12th Parliament · 1st Session
The President (Senator the Hon. W.Kingsmill) took the chair at 3 p.m., and read prayers.
– Will the Government secure for the benefit of honorable senators a copy of the evidence which
Professor Copland summarized in the Adelaide Advertiser, of the 4th December, in which he gave two graphs showing that from January, 1929, to September last the fall in the value of farm products was 30 per cent. and industrial products rose 4 per cent.?
– In view of the very bad state of the primary and secondary industries, the growing volume of unemployment and the further tightening up of public credit, does the Government consider it advisable, even imperative, to cease wasting time on subordinate issues and to call at once a conference of both Houses of Parliament to form a nonparty Government that will steer the country through the perilous situation confronting it ?
– I understand that the matter covered by the honorable senator’s question is the subject of a motion in another place this afternoon.
– On the 5th December, Senator Pearce asked a question, upon notice, regarding the positions of Mr. J. E. Collins and Mr. T. Trumble in relation to the re-organization of the High Commissioner’s Office. I am now in a position to state that on the direction of the Prime Minister (Mr. Scullin) Mr. J. R. Collins has taken over responsibility for the general working of the High Commissioner’s Office, and for advising the High Commissioner in all matters relating thereto. It is intended, ultimately, to amalgamate the positions of Official Secretary and Financial Adviser in London. For the time being, Mr. T. Trumble is assisting in the general administration of the High Commissioner’s Office whilst Mr. Collins is investigating the possibility of effecting further economies, re-arranging details of work and classifying the staff. The duties to be assigned to Mr. Trumble during the remainder of his stay in London have not yet been definitely decided upon, being dependent upon proposals the consideration of which will not have been completed until after the Prime Minister’s return to Australia.
– With the ob ject of obtaining information, I desire to ask the Minister representing the Minister for Markets and Transport -
– The Government has received a similar request from other States, and is doing all it can to secure the best terms possible for the wheatgrowers of Australia.
The following papers were presented : -
Customs Act - Regulations amended - Statutory Rules 1930,No. 140.
Defence Act - Regulations amended - Statutory Rules 1930,No. 139.
Papua Act - Infirm and Destitute Natives’ Account - Statement of Transactions of Trustees for year ended 30th June, 1930.
Dried Fruits Export Control Act - Sixth Annual Report of the Dried Fruits Control Board, year ended 30th June, 1930; together with a statement by the Acting Minister for Markets regarding the operation of the Act.
Papua Act - Ordinance No. 4 of 1930 - Native OffendersExclusion.
What amount of money has been expended to date in the erection of public baths in Canberra ?
What was the estimate of the cost of these baths?
What amount of money is expected to be required to complete these baths?
Is this money being taken from revenue or loan funds?
– The answers are -
Public Works was £10,000. The detailed estimate was later ascertained to be £10,500.
How many miniature golf-links are being put down by the Government at Canberra?
What is the cost of such golf-links?
– The answers are -
– The answers are -
Manufacture at Maribyrnong Munitions Factory.
asked the Leader of the Government in the Senate, upon notice -
– Inquiries are being made and the honorable senator will be furnished with a reply as early as possible.
asked the Minister representing the Minister for Defence, upon notice -
– The answers are -
asked the Leader of the Government in the Senate, upon notice - 1.Regarding the published declaration by the Government to the effect that a gold bonus or bounty would be paid, commencing in the year 1932 and continuing for ten years thereafter - has the Government considered the necessity of that declaration being binding on all future governments concerned?
– The answers are -
asked the Minister representing the Minister for Trade and Customs, upon notice -
– The information is being obtained.
Statement Concenning Tariffs
asked the Minister representing the Minister for Trade and Customs, upon notice -
– The answers are -
Mr. Brookes lias now no connexion with the Tariff Board.
Motion (by Senator Sampson) agreed to-
That Senator Crawford be granted three months’ leave of absence on account of urgent public business.
Debate resumed from the 4th December (vide page 978), on motion by Senator Barnes -
That the bill be now read a second time.
Senator Sir GEORGE PEARCE (Western Australia) [3.20]. - In my opinion, this bill is a piece of ‘class legislation. The report of the Piiblic Service Board showed that, so far from any real economy being practised in the administration of government departments, the number of permanent officers increased by 152 and the amount paid to them by way of salaries and allowances by £198,000 during the year ended the 30th June last. During that year, the average salary of Commonwealth public servants was £6 greater than that of the previous year. Let us contrast the position of the Commonwealth public servants with other sections of the community. In every State Public Service there has been a reduction, up to 10 ‘ per cent., of the salaries of all public servants receiving more than the basic wage, whereas in the Commonwealth Public Service there has been no decrease of salaries in the case of officers receiving less than £725 per annum. It is true that those whose salaries exceed that amount are being’ called upon to suffer a reduction ; but even so, as I have already pointed out, the average salary for the whole Service increased last year, by £6. I point out that that increase took place in a year when every State Public Service was being cut to the bone. Let us look at this question as it appears to the general community. In the case of pastoralists and graziers, it is not a question of a reduced income, but of no income at all. The income of these people must be calculated on the amount they receive over the cost of production. On that basis, the farmer is to-day receiving no income whatever. Yet the pastoralists “ and the farmers have to find the money from which the public servants’ salaries are paid. The wage-earning class also has had to accept reduced incomes. The wages of the shearers have been, reduced by 20 per cent., but they have still to contribute to the taxes out of which the Commonwealth public servants are paid. The coal-miners and the railway employees in nearly every State have been subjected to rationing, and, in some cases’, also to a reduction of wages and salaries. Artisans and labourers throughout the Commonwealth have been similarly affected. Thtwageearners of New South “Wales have recently been called upon by the Lang- Government to pay a wages tax of Is. in, the £1 which, in the case of a man on thebasic wage, represents about £10 per annum.
Senator Sir GEORGE PEARCE.The proposal to impose the tax has been announced in the press and has not been denied. Moreover, numbers, of union secretaries have objected to it, and resolutions have been passed by trade unions condemning it.
The Commonwealth Government has recently imposed a duty of 4d. a lb. on tea, and additional duties on tobacco and beer. These duties, as well as the sales tax,- will affect the incomes of the wage-earners to the extent of many pounds a year. So general has the reduction of wages and salaries become, that one of the most militant trade unions in Australia - the Coal Miners’ Federation, a union which for over twelve months fought against
Senator Sir GEORGE PEARCE.The Commonwealth public servants’ freedom from State income taxation has never been taken into consideration when their emoluments have been fixed.
I emphasize that it is a Labour Government which claims to represent particularly the wage-earners of the community, that makes this invidious distinction. Labour Governments in South Australia and Victoria, have been compelled by the exigencies of the position to bring their employees into line with other sections of the community by reducing their salaries. State public servants, railway employees, and teachers of the Education Department, have had their salaries reduced by Labour Governments, not willingly, but from sheer necessity. But. when it is suggested that Commonwealth public servants shall have their salaries reduced the Government says “Not on your life; you .shall not touch the 33,000 Commonwealth public servants; they shall remain a sheltered community.” Against them the wind of adversity shall not blow, as it blows against every other section of wage-earners in the community, including every State public servant. Why is this invidious distinction made? Is it because these gentlemen are banded together in public service ‘ associations which have very largely become politicalin their nature, and that they use thenvotes to safeguard the interests of their particular class? Is this Government overawed by the solid vote of these gentlemen and their relatives, and afraid to do what, the Labour Governments of South Australia and Victoria have clone? If that is not “the reason, what is it? I ‘tlo not believe that this invidious distinction meets with the approval of the great body of - the public servants themselves. I do not. believe that, they are so blind to their duty as citizens of the Commonwealth that they selfishly desire to escape thenshare of the sacrifice that the community generally is being called upon to make. I do not believe that the Government is doing them justice in the matter.
What, will be the result of this invidious distinction ? It will help to create a resentment against the Commonwealth public servants that will, in the long run, bring dire results upon those people. I was a member of the Federal Parliament at a time when the seat of government was in Melbourne, and the public finances of the Commonwealth and of the State of Victoria were in extreme difficulty. I well remember that the State Government of the day, while cutting down expenses in other directions, refused to touch the salaries of its public servants. Because of that distinction, a section of tlie Victorian press instituted a campaign against the public servants^ which spread through the country like wild-fire, and resulted in the origination of what was called the “ Kyabram movement.” So strong was the resentment that whs engendered as a result of the movement, that its supporters swept the poll at the next State election, secured a majority in the State Parliament, and effected reductions in the salaries of State public servants that were grossly unfair. A further result of the cowardly sheltering of those public servants was the introduction of a bill which withdrew from them the right to vote. They were given two representatives in the Parliament, but bad no other voice in thu governing of the country.
I recognize that upon the Government is cast the responsibility of endeavouring to balance the budget. It is not fulfilling that responsibility. It is merely doing one part of the job by imposing class taxation of an extremely burdensome character. That will not balance the budget. It. will only intensify the difficulties that face the country, and bring about more unemployment. The Government has not the courage to effect the necessary economies in an endeavour to balance the budget. The responsibility for this measure lies1 with the Government. It will have to explain to the electors of the country why one comparatively small section of the community is to be sheltered and selected for special treatment, to the detriment of the remainder. I. leave the responsibility with the Government. In view of the nature of this measure, I do not consider that the Senate would be justified in rejecting it. That would merely enable the Government to claim that it had introduced a bill that was designed to help to balance the budget, and it was rejected by the Senate. ‘ Full responsibility for this measure rests with the Government.
The bill reveals in startling light the class-conscious nature of the Government’s composite mind. We have heard a great deal, in recent years, about class-consciousness and the doctrine of class-hatred. This measure is the greatest exposition of classconsciousness and class-hatred that I have ever seen in legislative proposals submitted by any Government to this Parliament. The bill does not say that only wage-earners shall escape taxation. The average wageearner in private employment is already being taxed. All that the bill provides is that one section of the wageearners shall escape taxation. That section, I remind the Senate, does not include those wage-earners who are subject to the competitive market; and who have to accept casual employment. It does not include employees in the shearing industry, who have to travel from Queensland to Victoria in the pursuit of their avocation, nor does it include employees in the harvest fields - men who ‘have to travel from one district to another to earn their living. It affords no protection to wage-earners in the building trade who are subject to trade viscissitudes, and others who suffer as a result of unfavorable seasonal conditions and sometimes have to go for many months without any employment. Nor does it hold out any hope of relief to those who go into the bowels of the earth, to earn their living in an atmosphere of noxious gases or exposed to the risk of disease from contaminating dust. This bill does not enact that they shall be exempt from taxation because, as we know, they are at present subject to varying forms of Commonwealth and State taxation measures. The one section of salary and wage-earners which this bill protects, and for whom the Labour party and this Government stand, is that section of Commonwealth employees who are sheltered from the blasts of competition; those salary and wage-earners who, when they enter the service of the Commonwealth, are assured of permanent employment and are further protected by a superannuation scheme so that they will not have to fall back upon the old-age pension - a fate which befalls so many wageearners outside the Public Service. The bill protects those salary and wage-earners whose health and well-being are the continual care of the Commonwealth - those whose condition of employment are governed by a Public Service Act, the like of which similar workers in no other country enjoy; whose advancement depends not so much on efficiency as upon seniority ; who are given all sorts of rights by boards of appeal so that they may not be unjustly fined, suspended or dismissed, without the right of appeal to a tribunal in which the rank and file have representation, [t is this section of salary and wage-earners that is not to be called upon to make any sacrifice in this time of financial stress. The Government may think that the country will stand for this policy, but I can assure the Ministry that the people will not stand it for long. I also remind employees in the Commonwealth Public Service that their worst friends, in this regard, are the Government and. its supporters, who in this bill, have made such an invidious distinction between salary and wageearners throughout the Commonwealth. The provisions in this bill will cause, throughout the length and breadth . of this country, a feeling of deep resentment against Commonwealth public servants, and that resentment, I may add, will be strongest amongst their confreres in the employment of State Governments. All other sections of the workers will resent this unfair discrimination. They will resent deeply the fact that, while they have to face the blasts of adversity and make sacrifices, this sheltered section of Commonwealth employees is not to be called upon to bear its share of the burden. ‘
– I regret very much that the right honorable the Leader of the Opposition (Senator Pearce) has infused so much heat into the debate. In the course of his remarks, he stated that the Lang Government had introduced a measure to impose an unemployment tax of ls. in the £1. That statement is not strictly accurate. The tax has not been imposed, but it is understood that a proposal to this effect is under consideration. On other occasions, the right honorable gentleman , has been courteous enough to furnish me with advance Hansard proofs of his speech. I intend to ask him to be good enough to supply me with an advance proof ‘ of his speech this afternoon, so that I may check up his statements with regard to the Lang Government. In his criticism of the Government’s propos’al, the Leader of the Opposition made no reference to higher Commonwealth officials who, because of the nature of their appointments, are in a particularly sheltered position. High Court and Arbitration Court judges enjoy comfortable incomes. While I freely admit that many of the eminent jurists in the service of the Commonwealth would, if still at the bar, be able to earn twice the income which they receive from the Commonwealth, I feel that, at a time like the present, when all sections of the people are expected to make sacrifices, we might very well start at the top of the tree. Much of the blame for our present position must be laid at the door of the BrucePage Government, which, in the course of seven years, was responsible for an expenditure of approximately £500,000,000. The right honorable the Leader of the Opposition, as an influential member of that Administration, must be held answerable for his share in its misdeeds. As we all know, it made a large number of high-salaried appointments to the Commonwealth Public Service. But we must remember that 80 per cent, of’ the public servants are workers in the Postal Department, and that thousands of men in the Public Service are still classed as temporary employees, although at various schools they distinguished themselves by gaining scholarships and bursaries, and have given their best services to the Commonwealth. As a matter of fact, their status is not much better than that of the casual worker employed outside the Service. Senator O’Halloran and Senator Hoare, I feel sure, will be able to answer Senator Pearce, who has asked them how they propose to justify to South Australian State public servants, whose salaries have been reduced by a State Labour Government, the failure of the Commonwealth Labour Government to reduce the salaries of their fellow workers in the Commonwealth Service. The efforts of State Labour Governments to balance their budgets on behalf of vested interests overseas, in accordance with the recommendation of a distinguished visitor from the Bank of England, cuts no ice with me. Other countries, including the United States of America, are finding it impossible to balance their budgets within twelve months. So far as the public servants are concerned, is it not a fact that just prior to the dissolution of another place, a little over twelve months ago, the Leader of the Opposition, then the Leader of the Bruce-Page Government in the Senate, made certain recommendations in regard to reducing linesmen and others engaged in the postal service? “ .
– That is not a fact.
– I have no desire to have mis-statements incorporated in Hansard, but was there not something in the nature of a discussion upon the purchase of property by linesmen through the overtime and other allowances they received under the arbitration award?
– There was no suggestion pf any reduction of wages.
– I may be mistaken, but. if my memory serves me right, a little over twelve mouths ago, when Senator Pearce was Leader of the Senate, there was a discussion on linesmen and the postal service generally.
– That discussion had nothing to do with salaries or wages; it was entirely confined to additional allowances paid to postal employees.
– When the public servants go before the Public Service Arbitrator, salaries and allowances are submitted in one plaint.
– The whole thing was due to a costly blunder on the part of the Public Service Arbitrator.
– If that was so, the wonder is that the .Bruce-Page Government did not sack the Arbitrator or, following a practice of the Chinese Public Service, chop off his head.
– Why has not the honorable senator’s Government not appointed a new Public Service Arbitrator?
– The honorable senator need not answer irrelevant questions.
– I thank you, Mr. President; I have no desire to be led into trouble. The present Government will stand a general review of its-
– No, it will stand a general review of its actions. I wish to give my own personal view of the Melbourne agreement. Although I arn a supporter of the Government of the day, 1 think that the Ministers acted wrongly in putting their signatures to the. Melbourne document until the whole of the party had had an opportunity to review the business transacted at the conference.
– What is the honorable senator’s objection to the agreement ?
– Because it is impossible to balance the budget in one year.
– The honorable senator evidently knows more than the Government.
– I ask honorable senators to confine themselves to the Income Tax Salaries Assessment Bill.
– I was merely taking the opportunity to give my personal opinion’ of the action of the representatives of the Government in signing the Melbourne agreement on which the Leader of the Opposition has laid so much stress. Whether the public servants are in a sheltered position or not, SO per cent, of them are in the postal service, and, it must not be forgotten that whether they live in Canberra or elsewhere they come within the ambit of our general taxation measures.
– The honorable senator knows that he has a weak case.
– Whether the Government has a weak case or not, the day will come when it will be able to give a full account of its stewardship. It will then bc for the honorable senator to state his grievances against it.
Senator Sir HAL COLEBATCH (Western Australia) [4.3]. - I do not intend to detain the Senate for more than a few minutes. I propose to direct my remarks chiefly to an appeal to the Government to take into account what has happened within the last three months and then to consider whether it is possible by any means to get back to something like the position we occupied prior to that period. The bill is one of a number of proposals - I do not know how many there are - that are to take the place of the reforms, shall I call them, which were agreed to at the Melbourne Conference. I do not propose to add anything to what Senator Pearce has said in criticism of this particular measure. Every one recognizes that it is inadequate. If we get a full realization of the consequence of departing from the conditions of the Melbourne agreement and substituting proposals of this kind. I think Ave shall, at the same time, see how important it is that we should try to get back again to the conditions prevailing a few months ago. On the 28th August, the Thursday following the signing of the Melbourne agreement, Commonwealth 6 per cent, stock was quoted in London at £100 7s. 6d., and NewSouth Wales 6 per cent, stock at £100 2s. 6d. On the same day, New Zealand 6 per cent, stock was quoted at £104 12s. 6d. The Melbourne agreement was received with great approval everywhere - except in certain circles in Australia itself - and, as a consequence, £5,000,000 worth of Treasury bills which fell due in London about a week after the agreement was signed were renewed at very favorable rates. The rates -were not quite so favorable as might, have been obtained, because even in that short interval of a week, there were suggestions, to which I think quite unwise publicity was given, of an attempt to repudiate portion of the war debts, which did some harm. These Treasury bills, however, were renewed. From that time until now, there has been an apprecation in the value of dominion and colonial stocks; the market at Home in that three months has been getting easier. But what has happened to the stocks I have already mentioned ? On Thursday last Commonwealth 6 per cent. stock had fallen in three months from £100 7s. 6d. to £93 17s. 6d.- a fall of £6 10s. In the same period New South Wales 6 per cent, stock had fallen to £86 10s., or a drop of no less than £13 12s. 6d., while New Zealand stocks had risen from £104 12s. 6d. to £106. There had been a corresponding rise in all imperial securities.
– Does the honorable senator intend to connect his remarks with the subject-matter of the bill?
– 1 am afraid it is quite useless to discuss this measure unless we can say what it actually means. The bill is an alternative to the proposals agreed upon at the Melbourne conference, which in effect were that there should be a balancing of budgets, rigid and all-round economy, and a general reduction in expenditure. That was the principal element in the proposals. This is a substitute. We are to have no general economy; no all-round reduction in expenditure. Had the Melbourne agreement been carried out I have not the slightest doubt that the floating debt in London of £36,000,000, now approaching £37,000,000j would have been satisfactorily funded into a long-dated loan at a rate of interest comparable with the prevailing market rate. What would that have meant to the Government and to Australia generally? It would have meant the removal of £10,000,000 worth of treasury-bills, £5,000,000 worth of which were renewed for a short term and another £5,000,000 worth which are falling due, I think, during the present week. I do not know what arrangements, have been made to take them up; but they would have been out of the way. That would have been to our advantage. Of the £36,000,000, £8,000,000 was due in September last by way of overdraft to the London and Westminster Bank. The payment of that money would not merely have meant that a debt had been met on due date; it would have meant a great deal more to Australia. For many years, long before the Commonwealth was established, the London and Westminster Bank has financed the Australian States on terms extremely satisfactory to the States. The practice has been to advance money at bank rates; the interest always being lower, and, at times, very much lower than the long term rates. Had the money been returned to the London and Westminster Bank it would have again been available to tide us over our present difficulties. A matter of still greater importance is that £1S,000,000 of this amount was due to the Commonwealth Bank. I do not think that there is a person in Australia, excepting those who are stupid or prejudiced, who does not think that the Commonwealth Bank is eager to do all that it can for Australia at the present time.
-I must ask the honorable senator to confine his remarks to the bill.
– 1 am only discussing the principle of the measure. I am asking the Government to consider whether the principle which it is adopting under this bill is not ruinous to the Commonwealth? If that £18,000,000 had been repaid to the Commonwealth Bank it would have given the bank power to assist Australia - a power which it has not at the present time. I suggest to the Government that in submitting the measure in this form, and in doing what it has decided to do, it is rendering the greatest possible disservice to the Commonwealth and to the public servants, whose salaries and positions, I have no doubt, they are genuinely anxious to protect. We cannot speak of balancing the budget as something which is optional. Sooner or later we shall have to balance our budget. The time will come when we shall be compelled to do so,- and that may be when it is least convenient. Without wishing to strike an alarmist note, I say that unless the Government is’ prepared to reconsider this measure and go hack to the Melbourne agreement, or something equally effective, the position of every public servant of the Commonwealth will be much worse than it would have been if that agreement had been carried out. I venture to express the opinion that the great bulk of the public servants do not wish to be relieved of the 5 per cent., or, in the case of higher incomes, the 10 per cent, contribution which they ought to make to the falling revenues of the Commonwealth. What they want is that their positions shall be secure rather than that they should eventually find that no money is available to pay their salaries. I put it to the Government that if it persists in this course it will eventually have to dismiss a very large number of public servants, or face the position that it cannot pay them at all.
.- Every honorable senator believes that a reasonable effort should be made by the Government to balance the budget this year. After perusing the measure, [ can come only to the conclusion that it has been submitted for the purpose of levying taxation on a very small section of the community, while another and much larger section, which is equally able to contribute, is not to be asked to bear any burden at all. Although the Prime Minister (Mr. Scullin) distinctly stated, some time ago, that the party of which he is a member would not consent to a reduction in salaries or wages, this bill clearly provides for such a reduction. The Government is endeavouring to camouflage the position.
– Any taxation is equivalent to a reduction in salaries.
– Although the Prime Minister said that the Government, of which he is the leader, was opposed to a reduction in the allowances of Ministers and members, and of the salaries of public servants, it is now imposing a special tax which is equivalent to a reduction, particularly as the measure provides that the proposed taxation is to be deducted fortnightly from public servants’ salaries. A short time ago, the Acting Treasurer (Mr. Lyons) admitted that this tax would apply to only 1.33 per cent, or 441 members of the Commonwealth Public Service, who would contribute £45,435. He further said that of the 441 there were 312 with salaries ranging from £725 to £1,000 who would contribute £21,580; 98 with salaries ranging from £1,000 to £1,500 who would contribute £14,223; and 31 with salaries over £1,500 each who would contribute £9,632, or a total of £45,435. Although the average amount to be paid by these 441 officers is £103 ls., 98.67 per cent, of the Public Service are not affected at all by this special tax. I repeat what I have said on previous occasions, that the whole policy of this Government consists of imposing taxation from a political viewpoint. The Government boasts of having brought, about a reduction in the cost of the Public Service, but those reductions affect only those who are not members of organizations which can speak on their behalf. In this connexion, I may mention particularly the members of the military section of the Defence Department, who, in consequence of a system of rationing, have had their salaries considerably reduced, while the civil employees of that department, who are members of an organization, have not been affected. I do not wish to labour the question; but having heard so much about equality of sacrifice, particularly from Ministers, one naturally wonders why this distinction has been made. Surely honorable senators supporting the Government must realize that there is no equality of sacrifice under this measure.- I agree with the view expressed by the Leader of the Opposition in the Senate (Senator Pearce) that the Public Service, as a whole, would be prepared to take their share of the burden. The action which the Government is now taking is entirely prejudicial to the interests of the Commonwealth public servants who require permanency of occupation. In view of all the circumstances, it is quite conceivable that before very long a heavy reduction in the number of public servants will have to be made because sufficient money will not be available to pay the number at present employed.’ It is interesting to note that the members of the Opposition in this chamber submitted a proposal to the Government some time ago embodying a reduction in the allowances of Ministers and members. That proposal was rejected, but I am glad to say has now been adopted.
– The allowance to member^ should be reduced to £500 a year.
– I would be willing l.o support a reduction to that amount if effect were given to the Government’s boast concerning equality of sacrifice. I agree with every word uttered by Senator Sir Hal “Colebatch to the effect that the Government has refused to reduce expenditure wherever possible. Until that is clone, we are not likely to turn the corner and start along the road to prosperity.
– Why did not the previous Government do something?
– We were not facing the same difficulties then that we are facing now. I regret the action of the Government, with regard to the passage of this bill through another place, and its submission to the Senate, because I believe that the burden should be spread over the whole of the Public Service instead of being confined to one section. The cost of the Public Service is about £11,000,000 per annum. This bill proposes to reduce that cost by only £60,000, which is as a drop in the ocean. The Opposition , has already shown that a saving of £1,000,000 in departmental expenditure could be made without placing a heavy burden on any public servant. The people of Australia are already asking why the great bulk of the public servants are not being called upon to share the sacrifice which every other section of the community is making. The only reason is that the Government does not want to run the risk of losing the votes of the public servants at the next election.
– I understood from the honorable senator’s earlier remarks that the Government would lose votes because of its action.
– The Government does not run a great risk, seeing that only 44.1 public servants out of over 33,000 are being called upon to make any sacrifice at all. Apparently, the Senate must accept or reject the bill as it stands ; it would be useless to move an amendment. The Government must accept the responsibility for this bill and for its effect on the electors of -Australia.
– We are asked to vote for a measure to curtail the emoluments of ourselves and others. Ordinarily, that would be an unpleasant task; but the times are extraordinary, and what otherwise would be distasteful, cannot now be regarded as unpleasant. Others may be able to do our work better than we do it; but for the time being we are the elected representatives of the people. Therefore to us, not to others, comes the call for sacrifice. We are not alone in being called upon to relinquish a portion of our emoluments, for the bill provides that others in the public employ shall also make their contribution. But there a line has been drawn between what may be described as the higher-paid public servants - men who have attained to high status by reason of toil and study far into the night - and those who have not so worked. Why should those whose industry has earned them good positions now be penalized? If there is to be no reward for industry, what incentive is there for a man to devote his spare hours to study? We may as well waste our glorious and youthful prime if industry and perseverance are to remain unrewarded. To the extent that this bill penalizes the industrious section of the Public Service, it points the wrong way. A line has been drawn. On one side of it are 441 persons who are to be taxed; on the other side are 33,000 who are not to be taxed. Such a line of demarcation would be difficult to justify at any time; it is impossible to justify it when the country is passing through a difficult time. It is hard to imagine a single ground for excluding these 33,000 public servants from any share of sacrifice. This large body of public servants is being specially favoured now; but I doubt whether such treatment will tend to their ultimate advantage. After he had extracted £200,000,000 from the French nation, Bismarck said that the next time he conquered tlie French he would insist on paying that nation an indemnity, because the favours conferred on the German people by reason of the money obtained from France,, demoralized, instead of benefited, them. Although the Government may make these 33,000 public servants the curled darlings of society, they will not be curled darlings long, because there is an equalization always going on in our social system. Tolstoi has said that cows in a field, with grass up to their bellies, will not long reap the advantage of their favoured position if there are hungry cows outside, for the hungry ones will soon break down the fence. That is what will happen in the Public Service of the Commonwealth; the time will come when the present privileges will be wiped out.
The Labour Party, if it stands for anything at all, stands for the abolition of. privileges. Yet this bill creates privileges. Our motto should be: “ Win gold and wear it.” In a democracy there should be privileges for none. If nien arc not to be encouraged by higher pay to qualify for responsible positions in the Public Service, we might as well get back to tlie days when men were .ruled by clubs. The average citizen goes on much as before, marrying and giving in marriage, unaware that Australia is facing the most desperate situation in her history. At such a time when sacrifice is called for all round, one section of the community is deliberately allowed to escape. What is the justification for making curled darlings of Commonwealth public servants, and levying toll on other sections of the community for their benefit? Will the Government, attempt to justify its monstrous proposal ? I had not intended to speak as I have spoken, for I realize that there are other and more important things demanding our attention. Particularly at such a time I do not. desire to raise the party issue. But fair play is bonny play, and fair play does not favour one section of the community at the expense of other sections.
I wish that we were addressing ourselves to the more weighty problem’s that confront us. Probably, before we realize it. we shall have to face those problems, and endeavour to find solutions for them. The country will fare ill if we fail to solve them. Instead of saving £60,000, the Opposition claims that the Government ought, to save £1,000,000 under this bill.” Even £1,000,000 will not go far to bridge the yawning chasm which tests the courage of the bravest; but it is something. We are asked to engage in a. sham battle when soon - perhaps in a few weeks - we shall be called upon to engage in real warfare. And it is a sham battle of the meanest description, because we are asked to sanction something which is unsportsmanlike. Australians believe in fair play; they stand for a policy of playing the game. This bill asks us to play, not a fair game, bur a foul game; it asks us to grant favours to a sheltered section of -the community while heavier burdens are placed on others. I claim to be a friend of the Commonwealth public servants. For 2i years my voice has been raised in this Parliament in favour of making tlie Public Service of this country selfsupporting and self -respect! ug. I have stood for men being fully paid for what they do. But the position to-day calls for sacrifice. The sacrifice which the Commonwealth public servants are being asked to make cannot be compared with that which is being made by other section;: of the community. This Parliament has done much for the servants of the Commonwen 1th. It passed a superannuation scheme which had the approval of the executive heads of the Public Service. It also introduced a child endowment scheme, involving the country in £250,000 annually. Excepting, perhaps, in the case of some private institutions, such as hanks, there is no general scheme of family endowment in any part of Australia, other than, in the Commonwealth Public Service. And then on top of all those favours comes this further one, at a time such as the present! Where is the justification for it? The action is indefensible. For a long time Commonwealth Governments were in affluent circumstances. I well remember supporting one at. a time when it had money to bum - and when it burnt it, right and left. Then, as now, . the States had scarcely enough money to pay their way; A certain Federal Minister travelled to Western Australia and. lavished conces- sions in all directions upon the federal public servants employed in that State, with the result that a gentleman, who is now in the State Ministry of Western Australia, asked me what it was all about. There was the State Government, with a depleted treasury, asked by its employees to grant similar concessions to those introduced by the Federal Government. To do so it had to go on the market and borrow money. Such happenings bring about a difficult situation between State and Commonwealth,’ and create jealousy between their respective employees. The Common wealth Government never troubles about how its action will affect the budgets of the States. Take the position of John Brown, in the Commonwealth Service, and John Smith, in the State Service, living in the same town. Both are excellent citizens, willing to accept their fair share of the cost of the privileges that they enjoy as members of the community. John Smith, of the. State Service, bears his equitable burden, but John Brown, the Commonwealth employee, the curly-headed boy and pet of a foolish Government, does not. The whole thing is anomalous and places John Smith in an unfortunate position.
– Two wrongs do not make a right.
– 1. arn curious as to how Senator Hoare will defend the action of his Government. Inequality cannot beget equality. An ill-adjusted project like this must have ill-adjusted consequences. It must bring about a feeling of suspicion and jealousy and bad blood between State and Commonwealth public servants. Why should one section of the community be favoured at, the expense of the remainder? If it were a downtrodden section I should not mind. We have a model Civil Service, but favoritism such as this will bring about its undoing. I believe that the majority of our 33.000 Commonwealth public servants arc willing to do the manly thing, and. to accept, their fair share of the burdens of the community, particularly in days of unprecedented difficulty such as the present. Why does the Government not give them an opportunity to do the proper thing? It knows that in many instances*’ where working men know that the enterprise which employs them cannot pay the prescribed wages, they approach the management a’nd say, “ We know that your business cannot pay such wages, we are prepared to accept a substantial reduction in order to tide you over the present time of stress, and to enable your business to keep its head above water “. Why should the Government make the Commonwealth Public Service sacrosanct in matters of taxation? Why does it put this taboo upon it and say, in effect,” If you want to impose any hardship upon the community you can apply it to those outside this protected ring?” Such an attitude has not even the semblance of fair play. It is foul play, and those already overtaxed will have to bear a heavier load.
The Government’s proposed schedule of taxation bears particularly heavily upon those in receipt of incomes from property. Where previously a net income of £250, after making all deductions except statutory exemptions, bore no tax, it, is now subject to tax at the rate of 21.Sd. in the £1 or an annual tax of £9 2s., a. tremendous increase. The effect will be to cripple the productive capacity of the community and to destroy, more or less, the employing capacity of industry. I know that money has to be raised, but I suggest the burden should fall equitably upon all sections. The Commonwealth Government is not imposing any increased taxation on incomes below £500 derived from personal exertion. The majority of Commonwealth public servants will .receive an advantage both ways. They will be exempt from salary tax, and, after the statutory exemption is made, practically free from income tax. The new taxation begins to affect those on £700 and over. Whereas, under the old rates, a person receiving £700 per annum paid a tax of £14 10s. Id., he will in future pay £15 3s. 3d., and the burden increases with progressive severity as the salary becomes greater. . Why should those under £500 receive an advantage in every -way?
– The honorable senator must remember that, under the Melbourne agreement, the Federal Government undertook to keep out of the field of taxation as much as possible. Surely itis not his desire further to burden those who receive under £500?
– I am sure I do not know what this Government is to do to make ends meet, in conformity with the decisions of the Melbourne conference. It should, at least, do its utmost to balance its budget, and see that there is no favoritism such as it proposed by this bill. I shall not vote against the measure, because I know that we must avail ourselves of every source of* income, but I censure the Government for not gathering £1,000,000 from the Commonwealth public servants, as it proposed to do a short time ago. The present problem will become even graver in the near future and the Government must hold in reserve all the courage, wisdom, foresight and patriotism that it possesses to cope with the desperate situation that will confront the nation.
.- The application of this bill is limited, which is a regrettable feature when one considers the unfortunate position of the country. In every centre there is unemployment and rationing of work. In the circumstances, it is difficult to understand why the Government has introduced a measure such as this, which savours of class-favouritism. The Government knows the commitments that it has to meet, yet it introduces a bill that definitely sets out to preserve the privileges and salaries of Commonwealth public servants, while it imposes severe burdens on every other section of the community. And this is the party that used to have at the head of its platform “ equal opportunity for all “ ! Where does the equal opportunity come in, when in distressful times such as this it sets about to safeguard the interests of thousands of privileged employees? It is well known that the Prime Minister of Australia (Mr. Scullin) agreed, at the Melbourne financial conference, to reduce’ the salaries of public servants as part of an endeavour to balance the budget. When that project was submitted to caucus, a body that has no sense of the responsibility of government, it was rejected.
– The Prime Minister at no stage said that he would reduce salaries.
– Like many other people, the right honorable gentleman found on assuming office that he would have to re-adjust his outlook. When he realized the true position of our finances, he expressed willingness to do the right thing. I believe in the sincerity and honesty of the Prime Minister. At the Melbourne conference the Prime Minister made it clear that the Public Service would be called upon to bear its share of the financial sacrifices that would be required of the people. But what happened? After his departure for England, the Government submitted its proposals to a meeting of its supporters and they being subject to outside influences, decided against the adoption of the scheme in its entirety, fearing that a reduction of Public Service salaries would be followed by a reducion of the basic wage.
– It was a very good argument.
– It was no argument at all. We all know that the Government’s taxation proposals, so far as they concern the Public Service at all events, are so much camouflage. Wage-earners in private employment, with possibly one or two exceptions, have already suffered reductions, and State Governments have reduced salaries and wages paid to their employees.
– And still they are unable to balance their budgets.
– I admit that it is extremely difficult for any State Government to balance its budget this year. The Treasurer of the Queensland State Government balanced his budget quite honestly and fairly, but an alteration in the exchange position cost the Treasury an additional £48,000. Every citizen in the Commonwealth should bear his or her share of the present burden. As I have stated, the Government’s proposal to reduce Public Service salaries was defeated in caucus, because of the belief that arbitration court awards would follow the downward trend. But this movement is already in progress. In Victoria, last month, no fewer than 36 wages boards reduced the wages paid in the respective industries because the representatives of employers and employees on those boards, having an intimate knowledge of the conditions of industry, realized that it was impossible to carry on under existing awards. All round reductions are unavoidable at the present time. Although, the Australian Workers Union, of which the Assistant Minister (Senator Barnes) is president, is one of the strongest industrial organizations in Australia, it recently accepted awards authorizing reductions in wages to its members.
– Those reduction* were forced on the Australian Workers Union by the Arbitration Court.
– But the representatives of the Australian Workers- Union knew that the pastoral industry could not carry on unless wages were reduced. Why should all wage-earners outside the Commonwealth Public Service be expected to bear the brunt of this burden ? Practically every industrial concern in Australia is losing money. The cost of living also has fallen appreciably. Rents have been reduced in some cases by 50 per cent; so have the profits of industry and interest.
– Interest has not come down.
– No one can deny that costs are coming down. Why then should Commonwealth employees be favored ?
– Every one knows all about the Public Service, so why continue to talk about it.
– I do so, because the Government’s taxation proposals are so unjust.
– So are interest rates unjust at the present time.
– It is not at all satisfactory that we should be compelled, in our criticism of the Government’s unwise taxation proposals, to say anything that might give offence to Commonwealth -public servants. I believe, however, that not all public servants approve of the Government’s policy. I have spoken to large numbers of them in the several States, and, for the most part, they agree that the Government is placing them in an invidious and false position. They admit that some sacrifice should be expected of them.
– Can the honorable senator mention one meeting of protest by public servants against the bill?
– I am surprised that the Leader of the Senate should put such a question to me. He and everybody knows that no one wishes to suffer a reduction in income. We may assume that public servants are no exception to the rule. The Government acted unwisely in submitting its proposals to the representatives of Public Service organizations. Naturally, the three or four gentlemen to whom the Government appealed objected to the proposed reduction of salaries. As the paid representatives of the respective organizations, they would be expected to do that; but it is to be regretted that the matter should have been determined by three or four paid officials of the organizations mentioned.
– The honorable senator does not know the facts.
– I obtained my information from newspaper statements which, I understand, were furnished officially by the organizations interested.
– And they were not contradicted at the time by the Government.
– Those statements, as the Leader of the Opposition (Senator Pearce) interjects, have not been contradicted. Because of the reduction in the cost of living, Commonwealth public servants, excepting those living in Canberra, practically enjoy an increase of salary, owing to the refusal of this Government to lay the burden evenly on all public servants in receipt of salaries above the basic wage.
– The Commonwealth salaries bill went up by £1S9,000 in the last financial year.
– While wheat-farmers, pastoralists, and employees in all outside industries have suffered a reduction in income, Commonwealth . public servants, with the exception of a limited number, are not io be called upon to make any sacrifice. In some of the States the situation is so desperate that State Parliaments are being asked to pass moratorium bills to prevent creditors from ejecting primary producers from their holdings. Country storekeepers everywhere are carrying the farmers to the limit of their financial strength. As all sections of the people are facing tremendous financial difficulties, the Public Service should be asked to make some sacrifice.
One of the meanest aspects of the bill is the alteration in its retrospective provisions. Originally the salaries tax was made retrospective from the 1st November, but when the bill was under discussion in another place the date was altered to the 1st December.
– That was because the Senate is opposed to retrospective legislation.
– I am more inclined to think that the alteration was made because the Government had not made up its mind about the matter. I am not objecting so much to the amount of revenue that will be lost by this alteration, as to the spirit which prompted it. This spirit, I am convinced, is responsible for one-half of our present troubles. I realize that we cannot take the responsibility of interfering even with this limited taxation measure, but I,and other honorable senators on this side, enter a vigorous protest against such onesided and unjust legislation. I feel sure that the majority of public servants also disapprove of the Government’s action. They realize that it is only postponing the inevitable; that later the Government will be forced to introduce legislation to effect much more sweeping reductions of salaries. The financial situation will demand a drastic overhaul of the Public Service. The longer the Government continues in its present course, the greater will be its difficulties. The Government must either tax people who are already carrying as much taxation as they can bear, or reduce the salaries of public servants. It has now the opportunity to take the latter course, and show to the outside world that it is really in earnestin its endeavour to make ends meet. It must be done at some time or other. “Why not now? The situation, I admit, is a difficult one; but, instead of making an effort to set its house in order, the Government is laying up trouble for itself in the future. Next year we shall possibly have a deficit of from £8,000,000 to £10,000,000. I protest with all my vigour at this effort on the part of the Labour party to save public servants at the expense of the rest of the community, particularly when I know that they are willing to bear their share of the national burden.
SenatorE. B. JOHNSTON (Western Australia) [5.6]. - To all those who recall the promises of economy made by the Federal Government at the Melbourne conference, and subsequently, this bill is somewhat disappointing. At that conference, at which all the States were represented by their Premiers, and the Federal Government by the Acting Prime Minister (Mr. Fenton) and the Acting Treasurer (Mr. Lyons), it was unanimously agreed that each Government would proceed to effect drastic economies in order to balance its budget this year, and. thereafter to live within its income. It is to the credit of the whole of the State Premiers, State Governments and State Parliaments, that they immediately proceeded to give a very considerable measure of effect to that agreement. The Western Australian, Tasmanian and Queensland Governments have all made, and are making, drastic economies, and the Labour Premiers of Victoria and South Australia have proceeded with the unpleasant task of bringing about drastic economies affecting practically the whole of their employees.
– Their efforts have had the effect of increasing Commonwealth old-age pension payments by £630,000.
– But let me for the moment compare the manner in which State Labour Premiers have proceeded to honour their pledges with the actions of the Federal Labour Government. In New South Wales the then Premier, Mr. Bavin, was prepared to effect drastic economies in the Public Service, and possibly he is out of office to-day because he tried to do his duty faithfully and properly in that respect. The new Premier, Mr. Lang, who was not a party to the Melbourne agreement - on the contrary, throughout the recent election campaign, he condemned its provisions - stated in probably his first public utterance after becoming Premier, that he intended to impose a drastic tax of1s. in the £1 on all salaries down to £100 a year. Of all the Governments that assembled in Melbourne, only the Federal Government has entirely, and in my opinion shamefully, repudiated the agreement then entered into, and the bill before us proves conclusively that it intends not to effect any real economies in the administration of the Commonwealth, but to continue the financial drift which has characterized its career. On the 3rd of October, immediately after a Cabinet meeting, in an official statement to the press, the Acting Prime Minister said -
Proposals to balance the budget were approved. It was agreed that the expenditure must be reduced at the rate of approximately £4,000,000 a year. The recent decline in market prices of Government stocks shows that nervous holders are selling securities through fears that are quite unwarranted. The Government fully recognizesthat these fears must be removed at once. The Government, therefore, takes this opportunity of notifying the public that the proposals will include reductions and economics in expenditure at the rate of £4,000,000 a year.
The mountain has laboured and brought forth this mouse, a bill representing an economy of only £60,000 a year.
– Does the honorable senator suggest that the Government could save the £4,000,000 a year in salaries?
- Mr. Fenton said that he intended to save £4,000,000 a year in expenditure.
– But not in salaries alone.
- Mr. Fenton did not point out the directions in which economies would be effected, but I take it that one of the directions was a reduction of salaries.
– Of course it was.
– All that we have before us is a bill which affects only 441 out of something like 33,000 employees who draw salaries from the Government, and makes a miserable saving of £60,000.We all know why the very proper decision of Cabinet, as announced by Mr. Fen ton, was not carried into effect. The Government took its very proper decisions along to caucus, and, according to press reports, they were reversed by caucus.
Senator Dunn has told us that the Acting Prime Minister and the Acting Treasurer had no right to affix their signatures to the Melbourne agreement until it had been approved by a meeting of the Labour party. Although the Premiers of all the State Governments, including at least two Labour Premiers, could attend that conference, come to a decision and affix their signatures to the agreement with the full consent and support of their parties, Senator Dunn would have the Acting Prime Minister and Acting Treasurer of the Commonwealth put in the humiliating position of having first to consult those eminent financial experts who lead the left wing of the Labour party, and then go back and refuse to sign an agreement which they themselves thought it proper to sign in the interests of Australia. I am glad that they took upon themselves the responsibilty of endorsing thatagreement. The only mistake they made was not, as Senator Dunn suggests, in failing to consult caucus before signing it, but in submitting their proposals to caucus. If they had followed the proper constitutional course of submitting them to Parliament, the tribunal which represents the electors of Australia, the Melbourne agreement would have been honored in its entirety. I believe that a majority in both chambers would have assisted them to carry the agreement into effect. At any rate had the Government followed proper constitutional and democratic lines, the miserable hill we are now considering would not have seen the light of day.
– The honorable senator knows that if his own party had adopted that practice, Senator Duncan would still have been a Nationalist.
– I regret that, Senator Duncan’s differences with the Nationalist party are not clearly known to me, because I am not a member of that party. In any case, they do not affect my argument.
– Nor have they anything to do with the bill under discussion.
– The Government has flagrantly and ruthlessly broken its promise of economy, not of its own desire and initiative, but because caucus, which should never have been consulted, has decided its course of action. Had the Government’s proposals, as agreed to at the Melbourne conference, been brought to this Parliament, where they would have been approved of by a majority in both chambers, Australia would by now be well round the corner in respect to its financial difficulties. These difficulties have been increasing over since it became known abroad that caucus had repudiated the decisions arrived at in Melbourne. The Commonwealth’s salary bill is £11,000,000 a year, and the saving effected by this bill amounts to £60,000 a year, which is a little over 5 per cent., or one-half of one per cent. Caucus, in seeking to shelter the great body of the public servants, who do not wish to he thus sheltered, is actuated by a desire to retain their political support. In nearly all the States practically all Government employees earning above the basic wage have had a percentage reduction, and I am sure that Commonwealth employees do not expect to entirely escape such taxation in times of financial stringency and national stress.
The bill, however, has one merit - it reduces the allowance of members of Parliament by 10 per cent., and that of Ministers by 15 per cent. These reductions might well have gone a good deal further, particularly when we remember that the Constitution prescribed a parliamentary allowance of only £400 a year until Parliament otherwise provided. Parliament did not take long to increase the allowance; first to £600 and then to £1,000 a year. The Government should have gone a good deal further in setting an example to the community so- far as the reduction of Parliamentary salaries is concerned. These reductions are well overdue, and, in order to secure their operation as speedily as possible, and so that there will be no risk of their not coming into effect at once, I hope that, the bill will be approved by the Senate. Let us make sure of reducing Parliamentary salaries to the small extent’ permitted in this measure. At the same time I regret that the Government has, in this measure, laid down what is practically a new basic wage of £725 per annum for Commonwealth public servants, since no one receiving less than that amount is to be subject to this taxation. It is interesting for public servants in New South Wales to know that Mr. Lang, their cherished idol of a few weeks ago, now proposes to levy a tax of ls. in the £1 on the wages of all workers, including public servants in that State, receiving £100 a year or more, while the Federal Government proposes that its employees in Canberra, who do not have to pay State . taxation, and are. in” receipt of less than £725 a year-“shall be exempt from these imposts. This exemption should not be granted to Commonwealth public servants at a time when State public servants with every other wage-earner in the community have to submit to drastic reductions in Wages, and when over 20 per cent, of the organized workers in Australia are out of employment. In this time of stress every one should pull his weight in an endeavour to assist the Commonwealth over a period of financial stringency.
How different is the attitude of State Governments and even State Arbitration Courts, towards the public servants who come within their purview. A paragraph appeared in yesterday’s Melbourne Herald headed, “ Western Australian railways back to 48-hour week “. There is also a subheading, “ All must make sacrifice ‘.’. That is the opinion of the Arbitration Court of Western Australia, the judge of which is a broadminded and humanitarian man who enjoys the confidence of the whole community. That he has the interests of the workers at heart is evidenced by the fact that for three years he was a Labour member in the Western Australian Parliament. He was appointed - it was a good appointment - to the Arbitration Court bench of Western Australia by a Labour Government. The paragraph following the heading which I have just quoted reads -
Perth, Monday. The State Arbitration Court upheld to-day the application by the Commissioner for Railways for reversion to the 48-hour week.
For a number of years a 44-hour week, which was brought in by a Labour Government without consulting the Arbitration Court, has been in operation.
– That is what the honorable senator considers a good type of Labour man.
– He is a good type of judge, and carries out his responsible duties without fear or favor. The report continues -
The President (Mr. Justice Dwyer) stated that the conditions of the country’s affairs warranted railway workers making sacrifices as well as farmers, pastoralists and others. Bight thousand nien are affected, and the estimated saving to ‘tlie- railways is £100,000 a year.
When we remember that at present 8,000 Western Australian wheat-farmers are without any income at all, and have bankruptcy proceedings staring them in the face, the decision of the Court, which I have just quoted; should be applauded. I venture the opinion that that decision will be accepted by the railway workers of Western Australia, who have always preferred the State Arbitration Court to that of the federal tribunal.
My only objection to this measure is that it is not sufficiently comprehensive. The exemption of those receiving £725 a year and under is unjust and discloses an unreasonable discrimination to secure political support from one section of the community.
– For once honorable senators opposite are filling a role totally different from that which they have filled since the present Government has adorned the treasury bench. Instead of complaining that the Government does not propose to go far enough, or that it is indulging in drastic legislation or administration, they are condemning it because it has not gone far enough. There is a striking lack of unanimity of opinion amongst honorable senators opposite concerning the principle embodied in the bill. For instance, Senator E. B. Johnston contends that it provides for a definite reduction in the allowances of Ministers and members of Parliament, and the salaries of certain members of the Federal Public Service, while Senator Reid says that it is pure camouflage and in reality is not a reduction at all. It must either he a tax on, or a reduction in, salaries. But whichever it may be, it will reduce the cost of -the Commonwealth Public Service for the ensuing financial year. Honorable senators opposite contend that the only way in which to balance the budget is by reducing the wages of the workers irrespective of their status in the community. They would indignantly repudiate the suggestion that they were members of a low-wage party; but the tone of their speeches suggests that they are. Every argument they have adduced has been to the effect that the budget ought to be balanced by a reduction in wages of workers. I can visualize that in some instances it may be necessary to reduce wages in order to balance the budget; but in this instance it would mean that Parliament was to arbitrarily reduce the wages of lower-paid public servants, which have been fixed by various arbitration tribunals.
– Is the principle affected by high or low wages?
– It makes a very great difference, because the great bulk of the salaries of the lower-paid public servants, which have been fixed by an arbitration tribunal, should not be altered by this Parliament. The Leader of the Opposition (Senator Pearce), who referred to the action taken by the Labour Government in South Australia, suggested that a similar policy should be adopted by this Government. The only salaries that have been reduced by the Labour Government in South Australia are those received by persons in precisely the same class as are to be affected by this legislation. They include members of Parliament, railway commissioners, the Commissioner of Police, the Agent-General, and other highly paid public officers. Speaking from memory, I believe that apart from members of Parliament, and officers of Parliament, no public officer in that State earning less than £1,000 has been compelled to submit to a reduction.
– What about the school teachers?
– They were not reduced by legislation, or any administrative act of the State Government; but by the tribunal which fixed their salaries. A suggestion came from the employees that something in the nature of a mutual agreement should be entered into, and that was done. The great bulk of Commonwealth public servants, of whom there are over 34,000, are earning less. than £300 a year, and of this number 80 per cent, are employed in the Postal Department, which is a profitable undertaking, and are scattered throughout the Commonwealth performing a multiplicity of tasks under varying conditions. Tho only way in which their salaries or allowances should be varied is by an appeal to the proper tribunal.
– That tribunal does not exist.
– A public service arbitrator will be appointed at the proper time. A large number of the lover-paid public servants are governed by awards of the Federal Arbitration Court, which is at present functioning. It has been said that when other salaries were being reduced those of a section of the Commonwealth Public Service, subject to determinations of the Public Service Arbitrator, were being increased. Why were they being increased? Honorable senators who make this charge against public servants know the conditions under which the determinations were made, and that they provide for periodical adjustment based upon the cost of living figures. They also know that these conditions were established by the Government of which they were either members or supporters. When the cost of living was rising, Commonwealth employees, who were’ governed by these awards, had to wait until the time for revision same round before they received any advancein their salaries. There was then a considerable lag between the increase in the cost of living and the adjustment of their salaries. Is it fair that those who stood by the system of arbitration when it was against them should be penalized now that the cost of living is falling? I ask those honorable senators opposite, who mgc that, when times are bad, the public servants should immediately come into line and make a. sacrifice, whether they agree that, when the Commonwealth revenue is abounding, and there is a surplus in the Treasury, a portion of that surplus should be disbursed among the public servants? When conditions were against the public servants, honorable senators opposite stood for the strict observance of the law by which salaries were fixed: now that the tide is turning, and the public servants have a momentary advantage, they urge that awards should arbitrarily be set aside in order that the budget, may be balanced.
– Why not?
– During my public life, I have always stood foursquare for arbitration. I do so to-day. For that reason I do not stand for this Parliament becoming a machine to reduce wages in times of depression, unless the same liberty to interfere with awards is permitted when revenue is abounding and the Treasury is overflowing. The bulk of these agreements and awards will come up for review within the next few months when any necessary adjustment can be made.
The members of the Opposition are inconsistent in that while they blame the present Government for having increased the cost of living, they urge that the salaries pf public servants should be reduced because the cost of living has fallen by 20 per cent, during recent months. They also contend that the Government has made the Commonwealth public servants a sheltered community notwithstanding that they know that at the conference in Melbourne, the recommendations of which they so enthusiastically support, it was agreed that the Federal Treasurer should leave to the State Treasurers the field of taxation on incomes less than £500 per annum. Because the Commonwealth Government has honored that agreement it is accused of having created a. sheltered section in the community.
– Public servants living in Canberra pay no State income taxation.
– The public servants resident in Canberra form only a small proportion of the Commonwealth public servants throughout Australia. The total population of the Federal Capital Territory is a- little over 7,000 persons, and includes farmers, graziers,, business people, and minors, in addition to public servants. It is true that those few Commonwealth public servants escape the payment of State income taxes; but I venture the opinion that any one of them would willingly change places with a fellow officer Occupying a similar position, bearing the same salary in any of the State capitals, and cheerfully pay the State taxation to escape from Canberra.
– Does the honorable senator think that their salaries ought to come down?
– Whatever reduction might be made ought” to be made by the tribunals responsible for the fixing of the salaries of publicservants, and should follow the same principle th aft operates when the cost of living is rising. I again remind hon’orable senators that the awards under which public servants operate are subject to review annually. When the time for revision comes round they will be reviewed by the proper authority, and any necessary adjustments made. Honorable senators opposite are quick to recommend aj reduction of public servants’ salaries when they are obtaining some little benefit from the fall in rho cost of living; but they were not anxious to suspend awards to enable their salaries to keep pace with the increased cost of living.
– -The late Government introduced a bill to deal with the allowances of public servants.
– It was a bill to deal with their allowances by eliminating most of them. The public servants of t.ho Commonwealth receive no allowances to which they are not entitled; yet the late Government sought to deprive them of those allowances.
The Leader of the Opposition (Senator Pcarce) charged the present Government with having increased the cost of the iPublic Service since it assumed office, lie supported his contention by qtioting from the report of the Public Service Board for the year ended 30th June last. The right honorable senator must accept his share of the responsibility for any increase in the number of public servants in that year, seeing that he was a member of a government which was in office from July to November, 1929. Indeed, his responsibility must go further than that, for the present Government had, in the main, to carry out t he budget proposals of the previous Government in respect to departmental expense. It is scarcely fair that the right honorable gentleman should blame the present Government for what hiB own government planned. A fairer test would be to take the cost of the Public Service for the current financial year, for which the present Government will be solely responsible. As the bill provides for that sacrifice which the times demand, it has my support.
Senator DUNCAN (Now South Wales) “5.49]. - In common with other honorable senators supporting the Government, Senator 0’H.alloran finds it somewhat difficult to square the actions of the Government with the promises the Labour party made before the last eleo- tion. The honorable senator has made as strong a case in support of the Government’s proposals as could be made. I congratulate him on his speech. Like the curate’s egg it Avas good in parts. There were some parts that were not quite as good as we should have liked them to be. The Government and its supporters are finding it exceedingly difficult to justify the measure that is now before the Senate. When we remember what, has been said in the immediate past by those supporting the Government with regard to matters that are very similar to the proposal now before the Senate - the reduction of income, wages, &c. - we realize how difficult it is for them to find their feet when discussing thiis matter. We were assured that this Federal Labour Government would strenuously fight any proposal to reduce wages. But the facts of the position seem to have thrust themselves upon the Government, in common with a good many other people in the community, and it now makes what can only be regarded as a gesture, and perhaps in some respects a most unfortunate gesture, of its intention sooner or later to take that step which honorable senators of the Opposition knew to be unavoidable - an adequate reduction of government expenditure. This proposal affects only a few hundred civil servants. As. was pointed out, by the Leader of the Opposition (Senator Pen roe), the great majority of Commonwealth public servants will not be affected, for the present at any rate; but is it to be believed, even by the rank and file of the Civil Service, who, by the terms of the measure, are deliberately excluded from this taxation, that they will escape for any very reasonable length of time? Once the principle has been endorsed that reductions must be made, and reductions of a substantial character, its general applicability, to the Service is inevitable.
This is not a straight-out proposal to reduce salaries. It. would have been more honest if it were. It is a proposal to tax salaries, to bring about the reduction that, ought to be made in governmental expenditure.
– I do not see that the term employed makes a bit of difference. “ A rose by any other name would smell as sweet.”
– So far as the person in receipt of the income is concerned, it does not make much difference whether the process is called a salary reduction or taxation. The fact remains that he receives less, and he is not going to be thankful to the Government for the lessened income. I believe that this is a sort of try-out by the Government to see how the proposal is received, with a view to its taking action in future to cut the salaries of all Commonwealth public servants.No doubt the Government will claim that it did not reduce wages; it merely taxed incomes. It would have been much better had the Government faced the position, admitted the serious state of its finances, honored its pledges to the people, and brought down a straightforward measure to make the salary reductions that are necessary, instead of introducing a trifling scheme such as this, that can have but little effect as a reduction of the public expenditure. If carried, this bill will effect but an infinitesimal improvement in the financial position. It will not affect our credit, either internally or overseas. On the face of it, it is merely an indication to the people of Australia that a few hundred civil servants are to be taxed and sacrificed in order that the Government may save its face and be enabled to make some sort of reply to the charges that are so frequently made that it is failing to cope with the problem that confronts it, and has evolved no definite plans to meet its obligations, either of the present or of the future. I add my protest to those already recorded against the incidence of taxation proposed by the measure. I regard it as extremely unfair and unfortunate, and suggest that, even at this late stage, it would be advisable for the Government, in its own interests as well as in the interests of Australia generally, to withdraw the measure and recast it. Let it stand up to its obligations manfully, and bring down an adequate and fair proposal that will impose salary reductions on all civil servants with the exception of those on the basic wage. They cannot be taxed to any extent, otherwise the basic wage will no longer remain a basic wage.
– Thereis no basic wage for the unemployed.
– That difficult will have to be met other than by reducing the basic wage. All other sections of the community should be called uponto bear their share of the national obligations in an equitable manner. Even the man on the basic wage bears his quota. The Government would receive a great deal more credit from the people of Australia if it demonstrated in concrete fashion that it was awake to the necessities of the position. Let it bring down a bill that will not only be fair where this bill is unfair, but also adequate where this is inadequate. I believe that this measure will merely add to the prevailing discontent, without in any way benefiting the existing financial position of the Commonwealth. While I register my protest against its unfairness and inadequacy, I shall not vote against the measure.
– Only alarm at the suggestion made by Senator Duncan, and alarm at the statement that the Government might seize upon the suggestion that this bill should be withdrawn, prompts me to rise immediately. We had a naive suggestion by Senator Johnston that the only reason why he will vote for the measure is that a certain number of people who support the Government would be glad to see it rejected by the Senate. I trust his suggestion will not prove acceptable either to the Government or to the Opposition.
– I do not think that the honorable senator fairly interprets my remarks.
– I put it that that was the veiled suggestion underlying Senator Johnston’s remarks. The situation contains a measure of humour. The honorable senator was rather alarmed that the bill, if it were rejected here might go to another place, where its rejection would be received with a certain amount of acclamation by a section which does not approve of it, and that it would never again see the light of day.
I agree with Senator Duncan as to the paltry inadequacy of this poultice, which is to be placed on the blistering financial boil that is harassing the Commonwealth. I agree that this is merely a gesture made by this decrepit and broken Government, which we have been belabouring throughout the afternoon. I do not altogether join in the criticism that has been hurtled across this chamber at the Government. I believe that it .started out with the best intentions in the world. I believe that the Prime Minister was perfectly honest when he said that he wished to balance the budget of this nation, and that every State Premier should have a like purpose. But the people we are fighting here are ghosts, and the ghosts that haunt the Government in another place, the ghosts of which Australia is becoming very much scared, about which our overseas creditors hear so much. So that it ill becomes us to wage this drastic war upon the members of the Government, who, after all, are not responsible for the fragmentary nature of this measure.
– I thought it was a “ cark-ass,” not a ghost !
– I do not know whether Senator Sampson suggests that it is smellful or anything of the sortCertainly some of the resolutions that have emanated from it have not the odour of sanctity. This is a paltry gesture, even from this Government. If it had been made last November, shortly after the Government assumed office and realized the position, when the Prime Minister told us that an economic council was necessary, a considerable sum might have been saved from the salaries of Ministers and members of Parliament. Instead, the Government has meandered along, and done nothing, while the position has become worse and worse. Eventually it took its courage in its hands; but when it proposed to act it was frustrated by this ghost, which at times takes a physical form, and which dealt with the Government to such purpose that it has submitted to us this piece of patchwork, a feeble attempt to deal with the problem that faces the nation.
The only justification that has been offered for confining the reduction to salaries of £725 and over was that suggested by Senator O’Halloran. He is all for letting the arbitration tribunals, or the Public Service Arbitrator, have play. In ordinary circumstances, that would be a reasonable method; but this measure is not adapted to the demands of ordinary times. The absolute necessity of the nation has compelled the Government to present the bill to Parliament. There is absolutely no tribunal to whom the Government can go, and I suggest that it had no intention of going to such a tribunal if it existed. In South Australia the public servants, though _ they knew that the court would have to be approached before any reduction could be effected in their salaries, immediately entered into an agreement with ‘ the Government that they should be subjected to an all-round salary reduction. That is to their credit. The Government’s excuse that all employees in receipt of £725 a year or less are dealt with by the Public Service Arbitrator is futile, and it does not square with the action of the Ministry in preventing the arbitration system from functioning swiftly and effectively, because it is essential that action should be at once swift and sure. I agree with Senator O’Halloran that Parliament should not function as a wage-fixing tribunal, but I believe that, in certain circumstances, Parliament should act for the nation. If it is considered advisable that some of those employees, who are governed by awards of the Public Service Arbitrator, should be brought under the provisions of this bill, surely it is advisable that all should be brought under it and dealt with accordingly. What does the Government’s action connote? It connotes that, if certain sections of public servants willingly submit to a reduction in their remuneration, either by way of income taxation or by a straight-out reduction, the willing horse will be called upon to bear the whole of the burden all the time. In other words, it will fall mainly on those who are patriotic enough to say, “ I see my country in a position of great difficulty. I am in enjoyment of a steady job at a regular salary, but I see industry almost at a standstill. I see thousands of my fellow workmen out of employment, and men and women on every hand fearing an extension of the. trouble. I realize that business undertakings cannot be carried on much longer under existing conditions. I, therefore, feel it my duty to make a sacrifice in the interests of the nation and in the interests of my comrades.” It is idle to say; that those Corns monwealth employees, who are not subject to the provisions of this bill, come under the jurisdiction of the Commonwealth Public Service Arbitrator, because this Government has refrained from making an appointment to fill the vacancy caused by the retirement of the Arbitrator several months ago. Consequently, there is no tribunal to deal with that section of the Public Service mentioned by the Minister, because the office of the Public Service Arbitrator is, at the moment, nonexistent.
– In any case, it is not a statement of fact to say that the Public Service Arbitrator does not deal with public servants in receipt of salaries above £750 a year.
– I am aware of that. But I arn taking Senator O’Halloran on his own statement, and on that basis the position is so much the worse, because, if public servants, who come under the jurisdiction of the Arbitrator, should be excluded from the provisions of the bill then none should have been included. But let us examine the reasons advanced by the Ministry and its supporters in relation to other taxation measures introduced by this Government. Is it suggested that, in its other taxation proposals, the Government regards as sacrosanct the widow or the working man on the lower range of incomes or wages? No. We shall see presently, when we have an opportunity to discuss other legislation which will come before this Senate, that the Government does not intend to hold its hand as regards the taxation of those people.
The discrimination evidenced in this measure suggests to me that there is something sinister behind the protection offered to these “ curled darlings “ of the Public Service, as I think Senator Lynch termed them. It is not for the good of Australia that they should be exempt from taxation. In every department of State and in every State of the Commonwealth severe .reductions of salaries have been made, and I have no doubt that, in some of the States at all events, further economies will be necessary in order to balance the State budgets. The Commonwealth should set an, example to the people of Australia. We should not be expected to put our imprimatur on legislation which at best can only be regarded as a paltry attempt to right the financial situation. Inequalities in treatment of the Public Service have already been referred to. I remember, a short time ago that, when the cost of living figures were being investigated by the Arbitration Court, it was pointed out that, because of a temporary increase in the price of potatoes, wages of public servants living in Canberra were increased by £6. It seems to me that we are living in an unreal atmosphere when such things as these can happen while the country is passing through one of the gravest crises in its history. Apparently tlie Government is becoming alarmed at the turn which events are taking. Nobody wishes to see a general reduction in wages, because, economically, it is to the advantage of all that wages should be high, provided the employee earns the wages paid to him. It is better for the community, economically and in every way, to have a uniformly high rate of wages; but. when the wage fund is not there,- it is better to provide a little for everybody than to allow some people to starve from lack of work. It is better tomake an all-round reduction and endeavour to spread the hardship evenly over the whole community than to allow this sheltered class of public servants to escape.
I feel sure that honorable senators who are supporting the Government in this matter are not fully aware of the true significance of this proposal. Some of them may become enlightened before long. One honorable senator has said that the bill is an attempt to camouflage the real intentions of the Government. I do not go so far as that, but I do suggest that, it is a compromise designed to get the Government out of a difficulty. It would have been better if the Government had taken its courage in both hands and submitted a definite policy to meet the present situation. If it had honestly attempted to balance the budget and, in in doing so, had endeavoured to mete out even-handed justice to every man and woman in the community, it would have received whole-hearted support from honorable senators on this side.
Sitting suspended from 6.15 to S p.m.
– Senator O’Halloran has indicated that an understanding existed that the States were to beleft to deal with persons whose salaries fell below £500 a year - apparently the extent of the exemptionhas now gone up to £725 - but there is nothing to prevent the Public Service Arbitrator from dealing withthe salaries in excess of £725, and the honorable senator’s argument in that respect therefore goes by the board. The phantoms that seem to be in control of the Government may haunt them in years to come. At a time when this country is passing through a crisis unparalleled in its history, it ill becomes persons with any thought for its future or for civilization to harass a government which is -making a real attempt to rehabilitate its finances and restore to the minds of investors, oversea and local, a sense of confidence in it. The measure will receive my support, not only for reasons advanced by Senator Johnston, but also because it is part and parcel of the Government’s financial policy.
.- The failure of the Government to call upon all members of the Public Service to share in the sacrifices necessary at this time of trouble is attributable to the promise made on the platforms at the last election by every Labour candidate, that there would be no reduction of salaries. The billwe have before us is an endeavour to give effect to that promise, but theLabour party is still guilty of the charge of having reduced salaries above £725. When every one is suffering, the wool-grower, the wheat-grower, the dairyfarmer, the fruit-grower, the artisan, the unskilled worker, and the State public servant, and when there is a. tremendous reduction of national income, the Commonwealth Public Service should share in any sacrifice that is necessary. The argument advanced by Senator O’Halloran that it is the duty of arbitration courts to deal with questions affecting wages does not apply. Serious maladies require desperate remedies. In a time of crisis any machinery, arbitration courts or otherwise, that might prevent a return to prosperity should be cast aside in the interests of the public welfare. If a man’s house is on fire, he does not wait till the five brigade arrives. Ho turns on a hose in an attempt to extinguish the flames. Had the Government shown a reasonable disposition to reduce administration costs, a lot of our difficulty in financing the affairs of this country would have been avoided. There would have been more confidence on the part of our investors. It was not expected of this Government that it would attempt to balance the budget solely by increasing taxation, and by so doing make it more difficult, if not impossible, to bring about the country’s financial recovery.
One of the chief decisions of the Melbourne conference was that there should be some serious attempt at economies, but this Government has made no attempt to economize. I regard it as selfish on the part of the federal public servants not to offer to share in any sacrifice which is necessary at the present time. In Tasmania the salaries of State public servants have been reduced from the top to the bottom. Not only are wages taxed, as is being done in South Australia, but servant girls in receipt of £52 a year have been called upon to contribute 3d. a week to help the State to get out of its difficulties. These servant girls are really making this sacrifice in order that Commonwealth public servants earning up to £725 a year may go free. It is a dastardly and cowardly shame that the Federal Government has taken up this attitude. The Federal Labour party either will not, or cannot, realize the seriousness of the situation, or is pandering to a section of the community whose support it seeks. During the recent election, each issue of the official organ of the Postal Workers Union blatantly advocated the defeat of the Nationalist Government and the return of Labour, because the Labour party had promised not to reduce salaries. It was the essence of selfishness. Is there no public spirit left in the community? I believe, with the Leader of the Opposition (Senator Pearce), that the Commonwealth public servants would gladly share in the burden of sacrifice. At least that is what they tell me. Why are honorable senators of the Labour party trying to shelter a well-paid and wellcared for section, of the community? There is no earthly reason why all Commonwealth public servants should not, in the face of the falling cost of living, make some sacrifice to enable this country to get out of its difficulties. Very few of them are receiving less than £250 a year, and, I think, that even at this late hour the Government should see that all bear their share of the sacrifice. As Senator Colebatch- has said, the time is soon coming when the Government will no longer be able to meet the requirements of the Service, and, eventually, economic pressure will force the public servant to accept a reduction in salaries, despite the wishes of the present Government.
– I fail to understand why Senator Pearce has made referenceto squatters and farmers. The purpose of the bill is to lighten the burden on the squatters and farmers, and its effect is to impose a direct tax on a class of people who have not hitherto been touched. For instance, honorable senators will have their allowances severely reduced. Higher-paid officers of the Public Service will also be taxed, but the bill will not apply to officers in the lower grades of the Service whose salaries are fixed along lines very largely adopted by the Federal Arbitration Court, and are generally approximating the basic wage. The present Government does not propose to tax people on the basic wage or just above it - those who find it hard to live and cannot afford to pay taxation of any description, except that which they pay, indirectly, in the ordinary way. It is true that shearers and miners have had their wages so reduced that, indirectly, they are paying a tax in excess of that which is proposed in this bill, but that tax has been imposed, not by the Government, but by a court over which the Government has no control. If it had been the duty of the Government to fix the wages of shearers and miners, the reduction to which Senator Pearce has referred would not have come about. If, as Senator Ogden has said, servant girls in Tasmania earning £52 a year are paying a tax of 3d. a week, it is a State matter, but it seems to be an outrageous tax.
– The girls are paying it cheerfully.
– Possibly, and, while I should not fall out with them for doing so, I should not like to be a party to taxing them to the extent of 3d. a week. Senator Payne said that by imposing this tax, instead of reducing the salaries of public servants, the Government is camouflaging the situation. That is not the case. The Government realizes that if salaries or wages were actually reduced it would require a terrific fight to restore them. Instead of reducing the salaries of public servants the Government is imposing a tax, which will he the equivalent of the desired reduction, so that when the country again reaches a period of prosperity it will only he necessary to repeal the act under which the taxation is imposed and salaries will automatically be restored. If the Arbitration Court were to reduce .wages or salaries, and the Government were then to impose this tax, it would mean that after the Arbitration Court had practically scraped the bone, the Government would then come in and scrape the bone still more. This Government refuses to do that. There is no camouflage in this proposal. It is a genuine and earnest attempt to show the people that the Government believes that those covered by the hill should make a sacrifice to the extent provided. That is the position in a nutshell. I do not propose to speak at length at this stage as the Government is anxious to dispose of the business before the Senate with as much despatch as possible to enable senators to reach their homes for the Christmas season. The fact that, only three honorable senators on this side of the chamber have spoken on this measure, indicates that we are anxious to get it through as quickly as possible, and to proceed with the work of the country with expedition.
Question resolved in the affirmative.
Bill read a second time.
In committee :
Clauses 1 and 2 agreed to.
Clause 3: (Income - Salary - Tax).
.- This clause provides that the tax imposed under this measure shall be levied and paid in respect to each payment of salary on or after the first day of December, 1930. Will the tax apply to the salaries earned during this month, but which will not be paid before the end of December?
– The clause provides that the act shall be operative as from the first day of December. It applies to all taxable salaries, and the first payment will be collected on the first pay day in December.
Clause agreed to.
Clauses 4 to 8 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
.- I move-
That the bill be now read a second time.
This measure is supplementary to the bill which has just been passed. It merely provides the necessary machinery to give effect to the provision of that measure, so that it does not call for any lengthy discussion.
Senator Sir GEORGE PEARCE (Western Australia) [8.25]. - I direct the attention of the Assistant Minister (Senator Barnes) to paragraph a of clause 4 of the bill which reads -
The amount of income tax upon each periodical payment of salary shall be -
in the case of any senator or member of the House of Representatives who holds any of the following offices: -
Minister of State for the Commonwealth or presiding officer in either House of the Parliament - the amount which is the equivalent of 15 per centum of that payment; and
Chairman of Committees or Leader of the Opposition in either House of the Parliament - the amount which is the equivalent of 12½ per centum of that payment.
Does that mean that a tax of 15 per cent. is to be imposed on the total allowance of Ministers, and a tax of 15 per cent. on their allowances as members? Does it mean that, in your case, Mr. President, you are to pay 15 per cent. on the allowance which you receive as President of the Senate, and also 10 per cent. on your salary as a senator. You, sir, do not receive £2,100 a year as President, but a sum in addition to your parliamentary allowance of £800 as a senator. And so with the Chairman of Committees in each chamber. The clause seems capable of being construed that the President may have to pay 15 per cent. on his total allowance, and 10 per cent. on his allowance as a senator. I raise the point at this stage to enable the Assistant Minister (Senator Barnes) to give me a reply when the measure is in committee.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 (Imposition of income tax.) :
.- Clause 3 reads-
Income tax is imposed at the amounts declared in this act upon each periodical payment of salary payable by the Commonwealth or by the North Australia Commission.
I am not quite clear as to why the North Australia Commission is specifically referred to in this clause.
– Provision is made in the bill which has just been passed for the imposition of a tax upon salaries payable by the Commonwealth or any authority under the Commonwealth. As the North Australia Commission is the only authority which would not be covered by the word “ Commonwealth “ this provision has been inserted.
– I desire to be perfectly clear on. the point raised by Senator McLachlan. Clause 3 reads -
Income tax is imposed at the amounts declared in this act upon each periodical payment of salary payable by the Commonwealth or by the North Australia Commission.
Does the North Australia Commission pay its own members? Should not the clause read : “ Payable by the Commonwealth or to any member of the North Australia Commission “ ?
– The clause covers every person employed by the Commonwealth.
.- The words “or by the North Australia Commission “ have been inserted by the draftsman because the North Australia Commission is the only authority not covered by the word “ Commonwealth “. As honorable sena tors know, the word “ Commonwealth “ has a specific meaning. Laws of the Commonwealth have to he followed by an ordinance before they can apply to North Australia. I am advised by theCrown law authorities that these words have been inserted in order to include the one authority which might not be covered by the word “Commonwealth”.
– Why has not the Federal Capita] Commission been included in the clause? I should say that its position would be similar to that of the North Australia Commission.
– The Federal Capital Commission has been abolished.
Clause agreed to.
Clause 4 -
The amount of income tax upon each periodical payment of salary shall be -
in the case of any senator or member of the House of representatives who holds any of the following offices: -
Senator Sir GEORGE. PEARCE (Western Australia) [8.34]. - I should be glad if the Minister would explain how this clause will work.
– In the case of a Minister, the President of the Senate, or the Speaker of the House of Representatives, the amount of tax will be 15 per cent. of his total salary. In the case of the Chairman of Committees in either House, the amount of tax will be 12½ per cent. of the total salary payment.
– Will the rate of tax be 15 per cent. or 12½ per cent., as the case may be, on the total salary received as a member of Parliament and as a Minister or presiding officer?
– Yes. It will not be a tax at the rate of 10 per cent. on the £1,000 a year received as a member of Parliament and then 15 per cent. or 12½ per cent., as the case may he, on the further amount received as a Minister or a presiding officer. The tax will be 15 per cent. or 12½ per cent. on the total remuneration.
Senator Sir GEORGE PEARCE (Western Australia) [8.36]. - The clause might be intended to operate as the Acting Minister has said it will, but I doubt whether it actually will do so. Each of the presiding officers receives a certain sum per annum in addition to his parliamentary allowance. My interpretation of the clause is that he will pay a tax at the rate of 10 per cent. on the amount which he receives as a member of Parliament, and 15 per cent. on the further amount received as President or Speaker. The same rule would apply to Ministers. In the case of the Chairman of Committees the 12½ per cent. tax would apply only to the amount received for services rendered in that capacity. The tax is a. tax on the amount received as a presiding officer or as Chairman of Committees; the higher rate does not apply to the £1,000 or £800, as the case may be, received asa member of Parliament. I suggest that, whatever the legal interpretation, such an arrangement would only be fair. Let us see how the clause would work if that were not so. I understand that the Chairman of Committees in either House receives £700 in addition to his £800 a year as a member of Parliament. If the clause operates, as stated by the Minister, he would pay a total tax of £187. 10s. a year. Allowing £80 as the tax on his first £800, then £85 is the amount payable on the additional £700 received as Chairman of Committees. That is equal to a tax of 15½ per cent. on the amount received as Chairman of Committees.
– This measure is incorporated with the Income Tax (Salaries) Assessment Bill with which the Senate has just dealt. If the Leader of the Opposition (Senator Pearce) will look at clause 2 of that bill, I feel certain that he will realise that the Assistant Minister is correct. This bill only imposes the rate of tax upon a particular salary. If the right honorable gentleman will read the two measures together, the positionwillbecome clear to him.
– I see that that is so.
– Clause 2 of the Income Tax (Salaries) Assessment Bill contains a definition of “ salary “. It provides that- “ Salary,” in respect of an officer or employee of the Commonwealth or of an authority under the Commonwealth, means the annual remuneration paid to the officer or employee in respect of the office occupied by him and includes any annual allowance paid in respect of any duties performed in addition to those of that office, and. in respect of a senator or member of the House of Representatives, means any allowance payable to him under the Parliamentary Allowances Act 1920-1928, and includes, in the case of a senator or member of the House of Representatives holding any of the following offices, namely, Minister of State for the Commonwealth, or Presiding Officer, Chairman of Committees ‘or Leader of the Opposition in cither House of the Parliament, any payment by way of salary in respect of that office.
A Minister will be charged 15 per cent. on the special remuneration received by him as Minister, not on the ordinary parliamentary allowance of £1,000. On that part of his salary the rate will be 10 per cent.
– I direct attention to the words “ and includes “.
– In what form will the tax be collected? Will it have to be paid in sterling or in currency ? I do not expect the present Government to be so forgetful of its trust as to indulge in inflation ; but it may be that another, and worse, Government will obtain control of the treasury bench and resort to inflation. In that event the present ministerial salary would probably not buy a box of matches or a bar of soap. If the tax of 15 per cent. or, 12½ per cent. had to be paid in sterling, the person holding office would have to borrow money to pay it.
.- The Income Tax (Salaries) Assessment Bill makes it clear that the tax will not be paid by the person holding office at all ; it will be “docked “ from the salary payable to him.
Clause agreed to.
Clause 5 (Annual Salary and Annual Tax).
.- I take this opportunity to refer to the reply of the Minister to my remark that the whole position had been camouflaged by the Government. Clause 5 refers to the schedule to the bill, which sets out that the amount of tax payable annually on an annual salary exceeding £725, and not exceeding £805, will be the amount by which the salary exceeds £725. If that is not a reduction, I do not know what is. There it is clearly’ stated that the salary is to be reduced to that amount. Further down the schedule reads “exceeding £1,000 and not exceeding £1,028, the amount by which the salary exceeds £900,’’ which means that an individual receiving £1,028 per annum will be subjected to a reduction to £900. No matter what the Minister claims, that is definitely a reduction of salary, and I protest against the sheer injustice of the whole thing. The schedule sets it down that the Government proposes to tax the public servant whose salary may be £726 to £750, but another public servant whose salary is £724 escapes altogether. Could any section of a British community regard it as fair to place an enormous burden on a few people while many thousands who are between the basic wage and £725 per annum are allowed to go free? The principle is wrong. I believe that when the facts become known there will be such an outcry on the part of the general public of Australia that pressure will promptly be brought tobear upon the Government to have this bill effectively amended.
Clause agreed to.
Schedule and title agreed to.
Bill reported without requests; report adopted.
Suspension of Standing Orders.
.- I move-
That so much of the Standing and Sessional Orders be suspended as would prevent the bill being passed through all its stages without delay.
I am advised by those who have to administer the act that the sooner it is brought into action the better it will be for all concerned. I should, therefore, like the final stages of the measure concluded this evening.
Question resolved in the affirmative.
Bill read a third time.
Debate resumed from the 4th December (vide page 975), on motion by Senator
That the bill be now read a second time.
Senator Sir GEORGE PEARCE (Western Australia) [8.50]. - I think that this measure should be entitled “A bill to penalize thrift, discourage industry and create more unemployment.” That will be its effect, but what is needed is just the reverse. Let us see what is to happen. The table that has been issued by the Government contains the rates of taxation that have been and will be collected. Eollowing are a few examples of taxation on income from property: -
Very little will be left for the taxpayer when State taxation is super-imposed on those taxes on incomes of £250 to £400, which is just about enough for an old couple to live upon. I am sorry that Senator O’Halloran is not here, because he made a statement of Government policy this afternoon. He told us that it was agreed at the Melbourne conference that the Commonwealth Government would not tax incomes below £500. Here the Government is taxing incomes down to £250 and again breaking away from the Melbourne agreement.
Thousands of thrifty working men and women have made a lifetime of sacrifice,denied themselves the luxuries and pleasures which others indulge in, and invested their savings in property in order that they would not have to apply to the Government for a pension when they reached the winter of their lives. They have bought a few cottages, live in one, and let the others. It is upon such people that this ta-xation will fall so heavily that they will probably be forced to apply to the Government for the means of subsistence. They are brought to the level of those who deliberately refrained from saving, who purchased motor cars, and patronized race meetings and theatres, caring no whit for the future. That is the reward that this Government makes for thrift. I have received quite a number of letters on the subject and I shall read one or two which are typical of the remainder. Here is one -
I am writing to you to point out the extreme hardship that will be occasioned by the present Ministry’s taxation proposals should they become law. The case that has been brought under my notice is that of a widow with two children. Some five years ago she had an income of about £14 per week from property, and, in addition, an income from her interest in a proprietary company. She was induced to mortgage her house and enter into a contract to pay £200 per annum for ten years in order to purchase a shop site. Almost immediately the company commenced to lose money, and her income from this source dried up, and in later years she paid hundreds of pounds in order to keep the factory going. Since then the rents have been dropping steadily, and for 1920-30 were only £500, leaving only £200 for her to live on. This year the income will be only £350 to £400, leaving from £50 to £100 to live on. The federal income tax paid on the 1928-29 income amounted to £7 10s. 4d. Under the present proposals this will be increased to £55, which must be paid out of an income of from £50 to £100.
That was before the amount was reduced in another place. The writer goes on -
In addition, the State income tax is to be heavily increased, and will probably mean that the total income tax payable this year will be from £75 to £100. Even if there were no fixed charges to bo paid, this would be a staggering amount to find out of an income of £375, which is the most that can be received this year. . . .
Here is another letter, from an anonymous source -
I am writing to let you know bow” myself and other elderly persons will be hit if the amendment of the bill for taxation to give property-owners, holders of shares, moneys in the bank, &c, if only an exemption of £100 is
That was before the alteration was made in another place. The letter continues - and yet allow all public servants an exemption of £750. There is nothing human in that kind of legislation. Sir, it seems that the general public have got to keep these mcn in their position whether there is work for them to do or not, and their pay like the brook will go on for ever, while perhaps the people who are providing their pay year in and year out will go to the “ wall. This awful exemption of £100 will eat right at the heart of all fundamental principles. There are others besides myself who, by diligence and hard work, have invested their savings in these institutions and properties; some their all, and thought they would be safe in their old age and no burden to the Commonwealth.
Is that not a laudable desire, something that ought to be encouraged? The letter further states -
As it is the overloaded Public Service that is the cause of all this expenditure, they should be put on the same exemption as everybody else, and not singled out for special treatment. I do really think that the Labour Government should make the general exemption £300, with usual deductions to every one in the Commonwealth or States, and that would give him more than what he is getting from the people who have an interest and stake in the country.
The “writer then goes on to relate some of his experiences. That will be the class of people which will be hard hit by this taxation. I do not wonder that they feel bitter about it. To-day, our industries arc- struggling against adversity. One has only to read the financial columns of the press to realize that many firms which previously were paying satisfactory dividends will this year have no taxable income. However, they had a taxable income for their last financial year, upon which the assessment will have to be paid this year. It will be the final push below the water for many who are engaged in business. What is going to be the result? I am not appealing for sympathy for the bloated capitalists, as some people term a certain section of our people; but for those thrifty persons who, by their contributions* to the capitalization of industry, provide employment for hundreds of thousands of working men and women in Australia. The inevitable result of this form of taxation will be to increase the volume of unemployment. It seems to me that the Labour party, as constituted to-day, regards thrift as a crime - something to he punished - and that this tax is a blow at the hated capitalists. But I venture to predict that, in its effect, it “will be something in the nature of a boomerang, and that in the end it will hit the workers hardest of all. The following statement, by Mr. Thomas Buckland, president of the Bank of New South Wales, at the ordinary general meeting of the bank on the 28th November, 1930, will be of interest: -
Australian Treasurers have sought to meet their commitments by the imposition of fresh or increased taxes, but it would seem that the point has been reached at which increased rates of taxation will not produce more revenue. In view of the excessive costs of production many concerns and individuals will be unable to pay the taxes even though demand is made for them, and pressure to collect such, taxes will be of no avail but will tend to aggravate the situation. Australia is rapidly becoming, if it has not already become, the most heavily taxed country in the world in order to support its unsound and uneconomic systems of regulating trade and industry, and of developing the country in excess of economic possibilities. The burden is now becoming overwhelming, and unless it is reduced considerably at an early date, will bring disaster upon the Treasurers who have imposed it as well as upon those on whose shoulders it has been laid. To quote a Canadian writer of eminence, “ Economic ignorance has .bred legislative restraint; the labour vote helps to shut labour out of its inheritance “.
Those are the words of a man whose duty it, is to point to the dangers of unwise legislative action.
I could cite many other instances illustrating the injurious effect on enterprise of unduly heavy taxation, but I shall content myself with one only. The Midland Railway Company, in Western Australia, about 40 or 50 years ago built 300 odd miles of railway on the land grant principle, through what was their uninhabited country. It subdivided its land,, and sold large areas on terms extending over fifteen years and upwards. The principal sums under the contracts bear interest at 4 per cent, per annum. Over 500 of these contracts are still in force. The company never made any profits, but is carrying on in liquidation until the contracts are completed. By the federal taxation now in force, the 4 per cent, interest is reduced to an effective interest of i’3 14s. Sd. The new proposal will reduce it to £3 Ss. 8d., from which will be deducted State income tax. It is absurd to suggest that approximately 3 per cent, is a fair remuneration on the capital invested by that company.
Does any one contend that we do not want the investment of private capital in this country? As a matter of fact it is our most urgent need. Much of our present trouble is due to the fact that there has been an over investment, of governmental capital upon works which arc not returning a rate of interest sufficient to meet our annual obligations. If we had a larger investment of private capital, and if the industries or undertakings in which it was invested were not returning interest, the private individual, and not the general taxpayer, would have to bear the loss. But how can we expect an increase in private capital investment if we impose such crushing burdens on industry that even 4 per cent., as in the case of the Midland Railway Company, is taxed so heavily that its effective rate is reduced to 3 per cent. The inevitable result of this policy must be to increase unemployment. Since this Government has been in office the unemployment figures have increased from 12 per cent, to 20 per cent. I know that this trouble is world-wide, but I am convinced that the policy which we are pursuing, and which is expressed in this bill, will make our unemployment problem much worse than it is.
Senator Sir. GEORGE PEARCE.Yes, I am sorry to say that it is. I do not know of any other country where, in twelve months, the unemployment figures have doubled. Certainly they have not doubled in the United Kingdom.
Senator Sir GEORGE PEARCE.This unemployment problem is one of the tragedies of modern life, and I am afraid that, unless means are adopted to arrest the trend, society will be destroyed. It seems to me, therefore, that we should be exceedingly careful, in all our legislation, that we do nothing to aggravate the trouble. To increase the volume of employment it is necessary to increase the productivity of capital investments. On the other hand, every legislative act, the effect of which is to discourage the investment of capital, will lessen the chances of employment to the workers of this country. This measure will, I fear, have a most disastrous effect on industry generally, because it is essentially a tax upon capital investment in industry.
Senator Sir GEORGE PEARCE.I am afraid that, as the result of this legislation, the investment of capital in Australia will not be encouraged, especially if there are opportunities for reasonable returns in other countries adjacent, to the Commonwealth. Consequently there will be no occasion to devise means to pass it on. With incomes dwindling on every hand, taxation rates are being increased and capital investment further discouraged.
Several honorable senators inter ru ji! - ing,
– I would point out that, while it is disorderly to interrupt an honorable senator when he is addressing the Senate, it is doubly disorderly for honorable senators to take part in conversations across the chamber.
Senator Sir GEORGE PEARCE.I have nothing further to say except that I regard the bill as an iniquitous form of taxation. The rates are altogether out of all proportion to taxation imposed in any other measure previously presented io this Parliament. But the Senate is obliged to pass the bill because, if we reject it, the Government will throw on this chamber the responsibility of preventing it from balancing its budget. Apparently, the Ministry regards this as a means to that end. I believe that the bill will do a great deal of harm. I believe, also, that those who will realize it first, by bitter suffering and adversity, will be the people who put this Government into power - the wage-earners of this country. In the long period of unemployment which, I feel sure, will result from this Government’s taxation proposals, they will discover that this bill, which ostensibly is aimed at the capitalists, but which will really penalize the thrifty, will hit them hardest of all. One of the weaknesses of our national character is our proneness to the pursuit of pleasure to the disregard of the more serious side of the human character, as exemplified in habits of thriftiness. For my part, I should prefer to encourage people to make provision for a rainy day, and I regret to think that this bill will deal a severe blow to all those who have practised thrift in their daily life.
– I cannot allow this bill to pass to the committee stage without expressing my complete disapproval of it, and my intense disgust at the attitude of the Government. The bill imposes an iniquitous burden upon thrift. If we pass in review the history of this country we must be forced to the conclusion that the thrifty section of our people has been behind every progressive movement for the expansion of our industrial and commercial activities. By practising rigid economy in their every-day affairs, they were able to accumulate a certain amount of capital which they invested in one or other of our numerous industrial or commercial concerns, with the idea of providing- for their old age. Now the Government has decided to look upon all those who have incomes from property its criminals. When he made his financial statement, the Acting Treasurer (Mr. Lyons) said very little about this tax, but what he said was very important. He said -
The new income tux proposals relate principally to income from property. The object aimed at is an increase in property taxation, which, with increases by the States, will result in property bearing a fair burden in thu plan nf I budget re-adjustment.
Ever since income taxation has been adopted by the Commonwealth Parliament, provision has been made that income from property shall always pay a higher rate of tax than income from personal exertion, and the differentiation has not been small, particularly in the case of incomes amounting to over £500. The increase under the existing act is as high as 50 per cent, in the case of an income of £1,000. Surely that should be sufficient, but apart from the confiscatory increased rate of tax proposed in this bill, the amount of tax to be paid by a person whose income from property exceeds £200 is very much higher than it has hitherto been in Australia. This result is brought about by a reduction’ in the exemption in the case of income from property. On a net income of £350 from property, after all deductions, except the statutory exemption, have been made, the present rate of tax is £1, but under the provisions of this bill, it will be £4 14s. Od. in addition to which a super tax of ls. 6d. in the £1, amounting to £16 17s. 6d., has to be paid. The in: crease would have been sufficient if it had amounted to £4 14s. 6d.
We have heard it said that the bloated capitalist is fair game for taxation in order to meet the engagements of the Commonwealth Treasurer. During the hist eighteen months, people who have, by dint of hard work and frugal living, been able to accumulate a competency, have invariably invested it in bank or industrial shares. To some extent, they have invested in mining shares, but as mining investments are looked upon by the average individual in the community as more or less a gamble, I content myself by referring to the holders of bank or industrial shares, and 1 want honorable senators to ask whether they can justify the taxation proposed in this bill in view of ‘the enormous losses that have been sustained by those who have put their savings into bank and industrial shares, thus helping, materially, to carry on the industrial activities of Australia. The market values of bank shares and a group of ordinary industrial shares at the end of June, 1929, were, respectively, £89,574,632 and £39,618,024. The respective values on the 1st of October, 1930, were: £55,352,100 and £19,161,865. There was a decrease of £34,222,532 in the case of bank shares, and of £20,456,159 in. the case of industrial shares, or a total depreciation in value of £54,678,791. If it be reasonable to assume, and I think it is, that at least 50 per cent. of the holders of bank and industrial shares have had to realize upon them to meet their engagements, they have sustained the enormous and irrecoverable loss of £27,339,000. Day after day, we meet friends who last year were financially warm and to-day are shivering, and when we make inquiries we find that, in order to meet engagements, they have had to dispose of their shares at depreciated values. The greater part of the wealth that they acquired over years has disappeared, and the Government is further penalizing them by taxing the few miserable pounds that they have left. I warn the Government that the time has arrived when it must realize that Australia will not be taken out of its present difficult position by the taxation of the people.
– It will be principally by reducing interest.
– There is no interest to-day in hundreds of thousands of cases. Millions of pounds are locked up in concerns which have for some time past failed to pay dividends, and are not likely to do so for some time to come. On the advice of bankers and people high up in the commercial world, men who have invested their money in supposedly giltedged investments for the purpose of getting a reasonable 5 or 5£ per cent., to-day find that their holdings are not worth even 40 per cent. of the amounts originally invested. The decline in the market value for the first three quarters of 1930, as compared with the average market value for 1928-29 in respect of bank shares, has been 38.2 per cent., and in respect of industrial shares 51.6 per cent. The position is appalling. This is the time to talk not of imposing extra taxation, but of rigid economy. A private individual, finding that he is not making ends meet, will apply the pruning knife. Honorable senators have spoken to-day of the standard of living. I have seen in Sydney, Melbourne, Adelaide, and even in Tasmania, thousands of men who have no standard of living. Surely it is better to bring down the average so that all may have some means of living, than to maintain a few in lucrative and soft positions.
I propose now to show how this tax will apply to a great number of people, principally to persons of comparatively small means, who have, over a very lengthy period, worked hard and denied themselves many things in order that their children may receive a decent education, and so that they may themselves have some provision for their old age. I am referring to a class of people who at all times are determined to be independent of government support in their old age. Nothing would hurt them more than to have to depend on an old-age pension. They are a class of people who have been exceptionally helpful to Australia. If it had not been for their independent attitude, our invalid and oldage pensions appropriations would have been larger by many scores of thousands of pounds. If they had been extravagant, if they had spent every penny they earned on all things they desired, whether they needed them or not, as many others do, there would probably be no one to-day to whom this taxation could apply. The amount of the tax on property has been increased considerably through the raising of the exemption; but when we go further than that we find that a person with an income of £300 a year from property is hit very heavily. Property means interest on any investment, rents collected from property, interest paid on fixed deposits in the bank, and interest paid on current account in the savings bank. Australia prides herself on having the largest percentage of savings bank depositors in the Empire ; but that spirit is no longer to be encouraged. At any rate, if the people continue as they have for a long time past - to place their savings in the savings bank - the Government will confiscate a great portion of them. On an income of £300 from property the ordinary tax proposed in the bill before us is £2 l1s. 8d. To this has to be added £11 5s., at the special rate of 1s. 6d., making a total of £13 16s. 8d. On an income of £400 from property, the total tax payable is £29 8s. 4d. An income of £400 is not a very large one. I heard an honorable senator to-day say that he would not think of touching public servants earning under £500 a year, yet he is prepared to tax a man, perhaps 70 years of age and possibly with a wife and home to maintain, who has an income of £250 from property. On an income of £600 a year from property a total tax of £67 9s. 2d. is imposed as against £10 6s. 3d. last year, or an increase of 600 per cent. Can the Minister in charge of the bill (Senator Barnes) justify such an increase? The other day, while sitting in an office in Melbourne and feeling the effects of a long train journey, I had a vision in which I saw a court. The Bench consisted of the Acting Treasurer (Mr. Lyons) as the Chief Justice, theActing Prime Minister (Mr. Fen ton) and other Federal Ministers. I was anxious to ascertain the name of the accused and the nature of the charge. On making inquiries, I found that the accused was John Brown, a citizen whom we have all known for many years. Although the proceedings had commenced before I arrived I was just in time to hear the charge read by the Chief Justice, who, as I have said, was the Acting Treasurer. He said -
Prisoner at the bar, you are charged with many heinous offences, to wit, that when a young man and duringyour middle age you worked hard. You were sober and industrious, frugal in your living, persistent in your endeavours to save something for your old age, so that you and your wife should not be a burden on the country. You succeeded so well, although depriving yourself of many things that you desired, that at the time of your retirement from active work brought about through advancing years or ill-health you were assured of an income of £500 per annum. This, you contemplated, would enable you to carry on comfortably to the end. We have unanimously found you guilty and to mark the serious nature of your offence you are fined £40 6s. 3d. per annum for an indefinite period.
Imagine the consternation of the accused when he heard such a cruel sentence imposed. Similar cases were dealt with and the following penalties were imposed: - Persons in receipt of £350, penalty £20 12s.; £300, penalty £13 6s. 8d.; £600, penalty £57 3s., and £1,000, penalty £82 12s. It was almost unthinkable that a court should inflict such sentences upon men who were charged, not with a crime, hut with action taken in the best interests of their country. A perusal of the bill has shown me that such taxes are actually being imposed by this Government. If this measure becomes law, and I am afraid it will, the Government will have to accept the full responsibility. I do not believe that the Government or its leader in this chamber (Senator Daly) believes that the measure will in any way assist us to overcome the difficulties with which we are confronted. The Leader of the Opposition (Senator Pearce) said, that instead of the measure being helpful to the country, it will have a most detrimental effect upon the community and will seriously retard a return to prosperity. In the first instance the Government proposed to collect £1,600,000, but by its socalled generous act in raising the exemption from £100 to £200, it expects now to raise £1,000,000. I do not see how it can be termed a generous act to increase the exemption to £200, seeing that last year it was £300. As the Leader of the Opposition stated, the amountwhich the Government proposes to collect will be withdrawn from industry and consequently development will be seriously retarded.
– I do not think the Government will raise £1,000,000.
-Whatever amount is collected will be withdrawn from industry, thus causing further unemployment. I know many persons in Melbourne and Sydney, and in the part of Tasmania in which I reside, who, from the small incomes they receive, are able to provide casual employment; but who will now be unable to do so.
– Many of them will be seeking employment.
– Yes, and many will be obliged to draw the invalid and oldage pension. The bill has my strongest condemnation, and I sincerely trust that the first year of its operation will prove to the Government its disastrous effect upon the community. Instead of helping to stem the tide of adversity, it will actually accentuate it.
. - I desire, very briefly, to express my complete opposition to the, bill. Additional taxation should not be imposed by the Government, particularly at this juncture, and the Senate would be well advised not to pass the bill. The Government should introduce a policy of rigid economy, and governmental expenditure should be cut to the bone before vindictive taxation of this nature is agreed to. It seems, however, that we cannot expect any adequate reduction in. expenditure from this Government, and that it is its policy simply to try to tax the people into prosperity, which, of course, cannot be done. In the short period of twelve months, during which this Government has been in office, it has imposed three staggering increases in taxation, which is, I think a record of high taxation for the British Empire. It has already imposed super taxes on property of S per cent., 15 per cent., and 15 per cent., respectively, or a total of 3S per cent. Now we have this additional taxation, which is somewhat different in its incidence. There is to be a further tax of 5 per cent, on the present tax on personal exertion., and a new super tax of 7.V per cent, on the total income from property. I have met some persons who have said to me, “The Government are acting pretty reasonably. They are increasing the tax on personal exertion by 5 per cent, and on property by i$ per cent.” .That is not; correct. The Government is increasing the taxation on personal exertion by 5 per cent, on the amount of tax at present paid, a rid .that oil’ .”property by 7-o- per cent, on the whole of the income derived from property. That is to say by an extra ls. 6d. in the £1. on tlie whole of the income from property, in addition to federal, income taxation, State income taxation, and the three existing super taxes.
– An increase of COO per cent.
– Yes, on comparatively small incomes. This is the heaviest, blow which the Australian taxpayers have received since the inception of federation, and is particularly objectionable because it is aimed at the small taxpayer. The percentage increase is much higher on the small incomes than ou the larger incomes: but that is a point with which I shall deal later.
I am surprised that the Government should have introduced this measure particularly when the Acting Prime Minister (Mr. Fenton) and the Acting Treasurer (Mr. Lyons) said at the- Mel bourne conference that the Government did not intend to further encroach upon State fields of taxation. The field of income taxation should, I contend, be reserved to the State Governments, as was the case prior to the war. It; was only during and subsequent to the war that the Commonwealth Government entered this field. The previous Prime Minister (Mr. Bruce) publicly stated that it was the desire of the Government of which he was the leader, to vacate the field of income taxation as early as practicable. I am sorry that effect was not given to such a proposal. Although in August last the Government agreed not to further encroach upon taxation fields in which the States arc operating it has broken its undertaking as it has in connexion with reducing expenditure, balancing its budget, and living within its income.
– Can the honorable senator suggest how expenditure can be reduced ?
– The Acting Prime .Minister said that the Government, of which the Vice-President of the Executive Council (Senator Daly) is a distinguished member, had decided to reduce expenditure by £4,000,000. Since that decision was readied caucus has intervened, and the Government is now prevented from adopting the policy then proposed. I am sure that when Mr. Fenton made that statement he intended to make bigger reductions than the proposals for the saving of a miserable £60,000 which have been submitted to the Senate. The Government has failed to ‘ keep its promise to reduce expenditure. .Lt should have reduced expenditure to an extent sufficient to obviate the necessity for this additional obnoxious taxation. If the Government had made any real attempt to honour the agreement arrived at in Melbourne, to reduce expenditure by £4,000,000, it i night reasonably have accompanied such action by a degree of extra taxation. I am opposed to giving it further money to be spent recklessly in all directions. Indeed, I am opposed to all additional taxation until a campaign of ‘economy has been embarked upon. Since the present Government took office, it has increased taxation immensely, and there has been a corre- sponding increase in unemployment. This taxation will further increase unem ploymen t.
– Is there not unemployment inWestern Australia and other States in which non-Labour Governments are in power?
-Both taxation and unemployment have increased in all the States.
– The Commonwealth Government is not responsible for that.
– The Commonwealth Government is taking money from the thrifty persons in the community who otherwise would use it for reproductive purposes. I have here three statements which illustrate the increases of income tax proposed by the present Government. The first statement refers to the increases in taxation on incomes derived from personal exertion ; the second shows the original proposals of the Government regarding the taxation of incomes derived from property: while the third shows the amended proposals of the Government under the compromise accepted, by the Acting Treasurer (Mr. Lyons) on the amendment moved in another place by the right honorable member for Cowper (Dr. Page) -
Honorable senators will see from the tables how enormous is the increased taxation, particularly in respect of incomes derived from property. The higher the income the lower is the proportion of increased taxation. The taxation imposed by this Government through tariffs, sales tax, primage duties, embargoes, and land and income taxes, is vindictive and confiscatory. I can only describe it as legalized theft. When we add to those burdens the heavy State taxation, it is clear that these extra taxes cannot be imposed without great injury to industry and production. The more taxation and the heavier the tariffs the greater the unemployment. I have received from the Auctioneers, Land and Estate Agents Association of Western Australia the following letter setting out the difficulties of small property-owners at the present time.
I have been instructed by the council of this association to communicate with you, and to lodge a formal protest against the proposed additional property tax of 7½ per cent. now before the House for consideration.
It is felt by the members of my association that while all sections of the community have to-day to bear their share of taxation, the proposed further property tax is most unfair in its incidence, and that it would press unduly upon a very large number of people.
There are thousands of property-owners, both small and large, whose incomes to-day have been reduced in some cases almost to the point of extinction through the existing depression, which is responsible for - a large number fo houses becoming vacant. In addition to this, which is a direct source of loss of revenue and income, returns from their property have been materially affected for the following reasons: -
In addition to the above, property is already bearing a special tax on income as distinct from income derived from personal exertion.
For the above reasons I am instructed to express the hope that when this matter comes before the House you will give it your most earnest consideration - not from the point of view of excluding property from taxation, but from the angle of whether the owners who are suffering to-day to a previously unknown extent, should be so drastically harassed as will be the case under the proposed taxation.
The letter makes it clear that thousands of small property-owners have had their incomes reduced almost to the point of extinction, because the existing depression has left large numbers of houses vacant. The ease made out by the association should convince the Government that its taxation proposals are so iniquitous that they should be reduced at least so far as they affect the smaller incomes from property. On the 3rd October last, after the Melbourne conference, the Acting Prime Minister (Mr. Fenton) said that the Government would balance the budget, and to that end there would be a reduction of £4,000.000 in expenditure. He also undertook to avoid further encroachment upon State spheres of taxation. This billwhich violates that undertaking is undoubtedly the work of the Labour caucus rather than that of the Ministry. In these circumstances, the Senate would be well advised to reject the measure, and thus to protect the thrifty citizens of the country. They are the persons most affected by the Government’s proposals. I am entirely opposed to this confiscatory and oppressive taxation, and shall vote against the second reading. I hope that the Senate will reject the bill on the ground that it is impossible to tax the people into prosperity as appears to be the belief of the Government.
SenatorRAE (New South Wales) [9.52]. - I am sorry that I have had to listen to the doleful lamentations of honorable senators opposite ever since the Senate resumed its sittings. I have no praise to offer with respect to any form of taxation. At its best, taxation is a necessary evil. Certainly I should not dream of saying a word in favour of taxation for the mere love of taxing the people. I regard as an impertinence the repeated references of honorable senators opposite to the Labour caucus. The Labour party makes no pretence of disregarding the will of caucus. It speaks with the voice of the whole party; it does not believe in a despotism which lays down the law to individual members and stifles their individuality. Unlike the Nationalist party, it does not place all authority in the hands of a despot and allow him to bring the party to grief. -It believes that the collective wisdom of the party is greater than that of the few who com prise the Cabinet. The manner in which the Labour party arrives at its conclusions is no concern of any. other party. Parliament has to deal with the legislation that is presented to it. These repeated references to caucus can only be described as a gross impertinence.
– Honorable senators have quoted statements alleged to have been made by the Acting Prime Minister (Mr.Fenton) and others regarding their intention to balance the budget and to reduce expenditure by £4,000,000 in one year.
– The proposals, which included the transfer of certain moneys from the national debt sinking fund, have already been fully explained.
– It certainly was never intended to save £4,000,000 by reducing the salaries of government employees.
– Who suggested that?
– Honorable senators opposite carp and cavil at every piece of legislation which proposes to inflict heavier taxation, although they know that otherwise it is impossible to balance the budget. Even if one half of the public servants of the Commonwealth were thrown on the unemployment scrap heap, the consequent savings would not balance the budget. Honorable senators opposite know that; yet they squeal whenever further taxation is proposed. I doubt the genuineness of these protests. It may be that those who squeal loudest are themselves property-owners, whose nature it is to squeal when hit. We are told that the Government’s proposals discourage thrift. Unfortunately, the great majority of the citizens of this countryhave had thrift enforced upon them. While I do not pretend that the ills from which we suffer are entirely due to any one government, I submit that the extravagance and reckless expenditure of the previous administration were larely responsible for our present position. Opposition senators would have us believe that the financial drift is the result of the Labour party being in office. I remind them that there has not yet been time for its policy to have any great effect on the finances of the country. All this criticism of the Labour party is so much. bunkum. The ills from which weare suffering are, to a great extent, a legacy from the previous administration, which indulged in an orgy of reckless extravagance.
– And thrift.
– A former Treasurer (Dr. Page) claims to have paid off a large amount of the war debt during his term of office. That may be so. But while he was paying it off he was piling up other debts in excess of the amounts paid off the war debt. That kind of thrift does not appeal to me. That the country was more heavily in debt when the late Government went out of office than when it took control of the Treasury is evidence that it borrowed more than it repaid.
SenatorCarroll. - The interest bill was less when it went out of office than when it; took control.
– The honorable senator is mistaken. The position which confronts us can be met only by imposing additional taxation. Even if there were a Black Thursday and half the public servants of the Commonwealth were dismissed, the budget would not bo balanced. Taxation is inevitable. No matter what form of taxation the Government proposes it is condemned by the Opposition, who submit no satisfactory alternative. It is enough to make one feel ill to listen to the doleful predictions of honorable senators opposite, jeremiads that have been repeated ad nauseam. It is impossible to get revenue out of nothing, therefore those who have property must pay taxation. Until honorable senators opposite evolve a satisfactory substitute for the existing system we shall have to continue as we are.
– We are discussing in particular income which is derived from “property.” The term needs to be defined. Actually it may cover income derived from the accumulated savings of a life of labour. In the circumstances, the proposal of the Government exhibits an extraordinary and unreasonable differentiation between the incidence of taxation on income from “ personal exertion “ and that from property. I suggest that £300 a year is a reasonable expectation for any ordinary thrifty citizen after a life of labour. On that modest income such a person will have to pay a Commonwealth tax of £13 16s.8d., and it is safeto conclude that, with State taxation, he will have to pay £30, or 10. per cent. of his income. The Commonwealth tax, on an income of £300 derived from personal exertion, is nil. Actually there is no difference in the source of income. The one is deriving £300 from his labour of the moment, and the other from his accumulated labour of 30 or 40 years.
– The former may have a young family to rear.
– And the other may have a disabled family to care for, and Ids old help-mate in life to support. They are on a similar basis, and the differentiation is inexcusable. It certainly is not any encouragement for one to be thrifty. I remind my old friend, Senator Rae, that although the Acting Prime Minister (Mr. Fen ton) specially appealed to private enterprise to employ as many as possible,he immediately subjected it to this extraordinarily heavy taxation. It is obvious that private enterprise cannot comply with both demands. Here is another example of the anomalous position brought about by this taxation. A. man in receipt of £300 a year from his accumulated labour, pays a combined tax of £30, while the worker of to-day has to earn practically £1,000 before he pays an equivalent amount.
– Supposing that the former receives his income from property that he has inherited ?
– That complicates the mutter. The class to which I have referred are legion in the country. Now, because of their past frugality, they are to be taxed practically out of existence.
This excessive taxation must inevitably cripple private enterprise and restrict its capacity to employ. I know that the Government is hard pressed and must obtain revenue, but why does it not reduce expenditure? If some of its employees are not fully employed they should be dismissed. Instead of encouraging industry to employ as much labour as possible, these proposals of the Government will have the reverse effect.
– This is the second contribution of the Government to the Melbourne agreement and honorable senators opposite apparently think that it does not go far enough. Senator Pearce holds the view that the Government should indulge in greater economy if it is to restore confidence abroad. Another suggestion of his was that the salaries of all Commonwealth public servants should be reduced. We have already had some experience with regard to wage reductions. Wage reductions result in the reduced purchasing power of the community, and smaller revenue to the Government. Consequently more doles have to be paid. The more governments indulge in wage slaughtering campaigns, the worse becomes the condition of the country. Public servants are not receiving exceptionally high remuneration for their services. I object to the Service being called a sheltered one. I know many public servants, and am aware of the struggles they went through in order to qualify for entry to the Service. They made every effort to make themselves efficient in order that they should be engaged in permanent employment.
– Is not the honorable senator discussing another bill?
– I shall confine my remarks to that before the Senate. I ask leave to continue my remarks at a later date.
Leave granted: debate adjourned.
– I move-
That this bill be now read a second time.
The bill provides for the variation of the sinking fund law on the lines announced in the financial statement that was made by the Acting Treasurer on the 5th November last. The national debt sinking fund, established in 1923 to provide for the redemption of Commonwealth debts, was designed to pay off the post office debt in 30 years, and war and other debt in 50 years. The act provided for the payment of the necessary contributions to the sinking fund from revenue. These annual contributions amounted, in the case of the post office debt, to 30s. per cent. of the debt, and on war and other debt to 10s. per cent. of the debt. All these sums were to be accumulated at the rate of 5 per cent. per annum. The annual contributions thus payable to the sinking fund, compounded at 5 per cent. per annum on the basis provided in the law, would have sufficed, without any other assistance, to redeem the Commonwealth debt within the period provided for in the act. In addition to the contributions referred to, other moneys are payable to the sinking fund under the present sinking fund law. These sundry additional payments would, if continued, result, in the paying off of the debt in a much shorter period than that originally contemplated. The most, important of these excess contributions arc reparation moneys and half the profits of the Commonwealth Bank. Moreover, £7,415,755 of surplus revenuehas been applied to the redemption of debt since the establishment of the sinking fund. Though debt to that amount has been paid off from the surplus revenue, the contribution to the sinking fund of 10s. per cent. on the whole debt has been continued and would, under the law as it now stands, be continued for the full 50-year period. While such payments towards the redemption of our debt are justifiable in times of abundant revenue, the continuation of such heavy contributions, in present circumstances, would place an undue and unnecessary burden on the taxpayers of Australia. This proposal will, I am sure, meet with the approval even of my conservative friend, Senator Johnston.
In each of the last two years the actual provision for Commonwealth debt redemption has exceeded £6,000,000. The amount for 1928-29 was £6,230,000. For 1929-30, £6,422,000 was provided. For the present year provision under the law as it now stands was estimated at £6,850,000. These figures include payments to the British Government in redemption of our indebtedness to Great Britain. There is a separate law for the redemption of our debt to the British Government, and payments to that Government are made directly from revenue, and do not pass through sinking fund commissioners.
It must not be forgotten that, although the Commonwealth has had a sound debt redemptionscheme for seven years, it has been incurring new debt for new works at the same time as it has been redeeming old debt from the sinking fund. An important stage was reached in our sinking fund operations last year, when, for the first time, the debt redeemed from sinking fund considerably exceeded new debt created as a result of new borrowing. Even on the reduced basis of sinking fund provision now contemplated, we shall be paying into debt redemption this year considerably more than we shall be spending on new loan works. In other words, the sinking fund is doing the work which it was intended to do, and, up to the present time, has paid . off an additional £14,000,000. This is the amount to which reference has been made so frequently by the right honorable the Leader of the Opposition (Senator Pearce).
– The Government is doing tardy justice to the previous administration.
– I desire to take no credit away from the previous administration. My only concern, at the moment, is to secure the approval of the Senate to a measure which will enable us to divert from the sinking fund an amount which is not required by that fund, but which we need to ease the burden of taxation on our people.
In considering the Commonwealth sinking fund law it is important to remember that the bulk of the Commonwealth debt is war debt. Australia is doing as much as can reasonably be expected in paying off this debt over a 50-year period. As a matter of interest and comparison, I may point out that the debt of Great Britain to the United States of America, and the war debts of the Allies to Great ‘ Britain, are being repaid over a period of 62 years, whereas the Commonwealth, even under the amended arrangement authorized in this bill, will repay her war debt over a period of 50 years. As regards the non-war debt, approximately half was incurred for post office, telegraph, and telephone works, and these amounts are being amortized over a period of 30 years. In the light of all these facts, theGovernment considers that there is ample justification for adjusting the sinking fund to the original basis of 30 and 50 years, particularly at a time like the present, when Commonwealth and State budgets disclose deficits. The bill makes provision for reparation payments and profits from the Commonwealth Bank to continue to go towards debt redemption, but the annual revenue contribution now provided for will be reduced so that the fund will only receive in each year the appropriate amount due in that year for the redemption of the debt on the 30 and 50-year plan. If Commonwealth Bank profits fail to provide sufficient money to redeem the debt in the 30-year and 50-year period, additional sums from general revenue will have to be contributed. The result of this adjustment in the sinking fund contributions for the present year will be a reduction in the revenue contributions of approximately £1,950,000. When the Government announced its plan to reduce expenditure by £4,000,000, it was made clear by the Acting Prime Minister (Mr.Fenton) that the amount mentioned included £1,950,000 which it was intended to divert from the sinking fund to the general revenue. The amount, which will still be available for Commonwealth debt redemption this year, will be £4,900,000, which sum will exceed the amount of loan money expended. Suggestions have been made that these proposals represent a raid on the sinking fund. Statements of that nature are altogether unwarranted. They serve no good purpose, and are liable to damage the credit of Australia, because, as I have shown, we are maintaining a sinking fund that will compare favorably with sinking funds established by governments in other countries. The Commonwealth, when it established the national debt sinking fund, contracted to pay off its debts in periods of 30 and 50 years. This bill does not interfere with that arrangement; it merely places the sinking fund on a basis which will carry out what was the original intention of Parliament when the existing law was passed. To make unnecessary calls on taxpayers to the extent of nearly £2,000,000 a year would, in the present condition of finance, be not only burdensome but intolerable.
The sinking fund position of the Commonwealth is sound. The moneys provided for debt redemption in the first seven years of the scheme far exceed the provision contemplated. Relatively, no country appears to be doing more for the redemption of its debt.
In order to ensure that the proposals contained in the bill shall provide for the redemption of the Commonwealth debt within the periods of 30 and 50 years, the amendments now before the Senate have been submited to actuarial examination. The actuary attached to the .Commonwealth Superannuation Board, after completing his examination, has stated that the sums to be paid under the scheme in this bill will provide for the redemption of the debt as desired.
The adjustment proposed in the bill does not in any way affect the sinking fund for State debts established under the financial agreement. The agreement makes provision for the redemption of State debts existing at the 30th June, 1927, in a period of 58 years, and of new debts in a period of 53 years. The varying periods over which the Australian debt is being redeemed are as follow :-
Commonwealth Debt. - “War indebtedness to British Government - 35 years from 1921; post office debts - 30 years from 1923 in the case of old debt, and 30 years from the date of raising in the castof new debt. Other debt - 50 years from 1923 in the case of old debt, and 50 years from the date of raising in the case of new debt.
Debts of the States. - 58 years from 1927 in the case of debt then existing, and 53 years from the date of raising in the case of new debt.
Debate (on motion by Senator Sir GEORGE Pearce) adjourned.
Senate adjourned at 10.26 p.m.
Cite as: Australia, Senate, Debates, 9 December 1930, viewed 22 October 2017, <http://historichansard.net/senate/1930/19301209_senate_12_127/>.