, and of the. brilliant and effective services which His Australian Naval and Military Forces have rendered in the prosecution of (he war.
CHARGE against Contractors.
– What action, if any, has the Minister of Defence taken in connexion with the alleged supply of inferior and unwholesome foodstuffs to transports ?
– In reply to a question asked by Senator Newland on the 4th instant, respecting foodstuffs supplied to a troopship at Port Melbourne, and which were reported to have been seized and condemned, I promised to ascertain whether the report was correct, in order that any necessary action might be taken in the matter. I have now received a report from the QuartermasterGeneral to the effect that the foodstuffs in question were being supplied under orders of the Navy Department, and in this connexion would invite attention to the following statement on the subject, which has been made by the Minister for the Navy: -
The onus of responsibility regarding the quality of foodstuffs placed on board the transports in Australia rests with the Department of the Navy, and in compliance with a request made some months ago by this Department the Board of Public Health in the several States agreed to examine all articles of provisions placed on board transports for the use of troops on the voyage, with a view to ascertaining whether they are in accordance with the Pure Food Acts.
It is as a result of the strict surveillance exercised under this system that the attempts to place provisions of an inferior quality on board transports have been brought to light.
Regarding the reported statement that cabbages of an inferior quality were placed on board for troops, this is not correct. One of the Public Health inspectors discovered that the cabbages referred to were intended to be placed on hoard, but instructions were issued that the supply in question was to be rejected.
In connexion with the statement regarding the butter, the vessel referred to was not a hospital ship, but an ordinary transport. The butter placed on board this ship for the use of troops was apparently quite good when inspected before the departure of the ship from Australia some months ago, but on the return of the vessel to Australia the Navy Department directed the attention of the inspectors to the fact that portion of the remainder appeared to be bad. The Public Health Department caused same to be seized, and an embargo was placed on it.
Prosecutions are being instituted against several firms by the Board of Public Health at Hie request of the Department of the Navy.
In no nasa have provisions of an inferior quality left Australia in transports for the use of troops.
– Has the Minister of Defence noticed the statements appearing in the Sydney press during the last day or two, and also the questions brought up in the Legislative Assembly of New South Wales, affirming that city recruits, after being sworn in at the Victoria Barracks, are told to go home, and that they will be sent for when wanted, being left in practically a stranded position through having given up their employment in order to enlist? Is the Minister aware that at Goulburn and Dubbo instructions were received by the recruiting officer not to send any more men till further notice, and that, as this information was not disseminated through the district in time, a number of men presented themselves there only to be told that they must go home ? Has the Minister seen these reports, and, if not, will he take such steps as may ‘appear proper to him to prevent such discouragement to the recruiting movement from continuing?
– I did see the statements referred to, and the action reported to have been taken was entirely without any authority. A report has been called for from the District Commandant as to whether the statements are correct, and, if so, under what authority he took the action indicated.
– In view of many applicants for service at the front having been rejected for physical reasons, and the possibility of their being able to act in a manner which would be helpful to the recruiting work if they were put in possession of a certificate stating that they were unfitted for service, will the Minister take into consideration the advisability of giving to any man who has been so rejected a certificate to that effect, in order to enable him to ask others who may be fit to go, and at the same time to furnish a valid reason why he himself is not at the front?
– An instruction to that effect has already been given.
– Can the Minister inform the Senate whether the certificates will be retrospective?
– The certificates will date from the day when they reach the various districts. They cannot be made retrospective, because in many cases no record was kept of those who did so apply. But there is nothing to prevent such a person from again offering his services, and if he should fail to pass he will obtain a certificate.
– Have the Government taken any action in regard to the case of a postal employee at Ballarat named Jenkins, which i brought under their notice on the 5th inst. ?
– The PostmasterGeneral has supplied the following reply: -
With reference to the representations made in the Senate recently by Senator Barnes regarding the case of Mr G. Jenkins, formerly a casual employee of this Department at Ballarat, Victoria, vide Hansard of the 5th inst., I beg to inform you the history of this case is that Mr. Jenkins, who broke his leg on the 16th February, 1911, whilst in the employ of the Department, was granted leave, on full pay, from that date up to 15th December, 1911, and that from the latter date he was continuously employed as a casual employee on light battery work “until 3rd February, 1914. On 1st May, 1914, he was re-employed as batteryman on halftime basis, receiving pay at the rate of 8s lOd. per day, and continued in that position until 19th April, 1915, when, owing to ill-health, he was compelled to cease duty.
The accident to Mr. Jenkins occurred before the Commonwealth Workmen’s Compensation Act came into operation, and had that Act been in force at the time of the accident he would have received only half-pay during the time lie was incapacitated, that is, from 16th February, 1911, until 15th December, 191], when the Department’s liability would have censed.
It will be seen that Mr. Jenkins has been treated by the Department much better than would have been the case had the Workmen’s Compensation Act applied to him, and it does not appear that anything more can be done in regard to him.
– I wish to ask the Minister of Defence, without notice, whether it is a fact that members of the Expeditionary Forces have been charged for goods, comforts, &c, supplied by the public through the Red Cross Society; and, if so, whether he will see that the practice is immediately discontinued?
– It is not a fact.
– In view of the early departure for Egypt of Senator
Lt. -Colonel O’Loghlin, will the Minister of Defence depute the honorable senator to make inquiries on the spot with regard to the postal arrangements at the Base in view of the fact that so many complaints concerning correspondence with the Expeditionary Forces are daily being received by honorable senators and honorable members of the House of Representatives ?
– There is already one gentleman deputed to look into the matter referred to, who should be in Egypt about this time; but I will undertake to give consideration to the honorable senator’s proposal.
– Will the Minister of Defence ask the Prime Minister to consult the Premiers of the various States with a view to arranging that all returned sick and wounded soldiers shall be allowed to travel free over all Governmentowned and controlled railways and tramways during the time of their incapacity ?
– I think that the honorable senator’s proposal is a large order in the form in which he has put his question. He asks that returned sick and wounded soldiers shall be allowed to travel free on Government railways and tramways apparently at their own discretion, and anywhere they please.
– Only during their incapacity.
– Even so, that would be a big order. I can promise the honorable senator to bring his proposal under the notice of the Prime Minister, with a view to communicating with the Premiers of the States to know what concessions, if any, they are prepared to grant in the case of returned wounded soldiers.
– Will the Minister of Defence say whether any skilled masseurs have been sent to the front? If not, is it contemplated to send any to the front, and, if so, what number?
– Some have been sent, and it is contemplated to send more. I suggest, in order to get exact information, the honorable senator might give notice of the question.
– Has the fact been brought under the notice of the Minister of Defence that a conference of heads of churches held recently in Brisbane carried a resolution in favour of the establishment of wet canteens at the military camps?
– That particular fact was not brought under my notice, but now that the honorable senator has mentioned it, I am able to understand why it is that I have received such a budget of telegrams from Brisbane protesting against the establishment of a wet canteen at the camps.
– I ask the Minister of Defence whether it is a fact that a number of soldiers have been sent out of the camps to their homes after having passed the medical examination and enlistment for the reason that there is a lack of accommodation at the camps, and that their pay is being stopped while they are on leave?
– It is not a fact that they have been sent out of the camps. An announcement was made in the public press during the week that in Victoria it has recently been found necessary, after enlisting men, to allow them to return to their homes for a time, as the accommodation at the camp has not been sufficient. This has been largely due to the fact that the outbreak of cerebrospinal meningitis has necessitated giving the men more accommodation than has hitherto been found necessary. To my knowledge, no men have been sent out of the camps.
– Suppose these men have thrown up their jobs before enlisting?
– In such cases the men should represent the facts to the Commandant, and it might be found possible to accept them. Men who have enlisted at various centres have been notified that they will be called to the camps when required. This refers to Victoria only.
– Has the Minister of Defence received any information re garding a matter I brought under his notice some time ago concerning some remarkable bungling in connexion with the transmission of letters from relatives of soldiers to men encamped at Enoggera, in Queensland?
– I am sorry to say that I have not received the information promised, but I shall endeavour to expedite it.
– Is the Minister of Defence aware that press announcements with regard to the prevalence of cerebro-spinal meningitis in several of the military camps have raised a considerable amount of alarm amongst the civil community, and especially in the minds of mothers, who are apprehensive regarding their children ? Will the honorable senator take steps to have circulated as widely as possible succinct information which may be of value in dealing with the disease, and preventing its spread, as is done in the various States in connexion with tuberculosis ?
– I wish, first of all, to direct the attention of the honorable senator to the fact that the first part of his statement is not correct.. The outbreak did not commence in a military camp.
– I did not say that it did. I referred only to its prevalence in the camps.
– The honorable senator referred to the outbreak in the camps; but, as a matter of fact, it did not originate in the camps, but in the suburbs of Melbourne, and subsequently spread to the camps. As regards the circulation of information concerning the disease for the protection of the lives of the people, that is a matter which is dealt with by local Boards of Health, and I shall undertake to have the honorable senator’s suggestion brought under their notice. I wish to say that immediately cases of this disease occurred in the camps, a conference of the best experts we could get hold of was held, and their advice is being followed in every particular. Instructions have been given that neither money nor time is to be spared in endeavouring to stamp out the disease. I believe that already there is evidence that it is being successfully grappled with. In the camps instructions have already been issued to the men as to the precautions which they should take to prevent the spread of the disease. Large quantities of eucalyptus - which is believed to be the best preventive - have been distributed, and frequent swabbings of soldiers’ mouths take place in the camps. Everything possible has been done by the military authorities to prevent the spread of the disease in the camps ; but I shall have pleasure in bringing the honorable senator’s suggestion under the notice of the various Boards of Health, with a view to the issue of similar information for the benefit of the civil community.
– I ask the Minister of Defence whether, in view of the proposal to remove the Small Arms Factory from Lithgow to Canberra, which has been made in the House of Representatives, the Government will give an opportunity for the discussion of the subject in this Chamber?
– I direct the attention of the honorable senator to the fact that Parliament, in passing the Public Works Committee Act, provided that the recommendations of that Committee should be placed before the House of Representatives, because that is the House in which expenditure originates. An opportunity to discuss the matter in this Chamber will arise on the Supply Bill, which we expect to have here this week or next week.
– I desire to ask the Minister of Defence whether his Depart.ment can arrange to grant facilities to soldiers belonging to a particular town or district, who are at present located either at Seymour or Flemington, to return to that town or district prior to leaving for the front, in order that they may be farewelled by the citizens?
– Before any soldier leaves Australia for the front he is permitted to return to his home to say farewell to his relatives and friends; but, as I have already intimated in the press, it is desirable that persons who wish to give soldiers from any particular locality a send-off should, before fixing the date of that send-off, consult the Commandant of the State in order that they may ascertain when these soldiers will receive their final leave. The practice has grown up on the part of some country residents of first arranging farewell functions to soldiers, and afterwards endeavouring to get the leave of the soldiers fixed to suit the date of the send-off.
– Can a whole section of soldiers from a particular town be granted leave simultaneously?
– That must depend upon the military necessities arising out of the despatch of troops from Australia. The State Commandant is the best judge of the position, and he will endeavour to meet the needs of the occasion as far as possible.
– I ask the Minister of Defence if it is the rule that in every case a soldier who has enlisted for service abroad - no matter from what State he may have hailed - is allowed sufficient leave prior to embarkation to enable him to return to his home to say farewell to his relatives and friends?
– The rule applies to the particular State in which the soldier is being trained. If he has enlisted in the State to which he belongs, the leave usually applies to that State only. But there have been exceptional cases in which soldiers have been allowed to visit another State in order to say farewell to an aged mother, for example.
– 1 have in my mind a case in which a soldier was refused permission to return to his home in order to say good-bye to his aged mother.
– I ask the Minister of Defence what is the position, from the standpoint of pension rights, of the widow of a British reservist who has gone from Australia, and who has lost his life at the front?
– I do not think that British reservists are provided for in our War Pensions Act. But in order to make quite sure I ask the honorable senator to give notice of his question.
– We have provided for them in the Act. They have been placed on the same footing as our own soldiers.
The following papers were presented : -
European War -
Neutral Shipping - Policy of His Majesty’s Government: Despatch from the Secretary of State for the Colonies forwarding copy of memorandum communicated to the United States Ambassador.
Lands Acquisition Act 1906 - Land acquired under, at -
Copmanhurst, New South Wales - For Postal purposes.
Kalgoorlie to Port Augusta Railway Route, South Australia - 2501/2 miles from Port Augusta - For Railway purposes.
Kingoonya, South Australia - For Railway purposes.
Port Lincoln, South Australia - For Defence purposes.
Queanbeyan, New South Wales - For Federal Capital purposes.
Sandy Bay, Tasmania - For Defence purposes.
Urayarra and Tidbinbilla, Federal Territory - For Federal Capital purposes.
Wangaratta, Victoria - For Defence purposes.
Norfolk Island. - Ordinance No. 6 of 1915 - Marriage.
Northern Territory. - Ordinance No. 5 of 1915- Health.
Prisoners of War, &c. -
Treatment of Prisoners of War in England and Germany during the first eight months of the War - Paper presented to British Parliament.
Civil Internment Camp at Ruhleben - Note from the United States Ambassador transmitting a Report, dated 8th June, 1915, on the conditions at present existing - Paper presented to British Parliament.
Further Correspondence with the United States Ambassador respecting the treatment of British Prisoners of War and Interned Civilians in Germany - Paper presented to British Parliament.
Public Service Act 1902-13-
Promotion of E. T. Hall as Inspector, First Class, Landing Branch, Department of Trade and Customs, Victoria.
Regulations amended, &c. - Statutory Rules 1915, Nos. 132 and 133.
Return to Order of the Senate of 23rd July, 1915-
Post Office, Balfour, Tasmania: Papers and Reports in connexion with proposed removal. Steam-ship Service to Darwin : Contract with Eastern and Australian Steam-ship Company.
War Precautions Act 1911-1915. - Regulations amended, &c. - Statutory Rules 1915, Nos. 130 and 135.
– In reference to the paper relating to the contract with the Eastern and Australian Steam-ship
Company for a steam-ship service to Port Darwin, which has just been laid upon the table of the Senate. I ask the VicePresident of the Executive Council if that contract provides for the employment of white labour?
– The contract has been laid on the table of the Senate, so that the honorable senator will be able to see the whole of its provisions.
– But does it provide for the employment of white labour ?
– I am not quite sure what the honorable senator means by the “employment of white labour.” Consequently I would advise him to read the contract for himself.
asked the Minister representing the Treasurer,upon notice -
If any information can be given at this juncture as to the progress rate of subscriptions to the war loan?
– It is not considered advisable to issue progress reports.
asked the Minister of Defence, upon notice -
Will he call for a complete return from the Tasmanian Commandant showing -
Whether or not eight very inferior horses purchased in the south of Tasmania were sent to the Mowbray Remount Depot, Launceston, late in 1914, for the Australian Military Forces?
What officers purchased these eight animals, and what price was paid for them in each case?
If it is true that three horses were sold from the Mowbray Remount Depot, in January of this year, the animals realizing at the auction mart £1, £1 10s., and £3 10s. respectively ?
Who purchased these three horses when first acquired by the military authorities, what price was paid, on what date were they bought, and who was the seller in each case?
Whether it is a fact that two horses were sold recently from the Claremont Remount Depot, Tasmania, one animal bringing 5s., and the othier 15s., or about these prices?
Who purchased these two horses when first acquired, what price was paid, on what date were they bought, and who was the seller in each case?
What other horses (if any) were bought for military purposes during 1914 and 1915 that were sold by auction or privately disposed of by the military authorities as unsuitable for the purposes purchased, and who was the purchaser, what was the price paid, and who was the seller in each case?
– I will endeavour to obtain the information as early as possible.
– I move -
That this Bill be now read a second time.
This Bill necessarily follows upon the Loan Bill recently passed, and most of the matters dealt with in it were discussed at some length in the previous debate. Most of the clauses are of minor importance, but four of them deal with vital principles, all of which, however, were indorsed by the Senate when the Loan Bill was under consideration. The two measures necessarily hang together. Section 5 of the Inscribed Stock Act is amended to allow the Commonwealth, when borrowing money, to pay, if necessary, more than 31/2 per cent. It would be rather awkward under present circumstances to specify the rate of interest to be paid if at any time we are driven to borrow money. None of us can determine what future conditions will be, and Parliament is not always in session, and it is, therefore, deemed necessary to give power to the Governor-General in Council to fix the rate of interest for any future loan. Section 32 of the principal Act is repealed, and the following section inserted in its stead -
Transfers of stock may be made in such amounts as arc approved by the GovernorGeneral.
At present, under the Inscribed Stock Act it is not possible to transfer inscribed stock for amounts less than £50, but as the Senate, in passing the Loan Act, indorsed the principle of transferring inscribed stock or Commonwealth bonds of the amount of £10, it is desired to bring this measure into line. We cannot say what amounts we are prepared to go down to in regard to future loans, but it is anticipated that we may go as low as even £5, and in the circumstances it is thought best to leave the fixation of the amount to the Governor-General in Council. The next important amendment relates to section 52 of the principal Act. The Bill provides that stock certificates, stock certificates to bearer, scrip certificates to bearer, Treasury bonds and coupons, and transfers of stock or Treasury bonds, shall not be liable to stamp duty or other tax under any law of the Com monwealth or of a State. The Government desire, when borrowing money under the present or any future loan, that those wishing to participate in the loan shall know precisely what they are to receive. The position of our stock on the market will be an indication of the financial standing of the Commonwealth, and it is, therefore, considered undesirable to have our loans, and particularly our war loans, fluctuating in value as the result of taxation either by the Commonwealth or by a State. We want to see our stock recognised as the highest standard in the Commonwealth, and do not desire, therefore, to subject it to taxation. It is proposed, also, to enact that stock and Treasury bonds may be accepted at par in payment of estate duty under any law of the Commonwealth. The purpose is to enable those who have to pay estate duty under our Probate and Succession Duties Act to anticipate the payment by taking up inscribed stock or Treasury bonds. When the payment of estate duty becomes necessary, the stock or bonds will be accepted at the Treasury at face value.
– That does not apply to the Commonwealth land tax ?
– I understand not. It is thought that many who anticipate paying heavy estate duties will take this means of avoiding the forced realization of assets on an unfavorable market.
– There does not seem to be much in the Bill as outlined by the Minister that calls for criticism or cavil. I notice in clause 4 a provision dealing with Treasury bonds, and introducing a new part into the principal Act. I take it that this will be the first authority for the issue of Commonwealth Treasury bonds, although Treasurybills have already been issued. It seems very desirable to pass the provision enabling Treasury bonds to be accepted at their face value in payment of estate duty due under our Probate or Succession Duties Act. It frequently happens, when a deceased’s estate is called on for the payment of probate or succession duty, that the selling of portion of the estate at a time and in circumstances inevitably entailing a sacrifice is involved. And it is very desirable that in such a case Treasury bonds at their face value should be accepted in payment of the duty. Testators, while alive, will be able to invest in Treasury bonds, and so advance money to the Government, the interest being avail- able for use during their lifetime, and the bonds themselves afterwards furnishing a very handy and convenient means of paying probate duty. This will not in any way disadvantage the Government, but rather enable t’hem to get their proper quid pro quo for the actual cash that would otherwise be payable, at the same time avoiding embarrassment to the representatives of the deceased testator, or adverse effects on his estate. As far as I can gather from the Minister’s statement, the Bill is necessary in the circumstances. The first provision to which he referred is one which we should have to enact in any cas© as early as possible. I refer to the provision that the stipulation in the principal Act as to the maximum interest payable shall not be rigidly adhered to, at any rate, in the present circumstances. We are in a time of stress, and money may be on occasions urgently required. This makes a certain amount of elasticity eminently desirable, and the amendment furnishes it. The Government of the day should be in a position to negotiate for money, and get it as quickly as possible on what they conceive to be the bett terms.
– The provision giving the GovernorGeneral power to fix the rate of interest is so elastic that only the exigencies of the time could have prompted it.- We. have for a long time been talking about taking over the State debts, and one idea running through all the discussions has been that it would be well to establish consols, or something in the nature of a standard stock on the market, furnishing in this way a practical means of ^making a large saving for the taxpayers. If, later on, the State debts are consolidated, a common denomination of stock will be prepared, but under this Bill it will be possible, in the future, for the Governor-General, acting on the advice of the Government, to launch upon the market stock of a different denomination to that which may already be in circulation.
– If the rate of interest is likely to be very much higher in the future, it may be good business to leave the consolidation of State debts alone.
– Money will now be enhanced in value owing to the rate of interest at which the loan of £20,000,000 will be floated, namely, 4J per cent., and if in the future it is decided to take over the State debts - an idea which has been given expression to for many years, but which has not materialized yet- the proposal, I take it, will be to establish 3 per cent. Commonwealth consols. We will then have stock of different denominations in circulation, which policy will not make for satisfaction so far as the Commonwealth is concerned.
– No State debt now bringing more than 3^ per cent, would be converted into Commonwealth stock at 3 per cent. No investor would make the exchange.
– This Bill will enable the rate to go down as well as up.
– Quite so; and I understand that this elastic power is given because the necessities of the hour compel us to take this action.
– We must not pay more than 3J per cent., according to the Inscribed Stock Act.
– There is no figure mentioned in this Bill. The rate of interest might be 3 per cent., 4 per cent., or 5 per cent., or, as in the case of the Peninsular War, it might even go as high as 6 per cent. It would all depend on the state of the money market.
– Do you think that we should anticipate reaching that figure at the present time?
– This Bill will not make for uniformity in policy. The Government may fix 4£ per cent, as the rate for the first instalment of the loan, but later on they may fix a different rate, which may be governed by the state of the money market, and I would urge that they should keep in mind the wisdom of fixing such a rate as will conform to the rate of interest which will be decided upon when the State debts are taken over.
– But the States have debts running at all sorts of prices.
– I am aware of that, and I am pointing out that, in the event of the Commonwealth assuming the responsibility for those debts, they should keep in mind the wisdom of having stock of a uniform denomination on the market.
– I am afraid the State debts will not be taken over for a long time.
– There is the further point, that the inscribed stock or bonds will be accepted at their face value.
That seems reasonable enough from the point of view of the holders of the stock, but it may not be satisfactory from the point of view of the Government if, when stock depreciates in value, holders are enabled to present them to the Treasury in settlement of their accounts, for in that case the Treasury will stand to lose the difference between the market and the face value.
– But the Government would merely be getting back £1 for £1.
– Suppose a man held a certificate worth £100, and it depreciated in value to £90. If he had an account at the Treasury, he could present that certificate in payment of £100 in estate duty, and the Government would stand to lose £10 over the transaction. If, on the other hand, the market rose, and the certificate became enhanced in value, say, by 5 per cent, or 10 per cent., the holder of the certificate could sell the document and pay in cash.
– That may possibly be an inducement to buy inscribed stock.
– But the Government would already have received £100, and the holder of the stock would merely be handing back the receipt.
-The case I am citing shows that the position is not free from difficulties. I think that it needs to be stated very clearly in the last clause that if a person owns depreciated stock his executor should not have the liberty to come along and pay a debt to the Commonwealth with it, which would mean a loss to the Treasury.
– You would be for bidding the man to die when the stock was below its face value.
– I would do nothing of the kind. If latitude is allowed on one side it must be allowed on the other. When Commonwealth stock enhances 5 or 10 per cent, in value, a debtor to the Treasury will have the option of converting the stock and paying the debt in cash, keeping the added amount in his pocket. On the other hand, he should not have the liberty of paying a debt to the Commonwealth with depreciated stock.
– I can assure Senator Lynch that the Government are now considering the whole of the finances of Australia, and therefore are not likely to miss any opportunities which may be offering. As regards the issue of a standard bond for Australia, my honorable friend will agree with me, 1 think, that there is not much possibility of our reaching that ideal at the present time, or in the immediate future. As to the other matter it is very difficult to understand the attitude of Senator Lynch. Under this Bill a man who anticipates that on his death his estate will have to pay £10,000 to the Treasury can say to the Commonwealth, “ I will lend £10,000 to you, but after my death, instead of paying you £10,000, my executors will give you back your own receipt for that amount.” It is clear that under the operation of the Bill the Treasury will get the full value of the bonds, namely, £10,000. Surely Senator Lynch does not want to suggest, whatever other persons may do, that the Commonwealth Government should practically become gamblers and take their chance either one way or the other.
– Have you not heard of State Governments going into the market and buying their own stock at a depreciated value ?
– Yes ; but if we were to adopt the honorable senator’s view we would become gamblers, a thing which no Government would tolerate or dream of for a moment. Our position is quite clear. We shall demand £100 when that amount is due, and take good care that the debt is paid. It is unthinkable that a Government could take up the position of gambling; in stock. The Treasurer will not wish to know anything about the rise or fall in the value of stock. He will want £100 for a debt of £100. I trust that Senator Lynch will take no action at a later stage, because the principle in question has already been endorsed in connexion with the War Loan Bill.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 4 agreed to
Clause 5 -
After section 52 of the principal Act the following sections are inserted: - 52a. Stock certificates, stock certificates to bearer, scrip certificates to bearer, Treasurybonds and coupons, and transfers of stock or Treasury-bonds shall not be liable to stamp duty or other tax under any law of the Commonwealth or a State. 52b. The interest derived from stock or Treasurybonds shall not be liable to income tax under any law of the Commonwealth or a State. 52c. Stock may be accepted at par, and Treasurybonds may be accepted at their face value, in payment of estate duty payable under any law of the Commonwealth.
– This clause raises the question on which I have been trying to focus the attention of honorable senators. The Assistant Minister has pointed out that if a man purchased from the Commonwealth a certificate for £100 worth of inscribed stock, and at the time of his death the stock had depreciated to £90, the Government would be obliged in honour to accept the certificate from the executor at its par value. But he forgot to mention that the certificates will change hands over and over again. It is conceivable that the certificates may be bought in the market at £90 and £95, and that case would not correspond with the instance cited by the Minister. I contend that if the holders of depreciated certificates are permitted to discharge their obligations to the Treasury at the par value of the stock the Treasury will lose the difference between the depreciated value and the par value. If no option is allowed the Treasury will undoubtedly be a loser by the transaction. If the certificates enhance in value, say, by 5 or 10 per cent., the holders, whether original or otherwise, will be in the advantageous position of being able to go into the market, sell them, and pay 20s. in the £1 to the Treasury. Whereas, in the case of a depreciation of the stock .the holders will be in the equally happy position of being able to pay off a debt of £100 with a piece of paper which would only realize £90. That is an illogical position, and one which does not suit me. I see a pitfall which lies in front of the Treasury. If it were free to accept an appreciated certificate at £100 it could follow the beneficiaries under a will and get that sum - if it would be a fair gamble. The Treasury stands to lose, I think, unless it is clearly set out in the clause that in a transaction the acceptance of such certificates shall mean the payment in full sterling value of the amount of the debt owing to the Treasury.
– I am afraid that Senator Lynch loses sight of the fact that one is a taxation matter and the other a loan matter. When we empower officers to collect taxation they are not allowed to accept more than the tax which is due, otherwise there would be trouble ahead for an officer. This is not a clause in an ordinary Loan Bill, but a special provision to induce persons to lend their money to the Commonwealth for the time being. An elderly man who possesses a large estate and recognises that he is nilikely to live very long, may be anxious to help the Commonwealth according to his ability. Accordingly he will come to the Treasury and say, “ I anticipate that before the expiration of ten years my estate will have to pay £10,000 in stamp duty to the Commonwealth. It I pay down £10,000 now will you at my death transfer that amount in payment oi the stamp duty payable on my estate by my executors?” The Commonwealth will undertake the contract. It will not have anything to do with the certificates, because when the lender dies it will be practically a question of a transfer entry. But if, prior to his death, the stocks have decreased in value to the extent of £500, the honorable senator wants us, because of that fact, to charge his executors with an additional debt of £500. We do not permit an officer to accept anything in excess of the taxation. We do not want to enter into a gamble in these matters. We do not desire to follow the market. We only want to carry out the contract in which we enter when we give a certificate for the loan of £100.
– You must remember that the money that will be advanced to the Treasury may be repayable, perhaps, in the distant future, when it will be of greater value to the Commonwealth not to redeem the paper.
– We are practically offering an inducement to men to participate in this loan, because we want the money now. There are provisions in this Bill, and in the War Loan Bill, to which I would not consent in times of peace.
– When the Treasury receives bonds for the payment of succession duties, the indebtedness of the Commonwealth is reduced by the face value of the bonds.
– That is so. This Bill has been passed in another place, and, despite all the criticism of the measure, I think we shall be very lucky if we float the loan on these conditions.
– I regret that I cannot see eye to eye with the Assistant Minister in this matter. His contention really is that a country desiring to buy its own stock should always purchase it at par. We know that it is at the present time within the province of the Treasurer of any State to buy his own stock, but he is not bound to buy at par. What would be thought of a State Treasurer who bought the State stock at par when it had depreciated in the market to £80 ?
– The question arises, Was it sold at par?
– In some cases it may have been. But suppose that the State stock is sold at £95, do honorable senators contend that in buying it back a State Treasurer would be justified in paying £95 for it when the market price was only £80? In Queensland, when there is a surplus, the Government sometimes buys back its own stock, but no Treasurer would think of paying £95 for it when he could get it for £80. The nro.posal is most absurd, and it represents a most unfair concession to those who are invited to take up the war loan. Honorable senators should remember that they are to be paid interest at the rate of 4j per cent., and this interest is to be free from Commonwealth and State income tax. That, in my opinion, is too great a concession to make to those who are invited to take up the war loan, and especially to the rich patriots, who should be prepared to give their money to the Commonwealth at this time upon much more liberal terms. Now we learn that the Treasurer proposes to go much further, and that if Commonwealth stock for any reason depreciates to £90, he is prepared to accept it in payment of succession duty at its face value of £100. On the other hand, if it should appreciate to £110, the administrators of an estate will have the right to sell the stock they hold at £110 and. deducting the £10, pay the balance to the Treasurer as succession duty. So far as the holder of the stock is concerned, that is a game of heads I win, tails you lose, and it is utterly unfair to the Commonwealth.
– The Commonwealth might shake hands with itself if such a happy state of affairs arose.
– No doubt we should all be glad if the value of Commonwealth stocks appreciated, but we should be concerned also about the de preciation of our stock. We are being called upon in this Bill to make concessions to holders of Commonwealth stock to which, in my opinion, they are not entitled. The Assistant Minister, in dealing with the matter, has assumed that the original purchaser of the stock is the man who will be discharging the obligation of paying succession duty to the Treasury. That duty in respect of a large estate may not have to be discharged for nine years from the present time, and during that period the stock of the war loan may change hands a hundred times. Under this Bill it would be possible for a man to buy depreciated stock at £90, and a week later hand it in to the Federal Treasury at its face value, £100, in payment of succession duty. It is the Government who are really the gamblers under this proposal.
– We cannot be said to be gambling if we get £100 in payment of taxation to that amount.
– But the Treasurer may not be getting £100. The stock of the war loan is to be redeemable in ten years at £100, but by this Bill we are placing the Government in the position that they may have to redeem it at £100 in four or five years’ time, when it may be worth only £80 or £95.
– The Government will have received £100 for it when the holder took up the stock.
– That may be so, but the stock will be subject to the fluctuations of the market. We enter into a contract with those who are willing to take up the stock of the war loan to pay them 4^ per cent, interest, and to exempt that interest from State or Commonwealth income tax. That is a sufficiently liberal concession, and it is made on the condition that the holder of the stock can have it redeemed at par in ten years’ time. But the Government come down now with a further proposal, and the Treasurer says that long before the stock matures the holder may be entitled to gain an advantage from the depreciation of the stock in the money market. Tn the ordinary course of nature the older a man is, the nearer he is to the time of his death. A man may learn from his physician that he will probably die in six months, or in three months’ time. Commonwealth stock may have depreciated to £90, and for the sake of his heirs he may purchase the” stock, knowing that they will be in a position at his death to compel the Treasurer to take it at its par value in payment of the succession duty on his estate. Without this proposal we have made more than reasonable concessions to the capitalists of Australia, and more than should be necessary if they were imbued with a reasonable spirit of patriotism. This proposal, in my view, goes too far in pandering to the wealthy people in the community. Will the Assistant Minister say whether this provision will apply to the bonds as well as to the inscribed stock ?
– Yes, to the bonds, and to inscribed stock.
– That only aggravates the evil of the proposal. I entirely support the contention of Senator Lynch that the Government should not make this new departure. I think it is a new departure; I know of no other country in the world in which a similar concession is made.
– If payment of an estate duty is to be made, will the honorable senator say whether a taxation officer can accept more than £100 in payment of a debt of only £100?
– It is not a question of what our taxation officers may do. They are concerned that the Treasury shall receive what is due to it. I take the case of the Treasurer estimating his receipts for the year from death duties. He may estimate that the revenue from death duties will be £100,000, but owing to a depreciation of Commonwealth stock, and to the fact that under this provision he will have to accept it in payment of succession duties at a higher face value than the market rate of the stock, he may find himself very much out in his estimate of revenue from this source.
– How will he be out in his estimate?
– Because our stock will be subject to fluctuation. Owing to an outbreak of war, or a financial crisis subsequent to the delivery of his financial statement, a serious depreciation in the value of Commonwealth stock may take place. It is perhaps unthinkable that £100 Commonwealth stock should depreciate to £50, but we know that consols have at times gone down to a very low price. That may be due to the fact that only 2 or 3 per cent, interest is paid on them. Because of the depreciation of Commonwealth stocks under this provi sion, the administrator of an estate may escape the payment of one-fourth of the succession duty for which he is rightly responsible. I cannot understand how the Government could have submitted such a ridiculous proposal.
– The State will have had the full amount of the stock in the first instance.
– That is so, but so will the purchaser of the stock. A mau buying stock knows that he buys it sud- ject to market fluctuations, and the stock may depreciate to £75.
– It will be a sorry day for Australia when people will be able to buy our £100 4£ per cent, stock at
– We never know what may happen. As Senator Lynch has pointed out, England had to pay 6£ per cent, for money during the Peninsular War. If a new loan were put on the market at 6 *</inline> per cent., would not that have the immediate effect of depreciating the stock of the war loan considerably
Senator DE LARGIE (Western Australia) [4.18]. - The logic of the argument submitted by Senators Mullan and Lynch is irresistible. Some honorable senators have assumed that because the Government in the first instance get £100 from the purchaser of stock for £100 of the loan, the stock remains at that value, and that, when it comes to a question of paying taxation with it, no regard will be had to the then market value of the stock. The argument of Senators Mullan and Lynch is logical, and very much to the point, when they say that under this proposal the Government may be called upon to buy stock at a greater price than its market value justifies. If this stock is quoted at £90, and it is accented by the Government as representing £100 in the payment of succession duty, that will mean a clear loss to the Government of £10. A very rich man may have sufficient foresight to invest in this loan, and secure to his descendants a considerable profit in the payment of succession duties on his estate in stock of the loan. In ordinary circumstances, I should be prepared to support the view taken by Senators Lynch and Mullan, but we are not dealing with ordinary circumstances at the present time. For that reason I intend to be consistent by preserving the attitude which I took up when the Loan Bill was before this Chamber.
– The fact that we are at war was the only reason which I urged in favour of the Bill.
– Unfortunately I was absent from the Senate when the Assistant Minister was speaking. When the Loan Bill was under consideration here I recognised that we were offering very generous terms to investors in our war loan. To my mind, the payment of 4£ per cent, interest, and exemption from income tax, represent exceedingly liberal conditions to subscribers to that loan. On that occasion I supported the Government, because they were in dire need of the money.
– The people who have it must provide us with the money if they wish to be saved.
– I am anxious to see the loan an unqualified success, but I realize that in the event of its failure great damage would be inflicted on this country. We do not wish to witness a banking collapse or something of that kind. We want our banking conditions to remain as stable as possible. The Government, I hold, are quite justified in offering these additional advantages to the subscribers to our war loan. Under ordinary circumstances, of course, it would be madness to put forward any such proposition.
– The operation of the Bill is not limited to the duration of the war, or to that of the war loan. It will go on for ever.
– It will remain operative so long as the stock continues in existence. It has reference only to money raised for the purpose of carrying on the war. Consequently, I feel that the Government cannot help themselves.
– It is applicable only to the war loan.
– I can quite understand the attitude towards this measure of honorable senators who were hostile to the War Loan Bill, and to the conditions which were attached to it. If, for example, Senator Stewart is antagonistic to this measure - in view of his hostility towards the War Loan Bill - his attitude will be perfectly consistent. But those honorable senators who supported the latter Bill cannot reverse their attitude on the present occasion without being open to a charge of inconsistency.
– I move -
That proposed new section 52a be left out.
This proposed new section declares that stock certificates, &c, shall not be liable to stamp duty or other tax under any law of the Commonwealth or of a State. The present Government were returned to power on the cry of preference to unionists, and it appears to me that they are endeavouring to remain there by giving effect to a policy of preference to large capitalists. The two positions seem to me to be so contradictory that the Government will not receive any assistance from me. In this provision it is proposed to exempt probably the wealthiest people and the wealthiest institutions in Australia from certain forms of taxation. Iu itself I disapprove of this kind of taxation. In ordinary circumstances I would say that stock certificates, treasury bonds, coupons, &c, should be exempt from taxation, because I have never been able to see any wisdom, philosophy, or common sense m taxing the mere transfers of shares or bonds. It has always seemed to me to be merely an expedient which was resorted to by persons who knew nothing whatever of the real principles that ought to underlie taxation. What is the principle upon which people ought to be taxed? I have said a hundred times, and I repeat it now, that in connexion with taxation we ought to apply exactly the same principle that we apply to defence. In the latter case we go first to the very best men in the country - the men who are strongest and most physically fit to fight its battles. We go to others who are less physically fit only after the first line have been exhausted. If we wish to be logical we ought to apply exactly the same principle to taxation. We ought to go first to the strongest, or, in plain English, the richest, for the sinews of war. After we have exhausted them, we ought to levy upon those who are not quite so rich, and finally we ought to come to the great mass of the people. But, until the richest and the rich have been exhausted, we ought not to appeal to the great multitude, which in ordinary circumstances receives no more than a living wage. Who are the people who will take up this war loan ? It has been stated that the loan is open to anybody, and that the poorest can invest in it. My belief is that 90 per cent, of tb is loan will be subscribed by the richest people in Australia, by those who have money practically at call - money awaiting investment.
– Large numbers of persons are drawing their deposits from the Savings Banks to put the money into this loan.
– If they are doing what the honorable senator says, they are committing a very foolish act. Money in the Savings Bank is practically money at call, but money invested in our war loan is not money at call. “Unless I am much mistaken, a large number of the workers will be compelled to draw their money from the Savings Banks for other purposes, because it must be evident to all that very hard times are ahead of us in Australia. I have, therefore, arrived at the conclusion that the bulk of our war loan will be subscribed by those who have the largest possessions in Australia. Yet it is actually proposed to exempt these persons from taxation.
– The money will be very handy, no matter from where it may come, before we are through with this job.
– No doubt. Money is just as necessary for the prose cution of the war as are men. But I do not see our streets placarded with advertisements calling for money, as they are placarded with advertisements calling for men. I do not find social and press influences brought to bear upon the capitalists to induce them to play their part in this great struggle in the same way as they are exerted upon the workers, who are being pressed to go to the front to fight, and probably to die, for the Empire. I do not see any tiling of that kind.
– There is plenty of it.
– There is none of it. Our streets are placarded with posters announcing “Your comrades are calling you from Gallipoli.” But the comrades there require money as well as men to help them. Money is as essential to the successful prosecution of the war as are men. What does Mr. Lloyd George say? He says, ‘‘We do not want men. We want munitions.” Now munitions mean money. While the English Tommy goes to the front and risks his -life for a paltry bob a day, the capitalists of Great Britain are getting 4£ per cent, for the money they put into- the. war, and are doubling the price of coal, and of almost every other commodity that is bought and sold in the open market. These conditions might be expected in a country which .is governed by a Cabinet that represents the capitalistic class, but the other side of life should be exhibited here in Australia, where a Labour Government are in power. Senator de Largie has stated that it would be impossible to get the money we require within the Commonwealth on any other conditions than those laid down in this Bill. If that be so, it says very little for those persons who have the money. If the men of Australia refuse to volunteer, what do we call them ? Are they not being called “shirkers,” “slackers,” and “stayersathome “ ? As a matter of fact, every mean and despicable epithet which can be applied to men is being applied to those who do not volunteer. If they absolutely declined to enlist, what would happen ? We would pass an Act compelling them to do so. There is a sufficient number of men in this Parliament to make conscription the law of the country.
– Would the honorable senator support that?
– The honorable senator knows my position on this question very well. I am not bound to answer his question. I know that there is a sufficient number of men in this Chamber and in another place to insure the passing of a Bill of that character.
– Is the honorable senator one of them?
- Senator Turley is becoming very inquisitive in his old age. When he speaks he can say what he thinks about it. I have said here before what I think about it, and am not afraid to say it again, but we are not dealing with that point at present. That is how we act with regard to men, but money is as essential for the defence of Australia as men are. If men are being got on the cheapest possible terms, because no man goes to the front who does not sacrifice a great deal - running first the inevitable risk of great and unaccustomed hardships, and. secondly, the risk of never coming back-
– Order! The honorable senator must confine his remarks to the clause.
– I was simply contrasting the conditions under which two elements - capital and men - equally essential to the defence of the country, are being employed. I am quite justified in doing so, and if I am not permitted to argue on those lines parliamentary discussion is reduced to a farce. Senator de Largie said that unless we offer these conditions we cannot get the money. If the youth and manhood of Australia would not volunteer for the front unless they were paid a ransom, their names would stink in every man’s nostrils, and a law would be put in force to compel them to go on whatever conditions the Government chose to impose; yet capitalists who contribute money are to be exempt from taxation. Why not apply to them the same law that we would apply to the common soldier if he did not volunteer in sufficient numbers? We have never tried yet to get the money on better terms. I really believe that Senator de Largie and others who agree with him are libelling the capitalists of this country. I am confident that they would be delighted to offer the necessary money without exemption from duty or income tax. They have never had a chance.
– On a point of order, the honorable senator’s remark that I am libelling the capitalists of Australia is a very serious reflection on myself, and I ask that it be withdrawn. I have no desire to libel them.
– If the honorable senator objects to the statement, Senator Stewart must withdraw it.
– I am quite willing to substitute “ misrepresent “ for “libel.” I believe that if the capitalists had been approached by the Treasurer, as they should have been, with a proposal such as I outlined some time ago, they would have been glad to comply. The statement that unless we offer the conditions in this Bill we cannot get the money is a gross misrepresentation of the capitalists. What have they at stake ? There are in Australia numbers of men who own £1,000,000 worth of land or have £1,000,000 in a business, but everything they have is in the melting-pot. If Germany is triumphant their possessions will be commandeered by the German Government, and they will be as poor as the common crow. If everything they have is hazarded upon the die of war, would they not be very foolish not to come forward with money, which is as essential to the prosecution of the war as men? If the Government had approached them in the proper spirit with a business-like proposal, they would have jumped at it. They would have shown themselves to be true patriots, instead of patriots at 4£ per cent, with exemption from income tax. If holders of other stocks and bonds have to pay taxation, those who take up these bonds should also pay it, and I propose that there shall be no exemption in this case.
– Senator Stewart put before the Committee a position that does not exist. He says that if sufficient men will not volunteer for the front there are enough men in this Parliament to pass a law compelling them to go. I do not know whether he would be one of those; but I tell him candidly that I would not. He might like to take the young men of this country by the neck, and tell them to go to the other side of the world and fight for him because he is too old to fight for himself, but I do not take up that position. I believe the existing system is giving good results.
– Sending away the widow’s son to save the landlord’s son.
– I am not sending either.
– That is what the system is doing now.
– It is doing nothing of the sort. Quite a number of men have gone to the front who are what Senator Stewart terms capitalists. I know a few who had sufficient’ to live on without doing any particular work.
– Order! I see nothing in the Bill relating to recruiting.
- Senator Stewart was, apparently, allowed to roam over the whole gamut. He inquired why men who are asked to lend money to the Commonwealth to carry on the war should not have their wealth conscripted, if they do not offer it to us on the conditions we lay down. He thinks the Treasurer should have interviewed them, and is quite satisfied that if this had been done they would have poured in their money on conditions such as he placed before the Senate some time ago.
– He speaks as a capitalist himself.
– I believe he is somewhat of a capitalist, and may have been prepared to pour all his own money into the loan on those terms. I do not envy him his financial position; but the question must be viewed from another aspect. The party to which the honorable senator belongs gave the Treasurer authority to issue the loan under certain conditions. Here are the conditions under which Senator Stewart was one to authorize the Treasurer to issue the prospectus of the loan to the people.
– And money has been received under them.
– Large sums are being received; but Senator Stewart now says, “I made a mistake. I did not intend the Treasurer,to do what I told him to do, and I wish he would do something else. Now that the conditions are out, and people are pouring in their money, I want to alter them.”
– This is the place for me to speak.
– This is the placein which the honorable senator wants t» shelter himself, after personally, like other members, giving instructions to the Treasurer as to the conditions on which he was prepared to support the loan.
– What were the conditions? They were not before us in any Bill.
– I do not know whether the honorable senator was there; but, if he was, he gave his assent with a full knowledge of what is contained in the prospectus.
– I know what you are referring to.
– I am referring to our own party meeting.
– We want to hear more about this.
– The honorable senator knows that his party holds Caucus meetings, and so do we. I am not ashamed to be a member of a Caucus. I attend the meetings, and consider everything brought before me there as carefully as I would on the floor of this chamber. Here, then, are the conditions under which people were asked to put up their money for the loan. The first is, “All bonds and transfers of inscribed stock shall be free of Commonwealth and State stamp duty.” Does Senator Stewart want the loan stopped?
– How do you know that Senator Stewart was in favour of it?
– Is that to be the answer? I never heard Senator Stewart raise a word of objection to it until he rose here.
– He may have been opposed to it all the time.
– A man may be opposed to a thing in one place, and sufficiently disloyal not to say anything there, but be prepared to stand up in the limelight and say, “ I was not a party to this, and did not agree to it.” I am not going to stand for that sort of conduct here or at a party meeting. I, like others, knew the conditions before I saw the prospectus. I was a party to them, and intend to abide by them on the floor of this chamber, so far as this loan is concerned. If the party or Parliament thinks it necessary to alter them in connexion with another loan, that will be a different matter. We know the conditions under which we are asking the man with the money to come along and put it into this loan. I intend to vote against the amendment that has been moved by Senator Stewart, because I was a party to the agreement, which I went into with my eyes open.
– I have listened, as I have no doubt other honorable senators have, with a great deal of interest to this interchange of views concerning something which has happened elsewhere. I have nothing to say with regard to the expressions by Senator Stewart except that they are views which one expects to hear from that gentleman. I want, however, to draw attention to some defects in the clause myself. Whilst there should be, and no doubt there is, a desire that the terms of this loan should be fair and reasonable, if not attractive, I do not think the time has arrived when we should bind our hands with regard to any future action which may be necessary. It appears to me that in this clause we are insuring that those who subscribe to this loan shall be granted immunity, as the possessors of wealth, from taxation for all time. Surely we have not reached that stage yet?
-Colonel O’loghlin. - The loan is for only ten years.
– I do not know that we should grant immunity from taxation for that time to the possessors of £10,000 worth of wealth in one form, and not grant immunity to possessors of wealth in another form.
– You assented to this when the- Loan Bill went through.
– No; I want to make it clear that I understood at that time there was to be exemption from income tax, but now I see that this clause goes further. It says that these stock certificates and Treasury bonds “ shall Dot be liable to stamp duty or other tax under any law of the Commonwealth or a State.” Suppose that it became necessary later on to impose a wealth tax - the idea has been mooted, and it might possibly come within the next ten years - as the result of the action we are now taking. we. will exempt wealth in a certain form from that taxation. I am not speaking in favour of such a tax, but I am just saying that suppose that we decide to have such a form of taxation, those persons who participate in the £20,000,000 war loan will be exempt from that taxation. If that is the intention of Parliament, of course there is nothing more to be said. The policy, as Senator Turley has intimated, is decided elsewhere. But I want to remind honorable senators that it would not be fair or just, nor is there any necessity, to grant such wholesale immunity as that. Then let us consider what will be the effect of this policy upon State finances. If the Commonwealth is going to float these loans and grant such wholesale immunity as is proposed, it is quite clear that the States will have to raise their loans by offering the same immunity, or possibly more attractive terms than these, and this policy will not have a beneficial effect upon the ordinary commerce and industry of this country. Honorable members opposite have always expressed a special desire to protect the interests of the small man - the man who has capital in small parcels - but I would point out that in this proposal we are seeking to grant an additional bonus to capitalists in proportion as they are big.
– But you agreed to that in the War Loan Bill.
– No, because I did not then know whether the income tax was to be progressive or not. If it is to be a flat rate, then the amount of bonus given to those who subscribe to the loan will be fair and equal ; but if the tax is to be graduated, the biggest capitalist, who will take the biggest share of the loan, will therefore receive the biggest bonus. This, if I may use a familiar term, would be “ greasing the fat pig “ again.
– I rise to a point of order; that we should confine the discussion to the clause before the Committee, and proposed new section 52a deals solely with stamp duty.
– It also refers to “ other tax “ under a law of the Commonwealth or a State.
– I might point out to the honorable senator that Senator Millen is quite in order. The proposed new section does not deal only with stamp duty, but with “ other tax under any law of the Commonwealth or of a State.”
– Has the honorable senator read the proposed new section carefully ?
– Yes; it says -
Stock certificates, Stock certificates to bearer, scrip certificates to bearer, Treasury Bonds and coupons, and transfers of Stock or Treasurybonds, shall not be liable to stamp duty or other tax under any law of the Commonwealth or a State.
That might mean income tax or a wealth tax, or anything else, and I cannot see any reason for an exemption expressed in such wide terms.
– You cannot possibly extend the interpretation that far.
– If the words. “ or other tax “ do not mean an income tax or a wealth tax, I must admit that I do not understand what words mean. It seems to me quite clear that it will exempt holders of the stock or bonds from taxation during the currency of the loan. If a man subscribes to the war loan, and draws £10 interest as his income from the investment, by the exemption from income tax he will receive a bonus of 3d. or 4d. in the pound; but if he draws £5,000 from the war loan investment, he will get an exemption of 2s. 6d.
– You should have taken up this attitude when the War Loan Bill was under consideration.
– There was no intimation then that holders of these certificates would be exempt from all taxation.
– I can assure the honorable senator that we have taken legal advice, and have been informed that this will refer only to exemption from stamp duty.
– I am merely stating my opinion that while the terms should be fair and reasonable, as well as attractive, I take strong exception to any proposal which is going to exempt subscribers to the war loan from al] future taxation during the currency of the loan.
– I assure the honorable senator that the best legal advice is that it is not intended that exemptions shall apply to other than stamp duty.
– If that is the interpretation which the honorable senator puts upon it, it ought to be struck out.
– Having raised the question, and having received the Minister’s definite assurance on the point, I feel sure that the Minister will buttress the position he has taken up by the fur ther reference to the legal authority on the matter.
– It says “ stamp duty or other tax.’.’ That strengthens your position. °
– The “other tax” might be called a property tax or a surplus wealth tax, and under this provision the holders of Commonwealth stock or bonds would be exempted from such taxation.
– The Minister says it refers only to stamp duties.
– The marginal note indicates that.
– The marginal note is merely a guide to enable honorable senators to ascertain the subject-matter of the proposed new section.
– I am prepared to admit that to the layman it looks as if the position is as the honorable senator puts it, but the best authority we can get informs us that the exemption is limited to the stamp tax.
– Then what is meant by “other tax”?
– I am not prepared to take the liberty of altering the language of the Bill.
– The Minister having expressed the intention of the framers of the Bill, I hope he will undertake to refer this matter again to the legal advisers of the Government.
– What is the good of the words if they do not mean anything ?
– I am not in a position to say, because I am not a lawyer. All I can say is that these words, appealing to me as a plain, simple man, suggest that it is proposed to grant wholesale and complete indemnity from future taxation to holders of Government stock or bonds in connexion with the £20,000,000 war loan. But leaving that point alone, I want to emphasize that, by granting this exemption from any taxation, we shall be granting the biggest bonus to the biggest man under any scheme of graduated taxation.
– You granted that when you voted for the Loan Bill.
– But I did not then know that the income tax was to be graduated.
– But Y09 knew that the income tax would come along.
– Cannot Senator de Largie see that if there is to be a flat rate, the percentage of exemption “will be equal? Suppose a man drew £10 as income from an investment in this war loan, and the income tax was ls., the concession would be equal to 5 per cent. Similarly, if he drew £100 as income from such an investment, he would be exempted 100s., which would also be 5 per cent. I have put forward what appear to me to be some serious blots on the Bill ; but, knowing the composition of the Chamber, there is nothing more for me to do than to place on record the view I take of this proposal.
– We ought to be quite clear as to the interpretation which can be put on the proposed new section. If, as Senator Millen has suggested, it. mav be applied to any kind of taxation which may be imposed in the Commonwealth or in the States, the Committee ought to be told clearly whether it will drag within its compass all future taxation.
– If that is so, what does it matter in connexion with the first Loan Bill?
– It does matter. If the provision is capable of such a comprehensive interpretation as Senator Millen has contended for, it will certainly mean a great deal more than any Parliament would care to assent to. It is only supposed to be dealing with stamp duty; and any other element is, I hold, quite foreign to the common interpretation which may be placed upon “the words.
– It will cover a dividend tax.
– I would not put that interpretation on it.
– That may not be the purpose; but that, I think, is the interpretation.
– If that interpretation may be reasonably placed on the provision, there is only one thing for the Committee to do, and that is to leave out the words “ or other tax.” With the omission of those words there could not be any possible conflict of opinion as to its meaning.
– Is not the retention of the words necessary to prevent a subterfuge by a State?
– The words go further than that.
– I hope that the Minister is quite clear as to the true construction of the provision; but if he has any doubt on the subject I trust that he will move in the direction I have indicated.
– I do not think that it requires the possession of legal knowledge to interpret the meaning of the words “or other tax.” I contend that the marginal note referring to stamp duty is absolutely contrary to the context, because there is not the slightest doubt that under the proposed new section taxation in any other direction could be exempted.
– It will repeal our land tax, if that interpretation can be put on it.
– In my opinion, any tax, as well as stamp duty, can be exempted if the proposed new section is passed in its present form. It strikes me that the Bill was drafted hurriedly. Indeed, the marginal note indicates that it was, for the note stops with the words “ stamp duty,” while the provision gees on to deal with “ other tax.”
– I think that it is all right.
– If it is the desire of the Committee to exempt all those forms of taxation, the proposed new section is all right.
– Why not see if you can get money under those conditions before you commence to sing out?
– That is not the question. I desire the war loan to be a success, but I do not want to enact a comprehensive exemption. I suggest to the Minister that the omission of the words “ or other tax” will not interfere with the success of the war loan, and, in order to test the feeling of the Committee, I will move an amendment to that effect if Senator Stewart will give me an opportunity.
Amendment, by leave, withdrawn.
Amendment (by Senator Needham) proposed -
That the words “ or other tax,” in proposed new section 52a, be left out.
– The amendment of Senator Needham appears to fairly fit the position, although I am sorry that Senator Stewart has given up part of the ground which he fought so valiantly to hold.
– No, I can come again .
– The proposal of Senator Needham is, I think, a very fair one, and, if it will do nothing else, it will certainly remove the ambiguity of the proposed new section.We were all pleased to hear the criticism of Senator Millen in order to show in what a different light he is endeavouring to appear. I was prepared to rub my eyes, put out my hand, and see if I was awake when I found the Leader of the Opposition taking up such a novel attitude as he has done. Hitherto, the purpose of his political life has been to consistently urge that the Labour party has always been too severe upon capitalism. But now, when he comes to castigate the Ministry and their supporters for not being severe enough, I think that his position wants some explaining. The Labour party came into being for the purpose of making the capitalist in this country take off his coat and do some useful work. But when the Leader of the Opposition who, so far, has lived on the very cry of admonishing that party for its severity in regard to capitalism, comes forward and reprimands us for not being severe enough, I do not know what is going to happen, whether the end of the world is near or not. In my opinion, the correct course has been suggested, because we want to make the war loan a pronounced success. Senator Millen should keep in mind this fact, that in the Old Country the British Govern- ment are paying the price for loan money which is named in this measure. We know well that money has always commanded a lower rate of interest there than here. If the Commonwealth offers the same terms as the Old Country is offering, one of two things must happen. Either we shall be less successful in raising money, or we must give an extra inducement to those with money to spare to subscribe to our loan.
– Is the Imperial loan to be free from income tax?
– I do not know. But, seeing that the Imperial Government are paying the same rate of interest as is provided for in this measure, past experience tells us that we need to give a little more if we wish to be equally successful in raising money, and that little more may be represented either by a slightly higher rate of interest, or by some other consideration such as is outlined in the Bill.
– Why do you not make the other consideration equal?
– The honorable senator does not,I am sure, want the war loan to be a failure, or a partial failure, but an abounding success, and we cannot insure that unless we give something in excess of the rates prevailing in England. I believe that the adoption of the amendment would have very little effect upon those who are thinking of investing their money in the loan, but it is my intention in supporting it to take from them whatever questionable form of increment they might derive by virtue of the operation of a State Act. The amendment will make the Bill clear, and will do something to remove the possibility of legal points being raised in connexion with its operation. Broadly speaking, I believe that the measure is based on right lines. Perhaps the candid thing to do in the matter would be to offer the loan at 5 per cent, and do away with all the other privileges proposed.
– Hear, hear!
– Senator Stewart received that statement with an ironical cheer, but if he had money to invest I suppose he would invest it in the way in which he might get the best return. In view of our different circumstances, we are not offering more than is at present being offered in the Old Country for money, and it is especially necessary that we should make this first Commonwealth loan a pronounced success. Perhaps, as I have said, the best way to insure that would be to offer it at 5 per cent, and cut out the special privileges proposed, but in the circumstances I am prepared to support the Bill.
– I trust that honorable senators will realize the position we are in. They are setting out to discuss the Bill as though it were a new proposition submitted to them to-day for the first time. It has to be remembered that we have already passed the War Loan Bill, and that the prospectus of the loan has been issued. Generally speaking, the conditions upon which the loan is to be floated have been made known to the people of Australia. I am glad to be in a position to say that large sums of money have already been subscribed towards the loan, and still larger sums will be subscribed. In all the circumstances I suggest that it is desirable that, on the present occasion, we should set aside our individual views of what a loan proposal ought to be. I have already said that the War Loan Bill does not embody my personal views on the matter. But we do not know what the money market of Australia really is. We have the highest hopes that we shall be able to raise the money we require, and that there will he still plenty to spare, but I would ask honorable senators who say that the Government are proposing to be a little too generous whether they think that this is the only loan that we shall require to raise in Australia before the war is ended ? I am afraid that it is not.
– That is all the more reason why we should not be too generous now.
– I ask the honorable senator what he thinks will be the position of the Commonwealth if its first loan is a failure? Personally, I should prefer to give 1 per cent, more for the money than to run the risk of a failure of the first Commonwealth loan. With a mere handful of soldiers to maintain, our war expenditure last year amounted to millions, and before this year is over we may have 150,000, and perhaps 200,000, men in the field to provide for. We might have been able to float this first loan at 3 or 4 per cent.
– The interest is not involved.
– The privileges are. If Senator Millen were about to invest in a loan, he would take care to sum up the interest-value of the privileges proposed. If I felt that we were able to’ obtain money in Australia at 4 per cent., I should still be prepared to support a rate of 4£ per cent, for this loan, because it is the first Commonwealth loan. The Government have looked into every detail of this measure. As I explained when dealing with the War Loan Bill, they set their individual opinions of finance on one side. They consulted the best financial minds in Australia, men who have control of money, and who know what money is available in the Commonwealth. The War Loan Bill does not embody the individual views of finance of the members of the Government; but they were up against the position that they must get the money necessary to keep our soldiers going until the war is won. We have entered into a solemn contract in connexion with the loan. I do not wish to deceive the Committee. It was the clear intention of the Government to exempt all the documents connected with the loan from taxation. The reason why stamp and income taxes were specially mentioned is that they are the two taxes in existence that might be applied to’ these documents; but I wish to make it quite clear that it was the intention of the Government that the rate of interest at which the loan is offered to the public should not be subject to deduction by taxation in any shane or form. In the circumstances, I w.*nt honorable senators to set aside their personal views of finance.
– What is the good of our having views if we cannot express them here ?
– I have never objected to the expression of the honorable senator’s views ; but we are facing a situation in Australia to-day which is of greater importance than are the views of the honorable senator or of myself.
– It is clearly something too big for the Assistant Minister.
– When Senator Stewart says that we are giving preference to the big capitalists of Australia, ~1 can only say that I am sorry that he does not better realize his duty to the country at the present time.
– The proof of what I said is in the Bill.
– The Government have to get the money; and I believe that they will get it. I ask honorable senators to honour the promise of the Prime Minister of Australia.
– Why did he make such a foolish promise?
– He never made a promise to the effect suggested. There, is nothing in the loan prospectus about it.
– I am not proposing to dishonour the promise of the Prime Minister.
– I believe that he never made a distinct promise in regard to any anticipated taxation, but it was the clear intention of the Government to exempt the instruments of the loan from taxation. If honorable senators strike out the words as proposed by Senator Needham, though I do not suppose that any State Government would be unfriendly to the Commonwealth, it would be pos sible for a form of stamp taxation to be passed by a State Parliament which would affect these instruments. For the reasons I have given, I ask honorable senators to reject the amendment, and carry the Bill as it stands.
– I do not know that it is necessary to discuss the proposed omission of a few words in the more or less indefinite way in which the Assistant Minister has done.
– I was referring especially to Senator Stewart’s statement that we are. giving a preference to large capitalists.
– I am going to repeat that statement ; but, before doing so, 1 say that the Assistant Minister has been most illogical in the views he has expressed. He has asked the Committee to leave the words in the proposed new section, because he says the Prime Minister has given the assurance they contain. He told us a little while ago that they mean nothing but a stamp duty, and if that be so, there has been no special promise given in respect of them. But honorable senators, in listening to the honorable senator, must recognise that he thinks there is in the words themselves something more than a reference to a mere stamp tax. If they mean the same thing, we can strike the words out, but if, as the Minister has suggested, they mean something more, there is a strong argument for leaving them in the provision, in view of the fact that the loan prospectus has been issued. But if wm leave them in for that reason, that does not mean that we are agreed that they refer only to a stamp duty. I wish to repeat the statement by Senator Stewart, which the Assistant Minister has challenged. There is no disguising the fact that under this proposed new section, if the income tax is to be a graduated tax, this Bill will insure a graduated bonus to the advantage of the big capitalists of the country. Let me give the figures to prove this. A man paying income tax of 3d. in the £1 will get interest at the rate of £4 10s. ner cent, on his contribution to the loan, the same as every one else, but the amount of bonus he will receive by reason of the exemption will be 2s. 3d. so that his interest from the loan will really amount to £4 12s. 3d. per cent. In the case of a man paying income tax at the rate of 2s. 6d., his bonus will be lis. 3d., and, instead of getting interest at £4 10s., he will really get £5 ls. 3d. per cent, for his money. 1 agree with Senator Russell that we must make the war loan a success, but the correct way to insure that would be, not to grant an exemption and bonus to the big capitalist, but if a rate of £4 10s. per cent, is not considered sufficient, to make it £4 15s., or such a rate of interest as will be sufficient. I have the strongest possible objection to paying one man £5 ls. 3d. in interest, and another only £4 10s. or £4 lis., or any amount between those sums. Why should any citizen lending money to the Commonwealth receive more for his £1 than any other citizen ? What has been done at Home? The Imperial authorities are giving a little higher rate of interest to the small man who takes up a £5 bond than is given to those who take up large amounts. Here we have reversed the position. In this democratic Senate we have said that the bigger the share a man holds in the loan the higher the rate of interest he shall receive. I wonder what honorable senators would have said if there had been a schedule attached to the War Loan Bill, saying that a man who subscribed £10 to the loan would get interest at the rate of £4 10s. per cent., the man who subscribed £100 interest at the rate of £4 lis. per cent., and the man who subscribed £1,000 interest at the rate of £5 per cent. Honorable senators would not have sanctioned such a proposal. They would not consider it for a moment; but that is, in effect, what they are doing, because the larger the amount a man subscribes to the war loan, the higher the rate of interest he will receive. There is no reason why a man who takes up £100 of the loan should not receive the same rate of interest as a man who subscribes £1,000 to it. I see the difficulty of the Government if it is intended to introduce a graduated income tax, but no appeal to the patriotism of the country, and no appeal to honorable senators, and no declaration as to the necessity of making the war loan a success, can get away from the fact that, under the Government proposal, the greater the share a man holds in the loan the higher will be the rate of interest he will receive. I say that we could have insured the success of the loan upon a more equitable basis if, instead of introducing these new concessions, we had discarded them all, and fixed the rate of interest at something higher than we have proposed. The only difficulty I see in the matter of accepting the amendment is that the loan prospectus is out.
– These words are not in the prospectus.
– That is so, but I quite recognise the force of Senator Russell’s contention that the effect of the words is there. In proportion aa we recognise the force of the Assistant Minister’s appeal, we must recognise that the words which Senator Needham proposes to omit do mean something more than a stamp tax.
. -Having listened to the arguments on both sides, I am in considerable doubt as to the necessity for the amendment, and, that being so, I shall vote with the Government of whom I am a supporter. I have no doubt that Senator Stewart would do the same in similar circumstances, but, of course, he is never in doubt about anything. One reason why I am inclined to support the Government in retaining proposed new section 52a as it stands is that if the words “ under any law “ are left out, although a State Parliament would not have the power to impose a stamp duty upon these instruments, they might, under cover of some other law, impose taxation upon them. I do not know that the supporters of the Government or any members of this Parliament desire to place themselves in that position. There is, however, that danger.
– It is an imaginary danger.
– It may be a very real one in a year or two. We may have to impose still heavier taxation in the future, and the State Parliaments may also have to impose taxation. They may be very glad to have that opportunity. , If we strike out the words proposed to be struck out by Senator Needham, the State Parliaments will have power to impose taxation on such instruments of revenue as those mentioned in the clause. I intend to support the provision in its present form.
-Colonel O’LOGHLIN (South Australia) [5.36]. - Some comparison has been instituted between the terms which are attached to this loan and those which were attached to the Imperial loan which was floated recently. I desire to point out that the conditions imposed in respect of the Imperial loan were considerably more favorable to investors than are the conditions imposed in connexion with our own war loan, although usually we have to pay about § per cent, more by way of interest for loans than have the Imperial authorities. Although the rate payable under the Imperial war loan is the same as that which will be payable under our Commonwealth war loan, namely, 4^ per cent., subscribers to the former are guaranteed’ any advance in the rate of interest that may be paid in respect of future loans. In addition, the small holders receive 5 per cent, till their investments reach the amount of the bond. It will be seen, therefore, that the terms of the Imperial loan are much more favorable to subscribers than are those of the Commonwealth war loan, notwithstanding that the position has previously been reversed. I am anxious that we should not pay more than is necessary to insure the successful flotation of this loan. But I do feel that we must not on any consideration risk a failure.
– Why should there bo st f failure ?
-Colonel O’LOGHLIN.- If the conditions are not sufficiently attractive the money will not be forthcoming.
– -Does the honorable senator think that the capitalist will not put his money into this loan unless he gets his own terms?
.- He can get 5 per cent., and even 5 per cent., to-day on good securities. I am not prepared to say that we ought to provide in the Bill that money invested in this loan shall be exempt from any future taxation. It seems to me that if we exempt investors from stamp duty and income tax we shall be going far enough. Though I listened attentively to the reasons advanced by the Assistant Minister, he failed to convince me, and for that ‘reason I think that the words indicated in Senator Needham’s amendment should be struck out.
– I am as anxious as anybody to see our war loan a success, but I do not think that the omission of these words will in any way affect the result of its flotation. In reply to a question by Senator Millen at the beginning of this debate, the Assistant Minister assured him that the exemption from taxation would be confined to exemption from stamp duty. Later on, however, he said that it would include exemption from other taxes. He also stated that any honorable senator who supported” my amendment would be dishonouring a promise that had been made by the Prime Minister.
– I practically promised Senator Millen to look into the matter. I had the best authorities rung up concerning it, and that was the reason why I altered my original statement.
– The Assistant Minister told the Leader of the Opposition that the proposed new section would exempt investors in our war loan from stamp duty, but he afterwards said that anybody supporting my amendment would be dishonouring a promise made by the Prime Minister. I am not aware that any such promise was made. I stand by the prospectus issued- in respect of the war loan, and I will not allow any honorable senator to interpret my actions in a contrary direction. It appears to me that if a supporter of the Government dares to express an adverse opinion in respect of any matter, there is at once a suspicion that he is “ up against “ the Ministry that he is called upon to support.
– Nothing of the kind.
– That is the inference to be drawn from the words of the Assistant Minister.
– I made a strong appeal for my Bill, which a Minister ought to do.
– And I am making an appeal for what I consider is a right thing.
– If I used any language which the honorable senator regards as offensive, I apologize, but I would like to see the language.
– The honorable senator may see it in Hansard to-morrow. It has been urged that, under my amendment, the States might do something to evade the operation of this Bill. If that is the only argument which can be advanced against my proposal, it is a very poor one. The plain duty of the Committee is to omit the words to which I take exception. If they remain in the Bill, an unlimited exemption from taxa tion will be given to persons whom a majority of our party never dreamed of so exempting when this matter was first brought forward. _ Senator GRANT (New South Wales) [5.44]. - I support proposed new section 52a as it is printed. It seems to me that the Government have a faint glimmering of the correct idea underlying taxation when they propose to exempt these instruments from the operation of the tax-gatherer. Many people think that we can get at the wealthy by means of a stamp duty. It is utter folly to imagine anything of the kind. Such an impost is a tax upon industry. If a man insures his suburban residence, why should he be called upon to pay stamp duty? By insisting that he shall pay such an impost, we are merely taking something from him to which he 13 legitimately entitled. The Ministry, in proposing that this objectionable system of taxation shall be abolished, arecertainly proceeding on right lines. I decline to be side-tracked by the amendment. It is time we realized that the correct method of taxation is only indicated in this proposed new section. The provision condemns taxation by means of a stamp duty or by similar methods. I welcome it in its present form, and I hope that later on the Government will bring forward a measure of taxation which we shall all be able to support - a measure of direct land values taxation.
– Order ! The honorable senator’s remark has nothing whatever to do with the question before the Chair.
– This proposed new section is a very small step in the right direction, and, consequently, has my support.
– I listened to the fiery, and I might almost say vain, discourse of Senator Stewart, which appears to have quite unnecessarily stimulated honorable senators to attempt to curtail the advantages which are attached to this very necessary war loan. Every honorable senator is quite emphatic in declaring that he wishes to see the loan a pronounced success. If that be so, let us act consistently by offering to those persons who subscribe in very large measure to the loan those advantages which they were clearly told they would receive at the time the War Loan Bill was under consideration in this Chamber. The Commonwealth loan field has hitherto been an unreaped one. The Government of the United Kingdom are well aware of what kind of a response is likely to be made to a loan in the Old Country, whether it be for war or other purposes, but no Commonwealth Ministers have been in a position to say that they had anything like exact data which would enable them to judge whether such a loan as that how projected is likely to be successful. I do not care whether proposed new section 52a exempts subscribers from stamp duty and income tax only, or whether it exempts them from other forms of taxation. I say that at all hazards this loan should be made a substantial success. I desire to see it a pronounced success, and, consequently, I am in favour of offering the capitalists, both large and small, every material inducement to put their money into it. I also intend to appeal to their sense of patriotism. I resent the claptrap that has fallen from the lips of Senator Stewart, who has spoken of Shylocks. In. his view anybody who has a pound to lend is nothing less than a Shylock. Let me tell him that the principal loans made to the Treasury of the Republic of France are made by persons who subscribe 400 and 500 francs. How does any man know that the capitalist of Australia, in the largest sense of the term, is present in such numbers that he may be expected to subscribe in voluminous measure to this loan ? No man can tell the amount of floating currency in Australia available for patriotic loans, or loans for ordinary internal development. A great deal is thought along very fallacious lines in regard to the wealth of the country and its availability for purposes of currency. It is computed that in Tasmania there is £30,000,000 worth of real estate, but does anybody assume that if a wealth tax of 5 per cent, were imposed on that sum, an amount of currency to that extent would be forthcoming ? One of the fallacies which renders a wealth tax so weak that it his always to be abandoned immediately after its inception is that wealth is always available for purposes of taxation. It is not. What we want is currency - the every-day wealth of the capitalist - available for subscription to this and other loans that will inevitably fol- low it if the war is to be as protracted as appearances indicate.
– Will you not take a little of their credit?
– The interjection indicates another fallacy. You cannot forcibly take anybody’s credit. Credit is ephemeral and unsubstantial, and cannot be seized on in the arbitrary way indicated by the honorable senator. The item of interest on the war loan, and, in fact, the whole capital of the loan, represent only drops in the bucket so far as taxation is concerned. I hope the capital value of the total subscription will be more than £20,000,000, but that is the nominal amount. A 10 per cent, tax on the capital value would be £2,000,000, a mere drop in the bucket in comparison with the necessary war expenditure of the Commonwealth, for at the beginning of the war, in the columns of the Hobart Labour paper, I expressed the opinion that the Commonwealth would have a war debt of not less than £130,000.000 at the end of a couple of years. If we are to fight the Germans to a finish, and secure an unqualified victory, the capitalists of Australia, large and small, will have to rattle their money-boxes and rustle their cheque-books to the tune of a great deal more than £20,000,000; but when the War Loan Bill was before this Chamber I said that while I voted for all the privileges that would attach to subscription to the loan, I did not pledge myself to vote for the exemption of future loans from taxation. We have to cultivate the loan habit amongst the people ot the Commonwealth at this juncture. We cannot apply to the capitalists of the Old Country, the Government of which, after giving us what was in the circumstances a .generous measure of assistance, advised us to cultivate and crop our own financial field. We have to induce the capitalists of the Commonwealth - great and small - to give those sinews of war which will enable us to do our part in the great struggle. I hope to see a large proportion of the loan subscribed by people of small means, and believe that in a considerable measure people with a few hundred pounds will do a great deal to fill the subscription lists. When I spoke to the Minister the other day about publicity I feared for the moment that we might not be giving to the loan the publicity that the occasion demands. It must be made an overwhelming success, and to show a haggling spirit in lopping off little privileges will be to take a very misdirected course. I want to give every privilege which we foreshadowed to the people who are patriotic enough, and have been thrifty enough to have something to give to the nation in this crisis of its fortunes.
– What privilege will the omission of these words cut off ?
– They will cut off the exemption from other taxation. I want to make the exemption full and complete. Whatever may be the intention of the Administration, my position is clear. I am prepared, in regard to this first war loan of the Commonwealth, to “ go the whole hog.” I am ready to completely exempt the subscribers from taxation. We exempt £20,000,000 of capital- I hope more - and an income of interest payments to subscribers, if the full £20,000,000 be subscribed, of about £900,000 per annum. The national income is, on paper, of such considerable volume, that £1,000,000 a year is a mere drop in the bucket. If we are to have a war debt of £150,000,000, the little concession that we are making in regard to the first loan does not amount to very much, and will, even on its most liberal interpretation, in no great measure impair the taxable resources of the Commonwealth. Let us be liberal; let us be large-minded. There will be rejoicing in the camp of our enemies if it goes forth that, notwithstanding the liberal conditions of the loan, our capitalists and. people have failed to subscribe to the extent hoped for. I apprehend that such an eventuality would be construed by our enemies as a most substantial moral and material victory. Senator Stewart has spoken most emphatically, and with reiteration, of money being as necessary as men -
The strongest castle, tower, and town -
The golden bullet beats it down.
Men are much more important than money, for money alone will not win a war, and some very poor nations have waged very successful wars, and greatly increased their prestige thereby; but it is generally conceded that modern war, to be successfully waged, requires ample financial resources. Why, then, does this gentleman, pronouncing this economic creed - and a very sound economic creed it is as applied to war - attempt, by means of a pin-pricking amendment, to shear off some of those privileges which are necessary, because human nature is what it is, to make the loan an unqualified success ? I echo the sentiments of the Minister; I applaud the sentiments which fell from his lips when he spoke with necessary emphasis of the success of the loan. I hope it will be a success, and shall have a very much poorer opinion of the resources of the Commonwealth, and of the patriotism of its capitalists, than I have at present if it is not that substantial success which we all heartily wish to see it.
– Patriotic at 5 per cent;. !
– The honorable senator may not know the difficulty sometimes experienced in releasing capital for investment in a new channel. The honorable senator may be worth £10,000 or £20,000, and if asked to invest £5,000 in the most desirable security, he might be unable at the moment to find the money. You cannot dump down a 500-acre farm or North Queensland cane-holding in the Commonwealth Treasury, and a man nominally worth £100,000 of real estate according to the assessment books of his State, might find it impossible to subscribe even £5,000 to the Commonwealth loan, even though it might be regarded as a gilt-edged investment. I have already induced many people to subscribe to the loan. A friend of mine, who met me recently in Collins-street, and who has about £2,000 to spare, asked me if I advised him to invest it in the loan, and I said, “ Certainly; at once.” I hope the privileges these people were led to expect will be conserved to them by this measure, and I earnestly adjure the Minister to stick to his guns.
– What were they led to believe?
– That they would be practically free from taxation. I said the concession made the interest equivalent to 51/2 per cent. Let it be so. I advise the Minister to stick to every word of the Bill, and even if the construction of a Judge of the Supreme Court is that subscribers are exempt from all taxation, Commonwealth and State, to the extent of their capital and the interest they receive, I say ‘ ‘ Amen ! Let the Minister stick to his Bill.”
– I have come to the conclusion that this ought to be called “a Bill to amend the
Inscribed Stock Act in the direction of exempting the capitalists of Australia from their just obligations towards the present war.” I have a complaint to make against the Minister. I raised a point of order when the War Loan Bill was before the Senate, on the ground that this Bill should have preceded it, but the point was overruled, and, owing to the unbusiness-like methods adopted, a good deal of discussion has taken, place which might have been avoided. When the War Loan Bill was in Committee, I distinctly asked the Minister if the amendments of the Inscribed Stock Act were vital, and he said “ No “ ; but I find that they totally alter the whole aspect of the Loan Bill.
– I said, “ No; with the exception that the interest was to be increased beyond 3
– But this means a great deal more. Under this Bill, a man can take his money out of industry, or land, or other taxable security, and invest it in the war loan, and the resulting income will be exempt from State and Commonwealth taxation and from stamp duty. How, then, are we to get at him ? Further - and to this I take the strongest exception - he is to be exempt from other taxation, of whatever kind, of the State and the Commonwealth. Why should his interest from the war loan be exempt from other taxation of the Commonwealth ? If the Commonwealth is compelled by the necessities of the moment to impose a war tax, the man who has drawn his money out of industry, to the detriment of the Commonwealth, and invested it in the war loan, will be exempt from the Commonwealth tax. That is a monstrous proposal.
– We shall not have any industries if we do not get a war loan.
– It will be a bad thing for the Commonwealth if we cannot get a war loan with the words “ or other taxes” excised. They mean a great deal to the subscribers to the loan. They mean that they are to be exempt from all future taxation, and so will be a privileged class of their own. If we are to be fair in this matter, there must be no preference. Everybody must bear his share, in connexion with obligations arising out of the war, each person in proportion to his ability. But, as Senator Millen rightly pointed out, under pro posed new section 52a the richer a man is in the Commonwealth, the less likely is it that he will be called upon to pay war taxation.
– Does the Minister think that the omission of these words would imperil the success of the loan’*
– No words of mine ever conveyed that impression.
– I do not know what the Minister thinks, but I have been fairly astounded at his replies to the criticism of this provision. I say that as it stands at present, the wealthier a man is the more likely is he to escape. He may be worth £100,000, and all he has to do is to plank it into the war loan and then become exempt from any taxation, unless the Commonwealth come along with a proposal for repudiation.
– This is part of the war finance.
– If capitalists may avoid any responsibility to pay for the war by investing in this war loan, the burden will fall upon a considerable portion of the community who can ill afford to pay.
– No ; the honorable senator is absolutely wrong.
– I repeat that, if a man possessing £100,000 desires to evade taxation, he may do so by purchasing war scrip at per cent.
– But the taxation on incomes will be in respect of incomes earned before the war loan was dreamt of.
– That will be for one year only.
– But the war is not going to last for ten years.
– Perhaps not, but this exemption will hold good during the currency of the loan. The proposed income tax, it is true, may relate to incomes earned last year and during portion of this year,’but the next income tax will be levied on incomes earned during the current year, and if, in the meantime, a man has invested his money in the war loan, he will be exempted entirely from such taxation.
– Yes, and for ten years.
– It is a serious proposal for this Commonwealth to make, because it may be necessary to raise further war loans. Our first consideration should be to see that every man pays his fair share of the war taxation.
– Let us be sure that this war loan is going to be a success with the conditions attached.
– In normal times perhaps we could in another way get at the men who can best afford to pay taxation, but we are up against a unique situation to-day, and it is our duty to see that no man is allowed to go scot free of his just obligations to the Commonwealth. That is the position; yet here we find the Government deliberately introducing a measure to exempt from any financial liability the richest men in the community, and the richer they are, as Senator Millen has pointed out, the easier it will be for them to escape by investing in war scrip. This is a lovely arrangement indeed ! If this is the way the Government are going to ask the whole of the people of the Commonwealth to bear their just share of the burden, I do not understand what they mean. At the present time we have posters all over the town appealing to the young men of this community - “Your country wants you.” But what appeal are we addressing to the capitalists? Here it is - ‘ Your country wants your capital at a higher rate of interest than ever before given in Australia.” That is the way we are treating these capitalists. But, I ask, why should we discriminate between the manhood and the wealth of the country ?
– Why do you make an incomplete statement? Is that all we have asked from the capitalists?
– No more has been asked, so far as I am aware. There may be another £20,000,000 loan, or even £100,000,000, and yet, in the face of this possibility, we find the Commonwealth Parliament limiting its own authority - its own sovereign power - unless, later on, there should be a repudiation; and of course ihat would be a serious thing to do. The proper course to take is to prevent the necessity arising for such a line of action, and now is the time to do it. I sincerely hope that the Minister, for the sake of a few words which he said made no difference to him or the Bill, will see that this position is rectified.
– I hardly said that.
– The prospectus issued by the Treasurer is the only document to which the Commonwealth is com mitted, so far; and in that prospectus there is nothing committing the Commonwealth to the exemption of subscribersfrom paying any other form of taxation. In this Inscribed Stock Bill we are committing the Commonwealth to an exemption of all subscribers from all taxation for ever. It is a ridiculous position, and I sincerely hope the Minister will reconsider “the matter. I admit that we> are a good deal to blame ourselves, because when I raised the point that this Bill should have preceded the War Loan Bill the Leader of the Government - acting quite within his rights and within the Standing Orders - succeeded in arranging that the War Loan Bill should precede this measure. I think that if the present Bill had been before the Senate prior to the passage of the War Loan Bill, the Senate would not have committed itself.
– It will not mean going back on any undertaking if we delete the words now.
– No, because up to the present we are only bound by the prospectus.
– This Bill binds the contract.
– Exactly; and I would point out that the Senate is taking upon itself a very great responsibility. It is just as well that we should know exactly what the Bill means. It means that the wealthy classes of this community, the privileged classes, are to have greater privileges than ever, because if they subscribe to the war loan they will be exempt from all taxation during the currency of the loan.
– Let us be sure that they have the ability to avail themselves of the privilege attached to th’s loan before making an outcry. What will you say if they do not subscribe to the loan ?
– I will tell you. If they do not subscribe to the loan, I would conscript their money to use it in fighting the battles of this country.
– Are you sure the money is here ?
– I believe there is sufficient money in the Commonwealth for all our purposes, and I believe we can do all we have undertaken to do provided the rich man plays his part in proportion to his financial ability. What I object to is the proposal to exempt subscribers to the war loan from any future’ taxation, thus placing them above everybody else, and creating a privileged capitalistic autocracy in the Commonwealth.
– We seem to be placed in an unfortunate position with regard to this matter. When the Minister spoke last, he told the Committee that the Treasurer invited the representatives of the banks to a conference with him.
– I do not think that you will find the words ‘ ‘ conference “ in my remarks.
– The banks, as everybody knows, have a union just like the shearers’ or the labourers’ union, and I have no doubt that the representative of the banking association went to that conference charged to tell the Treasurer upon what conditions the banks were prepared to assist in the financing of this £20,000,000 loan. I take it that the message which the bankers’ representative delivered to the Treasurer was something like this - “ Yes, we will find you the money if you give us 4^ per cent, interest for it, and exempt us from all taxation.” If that is the case - and I do not think there is any reasonable doubt about it - surely I was not very far wrong when I applied the term “ Shylock “ to a bargain of that description. Let us look at the situation. The country is in danger. The possessions of these men are in danger. Their house is on fire, so to speak. If the money is not found the war cannot be prosecuted by Australia. And if the war is not prosecuted by us against the enemy, the latter will be victorious, and the possessions of those men will become a mere dream. Yet, in the face of those dangers, that is the bargain which they drove with the Treasurer of the Commonwealth. If ever the Treasurer of a country failed in his duty towards the country, the Treasurer of the Commonwealth has failed on this occasion. Instead of the bankers dictating terms to him, he should have dictated terms to them. He ought to have said to them, “ Gentlemen, if you are not prepared to lend us, on fair and reasonable terms, the money for the purpose of defending your property, we shall use the power which the people of the country have given us, and compel you to give the money up on our terms.” But, instead of doing that, the Treasurer weakly assented to the conditions which are sought to be imposed in this measure. Coming to the amendment of Senator Needham, this matter is very much more serious than I thought it was in the beginning, because, as Senator Mullan has very properly indicated, a time may come when the imposition of a wealth tax will be necessary. I know that Senator Bakhap does not believe in a wealth tax, because he says that a man may be very rich on paper, and, indeed, in fact, and yet not able to realize very conveniently. But take a man with £1,000,000 invested in land which he is not using, and out of which he is getting no income. Would any person in his senses contend that a man holding £1,000,000 worth of land values in the country should be exempt from taxation for the simple reason that he was not earning any income out of the’ land ? The thing would be ridiculous.. If the property of any persons in the Commonwealth is being defended by the soldiers of the Commonwealth, it is the property of the landowners.
– Try a wealth tax, and see whether it can be translated into currency.
– I know that the objection to a wealth tax is that a man may have houses, lands, and various forms of wealth, which are not realizable at the time; but I think that these persons could be financed, and, if the necessity arose, would be financed. In any case, they ought not to be allowed to escape; yet if proposed new section 52a is passed as it stands, a man owning £1,000,000 worth of land can realize, invest the money in the war loan, and be exempt from every form of taxation for ever after, as regards the income from the money so invested for the duration of the loan, a period, some people have said, of ten years. I do not believe that the debt will be paid in twenty years, nor in forty years. We are establishing, as Senator Mullan very well pointed out, a financial aristocracy by means of this measure. I trust that the Committee will omit the words, so that it shall not be in the power of any individual in the Commonwealth, by realizing whatever possessions he may have, and investing the proceeds in the Commonwealth loan, to escape taxation for all time. I believe that Senator Bakhap has mistaken the minds of the people who have money in Australia. I believe that if the Treasurer had taken the bull by the horns, he could have raised the money on very much more favorable terms than those which are indicated in the Bill; and, inasmuch as he did not do so, he failed, and it is the duty of the Committee to try to repair that failure as much as it possibly can. I intend to vote for the amendment.
– Owing to something which Senator Millen has said about the Bill controlling by its language future loans, let me state here, as clearly as I can, that my intention is to exempt from all taxation the income and the capital connected with the first war loan. But when the War Loan Bill was under discussion here, I did not indicate that my action was going to bind me in regard to future loans, nor do I intend to pledge myself at this juncture, although I am going to support this measure in its entirety, to vote for the exemption from taxation of money subscribed to future loans or of incomes derived from subscriptions thereto. But we have to be practical, and Senator Stewart’s utterances remind me very much of a phrase I struck in the writings of an old Elizabethan author, in which he said, “ Many things that are perfect in the theoric when inquired into savour very seriously of the practical.” That quaint language embodies a very solid truth. All . this talk about constituting a privileged financial aristocracy because of the small item of £20,000,000, and because of the exemption from taxation of the income derived therefrom in the way of interest on the loan is so much humbug, because that represents a very small amount of the alleged capital wealth of Australia. It will represent only a very small portion, I am sorry to say, of the loan expenditure which will be necessary in connexion with the war, and the interest on this very loan represents the merest fraction of the alleged income of the people of the Commonwealth. It will represent only a very small percentage of the total interest payments on the whole war expenditure. All these statements are simply humbug. They are not practical ; they are theoretic and academic disquisitions on what may happen if we do certain things. We are not going to do those things, but let us do what is immediately necessary, namely, hold out such golden inducements to the capitalists of the Commonwealth, large and small, as will enable them to subscribe in such measure that the initial war loan of this young nation will be a financial success astonishing to the whole world.
– I heard Senator Bakhap say just now that we ought to be practical. That is the very thing which I am trying to be. It seems to me that what he suggests is to give evidence of a want of that very practical quality which he professes so much to admire. It is useless for the honorable senator, who is helping to place a law on the statute-book, to say that he will take the liberty of stating when the law shall cease to operate. What we are doing is amending the Inscribed Stock Act, and not dealing with the war loan.
– Would it be necessary to amend the Act if it were not for the war loan?
– I cannot say.
– What is the originating cause of the amendment?
– In order to amend the law under which we offer public stocks.
– Because of the war loan we are amending the Act.
– We are amending the Act because of this Bill. If we had been practical, and done what the honorable senator thinks he is doing, we ought not to have touched the Act, but in the War Loan Bill to have put in the special conditions which he thinks ought to attach to the loan. What we are doing now is altering the general law. If we were to amend this measure, the Government could not float another loan, unless they came down with a further amendment, on any other conditions than those which are contained in this Bill.
Sitting suspended from 6.30 to 8 o’clock.
– I do not wish to detain the Committee at great length, but I should like to supplement what I have already said by one or two further observations. I want to dissociate myself from the line of thought given expression by Senators Stewart and Mullan.
– I am very glad to hear it.
– It seems to me that much of what we have heard from those honorable senators this afternoon would mingle more appropriately with the murmurings along the Yarra bank than with the statements that are commonly made in an assemblage of this kind. In this matter I find myself in accord with the objective of those honorable senators, but my reasons are of a very different kind. With regard to the proposal we are now considering - to grant these special bonuses to those who take a large share of the loan - I wish to put a few figures before the Committee. I do not for a moment say that the inducements we are offering are one bit too high. As practical men we must recognise that we must pay the current price for money.
– We cannot get money, even for defence, except by paying an extortionate price for it.
-The honorable senator will agree with me that we cannot get money without paying the current price for it. It seems to me that the inducements offered are not too high in view of the present condition of the financial and commercial world. It is, however, one thing to say that the conditions offered are reasonable, and quite another to consider how the inducements are varied, and how they are apportioned between the different classes of the community we are asking to subscribe to the loan. A good deal has been said about making the loan available to the small investor. If there is one class which more than another Parliament desires to encourage in times of peace, as well as in times of war, it is the small investor class. Yet under the proposals of the Government we say to the small investor in the war loan, “ You will get the bedrock price for your money,” but to the large investor we say, “You will get the bedrock price and a bonus in addition.” The loan is for £20,000,000, and the interest on that at 41/2 per cent, will amount to £900,000. “ The amount we shall lose by the proposed exemption from income taxation is uncertain, but, seeing that in many of the States the income tax upon income derived from investments, as distinguished from incomes derived from personal exertion, is1s. in the £1, I do not think it will be regarded as an exaggeration if I say that the exemption granted under the proposals of the Government in connexion with the loan will amount to 2s. in the £1, assuming the average tax in the States and in the Commonwealth to be 1s. in the £1. This will represent another £90,000 a year which we shall be paying for the use of the £20,000,000, or a total of £990,000. Instead of agreeing to pay 41/2 per cent, interest and a bonus of £90,000 in unequal and varying contributions, it would have been very much better, in my opinion, to have said that we would pay 5 per cent, interest on the money without any exemption. Then the small man would have obtained exactly the same return for his money as the large investor. The £90,000 which we are going to give as a bonus, in addition to interest at 41/2 per cent., is not to be distributed upon any basis of equality. Some men will not get any bonus at all. Men whose income is below the amount exempted from income tax will derive no benefit from the Government’s proposal. Some investors will be paying income tax at the rate of 3d. or 4d. in the £1, others at the rate of 6d. or 9d., and the more wealthy in the community, who will derive the chief advantage from the Government’s proposal, may be paying income tax at the rate of 2s. 6d. in the £1. These varying rates of income tax will, as I mentioned before dinner, represent all the difference between one investor receiving interest at the rate of £4 10s. on the money he invests in the loan and another receiving £51s. 6d. I see no reason for that inequality of payment. If it is necessary to offer interest at the rate of £51s. 6d. to induce a large capitalist to invest in the loan, it is equally fair and necessary to offer the same interest to the smaller investor. . If the small man can be induced to invest in the loan for an interest rate of £4 10s., why should we give the big capitalist £51s. 6d. ? The only thing that restrains me from moving in this matter is that the Government have issued the war loan prospectus.
– It is not affected by the particular amendment under review.
– No; but we have to consider what has happened as the result of the issue of the prospectus. Throughout the Commonwealth to-day there has been received a large number of applications for participation in the loan. I plead guilty to having made a small one myself. A great many people have made applications, and others are making financial arrangements to enable them to do so. In the circumstances, it would seem to me that, even though we admit that a mistake has been made, it would be an act of folly to attempt to set it right now.
– My amendment does not affect the prospectus.
– I am dealing now with a later sub-clause. I propose to vote for the honorable senator’s amendment. In view of the fact that the prospectus has been issued, I am not prepared to assume the responsibility of any action in the direction I have suggested, but I have taken advantage of the opportunity to make it quite clear that I am restrained by duress and the force of circumstances, due to the practical impossibility of recalling the prospectus. I do not approve of the Government’s proposal, but I am compelled by the force of circumstances to assent to its going through. I want to say that it represents, in my opinion, not only a foolish piece of public finance, but it discriminates between one class of investor and another, in such a way as to be quite unfair to the particular class in the community who, if we are going to discriminate between classes at all, should have the first claim upon the consideration of Parliament.
. - I take the strongest exception to the words that Senator Needham proposes to omit. Why we should specially exempt from other taxation the interest which will accrue from the war loane I am at a loss to understand. Why should we place the man who has money to sell in a position different from that of other citizens of the Commonwealth ? Most of our people, and particularly in the part of the Commonwealth from which I come, have been applauding the action of the New South Wales Government in fixing the price of wheat, of the Queensland Government in fixing to some extent the price of meat, and recently of the Commonwealth Government in fixing the price of sugar. They have applauded the action taken in one of the States for regulating the price of butter. If we may fairly regulate the prices of these commodities, why should we not keep capital within reasonable limits, instead of allowing it to exploit us as it has never exploited us before? Special Boards have been appointed in every State to keep down the prices of commodities, and here we find the Federal Government endeavouring to increase the price we are to pay for the use of capital. What is the effect? The workingman s wage has been depreciated, its purchasing power has been reduced, and yet capital is to be allowed to draw bigger profits than it ever drew before, and we have the Government coming forward with special concessions, in addition to offering a higher rate of interest than has been paid by the Commonwealth before, or by any of the State Governments for a very long time. Only recently the cry has been raised, which I hope will lead to something tangible being done, that there should be no profits out of the war.
– Hear, hear.
– I am glad to have Senator Millen’s approval of that statement, and later on I shall look for his support in connexion with the matter, because we should be able to appeal to the common sense of men imbued with the patriotic spirit in the carrying out of the huge task in which we are engaged. If there are to be no profits out of the war, why should we allow the capitalists to make additional profits out of the necessities of the nation?
– Because we want their money.
– When we want men to go to the war, do we bribe them in order to induce them to go? But honorable senators are prepared to bribe capital in order to make it do its part. I am glad to find that so far we have been able to secure all the men we require as volunteers. There are people in the Commonwealth who, if the response to our call for volunteers were not good, would be prepared to intimidate men, and secure their enlistment by some other means. If there has been a splendid response - and there has - to our call for men, why has there not been an equal response to our call for capital from the men who have it?
– We have never asked for it yet, and we do not know what the response will be.
– We are asking for it now, and how are we asking for it? Many men have given up good billets and big salaries, and have shown themselves prepared to lay down their lives on behalf of their country, but the capitalist is being asked to give his money at a rate of interest which was never offered before in the Commonwealth, and with greater concessions in addition than any previous Government has ever dreamt of offering.
– The honorable senator has asked what the capitalists have done, and I, say that they have given the Commonwealth £10,000,000 in gold without any interest. He ought to be fair, and admit that.
– If we succeeded so well in that case, it is the best reason for asking the capitalists for more on the same terms. When they gave us £10,000,000 until the war is over without interest, they must have recognised our right to’ secure the money on those terms. We can carry that further and say that we want more money at the same price.
– How much more gold is there in the Commonwealth ?
– It is not now a question of gold, but of credit. It has been represented by certain honorable senators that those who support the amendment are practically tearing up a scrap of paper, and that they are prepared to repudiate something.
– No, that has not been said.
– I understand that some honorable senators take the view that in supporting the amendment we are going back upon the loan prospectus.
– I do.
– And I do, for another.
– There is nothing so far from our minds. By carrying the amendment we shall not repudiate anything that has been done by the Prime Minister.
– Did not the Prime Minister make the definite statement that interest on the loan would be free from taxation ?
– So far as I am aware, he made no such statement. The statements that have been made are reflected in the prospectus, and the only promise it makes is that all bonds and transfers of inscribed stock shall be free from Commonwealth and State stamp duty, and that the interest will be free from Commonwealth and State income tax. It specifies exactly what is to bc exempted from all taxation. I can quite understand some honorable senators desiring to exempt subscribers to our war loan from State taxation. But the Bill goes further, and says that money invested in the loan shall be exempted from all Commonwealth taxation. Consequently,, if financial exigencies should compel us toimpose a wealth tax - as I believe they will before the war has terminated - those who have invested in this loan will, be freed from that tax for all time. Isthat a fair thing? It may be that we shall require to borrow £100,000,000, or perhaps more, to enable us to fulfil our part in this war. Averaging the rate of interest upon this loan at 5 per cent. - and I estimate that we shall pay that at least - it will be equivalent to- £1,000,000. That £1,000,000 will be exempt from income tax.
– Who says so?
– The Bill says so..
– There is no intention under this Bill to exempt the proceeds of all war loans from future taxation.
– I do not know whether the honorable senator is capable of interpreting the intentions of future Governments. I am endeavouring to interpret the intentions of the present Government in the light of this Bill.
– Does the honorable senator intend to exempt future war loans from taxation?
– I shall have no alternative.
– The honorable senator knows very well that he can exercise his privilege in connexion with other loans.
– All future war loans will have to be sanctioned by this Parliament.
– But by that time this Bill will have become a Statute, and all future war loans will be subject to its provisions.
– We need not pass those loans.
– The chances are that some honorable senators will be prepared to pass anything if the Government say it is all right. I am not willing todo so. When I entered this Chamber I said that, irrespective of whether a Liberal or a Labour Government were in power, I would support any good legislative proposals which might be brought forward.
– Has the honorable senator ever in his political career voted for a War Loan Bill?
– I have never voted for a loan which exempted the interest from that loan from all taxation.
– I know of no Loan Bill which does not contain a similar provision. The honorable senator will give this exemption to the States in time of peace, but will not give it to the Commonwealth in time of war.
– At the present time we are appealing for recruits, and we are asking the fathers and mothers of those serving at the front to pay the interest on this loan to a body of men who will be exempt from all liability in the prosecution of the war if they so desire.
– When the War Loan Bill was under consideration in this Chamber, X incidentally referred to the fact that investors in this loan will be a favoured section of the community as compared with many others who are making sacrifices in connexion with the war in which we are engaged. I expressed the view then - and I hold it still - that this is a time for equality of sacrifice, and that no section of the community should receive more consideration than another. On that occasion we were informed that, although the War Loan Bill did not provide for exempting investors from the payment of income tax, a prospectus had been issued, and a definite statement had been made, under which subscribers were guaranteed that all bonds and transfers of inscribed stock would be freed of any Commonwealth and State stamp duty, and that interest would be exempt from State and Commonwealth income tax. We were in a measure committed to that condition of affairs before the prospectus was issued, and before we had an opportunity of dealing with this Bill. Seeing that that guarantee has been given to investors, I would be loath to go back upon it.
– We are not proposing to do that.
– But’ the proposal that is now under consideration is altogether different from the guarantee which was embodied in the prospectus. New section 52a declares that -
Stock certificates, stock certificates to bearer, scrip certificates to bearer, Treasury-bonds, and coupons, and transfers of stock or Treasurybonds shall not be liable to stamp duty or. other tax under any law of the Commonwealth or a State.
– “ Under any law.”
– We do not know how long this war will continue. We all hope that it will be brought to a speedy and successful termination. But the longer it lasts the more necessary it will be to float loans or adopt some other means of financing it. We may yet be compelled to take measures of which we do not at present dream in order to finance it. But, under this Bill as it stands, a guarantee will have been given that investors both in our first war loan and in all future war loans shall be exempt from any form of taxation imposed by the Commonwealth or a State. It has been said that investors have been exempted from taxation in regard to the flotation of loans in peace time. Is that any reason why we should follow this precedent in time of war?
– Money for developmental purposes is on a different footing from money for war purposes.
– In peace time it may be necessary, as Senator Stewart says, to offer a reasonable rate of interest to secure the flotation of loans for reproductive purposes. But the position today is that we are offering a higher rate of interest in war time than we offer in peace time. In addition, it is proposed that we shall free investors in this loan, not merely from the payment of stamp duty and of income tax, but from any other form of taxation. That is a very dangerous precedent to establish. We have been told that all future loans will have to be sanctioned by Parliament. That is perfectly true. But if we once lay it down in this Bill that investors in this war loan are to be freed from all forms of taxation, it Will be manifestly wrong to put investors in future loans in a different category.
– We are likely to be obliged to make more liberal offers later.
– Yes. It all depends upon how we begin. Whilst I do not believe that it is the intention of the Government to do anything that is unfair to those who have already invested in our war loan we ought not so to restrict ourselves that in future we shall be obliged to do, not merely what is proposed under this Bill, but something more. We know perfectly well that at the present time the States are in a position such as, from a financial stand-point, they never previously occupied. All municipal, State, and Federal works have to be commenced and completed with the aid of borrowed money. Suddenly we are told that the financial gates have been closed against us, and consequently we have been thrown on our own resources even in respect to financing the war.
– Can we expect cheap money in such circumstances ?
– Then in wartime the position is that those persons who declare they are patriotic and prepared to see this war through to the end can be induced to lend us their money only by the offer of a higher rate of interest and better terms than they can obtain in peace time. In other words, we can get this money only if we make an appeal to the cupidity of these so-called patriots. If that be the position. I fail to understand what true ‘patriotism means.
– The honorable senator does not understand what finance means.
– I understand that this loan is a gilt-edged security.
– And it needs to be gilt-edged.
– According to the honorable senator, the only way in which we can get money for war purposes is by offering a high rate of interest for it.
– Why is it that in every country under the sun, people have to pay a higher rate of interest for money now ?
– I understand that subscribers to the Imperial war loan are not offered better terms than we are offering.
– They understand where they are.
– And we ought to understand where we are. It will be a great mistake to retain these words in the Bill. We do not know what it may be necessary to do in order to bring the war to a successful termination. It will probably mean an expenditure of millions of pounds on our part, and we shall have to find that money. Consequently, I cannot understand why those who invest in our war loans should not be called upon, as well as the other members of the community, to make some sacrifice. Senator Mullan has rightly said that the cost of living is increasing all over the Commonwealth, and that the difficulties of the masses are greater than they have been for years past. When we offer high rates of interest the effect is to withdraw money from certain avenues of industry, to make the money market tighter, and to render it more difficult for enterprises to be carried on. To this must be added the difficulty which the masses experience in providing themselves with the necessaries of life. At such a time we ought to hesitate before saying that we will not only pay 4^ per cent, interest to investors in our war loans, but also exempt them from the payment of stamp duty. and income tax, in addition to any other form of Commonwealth or State taxation.
– Will the honorable senator explain how it is that, irrespective of these loans, securities have fallen on the Stock Exchange and elsewhere since the outbreak of the war?
– For our own protection we shall be acting wisely if we delete the words to which Senator Needham has ‘taken exception, because we may find it necessary at a later stage to resort to other forms of taxation. If we have to do that it will be manifestly fair that all persons in the community shall make an equality of sacrifice.
– If the Treasurer publicly stated that subscribers to the war loan would not be subject to Commonwealth taxation, it must alter my opinion. I was in favour of giving subscribers certain favours, but I do not think Parliament can go back on any undertaking publicly given bv the Treasurer as the official mouthpiece of the Commonwealth.
– He made no such statement.
– The responsible Minister in this Chamber has said freely here that the Treasurer did make tha statement If so, %ve cannot afford to dishonour it. It is quite open to Parliament to get round the undertaking by imposing another form of taxation, but to do so would not be playing fair with the people who have put their money into this venture.
– I saw the Treasurer again in the dinner hour. and he re-affirms that he told the people of Australia through the press that the loan would be free from Commonwealth taxation; and of course the States have no power to tax it.
– If that is so, there is nothing for me to do but to retire from the position I said I would take up towards the amendment. Senator Millen made out -t. very ingenious case against the Bill, but there was a slight flaw in his argument. He said that the person who subscribed the most money to thu loan would secure the biggest bonus, but he relied mainly in that contention on the exemption included in the Income Tax Bill about to be introduced. We may guess that that exemption will be about £156 per annum, and will be maintained up to a certain amount of income, diminishing afterwards by gradations to nothing. Thus in regard to the higher incomes there will be no exemption, and on that score the person subscribing the largest amount to the loan will not get any such benefit or bonus as Senator Millen alleges. The king-pin of his argument was that thi exemption under the income tax would create inequality amongst the subscribers to the loan, and his argument would not be worth a straw but for the fact that such an exemption is to be made. Therefore, rightly construed, it is an argument against any kind of exemption from income tax, and consequently an argument for the abolition of the £156 exemption. Such an exemption is fixed to locate the minimum of subsistence - the living wage - and its operation will tend to equalize and not to create inequalities.
– You are confusing the exemption under the Income Tax Bill with the exemption from income tax provided for in this Bill - a very different thing.
– The honorable senator’s whole argument centred round the fact that there was to be an exemption of £156 in “the Income Tax Bill.
– It had nothing to do with it.
– Then I leave the field. I heard the honorable senator refer often to the fact that the exemption under the income tax would give rise to inequality of treatment as regards those contributing large and small sums to the loan. He forgot that there would be no exemption in the higher grades of incomes, and that therefore the big man would not be exempted.
– I made no reference to exemption under any future Income Tax Bill.
The exemption I referred to was in this clause, freeing the investor from liability to pay income tax on his interest. The size of the exemption under the Income Tax Bill does not touch my argument that the exemption from income tax of interest on investments in the loan would create inequality. Senator Lynch’s statement that there will be an exemption of £156 under the Income Tax Bill makes my argument even sounder. A man with an income of £156, all coming from investment in the war loan, would in any case not be liable to pay income tax, and therefore this clause gives him no bonus or benefit. Without the exemption in the Income Tax Bill he would get 4£ per cent, from the loan, whereas a man receiving £5,000 a year from the loan will get 4-J per cent, plus a remission of £625 in income tax.
– Most of the arguments addressed to the amendment would have been more relevant to proposed new section 52b; 52a deals solely with documents or instruments. It is proposed to exempt these from stamp duty or other taxes by Commonwealth or State. “Other taxes” would therefore mean taxes in the nature of stamp duty. It is 52b which deals with the income or proceeds from, the loan investment.
– Would the words “ or other tax “ free investors from such a tax as a wealth tax?
– I apprehend that the taxation referred to in 52a is stamp duty or kindred taxation imposed on the paper or instrument; 52a is in part declaratory, and in part enacting. It is enacting so far as it provides that the instrument shall not be subject to Commonwealth taxation, and declaratory as regards State taxation, because it is an accepted doctrine that Commonwealth instrumentalities are not subject to State taxation. This was established in the historical Tasmanian case of D’Emden v. Pedder, arising in the early days of the Commonwealth out of an attempt by the Tasmanian Government to impose stamp duty on receipts for Postal Department salaries. It will be found in the Commonwealth Law Reports, vol. I., page 91, the head-note reading as follows : -
Where, therefore, the Constitution makes a grant of legislative or executive power to the
Commonwealth, the Commonwealth is entitled to exercise that power in absolute freedom, and without any interference or control whatever except that prescribed by the Constitution itself.
We seek to give power to the Government to raise a loan for Commonwealth purposes, and we are proposing, by this measure, that these documents shall be exempt from all taxation. At the moment, I do not, and cannot, conceive of any other form of taxation than a stamp duty; but it is possible there may be other taxes, and if there be any demand hereafter, I am with Senator Bakhap in this matter. I would leave these instruments free of any taxation, present or future. I would hold out every inducement and encouragement to investors to put their money into this loan without fear of taxation. I agree with the Minister and with Senator Bakhap that it is our duty at this juncture and in the present circumstances to do everything legitimately possible to insure the unqualified success of the loan.
Question - That the words proposed to be left out be left out - put. The Committee divided.
Majority … … 3
Question so resolved in the negative.
– Before this clause goes through 1 would like to say a few words on the matter of exemption from income tax. I do not propose to move any amendment. The whole thing seems to me to reveal, in an extraordinary way, the incapacity with which this particular financial circumstance has been handled. We have heard to-night about money obtained by the
States for developmental purposes being free from income tax, but surely no man in his senses would for a moment compare money borrowed for, say, railway purposes with money borrowed for defence purposes.
– We ought to get money cheaper in war times.
– That is perfectly correct, and the reason why the opposite is the case is that in every European country the government is in the hands of the capitalists. The situation is altogether different out here, however, for the workers of Australia are masters of the situation, and, instead of going cap in hand to the capitalists to seek their terms - which I say emphatically are such as only Shylocks would think of imposing in the hour of the country’s danger - the Government of the Commonwealth should have laid down its terms. And those terms should have been cheap money with no interest during the war, and for a number of years afterwards. Instead of that we are offering probably the highest interest ever suggested in Australia for gilt-edged security, as well as the further inducement of freedom from income tax and all other forms of taxation. This appears to me to be going altogether too far. I know the Treasurer made a promise to this effect, and that it was placed in the prospectus, and for that reason I do not propose to move any amendment.
– But that applies only to the £20,000,000 loan, and this Bill deals with all future loans.
– We could, of course, try to amend the Inscribed Stock Act if, unfortunately, the necessity should arise; but, having laid down a precedent of this character, it will be exceedingly difficult to do that. I have said already, and other honorable senators have agreed with me, that the major portion of this war loan will be taken up by the richest people in the Commonwealth - the people who have money awaiting investment. There is a good deal of wealth in Australia, no doubt, and many people are more or less rich on paper, but if any man endeavours at the present moment to realize on his securities, he will find that he is attempting to do so on a falling market.
– And yet you ask that money should be cheaper.
– Those who have money lying in the bank are the people who are going to invest very largely in the loan, and these people, as I have already said, are the richest in Australia. I want to make it clear that there is an essential difference between a war loan and every other loan. What is the position of the country at the present time? It is in extremis; in absolute danger of its existence, and the capitalist is in just as much danger of his life and liberty as other persons are. If men are necessary, so also is money. If the young men of Australia formed themselves into a union and demanded £1, 30s., or £2 a day before going to the front, what would be said about them ? There would be a howl of indignation from end to end of Australia. They would be talked of as traitors to their country ; as men who were prepared to see their country perish rather than go forth to fight for it. And yet the capitalist says that, unless he gets 4£ per cent, for his money, with certain other privileges, he will see the country “go hang” before he subscribes a farthing. Honorable senators on both sides of the Senate have applauded that sentiment. I have not such a poor idea of the capitalist as they have,, for I believe that if he had been approached in the right spirit and at the right moment; if he had been dealt with by men who knew their business, we would not be called upon to pay 4A per cent, for this loan, and would have got money freely. Neither would we be asked to remit income tax to these people, as we are in the Bill now under discussion. The burden of interest on the people of Australia will be felt much more heavily within the next two or three years than ever it has been before, and where will the money come from ?
– From the workers and the producers.
– It will come from the bone and sinew of the working people of Australia, out of their blood and sweat. Every industry is going to be taxed, not singly, but doubly, and in many cases trebly, to pay this interest, and yet the wealthiest people on the continent, so far as their investments in the war loan are concerned, are to go scot free. If that is the kind of policy which appeals to the Government, and the party which sits behind the Government, it does not appeal to me. I regret very much that I cannot see my way to move an amendment, for the simple reason that the Treasurer, apparently, committed himself to the bankers before he consulted his own party. That is the only conclusion I can come to with regard to the matter. I trust that this discussion will be a warning to Treasurers in the future, if any occasion of a like character should arise, to take the party into their confidence before they deal with people who are outside of the party.
– You are not complaining that our party had not the opportunity to discuss this proposal?! Senator STEWART. - I could complain a good deal if I liked, but I do not propose to engage here in a controversy with regard to that matter.
– The bankers were not with the Treasurer when you met him at Parliament House.
– If there were more conferences between the leaders of the party and its members there would not be the necessity for this discussion on the floor of the Senate. I feel justified in saying at least so much. This is a wholly immoral proposition. It is one which ought not to have been made. It has been made, I believe, under the idea - which, I think, is also a mistaken one - that the capitalists, unless they were offered particularly good terms, would not subscribe to the war loan. If they would not subscribe, what then ? I have heard honorable senators talk about recruiting being very slow, and they have said that if our youth and manhood did not volunteer in larger numbers they would resort to conscription. If it is proposed to conscript human life for war purposes, why not conscript capital? If the capitalist refused to give his money, could we not as easily compel him to give it up as we could compel the worker to go to the front and sacrifice his life?
– Are you going to conscript wealth by means of an income tax?
– Order! I remind the honorable senator that on this Bill he is not entitled to talk of conscription, as it has nothing to do with that subject.
– I am perfectly well aware of that.
– Then the honorable senator will desist from that line of argument.
– I think that I am entitled to compare the attitude of Parliament with regard to men with its attitude in reference to money. I consider that that comes quite within the scope of the Bill.
– I ask the honorable senator not to continue on the line3 on which he has been travelling.
– With all due deference to you, sir, I do not see how the two subjects can be dealt with separately. All that I am advocating is that money should be dealt with in exactly the same fashion as men are proposed to be dealt with, and surely that is not travelling beyond the confines of the Bill !
– Have you ever known voluntary loans to be a success?
– Yes, very often - to the borrower. But as honorable senators do not seem to be prepared to treat this question in a serious fashion, although I think it is one of the greatest importance to the public of Australia, the only thing I can do is to register a protest against the exemption from income tax which is provided for in the measure.
– I rise to move an amendment in proposed new section 52b, in the direction of exempting further loans from the operation of the provision. I recognise that the prospectus for the war loan has been issued. The Prime Minister has given his word that that loan is to be free from income tax, both State and Federal, and I am not going to preach repudiation at this stage, at all events. But I intend to submit an amendment.
– Any subsequent Loan Bill will be brought before the Senate.
– This clause amends the Inscribed Stock Act, and, although we might desire it very much in the future, it might be very difficult to secure another amendment of that Act to meet my wishes in this direction.
– You would not have the Act before you, because the only measure which would come forward would be one to authorize the raising of the new loan.
– I would have to try in an awkward way to modify the provisions of the Loan Bill.
– You could limit the rate of interest.
– 1 could, but what I am about to propose is a much more satisfactory and business-like way of proceeding. I move -
That the proposed new section 52b be amended by the addition of the words “ provided that this provision shall only apply to the War Loan Act (No. 1) 1915.”
That means, of course, that the £20,000,000 will go, as stated by the Prime Minister, exempt from State and Federal taxation, but that future loans will not be exempt. This is, I think, a reasonable amendment. On the previous provision the whole question of exempting the interest from income tax was debated at length, and I am not going to be guilty of reiteration. But those who have given a pledge, or bound themselves in any way, will not violate anything they have promised or done by voting for the amendment. All that I ask them to do is not to bind themselves in the case of future loans. That is a fair thing. It is quite conceivable, as I have said before, that in the very near future the Commonwealth may have to adopt a very drastic system of taxation in order to secure the money for carrying on this disastrous and accursed war. The money will have to be found somehow, and it maybe necessary, as has been hinted, and, in fact, indicated in several directions, to impose a wealth tax. It will be seen that by exempting the proceeds of this loan from State and Federal income tax, we shall put the most wealthy men in the community in a position to evade their just obligations in connexion with the war.
– The State has no power to tax.
– Take the Commonwealth. A man with £100,000 today can, if he so desire3, place himself in a position where he need not contribute a single 6d. towards the cost of the war. That is a position which no fair-minded man should be called upon to support, and I am not going to support it. All that a man with £100,000 in cash today has to do to avoid taxation is to invest his money in the war loan, and then his income will be derived from the interest on the stock. He will get an income of £4,500 a year, and we shall not be able to touch a 6d. of it for war or other purposes. That is an incontrovertible statement of the case. If the Minister can show me wherein the Commonwealth can get at that man if it so desires, once the Bill is passed in its present form, I shall be Q amenable to reason. But the position is that once the Bill is passed in its present form the wealthy man, if he so desires, can become a shirker financially. Workers, if they do not go to the front, are charged with being shirkers and slackers : it is said that the country is calling them. Why do we not call on the capitalist in the same way ? We are calling on the capitalist with the alluring promise of a higher rate of interest .than ever he received before. I think that we should call on the capitalists to do their duty. If we ask the ordinary citizen to shed his blood on behalf of the country, and thereby do his duty, why should we hesitate to call on the capltalist to do his duty ? Are my honorable friends calling on him to do his duty by offering to him a huge rate of profit which he never secured before?
– This is “ Business as usual.”
– It is business with a vengeance when we are mortgaging posterity to the capitalists of this community. Who is going to pay the interest? It is proposed to exempt the capitalist from all liability if he so desires, and to make the dependant^ of . the men who lose their lives at Gallipoli stay here and work in shackles to provide the interest on the loan. A worker goes to the front; his father, perhaps, stays here in the shackles of the capitalist, working and delving to provide his interest. I read the other day that if the war should last two years it is estimated that the interest bill alone, combined with the war pension bills of the Allies, will be £450,000,000; and that, if you take what the worker would produce after keeping himself, there will be practically 15,000,000 workers in slavery for the rest of their lives, and posterity after them, feeding the capitalists, the ghoulish creatures who are responsible for the war and for the martyrdom of man. We ought to pause when we are asked to lay down the principle that the wealthier a man is the easier shall it be for him to relieve himself of his just obligations. That is not right. It is a proposition to which I shall never subscribe, and I do not think it is one to which any Democrat should subscribe. I trust, therefore, that honorable senators will see the reasonableness of my amendment, and, while we are committed to exempt the war loan of £20,000,000 from State and Federal income tax, we should not, on any consideration, exempt future loans.
– I appeal to the Committee to reject the amendment. Though it differs in words from the amendment which the Committee has just rejected, the principle behind it is very similar. The honorable senator proposes by the amendment to say that we shall take away some of the concessions offered in connexion with the floating of the first Commonwealth loan, when it becomes necessary to float another loan. If it does not mean that, the amendment means nothing. I wish that the authorities of the Treasury knew what the conditions of Australia will be when we are calling for a second loan in connexion with the conduct of the war. None of us knows what the conditions will then be, yet Senator Mullan is here proposing to lay down the terms of the next loan.
– No; it is the Government who are laying down the conditions in this Bill.
– Certainly not. We have made provision for the conduct of the war for a number of months, and we should leave it to the wisdom of Parliament to decide what shall be the conditions of the second war loan. Senator Mullan has been talking of Democracy all the time, but he is about the most timid Democrat I have ever heard of. He is afraid to trust the Parliament of the future. Senator Stewart has indorsed the honorable senator’s remarks. But when I have heard these honorable senators “mouthing” Democracy outside this chamber, they have always urged the people not to put Parliament in shackles. They have said, “ Trust the Parliament.” We hope that all honorable senators present will be here when, in a few months’ time, the next War Loan Bill is submitted. And I am quite sure that if Senators Millen, Mullan, Stewart, and a few others then desire to get behind the provisions of this Bill, neither the Government nor the Standing Orders will prevent them.
– The honorable senator will “ diddle “ us, as he has done on the present occasion. We have his measure now, and the measure of the crowd with him.
– I remind Senator Stewart that we shall have a few months’ preparation before being called upon to consider the next Loan Bill. I know that some honorable senators are opposed to the exemption of interest on these loans from income tax, but I remind them that we have amended the Inscribed Stock Act by providing for interest at a rate exceeding 3^ per cent., and they will be able to consider the next loan proposal on its merits. Generally speaking, the State Parliaments exempt their loans from income tax. I hope that, so far from there being competition between the States and the Commonwealth in the matter of raising money, there will be closer cooperation; but the security of the different States is so good now that if they went to the money market and offered 5* per cent, for a loan, plus exemption of the interest from State income tax, the Commonwealth would probably have to give equally liberal terms to raise a Commonwealth loan.
– The amendment applies the other way round also.
– I hope that shortly there will be such co-operation between the Commonwealth and State Governments that such a state of things as competition of this kind between them will be impossible. If the politicians have not sufficient sense to bring about such a co-operation, I hope that the people will be strong enough to force them to do so. The amendment can really effect nothing.
– The Minister thinks that we should not take the hurdle until we get to it.
– Yes; it is of no use to try to anticipate the future. Let us have the present Bill, and the Government will be pleased to listen to any suggestions which honorable senators have to make regarding any future loan. If they can show us a cheaper way of getting money for the conduct of the war, we shall be glad to admit that they are the men we want.
– The Committee can very well support this amendment, because by doing so we shall be in no way interfer ing with the present war loan. Those of us who have been supporting the Government up to the present time have done so in order to insure the success of the present loan. The failure of the present loan might bring) about a financial crisis in the affairs of the Commonwealth, and, in order to avoid that, we have taken certain measures to secure its success. I believe that we have been extremely liberal in the terms we have offered to the money-lenders-, but I am not prepared to lay down the precedent for all time that the money-lending class shall be exempt from all taxation. If we embody that principle in this Bill we shall find it very . difficult to alter it later on. If we do not embody that principle, we shall be able to deal with the next loanproposal on its merits. Senator Russell says that it is time enough to take the* fence when we get to it, but I apply that to the amendment, and say that when another loan is required it will be time enough for us to lay down the conditions of that loan. It would be a mistake for us at this stage to agree to a provision in this Bill which will require to be altered later on. Having done all that is necessary to insure the success of the present loan, and in view of the fact that the amendment cannot affect it in any way, I hope that the Government will be. satisfied with what they have achieved,, and will accept the amendment.
– I should like to know whether the amendment is in order. Can we embody in this Bill a provision not affecting the measure we are now discussing, but some Bill which will come before us later on ? We are now discussing a Bill which has particular application to the War Loan Bill, which was passed by the Senate, and I should like to know whether we can insert in this Bill an amendment which will have a direct bearing, not upon the War Loan Bill we have carried, but upon Bills which may be introduced later on, and of which we have no cognisance at the present time.
– That was the position we were in when the War Loan Bill was before us.
– No; when the WarLoan Bill was introduced the Minister stated that, although it contained no details as to the terms of the loan, the Government were committed to certain terms set out in the loan prospectus which was issued. Whether my point of order be sustained or not, I want to remind -honorable senators that the argument is advanced that we have offered special concessions in connexion with the first war loan in order to insure its success. Nothing succeeds like success, and if there is anything in that argument, it is strange that honorable senators should propose, in order that we may do as well in the future as we shall do in connexion with the present war loan, that we should make the terms less advantageous than those which we have offered in connexion with the present loan. Having made a success of the present loan, honorable senators would change the conditions which led to that success. I urged, in discussing a previous amendment, that we should begin on sound lines, and then we should not be liable to make mistakes.
– Under standing order 201, any amendment may be moved to any part of a Bill provided that it is relevant to the subject-matter of the Bill. I must come to the conclusion that the amendment proposed is relevant to the subject-matter of this Bill. The War Loan Bill, when brought before the Senate, was introduced subject to the provisions of the Inscribed Stock Act of 1911-15, of which the Bill we are now discussing will form part. I therefore hold that the amendment is quite relevant. As the amendment will become, if passed, a part of the clause, perhaps Senator’ Mullan will agree to make it read, “ provided that this section shall only apply,” and bo on.
– I am prepared to do so, with the concurrence of the Committee.
Amendment amended accordingly.
– I raised my point of order for the guidance of the Committee on such an amendment as Senator Mullan has submitted. The view expressed by the honorable senator in submitting his amendment is the view which I expressed earlier in the sitting. I said that it was a mistake to offer these facilities in the first place, but, having offered them, and being of the opinion that further loans will later on have to be floated, I ask myself whether it is wise to carry the amendment in its pre- ‘ sent form. The whirligig of time marks many changes, and if it should be necessary, as in all human probability it will be before long, to float another loan, different circumstances may then exist. When we are faced with that necessity I shall not be slow to express my opinion of any proposal for exempting any section of the community from taxation.
– The honorable senator may not have an opportunity.
– I shall have an opportunity, or I shall want to know the reason why.
– The Bill is before the honorable senator now.
– But to what will the Bill commit us? If the amendment be carried, the measure will be sent back to another place, and will afterwards be returned to this Chamber.
– That is no argument against the amendment.
– I am aware of that; but I know what will happen to it.
– The honorable senator should let us into his anticipations.
– Because I believe that I shall have an opportunity of discussing future war loans in all their aspects, I am not prepared to support the amendment. If we are not to exempt investors in future loans from taxation, it may be necessary to offer a higher rate of interest. I do not like to differentiate between the investors in our first war loan and subscribers to subsequent loans. Why should we discriminate between them?
– Only because we are keen upon getting them.
– Am I to understand that we shall not be keen upon getting subscribers to our second war loan?
– We shall have an idea of our resources then.
– If we are fully seized of all the circumstances in connexion with the present loan, and if those circumstances will guide us in respect of future loans, we shall then be able to proceed on definite lines.
– Our first war loan is largely of an experimental character.
– It is such a good experiment that the people are tumbling over each other to get into it.
– How does the honorable senator know that?
– The man in the street knows it. Is there any better investment offering in any part of the world ?.
– We have had no statement as to what measure of success is attending the flotation of the loan.
– No better investment has been offered in Australia. The interest payable under the loan is equivalent to more than 5 per cent. When a man can gee that rate of interest on a gilt-edged security, he is on solid ground. The principle embodied in the amendment is a sound one. I regret that the views expressed by Senator Mullan and others have not been more seriously entertained. But, satisfied as 1 am that 1 shall have an opportunity of exhaustively dealing with future war loans, I am not prepared to support the amendment.
– I understand that the amendment has been put forward on the plea that, by its insertion, we shall prevent the flotation of future loans upon the conditions set out in this Bill. If we are going to adopt the course advocated by Senator Mullan, we should have adopted it earlier in our proceedings by determining that, in connexion with future war loans, subscribers shall not get the same rate of interest.
– We have not dealt with the question of interest.
– We have struck out a limitation. Why should we make that deletion apply only to this war loan ? I think that this debate should impress upon Ministers the desirableness of affording Parliament an opportunity of discussing the conditions under which they intend to float loans in future before making any public declaration in respect of them. The Government by their responsible Ministers have largely tied the hands of this Parliament.
– The honorable senator will admit that there were special reasons for that
– It is because of this circumstance that I will take no part in altering the terms and conditions which have already been announced as attaching to our first war loan. But it is desirable that Parliament should be afforded an opportunity of discussing the conditions under which future loans are to be floated before they are placed on the public market. If that course be adopted, some good will have been achieved by this debate.
– Senator Millen has stated that if we intend to apply the principle that is involved in my amendment we should have applied it to the question of interest. I wish to point out to him that we have merely altered the Inscribed Stock Act in a way that will enable the Governor-General in Council either to lower or raise the rate of interest.
– And Parliament cannot regulate the interest.
– No, because it fluctuates. Senator Millen also stated that the hands of this Parliament have been tied by Ministers. Our hands may have been tied to some extent in regard to our war loan of £20,000,000, but they have not been tied in respect of future war loans. My amendment applies to future loans. The Leader of the Opposition is not satisfied with having his hands tied in regard to our first war lean - he desires them to be tied in respect to all future loans. Throughout the evening the Assistant Minister has been constantly harping on the necessity which exists for making our first war loan a success. Now, if there is one thing more than another which would contribute to its success, it is the adoption of my amendment. If that amendment be carried, it will be an intimation to the capitalists of Australia that if they wish to participate in the higher rate of interest payable under this loan, now is their opportunity. Consequently I am entitled to claim the vote of the Assistant Minister on that ground ?
– The capitalists may get better terms later on.
– They will not get better terms if I can help it. They are getting more than a fair deal now, and it is about time that we reconsidered our position in that regard. The Assistant Minister has said that Parliament may be trusted to do its work in nine months’ time. My reply is that it should be trusted to do its work now. Ministries come and go, and the Government of today may not be the Government of tomorrow. We ought, therefore, to do what we think is right regardless of what may happen six or nine months hence. How can we trust Parliament to do the right tiling in twelve months7 time if it will not do the right thing now 1
– It is doing the right thing now.
– It is insuring to the capitalistic class large profits. Where is the equality of sacrifice in connexion with this war? The gentlemen whom Senator Bakhap represents are making huge profits, but the masses are making huge sacrifices. The masses of the people will be burdened with debt for all time as the result of the war. I hope that the Assistant Minister will accept my amendment.
Question - That the words proposed to be inserted be inserted - put. The Committee divided.
Majority . . . . 13
Question so resolvedin the negative.
Clause agreed to.
Title agreed to.
Bill reported without amendment.
Bill (on motion by Senator Stewart) recommitted for the reconsideration of proposed new section 52c of clause 5.
In Committee (Recommittal) :
Clause 5 - 52c. Stock may be accepted at par, and Treasury-bonds may be accepted at their face value, in payment of estate duty payable under any law of the Commonwealth.
– I take exception to, and shall vote against, this further concession to the bond-holder. If the stock appreciates, the administrators of a deceased estate will sell it, and pay the probate duty in cash, but if it depreciates to £90 they can hand the stock into the Treasury and be credited with £100 for every £90 worth. It is a case of “ heads I win, tails you lose,” the Government losing all the time. If the Commonwealth is to recognise the principle of buying in stock before it matures, it should follow the practice of every other Government, and buy it at its market, and not its face, value. There is no reason why the Commonwealth should make another huge concession to capitalists, because that is all that this proposal is.
– It is in the prospectus. Are you going back on it?
– I never sanctioned its inclusion in the prospectus, and I do not think the honorable senator did.
– I am aware of my responsibility, and am quite prepared to vote against giving the capitalist any such concession. It would pay executors to buy stock at £90 and exchange it at par. Some State stocks are at £90 now, and one is at £89, while British Consols are down to £57. I know the interest on Consols is low, but if we subsequently issued stock at a higher rate this stock would be apt to depreciate.
-I would like to remind Senator Mullan,’ and those who think with him, that this is another case in which our hands are tied by the prospectus, and further, I would point out that his argument is not quite as annealing when we come to look round it. It is not going to be such a great advantage to the capitalist, as the smallest man in the community who is liable to State probate duty will also enjoy this concession. In the case of an estate liable to duty, executors will be able to go into the open market to buy bonds if they have depreciated. Therefore this concession, so far as it is one, is a concession to everybody who may have to pay probate duty. It is distributed over a very wide area. If this were the last loan to be floated we might be a little indifferent, but every one knows that this is our initial effort, and if it should happen that this loan, after being floated, were sold at a discount, what are we going to do with the next loan? If people could buy this at £90 or £95, they would not pay £100 for another loan issued on the same terms and conditions. There is a distinct advantage in the Government endeavouring to support the value of their own bonds. This proposal will tend to maintain that value, and therefore it is desirable that it should be left in the Bill.
– As there is a desire on the part of some honorable senators to have this matter tested, I will move -
That after the word “ Stock “ the words “ may be accepted at par “ be struck out, and that the word “ face “ be struck out, and the word “market” inserted in lieu thereof.
The section will then read -
Stock and Treasury bonds may be accepted at their market value in payment of a State duty payable under any law of the Commonwealth.
– Who is going to determine the market value?
– That is a matter which the Government may arrange by regulation, and I have no doubt that the honorable senator, as a lawyer, could do it much better than I could.
– You had better strike out the section.
– It. would be meaningless as amended.
– I am hoping thatsome honorable senators who take a more moderate view will accept the amendment. Originally it was thought that there might be big estates liable to probate duty, and if this provision were not in the Bill it might be inconvenient forthe executors to throw such estates upon the market, in order to meet the demands for probate duty. Therefore it was considered convenient to arrange that payment could be made in Governmentstock. What I take exception to is the possibility that the Government may give more than the market rate for its own stock, and by so doing give the capitalist a bonus. I do not see any good reason why, if the stock should become depreciated, the Commonwealth should lose by the transaction, and thus make a concession to bond-holders of anything from £10,000 upwards a year in addition to the other privileges. I hope, therefore, that the amendment will be accepted.
.- I trust the Committee will reject Senator Mullan’s amendment. There seems to be an idea that the Government have gone out of their way to give an advantage to the capitalist; but that is not the position at all. We wanted money to conduct the war, and we recognised that, apart from the money that might be floating about, we might be able to make a business arrangement with those who anticipated within reasonable time being called upon to pay estate duty. Now, when these men come to us they give us £100 for every £100 bond, and we will give them i per cent, on it, with the added condition that we will accept the stock in paymentof estate duty. We expect a good number of estates to pay duty during the next ten years. I do not think any great financial advantage is offered to those people, but we have endeavoured to offer them a fair and reasonable return in consideration of their advancing us money to help the country in its hour of need. I trust that Senator Mullan will not press his amendment.
– I have looked up the prospectus, and I find that those who have already subscribed to the loan have been invited to do so on the express condition that an. estate duty may be paid in stock or Treasury bonds. If we were to alter the Bill now, we would -be breaking faith with those who have already taken up a portion of the loan, and I am not prepared to go so far. I realize that under the proposal the subscribers to the loan will have “three advantages. They will be relieved of stamp duty and income tax, and, in the case of estate duty, may obtain a discount in the event of a depreciation of the stock. In view of the fact that we have entered into this bargain with some persons who have already subscribed to the loan, I feel we would be breaking faith with them if we altered the Bill.
– I cannot understand the position taken up by Senator Mullan. Some time ago he moved an amendment because the Bill, he said, went outside the conditions that were laid down in the prospectus, and now we are asked to amend a section in which it is distinctly stated that the bonds or inscribed stock will be accepted at par in payment of succession duties due to the Commonwealth, and that statement has been embodied in the prospectus. In the discussion of this and other finance measures, I have taken up the stand that, as I knew practically what was to be in the prospectus before it was issued, and was a consenting party to it, I would not do anything or give any vote that would have the effect of going back upon the arrangement
– Because I was not supported by a majority on a former occasion, something has been put into the Bill to which I object. Let me give an illustration of what the clause in its present form will mean. If a man invests £100,000 in the war loan, and on his death the probate duty on his estate is 10 per cent., his executors will have to pay £10.. 000 to the Commonwealth. But suppose that in the testator’s lifetime the stock has depreciated to £90. The executors will hand in to the Treasury £9,000 worth of stock, and the provision will thus make a present of £1,000 of the taxpayers’ money to the beneficiaries. It is all very well for the Assistant Minister to ask why we should not redeem the stock at its face value, seeing that the Commonwealth received £100 for the certificate. But how is a poor man to be treated ? Suppose that a poor man took up £100 worth of Savings Bank stock, and that at the end of two years when the stock had depreciated to £90 he went to the Treasury and asked £100 for it, would the Treasurer accept his plea that he was in a bad way; that he gave £100 for the stock, and therefore should receive that amount for it? No. The Treasurer would say to the poor man, “ You will have to wait for the arrival of the date of maturity to get the face value of your stock.” But the successors of a wealthy man who had invested £100.000 in the war loan would receive a concession of £1,000. That is the equality of sacrifice which the capitalists of Australia are making. I think that this question is of sufficient importance to be treated on its merits.
– I am treating it on the prospectus.
– I do not feel that I am committed to a prospectus which speaks of face value as against market value. The only difference between my honorable friend and myself is that he desires the beneficiaries in a huge estate to get the face value after the stock has depreciated, whereas I want them to getonly the market value.
– We do not deal with the stock, but with the £100 which has been paid to the Commonwealth.
– In the case of the rich man, what the Minister should be concerned about is that the Treasurer should get £10,000 in probate duty, and not accept stock with a realizable value of only £9,000.
– Do you not realize that before the rich man got the stock we received from him solid cash in advance ?
– My difficulty is to get the Assistant Minister to realize what is the right thing to do towards the Commonwealth and the taxpayers. In other words, what is just to the poor man. A man who buys £100,000 worth of the stock will receive 4£ per cent, interest, which will be exempt from income tax, and the stock will be exempt from stamp duty. His £100,000 will be beyond the reach of the Commonwealth altogether. But, not content with absolving him from making any sacrifice for the- country, we are proposing to exempt his estate from legitimate taxation.
– If the stock had depreciated to £90, the estate would have depreciated to £90,000.
– That does not vitiate my argument in the slightest degree.
– But the £100,000 paid to the Commonwealth for bonds would not have depreciated.
– The Commonwealth would pay £100,000 for the bonds when nobody else would give that sum for them:
– That does not trouble us. We shall have received our money.
– Why not give every other man a similar privilege when he is short of cash ? The Minister erroneously supposes that every man who buys stock will retain it till his death. The man to whom the Government will be giving £100 for bonds may have bought them at £90. I hope the Minister will review the situation.
– I congratulate Senator Mullan on his pertinacity and courage in pursuing this subject so far, especially when Senator Lynch, who raised the issue, has abandoned it and given good and solid reasons for so doing. He has pointed out that the loan money already advanced to the Commonwealth by investors was advanced upon this condition, which was offered to the investors by the Government - a condition which Senator Mullan now asks us to modify or dispense with. In effect, his amendment means nothing more nor less than repudiation in regard to every £1 advanced to the Commonwealth by investors since the loan was floated. Senator Mullan has been at great pains to point out that it is quite possible that a £100 bond, when tendered to the Government in payment of probate or succession duties, may be worth in the market only £90. Therefore, he argues the Government ought to take the bond at £90, and he professes to be quite concerned at the prospect of the Treasurer accepting the bond at its face value of £100 when nobody else in the community would do so. Does the honorable senator not realize that the Government are in a totally different position from any body else? For that £100 certificate the Government will have received £100 in cash, but the person who would buy it for £90 would not have received £100 for it previously. Moreover, -when the Government receive back the £100 certificate, their indebtedness is reduced by that amount. The purchaser of the bond in the open market does not have his indebtedness reduced by £100. He merely gives £90 for a bond for which somebody else gave £100.
– If these bonds are accepted by the Government in payment of probate duty, what is to become of them ? In the redemption fund provisions of the existing Inscribed Stock Act it is provided that the Government may with sums available from that fund purchase their own bonds. I desire to know what is to be done with the bonds? Are they to be destroyed and cancelled, or is the Treasurer to pay interest to himself as the holder of the bonds?
– What would you do ?
– I should destroy the bond. If I had my way that silly sinking fund provision would be deleted entirely. A sinking fund is a fallacy in a country that continues to borrow. My point, however, is that we are passing this provision without any stipulation as to what is to be done with the bond when the Government receives it back ; we do not say whether the Treasurer shall destroy the bond, and reduce the amount of the loan to the extent of its value, or hold it, as a private individual would, and receive interest for it.
– I should say that the bond would be cancelled.
– It ought to be cancelled ; but there is no provision to that effect. There should be a provision that immediately the bond is received by the Treasurer it should be cancelled, and struck off the register. The only clause which I can see dealing with this matter is the provision which gives the Government power to re-sell the bond which it has purchased. I do not like that procedure, and I regret very much the absence of a provision requiring that, when the bonds have been redeemed by the Treasurer, they shall be cancelled. There should be no trafficking in bonds by the Treasurer in order to raise further sums of money. If more money is required, he should float another loan. Senator Keating seemed to draw some comfort from the fact that the Treasurer, having received £100 bond, would have his indebtedness reduced by that amount. But if the bond were quoted at £90, the Treasurer could buy that £100 bond for £90, and be £10 to the good. As a financial expedient Senator Keating’s proposal is just 10 per cent, to the bad. Senator Mullan’s fallacy seems to be in assuming that the men who are to pay these bonds to the Treasurer are the original purchasers.
– Not necessarily.
– If ever these bonds become depreciated all probate duty will be paid with them. There does seem to be a considerable gain in the Government maintaining the value of its own bonds.
– If those bonds and scrip are paid in in five years for succession duty, the Government will save the interest on them accordingly.
– My honorable friend says so, and it appears to be quite a simple proposition; but if this £20,000,000 comes back to the Treasury in five years’ time, that will mean that we shall then be £20,000,000 short, and shall have to resort to additional taxation or to float other loans to meet our liabilities. I understand that the estimate of the probate duties for the year is £1,000,000. The currency of the loan is ten years. If it depreciates, and I do not think it will, to the extent of 1 per cent., we shall have the probate duties paid solely in loan scrip. That will mean that during the currency of the loan £10,000,000 will come back to the Treasury in the shape of succession duties. We are invited to believe that during the currency of the loan, £10,000,000, or one-half the total amount of the loan, will be removed from the market. Unless the credit of the country is going absolutely to the wall. I refuse to believe that a Commonwealth loan of £20,000,000 is going to depreciate to such an extent that one-half of it will be redeemed at a discount.
– It will be a bad look-out for Australia if we get into that position.
– I agree with the honorable senator ; and if the loan is to depreciate to that extent, heaven help us when we try to float another loan.
Proposed new section 52c agreed to.
Bill again reported, without amendment; report adopted.
Bill read a third time.
Bill presented by Senator Russell, and read a first time.
Motion (by Senator Pearce) proposed -
That the Senate do now adjourn.
Senator Lt.-Colonel O’LOGHLIN (South Australia) [10.36].- I wish to occupy the attention of the Senate for but a few minutes to refer to a matter which was discussed here last week : the provision made for the outfit of nurses going to the front. In answer to a question put by Senator Keating, the Minister of Defence gave a list of requirements stated to be necessary for nurses going to the front to attend the wounded. I venture to say, either that the Minister was misinformed with regard to the requirements necessary, or military officers in some of the States, and notably in South Australia, have a different idea of those requirements.
– When was that list issued ?
-Colonel O’LOGHLIN.- I cannot give the date, hut it has been sent to me as the official list supplied by the military authorities in Adelaide to nurses going to the front from that place. The Minister of Defence has given attention to the matter, and has made provision for an advance of £6 upon the amount originally paid for the outfit of nurses. I may tell honorable senators that the list I have quoted has been carefully checked, and the cost of providing these requirements would amount to £42. I think that the nurses should be treated in the same way as the soldiers, and that requirements which it is necessary they should take with them should be supplied to them.
– Surely nurses should themselves be good judges of what is required. The Nurses Association have told me that they are satisfied with the list I have adopted.
-Colonel O’LOGHLIN. - I ca.n vouch for the list which I have quoted, because it has been supplied to me by a person in whom I have every confidence, who has a daughter a nurse, and who, in a letter I have here, vouches for the accuracy of every item in the list. With the wages they receive, and the expenses they are paid, the nurses are not as well off as the boys who act as their orderlies, and who need to have no training or experience at all.
– Yes, they do; that statement is quite incorrect.
Senator MILLEN (New South Wales)
I should like to remind the Minister of Defence that he promised some time ago that inquiries would be made as to the origin of a circular sent out to nurses, whose services had been accepted for the front, directing them to apply to particular firms for their outfit. I should like to know if the Minister was successful in the inquiries that were to be made. I should like to say, further, with regard to the nurses’ outfit, that it is rather difficult to determine what is a fair allowance to make. The Minister recently fixed the amount at £21, and now Senator O’Loghlin, speaking evidently after some consultation with authorities, says that the articles required amount in value to £40 odd. When the war first broke out I consulted the DirectorGeneral of Medical Services, who told me he had spoken to one of the most experienced matrons in one of our big hospitals, and on her advice and his I originally fixed the figure at £15. Something may have been overlooked; but it proves how difficult it is to determine what, on the face of it, appears a very simple problem.
-Colonel O’loghlin. - Why not supply what is required ?
– Many things in the list read by the honorable senator are supplied.
– The Minister has to fix some limit - there must bs some standard.
– Why not say that certain things are required, and provide for them?
– So we have.
– I am surprised at the statement of Senator O’Loghlin that so large a sum is necessary. I concluded from what I heard in Sydney that the increase to £21 was regarded as very reasonable, with the intimation in the circular that the nurses were free to get the goods where they liked, and make them if they could, instead of being compelled to pay prices they regard as excessive.
.- If the list read by Senator O’Loghlin has been circulated by military authorities in South Australia since I introduced the amended schedule, it is not only without authority, but in defiance of authority. It contains a large number of things that the nurses do not require.
– I could not say what is the ‘date of its issue.
– The nurses do not require to provide sheets, pillowslips, cutlery, and so forth, because all these are supplied to them, and the list, if it has been issued recently, is misleading. Ab regards the list that has been adopted, the additional articles were put in after consultation with the Nurses Association in Melbourne, the members of which expressed their satisfaction with it; and, therefore, I think it ought to be taken as meeting their wishes. I have given instructions that inquiries shall be made as to how the list referred to by Senator Millen came to be issued in Sydney, but I have hot yet received a report on the subject.
Question resolved in the affirmative.
Senate adjourned . at 10.44 p.m.
Cite as: Australia, Senate, Debates, 12 August 1915, viewed 22 October 2017, <http://historichansard.net/senate/1915/19150812_senate_6_78/>.