Senate
29 May 1918

7th Parliament · 2nd Session



ThePresident (Senator the Hon. T. Givens) took the chair at 3 p.m., and read prayers.

page 5140

QUESTION

ECONOMIC CONSCRIPTION

Employment at Henderson Naval Base.

Senator NEEDHAM:
WESTERN AUSTRALIA

– I ask the Minister representing the Minister for Works and Railways whether men seeking employment at the Henderson Naval Base, Cockburn Sound, Fremantle, have to produced rejection badge before employment is given them?

Senator RUSSELL:
Vice-President of the Executive Council · VICTORIA · NAT

– Following on the reply given to the honorable senator’s question, No 3, on Thursday last, I now inform the honorable senator that men of military age, when seeking employment on the Henderson Naval Base, Cockburn Sound, Fremantle, are not askedto produce their rejection badge before obtaining employment.

page 5140

PAPERS

The following papers were presented: -

Defence Act 1903-1917.- Regulations amended. Statutory Rules 1918, Nos. 110, 113. 114, 115, 117, 119, 120, 121, 122, 123, 124, 125.

Northern Territory. - Ordinance No. 8 of 1918- Liquor (No. 2).

Public Service Act 1902-1916. - Promotions -

R. Sinclair, A. B. Cooney, and H. L. Ferns, Department of Defence.

W. Soutar, Department of Trade and Customs.

page 5140

ASSENT TO BILLS

Assent to the following Bills reported : -

Lands Acquisition (Defence) Bill.

Loans Sinking Fund Bill.

Inscribed Stock Bill.

page 5140

QUESTION

SOLDIERS’ EDUCATIONAL BUREAU, BRISBANE

Senator FOLL:
QUEENSLAND

– I ask the Minister for Repatriation whether he has decided upon any action in connexion with the trouble which recently occurred at the Soldiers’ Educational Bureau in Brisbane ?

Senator MILLEN:
Minister for Repatriation · NEW SOUTH WALES · NAT

– I understand that the institution referred to has been closed by the State Minister for Education, and 1 have asked for a report from the State Repatriation Board as to whether there are any difficulties in the way of the institution being taken over and conducted by the Repatriation Department.

page 5140

QUESTION

FINANCIAL MEASURES

Power of Disallowance

Senator LONG:
TASMANIA

– I ask the Leader of the Senate if he will be good enough to give honorable senators some information in respect to the following paragraph which appeared in the Commonwealth Gazette of 23rd May: -

Prime Minister’s Department,

Melbourne.

His Excellency the Governor-General directs it to be notified that the Right Honorable the Secretary of State for the Colonies has intimated that His Majesty will not be advised to exercise hia power of disallowance with respect to the undermentioned Act of the Parliament of the Commonwealth of Australia:-

No. 1 of 1918- An Act to grant and apply a sum out of the Consolidated Revenue Fund for the service of the year ending 30th day of June, 1918.

  1. A. Watt,

Acting Prime Minister.

Is it customary to have financial measures passed by the Commonwealth Parliament sent to the Colonial Office for ratification 9

Senator MILLEN:
NAT

– I am unable to give the honorable senator any information on the point myself. I am not in the habit of spending very much time in perusing the columns of the Commonwealth Gazette. If he will give me an opportunity of doing so, I shall endeavour to obtaiin the information for him later in the week.

page 5140

QUESTION

PARLIAMENTARY RECRUITING COMMITTEE

Senator FOLL:

– I ask the Minister for Defence whether the Government have decided to disband the Parliamentary Recruiting Committee appointed about twelve months ago. If so, why? And if the Committee is not to be disbanded, why has it not met during the last three or four months?

Senator PEARCE:
Minister for Defence · WESTERN AUSTRALIA · NAT

– I think the facts of the case are that the new recruiting scheme announced by the Government some time ago provided for a new system of organization, in which there was no place for the then existing Parliamentary

Recruiting Committee, and therefore the Committee lapsed.

Senator O’KEEFE:
TASMANIA

– Arising out of the Minister’s reply, I would ask him whether it is not customary, in a case of the kind, to acquaint the members of the Committee concerned with the fact that their services are no longer required ? Does the Minister not think that there was rather a lack of courtesy in not telling the members of the Committee that some new arrangement was to take the place of that under which they were appointed, and that the Committee was therefore disbanded ? As a member of the Committee, 1 knew nothing about the matter.

Senator PEARCE:

– If there was any discourtesy, I assure the honorable senator that it was not intentional.

page 5141

QUESTION

VISIT OF THE PRINCE OF WALES TO HIS HOLINESS THE POPE

Senator LONG:

– I ask the Leader of the Senate (Senator Millen) whether he noticed a cablegram in this morning’s newspapers stating that His Royal Highness the Prince of Wales has paid a visit to His Holiness the Pope; and if, as a result, the Minister anticipates any trouble in the Win-the-war party?

page 5141

QUESTION

WHEAT FREIGHTS

Senator McDOUGALL:
for Senator Gardiner

asked the Vice-President of the Executive Council, upon notice -

  1. What was the cost of carrying wheat from Australia to San Francisco -

    1. in 1914, by privately-owned vessels.
    2. in 1916, by privately-owned vessels,
    3. in 1917, by Commonwealth vessels.
    4. in 1918, by Commonwealth vessels?
  2. What was the cost of carrying wheat from Australia to Great Britain -

    1. in 1914, by privately-owned vessels.
    2. in 1916, by privately-owned vessels.
    3. in 1917, by Commonwealth vessels.
    4. in 1918, by Commonwealth vessels?
Senator RUSSELL:

– The answers are - 1. (a) No shipment.

  1. No shipment.
  2. 90s. to 95s.
  3. No shipment. 2. (a) 19s. 6d. to 32s. 6d.
  4. 85s. to 130s.
  5. 122s. 6d. (France - no shipments to Great Britain.)
  6. 150s.

page 5141

UNLAWFUL ASSOCIATIONS ACT

Detention of Offenders

  1. Is it a fact that men who have been imprisoned under the Unlawful Associations Act are still detained, although they have served the full term of their sentences?
  2. If so, will the Government see that those men are immediately released or put on their trial if any further charges are made against them?
Senator MILLEN:
NAT

– The answer is - 1 and 2. All persons at present in custody who have been convicted of offences against the Unlawful Associations Act are being detained by full authority of law.

page 5141

COMMITTEE OF PUBLIC ACCOUNTS

Motion (by Senator Millen) agreed to-

That, in accordance with the provisions of the Committee of Public Accounts Act 1913, Senator Crawford be appointed a member of the Joint Committee of Public Accounts in place of Senator Fairbairn, discharged from attendance as a member of such Committee.

page 5141

ACTS INTERPRETATION BILL

Bill read a third time.

page 5141

INCOME TAX ASSESSMENT BILL

In Committee (Consideration resumed from 24th May, vide page 5108) :

Clause 2 -

Section three of the principal Act is amended -

by omitting the definition of “Income” and inserting in its stead the following definition: - “ ‘ Income ‘ includes -

interest upon money secured by mortgage of any property in Australia ; and

in the case of a co-operative company or society, all sums received from members in payment for commodities supplied . . . to them or received in respect of commodities . . sold by the company or society whether on its own account or on. account of its members.”

by inserting in the definition . of “ Income from personal exertion,” after the word “derived” the words “ from sources.”

by inserting at the end thereof the following definition: - “Value” in relation to live stock means the value as prescribed.

Section proposed to be amended - “Income” includes interest upon money secured by mortgage of any property in Australia. “ Income from personal exertion “ or “ income derived by amy person from personal exertion “ means imcome derived in Australia consisting of earnings, salary, wages, commission, fees, bonuses, pensions, superannuation allowances, retiring allowances and gratuities not paid in a lump sum, allowances received in the capacity of employee, and the proceeds of any business carried on by the taxpayer either alone or as a partner with any other person. “ Income from property “ or “ income derived from property “ means all income derived in Australia and not derived from personal exertion. “ Partners “ includes persons who are in receipt of income jointly.

Debate resumed on amendment by Senator Pratten -

That the following words be added to subparagraph (b) of paragraph (e) : - “ This section shall not apply to any co-operative mutual society trading exclusively with and returning its profits to its members.”

Senator FOLL:
Queensland

.- I find by investigations since Friday last, and after arriving at the true meaning of the word “trading,” that Senator Pratten’s amendment, if carried, will mean that every butter factory, cheese factory, and co-operative sugar mill in Queensland will not be exempted, while they should he. I therefore propose to vote against the amendment. When the War-time Profits Bill was under discussion exemptions were granted to every firm or institution that liked to tack on to its name the word “ co-operative.” There exists in Queensland,and I take it in other places, grocers’ shops which are called cooperative establishments, although they are very little different from an ordinary joint stock company, inasmuch as they trade with anybody, whether he is a member of the concern or not. If these firms are to be continually exempted from every form of taxation proposed by the Government, it will be quite impossible for small grocers or other small concerns in a similar line of business to compete with them. They have already been exempted from one class of taxation, but, apparently, it is not the intention to exempt them still further. In discussing the definition of “ Value “ on Friday, Senator Senior made certain suggestions to the Government, which I sincerely trust will not be accepted. He made comparisons between cattle and sugar, and between sheep and barometers. When an honorable senator makes comparisons of that sort I can come only to the one conclusion, that he knows very little about stock values and the way they fluctuate. Senator Senior’s suggestion cannot possibly be accepted, because in Queensland, at any rate, the value of the stock on one station may be entirely different from that on an adjoining station. If a good rainfall is experienced in one part of Queensland, and a few miles away they are having a dry time, it will be impossible to put the same value on all the stock according to the local sales, as Senator Senior proposed.

Senator PRATTEN:
New South Wales

– We have not heard from the Minister with regard to this clause.

Senator Millen:

-I spoke several times on Friday..

Senator PRATTEN:

– I thought some attempt would have been made to define the position of co-operative societies. The object of my amendment was to relieve truly co-operative societies from taxation under this Bill. It has been pointed out in the course of the debate that there is very little true co-operation in Australia; that co-operative societies have gradually developed into largely trading concerns, and have come into active competition throughout the length of Australia with businesses controlled by private enterprise. It is not the intention of my amendment, neither would it be fair and reasonable, to exempt such societies. True co-operation as it emanated from Rochdale, is the banding together of a body of consumers in order to cut out the profits of the middleman and cheapen the price of commodities to themselves. My amendment, as is generally acknowledged, will not have very far-reaching effect just now. Even if it is carried, it will not affect the revenue, because in the case of truly co-operative institutions which distribute their profit by way of bonus to their members, any savings effected by the members will be included in their individual assessments.

Senator de Largie:

– So your amendment is not loaded.

Senator PRATTEN:

– I moved it merely with the object of encouraging and promoting the spirit of true cooperation, which we glibly talk about in connexion with the future development of Australia.

Senator Millen:

– How can the amendment benefit any taxpayer unless it penalizes the revenue?

Senator de Largie:

– It is only so much pretence.

Senator PRATTEN:

– It is not. I do not like the ill-informed interjections of my honorable friend. I have laid down the principle that true co-operation is the banding together of a body of people in order to eliminate the middleman’s profits, and if honorable senators have been following me closely, they will remember that I pointed out that any savings made by members of co-operative societies would ultimately be a benefit to the revenue, because such savings would be added to the individual assessments of income taxpayers. The amendment has many advantages; and looking forward, as I do, to the development of this principle in Australia, I hope it will be agreed to.

Senator FAIRBAIRN:
Victoria

– I am sorry that I cannot agree with Senator Pratten, although I am as much in favour of co-operation as anybody. My conception of true cooperation is a society which makes no profits at all, but which carries on business at such low prices to its members as will merely cover the cost of distribution. When co-operative societies start to make profits they immediately clash with the ordinary traders. If we want to hold the scales evenly between man and man - and this is what we ought to do - we should treat co-operative companies in exactly the same manner as we treat a man who conducts any business. Are we to lay down the principle that a small grocer is to be taxed because he makes a profit, while a big co-operative society shall escape scot-free? I cannot understand any advocacy of that practice. Directly we get away from the basic principle of co-operation, co-operative societies are in just the same position as the ordinary traders. There are plenty of such societies throughout Australia. Aa a rule they fall into the hands of a few rich shareholders, and they are cutting out the small traders all over the country. I am entirely in favour of co-operation on proper lines, but I cannot see that we will be doing any good by exempting cooperative societies from taxation under this measure.

Senator SENIOR:
South Australia

– I have strong objections to the clause. If a co-operative society acts as agent for the sale of stock belonging to its members, that income is to be taxable, although the society might not have made any direct monetary benefit from the transaction at all.

Senator Pratten:

– My amendment seeks to exempt societies which trade exclusively with their members.

Senator SENIOR:

– In sub-paragraph b it is provided that income shall include all sums received from members in payment for commodities supplied, or animals, or land sold to them.

Senator Crawford:

– Less, of course, what is paid out.

Senator SENIOR:

– No. It is clear that in the case> of co-operative societies any sums received for the sale of animals or land shall be included as income, although the society may have made .nr profit out of the. transaction. If a profit has arisen from that agency, I can quite understand, that it should be a legitimate subject for taxation. The ideal cooperative society is that society which trades without making any profit at all. That, however, is not practicable, because a society, like any man in business, cannot carry on safely without a margin for profit, which, in the case of a cooperative society, is distributed in some form or other to its members at the end of the year. I see this difficulty in regard to the clause under consideration. In the. case of co-operative societies, it taxes income at its source, and also taxes the same income after its distribution amongst those of its members who are liable for income tax payment, so that really they become subjects of double taxation.

Senator Millen:

– No. Such payments would not be taxed in the society’s return, because the profits would have been distributed.

Senator SENIOR:

– I want to assure the Minister that I am not indulging iri carping criticism. Am I to understand that any suras distributed will not be taxed as income of a co-operative society?

Senator Millen:

– Not if it has been distributed.

Senator SENIOR:

– There should be some provision, as in the case which I mentioned previously in connexion with this very clause. It was, that where a company under necessity was compelled to transmute its business as from a cheese to a butter making concern, and from either, say, to a hog-raising business, and where a certain outlay was rendered necessary to carry on that changed form of business, it would be unfair to tax such capital. It could be taken for granted, in those circumstances, that the factory concerned had to make its changes, or cease from being a factory, and thus come to an end of its being regarded as a source of revenue. If that sum is to be subject to taxation, it lays a. penalty upon a company which it would not have to hear in other circumstances. To all intents and purposes it is equivalent to a manufacturer replacing obsolete machinery.

Senator MILLEN:
New South WalesMinister for Repatriation · NAT

– Two points have been raised by Senator Senior to which I wish to reply. I assure the honorable senator that no income will be taxed twice.

Senator Henderson:

– Hear, hear! That satisfies me.

Senator MILLEN:

– I am speaking of net income, which represents profits, and which is not distributed by a company, and will be taxed only when it is distributed. In no case will such moneys be taxed twice.

Senator Pratten:

– But this is taxation twice.

Senator MILLEN:

– I cannot understand how the honorable senator, with his business knowledge and experience, can contend that. If it is taxed at its source, when it is not distributed, it cannot be taxed later on. But if it is distributed later by a company, it enters into the income of the individual, and, if that income is brought within the taxable area, it is then taxed.

With regard to the other point raised by Senator Senior, he has in mind the smaller companies, which generally excite our sympathies. A company decides to expand its operations, or it may be that it is forced to transfer from one line of business to another; and, out of accumulated profits, it is proposed to install new plant. Senator Senior contends that the companyshould not have to pay upon such outlay. Would the honorable senator exempt from taxation all income that is paid into the building up of assets ? Take the case of a wealthy pastoralist - one having a very substantial income, say, of £10,000. He is told that, as long as he is building up other assets, he will escape income tax. So he says, “I will live on £2,000, and put the other £8,000 into the expansion of my business.” Surely, that is no justification for releasing him from payment. If we exempted that class of case for which Senator Senior pleads, it would be extremely difficult to deny the same concession to those who, instead of electing to spend their money, place it to the creation of further assets.

Senator PRATTEN:
New South Wales

– I desire, in speaking again, only to make this matter perfectly clear. I understand the Leader of the Senate (Senator Millen) to have said that when the balance remaining in the hands of a company has been taxed, it will not be taxed again. But I think he added that it would not be taxed again unless, in the distribution of that balance in any future year, an individual shareholder’s portion were brought within the taxable ambit set out under this Bill. What happens in the case, . say, of a butter factory is this : A factory has a surplus to credit of profit and loss account. This is distributed (a) by dividend to shareholders, (b) by transfer to reserve, and (c) by balance paid to suppliers during the next succeeding monthly payments.

Senator Millen:

– A and C are exempt; B pays.

Senator PRATTEN:

– Suppose its reserves are distributed in any succeeding year-

Senator Millen:

– Then the taxpayer gets a rebate.

Senator PRATTEN:

-That was not quite clear before; but it is now clear that, once the reserves are taxed, that ia the last tax paid on them, whenever they are distributed.

Senator Millen:

– No; when they are distributed the taxpayer will get a rebate on the amount the company has paid.

Senator PRATTEN:

– That clears up a very knotty point, and one of much importance and anxiety to the primary producer. I take it that we may now rest content upon that issue, namely, that there cannot be, and shall not be, anydouble taxation under this Bill.

Senator MILLEN:
(Ministerfor Repatriation · New South Wales · NAT

– If the honorable senator will look at section 16, sub-section 2a, of the Act (vide page 10 of thecomposite Bill, showing the proposed amendments), he will see confirmation of what I have already stated, namely, that provision is made for a rebate to the taxpayer whose income is partially made up of the distribution by a company of income which, in some previous accounting period, had paid tax upon it. Subsection 2 a reads -

Where a company has paid income tax on undistributed income, and that income is In any year subsequent to that in which it was derived by the company distributed to the members or shareholders of the company, a member or shareholder whois a taxpayer shall be entitled to a rebate. . . .

And then it sets out the particulars by which it is ascertained. I emphasize that in no case is income asked to pay taxation twice.

Senator BAKHAP:
Tasmania

– I do not intend to lose sight of the main point at issue in connexion with this provision. With me it is not a question of when these profits will be distributed, or what taxation they will pay either in one form or another. The principle of co-operation is so valuable that I do not wish to see the reserves of genuinely co-operative societies subjected to taxation at all. That being so, I hope that the mover of the amendment will allow it to go to a vote. It appears to me that even from the Ministerial standpoint men of straw are constantly being put up merely for the purpose of being knocked down. The Minister (Senator Millen) has said that if these mythically large reserves of genuinely co-operative societies are ultimately distributed amongst the shareholders, those shareholders will have to pay the tax upon them, if by this addition their ordinary incomes are brought within the taxable ambit.

Senator Millen:

– That is clearly what I did not say.

Senator BAKHAP:

– I understood the Minister to say that.

Senator Millen:

– These mythically large reserves, not having been distributed, will have paid the tax.

Senator BAKHAP:

– In genuinely cooperative societies, the reserves are nearly always distributed, and, in any case, they do not amount to a formidable sum. But, as I have previously remarked, the principle of co-operation is one which it is so desirable to encourage that we may reasonably exempt such reserves from taxation.

Question - That the words proposed to be added to sub-paragraphb of paragraph e be added - put. The Committee divided.

AYES: 11

NOES: 15

Majority . . . . 4

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Senator PRATTEN:
New South Wales

– Cannot these clauses be dealt with sub-clause by sub-clause? Some of them cover two or three pages.

Senator Millen:

– The honorable senator can pick out whatever provision he may wish to discuss.

Senator PRATTEN:

– But the difficulties involved are exceedingly intricate. Under our Standing Orders, I think that I am entitled to ask the Clerk to read the clause.

Senator Millen:

– Has not the honorable senator read the whole of it - every line of it?

Senator PRATTEN:

– Have I not the right to ask the Clerk to read the clause before it is put?

The CHAIRMAN (Senator Shannon:
SOUTH AUSTRALIA

– Our Standing Orders provide that the number of a clause and its marginal note shall be sufficient, unless otherwise ordered, and I take it that the only order which can be given in this connexion is one by the Senate, and not by the Committee.

Senator O’Keefe:

– Our Standing Orders may provide for what you, sir, have stated; but as a matter of convenience for many years, it has been the custom for the Chairman to read any clause, when requested to do so by an honorable senator.

The CHAIRMAN:

– That is quite another matter.

Senator Grant:

– I do not wish to raise any objection to your ruling. But I have an amendment to propose to this clause, and I think it is unfair on your part- -

The CHAIRMAN:

– Order ! The honorable senator is out of order in reflecting on the Chair. He must withdraw that remark.

Senator Grant:

– I withdraw it. But I would point out that you, sir, proceeded to put the clause to the Committee before honorable senators had had sufficient time to return to their seats after the division had been taken. It would be very much better if, after a division, a limited time was allowed honorable senators to resume their ordinary places in this chamber.

Senator de Largie:

– Is this in order?

Senator Grant:

– It is a fact, whether it be in order or not. As a number of amendments are likely to be submitted

The CHAIRMAN:

– The honorable senator will be quite in order in moving any amendment that he chooses.

Senator Grant:

– I shall avail myself of the opportunity of doing so immediately after a division has been announced, and before honorable senators have had time to return to their seats.

Senator Pratten:

– May I ask under what standing order you give your ruling in regard to the reading of the clause?

The CHAIRMAN:

– Under standing order No. 200.

Senator PRATTEN (New South

Wales) [3.50]. - It is proposed by paragraphf of clause 2 to amend the defini tion of” income from personal exertion ‘ ‘ by inserting after the word “derived” the words “from sources”. This raises the question of the definition of the term “ from sources in Austrafia.” For the sake of clarity in connexion with the collection of our income taxation I suggest that there should be some distinct definition of the term “ from sources in Australia.” The Commissioner for Taxation issued some time ago a handbook on the war profits tax. I think he is to be congratulated upon the clarity with which he deals with the multiplicity of complications in this legislation. In that handbook he defines the words “ from sources in Australia “ in these terms -

In the case of sales made by Australians in businesses of persons outside of Australia, the question sometimes arises whether, in fact, the profit has arisen partly or wholly from sources in Australia? If the business has been actually transacted in Australia, the whole resulting profit is taxable. In determining that business has been actually transacted in Australia, in such cases it is necessary that any two of the following three places be in Australia: - (1) The place where the contract of sale is made; that is. where the orders are definitely accepted. (2) The place where the goods are delivered to the purchaser; that is, the place where they cease to be at the vendor’s risk, and where they are taken over by the purchaser. (3) The place where pavment is made.

There should be some definition of the words “from sources in Australia,” and I therefore move -

That after the word “ sources “ in paragraph (f) the following words be inserted : - “Provided that the profits shall be deemed to have been derived from sources within Australia, when any two of the following three places are in Australia: - (1) The place where the contract of sale is made ; that is, where the orders are definitely accepted. (2) The place where the goods are delivered to the purchaser. (3) The place where payment is made.”

I submit this amendment to make the position perfectly clear. The commercial and trading world regard this definition by the Commissioner of Taxation as a perfectly clear and equitable one. I feel quite sure that with the present Commissioner administering the Taxation Department there will be no trouble over this matter. But if it is already defined in print by the Commissioner of Taxation, and is already being acted upon by the income tax authorities, there can be no objection to the incorporation of this definition in the Act itself, in order that this equitable principle may be laid down for all time and that so long as the Act is in operation there may be no possibility of dispute on this point.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I should like to point out that, apart from the merits or demerits of the amendment, it cannot possibly be made where the honorable senator proposes that itshould be made. He overlooks the fact that if the amendment were carried it would involve the insertion of oertain words in the middle of a section of the existing Act, and this, followed by a new series of clauses now submitted, would be absurd. The honorable senator must see that he must make provision for the insertion of this amendment in that part of the existing Act to which it refers.

Senator Pratten:

– Can the Minister suggest a place for its insertion?

Senator MILLEN:

– I can suggest a place for it, and that is the waste-paper basket. But I am pointing out now that the amendment cannot be inserted where the honorable senator proposes, as that would involve its insertion in the middle of a different section of the existing Act.

Senator PRATTEN:
New South Wales

– I am sorry that the Minister for Repatriation does not see the importance of such an amendment as I have moved.

Senator Millen:

– I merely pointed out that it could not be inserted where the honorable senator proposes.

Senator PRATTEN:

– Quite so; but on the second reading of the Bill, the Minister promised that should any amendment be suggested which was considered important by any honorable senator, if it could not be dealt with while the Bill was going through Committee, he would be prepared to recommit clauses of the measure if he were requested todo so. Will the honorable senator agree to recommit this Bill in such a way as to give me the opportunity to move such an amendment of the existing law as I have suggested ?

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I may point out to Senator Pratten that, even if this clause be now passed, there will be nothing to prevent him, at any later stage in Committee, bringing forward his amendment as a separate clause. It is impossible to insert the amendment where the honorable senator has proposed, because, owing to the somewhat complicated form in which this amending Bill is presented, it would involve the insertion of the words proposed in the middle of a section, of which it would make nonsense. By withdrawing his amendment now, which is what I suggest the honorable senator should do, he will not lose an opportunity of inviting the Committee to consider his proposal. He can submit the amendment later, as a separate clause.

Senator Pratten:

– I ask leave to with-‘ draw my amendment for the present, on’ that understanding.

Amendment, by leave, withdrawn.

Senator GRANT:
New South Wales

– In paragraph j of clause 2, it is proposed that there should be a new definition of the word “ value “ in relation to live stock, and that in future the value of live stock shall be “ the value as prescribed.” I am not quite sure what that means; but I am under the impression that the intention is that the Income Tax Commissioner is, of his own volition, to value the whole of the live stock in Australia, instead of permitting the owners to do so. In my view, it would be far better that paragraph j should be left out, and that the Act. in this respect should remain as it is. The owners of live stock should be allowed to value their own stock, and pay taxation accordingly.

Senator Millen:

– Does the honorable senator seriously mean that?

Senator GRANT:

– I do.

Senator Earle:

– Then we should not get much taxation.

Senator GRANT:

– I object to paragraph j of clause 2.

Clause agreed to.

Clause 3 -

After section 8 of the principal Act, the following section is inserted : - “ 8a. (1) The Governor-General may make arrangements with the Governor in Council of a State for the collection by the Commonwealth on behalf of the State, of income tax at rates to be fixed by the Parliament of the State, on a taxable income ascertained in accordance with this Act or an Act of that State.

The Governor-General may make regulations for carrying into effect any arrangement under the provisions of this section.”

Senator PRATTEN:
New South Wales

– This is, perhaps, inferentially, the most important clause in the Bill. It provides for the Commonwealth being able to make an arrangement with the States to collect their income taxes. It does not provide for the State authorities making an arrangement with tha

Commonwealth to collect its income tax. It will be remembered that, on the second reading of the Bill, the Minister for Repatriation (Senator Millen) specifically asked me, if I felt so inclined, to pursue further this question of uniformity of taxation. I quoted in my second-reading speech many figures. None of them has been replied to. I should like to accept the Minister’s invitation to consider this matter further.. I ‘ regret that, in my view, it was not adequately dealt with by the Minister in his reply to the second-reading debate. In order to make the position clear, I shall direct the attention of honorable senators to the figures I quoted before, at the risk of having to repeat some of them.

It is generally recognised by all who come into contact with the business community that there is a” most profound feeling of dissatisfaction amongst incometaxpayers throughout Australia in connexion with the complexity and complications of the methods adopted. The Treasurer (Mr. Watt) has publicly stated that uniformity in income tax collection would save the taxpayers of Australia £1 .500,000 a year in time, trouble, and expense. National efficiency is so very often urged upon us that why, in Heaven’s name, the Government do not tackle this problem I cannot, for the life of me, understand. On the Treasurer’s own showing, the taxpayers can save £1,500,000 at once, and yet, for years past, and even this year, this question has been pecked at and paltered with until we are in no better position than we were in five years ago. In March of last year, at a Conference of Commissioners of Taxation, Federal and State, a uniform Income Tax Bill was drafted. For this the Commonwealth Income Tax Assessment Act was taken as a basis. This meant that the States, under the pressure of circumstances, and with a desire to unify this matter throughout Australia, practically agreed to jettison the State Acts and build up a uniform measure on the basis of what the Commonwealth was doing. Since then nothing has been done.

Senator Millen:

– This Bill is something.

Senator PRATTEN:

– I shall come to that shortly. Nothing has been done, and we have had another Premiers’ Conference. . State rights and Commonwealth rights seem to be clashing with each other, just the same as if there were no war on and no reform were needed in this direction. Judging from the inconclusive results, and the want of bona fides of all parties concerned, uniformity seems as far off as ever. It is futile for the State Commissioners or the Commonwealth Commissioner to think they live in glass houses. Both sides can throw stones at one another, and it is common knowledge that the administration of the Commonwealth Income Tax Department is inefficient and unsatisfactory. I have no hesitation, on comparing the administration of the Commonwealth Department with that of New South Wales, in saying that the latter is infinitely more efficient and thorough. To prove this, I put forward, on the second reading, figures that appeared to me reasonably correct. I think honorable senators agree with me that there are tens and scores of thousands of people throughout Australia who are not paying the Federal tax they should pay. My figures fully proved that that was so. Senator Millen’s reply, in effect, was that if it were so a year ago, it was not going to occur any longer, because the Commonwealth Taxation Department had received nearly 600,000 returns this year.

Senator Millen:

– And also that you had overlooked the very important factor of New South Wales’ contributions paid at the Central Office.

Senator PRATTEN:

– I am coming to that. The returns in the New South Wales Income Tax Department number over 200,000, and the assessments are only 60,000, so that it by no means follows that because the Commonwealth has 600,000 returns this- year the big gap between the assessments last year and the number of people who ought to pay income tax will be bridged. I gave figures, on what I considered good authority, that proved, in effect, and approximately, that the efficient organization of the Income Tax Department of the State of New South Wales enabled it to collect a sum equivalent to the’ amount collected throughout New South Wales by the Federal Department. I showed that the income tax revenue from the whole Commonwealth last year was, approximately, £5,500,000. If we take two-fifths of that amount, a proportion that holds good in most comparisons regarding the States, so far as I have studied them, we get, approximately, the proportion of that sum collected for the whole State of New South Wales. That would be just over £2,000,000. The State Department collected last year £2,040,000, or, approximately, the same amount as the Commonwealth.

Senator Millen:

– That again shuts out New South Wales’ contributions at the Central Office.

Senator PRATTEN:

– -The honorable senator evidently has not followed my argument. I took two-fifths of the total collections for the Commonwealth, and I think it will be found that that represents approximately the share contributed by the State of New South Wales, wherever the amounts were paid.

The maximum assessment in New South Wales is ls. lid. for property, and ls. 3d. for a company. The exemption in New South Wales of income before the tax starts is £250. Compare these with the Commonwealth exemption of £156, and the Commonwealth maximum rates of 6s. 3d. for property and ls. 10½d. for companies, and honorable senators will at once begin to see that there is something wrong with the Federal Income Tax Department. I have it further, on the best authority I can get, that if the State of New South Wales collected income tax with the machinery of its State Department on the Commonwealth graduation and with the Commonwealth exemption we could get nearer £4,000,000 in New South Wales than the £2,000,000 odd that the Federal Income Tax Department is getting there now. I stated on the second “ reading that the New South Wales Department collected income tax for 1915-16 to the extent of £1,653,000, and that the amount collected in the same period, in the same State, by the Commonwealth authorities was only £1,691,000, or a difference in favour of the Commonwealth of £38,000.

Senator Millen:

– Then there are the central contributions.

Senator PRATTEN:

– The amounts collected at the Central Office consist principally of money from taxpayers who have assessable incomes in more than one State. I have taken the trouble since my honorable friend raised that point to see what Knibbs says about this period. He states that in New South Wales, for the period 1915-16, the Federal Income Tax authorities collected £1,197,000, and that a sum of £1,393,000 was collected at the’ Central Office. If we again take the proportion of two-fifths as representing the share of New South Wales, the amount collected for that State at the Central Office, added to the amount collected in New South Wales, gives a total figure which exceeds the amount collected by the State Department for the same period of less than £100,000. Seeing that my figures show an excess in favour of the Commonwealth of £38,000, and that the figures my honorable friend relies on show an excess in favour of the Commonwealth of less than £100,000, I claim that my argument is sound and has not yet been refuted, and that the figures on which I base my arguments are true and unassailable.

As Senator Millen has asked me to carry the matter further, I point out that in the Income Tax Department of New South Wales a staff of 140 persons, consisting of sixty-eight permanent and seventy-two temporary officers, is employed. This staff collects an amount approximately the same as the Commonwealth. The Federal Income Tax Department in Sydney employs over 500 persons, and they work overtime from six to eight months in the year. There, again, the comparison is in favour of the State methods, because 140 officers collect approximately the same amount of income tax as 400 officers, after allowing for land tax administration. I have proved up to the hilt the necessity for more efficient methods in the collection of Commonwealth income taxation. I have shown that, instead of collecting £6,000,000 in income tax this year, we ought to collect nearer £9,000,000, and it cannot be gainsaid, in view of the differences in the exemptions and graduations, that if New South Wales is going to collect £2,250,000 this year from its State income tax, the Department of that State, if intrusted with the collection of the Federal tax, would gather in nearer £4,000,000 for New South Wales than the amount the Federal Department is getting now.

Reverting to the much-vexed question of uniformity, which, according to the Treasurer, will save the taxpayers £1,500,000 a year in time, trouble, and expense, and to Senator Millen’s interjection that the Bill does something towards achieving uniformity, I have here the report of the resolutions and proceedings of the Conference of Commonwealth and State taxation officers held at Melbourne in March of last year. In the appendix to this report there is a suggested uniform Act for Commonwealth and State income tax assessment, which, I understand, was unanimously adopted by the Commonwealth and State Commissioners. I have here the suggested Act with the alterations proposed, and I think it has been suggested, though I do not know whether it has been definitely stated, that the amending Bill, with which we are now dealing, is an advancein the direction of uniformity. Does the Leader of the Senate claim that? He does not reply. I will tell him what I think about it.

Senator Millen:

– You would do that whether I replied or not.

Senator PRATTEN:

– If anybody says that the measure now before the Committee is an advance in the direction of uniformity, he is either stating what he knows to be untrue or he does not know anything about the matter. I have taken the trouble to go through this suggested uniform Act, which was unanimously agreed to by the. Commissioners in March of last year, and compare it with the amending Bill now before the Committee. Approximately, I suppose, there are in this amending Bill about 100 alterations of the principal Act, and I say most definitely that, approximately, about 25 per cent. of them are in the direction of uniformity, while about 75 per cent. are getting away from that principle of uniformity which was unanimously recommended last year.

Senator Millen:

– Do you say that that report was unanimously adopted?

Senator PRATTEN:

– I said that, as far as I know, it was.

Senator Millen:

– Then you do not know the facts. It was not unanimously adopted.

Senator PRATTEN:

– I do know that on the main bone of contention there was unanimity among the Commissioners. The report states they agreed that, in regard to taxation of companies, there should be taxation of income at its source.

Senator Millen:

– Do you say that that was unanimously adopted?

Senator PRATTEN:

– The report does not say that there was any dissenting voice on this matter. It says -

Commissioner Downey (Tasmania) moved, and Commissioner Whiddon (New South Wales) seconded - “ That, in the opinion of this Conference, it is desirable that the profits arising from the operations of companies should be taxed at their source.” Carried unanimously.

Senator Millen:

– Now read on to the bottom of that page.

Senator PRATTEN:

– Very well-

Acting Commissioner Ewing (Commonwealth) dissenting on the ground that it would destroy the principle of aggregation of income.

But that was with regard to section 14b.

Senator Millen:

– It all involves the one point.

Senator PRATTEN:

– I say it was the unanimous opinion of the States Taxation Commissioners at that Conference that the income of companies should be taxed at its source. These gentlemen met in Melbourne over a period of several weeks, each of the States and the Commonwealth being represented, and the result of their deliberations, as I have already said, was the suggestion that a uniform Act, on the lines of the Commonwealth Act, should be adopted, and I regret that those responsible for the drafting of the measure now before the Chamber have not seen fit to keep reasonably within the ambit of the Conference’s resolutions.

Senator Bakhap:

– But the honorable senator will see that the clause suggested is only permissive. The States may adopt the arrangement if they like, but only if they like.

Senator PRATTEN:

– I am speaking generally on the principle of uniformity. From time to time statements have been made by various State representatives, the gravamen of their charge being that the Commonwealth wished to ride roughshod over them, irrespective of whether it was right or wrong. I want publicly to say this, because I do not think this question of uniformity ought to be paltered with any longer. It has been before us for years, and I regret extremely that the suggestions of the Conference have not been adopted in this Bill.

I am sorry the Bill will not do anything to bring the States and Commonwealth into closer agreement. I ask any honorable senator, if he were Treasurer of any State concerned, would he hand over the collection of a

State income tax to the Commonwealth authorities under existing conditions, which, as I have already shown, enabled the income tax officials of New South Wales to collect as much from a maximum tax of ls. lid. as the Commonwealth can from a maximum tax of 6s. 3d.?

Senator Senior:

– But does not the honorable senator lose sight of the fact that the State exemption is different from that of the Commonwealth ?

Senator PRATTEN:

– The exemption in New South Wales is £250, whereas the exemption for Commonwealth taxation purposes is ‘£156. Consequently right throughout Australia, the Commonwealth has an additional taxable area. In New South Wales, taxation does not start until a man has an income of £250 a year.

Senator Bakhap:

– The honorable senator will recognise that some of the States would get hardly any revenue at all if they had such a high exemption.

Senator PRATTEN:

– I am not discussing the question of exemptions - whether the New South Wales limit of £250 is too high, or whether the Commonwealth exemption of £156 is too low. I am only pointing out the fact, which is selfevident, that the State office in Sydney is infinitely more efficient than the Commonwealth office in Melbourne.

Senator Ferricks:

– But I think you pointed out in your second-reading speech that the incidence of taxation in New South Wales, with a maximum tax of ls. lid., is higher than the incidence of Commonwealth taxation with a maximum of 6s. 3d.

Senator PRATTEN:

– No. I think I pointed out that the maximum taxation of companies in New South Wales is ls. 3d.”, while the maximum taxation of companies by the Commonwealth is ls. 10½d. and I said that if the New South Wales Government could tax their companies at the Commonwealth rate, they would get, in this difference alone, approximately an additional £500,000 a year. I feel that this matter is very important. Probably the clause is the most important in the whole Bill, and I therefore made a few notes in regard to where we are on this question of uniformity.

The chief reason assigned by the Treasurer (Mr. Watt) for his refusal to tax company profits at their source is that that method of taxation is unjust; that the rate of tax should be computed on the aggregate income ; and that, by taxing company profits directly, the principle of aggregation of income would be violated. I think the Minister in charge of the Bill, in his reply on the second-reading debate, also mentioned this, and gave some attention to the question of equitable taxation. I am not advocating any inequitable taxation. I have said time and time again that the burdens of the future will have to be placed upon the backs of those best able to bear them, and that the richer a man is the more he ought to pay. Consequently, I am heart and soul with the graduated system of taxation.

Senator Grant:

– Which is, of course, quite wrong.

Senator PRATTEN:

– If aggregation of income is omitted, one of three results will ensue. The shareholder whose individual income is taxable on a higher rate than that payable by the company, pays les3 than he should ; while the shareholder whose individual income is taxable at the lower rate pays more than he should.

Senator Millen:

– That is what you are advocating.

Senator PRATTEN:

– No. The small shareholder, whose total income is below the exempted minimum, pays indirectly at the Commonwealth rate, although he is not liable for taxation. Under the present Income Tax Act undistributed profits are aggregated, so most complicated results follow. It is fair to claim that the present method of taxing company’s profits is both inconsistent and illogical. That is the point I want to make to the Minister. I should like to say, also, that it is quite possible to tax the whole income of a company at its source, and yet retain and apply the principle of individual graduation. This matter has engaged the attention of practically all the trading organizations, all the accountants, and all the income tax assessors of Australia. For years they have been placing before the, Federal Treasurer various suggestions, but, owing possibly to the war coming upon us, necessitating the Minister’s attention being given to other important subjects, this seemingly unimportant matter,, by which the people can save £1,500,000 a year, has been overlooked. I say: Let a company pay taxation on the profits earned during the taxable year, irrespective of the amount distributed or retained, as, I understand, is the practice in Victoria. Then let the shareholder show in his personal schedule the dividends received by him, and include such dividends in his income tax return for the purpose of aggregating the total income; and allow the shareholder a rebate on the dividend at the rate paid by him in the company return. This could be automatically done in the Income Tax Office, and not by the taxpayer himself. If the shareholder is exempt from taxation, the tax paid on his behalf by the company can be claimed by him and refunded. This refund could be obtained by a simple form of declaration supported by the necessary evidence.

If the Minister in charge of the Treasury says uniformity has to come, then uniformity will be very near. If, however, the question is met in the spirit of seeing only its very many difficulties we shall never get nearer than we are now. There are difficulties to be overcome, but if one does not want to overcome them, then 150 different reasons can be found, for instance, by the Treasurer, or the Commissioner of Taxation, why they cannot be circumvented. The. case for uniformity is universally accepted.

Summing up the position, I cannot do better than quote from a joint letter sent to the Melbourne newspapers a little while ago by representatives especially appointed for the purpose by the Incorporated Institute of Accountants, the Society of Accountants and Auditors of England, the Employers Federation, the Federal Institute of Accountants,” and the Chamber of Manufactures. Those representatives included such men as Mr. Cuming, president of the Chamber of Manufactures, and Mr. Keep, of the Chamber of Commerce. They said they were perfectly in accord with the conclusion that if half-a-dozen business men sat down together for half-a-day they could devise a satisfactory arrangement to prevent the duplication of income tax returns. Those representatives, in their letter, continued -

Disappointment must be expressed that nothing definite resulted from the Premiers’ Con,ference in Sydney regarding the uniformity of taxation returns. As far back as 26th March last, in a letter to the Federal Treasurer, we suggested that the matter be referred to a commission including skilled accountants and representative business men. It appears to us that this is the only way to obtain any result whichwill be satisfactory to the community as> a whole.

I do not wish to delay the Committee further. This is proba’bly the most important clause in the Bill. If we can obtain uniformity, and go back in the direction of simplicity in taxation, many pages of complicated print, such as the Committee has before it, would disappear. I see no necessity for much of - it.~ We have set out on a deliberate, scientific, academic system, and assuming that the Secretary to the Treasury, the Government Statistician, and the then’ Commissioner of Taxation are responsible for taxation Bills, they have imposed on the taxpayers one of the most complicated and intricate Bills possible to produce, as a result of which taxpayers are put to the expenditure of time and trouble, and the Government of the country are not able to collect all the taxes which are their due.

Senator FAIRBAIRN:
Victoria

– I agree with Senator Pratten that this is the most important clause in the Bill. I am glad it is included, because I look upon it as a step in the direction in which we so intensely desire to proceed, namely, that there should be some simplification of the system of taxation. To have a State Taxing Department in every State and a Federal Taxing Department in every State also, is becoming unendurable.

Senator Bakhap:

– We erred in creating Departments when similar Departments already existed in the various - States.

Senator FAIRBAIRN:

– Yes, and the difficulty is to get out of the error. Senator Pratten has brought forward some startling figures regarding the cost and number of officials in the two Departments in New South Wales. I hope the Minister (Senator Millen) will be in a position to reply in some detail upon the figures quoted. I agree with. Senator Pratten that one explanation as to the excessive number of officials required in the Federal Department is in respect to the taxation of companies. I strongly agree with Senator Pratten that if we taxed the profits of companies - that is, taxed them at their source - we would be going a long way in the direction of simplification. At present we tax a company only on the undistributed amount of its assets, and shareholders, when they get their divi- dends, have to pay on the remaining, amount.

Senator Millen:

– They do not pay twice on the same amount.

Senator FAIRBAIRN:

– I know that they are two distinct amounts. It means a huge expenditure of time and trouble to the Federal Department to have to go closely over the returns of great numbers of taxpayers to ascertain whether shareholders are evading taxation. I fear that, despite all the efforts on the part of the officials, many people manage to dodge their responsibilities. If a company were taxed on the whole of its income, and then distributed it to its shareholders, as the shareholders received their portion they could claim upon the Treasury, which would have to refund the amount which had been overpaid by them.

Senator Millen:

– There would be as much work involved under that system as at present.

Senator FAIRBAIRN:

– I do not agree with the Minister. I am told by experienced accountants that there would not be anything like the work required if that method were in practice. It would immensely simplify matters ; and it would, bring the system into line with the procedure in the various State Income Tax Departments, with which the public are already familiar. We cannot expect the Federal system to be changed at present, but I hope it will be seriously considered.

I like Senator Pratten’s suggestion that the Government should agree to appoint a small committee - an honorary one, for we need not spend a £5-note upon it - to go into the question, with the assistance of an accountant, and draw up a clear .Bill on the lines of that most admirable .draft Bill framed by the heads of all the Taxation Departments when they met in conference in Melbourne. I carefully studied that measure and thought it very clear and concise. I” could understand its every clause, but I have not had the same experience with respect to the Bill presented by the Commonwealth Government. I hope something really tangible in the direction I have indicated may be brought about before Parliament meets again. I do not advocate reduction of taxation. In fact, it is going to be all the other way. We know that wealth must bear its share. All that I am afraid of is that its share is going to be the whole lot. In my opinion we shall all be having to start off from scratch together again. However, so long as we win the war that is the only thing that matters. T know well, and have said so before, that when it comes to a matter of sacrifice it is impossible to compare life with wealth. I hope the Government will take the matter seriously in hand.

Senator Millen:

– The Bill is evidence that we are doing so.

Senator FAIRBAIRN:

– I concede that; but I feel it my duty to urge that the Government should do all in their power to remove the tremendous volume of friction, and of work, and of worry, from the taxpaying people, who have quite enough to think about at present.

Senator GRANT:
New South Wales

– Very much of the alleged excessive cost incurred in the collection of Federal income tax is due to the extraordinary and almost incomprehensible formula which has been supplied by some astute mathematician for the calculation of a person’s income. The formula is quite beyond the capacity of any member of this Committee to comprehend, and it may be said to be mainly responsible for what appears to be the extraordinary number of officials required by the Commonwealth in its New South Wales Department, as compared with the total employed by the State Income Department. But it is possible that there is another and very lucid explanation of the difference in the amounts collected by each of those collecting bodies. State income tax in New South Wales accelerates, on small incomes, much more rapidly - even after the £250 exemption is allowed - than the tax under the formula supplied by the Commonwealth taxing authorities.

Senator Millen:

– That is one of the factors which was overlooked by Senator Pratten.

Senator GRANT:

– One of the factors overlooked by the honorable senator is that, notwithstanding the complicated formula adopted by Hie Federal Income Tax Commissioner, the amount which has to be paid on small salaries accelerates much more rapidly under the State taxing machinery, with an exemption of £250, than it does under the Federal tax-, ing machinery, with an exemption of £156. But that is not the only reason why the cost of collection may be greater in the case of the Commonwealth. It must be remembered that the Commonwealth Income Tax Commissioner has also to collect the Federal land tax.

Senator PRATTEN:
NEW SOUTH WALES · NAT

– I allowed for that.

Senator GRANT:

– Here, again, the land-owners of the Commonwealth are supplied with a formula, which not one per cent. of them can hope to understand. Indeed, the man on the land is too busy producing wealth to trouble about understanding it. He tamely pays his tax.

Senator Millen:

– He pays it because he is afraid of the tax which the honorable senator wishes to impose on him.

Senator GRANT:

– How simple a land tax would be at, say, 3d. in the £1, is known to Senator Millen as well as to myself. Any person would then be able to calculate his liability without the slightest difficulty. Yet a trifling tax of 3d. in the£1 would produce a revenue of £5,000,000 annually. It must be remembered, too, that in New South Wales the Taxation Commissioner has to employ a very considerable staff in order to calculate the land tax which has to be collected in that State. There, a very complicated formula is adopted. It starts at £5,001, with a tax of11-18750d. in the £1, and it goes, either in a sweep or a curve - I am not sure which - up to £75,000. At that point, and subsequently, a flat rate of 9d. in the £1 is operative. If, however, the landowner is an absentee, he is entitled to no exemption whatever. Notwithstanding the plank in the Labour party’s platform that there shall be a rigid exemption of £5,000, the Labour Government imposed upon absentee land -owners a flat rate of1d. in the £1 until £5,000 is reached. Then, at £5,001, they have to pay 21-18750d. in the £1 until £80,000 is reached. At that point a flat rate of10d. in the £1 becomes operative. What the rate of the tax is between these various amounts only a very limited numiber of honorable senators would be able to calculate, and we ought not to expect the army of gentlemen employed in the Federal Income Tax Department to be able to make such calculations any more rapidly, or any more correctly, than can the average member of this Parliament.

Senator Crawford:

– They do not make them. They have a ready reckoner.

Senator GRANT:

– Of course they have. But it takes some time even to look that up. They have to collect the Federal income tax and the Federal land tax.

A very substantial allowance ought to be made by Senator Pratten, on account of the cost of collecting the Federal land tax. In New South Wales, the State land tax, which is a flat rate of1d. in the £1, does not apply to any of the lands in the Eastern or Central Divisions, and only to a comparatively small area in the Western Division. As a matter of fact the total revenue collected under this heading last year was only £3,190. It should not impose a very great strain upon the time of the New South Wales Income Tax Commissioner to send out the notices involved in the collection of such a small amount. In condemning the Federal Income Tax Commissioner, Senator Pratten should remember these facts. I would also remind him that the wartime profits tax has to be collected by that officer. Obviously, he requires very substantial assistance to enable him to accomplish his task. Then there are a number of other taxes which have been imposed, but which have not yet been collected. I think I have said sufficient to show that it is unfair to institute a comparison between the Federal Income Tax Commissioner and the New South Wales Income Tax Commissioner to the detriment of the former. In New South Wales there is a general exemption of £250, and the tax increases, not by fractions of a penny, but by pence, and this fact makes it quite a simple matter to calculate the impost involved.

There are other reasons why I think it is advisable to pass this clause. It really represents an effort, however small, on the part of the Government to terminate what is unquestionably a source of tremendous annoyance to those persons who have large incomes, especially in the different States. The army of clerks which must be employed by this class to protect their incomes must be a source of very great expense and very great annoyance to them. I know perfectly well that, owing to the energy that is displayed by the Australian workman, he is now able, with the aid of machinery, to produce so much every year that he can afford to, and does, keep whole armies of men battening upon him. without rendering him any service whatever. Yet it was even gravely suggested here to-day that another Committee should be appointed to unravel what is as plain as noonday.

Senator Bakhap:

– Just now the honorable senator told us that it was impossible to understand this measure. Where is he ? He is as clear as is mud in a wine glass.

Senator GRANT:

– I made no such statement. The honorable senator must have been asleep. I said it was as plain as noonday that the trouble to which people are being subjected is becoming unendurable, and that it is a source of endless expense. To-day, in Australia, we have seven different Land Tax Acts, which are administered by various and conflicting authorities.

Senator Bakhap:

– Those authorities were in existence before the Commonwealth authority was created.

Senator GRANT:

– I am quite aware of that. But when the Commonwealth took over the Customs and Excise duties, the machinery in the various States relating to those matters was either abolished or taken charge of and operated from one centre, with a fair degree of satisfaction and considerable economy. This clause represents an effort on the part of the Government to secure authority - whenever the States will agree to this course being adopted - to collect income tax for them. I, for one, am not prepared to hand over to the States the business of collecting the Commonwealth income tax.

Senator Bakhap:

– Why not?

Senator GRANT:

– Because one collecting authority will operate much more satisfactorily and economically than will half-a-dozen similar authorities, and because, if the Commonwealth undertake the collection of taxation for the States, it will hold the cash, and will be able to give to the States their share of it. At the present time we are collecting Customs and Excise duties from the States-

Senator Millen:

– We axe collecting them for ourselves.

Senator GRANT:

– We hand back to the States 25s. per head of the net proceeds of those duties. It is much better that we should do that than that the States should collect this revenue on our behalf.

The proposal of the Government is not complete, because the Constitution does not permit us to do what we would like to do. It does not permit us to enforce over the whole of the Commonwealth one income tax. If that were possible it would be the correct course to adopt. But as this clause represents a small step in the right direction I intend to support it.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I cannot help thinking that certain honorable senators who have addressed themselves to this clause have overlooked its purpose. They have been speaking of the desirableness of securing uniformity. This clause represents the first step in that direction. Yet they have spoken as if the authors of this Bill were a band of barbarians blocking the road to progress. How would they secure uniformity except by such a clause as that which we are now considering?

Senator Pratten:

– You only go half way.

Senator MILLEN:

– We only go half way when there is a State at the other end of the journey with which we have to get an agreement. There are only three ways in which we can secure uniformity. One is by the Commonwealth bludgeoning the States regardless of their constitutional rights; the second is by the Commonwealth surrendering to them and saying, -“Do just as you like” - a course which is plainly impossible; and the third is the alternative which is here offered, namely, an agreement with the States. Senator Pratten has spoken as if the Commonwealth were a defaulter in this matter. But it can truthfully be said that this is the first practical step in the direction of securing uniformity. By means of this clause the Government will say to the States, “ We are now ready to arrive at an agreement with you to attain this desirable objective.” The Government are doing this, though not a single State has, so far, moved in that direction. I do not blame the States for their inaction. Any individual State may well say, “It is useless for us to move until we know that the central authority is ready to meet us.” But this Bill, when passed, will be a plain intimation from the National Legislature that we are now open to negotiate with the States with a view to arriving at an agreement with them which will be to our mutual advantage.

There was no need for the denunciation of this clause in which Senator Pratten indulged. Surely the honorable senator does not intend to oppose it. Yet those who listened to him, if they were not aware of the circumstances, could only conclude that he was in some way criticising the Government for failing to do something. This clause embodies the only practical thing we can do at the present moment. It is an offer to the States, and it is for them to say whether they will accept it or not. Senator Pratten said that it is useless for the taxing authorities of the Commonwealth, and of the States, to throw bricks at one another. That might be so, but it does not apparently prevent some people from throwing bricks at both of them, which, by the way, is always a popular thing to do.

Senator Pratten:

– I think we should have legislation by common sense rather than by red-tape.

Senator MILLEN:

– These generalities do not help us one bit. Here is a commonsense proposition. Honorable senators are asked by this clause to give the Government of the Commonwealth the power to enter into an agreement with the Governments of the States to do the very thing Senator Pratten desires. Can he show me a practical method of doing it other than that here proposed ? The only other way in which it might be done is to appeal to the people to alter the Constitution and make this the sovereign Parliament. That is the very last thing that Senator Pratten desires.

Senator Pratten:

– How does the Minister know that?

Senator MILLEN:

– Because the honorablesenator has said this afternoon that he desires the States in this matter to act for the Commonwealth.

Senator Pratten:

– I do not think so.

Senator MILLEN:

– Under Unification we could not have that.

Senator Bakhap:

– We might have it without any alteration of the Constitution at all.

Senator MILLEN:

– Exactly. If this clause be passed the agreement provided for might take the form of the State authorities acting as the collecting agency.

Senator Bakhap:

– That would be possible under the general heading of an “ arrangement.”

Senator MILLEN:

– The arrangement might be that the State authorities should collect the taxation. The clause provides for doing the very thing that Senator Pratten desires, and yet, from the” terms in which he has spoken, I can only conclude that he has been denouncing the Government for having failed to do something.

Let me say, with regard to the honorable senator’s general criticism that the Bill does not move in the direction of uniformity, that I entirely differ from him on that point. First of all, the Bill was not unanimously adoptedby the Conference of Taxation Commissioners. They were not at all unanimous in dealing with the matter, but this measure includes every provision put before the Conference which was adopted either unanimously or by a majority. In the circumstances it may fairly be claimed that it does go a long way to secure uniformity. Whilst that is done by this Bill, may I ask what the several State Governments have done to bring about uniformity in their present diverse laws? They have done nothing at all. I repeat, therefore, that this proposal represents a direct practical and immediate advance towards that uniformity which every one believes to be desirable.

Senator Pratten:

– The Minister will pardon me for a moment. He stated just now that this clause 3 provides for the States collecting Commonwealth income tax.

Senator MILLEN:

-No, I did not. All that I say is that this is a clause which would enable the Commonwealth Government to make an arrangement with the State Governments, and it would be quite competent for the two authorities to arrange that the State Governments should collect.

Senator Pratten:

– But the clause does not say so.

Senator MILLEN:

– It provides that an agreement may be made under which that would be possible.

Senator Pratten:

– No; the agreement provided for is that the collection should be by the Commonwealth Government for the State Governments.

Senator MILLEN:

– That is so. I was in error, and I thank the honorable senator for correcting me. However, the clause does lead in the direction which, I believe, the vast majority of people believe to be the right one.

If we are to have uniformity, and one collecting agency, I have no hesitation in saying that if it comes to a choice of the collecting agency, I believe the Commonwealth authority would be the only possible choice. Many reasons point to that. One is that the Commonwealth, being the collecting agency, would establish uniformity, and there is no other guarantee for it.

I hope that Senator Pratten will not mind my expressing a considerable amount of surprise and regret that when he makes statements here he is not more careful to set out those factors which ought not in fairness to be ignored. He made the statement here this afternoon that 400 officials are’ employed in the Income Tax Department of New South Wales.

Senator Pratten:

– I said 500.

Senator MILLEN:

– Does not the honorable senator think that there was any responsibility upon him when he said that 500 officials were employed in the Income Tax Department in New South Wales, to point out that it was not an Income Tax Department solely, but that the staff of the Department collecting income taxation has also to deal with land tax, estate duties, war profits taxation, and the entertainment tax?

Senator Pratten:

– The Minister will remember that I compared the New South Wales Department with, say, 400 less than the number employed in the Federal Department.

Senator MILLEN:

– The honorable senator made the state’ment that there were 500 officials employed in the Income Tax Department. As a matter of fact, the Department is not an Income Tax Department alone, but has many other activities, and if the honorable senator desired to deal with the matter judicially he should have set out clearly the work which the Department had to undertake. If he wishes to establish a reputation for putting matters fairly and in a judicial spirit before the Senate he must be careful not to ignore such important factors, as otherwise the officials directly concerned might complain that they were not fairly treated when the honorable senator’s statement would lead to the conclusion that they were a lot of incompetents or idlers. The honorable senator should recognise, when referring to the number of officials employed, that it is important to consider the duties they are called upon to discharge.

Senator Pratten:

– Quite so.

Senator MILLEN:

– I wish to say a word on the question of the principle of taxation raised by Senators Pratten and Fairbairn.

One of the points of difference between the Commonwealth and States taxation authorities at present is whether it is or is not right to tax incomes at their source. I am not going to argue as to the convenience to the staffs of the Taxation Department of the method adopted. I am not greatly concerned about that, but I am concerned about the equity of the taxation as it affects the taxpayer. Under the system prevailing in New South Wales there are possibly thousands of men with small incomes paying a greater tax than they ought to pay, and, correspondingly, a number of rich men escaping taxation which they ought, to Pay:

Senator Pratten:

– Is that now ? ~~~~

Senator MILLEN:

– Yes, in New South Wales to-day. That arises in this way: New South Wales, like the Commonwealth, has a graduated tax, and has decreed that a man with a small income* shall pay at a lower rate than a man with a higher income. The New South Wales Government fixed a flat rate upon the profits of companies. A small shareholder might otherwise be exempt from income tax altogether, but if he draws £50, £100, or in New South Wales up to £250 a year as income from a company, he has to pay taxation upon it. If he obtained that amount of income from any other source he would be free of the State income taxation, but deriving it from the profits of a company he is called upon to pay a flat rate of ls. 5jd. in the £1. At the same time, while he is paying that flat rate upon an income which the Parliament of the State said ought not to be taxable, there is alongside of him a big shareholder who ought to be paying 3s. or 4s. in the £1, who is only paying the same rate of ls. 5Jd.

Senator Pratten:

– Where is that?

Senator MILLEN:

– In New South Wales, the State from which Senator Pratten comes.

Senator Pratten:

– The Minister has been misinformed.

Senator MILLEN:

– That is the principle of taxation at the source.

Senator Pratten:

– Does the Minister quote his figures as facts or as an illustration ]

Senator MILLEN:

– Merely as an illustration, but whether the figures I quote are accurate or not, it is impossible to deny that where the tax is levied in the form of a flat rate on the profits of companies, and some shareholders should pay higher income tax than others, if you take an average rate some would be found to be paying less and others more than they ought to pay.

Senator Fairbairn:

– We suggested a way out of that difficulty.

Senator MILLEN:

– That is so, but I am dealing, first of all, with the inequity, or rather the iniquity, that follows from the New South Wales system. Senator Fairbairn admits that if you adopt the simple procedure of taxing at the source it is inequitable.

Senator Fairbairn:

– Absolutely.

Senator MILLEN:

– Now I come to the question of convenience. It is suggested that it is convenient to have a flat rate, and then adjust matters afterwards.

Senator Fairbairn:

– I am told by all the auditors that that is the proper way “to do it.

Senator MILLEN:

– It is largely a matter of speculation, unless one has a very intimate knowledge of the working of the land tax system in the Commonwealth and the States, to decide which involves the most work, or would relieve people to the greater extent of inconvenience. It seems to me that the Commonwealth system, under which the Government say to a taxpayer, irrespective of whether his income is obtained from the profits of a company or in the ordinary way of trade as an individual, “ Send in your return, and we shall directly and simply assess you at the rate appropriate to the income you have earned,” is simplicity itself compared with the alternative now offered. It is now proposed that, first of all, a company should be charged a flat rate, and then the shareholder, whose proper rate would be less than that, should come to the Taxation Department for a refund, whilst a taxpayer whose rate was higher would have issued to him a supplementary notice charging him with the difference. It seems to me that as between the two the system operating in the Commonwealth can claim the laurels on the ground of simplicity. I cannot help thinking that a number of the prominent gentlemen, as they are, and honorable men who put forward the other view, are influenced in their judgment by the circumstances of those with whose affairs they are familiar, namely, the recipients of the higher incomes. For every recipient of a higher income there must be ten, twenty, or fifty recipients of smaller incomes. I cannot help thinking that the people who talk in the way to which I have referred, and write to the newspapers about it, are not greatly concerned about taxpayers of small amounts, but on behalf of the taxpayers of small amounts I put in a protest against the proposal to alter the present system requiring each taxpayer to send in his return of his income, and pay tax on .the measure of the income he receives.

Senator McDOUGALL:
New South Wales

– I rise to commend the Government for having at last proposed something in the direction of uniformity in connexion with our Taxation Departments. I think this clause is a step in the direction of the goal, which I hope yet to see attained, of one taxing master and one tax gatherer. I cannot understand the position taken up by Senator Pratten, or his calculations. I do not claim to be an authority on such calculations, but I believe that the Federal method of taxation is more equitable to the small taxpayer than is the method adopted by the State of New South Wales. T have made up the taxation return for a friend, who, under the New South Wales law, has an exemption of £250, and under the Commonwealth law an exemption of £156. He has to pay income tax to the State Government to the amount of £19 7s. lid., and to the Commonwealth Government to the extent of £10 ls. 7d. I can let Senator Pratten see the papers in this case, and perhaps * he will be able to account for the difference. The matter is one which does not greatly concern those who, like myself, have to pay income taxation which is very light compared with that which has to be paid by Senator Pratten and his friends. It is a privilege and honour for them to assist their country to the extent of the amount they are paying, and I only wish I was in the same box, and had to do the same. Income taxation, as imposed by the Commonwealth, is more favorable, equitable, and just, so far as the small taxpayer is concerned. The contention that the Commonwealth should consent to allow the States to collect its taxation for it is absolutely untenable. We have not the sovereign rights in regard to certain matters of self-government that the States have, and it is our duty, wherever we think we should have uniformity, to seek to give the Commonwealth Parliament, by means of an alteration of the Constitution, constitutional power and sovereign rights. That applies particularly to taxation.

Senator Pratten’s comparison of the number of employees in two different Taxation Departments - State as against Federal - is unfair and unjust. He gave only one side of the question. It was just as if he said that a certain business was carried on with a certain number of employees, and another business with considerably less, without mentioning the important fact that the larger number of employees had to do ten times more work than the others. I guarantee that the Federal Income Tax Commissioner and his Department have ten times the work that the New South Wales Commissioner and his Department have to do. I hope the Government will not allow theclauseto be altered. It is a step in the right direction, and I shall vote with the Government to keep it as it stands.

Senator FAIRBAIRN:
Victoria

– Whether the incomes of companies are taxed at their source, or at any other point of their distribution, I hope that neither the State Parliaments nor the Federal Parliament will let these details stand in the way of a proper amalgamation of the income tax Departments.

Senator Millen:

– Hear, hear !

Senator FAIRBAIRN:

– I am glad to have the Minister’s indorsement, because these, after all, are only details. What the people want is one collecting body throughout the Commonwealth. It does not matter to the taxpayer to a very great degree whether the system is State or Federal. We want, of course, a simple system, and I have been assured that the taxation of companies at the source is the most economical method. I do not know whether that is so or not, and do not pretend to express an opinion.

Senator Millen:

– I think it is more economical from the point of view of the Taxation Department.

Senator FAIRBAIRN:

– It is, however, comparatively a side issue so long as we get what the Government and the people are aiming at, that is, an early solution of the present difficulty which is so greatly harassing the business community.

Senator FERRICKS:
Queensland

– Are we to understand that this clause is simply a speculative feeler put out by the Government in the hope that something may follow in the direction of uniformity, or has an understanding been arrived at among the Taxation Commissioners who sat in Conference, that if the Federal Parliament adopts this principle subsequent advances are to be made by the States to the Commonwealth, or by the Commonwealth to the States, in this direction ?

Senator BAKHAP:
Tasmania

– The complexity of modern commercial transactions is necessarily reflected to a very large extent in income tax legislation. Whether it would be more economical for the States to collect taxation on behalf of the Commonwealth, or for the Commonwealth to collect it on behalf of the States, is a moot point. As the Commonwealth possesses very few exclusive powers of taxation, there must from time to time arise, from the very necessities of the case, considerable difference between Acts of. taxation which operate in the same field. There is a great deal of talk about uniformity, but I, for one, am not greatly struck with the principle. Australia is a very big country - a continent as big as Europe, with the exception of European Russia. Instead of adding to the functions of the Commonwealth Government, it is desirable, if possible, to reduce them and to confine the sphere of Commonwealth legislation to a few of the larger continental principles of government. In the Constitutionwe have dozens of powers which we have not yet exercised. As a general principle it would be wise for the Commonwealth Legislature, so long as the principle of Federation continues to be observed, to refrain from creating new Departments in connexion with Commonwealth activities where State Departments of a similar kind have long been in existence.

We talk about an approach to uniformity. This, of course, is an invitation to the States to subordinate their income taxation Departments to the newly created

Commonwealth Department. To my mind the efficiency of the officers of the Commonwealth Department, as of those of the State Departments, is not called in question, but it is extremely undesirable for the Commonwealth to create new Departments of taxation where similar State Departments already exist. I was one of those who, filled with enthusiasm, helped, in my humble way, to establish the new Commonwealth. We were told at the time that the cost of Federation would be a mere trifle, and, although perhaps too much was anticipated in the direction of economy, there is no doubt that the cost of Commonwealth activities has almost appalled those who were most enthusiastically in favour of Federation at the outset, and who are still hopeful of the prospects of our Commonwealth. The Commonwealth, which only lately instituted income tax legislation, had before it evidence that in almost every State income taxation was being levied, but it created a new Department, or added to the officers of the existing Taxation Department. If it follows that principle through the- whole field of taxation, where very few of our powers are exclusive, we shall have a tremendous multiplication of the Commonwealth Public Service. Against this I am going to set my face.

There is nothing mandatory in the clause, nor could it constitutionally contain anything mandatory, and I do not think it desirable that it should. It is only permissive, and innocuous enough. It is an invitation to the States to set aside their, in some cases, long-established Departments of Taxation, in favour of the newly created Commonwealth Department. That is a wrong principle, which I shall not support by any vote of mine. For the future, if a Department exists, common to all the States, which can be utilized to collect Commonwealth taxation or carry out Commonwealth duties, that Department, in the interests of national economy, will have to be used until the principle of Federation is superseded by something else. No doubt the clause, if availed of by the States, will tend to something in the way of uniformity, but I do not think any great or practical degree of uniformity is as possible as some of those who are intimately acquainted with the work of the Departments make out. I recollect an Income Tax Act which I helped to enact in Tasmania. Owing to the exigencies of the economic and industrial conditions of that State, we had to do things there in connexion, with income taxation which we did very reluctantly, and which probably no Legislature in any of the other States would have cared to do. That being so, it must be recognised that over this continent there will always be a great disparity and difference of conditions in connexion with the particular activities which are selected as suitable subjects for taxation.

The only thing I believe will ensue from the wide discussion of this principle is that the people of the Commonwealth, who are still very much more in favour of the Federal principle than some individuals seem to think, will set their faces against any duplication of services and instrumentalities which already exist in the States, and which can be utilized by the Commonwealth for the purposes of Commonwealth services entailed by legislation passed by this Parliament. There is no occasion to oppose the clause, but I expect no very great result from it, because it says to the States, in effect: “Our Taxation Department must stand. If you like to recognise that, we will collect your taxes for you, but, although your Departments were in existence before ours, we decline to set aside our agency in favour of yours.’’ That is to say, we will permit the States to subordinate their agencies to ours in the field of taxation, which is as open to them as to us; but we declare, by means of this clause, that we certainly shall not do away with our Taxation Department in favour of theirs, notwithstanding that theirs were in existence long before ours.

Senator PRATTEN:
New South Wales

.- The Minister (Senator Millen), in claiming that this is a long step in the direction of uniformity, is looking at it only through Commonwealth spectacles. I have already pointed out that in at least half the alterations made by this Bill in the existing Act, the Government depart from the uniformity arrived at by the Conference of Taxation Commissioners last year. This clause, in effect, provides that it shall be lawful for the Commonwealth to collect the State taxes. It does not make provision for the States to collect the tax for the Commonwealth. It says in so many words, “We, the supreme Commonwealth, are willing to swallow you up whenever you are ready to be swallowed; our methods must be your methods ; our taxation must be your taxation ; our officials must be your officials.” It does not pay the due and proper regard that should be paid by the Commonwealth to the efficient State officers.

Senator de Largie:

– Three cheers for State rights !

Senator PRATTEN:

– If it comes to that, I remind Senator de Largie that this is a States’ House, that there are six senators from each of the six States, and that the Constitution provides and expects that we shall look at problems from the angle of the States. Coming, as I do, from the State of New South Wales, which contains two-fifths of the population and everything else in the Commonwealth, I am not going to stand here and see the business-like rights of that State further encroached upon by the Commonwealth unnecessarily.

The Leader of the Senate (Senator Millen) read me a little lecture a while ago upon the question of accurate quotation of figures, but he did not challenge my figures, except those I quoted in connexion with the respective employees of the two Sydney taxation offices.

Senator Millen:

– I did not know the figures, and, therefore, did not deal with them. But I do know certain facts to which you did not refer.

Senator PRATTEN:

– I repeat that the Minister did not challenge figures which I have twice given in comparing the collections by the New South Wales Taxation offices, though he read me a .little homily on the accuracy of my statements relating to the comparison of results achieved by employees in the two Sydney offices. I did mention the number of employees in the Sydney Income Taxation Office, and regret that I made the slip, because it could be clearly understood from my further references to the matter that I meant the Federal Taxation Department in New South Wales. I repeat that in the New South Wales Taxation Department there is a staff of 140, consisting of sixty-eight permanent and seventy-two temporary officers, and the New South Wales Taxation Department employs over 500 persons, who, from six to eight months of the year, work overtime. Now, we have this comparison : The 140 State officers collect, approximately, the same amount of income tax as 400 persons, allowing for land tax and other administrative duties, collect in New South Wales for the Commonwealth. It may be that the 400 persons I allocated to the Federal income tax side of the Taxation Office in Sydney is too large a number; but if we allow for only 300, or even 250, we shall still have the fact that they are employees working all the time, and for six or eight months of the year working overtime, as compared with sixty-eight permanent and seventy-two temporary State officers, who work no overtime in the Taxation Department of New South Wales.

It seems futile for Parliament to expect uniformity, in view of the position taken up by the Federal Taxation authorities and the Commonwealth Government. I repeat that the clause now under consideration practically says to the States, “ We now have legislative authority to collect your taxes, but have no necessary authority to do anything else, or avail ourselves of your offices. We have all the knowledge in connexion with income taxation, and what we do not agree to, you must. We will agree to nothing that you suggest.” That is altogether a wrong attitude, and I again ask any honorable senator, if he were a Treasurer of one of the States, what would he say to the Commonwealth under these circumstances? I am sure he would say, “ You can go hang. You are not efficient enough to collect our taxes.”

Although this clause may be a little step in the direction of uniformity, I am afraid it will be inoperative, and that it will only be a step, and that after ‘we have passed the Bill, the exasperation of the public will be greater than ever, with the result that this highly desirable reform will be put off. I appeal to the Government to appoint some business-like honorary committee, the members of which would gladly deal with the matter at no expense to the Commonwealth, because it is urgent. I have already pointed out that it costs the State of New South Wales only lj per cent, to collect its taxation, as compared with 2 per cent. cost to the Commonwealth, and I again urge that the course suggested would lead to greater simplicity in the matter of collections than is possible under the presentsystem, and that the Federal taxation would be greatly increased.

Just a word now on the question of graduation. Nobody wants to see the rich man escape, but we do want to see all income first taxed at its source and then graduations made on individual taxpayers’ returns. I appeal to the Minister that these matters should be considered outside the officers concerned, in order to bring about that national efficiency which is so highly desirable.

Senator MILLEN:
Minister for Repatriation · New South “Wales · NAT

Senator Ferricks asked just now if this clause was to be the end of things. I hope it will be only the beginning. It has been arranged that the matter of the co-operation of State and Commonwealth in this direction shall be one of the subjects to be discussed at the forthcoming Conference of the State and Federal Treasurers.

Clause agreed to.

Clause 4 -

Section nine of the principal Act is amended -

  1. by omitting from sub-section (2) thereof the word “ taxpayer “ and inserting in its stead the word “ person “;

Section proposed to he amended -

  1. Any officer who acts in the execution of his office before he has made the prescribed declaration, or who, after making the declaration, divulges any information relating to the affairs of a taxpayer except in the performance of his duty under this Act, shall be guilty of an offence.

Penalty: Two hundred and fifty pounds.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I move -

That after the word “ amended,” line 2, the following new paragraph be inserted: - ” (aa) By inserting in sub-section (2) thereof, after the word ‘ declaration ‘ second occurring, the words makes a record of, or ‘ “

The amendment sounds complicated, no doubt, but if read into the original section it will become quite simple. It has been found necessary, because there is reason to believe that some officers have made records of the information received with respect to a taxpayer’s income. These records have sometimes been used to the detriment of the Department and annoyance to the taxpayer, whose business affairs have thus been divulged. The amendment, therefore, is merely a precautionary provision.

Senator GRANT:
New South Wales

– It appears to me that it would be a very good thing if the Commonwealth would make available for the inspection of all taxpayers exactly how much other taxpayers are paying. We would then be able to compare the receipts under State and Federal taxes and discover any discrepancy. This practice would also remove from the minds of some taxpayers a suspicion that others were escaping their fair share of taxation.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 5 agreed to.

Clause 6 -

Section eleven of the principal Act is amended -

by adding at the end of sub-section (1) thereof the following paragraphs: - “ (i) pensions paid under the War Pensions Act 1914-1916; and

the income of an agricultural, horticultural or other similar society or association, not carried on for the purposes of the profit or gain to the individual members thereof, established for the purpose of promoting by means of exhibitions and demonstrations the development of the agricultural, pastoral, horticultural, viticultural, stockraising or industrial resources of Australia.”

Section proposed to be amended - 11. (1) The following incomes, revenues, and funds shall be exempt from income tax: -

Senator PRATTEN (New South

Wales [5.47]. - This section exempts interest on Commonwealth loans from income taxation, and under the proposed new subparagraph j of paragraph d, it is provided also to exempt the income of an agricultural, horticultural, or other similar society or association not carried on for the purposes of profit or gain to the individual members, and established for the purpose of promoting the development of the agricultural, pastoral, horticultural, and other resources of Australia. I am in some doubt as to whether the provision is comprehensive enough to take in associations other than those specifically mentioned. As honorable senators know, there is a number of associations outside of this narrow ambit existing in Australia, helping on the development of this country. For instance, there is the Chamber of Manufactures; also the Chamber of Commerce, trade unions, and other organizations. They are all much on the same basis, and I think the provision should be comprehensive enough to include them. I have one or two suggestions to make with regard to this matter. I think the subparagraph should read as follows : -

  1. The income of any society or association not carried on for the purposes of the profit or gain to the individual members thereof, established for the purpose of promoting the development of the agricultural, pastoral, horticultural, viticultural, stock-raising, manufacturing, or industrial resources of Australia.

That would practically mean the elimination of the words “ by means of exhibitions and demonstrations “ and would introduce “ manufacturing,” which would include Chambers of Manufactures. We desireby every means to stimulate primary and secondary production, and would welcome all associations and bodies of individuals who wished to get together and, by their activities and subscriptions, help primary and secondary industries. I ask the Minister whether something cannot be done in the direction I have indicated.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– The honorable senator was good enough to give me, beforehand, a copy of his suggested amendment. His proposal is in entire conformity with the spirit of the clause. Senator Pratten, however, has expressed a little more happily, so far as the language is concerned, the underlying principle. I shall be pleased, therefore, to accept it as a substitute for what the Bill contains. *

Amendment (by Senator Pratten) agreed to -

That sub-paragraph (j) of paragraph [d) be left out, and the following inserted in lieu thereof: - ” (j) the income of any society or associa tion, not carried on for the purposes of tho profit or gain to the individual members thereof, established for the purpose of promoting the development of the agricultural, pastoral, horticultural, viticultural, stock raising, manufacturing, or industrial resources of Australia.”

Clause, as amended, agreed to.

Clause 7 (Exemption of income from personal exertion earned by persons on active service).

Senator PRATTEN:
New South Wales

– With respect to this exemption, granted by the original Act, it has been suggested that the words “ date of his departure “ should be struck out to permit the inclusion of “ date of his enlistment in the Forces.” I do not think it is quite fair to the soldier, after his enlistment, to mulct him in income tax before he has departed on active service and after his return; that is, if the principle is accepted that while he is away he should not be required to pay. Apparently, there would be some injustice inflicted. If it is proper to give relief from income tax payments in respect of a man who departs to fight for his country, then it seems quite proper that he should have exemption from the date of his enlistment.

Senator Millen:

– Although he may not leave Australia at all ?

Senator PRATTEN:

– I see the objection there; but the point is that he is under military discipline, and has no time or opportunity to look after his own business affairs. The same commercial circumstances prevail, although he may not have left Australia, as would exist after he has gone abroad. Seeing that, on the whole, when a man enlists in the Military Forces he loses control of his civil freedom and becomes part of the great military machine, if it is fair to grant exemption when he has departed as a military unit, then it is fair to expand that exemption to the whole period of his being a. military unit - that is, from the time of his enlistment to the date of his discharge. I have a suggestion for a substitution in the language of the clause after the manner I have indicated. I trust the Minister will agree that it is equitable that when a soldier loses his civilian identity his exemption should begin.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I am not able to accept the proposed amendment, although it does appeal to one’s sympathies. But if there is to be exemption granted from the time a soldier enlists, it must be remembered that large numbers have enlisted and, after a few weeks or months, have been discharged without having left Australia. During that period, they have been withdrawn from their civil occupations.

Senator Buzacott:

– They would be exempt, then, for that period only.

Senator MILLEN:

– Yes; and the same would apply to men in home service. There have been some remarkable cases with respect to men who have enlisted. They have been in camp-

Senator Needham:

– I know of some men who have been wearing uniforms from October, 1914, and have not gone abroad yet.

Senator MILLEN:

– It is not unreasonable to say that when a man leaves Australia on active service he is out of touch with his private business interests; and it is fair, therefore, to exempt him. But this proposal would open the door to the granting of exemptions which, perhaps, could not be fairly conceded.

Senator CRAWFORD:
Queensland

– What would be the position of a man who is abroad at the time he enlists ? Such a situation could apply to any Australian who has enlisted with the armies of any of the Allies.

Senator Millen:

– He would come under this clause. This includes men who are on service in other Forces, and who may have enlisted abroad.

Senator GRANT:
New South Wales

– Is it intended to exempt from the operations of the Act the income derived by a military official abroad when that income is paid to him, say, by a State Government to make his military pay equal to his civil salary before the date of his enlistment? The Bill is not quite clear upon that.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

Senator Crawford has directed attention to what is, I think, a possible weakness in the clause. He has asked what would happen under this provision in the case of an Australian who, having left Australia, ultimately enlists in some Imperial unit, or some one of the Allied armies. He inquires at what date his exemption would commence. I think - speaking as a layman - that, according to this clause, such a man could claim exemption from the date of his leaving Australia, although he has not then put on the King’s uniform. I ask that the clause be passed, so that I may submit it to the draftsman for the preparation of a proper amendment.

Clause agreed to.

Clause 8 -

Section 14 of the principal Act is amended -

  1. by inserting at the end of paragraph (e) the following proviso : -

Provided that when the taxpayer is an employee and premises are occupied by him for purposes of residence in connexion with his employment, the taxpayer’s income shallinclude the annual rental value of the premises or part thereof used by him for the purposes of residence.

Section proposed to be amended -

The income of any person shall include . . .

  1. 5 per centum of the capital value of land and improvements thereon owned and used or used rent free by the taxpayer for the purpose of residence or enjoyment and not for the purpose of profit or gain.
Senator GRANT:
New South Wales

– This is probably the most objectionable clause in the Bill. Originally, the Labour Government decided - by a nominal majority only - to foist upon the country this form of legislation as it appears in the section of the Act. It is a direct tax upon industry. The present Government, following the vicious and mischievous example set by the Labour Government, proposes to proceed along the same evil pathway. I would like to see those now in power depart from that path and get on to a proper procedure of raising national revenue. This is a proposal to take into consideration the house in which an employee may live - to calculate its value, and, presumably, the value of the land upon which it is erected - and to charge him 5 per cent. upon the total amount thus involved. Apart altogether from the basic wrong contained in the provision, this tax will fall very heavily upon some employees who receive less than £156 a year. For instance, it provides for taking into consideration the accommodation occupied by a caretaker in connexion with stores, offices, and other buildings. Many of these offices and buildings are erected on land which is worth many hundreds of pounds per foot, and when the. value the accommodation provided for, say a caretaker, is taken into account, it is obvious that the tax will constitute a very serious impost upon a class of persons who are usually paid very small salaries. We know perfectly well that the wages of watchmen and caretakers do not equal those that are received by artisans and others. But why should we seek to discourage the erection of houses if only for week-ends and pleasure purposes? Does not everybody know that to-day rentals are exceedingly high, and that anything in the form of a handicap upon those who are prepared to invest their money in buildings should not be countenanced by this Parliament ? Do we not all desire to see the building trade active, and better accommodation provided for every person ? Then why should we seek to levy a tax upon people who desire to invest in dwellings ? In New South Wiales we are told that the Pair Rents Court is a serious handicap upon, and acts as a deterrent to, the erection of new houses. We know that the abnormally high cost of building materials is another serious factor, as is also the high price of land. Yet, on the top of all these things, the Government propose to still further inconvenience persons who invest their money in this form of enterprise by taxing them according to the value of their residences. I trust that the Minister will see his way to abandon this proposal.

Senator FAIRBAIRN:
Victoria

– I rise to call attention to paragraph d of clause 8 of the Bill, which proposes to amend section 14 of the principal Act by omitting therefrom the third proviso to paragraph b, and inserting in its stead the following proviso : -

Provided further that where a company distributes to its members or shareholders any undistributed income accumulated prior to the first day of July,1914, the sum so received by the member or shareholder shall not be included as part of his income. For the purposes of this proviso amounts carried forward by a company in its profit and loss account, appropriation account, revenue and expenses account, or any other account similar to any of the foregoing accounts, shall not be deemed to be nccnmulnted income.

I would like the Minister (Senator Millen) to explain what accounts will be exempted under this provision. Accounts which cover amounts carried forward to profit and loss, and which are not to be deemed accumulated income, appear to me to embrace almost all accounts of which we can conceive. This is the most terribly retrospective clause which it has ever been sought to embody in our legislation.

Senator Millen:

– It is entirely for the benefit of the taxpayer.

Senator FAIRBAIRN:

– Some of these profits may be twenty years old.

Senator Millen:

– They will be exempt from taxation if they are distributed now.

Senator FAIRBAIRN:

– I think not. In the early portion of it the clause says that they shall be exempt if they are accumulated profits; but it then goes on to say that practically no account shall represent accumulated profits. It is a most extraordinary provision, and I know of several cases in which it is inflicting very great injury upon people. At the same time, I recognise that, as it is designed to protect the revenue, it will have to be passed. But I would like to tell honorable senators how it will work out. Section 14 provides that the “carry forward “ in profit and loss account shall not be deemed to be accumulated income. Let me give an instance of the effect of that provision. Let us suppose that A and B are two companies, which, on 1st July, 1914, have each £100,000 undistributed on account of contingencies. In A’s books let us assume that the amount has been transferred to a reserve account, . but that in B’s books it is still shown in profit and loss account. When the contingencies disappear and both companiesdistribute in dividends, A’s shareholders will pay no tax on these dividends, whilst B’s shareholders will pay tax. In other words, a book entry will make income either taxable or non-taxable. Do honorable senators fully appreciate the absurdity and unfairness of such a position, and do they realize that the proposed amendment of the clause will extend and perpetuate the injustice by so defining profit and loss account as to include “ appropriation account, revenue and expenses account, or any other similar account “ ? The clause is the most extraordinary example of proposed retrospective legislation that I have ever seen. I know of one case in which a small number of men were trading as a company. It waa practically a private company. They had an amount of £22,000 to their profit and loss account, and they invested that amount in a lemon orchard on the Murray River, which will not come into bearing for five or six years. They divided the profit which was made by them prior to a Federal income tax coming into operation. Later on, when legislation wasenacted authorizing the collection of this tax, the Department came down on them with a demand for £7,000. This action did seem very harsh, and I know that, as a result, these persons were put to very serious inconvenience, although the Department met them as far as it could by deferring the payment of the tax.But so long aswe are legislating in this way with our eyes open, I havenothing more to say. The astounding feature of the whole business is that, under the first Income Tax Act, these profits werespecially exempted from taxation. ThenMr. Tudor brought forward an amendment under which they were made taxable. I will undertake to say that there was not a single representative in another place, nor was there a single honorable senator, who understood the change which was then effected. The explanation made by the Minister was anexceedingly weak one.

Senator Needham:

– What was Mr. Tudor’s proposal?

SenatorFAIRBAIRN. - I have already stated that in the original Act these profits were not taxable. Under Mr. Tudor’s proposal, however, amounts carried forward toprofit andlossaccount were made taxable. I am perfectly certain that Mr. Tudor did not understand what he was saying at the time, nor did any of the representatives in another place. Several law suits haveresulted fromthat change in our legislation.However, I understand thatthere is nointention to again interfere with the peoplewho were chiefly concerned in that litigation and whohave paid up the amountsthat were alleged to be due by them. Iknowthat this clause is brought forward for the purpose of protecting the revenue. At the same time, I should like theMinister to explain what accounts will now beexempt from taxation.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– The honorable senator has put to mea question which, I frankly admit, is a puzzler. I wish that I had a better cause to argue. But I cannot for the moment think of anyaccount which will beexempted from taxation under this clause, unlessit be a reserve for the equalization of dividends. Perhaps a fund so called might meet the ease. Bub the clause will impose no obligation on anybody to which he is not already liable. It says that where a company. has appropriated to a certain fund certain of its : profits, and, later on, it distributes those profits, the incomeso distributed shall not pay tax. But it goes on to say that if, inthemeantime, those “profits have been paid into funds carryingcertainlabels, they shall be subject to taxation. It will thus put upon companies the obligation of finding some fund which isnotlabelled as enumeratedhere. I cannot for the moment think of any other fund which -will enable the recipient taxpayer to obtain the benefit of this clause.

Senator GRANT:
New South Wales

– I invite the attention 5f the Committee to paragraph d of this clause, proposing the insertion of a new proviso for the third proviso of paragraph b of section 14 of the existing Act. It seems to me that the new proviso will give the Commissioner of Taxation power to go back to July, 1914, and compel all taxpayers to overhaul their multitudinous accounts, and put them to no end of expense and trouble for probably a very small amount of additional revenue. It would be well if the Minister for Repatriation could give the Committee an assurance that the effect of agreeing to the proposed new proviso willnot lead to retrospective action in the direction I have indicated.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I have already stated thatthe proposednew proviso will notimposeany additional liability upon any taxpayer. I do not knowthat I canaddvery much towhat I have already said about it. It might have been worded somewhat differently. It sets out by saying that . any profits made before a certain date, when distributed, shall not be taxed. Having apparently opened a door wide by which accumulated profits might escape taxation, the proviso continues to carefully block, brick by brick, the space represented by the opendoor. I believe that the object of the proviso is to meet technical requirementsrather than anything else, and I amassured that it will not impose upon anybody any taxation that is not now payable.

Senator Grant raiseda point in connexion with a later portion of the clause,under which a person occupying a house in connexion with his employment is called upon to add to his income its estimated annual rental value. I think that is a fair proposition provided it is stipulated that the man occupying the house shall be charged upon an addition to his income not necessarily equivalent to the rental value of the house as computed in the ordinary way, but equivalent to its rental value to him. It is quite within our knowledge that men filling certain positions are frequently given houses to live in which are more spacious than they would need. I think it is right that in such cases the taxpayer’s income should ‘include the annual rental value of the premises to him. That would insure that the occupant of such premises would not be called upon to pay taxation in respect of a higher rental than he would ordinarily have to pay for a residence that he would select for himself. I think that it is right that these persons should have to include in their income something in respect of the rental value of the premises they occupy in connexion with their employment. An ordinary taxpayer is compelled to do that.

Senator Grant:

– It is very wrong, all the same.

Senator MILLEN:

– I think that it is absolutely right. If Senator Grant has £1,000 to invest, and puts it into a house, and so saves paying rent, he should pay income taxation upon the profits of that investment.

Senator Grant:

– Who strikes the valuation ?

Senator MILLEN:

– The Act provides that it shall be 5 per cent. on the capital value, and I think that is a very moderate rate. There is no member of the Senate who would put money into bricks and mortar to-day for a return of 5 per cent. The fact that the Commissioner of Taxation is satisfied with such a low rate is but another instance of that moderation which is making him notorious throughout Australia. I move -

That paragraph (f) be amended by inserting after the word “ value “ the words “ to him “.

Senator GRANT:
New South Wales

– I have heard of a State Government expending £2,000 or £3,000 upon the erection of a superintendent’s residence, and I believe that the Commonwealth Government have spent substan tial sums of money for official residences in connexion with public works in the course of construction. The amendment moved by Senator Millen would enable the occupiers of these residences to escape the payment of income tax on the rental value of the property at 5 per cent. by including in their incomes only the rental value of the premises to them. I believe that under the amendment persons occupying such premises would be placed in a position of advantage as compared with persons occupying rooms or dwellings attached to many public buildings in all of the large cities. I am opposed to the whole paragraph, but I entirely object to the suggestion now made that persons occupying the buildings provided in connexion with their employment should be allowed practically to occupy them at a smaller rental than they would otherwise be required to pay. If it is a fair thing; that a man living in his own house should include in his income an amount equal to 5 per cent. of the capital value of his house and land in lieu of rent, it is not right that persons occupying residences in connexion with their occupation should have their incomes estimated on a different basis.By the way, I should like to mention that this introduces in a certain sense a land value tax without any exemption at all, providing the land is built upon, notwithstanding the f act that the Federal Labour party have agreed to a £5,000 exemption in connexion with the land tax.

The CHAIRMAN (Senator Shannon:

-I ask the honorable senator not to continue that line of argument.

Senator GRANT:

– I was pointing out that fact for the information of Senator Millen, who occasionally forgets the foundation principles of taxation.

Senator Millen:

– The honorable senator never gives me a chance to forget them.

Sitting suspended from 6.30 to 8.0 p.m.

Amendment agreed to.

Amendment (by Senator Grant) proposed -

That paragraph (f) as amended, be left out.

Senator PRATTEN (New South

Senator Grant’s contention. I am reminded of the many differing circumstances under which employees occupy premises for employers. In many cases they occupy them as caretakers only. Sometimes they may prefer to live elsewhere, and the paragraph may inflict an injustice on an employee occupying an employer’s premises. I understand that Senator Grant intends to move to substitute a new provision specifying that the employee shall pay no rent. Of course in certain circumstances the occupying of premises has to be taken into consideration when wages are being fixed. I retain an open mind on the subject until I arn perfectly clear as to what Senator Grant means by his amendment.

Senator Grant:

– I propose to strike the paragraph out.

Senator PRATTEN:

– What does the honorable senator propose to put in its place ?

Senator Millen:

– Nothing.

Question - That paragraph f, as amended, be left out - put. The Committee divided.

AYES: 7

NOES: 13

Majority … … 6

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Senator PRATTEN:
New South Wales

– I do not understand the paragraph as amended even now. All sorts of people, such as policemen, police officers, public servants, andemployees of private firms, will be affected by it. Will the Minister explain who are Included ?

Senator MILLEN (New South Wales business firm employs some one, and as part of his remuneration offers him premises to live in, it may deduct as an expense an amount represented by the value of the accommodation for that employee. If that amount is entitled to be taken off the income of the employer as a deduction for expenses, clearly it is entitled to be put on to the beneficiary as part of his income. For that reason itis thought fair that where any one, as part of his income, has the use of premises to live in, it shall be regarded as part of his emoluments, and he should be called on, if within the taxation limit, to pay tax upon it.

Senator GRANT:
New South Wales

– Does the provision mean that every schoolmaster and schoolmistress for whom premises are provided by the various Education Departments will have to pay income tax on 5 per cent. of the capital value of the land and improvements thereon constituting those premises ? Is that the effect, also, on police officers ?

Senator Millen:

– Certainly not, if they are charged rent.

Senator Pratten:

– And if they are not charged rent?

Senator Millen:

– Then it is assumed that the value of the premises they occupy is part of the emoluments of their office.

Senator GRANT:

– -Then it is to be regarded as part of their salary, and they have to pay tax on 5 per cent. ofthe capital value?

Senator Millen:

– No. The words “ to him,” which I put in, and to which the honorable senator objected, have the effect of basing the tax, not on the capital value, but on the value to the occupant.

Senator GRANT:

– Then the Commissioner in charge of the premises on the Yanco Estate, in New South Wales, which cost the Government about £2,000 or more to build, or the occupant of the premises recently tenanted by Colonel Miller at Canberra, which cost the Commonwealth considerably over £2,000 to build, are not to pay in proportion to the value of the buildings and land, but are to be permitted to value the premises themselves, and pay accordingly ? Apparently that is the position now placed before us by the Minister. It is highly unsatisfactory from every point of view.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

Senator Grant seems to have only two points of view - that from which he sees in this clause some relief to highly-paid officials, and the other when he looks through the wrong end of the telescope, and sees some injustice to a poor, struggling individual. The principle of this provision is not only fair in itself, but just to any individual, no matter what his position. Colonel Miller, whose name has been mentioned, or the humble school teacher, is not to pay according to the value of the bricks and mortar put into the premises by some one without consulting him, but according to the value of the premises to himself. An employer running a factory may put up rather a spacious manager’s house, assuming that he is going to have a married man there, or he may have built it in the first instance to reside in himself. Later on he offers the position to a single man, or a married man with a small family, who requires but a modest cottage. It would not be fair to make the occupant, who requires only a small dwelling, pay tax on 5 per cent, of the capital value of that big place.

Senator Grant:

– Of course not.

Senator MILLEN:

– Therefore, this provision now provides that he shall pay tax on a rental corresponding to the value of the premises to himself.. That is absolutely fair to the low-paid school teacher or the highly-placed official. Their own circumstances determine the rental value on which they shall be assessed.

Senator GRANT:
New South Wales

– That is all very fine, but in the administration of an Act of this kind various difficulties crop up, and we find that in the vast majority of cases the poor man occupying premises of this kind is taxed up to their full value, while the wealthy man probably gets off at a value fixed by himself.

Senator PRATTEN:
New South Wales

.- The Minister has clarified the position somewhat, and the intention, as he has illustrated it, seems to be equitable and just. But the paragraph appears to cover country officials and State servants. What does the Minister propose in the case of a police officer getting £250 a year and quarters, or a schoolmaster getting £300 a year and quarters ? What does he propose in the many cases that exist in the country ?

Senator Millen:

– I propose what this Committee has approved.

Senator PRATTEN:

– We are told by the Minister that to the income of police officers, schoolmasters, and other people similarly situated, who are provided with accommodation by the State or Federal Government, will be added an annual sum to represent the value to them of these premises. We know now how far the provision goes. It is very far-reaching and practically ropes in everybody, though I do not say it does so unjustly.

Senator GRANT:
New South Wales

– Under this measure taxpayers are entitled to an exemption of £156, and in some cases of £100, and the Minister in charge (Senator Millen) now proposes an additional scheme under which a large number of people in receipt of small incomes will be further taxed.

Senator Millen:

– No. This amendment does not do that. As the original Bill stood they were charged 5 per cent, on the value of the property. We are now» liberalizing that provision.

Senator GRANT:

– No ; the Government propose to place a tax on every schoolmaster1, and upon every public servant in Australia, who is living in accommodation provided for him by the Government. In some cases this accommodation is of a very inferior character, but still every schoolmaster and every schoolmistress throughout the Commonwealth will be carefully sized up under this drag-net proposal, and be called upon to pay more taxation than before.

Senator Henderson:

– We will all have to do that. a

Senator GRANT:

– Nobody objects to taxation provided it is imposed in a reasonable manner.

Senator Crawford:

– Why should Government employees be exempt any more than other people?

Senator GRANT:

– This provision does not apply to Government employees only, but to employees of the various wool, coal, meat, and other kings throughout Australia.

Senator Henderson:

– It applies to everybody.

Senator GRANT:

– It is a proposal that ought not to be encouraged, because it represents a tax upon industry. If an employer cares to build a better house for his employee, why should the employee be taxed for that improved accommodation ?

Senator Millen:

– Why did the honorable senator pass the Act? That principle is in it now.

Senator GRANT:

– It did not pass with my consent, anywhere, or at any time. I have no doubt, however, that the Minister voted for it with a joyful heart, as he has always done ever since he was on the other side of the Chamber.

Senator Millen:

– But you were on this side when that Act was passed.

Senator GRANT:

– And the Minister was on this side of the Senate.

The CHAIRMAN (Senator Shannon:

– The honorable senator must confine himself to paragraphf of clause 8.

Senator GRANT:

– This provision, I maintain, is equivalent to a tax upon industry, and should not be tolerated.

SenatorFOLL (Queensland) [8.20].- I may be dull of comprehension, but I fail to grasp Senator Grant’s point of view.

Senator Grant:

– You would never grasp anything.

The CHAIRMAN:

– Order ! The honorable senator is not in order in alluding, to another honorable senator in those terms. I must ask him to withdraw that remark.

Senator Grant:

– I withdraw it.

SenatorFOLL. - If Senator Grant’s suggestion be adopted all public officials, will be debited with a percentage value of the premises they occupy, and a postmaster, for instance, might have to pay on the total value of the post-office property. This would be an exorbitant charge. Instead of materially reducing the tax on the employees, Senator Grant’s suggestion would materially increase it.

Senator PRATTEN:
New South Wales

. - In this clause the word employee does not seem tome-

The CHAIRMAN (Senator Shannon:

– Order ! The honorable senator cannot now propose to amend paragraph f. It has. already been agreed to by the Committee.

Senator Grant:

– We can knock it out altogether, though.

Senator PRATTEN:

– I merely rose to point out to the Minister in charge the doubt that exists in my mind as to whether the word “ employee “ would cover the officials referred to. I presume it will.

Clause, as amended, agreed to.

Clause 9 -

After section fourteen of the principal Act the following section is inserted : - “ 15. Income shall be deemed to have been derived by a person within the meaning of this Act, although it is. not actually paid over to him, but is reinvested, accumulated, capitalized, carried to any reserve, sinking, or insurance fund however designated, or otherwise dealt with on his behalf or as he directs..”

Senator PRATTEN:
New South Wales

– We do not seem to have very much time to consider these clauses point by point. I wanted to make a few remarks on clause 8 before you put it. I would point out-

The CHAIRMAN (Senator Shannon:

– Order ! The honorable senator will not be in order in referring to clause 8.

Senator PRATTEN:

– Then I will ask you to request the Clerk to read clause 9.

The CHAIRMAN:

– Is it the wish of the Committee that clause 9 should be read ?

Senator Grant:

– Aye.

Senator PRATTEN:

– I point out, Mr. Chairman, that understanding order 420 it is mandatory on you, if requested to. do so by any honorable senator, to have a clause read. It reads -

Each senator may, of right, requirethe question to be read by the Clerk for hisinformation at any time during the debate, but not so as to interrupt a senator speaking.

The CHAIRMAN:

– That refers to the Senate. The position with regard to clauses of a Bill are dealt with in standorder 200.

Senator Millen:

– I do not think it is a. question so much of reading the clause as of deciding whether we shall have the clause or not.

Senator PRATTEN:

– No. It is a question whether we shall have breathing time to consider the clauses.

The CHAIRMAN:

– Order ! The honorable senator is not in order in suggesting that the Chairman is forcing the business through, and I must ask him to withdraw that remark. Members of the Committee have ample time to consider any clause. The business is entirely in the hands of the Committee.

Senator PRATTEN:

– I withdraw any insinuation I made against you, Mr. Chairman.

Senator SENIOR:
South Australia

– It appears to me that under the proposed new section a taxpayerwill have to pay on any sum of money invested on his behalf by his employer in an insurance fund. I think this has been specifically exempted in the existing Act.

Senator MILLEN:
Minister for Repatriation · NewSouthWales · NAT

, - The clause is not difficult of comprehension, and it is entirely equitable. It should also commend itself to honorablesenators, because it is obviously a clause which will stop those “ways that are dark, and tricks that are vain,” which are not unknown in the commercial world of this or any other community. Obviously, income may represent something other than actual cash received. It may represent the profits of a transaction in the shape of goods or bills. It would still be income. Suppose a person had money on mortgage, and allowed the interest to accumulate, should he be allowed to escape a payment on his income ? The clause assumes that a man has been paid the money he is entitled to receive.It would be very easy, but for this provision, for a man, by foregoing demands for ‘payment, to build up assets, and thus avoid his income tax payment. Under these circumstances there is no hardshipin requiring thata man shall do thefair thing.

Senator FOLL:
Queensland

.- I would like to know how the principle would apply in Queensland, where there is a law for compulsory insurance under the Workmen’s Compensation Act? Will an employer, whohas to pay compulsory insurance premiums, in respect of his employees, be allowed an exemption?

Senator Millen:

– That would be counted as working expenses.

Senator GRANT:
New South Wales

– It appears to me that a person who may be foolish “enough to invest money in some fund may not only have to pay income tax on what he does not receive, but may have his money reinvested withouthis consent. To avoid that, it might be well to make a slight alteration in the verbiage of the clause. My intention is to make it clear that the money is being invested, not only with a person’s knowledge, but with his consent.

At present, the phraseology does not quite convey that intention. I move-

That the word “or”, line 11,be left out

With a view to insert in lieu thereof the word “and”.

The clause would then read -

Income shall be deemed to have been derived bya personwithin the meaning of ‘this Act, although it is not actually paid over to him, but is re-invested, accumulated, capitalized, carried to any reserve, sinking, or insurance fund however designated, or otherwise dealt with on his behalf and as he directs.

Senator Earle:

– It would have the same meaning.

Senator PRATTEN:
New South Wales

.- I hope the honorable senator will withdraw his amendment.If he will refer to the draft uniform Bill, whichwas agreed to by the Income Tax Commissioners last year, he will note that this is one of those clauses which have been copied word for word from the . draft. I would not like to see any difficulty placed by the Legislature in the way of uniformity.

Senator GRANT:
New South Wales

– In view of the . fact indicated by Senator Pratten, which I had overlooked, I ask leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause agreed to.

Clause 10 (Amendment ofsection 16).

Senator PRATTEN:
NEW SOUTH WALES · NAT

– This is the clause which contains the ‘extremely complicated company provision’s. I like the frank way in which the Leader of the Senate (Senator Millen) stated, before the adjournment, that he did not understand some of the provisions of the measure. No honorable senator understands entirely what clause 10 means. It is largely technical.

Senator Earle:

– It has been drafted by the Commissioner for the prevention of tax dodging.

Senator PRATTEN:

– It is very easy to make general observations, but an act such as this will affect somebody throughout the Commonwealth in almost every line. I am not going to say whether the provisions here are more complicated than they should be. It is a distinct departure from the draft Bill of the Commissioners. I do not understand very much about what is in clause 10. Admittedly, the clause is of an extremely complicated character, and is likely to give rise to a great deal of litigation. We have heard that some of the retrospective clauses are most unfair, and that if they are left entirely to the adjudication of the Commissioner they may be carried out in too harsh a manner. I suggest that a clause be included to provide for a Board or Boards of Reference in connexion with the administration of the whole Statute. We have already adopted the principle with respect to a very complicated lawthe War-time Profits Act- namely, that it rightly admits of the establishment of Boards of Reference. It is fair to the taxpayer that there should be some Board or Boards to whom be may appeal in any case of possible injustice inflicted upon him.

Senator Grant:

– No wonder the Commonwealth taxing staffs are numerous, when they have to administer sections such as these.

Senator Foll:

– On a point of order, is the honorable senator in order in advocating the appointment of referee boards to deal with this Act generally when the Committee is discussing, at present, clause 10?

Senator Grant:

– I rise to order. This clause is so complicated that even Senator Pratten is not quite able to grasp it. It may be as clear as noonday to Senator Foll, but I suggest that the Committee be given an opportunity of arriving at some understanding of its meaning

Senator Millen:

– A board of reference will not help to that end.

The CHAIRMAN (Senator Shannon:

– Order ! Senator Pratten is quite in order in making that reference.

Senator PRATTEN:

– Continuing my line of argument, it is clear that, under such a complicated Act as this will be- - and it will practically give autocratic power to the Commissioner - taxpayers may eventually be placed on the horns of a dilemma. If the Commissioner attempts, in the opinion of the taxpayer, to inflict an injustice upon him, his only recourse will be to a Court of law; and the hearing of the case will follow in legal fashion, which may, or may not, give justice to the Commissioner or the taxpayer. I repeat that we have acceded to the principle in connexion with the Wartime Profits Act.

The CHAIRMAN:

– Order! The honorable senator is not in order in referring to the scope of the whole Bill, or in making a second-reading speech.

Senator PRATTEN:

– I shall confine my reference to this clause. The sensible way out would be to provide, somewhere during the Committee stage, for the establishment of a board or boards of reference, which would be able to adjudicate in a practical commercial way. I do not propose an amendment necessarily to the clause under discussion.

The CHAIRMAN:

– I point out that the honorable senator will have- a much better opportunity by moving to insert a new clause in the direction he has indicated.

Senator PRATTEN:

– While this clause was under discussion, I thought the matter might be approached so that the Leader of the Senate could be in a position to consider the suggestion.

Senator MILLEN:
Minister for Repatriation · New South Wale3 · NAT

– I am surprised that the honorable senator could imagine that a board of reference would help in connexion with this clause. The Board would not legislate. If we agreed to the establishment of a board, it would not help to determine the judgment of this Committee whether clause 10 should remain or not.

Senator Pratten:

– That is so.

Senator MILLEN:

– We must accept the responsibility of whether the clause shall stand, be struck out, or be amended. Mention has been made of its complexity. I cannot think that Senator Pratten, who has been sleeping with the Bill for the past fortnight, is not familiar with all its crevices. I invite the honorable senator to look at sub-section1a. Under that provision, it is proposed to impose a tax of 6d. in the £1, plus the flat rate, in the case of absentees who draw their dividends from companies here. That means that, in addition to a flat rate, in these cases there shall be a charge of 6d. in the £1. Is that complicated? Coming to the next paragraph, it provides -

The interest paid or credited by the company to any person, who is an absentee, on money raised by debentures of the company and used in Australia or on money lodged at interest in Australia with the company, shall be liable to pay the tax. The same rate is proposed to be levied there. It is, of course, a debatable question whether or not we should impose an extra tax upon an absentee. But that question has not been raised, and consequently there is no complexity about the paragraph in question. Then, paragraph c deals with the holders of bearer debentures - those documents which cannot be traced. Here, again, the company is called upon to pay the tax as if the whole of the amount distributed by it were the income of one individual. That is done to protect the revenue, because it is impossible to trace the holder of bearer debentures. But, whilst calling on the company to pay taxation on the amount which it thus disburses, as if it were the income of one individual, it is provided in later clauses that the individual adversely affected may reveal himself if he chooses to do so to the Income Tax Commissioner, and may say to that officer, “ I have been charged through the company at the maximum rate. I have included the amount in my income, and, therefore, I claim that I should be charged only at the rate which that income is entitled to carry.”

Senator Fairbairn:

– In this provision it is proposed to tax companies at their source.

Senator MILLEN:

– Yes; and perhaps it is for that reason that Senator Pratten confessed that he did not understand it. I submit that the clause is not the complicated mystifying one that the honorable senator would have us believe.

Senator PRATTEN:
New South Wales

– My honorable friend, Senator Millen, has explained with some degree of clarity the first three or four provisions of this clause. But there is a good deal of other -matter which requires explanation. No doubt, I shall be able to understand it if Senator Millen will go from Dan to Beersheba in connexion with the clause in the same manner as he started out to do just now.

Senator BAKHAP:
Tasmania

– This clause may be necessary, but I believe that the charge of complexity which is so frequently made in connexion with long clauses of this description is largely occasioned by the draftsmanship. This clause covers two pages. There are four provisos in it before we reach the second sub-clause. Then there is a proviso in that sub-clause. Now, if these clauses were made very much shorter and simpler, the charge of complexity which we so frequently hear would not be made. I suppose that mem bers of Parliament speak one kind of language; there is another kind of English which is called “journalese,” and it seems to me that there is still another which might very well be called “ draughtsmanese,” which applies to the drafting of parliamentary Bills. Here is a proviso which reads -

Provided also that a company shall bc entitled to deduct and retain for the use of the company from the interest or dividend payable to any person who is a holder of debentures or share stock payable to bearer an amount which bears the same proportion to the amount paid by the company under paragraph (c) of this sub-section as the interest or dividend payable to that person bears to the total interest or dividend payable in respect of those debentures or that share stock.

Senator Millen:

– The honorable senator knows very well what that means.

Senator BAKHAP:

– The provision might very well be epitomized in about five lines. I do not say that it is unnecessary, but the language of these clauses should be simpler, and the’ clauses themselves should be shorter. In the clause now under consideration, the taxation of absentees, the taxation of the debentures of a company, and the deduction by a company of a proportionate amount of the tax which should be paid by every debenture-holder, are all lumped together. I venture to say that these matters should be dealt with in separate clauses. We are embodying in this clause in an uncouth manner the salutary provisions, which should be made the subject of separate clauses, and I say this, with all due deference to the Parliamentary Draftsmen, to whom I am willing to concede the possession of any amount of ability. This proviso, which covers almost ten lines, could be met by saying that a company shall be entitled to deduct from its disbursements to share and stockholders a proportionate amount of the taxation payable by it on such disbursement. Anybody dispassionately looking at the clause must see that something savouring of more clarity should be introduced into the drafting of this financial legislation.

Senator FAIRBAIRN:
Victoria

.- The Minister (Senator Millen) has explained that this is a wonderfully simple clause. But its first proviso reads -

Provided that a company shall be entitled to deduct and retain for the use of the company from the amount payable to any of the persons, referred to in paragraphs (a) and (b) of this sub-section suchamount as is necessary to pay the tax which becomes due in respect of that amount.

That sounds quite simple. But, if the Minister were a company and had made a contract for these bearer debentures in England, he would find that he could not possibly make the deduction for which this clause provides. Thus the. effect, of the clause will be to impose the highestrate of tax upon companies. I agree entirely with the remarks of Senator Bakhap, andI ask, the Minister if he really. thinks proposed new sub-section 2 is.necesr sary? That sub-section reads -

Where, in the opinion of the Commissioner, a companyhas not in any year distributed to its members or shareholders a reasonable proportion, of its taxable income, the taxable income of the company shall be deemed to have been distributed to the members or shareholders in proportion of their interests in the paid-up capital of the company, if the Commissioner is satisfied that the total tax payable on it as distributed income is greater than the tax payable on it by the company.

That really permits the Commissioner to override the board of directors of a company.I do not think therecan be many cases in which companies do not distribute these profits to their shareholders. It would simplify the measure a great deal if proposed new sub-section 2 were excised.

SenatorMillen. - I think I can show the honorable senator the necessity for retaining it.

Senator FAIRBAIRN:

– I should be very glad if the. Minister will do so.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– The point raised by Senator Fairbairn, which forms part of this extremely simple clause, arises in this way: There are in Australia a number of really proprietary concerns, which, in order to obtain the benefit of company law, register themselves as companies.. Not infrequently they represent, in a company of 20,00,0 shares, one gentleman, who holds, say, 19,090 shares, and his wife and daughter, together with two or three clerks, who hold a share or two apiece. If a. company abstains from distributing its profits, the taxpayer who would be liable to pay a high rate of, perhaps, 4s. or 5s. in the £1 escapes by the payment of a very low rate. That is not desirable. As a matter of fact, complaints have been made by ordinarytraders, who say, “ We have not formed ourselves into a company, and. we are, bound to pay upon the higher rate, but because our competitor has formed himself into a. company, and has. not. distributed his profits, he has avoided the payment of the tax which we Lave had to pay.” I think, therefore, that there is justification for this clause.

Senator CRAWFORD:
Queensland

– However good the clause may: be in itself, it is rather too much to ask the Committee to swallow it in one mouthful. I think it would help to a proper understanding of it if it were dealt with in three parts. It deals with three entirely different subjects. The first portion of it deals with the collection of the tax from absentees, the second with cases in which companies do not distribute to their members a reasonable proportion of their taxable income, and the third with butter companies. I do submit that the clause ought to be split up.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

. - May I point out that the Committee is under no necessity to swallow this clause at one fell draught?

Senator Bakhap:

– It ought to be remodelled.

Senator MILLEN:

– I am not going to enter into a discussion of the merits or demerits of the draftsmanship. I have seen many attempts made to secure simplicity in draftsmanship, and they have generally resulted in briefs in an army of lawyers.

Senator Bakhap:

– Admittedly, income tax legislation iscomplex.

Senator MILLEN:

– It is. It is so complicated that a draftsman may almost be pardoned - in view of the frequency with which he finds apparently plain words capable of a double meaning - if he seeks to make quite clear the intention of the Legislature even by the employment of redundant language. I am not discussing the merits of the draftsmanship ofthe Bill now. I point out to Senator Crawford that if he orany other member of the Committee believes that it is necessary to discuss or amend any one of the paragraphs of this clause it’ is quite open to him to do so. For that reason I say there is no disability upon the Committee in submitting the clause as a whole, seeing that every line of it is open to review.

Senator PRATTEN:
New South Wales

Senator Fairbairn has rightly pointed out that under the proposed new sub-section 2 the Commissioner of Taxation is given power in certain circumstances to override a board of directors of a company. I do hot like to give this very drastic power to the Commissioner of Taxation. That is an additional reason why I hope the Minister for Repatriation (Senator Millen) will provide some safeguard against a harsh decision by the Commissioner of Taxation. I quite agree that in certain circumstances the payment of legitimate taxation might be dodged if there wereno provision of this kind included in the Bill. But, oh the other hand, I say that honorable setaators should hesitate before they give such an autocratic and arbitrary power to the Commissioner of Taxation. This legislation may be found to be full of pitf alls, and I echo Senator Crawford’s request that the clause should be dealt with in sections. We shall want to know what will be its effect upon a butter company.

Senator Millen:

– Does the honorable senator object to the provision affecting butter companies?

Senator PRATTEN:

– I am taking one thing at a time. I am referring to the arbitrary power given by the proposed new sub-section 2 to the Commissioner of Taxation, to say what part of the profits of a limited liability company shall be distributed so far as income tax is concerned. There may be a keen conflict of opinion between the directors of a company and the Commissioner. They may say that they must have a certain sum placed to reserves, in order to insure the stability of the company. The Commissioner will have the power under this law to say, “ I shall not agree to that, but will tax you upon the whole of the profits you have made.” The discussion hasjustified my opinion as to the complexities and pitfallsof the clause.

Clause agreed to.

Clause 11 agreed to.

Clause 12-

Section , seventeen of the principal Act is amended by inserting after paragraph (b) the following paragraph: - ” (bb) As an alternative to the deduction allowable bythe last preceding paragraph, there shall at the option of the taxpayer be deducted so much of the income of the finan cial year as is appropriated for development (the cost of which is not deductable under section eighteen of this Act) and for new plant : “ Provided that any of the money so appropriated which has not been expended for that purpose at the end of . the year in which it was appropriated shall be liable to tax as income of that year.”

Section proposed to be amended -

In connexion with income derivedfrom m ining operations(other than coal mining) carried on in Australia, the following provisions shall apply . . .

the capital expended by the person carrying on the mining . operations in necessary plant and development . . .

Senator NEEDHAM:
Western Australia

– I should like some information upon this clause, which must be a matter of concern to every honorable senator interested in mining.From themining point of view this is one of the inost vital clauses of the Bill. It prescribes that deductions are to be allowed for development expenditure, and that the whole of the expenditure incurred for development in any financial year shall be allowed as a deduction for that year. I am guided in the remarks I am making by a statement which appeared in the Argus of 11th May, in an article by Mr. Maughan, of Western Australia. In that very able article Mr. Maughan points’ out that no true profit can be said to have been earned bya mine until that development expenditure is taken into account. Hementions the fact that the Conference of Federal and State taxation officers unanimously recommended that development expenditure should be treated in the manner suggested, that is. to say, that any money expended upon development of a mine should be deducted from the income for the year in which that expenditure takes place. It is very important thatour mining ventures should not be unnecessarily hampered.

Senator Millen:

– Will the honorable senator indicate the amendmenthe proposes ?

Senator NEEDHAM:

– I did not intend to propose an amendment but to obtain from the Minister some explanation of the actual effect of the clause.

Senator Millen:

– Perhaps I can offer an amendment which will meet the point the honorable senator desires to raise.

Senator NEEDHAM:

– I am glad to hear that. I wish to know from the Minister how the clause would affect the mining industry. I realize that there can be no desire to tax that industry unnecessarily.

Senator MILLEN:
New South WalesMinister for Repatriation · NAT

– The matter to which I assume Senator Needham wished to refer was brought under my notice by two or three honorable senators who are concerned in mining. The amendment I propose to offer is to insert before the word “appropriated” in the first part of the paragraph bb the words “ expended in that year for development or.” I think that that will meet the objection taken by a number of honorable senators interested in mining constituencies. I move -

That before the word “ appropriated,” line 9, the words” expended in that year for development or “ be inserted.

Senator PRATTEN:
New South Wales

– I support the amendment most heartily. It will make the position very clear. If it had not been cleared up some injustice would very possibly have been inflicted on small mineowners. The amendment should meet the views of Senator Needham, and should assist the stimulation of mining so necessary in Australia just now.

Senator BAKHAP:
Tasmania

– Although it involves but the addition of a very few words, the concession made by the Minister for Repatriation in this amendment is a practical and substantial one, and of great value to the mining industry. I had marked on the margin of my copy of the Bill the substitution of the word “ expended “ for the word “ appropriated,” but the amendment submitted by the Minister in charge of the Bill will be more comprehensive than that. It represents the most material concession we have received from the Minister so far, and I accept it with pleasure.

Senator MILLEN:
New South WalesMinister for Repatriation · NAT

– Before the amendment is adopted I should like, for my own satisfaction, to state that I intend to propose a further amendment of the clause. I intend to move the omission of the words at the close of the first paragraph, “ and for new plant.” I make that statement before the amendment I have moved is carried, because I should not like honorable senators to think that I am offering them a concession with one hand and taking it away with the other. The Committee might agree to the amendment I have moved, and we can deal with the later amendment when I submit it.

Amendment agreed to.

Senator MILLEN:
New South WalesMinister for Repatriation · NAT

– I move -

That after the word “Act,” line 12, the words “ and for new plant “be left out.

Senator Bakhap:

– Why?

Senator MILLEN:

– I am asked why I move this amendment. If a company starts by expending £100,000 of its capital in putting up a plant to commence operations, that amount would not be taken off the income of the company.

Senator Pratten:

– It would not have any income.

Senator MILLEN:

– Exactly, and so that amount would not be taken off. It would be capital expenditure; but iu this case, bearing in mind that under paragraph b of sub-section 1 of section 18 of the existing Act, allowance is made for the depreciation of machinery, if a mining company puts its profits into an asset represented by new machinery, would that not be a fair subject for taxation?

Senator Pratten:

– That would be development.

Senator MILLEN:

– There is a difference between development and the purchase of machinery. The purchase of machinery might be made because development work shows the justification for it. Senator Buzacott. - A mine canuot be developed without, machinery.

Senator MILLEN:

– Take the case of a coal mine, in which the new automatic coal-cutters are introduced. The instalment of that machinery would not be regarded as development. It would be an investment of capital. Development work may be an investment, but it may also be a speculation. Honorable senators will see the difference between true development work, which may end in nothing but a hole in the ground, and investment in machinery, which is a tangible asset.

Senator NEEDHAM:
Western Australia

– The Committee should pause before accepting the amendment.

Senator Pratten:

– We have a gift from the Greeks.

Senator NEEDHAM:

– It looks like it. I am reminded of the cow which, after giving a bucketful of milk, kicked the bucket over. The Minister’s new amendment will absolutely take away from the mining industry the benefit conceded by his first amendment. Senator Buzacott very pertinently interjected, “ How can you develop a mine without machinery ?”

Senator de Largie:

– You can develop it without much machinery.

Senator NEEDHAM:

– Can you develop a mine without machinery?

Senator de Largie:

– Do you call a windlass a machine?

Senator NEEDHAM:

– Presumably it would be new plant. What is the definition of “new plant”? Experienced miners in the Committee might help us in that regard. If the Minister will tell me what new plant means so far as developmental work is concerned, I may be more satisfied in regard to his amendment to strike out the words “ and for new plant.”

Senator BAKHAP:
Tasmania

– I earnestly advise the Minister not to press the amendment. The very fact that new plant is included in the deduction clause in the first place is evidence that mining plant differs considerably from any other. As a miner, I say that mining plant, as a rule, has very little residual value. We might possibly get a little for a portable engine which has not been in use too long, but the bulk of mining plant has practically no residual value. I am acquainted with one of the largest mines on the North-East coast of Tasmania, where two batteries of. fifty head each were erected, and operated for about thirty years. The shareholders never received a penny in dividends, although the mine was of inestimable value in developing the district. The Tasmanian Government advanced the company £5,000 after it had been operating for about thirty years. The war broke out when the company was in process of reconstructing for the sixth or seventh time, and in consequence of the war it had to default. The Tasmanian Government having lent £5,000, became practically the owner of the mine, and for two or three years it was worked as a State mine. The other day the com pany, with all the plant, including the batteries, dressing machinery, water races, some of them 30 miles in length, and leases amounting in area to about 400 acres, was sold. The whole box of tricks brought £2,000. Most of the shareholders were Englishmen, and showed the tenacity of their race by frequently reconstructing the company, but they got no return. It would have been nothing less than a crime to charge the company on the money which it put into new plant from time to time in the endeavour to cope with new mining problems as they arose.

Senator Crawford:

– If they made no profits they could not be taxed.

Senator BAKHAP:

– They could be taxed if they did not declare a single shilling in dividends if it could be shown that they had puta taxable amount into plant.

Senator Millen:

– Not unless they made the amount out of profits.

Senator BAKHAP:

– In such a company it may be necessary to put the whole of the profits into the business in order to tackle some new mining problem, and in the long run the shareholders may not get 6d. At times very considerable amounts gained by the operations were put into plant to deal with the problems that arose, principally from the fact that the company had to treat low-grade material.

Senator Millen:

– That is hardly an argument for letting a Mount Morgan off.

Senator BAKHAP:

– If Mount Morgan shut down to-morrow, what percentage of residual value would its plant bave?

Senator Millen:

– It is allowed depreciation on the plant.

Senator BAKHAP:

– But for one amendment, a company would be charged income tax on money put into stopes, and holes in the ground, and winzes, that would not have a penny of residual value if the company shut down; but the Bill has been fortunately and wisely amended by the Minister in that regard. If we agree to excise the words “ and for new plant,” we shall be doing companies more injustice than has been remedied by the previous amendment.

Senator BUZACOTT:
Western Australia.

– I trust the Minister (Senator Millen) will reconsider the ‘ amendment. We depend to a great extent to-day on the opening up and development of our primary resources, and I hope the Commonwealth Government are going to do all they possibly can to assist and foster those industries, and more particularly to assist the men who are prepared to go into the back country and live on the smell of an oil-rag year after year, in developing what is, after all, one of the main industries of Australia. It is the industry on which Victoria was built up, and on which Western Australia is being built up to-day. On the Westonia field, one of the newest and most promising in our State, I know a number of prospectors who for many years have been making considerably less than a living wage. They have now reached the water-level, and must expend money on a winding engine and pumping plant. If the amendment is carried no allowance will be made to them for that expenditure, although it is necessary to open up and develop the mine. The amendment will be a big handicap to new mining fields, as it will not give a fair deal to the men who, after all, are responsible for. the building up of the chief cities of the Commonwealth.

Senator CRAWFORD:
Queensland

.- The Minister (Senator Millen) would be well advised to let the clause stand as it is. Provision is made in the original Act for the whole cost of plant to be written off in the course of a number of years. I do not see that in the long run it makes any difference to the Government whether the whole of it is written off in one year or in a period of years, but it will make a material difference to a struggling mining company. In this matter my sympathies are with the struggling company.

Senator PRATTEN:
New South Wales

– The Minister’s proposal is almost unfair. I look on the clause as the poor man’s clause in mining. The rich man’s clause is in another part of the Bill. It allows the rich man to deduct from his income tax schedule all the calls he pays to mining companies or syndicates, but the prospecting party, or party of working miners, would be prevented by this amendment from making any deduction for new plant.

Senator Millen:

– If the clause is left as it is, I presume you will give me a guarantee that only struggling miners will take advantage of it.

Senator PRATTEN:

– I do not see how this clause will affect the other class of mining companies, in view of the other clauses of the Bill relating to companies. Very liberal provisions have been made throughout the Bill to stimulate the production of metal in Australia. Calls on mining companies, limited or unlimited, or syndicates, are deductible from individual income tax schedules. That practically will allow a company to start with any amount of capital thought to be desirable, and by virtue of this provision to be able to buy its plant and machineryfree of income tax; but if the Minister insists upon the amendment he has submitted, I fear it will, as Senator Buzacott has pointed out, inflict great hardship upon the poorer men and prospectors, of whom there are so many, and of whom there will be so many in Australia after the war. I ask him to leave the matter where it is at present. It is not a now principle.

Senator Millen:

– It is a new provision.

Senator PRATTEN:

– I ask the Minister not to take away the provision re,garding the expenditure on new plant out of profits, because I think that is inadvisable, and I remind the Minister that Australia has been pioneered by working parties such as those which this amendment will affect.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I admit that the arguments presented create some little difficulty in my mind. First of all I should like to remind the Committee that the amendment I submitted cannot be regarded as doing an injustice to the mining industry, because, even if it is agreed to, concessions which are not extended to any other industry are granted to the mining industry,’ and, therefore, all that. can be said is that the concessions do not go quite so far as some honorable senators think they should. The amendment cannot be termed unfair. I realize that money expended in plant necessary for developmental purposes should be exempted for the same reason that wages paid for developmental purposes should be exempted; but there is another kind of plant which is used for the permanent working of the mine - so far as a mine can be worked permanently. I am afraid, however, it will notbe possible to discriminate between the two. Some classes of plant, the winding and pumping machinery, for instance, used in the developmental stages, may be just as necessary when a mine has passed beyond that stage. Consideration of this aspect of the question has created some difficulty in my mind. I have been endeavouring to see if it were possible to differentiate between the two kinds of plant used; but I am afraid it will not be possible to draw the line of demarcation. There is another difficulty, and I want the Senate to appreciate it, or, at all events, to consider it. As the Bill stands at present, the owners of mining properties are enabled to deduct from their income tax schedules the amount of money spent on their plant. But they should not be able, under another portion of the Bill, to deduct the amount again, under the heading of depreciation.

Senator Crawford:

– They should not make any claim for depreciation if they have written off the value of a plant.

Senator MILLEN:

– If this amendment is rejected - or it may be withdrawn - it will be necessary to make a further amendment, otherwise thousands of pounds spent that way in the coming year on engines or boilers would next year be deducted from income tax. returns; and as the Bill now stands, unless we make some other provision, mineowners would be able to deduct again, under the heading of depreciation, a certain amount for the value of the engine and boilers. I do not think the Committee will askme to allow that.

Senator Crawford:

– That would not be reasonable.

Senator MILLEN:

– I admit quite frankly that I am half inclined to withdraw the amendment now before the Committee. I merely want to do the right thing, and I ask the Committee, if it is withdrawn; to help me to put in some further provisions to prevent a duplication of deductions.

Senator Pratten:

– That is fair.

Senator Bakhap:

– If owners of mine property write off the whole amount; they should, not: next year be able to claim depreciation.

Senator MILLEN:

-That is so, and I have drafted an amendment which, I think, will probably meet the case. I ask leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Amendment (by Senator Millen) agreed to -

That the following proviso be added to the clause: -

Provided further that no deduction under paragraph (e) of sub-section (1) of section 18 of this Act shall be allowed on any new plant to which this paragraph applies.

Clause, as amended, agreed to.

Clause 13 agreed to.

Clause 14 -

Section. 18 of the principal Act is amended -

by omitting paragraph (h) of subsection (1) thereof and inserting in its stead the following paragraph : - “ (h) (i) payments made during the continuance of the present war to any patriotic fund established in any part of the King’s Dominions or in. any country in alliance with Great Britain for any purpose connected with the present war, if the payments are verified to the satisfaction of the Commissioner ; and

contributions made to the Department of Repatriation or to any public authority for the purpose of being handed over to the Department of Repatriation :

Provided the value of the contribution if in kind shall be verified to the satisfaction of the Commissioner;

Section proposed to be amended -

In calculating the taxable income . . . there shall be deducted -

gifts exceeding Twenty poundseach to public charitable institutions in Australia, and contributions exceeding Five pounds in the aggregate in respect of each object of contribution made during the continuance of the present war, to any public fund . . . for any purpose connected with the present war…..

Senator PRATTEN:
New South Wales

– This is another long clause, which, I think, might very well have been cut up into several distinct clauses, because it refers to several different principles. I wish first to draw the attention of the Committee to a provision that has been omitted in another place. The Bill as originally introducedby the Treasurer (Mr. Watt) provided for deductions from a taxpayer’s income tax schedule of gifts of not less than £20 to public and charitable institutions in Australia if the gifts are verified to the satisfaction of the Commissioner.

Senator Fairbairn:

– I have an amendment with regard to that subject.

Senator PRATTEN:

– Then I shall leave this matter in the hands of Senator Fairbairn. This clause amends section 18 of the principal Act, and subparagraph d, of section18, refers to deductions for repairs to or on part of any property occupied for the purpose of producing income. It reads as follows: -

  1. Sums expended for repairs to or on that part of any property occupied for the purpose of producing income or from which income is derived, and for the repair of machinery, implements, utensils, rolling-stock, and articles employed by the taxpayer for the purpose of producing income.

The words I object to are “ on that part of any property.”It seems to me that the deductible allowances should not be so restricted; and later in the discussion on clause 14, which must necessarily be of some dimensions, I shall probably indicate an amendment, so as to widen the clause and allow for deductions for repairs to or on any property occupied for the purpose of producing income.

Senator MILLEN:
[Minister for Repatriation · New South Wales · NAT

– I move -

That after the word “ made “ in sub-para, graph h 1. of paragraph (f) the words “ or gifts purchased and forthwith presented,” be inserted.

This will widen the scope of the subparagraph, and include, as deductions, gifts, as well as cash payments.

Senator Pratten:

– Will it cover gifts or donations made to hospitals?

Senator MILLEN:

– No; but Senator Fairbairn is moving in regard to that matter.

Amendment agreed to.

Sub-paragraph further consequentially amended.

Senator FAIRBAIRN:
Victoria

– I move-

That the following sub-paragraph be added to paragraph (f) : - “ (iii) gifts exceeding One pound each to public charitable institutions in Australia if the gifts are verified to the satisfaction of the Commissioner.”

This will be practically restoring the Bill to the language of the Act. It will not require many words of mine to commend the proposal to honorable senators. Contributions throughout the war have been splendid in their totals, but we may at any period come upon most difficult times. I feel sure that my amendment will meet with the sympathy of the Committee.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I am rather surprised at Senator Fairbairn providing in his amendment for the deductions of such a low sum as £1 . On the broad principle it is quite right that if an exemption is made in favour of wealth, a similar exemption should also be made to include the gifts of persons of humbler mean’s. But honorable senators should consider the amount of work which would be thrown upon the taxation officials if they were required to verify everycontribution throughout Australia amounting to £1 and over. And while the task would be tremendous the exemption to taxpayers would be insignificant. If the Committee is disposed to re-enact the principle, I appeal to Senator Fairbairn to fix a more substantial sum.

Senator FAIRBAIRN:
Victoria

– I have no objection, and I ask leave to amend my amendment by substituting “ Twenty pounds “ for “ One pound.” That would be restoring the figure already in the Act. Personally, however, in stating the lower amount I had the widow’s mite in view. But if the amount I first quoted Would have the effect of throwing a great deal of work upon’ the Department it might be well to increase the exemption.

Amendment, by leave, amended accordingly.

Senator O’LOGHLIN:
SOUTH AUSTRALIA · ALP

-Colonel. O’LOGHLIN (South Australia) [9.50]. - I am sorry Senator Fairbairn has departed from his first proposal. The Leader of the Senate (Senator Millen) put the matter very properly in stating that if the principle is to be retained and an exemption is to be granted to a large contributor, the gifts of humbler people should also be proportionately exempted. Very often we know that it is thosewho make the relatively smaller gifts who make the greater sacrifice. As to the work thrown upon the Department, it would be for the taxpayer claiming the exemption to place verification before the officials.

Senator CRAWFORD:
Queensland

– I regret that Senator Fairbairn did not adhere to his original proposal, or that, in accepting an alteration, he did not state a smaller sum than £20. I see no reason why there should be a distinction between contributions to patriotic funds and to charitable institutions, such as hospitals. The Act provided that only contributions over £20 to patriotic funds should be exempted; but that provision has been deliberately struck out. If the principle is to be restored I cannot see why it should not refer to gifts for charitable institutions as well as to patriotic funds.

Senator Millen:

– Concerning gifts to patriotic funds, the Department can make a check, since it is the recipient of the contribution.

Senator CRAWFORD:

– But there are many patriotic funds to which gifts may be made iri most distant parts of the Commonwealth. I see no more difficulty in the verification of contributions to charitable institutions than in checking small gifts to some patriotic fund or other at the other end of Australia. Contributions for both purposes should stand upon the same footing.

SenatorLt. -Colonel O’LOGHLIN (South Australia) [9.53]. - I move -

That the amendment he amended by leaving out tho words “ Twenty Pounds “ and inserting in lieu thereof the words “Twenty-one Shillings.”

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– The proposal, as Senator Fairbairn stated it after having obtained leave to amend it, was that the amount of exemption be fixed at £20. It has now been moved that the exemption shall be twenty-one shillings. I have already pointed out what a huge difficulty will present itself in verification by the Taxation Department of such a small sum as the latter. Is it not possible to arrive at a viâ media?

Senator Crawford:

– Make it £5.

Amendment of the amendment agreed to.

Amendment, as amended, agreed to.

Senator PRATTEN:
New South Wales

– Paragraph c deals with deductions for sums expended for repairs to or on the part of any property occupied for the purpose of producing income or from which income is derived or is deemed to have been derived, and for the repair of machinery.

The TEMPORARY CHAIRMAN (Senator McDougall:
NEW SOUTH WALES

– Order! It is not possible for the honorable senator to deal with paragraph c at this stage. The Committee has dealt with the clause up to paragraphf.

Senator PRATTEN:

– I intimated previously that I had something to say upon this paragraph, and I have a great deal to say in respect to paragraph e, as well as an amendment to move.

The TEMPORARY CHAIRMAN:

– The honorable senator should have intervened at an earlier stage. There is only one course open to him now, and that is to move later for the recommittal of the clause.

Senator PRATTEN:

– I hope the Minister will have no objection to dealing with the matter now.

The TEMPORARY CHAIRMAN:

– Order ! It is not in the hands of the Minister, but of the Committee. The question is the adoption of clause 14 as amended.

Senator PRATTEN:

– To test the matter, I move, after line 11, paragraphf

The TEMPORARY CHAIRMAN.Order! The honorable senator cannot move anything in connexion with this clause prior to line 28, up to which the Committee has already given its attention.

Senator PRATTEN:

– I trust the Minister will agree to recommit the clause, so as to have the question of depreciation thoroughly threshed out.

Clause, as amended, agreed to.

Clause 15 (Special deduction).

Senator GRANT:
New South Wales

– I would like the Minister to explain the effect of the alteration that is proposed in this clause and to inform us what amount of additional revenue will be secured thereby.

Senator Millen:

– I am afraid that 1 cannot hold out any inducement to the honorable senator in that regard. No additional revenue will be secured as the result of the proposed amendment.

Senator GRANT:

– What is the objective of the proposed alteration? Under it will the smaller incomes pay a higher rate of tax, and, if so, how much? To what extent will the revenue be benefited? At what point does the exemption vanish under the principal Act, and at what point will it vanish under this amendment ?

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

.- My honorable friend is anxious to know whether the amendment proposed will make it easier or harder for the taxpayer. Its effect will be that the smaller taxpayer will, be relieved. It willimpose upon the recipients of. small incomes a slightly less burden.

Senator Grant:

– Does the Minister regard £1,000 as a small income?

Senator MILLEN:

– I do.

Senator GRANT:
New South Wales

– The explanation of the Minister is hot satisfactory to me. When we consider that in New South Wales alone 500 officials are employed in the Commonwealth Income Tax. Department, and that thereis animmense staff in Victoria, in addition, to large staffs in all the other States, it is surely not too much to expect that one of these officers should be told off. to make the necessary calculation. Apparently the . Minister has not the information which I seek, and consequently I ask him to postpone the consideration of this clause until to-morrow. By that time the Commissioner of Taxes will perhaps be able to furnish us with the information for which I have asked.

Senator PRATTEN:
New South Wales

– I join with Senator Grant in asking that progress be reported. Some of us have been giving very close attention to this Bill since 3 o’clock this afternoon. We have made very fair progress, and in the circumstances our request is not an unreasonable one.

Senator MILLEN:
South Wales - Minister for Repatriation · New · NAT

– I think that the request of Senator Grant is an entirely reasonable one, and that the consideration of this clause should be postponed till I am in a position to give him more definitely the information which he seeks.

Clause postponed.

Clause 16 -

Section 20 of the principal Act is amended -

  1. by omitting from paragraph (f) the words “or alterations”;
  2. by inserting in paragraph (g) after the words “income was derived” (first occurring) the words “but the Commissioner may allow a deduction for bad debts claimed in respect of any year if he is satisfied that the taxpayer has in that or any previous year included those debts as income in his return. ‘

Section proposed to be amended -

A deduction shall not, in any case, be made in respect, of any of the following matters-

  1. Rent or value of or cost of repairs or alterations to any premises. . . .

  2. Any bad debts, except bad debts . . incurred in and actually written off by the taxpayer in the year inwhich the income was derived. . . .

Senator PRATTEN:
New South Wales

– May I again appeal to the Minister to report progress ?

Senator Millen:

– The honorable senator is new here, otherwise he would know that this is an indecently early hour for us to knock off.

Senator PRATTEN:

– We cannot rush through provisions of the Bill in this manner. Here is another clause dealing with m achinery-

Senator Millen:

– Then discuss it.

Senator PRATTEN:

– If the Leader of the Senate will not agree to a reasonablerequest, I suppose that we shall have to discuss it. But I would remind him that he possesses an advantage over everybody else here. He hasthe Taxation Commissioner behind him, and an annotated . copy of the Bill before him. I think that in the circumstances he might very well accede to my request. In this clause there is some reference to depreciation which requires discussion. I donot think that the Minister need fearthat there will be very much debate upon the remaining clauses of the measure.

Senator CRAWFORD:
Queensland

– I should like to add my protest to that of Senator Pratten. We havegiven close attention to the Bill, and. we have made considerable progress. It isquite reasonable that we should now be afforded a further opportunity of looking into its provisions. It is a very complex Bill, and we ought not to be called upon to deal with it until we understand it fairly well.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I have never been disposed to turn a deaf ear to a reasonable request from members of this chamber. But” when a request for an adjournment is made to enable honorable senators to become more familiar with this Bill, I am entitled to point out that they have now had it before them for some time. It is not. to be assumed that by adjourning half-an-hour earlier than usual any honorable senator will be enabled to make himself more familiar with the Bill than he is now.

Senator Crawford:

– We have had a lot more light thrown upon it to-day.

Senator MILLEN:

– But the honorable senator does not mean to tell me that if we adjourn now, he will at once proceed to study it. On the contrary, he will turn up here at three o’clock to-morrow just as well or as ill-informed as he is to-day. No honorable senator will pretend that he is going to take the Bill into the privacy of his room and study it to-night. I do ask the Committee to pass a clause or two more, before we adjourn. I have never known honorable senators at 10 o’clock in the evening, attempt to close debate before Ministers were prepared to close it.

Senator PRATTEN:

– I do ask the Minister-

The TEMPORARY CHAIRMAN (Senator McDougall:

Senator Pratten has already requested the Minister to report progress, and the Minister has declined to do so. I cannot allow further argument on the question. Whether he goes on or not is entirely a question for the Minister to determine.

Senator PRATTEN:

– If you, sir, will permit me to make one more appeal to the Minister, I would remind him that this Bill was first introduced into another place on the 10th April.

Senator Needham:

– I rise to a point of order. Are we discussing clause 16 or a proposal to report progress?

The TEMPORARY CHAIRMAN:

– I was going to allow Senator Pratten to make another explanation, although he is decidedly out of order.

Senator CRAWFORD (Queeusland) the Minister to pass without some protest. I think that he cast a very grave reflection on members of the Committee when he said that if we adjourned now, those honorable senators who Were asking for the adjournment would turn up at 3 o’clock to-morrow no better informed than they are now.

Senator Millen:

– As the result of knocking off half-an-hour earlier tonight !

Senator FAIRBAIRN:
Victoria

– I wish to move-

That the following proviso be inserted: - “ Provided that in the case of a business using leasehold property upon Which the lessee covenanted with the lessor to expend money on improvements which will revert to the lessor upon the termination of the lease, a deduction shall be allowed of an amount Obtained by dividing the sum expended by the number of years for which the lease was first granted and to which the consideration applies.”

This is quite a simple proposal compared with many that are included in the Bill. When a lessee erects a building on a piece of land which he has leased, the improvements placed upon it by him become the property of the landlord on the termination of the lease. My intention is to make the tax fall on the landlord, and to exempt the lessee, whose asset each year is a diminishing one.

Senator Crawford:

– It is really a part of his rental.

Senator FAIRBAIRN:

– Yes. I propose to exempt the lessee-

Senator THOMAS:
NEW SOUTH WALES · NAT

– And to put the tax on to the landlord?

Senator FAIRBAIRN:

– The Government can do that. I have nothing to do with that.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I direct the attention of Senator Fairbairn to the fact that we have already agreed to a provision which meets what he desires. By reference to paragraph i of clause 14 of this Bill he will find that provision has been made for the insertion of the following paragraph dealing with deductions: -

The annual sum necessary to recoup the expenditure on improvements made under covenant with the lessor on land by a lessee who has no tenant rights in the improvements. The deduction Under this paragraph shall’” be ascertained by dividing the amount expended on the improvements by the lessee by the number ot years in the unexpired period of the lease at the date the improvements were effected.

I think that will meet what the honorable senator aims at.

Senator Fairbairn:

– Yes. I must have missed that provision somehow.

Senator PRATTEN:
New South Wales’

.- I should like to have some further explanation of the clause under the references to bad debts. Under the existing Act, permission is given to deduct bad debts proved to be such to the satisfaction of the Commissioner, and to have been incurred in and actually written off by the taxpayer in the year in which the income was derived. It is in thisBill proposed that the Commissioner may allow a deduction for bad debts claimed in respect of any year if he is satisfied that the taxpayer has in that or any previous year included those debts as income in his return. There is a good deal of controversy in regard to the position of bad debts. It is claimed by the commercial community that what is really a bad debt should be written off, and if the taxpayer has the luck to have it paid in future years, it could be added to his profit, and accordingly to his taxable assessment. Perhaps the Minister can give the Committee some explanation of the amendment proposed by this clause in connexion with bad debts.

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– This is a concession to the taxpayer. The existing law provides that he shall be allowed a deduction in respect of bad debts actually written off in the year in which the income is derived, provided those debts have been incurred within a limited period before. Now, in a spirit of generosity it is proposed that if the amount of a bad debt is included by the taxpayer in his income for one year, he can in a subsequent year have the amount deducted if it can then be shown to have been a bad debt. That is distinctly in the interest of the taxpayer, and I therefore assume that the Committee will support the proposal.

Senator PRATTEN:
New South Wales

.- I should like to know from the Minister why the words “ or alterations “ are to be omitted from the existing provisions?

Senator Millen:

– That amendment was recommended by the Conference of Taxation Commissioners.

Senator PRATTEN:

– Is that so? This, I suppose, is another attempt in the direction of uniformity. We are dealing here with deductions which may be made in compiling income-tax returns, and, as this is a very important clause of the Bill, I again ask the Minister for Repatriation to report progress.

Clause agreed to.

Clause 17 agreed to.

Clause 18 -

Section twenty-two of the principal Act is amended by omitting from sub-section (2) thereof the word “ Five “ and inserting in its stead the word “Ten.”

Section proposed to be amended -

The agent shall be assessed thereon and liable to pay tax on five pounds per centum of the amount so payable.

Senator GRANT:
New South Wales

.- I should like the Minister to explain why it is necessary to substitute “Ten” for “Five” in sub-section 2 of section 22 of the existing Act?

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– I am asked why the proposal is made to double the basis of the tax in this case. It is thought, in view of the higher prices now prevailing, that that is not an unfair thing to do.It is not possible to directly assess the profits made in these cases, but it is obvious to every one that they have increased very much of late years in consequence of the war. In the circumstances it is not unreasonable to charge 10 per cent. instead of 5 per cent. in the case of incomes that cannot otherwise be determined.

Clause agreed to.

Clauses 19 and 20 agreed to.

Clause 21 (Trustees).

Senator PRATTEN:
New South Wales

– May I again appeal to the Minister to report progress? We have got through the Bill very well. Some of us were all last night in the train, and we have to-day given close attention to this measure.

Senator Millen:

– I want this clause through, because it finishes a part of the Bill.

Clause agreed to.

Clause 22 agreed to.

Progress reported.

page 5185

DEFENCE (CIVIL EMPLOYMENT) BILL

Bill presented, and (on motion by Senator Pearce) read a first time.

page 5185

ADJOURNMENT

Detention of Offenders against Unlawful Associations Act.

Motion (by Senator Millen) proposed -

That the Senatedo now adjourn.

Senator Lt.-Colonel O’LOGHLIN (South Australia) [10.25]. - I wish to bring under the notice of the Senate the case of men imprisoned for breaches of the Unlawful Associations Act. I think that when honorable senators ask questions of members of the Government they are entitled to straightforward answers, and to the information for which they ask, so far as it can be given. I shall read certain questions I asked to-day and the reply made to them by the Leader of the Senate (Senator Millen), and I shall ask honorable senators to say whether the reply fulfils the conditions I have referred to. Ministers have had notice of the questions I asked since last week, and they should, therefore, have been prepared to give me something like a reasonable answer. I asked -

Is it a fact that men who have been imprisoned under the Unlawful Associations Act are still detained, although they have served the full term of their sentences?

If so, will the Government see that those men are immediately released or put on their trial if any further charges are made against them?

I shall now read the Minister’s reply, and leave it to honorable senators to say whether it is a straightforward answer to the questions I put or mere camouflage. The reply was - 1 and 2. All persons at present in custody who have been convicted of offences against the Unlawful Associations Act are being detained by full authority of law.

That is not an answer to either of the questions I put. I take this opportunity to bring under the notice of the Senate, in particular the case of a Mr. Edward Moyle, who was imprisoned under the Unlawful Associations Act last year and is still detained. I do not know whether he is still in prison, but he is still detained, although his sentence expired some two months ago.

Kitchen and Detective Nation gave evidence. Detective Trestrail stated that he had heard accused speak in Victoria Square on “free speech,” and promulgate the Industrial Workers of the World ideals. Speaking on “ free speech “ is, no doubt, a very heinous offence. Mr. Smith said -

I like that. What did he advocate to give you that belief? and the witness replied -

Ohe bigunion, and the abolition of wage slavery.

That is the only evidence given by the police, in addition to the documents found in accused’s possession, to connect him with the Industrial Workers of the World ideals.

Senator Lt.-Colonel O’LOGHLIN.Yes.

Senator Lt.-Colonel O’LOGHLIN.Yes; and he has served his sentence. According to the report -

The accused in evidence denied that he was a member of the Industrial Workers of the World. For about two and a half years he had been secretary of the Adelaide section. Although he had accepted moneys from members passing through Adelaide, there was no sectional meeting place in this State. He had not spoken publicly in support of the Industrial Workers of the World, nor had he distributed any literature.

The usual sentence in most cases of this kind is six months’ imprisonment. So lightly did the magistrate regard this case that he gave Moyle only four months’ imprisonment. After serving that four months in Adelaide, and before being removed to another State, Moyle was still detained in prison, and in prison garb. I have that from relatives and friends of his who visited him in prison. They found him detained as an actual prisoner, although the full term of his sentence had been served. I wrote to Mr. Groom, the Acting Attorney-General, as follows: - ite Moyle’s Case. - I have seen a letter sent to Mrs. Moyle, Parkside, South Australia his sister-in-law, in which it is stated that if he enters into a bond of £200 himself, and obtains two securities of £100 each, he will be released”.

Thishas not been asked in other cases where Industrial Workers of the World suspects have been released - Wilson, of Sydney, and. Riley, of Broken Hill, among others. From what I can learn, Moyle is a quiet, inoffensive type of man, and has not done anything of an inflammatory or criminal nature. Undue influence has, I think, been given to the finding of Industrial Worker’s of the World papers, &c., in his possession. There hasnot, to my knowledge, been any Industrial Workers’ of the World organization in Adelaide for some years.

Under these circumstances, seeing that Moyle has served his sentence, and in view of the conciliatory policy emanating from the GovernorGeneral’s Conference, I would urge that Moyle , be released as most of the other Industrial Workers of the World detainees have been. The executive of the South Australian branch of the Australian Labour party strongly support this view. I trust that you will reconsider the matter.

I have since seen Mr. Groom, and also had a letter from him, in which he says that he regrets that he cannot release Moyle except on the conditions specified.

Without, any, . recrimination or. heat, I ask tho , Minister to bring: the. case again- be-, fore the. Acting . Attoir.nsyTGeneral, and to see. if- the Government : cannpfc treat Moyle., in the, same, way : as,- so . many other Ir>r dustrial,,Worjker»: of -the World prisoners have. hean; treated, men -who, I anr. sure, deserved no more, lenient treatment than Moyle did. A burglar or highway robber, or even a murderer, is released when his. sentence has been served. Only the other day, Antonio Soro, an Italian, who committed, a murder in Victoria, was released after serving four years of, I think, a life sentence.- I-.am not finding fault with that, because we are all inclined to leniency and mercy where it can be Bhown to be justified.

Senator Lt.-Colonel O’LOGHLIN.Yes. Moyle’s case was brought before the Governor-General’s Conference by Mr. Williams, one of the delegates from South Australia. The Prime Minister. (Mr. Hughes) mentioned that,, a. number of. the Industrial. Workers of the World men were birds of passage, many, of them from A^m erica, but it was pointed out that Moyle, who came from Lancashire, had lived in Australia for thirteen years-. There were no. other charges- of any sort, against him. To my knowledge, he has bean in South, Australia, for eight or nine, yeacs, and.,1 can see. nothing -special in , his ; case to.jua.tify the-Gc-veEnment in- detain?, ing. hjm. after- his sentence has. been; served,. and demanding bonds,. when they have not done so in other cases. Will the Minister do as he did in the. case brought before the Senate by Senator Gardiner, and make representations, to his, colleague that Moyle, should- be treated, with, the - same., justice and; fair-, ness as other ‘ Industrial Workers of the World detainees have been 1

Senator MILLEN:
Minister for Repatriation · New South Wales · NAT

– . Senator O’Loghlin took, exception to the terms of. She. reply- to his question, and applied to them the word “camouflage.” The same accusation appears to be applicable to his own question, which, sought to convey an impression not justified by the facts - that Moyle, had- served his sentence. The honorable senator repeated that statement to-night. Moyle has not served - his sentence.

Senator Lt Colonel O’Loghlin:

– He. served four months.

Senator MILLEN:

– That was not the full term of his sentence. The honorablesenator knows that the punishment underthe Unlawful Associations Act is not merely the term of- imprisonment to which the Court sentences the accused) but also carries- with it the. possibility- of deportation. It is not fair to assume ; that men are being held in. excess of thepunishment allotted to them by the law of- the. country. I do not know that.thehonorable senator is quite right in representing Moyle as -a . mere thoughtless innor cent in this, matter. He was, and conr tinued, secretary of the Industrial Workers of the World as- long as it had. an existence in Adelaide. He was the general secretary there for the whole of Australia, as long as there was a- branch of that body, in Adelaide. It was only when, owing to the good- sense of theAdelaide people, not enough support was forthcoming for a branch there, that Moyle could, pretend that he had ceased to be the secretary.

Senator Lt Colonel O’Loghlin:

– There has . been no. branch there since “the Unlawful Associations Act. was passed.

Senator MILLEN:

– That did not pre* vent him-. being a member of the- Industrial Workers of the World Association. The head-quarters were shifted from Adelaide to Sydney, but Moyle was still found in possession of a large amount of Industrial Workers of the World literature.

Senator Lt Colonel O’Loghlin:

– He had. those, papers from his. previous, secretaryship.

Senator MILLEN:

-Why did he still treasure them? Was it for the purpose of distribution ?

Senator Lt Colonel O’Loghlin:

– Tt was pointed out by his., counsel that the association could be. revived six months after the war was. over, and that it was. an act of caution on his- part to preserve those documents, in case he had to produce. them.

SenatorMILLEN.-Whether- the law,is wise, or.- foolish, the -fact -.remains thatthe. man-, was . found guilty under it by, the Courts, of the country-;- I ami pre^-. pared to, assume, unless,- evidence, to the contrary is., shown j that the. decision of the . Court was in conformity with the evidence submitted. The honorable senator asks why different treatment ie meted out to Moyle. Surely he does not mean that to be taken logically. If so, as some men found guilty of the same offence are still detained, he really means that we ought to keep Moyle in custody.

Senator Lt Colonel O’loghlin:

– Why is he treated differently from those who have been released?

Senator MILLEN:

– The honorable senator knows the reason why. When a number of men are found guilty of an offence of the kind, and the Administration review their cases, extenuating circumstances may be found in some instances which are not present in others. Moyle’s case has been reviewed, as is shown by the correspondence read by the honorable senator, and the decision has been given. Instead of complaining that Moyle was asked to find sureties for his good behaviour, and that that was a hardship, I might as well ask why that option has been extended to him and not to others.

Senator Lt Colonel O’loghlin:

– Sureties were not asked in other cases.

Senator MILLEN:

– There are other cases where the option has not been given. It cuts both ways. If the honorable senator says that because one man has been released without a bond all men ought to be, my answer is that some men are still there and have never been given the option of a bond, and Borne men have been deported. If the treatment meted out to one is to he the treatment meted out to all, I might contend that Moyle ought to be deported, and never given the chance of getting out of gaol.

Senator Lt Colonel O’loghlin:

– More camouflage !

Senator MILLEN:

– That would be the logic of the argument. Each of these cases has to be judged on its merits.

Senator Lt Colonel O’loghlin:

– Have you looked into it yourself?’

Senator MILLEN:

– I have not; nor has the honorable senator, except on the ex-parte evidence he has quoted. These cases have been looked into, and I am prepared to believe that they have been looked into with every desire to treat the men as fairly as the requirements of the law will permit. I pan see no reason why I should promise to submit Moyle’s case again to the Acting Attorney-

General (Mr. Groom). The honorable senator has been recently in correspondence with the Minister, whose reply he had only within the last few days or weeks, and I oan, therefore, Bee no reason why I should represent to him what Senator O’Loghlin has no doubt so well represented on Moyle’s behalf.

Senator Ferricks:

– How many men have been deported ?

Senator MILLEN:

– I cannot say.

Question resolved in the affirmative.

Senate adjournedat 10.45 p,m.

Cite as: Australia, Senate, Debates, 29 May 1918, viewed 22 October 2017, <http://historichansard.net/senate/1918/19180529_senate_7_85/>.