12th Parliament · 1st Session
The President (Senator the Hon. W. Kingsmill) took the chair at 3 p.m., and read prayers.
The following papers were presented : -
Railways Act.- Report on Commonwealth
Railways Operations for the year ended 30th June, 1931 (in substitution for the Paper tabled on the 14th October, 1931).
Seat of Government Acceptance Act and
Seat of Government (Administration) Act- Fish Protection Ordinance - Regulations amended.
Notice of motion (by SenatorFoll.) to disallow regulation No. 87 under the Fish Protection Ordinance 1930-31, Territory for the Seat of Government, withdrawn.
Bill read a third time.
Debate resumed1 from the 23rd October (vide page 1152)’, on motion by Senator Baknes -
That, whereas- on the twenty-ninth day of July,. Out thousand? nine hundred and thirtyone the Senate resolved that the Government of the Commonwealth, be authorized to request and’ consent to the submission by the Government of the United- Kingdom to the- Parliament at Westminster of a bill, for a statute containing *he provisions set out in- the schedule to the resolution, and the enactment of the said statute:
And whereas it rs desirable to supplement the- said resolution in the manner hereinafter appearing :
Now therefore the Senate resolves that the Government of the Commonwealth be authorized’ to request and’ consent to the inclusion in- the said! statute of a clause as follows : - “ Nothing; in this act shall be deemed to require the concurrence of the Parliament and’ Government of the Commonwealth of’ Australia in any law marie by Parliament with1, respect to any matter within the authority of the Statesof Australia, not being a matter within the authority of the Parliament or Government of the Commonwealth of Australis., in any case where it wouldhave been in accordance with the constitutional practice existing before the commencement of this act that Parliament should’ make such law without such concurrence.”
Senator Sir GEORGE PEARCE (Western Australia) [8.10]. - Honorable senators will recall that in July last, when the original resolution dealing with the Statute of “Westminster was under discussion in the Senate, I expressed opposition to itr and voted against its adoption. Because of certain objections raised by some of the State Governments, it is now proposed to add this supplementary resolution. “When speaking to this motion on Friday last I asked leave to continue my speech to-day in order that I might have an opportunity to consider the nature of those objections. Since then, through the courtesy of the Government, I have had an opportunity to peruse the file, in the Department of External Affairs, containing the communications which have passed between the Commonwealth and State Governments on this subject, and it seems to me that this amendment fully meets the objections raised. Opposition by some of the States was due to the fear that the Statute of Westminster might, in some way, over- nid’e or’ take- away from them the rightswhich, they enjoy under the Constitution. This supplementary resolution, enacts that -
Nothing in this- act shall be deemed torequire the concurrence of the Parliament and. Government of the Commonwealth of Australia in any law made by Parliament with respect to’ any matter within, the authority of the States of Australia, not being- amatter within, the authority of the Parliament or Government of the Commonwealth, of Australia, in any case where it would have-, been in. accordance with- .the constitutional practice existing, before the commencement of this act that Parliament should make such law without such concurrence.
The amendment is a declaration by this Parliament that the Statute of Westminster does not in any way take away the rights of the States under the Commonwealth Constitution. Having studded the grounds of the objections raised, and having considered the position- of the objecting States, under the Statute of Westminster in its altered form, following the addition of this resolution, it seems to me that those objections have been fairly and fully met. But there is on the file a further communication which, I understand, I have the permission of the Government to read. It is. a- telegram dated the 15th October, 1931,. addressed by the right honorable the Prime Minister (Mr.. Scullin) to the Premiers of Queensland, South Australia and Tasmania, and is in the following terms : -
In the resolution passed by the Commonwealth Parliament, it is provided that no section of the statute shall apply to Australia unless adopted by the Commonwealth Parliament. The Commonwealth Government is prepared to give yon an assurance that, they will not introduce any measure for the adoption of any section of the Statute of Westminster until there has been an opportunity for further discussion with you.. Should such discussion show that further amendment of the special clauses relating to Australia is desirable, the Commonwealth Government will approach the Government, in the United Kingdom for the necessary amending legislation. In these circumstances, are you prepared to withdraw your objections to the Government of the United Kingdom introducing the Statute of Westminster at an early date in fulfilment of their obligations to the other dominions resulting from the Imperial Conference last year?
So far as I am aware, there has been no reply from the State Governments to that communication.
If this amendment is adopted, there should be no doubt whatever about the preservation of the rights of the States under the Constitution.
– The right honorable the Leader of the Opposition (Senator Pearce) has correctly stated the position. Because certain of the States believed that rights which they possess under the Constitution would be infringed by the Statute of Westminster, the Government introduced this amendment to meet their objections. As the right honorable the Leader of the Opposition has observed, our concern now is to see that the amendment is wide enough to cover those objections. This supplementary resolution was not considered by the Parliaments of Western Australia or South Australia. The objections raised in those Parliaments were directed against provisions in the original statute. I therefore appeal to honorable senators to consider, before they enter into a protracted discussion, whether the amendment which has been drafted to meet the particular objections raised by certain States has effectively met them.
.- The Leader of the Opposition (Senator Pearce) has read a telegram that was sent by the Government to various State Governments on the 15th October in relation to this subject. It is extraordinary that we should be asked to deal with the matter before the replies from the States have been received. The position is most unsatisfactory. In Western Australia there is a large body of organized public opinion against this proposal, because it does not go far enough. On the 23rd October, immediately after the text of this amendment was announced in the House ofRepresentatives, I received a telegram from Mr. H. K. Watson, President of the Dominion League of Western Australia, which reads as follows: -
Proposed amendment Statute Westminster insufficient and in order to obviate further amendment at later date following sub-section should now be added : “Nothing in this act removes restricts or diminishes the unfettered power of the Imperial Parliament to repeal alter or amend the Commonwealth of Australia Constitution Act 1900 “.
This shows that one State, at any rate, is not satisfied with this proposal.
– Queensland has intimated that it is satisfied, but South Australia, Western Australia, and Tasmania are not satisfied.
– I thank the Leader of the Government (Senator Barnes) for giving us that information. It is clear that of those four States the one with the largest population is satisfied, while the three with smaller populations are not satisfied. It would be very helpful if the Government would make available to honorable senators the full text of the replies that have been received from the different States, and in order that this may be done I ask leave to continue my remarks on another occasion.
Leave granted; debate adjourned.
That the billbe now read a second time.
The object of this measure is to enable relief to be given to persons whose eligibility for pensions under the Invalid and Old-age Pensions Act is affected by the fact that they are entitled to deposits in the old business division of the New South Wales Government Savings Bank. Owing to the closing of that institution, these persons are, unfortunately, unable to operate on their accounts, which, in many instances, represent their whole life savings. As the pensions law stands at present, these deposits constitute property within the meaning of the act, and there is no option but to take them into account, in dealing with claims for pensions, despite the fact that the depositors are unable to operate on their accounts. It has been represented that in some cases this is causing hardship, and it is the earnest desire of the Government to afford relief in these instances. Cases Lt i’-; been brought under notice in which pu” ons who are debarred from receiving pensions have offered to refund any pension paid to them, when the State Savings Bank is in a position to repay deposits. I’ is now proposed to amend the law in order to enable pensions to be granted to these persons irrespective of the amount of their deposit in the Savings Bank, subject to their assigning the amount of such deposit to the Minister administering the Invalid and Old-age Pensions Act. Provision already exists under the New South Wales Government Savings Bank acts for the assigning of deposits. If the proposed amendment becomes operative, ally claimant or pensioner who has a deposit in the old business division of the New South Wales Government Savings Bank will be able to assign his deposit to the Minister, and thereupon the amount of such deposit will cease to be regarded as property for pension purposes, and the amount of pension will Be assessed accordingly.
It must be clearly understood that this concession will apply only to those persons who h,ave money in the old business division of the New South Wales Government Savings Bank. Deposits in the new business division of that bank, or in the savings bank of any other State, or in the Commonwealth Savings Bank, will not be entitled to the benefits of this amendment. When the whole or any por-
tion of the assigned deposit is being paid by the Savings Bank Commissioners, the amount of pension which has been paid as a result of the assignment will be deducted from such payment, and the balance remaining, if any, will be paid over by the Minister to the pensioner, or to his representative, in the event of the pensioner’s death.
The cost of this amendment cannot be estimated at present; but the Commonwealth will be safeguarded by the provi-. sion for the deduction of any pension paid as a result of the amendment from any moneys eventually received from .the Savings Bank authorities.
Honorable senators will doubtless understand the situation without any further explanation from me; but I may say that I have come into personal contact with a number of people who are in the circumstances which this bill has been framed to meet. They are quite good people, who have certain moneys in the bank which they cannot touch, and they have been left high and dry. Unfortunately many deserving and thrifty citizens who have deposited the only money they possess in the Government Savings Bank of New South Wales are without funds. I think that the Senate will admit that assistance should be afforded in the manner provided in the bill to those who are eligible for a pension.
Senator Sir GEORGE PEARCE (Western Australia) [3.33]. - We all agree ‘that the circumstances of those who, but for their deposits in the Government Savings Bank of New South Wales would be eligible for an old-age pension, are tragic. I regret, as I am sure we all do, the necessity for the introduction of this measure; but I congratulate the Government upon having brought it forward to assist those who have been so seriously affected by the closing of that institution. One is tempted to discuss the cause of the closing of the Government Savings Bank of New South Wales, but this is not the occasion to do so, and I shall not delay the bill by dealing with that issue at this juncture. I support the second reading.
.- Like the Leader of the Opposition (Senator Pearce) I regret that it is necessary to introduce a measure of this nature. I remind the Leader of the Government in the Senate (Senator Barnes) that the depositors in the Primary Producers Bank and the Federal Deposit Bank of Queensland, which have closed their doors, are unable to operate on their accounts, and are, therefore, in the same position as the depositors in the Government Savings Bank of New South “Wales. In these circumstance; it seems only reasonable that these depositors, who number many thousands, should be entitled to the same privileges as it is proposed to confer upon some who have money in the Government Savings Bank of New South Wales. It is within my knowledge that a number of persons who have deposited money in the Primary Producers Bank of Australia are in exactly the same position as many of those unfortunate persons who have their money in the Government Savings Bank of New South Wales. If this matter is to be dealt with in a true federal spirit, relief should be given, not only to a section of the people of New South Wales, but also to those who have money in the Primary Producers Bank and the Federal Deposit Bank of Queensland. My colleagues from Queensland will bear me out when I say that the Queensland institution mentioned operates in exactly the same way as the Government Savings Bank of New South Wales, and, although compelled to. close its doors, possesses assets, which, though not of a liquid nature, are far in excess of its liabilities. In these circumstances a long time must elapse before its depositors will be able to obtain their money. When the committee stage is reached, I trust that the Government will agree to include in the bill a provision to cover necessitous depositors in the Primary Producers Bank and in the Federal Deposits Bank. As the Minister pointed out, the measure provides for granting a pension at the present rate to persons eligible for a pension, who have no other means, apart from their deposits in the Government Savings Bank of New South Wales. Three financial institutions that have closed their doors within recent months–
– Unfortunately, there are more than three.
– I am referring to savings banks.
SenatorHerbert Hays.- The institutions mentioned may not have sufficient assets to meet their liabilities.
– The Federal Deposit Bank of Queensland is known to possess assets far in excess of its liabilities. The honorable senator’s interjection might also be applied to the Government Savings Bank of New South Wales, as it is impossible to assess the value of that institution’s assets, which are represented by the same class of investments as those held by the private banking institutions I have named.
– Very largely. Millions of pounds deposited with the Government Savings Bank of New South Wales and the Federal Deposit Bank of Queensland have been invested in real estate. Both of these institutions have suffered as a result of a slump in property values during the last two or three years. The private banking institutions I have mentioned, particularly the Federal Deposit Bank of Queensland, have money invested in. government securities in exactly the same way as the Government Savings Bank of New SouthWales.
The PRESIDENT (Senator the Hon. W. Kingsmill) . - If the honorable senator proposes to move an amendment he should discuss this matter in committee.
– If the Senate passes the measure in its present form the Government will consider the point raised by the honorable senator.
– If the Leader of the Government in the Senate (Senator Barnes) will intimate his willingness to accept an amendment on the lines I have suggested, I shall have nothing further to say. I am endeavouring to ascertain whether such an amendment is acceptable to the Government.
– The Government cannot accept such an amendment to this measure, but the suggestion made by the honorable senator will be taken into consideration if the bill is passed.
– I cannot accept such an indefinite statement. I shall content myself by informing the Senate that, when the bill is in committee, it is my intention to more an amendment to include the two banks I have mentioned.
– I remind honorable senators that the proper time to discuss an amendment such as that foreshadowed is when the bill is in committee. On the second reading of a bill honorable senators should deal only with general principles, and not with details.
– I do not wish honorable senators to be misled in connexion with this measure. Senator Poll must realize that it is competent for the Federal Government to introduce remedial legislation to assist a, State or quasi State instrumentality. ‘ If honorable senators feel that the principle embodied in the bill should be widened to cover other private banking institutions, I may say at once that the Government cannot accept such a proposal. The Senate should understand that the Government is simply introducing this measure to assist a State or quasi State instrumentality.
– I again remind honorable senators that in speaking on the motion for the second reading of the bill they are entitled to deal only with its general principles. The amendment foreshadowed should be discussed when the measure is in committee.
– Although I intend to support this bill, I should like to direct the attention of honorable senators to the cause of the trouble which has necessitated the introduction of this measure. I do so now, if only for the purpose of obviating the necessity of this Parliament discussing similar legislation in the future.
I am quite prepared to give the Government full credit for its kindness of heart and humane inclination in coming to the rescue of a large number of persons in New South Wales, but the cause of the evil which has to be remedied is, as is patent to every one, the action of a certain State Government. If the Federal Government is to be compelled to continue giving relief because of the mismanagement of public affairs by a State Government, this Parliament and this Government is undertaking a very big task. We should not pass legislation of this character without determining the real cause of the trouble, and we should. if possible, endeavour to prevent other governments from adopting a policy such as has led to the present “unfortunate position. The bill would be more properly and honestly entitled “A bill for an act to protect the aged poor of New South Wales against the hardship inflicted upon them through the mismanagement of public affairs in that State under the Leadership of Mr. Lang”.
– And prior thereto.
– I would not go so far as that. It is plain, from the explanation that has been given by the Minister, that the Government would not, be wasting the time of the Senate this afternoon in the consideration of this measure were it not for the fact that Mr. Lang has so hopelessly mismanaged the affairs of New South Wales that the most deserving section of its population has been landed in the hopeless and hapless position that confronts them to-day.
– The remarks of the honorable senator are entirely irrelevant to the bill.
– And they are not accurate.
– Am I not entitled to discuss the origin of the condition of affairs which is responsible for the introduction of this measure?
– Then I fail to see the purpose of any public discussion of this or any other matter. If we cannot point strikingly to, and endeavour, to eradicate, the cause of any trouble that has led to the introduction of legislation, with all due respect to you, sir, our liberty in debate is very greatly circumscribed. We must got to the root cause of this trouble; and that, I submit, is the mismanagement of public affairs in New South Wales.
– I ask the honorable senator not to dwell on that phase of the question.
– Then all that I can do is to say that I am in favour of the bill?
– If the honorable senator agrees with the principles of the bill, certainly.
– I cannot consent to conditions that may involve a repetition of the spectacle that we have witnessed this afternoon, of the Federal Government coming to the rescue of a State government which, by virtue of its gross mishandling of public affairs, has brought hardship and suffering upon a large section of its people. Senator Daly may be an apologist for Mr. Lang, but we know that in his heart he detests him, and that lie has no enthusiasm for the task that has been, assigned to him.
– And I know that this bill has nothing to do with Mr. Lang.
– The honorable gentleman is trying to put the best face on things by invoking the power, the might, the charity, and the wisdom of this Parliament, in an endeavour to rescue the victims of Mr. Lang’s mismanagement from the plight in which he has placed them. Are we not entitled to draw attention to that?
– I have already informed the honorable senator that he must not make that the main burden of his speech, as he has done up to the present. I consider that his allusion to it has been sufficiently lengthy.
– I point out that on another occasion this Parliament has had to take action in relation to this same State and this same government. I refer to what was done in connexion with the Financial Emergency Act. Are we to allow the time of the Federal Parliament to be wasted in correcting the misdeeds of State governments, without drawing attention to them? Such an attitude would not be consistent with the proper performance of our duty.
– For the guidance of the honorable senator I point out that the motion for the first reading of a money bill affords him ample opportunity to make whatever remarks suggest themselves to him on any subject.
– These men find themselves penniless, foodless, and possibly homeless. The cause of their plight is well known, but it ought to be ventilated far and wide, so that every selfrespecting citizen may be made aware of it, and in order that it may serve as a caution and a warning to other State governments to avoid those acts that have necessitated the introduction of this measure. Not withstanding Senator Daly’s injunction to me to keep quiet, I intend to do what I can to place the facts before the public.
– I did not suggest that the honorable senator should keep quiet.
– How are we to conduct the affairs of the Senate if we shut our eyes and swallow everything the Government throws at us?
– I ask the honorable senator to begin now his discussion of the bill.
– It is my intention to support the bill, because I believe that the Government is doing what it ought to do on humanitarian grounds and no other. Failure to take this action would lead to still greater suffering being caused than now exists in the rich and powerful State of New South Wales. According to the statistics, no other State in the Commonwealth is as rich as New South Wales to-day; yet the Federal Government is faced with the necessity of seeing that the aged poor of that State who have been left in the lurch by their Labour government get a fair deal.
– That is nonsense.
– For what other reason has the bill been introduced? At any rate, the Federal Government is coming to the rescue of these victims of Langism in New South Wales.
– Is the honorable senator intentionally defying my ruling?
– I have no such intention. But I intend that my views shall be known to these wrong-doers whose actions in the past have rendered necessary the introduction of this bill.
– I have already pointed out to the honorable senator that this is neither the time nor the place for a discussion along those lines, and that on the’ motion for the first reading of a money bill ample opportunity is furnished to honorable senators to deal with such subjects. I ask him now to confine his remarks to the bill.
– If I were asked to describe as gentlemen those who are responsible for this mismanagement I could not do so, because I do not consider that they are anything of the sort. They have not the slightest conception of the qualities that make for gentlemanly behaviour. Nor can they be described as good citizens, because they neglect what is their simple duty when they leave it to another authority to come to the aid of the aged poor, whose unfortunate plight is the direct fruit and result of their actions.
– I again ask the honorable senator to desist from that line of argument. Does he intend to do so?
– Yes, sir. I support the bill; and I hope that it will be the last of its kind that either this or any other Government finds it necessary to introduce. I .trust that State Governments, and particularly men of the type of those who are now charged with the administration of public affairs’ in New South Wales, will be warned by what has occurred on this occasion.
.- I am sorry that Senator Daly was so definite in his pronouncement that the Government would not entertain a proposal to extent the scope of this measure. I can support the remarks of Senator Foll with a communication that I’ have received to-day from the Commissioner of Pensions, in reference to a case that is exactly similar to that of the depositors in the Government Savings Bank of New South Wales. I have long held the belief that the action now proposed by the Government could, with , id vantage, have been taken in more than one State. I have had brought before me cases in which it would have paid old people to have handed over their assets to the Government in return for a pension. I am not satisfied with the answer that I have received to-day, and intend to argue the matter afresh with the Commissioner. The sympathy of every honorable senator must go out to those who arc suffering in New South Wales, and it will probably induce them to agree to the passage of this measure; but why should it be confined to that State, when other persons who are also citizens of Australia are similarly circumstanced? Had not Senator Foll made his announcement, it was ray intention to move for the widening of the scope of the bill so as to include similar cases in other States. Any applicant for a pension, under the conditions laid down in the bill, would have to produce evidence of the possession of assets before a claim could be approved.
I trust that before the session terminates this year action along the lines suggested will be taken by the Government.
.- I endeavoured to obtain the call earlier, so that I could voice the opinion that has just been expressed by Senator Reid. I welcome the introduction of this measure, because it indicates that at last consideration is to be given to people who are entitled to receive, but, under the law as it stands, have been debarred -from receiving, an old-age or invalid pension. There are thousands of cases throughout Australia of persons who, because of the inflated value of property, and the valuations that have been fixed by State authorities, have been denied the right to a pension. Under the bill it is proposed to grant pensions to persons who possess assets that at the present time are not liquid, and that cannot be realized except at a very heavy loss.. If those assets are assigned to the Government, they will not be taken into account in calculating the income of an applicant for a pension. But why should we discriminate between that particular type of individual, and those who may have assets which on paper are worth £400, but would not realize 400 pence in the present state of the market? There are hundreds, possibly thousands, of such cases.
– The honorable senator says that their property is not worth 400 pence. The security in the cases with which the bill deals is the amount on deposit in a government guaranteed bank.
– The object of the bill is not that. It is to give people who have assets which they cannot realize an opportunity to gain a pension. Many people besides depositors with the Government Savings Bank of New South Wales and the other two banks mentioned, have assets which, although not realizable at present, preclude them from obtaining a pension. One instance within my knowledge is the case of a woman who has been confined to her bed for five years. She is the owner of a property which cannot be sold or let, and yet the value placed on it by the local authority is such as to preclude her from receiving a pension. Time after time attempts have been made to have the valuation reduced, so as to permit this woman to receive a pension, but the local authority refuses to take any action. Such a case should come within the scope of this bill. The measure should provide for necessitous cases in which it can be proved that the persons concerned are entitled, under the spirit of the law, to obtain an invalid or old-age pension. I am in favour of the amendment foreshadowed by Senator Foll. I trust that this discussion will lead the Government to amend section 25 of the principal act so as to permit those who are really entitled to pensions to receive them.
– I support the bill at this stage. I agree with most of the previous speakers that the time has arrived when we should seriously consider amending section 25 of the act in the direction indicated by Senator Foll, particularly in view of the existing depression. It seems to rae, that this legislation, which provides that one section in one State ‘ shall re”ceive a benefit not to be given to a similar section in another State, is unconstitutional. The Government is now coming to the assistance of depositors with the Government Savings Bank of New South Wales by providing that their deposits shall not be taken into consideration in assessing their pensions. Certain citizens of New South Wales are to benefit thereby, yet other citizens of the Commonwealth are to remain the victims of the depression. We are likely to have a series of these proposals, and as time goes on we may have to nationalize our financial institutions so as to provide for national schemes in relation to social services, including pensions. It is obviously unfair to give to certain citizens of New South Wales a privilege that is not to be extended to citizens in other States.
– There is not the same guarantee in the other States.
– That statement may be questioned. The citizens of this country are entitled to our protection. They are expected to pay their taxes, and, therefore, one section in one State should not receive benefits that are denied to a similar section in another State. Many cases of hardship have already been mentioned. I know of a working man who has put every penny he possessed into Commonwealth bonds. He cannot now obtain interest on those bonds, a pension, or unemployed relief allowance. Once we start to amend section 25 of the principal act we are likely to have before us a series of amendments similar to this, otherwise the Government may deal unjustly with the people as a whole. I support the bill, but I hope that in committee we shall evolve a sound and practicable scheme which will ‘ deal out even-handed justice to every section of the community.
– While I have the greatest sympathy with the poor unfortunate people who are suffering from a cause which must not be mentioned here, trouble of which this Government is now seeking to relieve them, I consider, with all due respect to the Minister and his legal advisers, that he is treading very closely to a controversial constitutional question. One provision in the bill applies to depositors with the Government Savings Bank of New South Wales, and if it is passed in its present form, the benefit to be derived under it will be given only to those depositors. Having regard to section 99 of the Commonwealth Constitution, I cannot see that the Government has any justification for attempting to restrict benefits to be derived under this legislation to one section of the people in one State. Why does not the Government bring down a measure embracing depositors with other banking institutions which are in a position similar to that of the depositors in the Government Savings Bank of New South Wales? The Government may be actuated by the most humanitarian motives, but that does not alter the fact that this legislation is unconstitutional. I. know that certain unfortunate depositors with the Government Savings Bank of New South Wales are on the dole. When they receive it they have to produce their pass-books, and in it is debited the amount of the dole, plus 5 per cent, interest. This is the class of person which the Government says it is going to rescue.
– We are coming to the rescue of the depositors.
– To save themfrom what?
– From want.
– From want, when they have money of their *own *
– Which they cannot use. This Government is striving to save them from want.
– I could, if the President would permit me, tell the Minister from whom these people are to be saved.
– The honorable senator may allude to a matter outside the bill, but he must not debate it.
– ! accept your, ruling, Mr. President. The money of the people whom this bill is to benefit is locked up in the Government Savings Bank of New South Wales. This legislation will benefit only one section of the people. If a position similar to that in New South Wales arises in any other State, we shall have to bring down further legislation to deal with it. Why bring down this legislation piecemeal? Why not provide for all these contingencies in one measure.
– What about the Western Australian Bank?
– If a similar position subsequently arose in Western Australia, many persons who would really be entitled to invalid and old-age pensions could not obtain them. My sympathies are entirely with the unfortunate depositors in New South Wales, but I suggest that the Government redraft the bill, and make it applicable to all the States.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 -
Section twenty-five of the principal act is amended by adding at the end thereof the following subsections: - (2.) Notwithstanding anything contained in this act, where any claimant or pensioner who has a deposit in the Savings Bank Department (Old Business Division ) of the Government Savings Bank of New South Wales constituted under the Government Savings Bank Acts 1900- 1931 of the State of New South Wales assigns that deposit to the Minister, the amount of any deposit so assigned shall not be taken into account in assessing the net capital value of the accumulated property of any such claimant or pensioner.
– I move -
That after the word “ Wales “ proposed new” sub-section 2 the following words be inserted: - “ or in the Federal Deposit Bank, or in the Primary Producers Bank of Australia, Limited “.
It is unnecessary for me to stress once again the reason why I am moving this amendment which, if passed, will bring additional institutions within the scope of the bill. I regret that the Minister has not seen fit to reply to some of the suggestions of honorable senators. Perhaps he is waiting to reply at this stage. The Government should take into consideration the remarks of Senator Carroll and other honorable senators, who stated that other States as well as New South Wales were suffering financial disabilities. Not only are there hundreds of people in Australia unable to obtain money which is tied up in banking institutions, but there are hundreds of thrifty people who have property which is absolutely useless to them from a revenue point of view. Because of the Moratorium Act in New South Wales, and the depression throughout Australia, these people are receiving no rentals, and yet are being deprived of their right to receive an old-age or invalid pension.
– Their property is a liability to them.
– That is so. They are called upon to pay municipal rates, although they are getting no return from their properties. If the Government is anxious to relieve them, it may do so by bringing them within the scope of this bill. Where persons have property which cannot be sold or let. its value as assessed for municipal purposes should not be taken into consideration in arriving at their pensions.
– Is the honorable senator, in favour of increasing the cost of social services?
– I am in favour of giving our citizens who are in difficulty equitable treatment, irrespective of their particular disability, but I am not in favour of selecting one section of the community for favorable treatment. I have every sympathy with the unfortunate depositors with the Government Savings Bank of New South Wales, but there are other people in the community who are suffering disabilities, and the Government could very easily make .provision to grant them old-age pensions. Thousands who have valuable assets are unable to obtain one penny for them. The Government could grant such persons a pension, hold their securities, and debit the advance against them. I urge the Government to consider the requests that have been made by Senator Kneebone and Senator Carroll, and make this scheme more comprehensive.
– The arguments that have been advanced by honorable senators in favour of making this measure more comprehensive may gain our sympathy, but I point out that the bill is designed purely to assist individuals whose savings are tied up in a government, not a private, institution. Honorable senators will appreciate the difference. I am greatly in sympathy with the unfortunate persons whose money is locked up in private banks and other institutions, but I submit that the Commonwealth Government cannot be expected to come to their assistance. As Senator Payne pointed out, many persons bought, at an inflated value, land that is not now worth 4d. an acre.
– I did not say that they bought it at an inflated value. I said that it appeared on the books of the local authority at an inflated value.
– It amounts to the same thing. They bought land at a value that cannot now be realized. Surely the Government cannot be expected to come to their relief. We are concerned now with granting a measure of relief to persons who deposited in a bank that is guaranteed by a government money that they are at present unable to withdraw. The Commonwealth Government is prepared to take the responsibility of backing the Government Savings Bank of New South Wales, and of paying such persons a pension, which will at least enable them to live, and their deposits with the bank will be held as security for the advance.
It was news to me to hear from Senator Poll, and other honorable senators, that there are many persons in the differentStates in circumstances very similar to those of the depositors in the old division of the Government Savings Bank of New South Wales. I assure honorable senators that if it can be proved that the conditions are identical, the Government will give the matter most . sympathetic consideration. That is as far as I can go. We all realize that the closing of the Government Savings Bank of New South Wales has inflicted hardship on a most deserving section of the community, and we should endeavour, as speedily as possible, to ameliorate their conditions. I ask the Senate to reject the amendment that has been moved by Senator Poll, and any other of a like nature, and to expedite the passage of this bill.
Senator Sir GEORGE PEARCE (Western Australia) [4.24]. - I point out that, as the relief proposed by this bill will increase a charge or burden on the people, the amendment will have to go to another place as a request.
We must proceed in this matter with some sense of our responsibility. For some time we have been endeavouring to re-adjust the financial position of the Commonwealth, and we are aware that during the present financial year our budget will not balance by some millions of pounds. The Government has gone to the limit in its overdraft with the banks. Is this a time when we should proceed to .make sweeping amendments in the Invalid and Old-age Pensions Act which would liberalize those social services to the extent of millions of pounds? Some of the proposed changes would make valid a wide range of claims that hitherto have been excluded from the operation of the act, because of the property restrictions. If we widened the application of the principal act we should open the door to thousands of applicants who are not at present eligible. Is the Commonwealth honestly in a position to pay those additional claims? I suggest that it is not. While the persons concerned have our sympathetic consideration, we know that we cannot assist them financially if the Commonwealth i? to meet its obligations.
There is a dangerous principle involved in some of the amendments that have been forecast. I do not say that that is so in connexion with the one that is now before the committee. The bill is designed to provide assistance to persons who deposited their money in a bank that is guaranteed by a State Government. For the time being, that money is locked up, but eventually it will be available to the owners. Very largely it is represented by Commonwealth bonds, which clearly makes this Government responsible, as ultimately it will have to pay the holders the value of those bonds. The other institutions to which reference has been made by certain honorable senators are purely private trading banks, which are in no different position from an ordinary private t rading company. If I invest my money in a private trading bank or company, I do so solely with the hope that I shall make a profit. I take the risk of the concern disclosing a loss on its transactions. It is a fact that, in addition to private trading concerns, certain insurance companies - which are very similar to banks in. the nature of their business as their purpose is to encourage investment by the thrifty - have gone into liquidation. It is to be hoped that in regard to both trading and insurance companies, some money will be saved out of the wreck. If I voted for the amendment moved by Senator Foll, I should he faced with the difficulty of where to draw the line. Another amendment might be brought forward dealing with a very worthy and honest trading concern which had excellent’ assets, but which was, temporarily, unable to meet its liabilities. Where should I stop? If I voted for the amendment ‘I should be admitting the principle that in going beyond this particular government institution, the Commonwealth Government should accept assets that are at present in the hands of the receiver at their face value, and grant to their owners invalid or old-age pensions pending their liquidation.
– That is not the proposal.
– Indeed it is. If the honorable senator reads the bill he will see that a claimant who has a deposit in the old division of the Government Savings Bank of New South Wales may assign it to the Government, and receive a pension, which will be charged against the deposit. When the assets that are to-day frozen again become liquid the amount that has been advanced in the form of pension will be deducted from the deposit. If we extend that principle to the two private banks which have been named, we shall not be able to stop there; in order to be consistent, we shall also have to include those insurance companies which have gone into liquidation. The same argument can be used in connexion Auth any private trading company. I cannot see any difference between a private trading bank and a private trading company; a person puts his money into the one or the other, according to his judgment as to which will give him the better return, or prove the safer investment. 3? or the reasons which I have given, I am unable to vote for the amendment, although I sympathize with those depositors who have put money into trading banks which have gone into liquidation.
– The right honorable the Leader of the Opposition (Senator Pearce) has touched the real point at issue in this measure. The principle underlying the bill is entirely different from Senator Foil’s conception that it provides for a loan being made to one section of the community. Under the Invalid and Old-age Pensions Act, certain classes of persons are disqualified from receiving pensions, among them being those who possess assets of a certain value. All that this bill proposes to do is to put the man who has an asset in a national banking institution on the same level as another who has an asset in a private bank. Under the existing legislation a person with an asset of £500 in a private bank is not eligible to receive a pension; but should that asset, on revaluation, be deemed to be worth only £200, he would be entitled to’ a pension. A man with £500 in the Government Savings Bank of New South Wales cannot be regarded by the Commissioner of Pensions as holding an asset worth only £200, notwithstanding that the bank has suspended payment. It is not possible to devalue a national asset without admitting that a policy of repudiation has been embarked on. It is, however, possible to devalue private assets. Indeed, they are being devalued every day. This bill merely proposes that certain national assets shall be placed on the same basis as private assets.
– The bill will create a new class of pensioners.
– That may be so for a time. An. applicant for a pension, who has £500 deposited with the bank referred to by Senator Foll, can approach the Commissioner of Pensions and prove that his asset is no longer worth its face value, and that, therefore, he is eligible to receive a pension; but an applicant for a pension who has £500 deposited in the Government Savings Bank of New South Wales cannot do so. A landlord who owns certain real estate can. point out to the Commissioner of Pensions that the property which formerly disqualified him for a pension has now fallen in value to such an extent that he is entitled to a pension. A man with an asset which is not deposited in a national institution, and which previously precluded him from receiving a pension, can show that it is now worth only, say, 2s. fid. or os., for every £1 of its face value. The Commissioner of Pensions takes into consideration the market value of the asset. In the case of an asset in a bank which is guaranteed by the State, and backed by the nation, that market value must always be regarded as 20s. in the £1, unless the nation is prepared to admit that it cannot meet its liabilities. There would be no need for this legislation if depositors with- the Government Savings Bank of New South Wales were on the same footing as ordinary shareholders, or depositors in the bank referred to by Senator Foll.
– Deposits with the Government Savings Bank of New South Wales are being offered for sale at 1.Gs. in tho £1.
– I do not doubt that speculators are prepared to purchase deposits with the Government Savings Bank, of Nsw South Wales at loss than their face value. One purpose of this bill is to enable a Commonwealth officer to know what to do when certain applications come before him. In effect, it tells him that he is to treat deposits in a State institution as being worth 20s. in the £1, notwithstanding that certain speculators are exploiting the people by paying them only 16s. in the £1 for them. The bill does not discriminate against depositors with private institutions; but it will remove a disability which depositors with national institutions suffer as compared with depositors with private institutions.. I can assure Senator Foll that the applicant mentioned by him would be granted a pension if, on investigation, it were found that the present value of his asset entitled him to it.
In order to protect the revenue and only in that sense, can the proposal in this measure be regarded as a loan - the Government insists that the deposit shall be assigned to the Treasurer, so that when the deposit again becomes liquid, a pensioner who, but for this legislation, would not be entitled to a pension, will repay to the Commonwealth the amount advanced to him by way of pension.
– If the money is there for the purpose.
– If the Government did not believe that Australia will emerge successfully from this financial crisis, and that every State Government, as well as the Commonwealth Government, will eventually pay 20s. in the £1, it would not have introduced this legislation; it is because the Government has faith in the future of this country that it now asks Parliament to accept this measure.
Senator Sir HAL COLEBATCH (Western Australia) [4.43]. - I submit that the position is entirely different from that stated by Senator Daly. A depositor with the Primary Producers Bank cannot satisfy the Commissioner of Pensions that his deposit of £500 is worth only £200.
– That is being done every day.
– Since the- directors of that bank have announced that deposits will be repaid in full, and that shareholders are still liable for £4 a share, there is no reason to doubt that the full amount will be paid. I submit, moreover, that it is not a question of the asset being good or bad. If the asset is good the Government will eventually recover the amount granted by way of pension; if otherwise, the applicant is entitled to a pension according to the law of the country. There are two classes in this community - that which saves, and that which does not, or cannot, save. It is a grim commentary on our boasted high standard of living that 50per cent, of the persons whose age entitles them to an old-age pension apply for a pension. This bill concerns persons who have saved money in order that they shall not be dependent upon a pension in their old age. Why should any distinction be drawn between those who have saved their money and put it into a State savings bank, and those who have placed their savings in any other bank ?
– Surely the honorable senator recognizes the difference between backing a private bank and backing a national bank?
– That issue does not arise. The bill is not backing a national bank. The bill provides that the Commisisoner for Pensions may say to an applicant that, because he has a deposit in the savings bank, and that deposit is a frozen asset, he can hand it over to the Commissioner, who will then grant a pension.
– The Commissioner will do that, because the State is behind the Government Savings Bank of New South Wales.
Senator Sir HAL COLEBATCH.It does not matter two straws whether the State is behind the institution or not. The attitude of the Commissioner should be that the depositor in either the State Savings Bank or the Primary Producers Bank has stripped himself of his disqualification by assigning his deposit to the Commissioner. If later on it is found that the deposit is worth more than the amount of pension that has been drawn, the Commisisoner will repay the balance. There is no reason why the depositors in private institutions should be treated differently from those with money in the Government Savings Bank. There is no implication that the Commonwealth Government would be back ing the private institutions; it would be simply paying pensions, as provided for under the law, to persons who had reached the required age, and had no* assets. I suppose the Leader of the Government will agree with me that ifa man of sixty-five had a deposit of £1,000 in a bank which went bankrupt, so that there was no possibility of his ever getting; any of it back and he had no other property, he would be entitled to a pension.
Senator Sir HAL COLEBATCH.Then if a depositor with the Primary Producers Bank is willing to assign his deposit to the Commisisoner for Pensions, in what way is his position different from that of the other man?
– There is no need to alter the law in order to pay the pension in the case mentioned.
Senator Sir HAL COLEBATCH.I know that; but we are asking that the two sets of depositors, whose positions are to all intents and purposes identical, should be treated in the same way.
– The difference is that it is possible to value the assets of the depositor with money in the Primary Producers Bank, whereas it is not possible to value the assets of the Government Savings Bank depositor.
Senator Sir HAL COLEBATCH.I defy any one to say that a deposit in the Primary Producers Bank is worth a certain amount. If a man has a deposit of £2,000 in the Primary Producers Bank, and that is his only asset, he may be indigent: yet, because he is recorded as the holder of a frozen deposit, he will be refused a pension. I cannot see any difference between his case and that of the depositor in the Government Savings Bank. I do not see why we cannot make the principle of this bill applyto a private depositor as well as to those with money in the Government Savings Bank. The Government would not be advancing money on security ; it would be granting a pension on the assumption that the applicant was entitled to a pension, because he had reached the necessary age, and had no money.
– The committee should understand that there is a big principle involved in this proposal, and it may easily commit the
Government to payingmore than it can afford. Statistics show that about 40 per cent. of those who have reached the qualifying age are drawing pensions, which are costing the Commonwealth £10,000,000 a year. If the qualification is to be extended as is proposed, it may involve the country in the payment of many more millions. I have every sympathy with the Government Savings Bank depositors, and appreciate the fact that the vagaries of Mr. Lang embarrassed the bank to the extent of about £22,000,000 this year, thus bringing about the present tragic state of affairs; but we should not forget that, if we make it possible for depositors in all sorts of private institutions to draw pensions, the Commonweal th simply cannot find the money. I do not know what are the assets of the Primary Producers Bank, but I understand that some of them are represented by uncalled capital. The value of such assets may be good, bad or indifferent; I cannot say. But if we admitthe depositors in private banks, why should we not extend the provision to otherprivate institutions? Sir George Pearce referred to insurance companies. A person who puts money into an insurance company does so as an investment, and a person who puts money into a private trading bank does so in order to reap profit. Therefore, if we made this provision apply to private bank depositors, there would be no reason why it should not also apply to any insurance policy-holders, who may be placed in a similar parlous state. In regard to the Government Savings Bank depositors, I think we have power. The Commonwealth Government has power to make grants to the States, and has already made them to Western Australia, Tasmania and South Australia. This may be regarded as a form of assistance to a State. We should be careful to do nothing to injure those who are already drawing pensions, and in this connexion we should remember that, when the budget comes down next time, it is probable that the deficit will be much more considerable than some people think. It has been stated that the Government Savings Bank of New South Wales holds Commonwealth bonds, though I do not know to what amount. I wish to ask the Minister this question: Suppose a person who has attained to the necessary age claims a pension, and the claim is granted, he assigning to the Commissioner for Pensions his deposit in the Government Savings Banks of New South Wales, will he continue to be entitled to entitled to draw a pension when the pension payments have exceeded the amount of the deposit?
– Of course. He will then possess no money, and will be eligible for a pension because of his age and his indigence.
– That being so, we should not forget that it may be possible for a depositor to get rid of his deposit in some other way than by assigning it to the Commissioner. Once we start widening the provisions of the Pensions Act, we should be careful that its scope is not extended beyond the capacity of the Commonwealth to meet claims.
.- I agree entirely with the opinions expressed by Senator Sir Hal Colebatch. If a man is 65, and is hard-up, he can apply for the old-age pension, and no one can prevent him from getting it. A Government Savings Bank depositor must be 65 years of age before he may claim a pension, and it is proposed to grant it to such a man if he assigns to the Commissioner for Pensions the frozen asset which is of no use to him. The bank’s depositors saved the money which is now withheld from them, in order to provide for their old age, but, as a result of Mr. Lang’s policy in New South Wales, their thrift has been rendered useless. The position of depositors in private banks which have failed is exactly the same. They are not eligible for a pension until they are 65 years of age, and their savings are tied up in exactly the same way as are deposits in the Government Savings Bank. Why should they not be able to assign those deposits to the Commissioner for Pensions, and then become eligible for pensions? If such assets are ever liquidated, the Commonwealth Government will benefit to that extent. These people are of the prescribed age, and if they had saved nothing at all would be eligible for a pension. Why, then, should they be penalized because they have been thrifty ? They are just as hard- up as those who never saved anything. The payment of pensions to such depositors may embarrass the Commonwealth finances, but that will be the result of the legislation on our statute-book.
Senator Daly said; that the value” of the deposits in the Government Savings Bank of Now South Wales is fixed because it is a national asset, but I remind him that Mr. Lang can repudiate all such obligations. He has done so before, and there is no guarantee that the assets represented by assigned deposits will ever be worth anything to the Commonwealth. The Prime Minister (Mr. Scullin) stated the other day that the Government Savings Bank had been advanced ?3,000,000 by the Commonwealth to save it from closing, but that that was of no avail. Then the Commonwealth Government offered the bank the same terms as it had offered to similar institutions in other States, and the New South Wales Government turned them down. Now the Commonwealth is being asked to help this institution further.
– -The honorable senator would cut off his nose to spite his face.
– No, I merely mention in passing that it was Mr. Lang who inflicted these hardships on the depositors by refusing to accept the proposals of the Commonwealth Government, even after having received actual assistance to the extent of ?3,000,000. Again I say that, provided the depositors with money in private banks are prepared to assign their deposits to the Commonwealth Government, there is no reason why they should be treated differently from Government Savings Bank depositors.
– If is possible to devalue the assets in the case of private institutions, but not in the case of the Government Savings Bank.
– I cannot see that it matters what value is placed on the assets. There is no value in the deposits in either institution at the present time. Both are frozen.
– But in the one case we can value the ice, while in the other we cannot.
– -The real point is that the depositor in either institution, when he claims a pension, is 65 years of age, and has nothing to live on. He cannot touch his savings, and he is starving. It does not matter what’ value the Commissioner for Pensions places on the deposits, because, actually, the depositors have nothing at all.
– If I deposit money with a private bank, and on the due date it is not repaid, I can sue for the money and drive the bank into liquidation, thereby proving the value of my asset.
– But this bank is in liquidation now.
– The value of the deposit in liquidation is the value accepted by the Commisioner of Pensions.
– The savings in the Government Savings Bank of New South Wales are taken at their face value, and the pension is to be given because the applicant has reached the age at which an indigent man is entitled to the oldage pension.
– And because the nation owes him money which, at the presenttime, it cannot pay him.
– Of course. Deposits in other banks would also have to be taken at their face value. Since I agree with Senator Colebatch, I shall vote for the amendment. On reaching the age of 65 years, any person whose income does not exceed a certain sum, may obtain the old-age pension.
– What of the landlord who cannot collect his rents?
– I am not now speaking of landlords. A person who is physically incapable of earning a living, may apply for the invalid pension; but, if his parents were in a position to maintain him, he would not be entitled to it. If the parents happened to be depositors iu the Government Savings Bank of New South Wales, they would now be no longer able to keep that invalid out of any money held there, so the provisions of this bill may apply to invalids who are dependent on their relatives. But the scope of the bill has nothing to do with the principle involved. We have passed legislation providing for the payment of old-age and invalid pensions, and we must put it into operation. If we take over the assets, irrespective of the bank with which they are deposited, the pension must be paid.
– The more one considers this proposal, the more convinced one must be of the trouble which will be caused by its passage. In the first place, no statement has been made by the Government as to the cost that the bill will involve, although it is essential that that be done prior to the introduction of any money bill. In this case, we are asked to vote in the dark. We do not know whether we are authorizing the expenditure of hundreds of thousands or, perhaps, of millions of pounds.
– Nor does the Government.
– Of course not. An estimate of the cost should be made by any government with a pretence to business methods, in order to let the custodians of the interests of the people concerned know exactly what they are asked to vote upon. If the fact were laid bare at this moment that this small measure may involve the Government, with its empty treasury, in an expenditure, possibly, in the neighbourhood of £1,000,000, we should not be in the least surprised, but, although the ‘ exact position is not made known, the importance of that aspect of the matter is not any the less. The Government, with all the information at its disposal, should at least have taken the Senate into its confidence, and stated that this bill involves the expenditure of some £1,000,000 on behalf of poor people in New South Wales. I feel that in this matter we have passed from one dilemma to another, and we do not know where the difficulties will end. Senator Foll has pointed out that there might be two depositors, say, brothers, one having money deposited’ in the Government Savings Bank of New South Wales, and the other having a similar amount in the Primary Producers Bank. One depositor is to be protected under this measure, but the other is to have no consideration whatever. Why should any differentiation be shown between two citizens, one of whom deposits his money in a bank of which a government is the so-called defender, while the other places his savings in a private bank ?
One gets back to the root cause of this trouble, upon which I do not intend to dwell. This measure is simply an expedient to overcome a difficulty brought about through outrageous governmental extravagance. I forebear to go into details, because I know that I should be called to order; but there should be no impediment in the way of a member of this chamber ascertaining the germinal cause of every trouble that is brought under our notice. A cancer cannot be cured without cutting out its roots. The Government seems not to know what is involved by this measure; although it is its business to know. It has no right to remain on the treasury bench if it cannot tell us approximately what this bill will cost the country. Are we expected to open our mouths and swallow anything the Government is pleased to thrust into them? I object to such a procedure. Why does not the Government admit that the bill means what I have said, and perhaps more?
– I said sufficient, I think, to convince a sensible man as to what the measure means.
– How much did the Minister say the bill would cost ? He cannot bluff me. I require a straight answer to a straight question. How can members of this Senate, with any pretence to the qualities they are supposed to possess, approve of the Government’s action in withholding this information? We are presumed to know something about public affairs, and the necessity for adjusting with equity the conditions of all members of the community.
I shall vote for this bill, in obedience to my charitable instincts, but not out of sympathy for the originator of the grievance which the bill proposes to remove. I am prepared to overlook the shortcomings of the Government, in order to see that deserving citizens in New South Wales are not left without humpy or blankets or food for their stomachs; but I must also have regard for the interests of other people, in States other than New South Wales, who are without bread and shelter, who have no rug to throw over their shivering bones, because they have put their money into private banks. This position has been brought about because of the actions of a public man who went about New SouthWales making himself a good fellow at other people’s expense. That is why the other Australian governments are landed in this unenviable position to-day. In this matter we need to take a warning from what happened in the past. This bill may involve an expenditure of half a million, a million, or a million and a half. The Government Savings Bank of New South Wales is the repository of the savings of the people, and under the bill the Government may be committed to satisfy the demands of a newly-created class of pensioners in New South Wales.
– The money will all be paid back.
– How does the Assistant Minister know that?
– Because I have more faith in my own country than the honorable senator has.
– It is a question, not of faith, but of cold facts. The warrants of the depositors in the Government Savings Bank of New South Wales are now selling in Sydney for 15s. If one had mountains of faith, it would not justify one in believing that a deposit receipt was worth 20s., when the owner was willing to take 15s. for it. One can easily imagine a depositor being in the position of not having sufficient money in the bank to cover the sum to be advanced to him under this bill. Ultimately, will not the Commonwealth Treasury have to make up the loss?
– These persons are en titled to the pension.
– I have in mind other persons who are entitled to it. Take an aged couple who have struggled throughout their lives, and have saved, perhaps, a shade more than the minimum amount which entitles them to obtain the pension. Such an old couple need have only £1,700, as the result of thesaving of a lifetime, to preclude them from getting a pension. Now, as a result of this bill, they may obtain the pension if their money is in the Government Savings Bank of New South Wales. But their £1,700 has already diminished in value to the extent of 25 per. cent., and in the event of. their assets being insufficient to meet the pension payments, not only will the Government lose that 25 per cent,, but it will lose the interest on it as well. This fairy godfather, the Commonwealth Government, is throwing a mantle of protection over Lang, in order to helpto buy votes for him throughout New South Wales. The Federal Government must stand the loss of 25 per cent, of the capital, and the loss of interest in to the bargain.I defy Senator Daly to contradict me in saying so. Is that not the proposal which the Government is asking the Senate to endorse? As I have already said, only the claims of sweet charity cause me to support this bill, but we are inflicting a positive injustice upon other classes of citizens, who will suffer equally in cases such as have been pointed out by Senator Foll. The man whose money is deposited with the Primary Producers Bank cannot get even a cornsack with which to keep out the cold.
-. - The honorable senator should confine his remarks to the clause under consideration, and not discuss the bill in general.
– The clause provides for the assignment of a depositor’s asset to the Minister, and stipulates also that when the Government, Savings Bank of New South Wales gets on an even keel, if it does, and is once more rehabilitated, the assigned asset shall be looked into by the Minister, and if there is sufficient to repay the amount paid out in pension, well and good, but if not the loss will have to be met out of the pockets of the taxpayers. But Mr. Lang, meantime, has his popularity at the expense of the poor and the Commonwealth taxpayer. The difference between the prospective realizable value of the asset and its present-day nominal value is 25 per cent., and to this has to be added interest.
– The source of the pension payments will be the deposit of the pensioner, and when that is exhausted the pensioner will continue to draw the pension, because he will then have become entitled to it under the existing law.
– There is no mention in this clauseof what will happen when the time comes to realize on the deposits, nor of the loss of interest in the meantime, which this Government will haveto stand in order to make good Mr. Lang’s high-kicking policy. The loss will have to be shared by the poorer States, whose people have, apparently, a more highly-cultivated civic instinct than the people of New South Wales. At any rate, they pay 20s. in the £1, and they do not come sprawling on all-fours to the Federal Government, as Mr. Lang has done, saying, “I have landed myself in trouble; give me money to square my ledger, and, above all, help my aged poor.”
– The honorable senator has exhausted his time.
.- I should like to point out to Senator Millen and Senator Pearce, that there is a great deal of difference between persons who have made deposits in the Primary Producers Bank, the Federal Deposit. Bank, or the Government Savings Bank of New South Wales, and those who have invested their money in the purchase of shares or in the payment of insurance premiums.
– I spoke only in respect of insurance companies.
– With one exception, each State Government demands a deposit from insurance companies. Policy-holders are, therefore, protected, though not to the extent that they should be, judging from our experience in Australia. There is a vast difference between the investing public and the saving public. Senator Pearce referred to ‘the man who has purchased shares in a public company, and lost his money thereby automatically becoming entitled to an old-age pension. The case of such a man is quite different from. that of one who puts his money into a savings bank to make provision for his old age. The man who buys shares in a company knows that there is always a possibility of losing his money if the company goes into liquidation. The money placed on deposit in the Primary Producers Bank and in the Federal Deposit Bank is valued by the Commissioner of Taxation at 20s. in the £1. There is practically no difference between it and money placed on deposit in a private savings bank operating under a charter from a State Government. At any rate, it is valued at 20s. in the £1 so far as entitlement to an old-age pension is concerned.
If these banks are included in the bill, and it is afterwards shown that the amount of money the depositors have in the institution has depreciated in value, the depositors may, under the existing law, become recognized claimants for oldage pensions. Consequently, the Commonwealth Government cannot be a loser.
– The honorable senator is asking for the impossible. No sane government would accept his amendment.
– I must press it. I am merely asking for justice and equal treatment for all sections of the community.
– The bill is designed to afford relief to a very large body of people who are suffering a tremendous hardship. Honorable senators should distinguish between, people who deposit their savings in a savings bank and those who place their money on deposit in an institution such, as the Primary Producers Bank. I am not familiar with the Federal Deposit Bank, but if it is anything in the nature of a savings bank I can draw a clear line of distinction between it and the Primary Producers Bank, which embarked on its career on a purely commercial basis. We are apt in these Modern days to lose sight of the original functions of a savings bank. Its original purpose was to allow the poorer people to accumulate a certain amount of money against a rainy day. A savings bank is, therefore, in a very different class from a commercial concern, such as the Primary Producers Bank, which Senator Foll wishes to have included in a bill designed to afford relief to a number of depositors in the Government Savings Bank of New South Wales who arc seriously embarrassed. I refrain from expressing any opinion upon the causes which led to the downfall of that particular institution, but the fact remains that the bank has closed its doors against the old depositors; they are unable to get anything. We have been inundated with correspondence as to what should or should not be done to enable them to regain their money; but, at any rate, “we have before us to-day a measure to tide some of them over a difficult time. If their money were entirely lost, some of them would certainly be entitled to the old-age pension. The bill, I. take it, applies only to those who are dependent upon what they have in that savings bank. If their money disappeared they would be entitled to a pension.
– And when their deposits were exhausted they would be entitled to a pension.
– If, when the Minister is able to take over these deposits, which may be a doubtful matter under the law as it stands at present, he finds that these people have nothing to their credit, they are still entitled to a pension. That, I suggest, is a logical answer to the assertion of Senator Lynch that this bill is creating a new set of pensioners. It is merely relieving certain people who have money locked up in the Government Savings Bank of New South Wales. When that money is exhausted, they will automatically come under the provision of the existing law. In the commercial world men take risks when they make deposits in private banks, but the Federal Deposit Bank may be an institution of quite a different class. If my memory serves me aright, representations have already been made to us in a connexion which points to the fact that it is a savings bank.
– It is a small savings bank.
– I shall not vote to give any relief in the case of the depositors of the Primary Producers Bank. It would not be within the spirit of the measure to do so. This bill is to give social relief to a certain number of people who find themselves in very difficult circumstances. There is not the same call upon us to afford relief to people w ho placed their money on deposit in the Primary Producers Bank. They are not small men whose all is practically at stake.
– They are. Many small farmers have their all at stake in that bank.
– The small farmer who usually puts his money on deposit in a private bank is clearly not in the same category as the person covered by this bill. If the Federal Deposit Bank is in the same class as the Government Savings Bank of New
South Wales, there might be something to be said in favour of covering its depositors by this bill, but the depositors in the Primary Producers Bank are not in the same category. Subject to further enlightenment about the Federal Deposit Bank, I shall vote against the amendment. We have heard nothing from the Government as to the position of the depositors in the Federal Deposit Bank. I gather from what the Minister said that the Government has devoted its attention only to the undoubted hardship which is being endured by a number of people in New South Wales who have deposits in the Government Savings Bank of New South Wales.
– That is so. The position of the depositors in the other institutions can be considered.
– I was about to suggest that they could be a matter for further investigation. Those who had deposits in the Government Savings Bank of New South Wales prior to its suspension of payment are in need of relief. It has come to my knowledge that some of them have been offering their deposits to other institutions at 16s. in the £1 ; but the private institutions are unwilling to take advantage of the hardship of these people. Having regard to the whole of the circumstances, and particularly to the causes which have brought about this horrible state of things in New South Wales, I commend the Commonwealth Government for the magnanimity it has displayed in bringing down this bill. This proposal to give relief to deserving cases is in the true spirit of the Pensions Act. Possibly, Senator Foll can make out a good case for the depositors in the Federal Deposit Bank. I understand that that institution is, in some respects, similar to the Government Savings Bank of New South Wales, and probably its assets include government bonds. But the information so far vouchsafed the committee would not warrant me in voting for the amendment. I am informed that the Federal Deposit Bankis a purely commercial concern; if that be so, its depositors are in a different category from those in the savings bank. In regard to the provision that the savings bank depositors may assign their deposits to the Minister, I should like the Leader of the Senate (Senator Barnes) to inform, the committee whether the Parliament of New South “Wales has passed amending legislation whereby an effective assignment of the deposits can be made.
– I ask leave to amend my amendment by subdividing it so that the portion to be dealt with first shall read -
That after the word “ Wales proposed new sub-section 2 the following; words be inserted: “or in the Federal Deposit Bank”.
Leave given; amendment amended accordingly.
– This bill is introduced to relieve people who ask no charity from the Government, but who, in return for the concession now proposed, are prepared to assign their deposits to the Minister. They have money in the bani for their maintenance, but they cannot utilize it; such a position would be intolerable to anybody. The New South Wales Parliament has recently provided -
It shall be competent for a person entitled to a deposit in the Savings Bank Department (old business division ) to assign the whole or any pari; of his de-posit in such form as may be prescribed by the regulations. Notice of the assignment shall be given to the Commissioners in accordance with the regulations.
That provision overcomes the difficulty mentioned by Senator McLachlan ; apart from that I, as a layman, should think that a citizen has a right to assign his assets to any person or institution. This bill was introduced because of representations to the Government regarding definite cases of hardship that called for immediate relief. Senator Foll has raised other matters of which the Government lias no knowledge, but I undertake that the Government will give sympathetic consideration to any representations for the relief of other citizens whose predicament is similar to that of depositors in the Government Savings Bank of New South Wales.
– Does the honorable senator mean to say that the Government does not know that two banks have “ gone broke “?
– I know of no bank that has “gone broke”. The Government Savings Bank of New South Wales temporarily closed its doors owing to panic on the part of depositors, but if I had money in it I would be quite confident of getting it some day. The conditions in Australia during the last few years have encouraged our people to live beyond their means; as a result we are financially embarrassed temporarily, but I believe that the resources of this country, and the courage of our people, are sufficient to get us out of our troubles. I ask the committee to reject the amendment. The bill is regarded by the Government as urgent, and I hope that there will be no delay in passing it.
– Very few honorable senators seem to know much about the Federal Deposit Bank. I invite Senator Foll to explain the nature of the institution, where it operates, who controls it, and its present financial position. Is there any possibility of the Commonwealth Government, or a State Government, exercising any control over it?
– What control has the Commonwealth over the Government Savings Bank of New South Wales?
– The Government of New South Wales has control over it. A gratifying feature of the speech of the Leader of the Opposition (Senator Pearce) was his recognition of the fact that we are legislating for the Australian federation, and that repudiation on the part of any Parliament reacts injuriously on the whole. I should like Senator Foll to explain the precise nature of the bank to which he refers.
– It is an ordinary bank.
– If it is an ordinary bank its depositors are in the same position as shareholders of an ordinary trading company. If, for example, I invest £500 in a private company which undertook, on a certain date, to repay the amount of advance, and if it failed to honour its obligation on the due date, ] could drive it into liquidation and so remove the disability which might prevent me from making application for an invalid or old-age pension.
– A depositor in a private bank could not force it into liquidation.
– He could sell his deposit receipts on the market.
– Depositors in the Government Savings Bank of New South Wales can do that.
– But deflation of private assets does not react upon the nation to the same extent as deflation of the national assets.
– That is a tine distinction.
– It is a distinction which the Senate cannot ignore. If a depositor in the Government Savings Bank of New South Wales is precluded from obtaining a pension because the bank is backed by the nation, he may be forced, in certain circumstances, to sell his bank deposit for, say, 16s. in the £1. Is it not in the best interests of Australia to prevent that by allowing a depositor who may be pecuniarily embarrassed to obtain an oldage pension on the security of his bank deposit ?
– No one disputes that. All that I am asking is that the scope of the measure be extended.
– No one regretted more than did the members of the Ministry the circumstances that compelled us to bring forward proposals to reduce pension payments from £1 to 17s. 6d. a week. But’ the party to which the honorable senator belongs, in common with government supporters, agreed to the Premiers plan, one feature of which is a reduction of social services. The Government intends to honour that plan, but desires to give the maximum measure of relief to necessitous cases.
– The moral of the Minister’s reasoning is that people should invest their savings, not in private institutions, but in Government Savings Banks.
– There is something to be said in favour of those persons who place their surplus money in Government Savings Banks, to earn 4 per cent., as against those who invest in private enterprise concerns in the hope of getting a return of 8 per cent.
– The depositors in the Federal Deposit Bank were paid the same rate of interest as depositors in a Government Savings Bank.
– That does not affect my argument that depositors in a private” bank may, if the institution fails to honour its obligations, institute bankruptcy proceedings. In that way, the value of their assets can be definitely ascertained.
– All that Senator Foll is asking i3 that the depositors of the Federal Deposit Bank should be able to obtain pension payments while the bank is in liquidation.
– If it were possible, I should also like certain unfortunate landlords who, in so many instances, are unable to secure rent, to be eligible for the pension until such time as they can obtain rent again from their tenants. But we have to recognize that, even with a heavy curtailment of expenditure on account of pensions, our total pension liability this year will approximate £11,000,000. The Government takes the view that, as the Government of New South Wales has adopted the Premiers plan,’ obligations due by the New South Wales Savings Bank are practically obligations of the nation, and should not operate as a disability in connexion with eligibility for pension payments. But the Government has gone as far as it can go with safety. If the Senate, in its wisdom, decides to increase the cost of social services by the inclusion of depositors in the Queensland Federal Deposit Bank, and if the financial institutions can be induced to support the Government in this matter, no one will be more pleased than members of the Ministry. Senator Foil’s proposal deals with the depositors of a private bank, concerning which two alternatives are available to depositors. One is to sell their assets to speculators, and the other is to sue the bank on the due date. Only one of those alternatives is open to the depositors of a Government Savings Bank.
– I doubt that depositors could force the Government Savings Bank of New South Wales into liquidation.
– I am obliged to the honorable senator for mentioning that point. A Government Savings Bank is in a different position from a private bank in that its depositors cannot force it into liquidation.
– The Federal Deposit Bank is in liquidation, but the Queensland Treasurer has declared that the deposits are equal to 20s. in the £1, and although depositors cannot get anything from the bank, the Pensions Department will not consider applications from necessitous depositors.
– If the bank is in liquidation, the value of the assets is definitely ascertainable, and the eligibility of depositor applicants can easily be determined by the Commissioner of Pensions. Can the honorable senator point to one depositor of that bank who, otherwise, would be entitled to a pension?
– Yes. I also ask the Minister if that can be done in the case of depositors of the Government Savings Bank of New South Wales?
– I have no doubt that it would be possible to prepare a list of depositors who, because of the failure of the bank, are in necessitous circumstances.
– The Queensland Federal Deposit. Bank is similar to other trading banks except that it has been conducted more on the lines of a building society, and the bulk of its funds has been invested in homes for the people. For the most part, its depositors are persons of small means. Recently, I understand, following an investigation of the affairs of the bank, the Treasurer of Queensland stated definitely that the deposits were worth 20s. in the £1, but the unfortunate depositors will not be able to get any portion of their money for at least five years. In the meantime, many of them are in necessitous circumstances. As they are in much the same position as a large number of depositors in the Government Savings Bank of New South Wales, I seeno objection whatever to their inclusion in the bill. The Government will be amply protected, because all payments made to those depositors will be deducted from the amount standing to their credit with the bank in question.
– Why is the honorable senator endeavouring to embarrass the Government by delaying the passage of this bill?
– I resent that remark, and ask that it be withdrawn.
– I withdraw it quite willingly. The measure can be passed in its present form, and later we can consider the claims of depositors in the Federal Deposit Bank.
– I accept the honorable senator’s withdrawal, and I assure him that I have no desire to delay the passage of the bill. I am, however, anxious that the interests of deserving people in the State that I assist to represent are not overlooked. I shall fight for them to the utmost of my ability, just as the honorable senator is fighting for the people of New South Wales.
– I point out that if this bill is agreed to, an important departure will be made from the fundamental provisions of the principal act. At present, under the parent act, a person, to become eligible for a pension, must show that he is poor and needy; but no distinction is made as to the cause of his poverty. It does not matter, for instance, whether he has been made poor through the action of a government bank, or a private bank, but the amendment now being introduced by the Government is designed to make a new distinction between persons who apply for the pension. Hitherto, all that was necessary was for an applicant to show to the appropriate authority that he was not in receipt of a certain income, and he would be granted a pension. It is now proposed that a differentiation shall be made which will be clearly subversive of the principles underlying the principal act. If a person can show that his poverty is due. to some action by a certain government bank, he may obtain a pension; but unless the amendment of Senator Foll is agreed to, persons who have been made poor by the action of a private bank will not be eligible for a pension. In my opinion, no distinction should be made as to the cause of the impoverishment. But this amendment originates a brand-new principle, and makes a distinction in the quality of the applicant’s poverty. I consider that the Government is making an unreasonable, unwarranted, and inexcusable departure from what have hitherto been the guiding principles of our pensions legislation.
SenatorDaly.- That is “ Lynch “ law !
– If it is, it is real good law. Those who constitute our law authorities at present are making a hotch-potch of the law, and a little “ Lynch “ law, which would ensure that natural justice would be done, would he a good thing. Under the conditions that the Government is seeking to set up, a mantle of protection is being thrown over one section of people, while another section, whose state is just as deserving and just as appealing, is being left unsheltered from the cold winds. These people may perish, for all that the Government cares.
Question - That the words proposed to be inserted be so inserted (Senator Foll’s amendment) - put. The committee divided. (Chairman - Senator Plain.)
Woes . . . . . . 15
Majority . . . . 5
Question so resolved in the negative.
Remainder of amendment not’ proceeded with.
Clause agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Standing and Sessional Orders suspended, and bill read a third time.
Sitting suspended from 6.12 to8 p.m.
– I move -
That the bill be now read a second time.
The purpose of this bill is the rectification of some minor anomalies which have been revealed since the passing of the Financial Emergency Act in July last. Section 10 of that act’ provides . for a general reduction in public service salaries and wages; but the provision for the calculation of the amount of the deduction, being based on the salary at a fixed date, does not meet those cases in which the salary of an officer is subsequently increased or decreased. The proposed amendment will enable the amount of the deduction to be varied in accordance with any increase or decrease in the salary received by any employee. As Commonwealth salaries and wages had been reduced by approximately 20 per cent., it was thought just to protect the recipients against certain punitive State taxation which had been foreshadowed. It was not proposed to exempt Commonwealth employees from their existing liability to pay the ordinary State taxation, but it was desired that additional State taxation, which would really amount to the superimposition of a State cut on the Commonwealth cut in salaries, should be rendered nugatory.
Section 19 limited State taxation to the rates in force in the State at the 30th June, 1930, subject to any additional percentage prescribed by the GovernorGeneral to apply to all States. There have been increases in State rates of taxation since the date’ mentioned, and as they are bona-fide taxation measures it appears that the new rates may properly be applied in the case of Commonwealth salaries, provided always that the safeguard of a maximum rate of tax is maintained. The rate now applicable to residents of South Australia is considered a fair maximum, and consequently it is proposed to select that rate. Where any State has a lower rate than that in force in South Australia that lower rate will be payable within its borders. Should any State subsequently increase its rate beyond that of South Australia, the tax will be payable only up to the limit of the South Australian rate. The provision in section 29 of the act by which the maternity bonus is limited according to the income of the claimant and her husband, or of the claimant where she has no husband, for the previous twelve months, is operating harshly in those cases in which, at the date of the birth, either no income, or a very diminished income, is being received. It is therefore proposed to grant relief by giving ihe Commissioner power to pay the bonus where he is satisfied that, at the time of the birth, the income does not exceed £2C0 per annum. The bill contains nothing of a controversial nature-
– Doesn’t it?
– In my opinion, it is a measure with which every honorable senator should agree, since its object is to mete out even-handed justice to all. I commend the bill to the Senate.
Senator Sir GEORGE PEARCE (Western Australia) [8.8]. - I do not intend to oppose the second reading of this bill, but 1 desire to emphasize that its form is the result of events which have taken place since the original act was passed. When that measure was before us, no one dreamed that any State Government would be capable of making such a proposal as that which has since been put forward by the Government of New South Wales. The extreme ideas of Mr. Lang i.u relation to taxation make necessary the introduction of a measure to protect the salaries of Commonwealth public servants. Had the proposals of Mr. Lang become law, a Federal public servant who, in terms of his employment, was transferred to New .South Wales, would have been dealt with most unfairly as compared with Federal public servants in other parts of the Commonwealth.
Certain sections of the press have suggested that this bill seeks to differentiate between the taxation levied on the salaries of members of this Par li amen t, and that to which the salaries of the general public are liable. It does nothing of the kind. When this measure is in full operation, members of this Parliament and officials of the Commonwealth will be placed on the same footing as every other taxpayer in the matter of taxation. Indeed, in Western Australia, members of the Federal Parliament will be a little more heavily taxed, because the State, having been empowered to tax federal salaries, refuses to allow Federal members of Parliament the deduc tions which State members of Parliament may make from their taxable income.
– The position is the same in Tasmania.
Senator Sir GEORGE PEARCE.For many years I paid taxation to the State on a part of my salary on which I would not have paid taxation as a member of the State Parliament.
– That position hasnever been reversed with regard to propertyowners : they pay three times as much taxation to the Commonwealth as they do to the State.
Senator Sir GEORGE PEARCE.That position does not arise in connexion with this bill, which deals only with income from personal exertion. I have mentioned this matter because it has been suggested that legislation has been introduced into the Commonwealth Parliament to enable members of this Parliament, and federal officials, to escape taxation. That is not the case. The idiosyncrasies of Mr. Lang and his strange views on taxation make this bill necessary in order to prevent an injustice being perpetrated on certain persons in the community. I support the bill.
Senator LYNCH (Western Australia) [S.12J. - I do not agree with the Minister that this bill is harmless; I see in it an injurious germ. If we pass it we shall establish a precedent which may, in the future, benefit the Commonwealth, injure the States, and cause confusion to both. The bill does more than limit the taxation to which members of this Parliament and officers of the Commonwealth Public Service shall be subject. By section 51 of the Constitution, 39 enumerated powers were vested in the Commonwealth, among them being the power of taxation - a power which was limited in only one respect, by the words: “ but so as not to discriminate between States or parts of States “. No reasonable interpretation of the Constitution will reveal any warrant for the bill now before us. If the power of taxation vested in the Commonwealth under the Constitution, were subject to the further limitation: “but so as to enable one section of the people to be singled out, and” taxed less heavily than other sections or the balance of society “, the introduction of this bill might be fully justified but not otherwise. In my opinion, there is no justification for this proposal. In the 1907 act, which dealt with the taxation by State Parliaments of the salaries of federal officers and federal members of Parliament, there was a clear recognition of the rights of the States, and of the corresponding and concurrent rights of the Commonwealth. The purpose of that act was to delimit the spheres of Commonwealth and State taxation, and to define the respective powers of Commonwealth and State Governments in respect of taxation.
– That act gave permission to the States to tax Commonwealth members of Parliament, and members of the Commonwealth Public. Service. Before it was passed the States had no such power.
– I beg to differ. For a long time past attempts have boon made to limit the taxation powers of the States. The thin end. of the wedge- was inserted years ago, and it looks now as if the wedge is about to be driven home. If this tendency is not checked, the result will be that the States will enjoy no powers of taxation at all, or any worth speaking about, except by the grace and consent, and with the benediction, of the Commonwealth Government.
– Why does not the honorable senator discuss the rights of the States when the tariff is being debated ?
– I shall give the honorable senator some good but cheap advice, for which I shall not charge him even Cs. Sd. This is not the first time that attempts of this kind have been made to impose the will of the Commonwealth Government on State Parliaments in. regard to taxation matters. Senator Daly must know of several notable cases in which this point has been involved, notably, the Chaplin case, in South Australia. Chaplin was a postal employee working in South Australia, and objected to: paying State income tax on the salary be- received from the Commonwealth Government. The lower court decided iti his favour, and when tha State appealed against the decision, the Supreme
Court of South Australia stated a case for the High Court. The case was argued before Chief Justice Griffith in 3911. Frequent references were made during the argument to the famous McCulloch v. Maryland case, in which a similar point arose for decision, by the Supreme Court of the United States of America. Chief Justice Griffith referred extensively in the course of his judgment to the American precedents, and made them the basis of his own decision, with the result that he laid down the’ principle that State Governments had the right to tax the incomes of Commonwealth employees, and Commonwealth members of Parliament.
– But that was after the- 1907 act was passed.
– The High Court stated that the act of 1907 regulating the amount and extent and rate of taxation which could be levied on the incomes of Commonwealth public servants and Commonwealth members of Parliament was a grant of power to the several States of the Commonwealth. In the American case the banks established under the federal authority challenged the right of the State Governments to tax them or their employees, and Mi1. Justice Griffith quotes the famous American Chief Justice Marshall as follows: -
But it is argued Unit the banks, being instrumentalities of the Federal Government, by which some of its important operations arc conducted, cun not bc subjected to such State legislation. lt is certainly true that the Bank of the United States and its capital were held to be exempt from State taxation on the ground here stated, and this principle, laid down in the case of McCulloch v. Maryland (3), has been repeatedly affirmed by the court.
Chief Justice Griffith then declares as follows in his judgment, as reported at page 3S3 of the Commonwealth Law Reports, 1911:-
That is, in substance, saying that the grant of a, salary to ani officer of the Commonwealth is made on condition that ho is subject to a law of the State as to taxation to the same extent as. any other citizen, and is a solemn declaration that such taxation is not a.n interference with the exercise of the powers of the Commonwealth. The limitation, it is to heobserved, is the same as that in the act of Congress which was in question in Van Allen v. Assessors (1). If the State Parliament were to impose upon salaries of Commonwealth officers an income tax higher than that on other salaries of the same amounts, then the doctrine of Boater v. Commissioners of Taxation, Kew South Wales (2) would come in, and the act would bc so far void. For these reasons I think that what we said in Baxter v. Commissioner of Taxes, New South Wales (3), whether regarded as a dictum or not, is sound law and part of the law of the Commonwealth. Our opinion upon this question disposes of the whole case, because, if the appellant is not exempt from taxation, the question whether the assessment is conclusive and binding on him, he not having appealed against it, does riot arise. It is unnecessary, therefore, to send the case back to the Supreme Court, and the
Appeal trill be dismissed.
The Government now proposes to go much further than it did in the Financial Emergency Act, section 19 of which this bill purports to amend. Section 19 states -
The allowances, or salary and allowances, of any senator or member of the House of Representatives (including any senator or member who holds a parliamentary office) and if any Minister of State and the salary of any officer or employee, after reduction in accordance with this part, shall not be subject under the law of any State to taxation »t a higher rate or percentage ot to a greater extent than the prescribed rates or percentages of that salary in addition to any tax imposed on that salary under any law in force in that State on the thirtieth day of June, ‘One thousand nine hundred and thirty.
It is now proposed to increase the power of the Commonwealth, and to lessen the power of the States in the matter of this class of taxation. It was laid down in the Financial Emergency Act that a State might not tax Commonwealth members of Parliament, and members of the Commonwealth Public Service, to an extent greater than the taxation in force on the 30ih .Tune of last year, but section 19, which contained that limitation, is to be repealed by the present bill, and it is laid down that the amount of taxation which a State Parliament may levy shall be. such as may be fixed from time to time by the Commonwealth Government, by proclamation of the Governor-General, [a other words, the power of State Parliaments in this direction has been wholly destroyed.
– I do not think that the honorable senator will regard the power as negligible when he gets his next State income tax assessment.
– I am not concerned with that, but with the principle which is involved. If this bill becomes law, Statetaxation on Commonwealth public servants, in excess of the amount stipulated! by the Commonwealth Government, may presumably be challenged either by theperson concerned, or by the Commonwealth.
– The purpose of this provision is to prevent injustice to« Commonwealth employees.
– This bill proposesto place members of the Commonwealth Parliament, and members of the Commonwealth Public Service, in a specially favoured position, and to guard them, from taxation by States, except with the consent of the Commonwealth Government. It is putting them in a sort of taxation armour, which no State legislation can pierce. That was never intended. Such a thing was never contemplated by the framers of the Constitution.
– It is not proposed in this bill to exempt Commonwealth members of Parliament, or members of the Commonwealth Public Service, from any taxation payable by the citizens of a State.
– Clause 3 of this bill proposes to repeal section 19 of the Financial Emergency Act, and thus repeals the provision that the amount of tax which a State may impose on Commonwealth public servants and members of the Commonwealth Parliament shall not exceed that in force on the 30th June of last year. In place of that provision it proposes to insert another to the effect that the Commonwealth Government, through the GovernorGeneral, may impose its will upon State Parliaments in regard to matters of taxation. In plain language the power of taxation over the class mentioned is taken away from the States absolutely, and vested in the Federal Parliament. The power of the States would be so reduced under this measure that they would be unable to impose taxation upon federal servants and members of this Parliament, unless the Commonwealth Government had agreed to the rate and extent of that taxation. Either designedly or otherwise, a most injurious precedent would be established under this proposal. The power of taxation is to be wrenched from the States, and placed in the hands of the federal authority, for any tax that a State may impose is to be subject to review at the hands of that authority. That was never contemplated by the Constitution. When the time comes for the consideration of uniform taxation, this measure will serve as a precedent; this will be the fountain head to which all believers in .that novel departure will appeal for warrant and justification. Having accepted the federal principle we should respect it, and not whittle away the powers of the States, with a corresponding aggrandizement of federal powers. If the act were left in its original form, I would not complain, but this bill takes from the States every vestige of financial independence in respect of its foremost function, taxation.
There are other aspects of this matter. Senator Pearce has mentioned the position of Western Australia. I have tangible proof of the stringency of Commonwealth legislation compared with State laws. In regard to property taxation, the federal imposts are three times as heavy as those for the State of Western Australia. Victoria has been regarded in the past as the best part of Australia in which to live in order to escape heavy taxation. Frequently citizens of Western Australia have removed to Victoria because the burden of taxation is lighter there than in other States. Citizenship of a State carries with it the responsibilities of citizenship, and the creation of a favoured class of persons would establish a most unwelcome, if not unjustifiable, precedent. No member of this Parliament, and no federal public servant, desires that. A gentleman in New South Wales, whose name is unmentionable in this chamber, was responsible for the principal act which this bill amends, and, therefore, he is also indirectly responsible for this bill. According to the judgment of the High Court, and according to the decisions on which that judgment was based, we must not set up a separate class which is to be favoured at the expense of the rest of society. This bill vests a discretionary power in the Governor-General - which, after all, means the Government, or the Ministerial party - and the power of taxation, so far as members of this Parliament and officers of the Commonwealth are concerned, is taken completely from the States.
I am not greatly surprised at this measure, because it comes from a party that sees no good in the continuance of our federal system under which the States perform certain duties within their allotted spheres. That party believes that the States are serving no useful purpose to-day, and ought to be abolished. Those whom the gods wish to destroy they first make mad, and in the present case, when the party opposite is dealing with an institution that it wishes to destroy, it seeks first to strip it of every vestige of power that was given to it under the Constitution, and make it impotent and helpless- to discharge its high functions. For that reason, I shall call for a division on this bill. We have had only 30 years’ experience of federation, and many miserable proposals to tinker with the Constitution have been made. If we are vo retain the federal system, and uphold the States in the useful spheres in which they now legislate, we must recognize this bill as a further attempt to undermine their power for good.
– The honorable senator would unite Ireland and divide Australia.
– When I corner tlie Minister, he immediately introduces an extraneous subject. He might well go to Ireland, for some useful lessons; it is regrettable that wc have not a Cosgrave on this side of the world, and at the head of the honorable senator’s party. He would do some cleaning up. Unless we intend deliberately to abolish the federal system, we should respect it as the Constitution solemnly enjoins us to do. The States are doing splendid work. How could we get on without them?
– Even New South Wales?
– She has deliberately outclassed herself, and has become a shocking example in the eyes of Australia, as well as the rest of the world : but the impartial historian of the future will admit that the States have rendered magnificent service. They have developed the areas entrusted to their care, and have always jealously preserved the interests of their citizens. How could Queensland be administered from Canberra? Such a proposal is unthinkable, yet under this bill an attempt is made to undermine the usefulness of the State legislatures. See what the State of Western Australia is doing to foster and advance the interests of its citizens over that vast area. No government in Canberra could ever hope to do so well for the people of that State, yet the ideal of the party supporting the Government is the abolition of State Parliaments. That party is working wrongly, unwisely, and oven tyrannically, in many directions. It is particularly the duty of this Senate, the cutodian of the rights of the States, to uphold the Constitution, and see that it is fairly and impartially interpreted.
No government should be permitted to encroach upon the powers of the States, and seek to break up the federal system. Unless it is desired to reduce the States to powerless legislative atoms, why interfere with their important functions in the matter of taxation as this bill proposes? Those of us who see nothing wrong in the federal system should refuse to pass this bill, and we should demand to know what reason the Government has for bringing it down. What has happened since the act was passed last year to warrant this move iu the direction of robbing the States of their constitutional rights? This bill has been steal thily introduced for the purpose of giving more power than the Constitution provides to the Federal Government, with a corresponding stripping of the taxing powers of the States. In South Australia, when Mr. Hill, the State Premier, brought in a taxation measure, he would know, under this bill, that it would have to undergo the scrutiny of the Federal Government. If Senator Daly were in Mr. Hill’s place, and he found it necessary to impose further taxation to meet the necessities of the hour, how would he feel if he could not tell whether or not he would get the Federal Government to agree to it? Mr. Hill’s charter is full power of taxation with the single exception that it is rendered nugatory by the power of the Commonwealth Government to take to itself an authority which it does not want.
– It may want it, but does not need it.
– I positively refuse to do this thing. The Federal Government has everything. In future, if a State wishes to impose further taxation in this regard it must approach the Federal Government, and say “By your leave we propose to do this.” The Constitution does not provide for that. Wherein lies the warrant for this Government’s attempt to sneak in a proposal of this ki.n.d to add more power to the federal authority when it is not putting the powers it already possesses - to the best use? The States have a mighty work to do in the development of Australia. Why make them weak, limp and vapid as this amendment will do? If honorable senators choose to destroy the States by depriving them of the power to impose essentially just taxation they will answer for it on the hustings. For my part I refuse to accept the bill. I treat it with disdain. It is un-federal, unjust and grossly unfair to the States, which accepted the federal contact in the belief that their power of taxation would remain jealously safeguarded. There is no warrant for this further attack upon that power. I object to the bill on every ground, apart altogether from the incidental aspect of it, the creation of a section in Australia that will be subject to an easier form of taxation than any other; and I shall call for a division on the second reading.
– I did not think that it would be necessary to debate this bill, and indeed it would not have been, but for the unjustifiable attack made upon the Government by Senator Lynch. It may or may not have been known to the honorable senator that the Constitution, which he has so frequently mentioned, gives no power to the States to impose any taxation upon any member of the Commonwealth Parliament or any Commonwealth officer. The compact declared that members of the Commonwealth Parliament and Commonwealth public servants were to be free from State taxation, but subsequently the Commonwealth Parliament conceded certain powers to the States enabling them to tax members of the Commonwealth Parliament and Commonwealth public servants. The honorable senator quoted a case in the Commonwealth Law Reports. I could quote the case of Alfred Deakin, appellant, and Thomas Prout “Webb (Commissioner of Taxes) respondent on appeal from the Supreme Court of Victoria.
– In what year was that?
– That was in 1903. The right honorable senator by interjection attempted to convey to Senator Lynch that the power of the States to tax Commonwealth Ministers and members of Parliament was conceded by the Commonwealth to the States, and was not in the Constitution itself.
– Then why did not the late Chief Justice quote that act?
– It was after that law had been passed.
– The Leader of the Opposition has properly pointed out that subsequent to this particular case the Commonwealth Parliament passed a law enabling the States to tax Federal Ministers and members of Parliament and federal public servants. The case quoted by Senator Lynch was an interpretation of the law as altered by this Parliament subsequent to the earlier decision of the High Court.
– If there had been any relation to the later case the late Chief Justice would have quoted it.
– The late Chief Justice was interpreting the law as it stood in 1911 and not what it was prior to the enactment of the Commonwealth Parliament.
– Senator Daly has merely mentioned the case of 1903; he has not quoted it.
– Very well, I shall quote the head note of the case, and then the honorable senator will see what the decision was. This is the head note to the case -
The principle, enunciated in D’Emden v. Pedder (ante p. 91, at p. Ill), that “when a State attempts to give to its legislative or executive authority an operation which, if valid, would fetter, control, or interfere with, the free exercise of the legislative w executive power of the Commonwealth, the attempt, unless expressly authorized by the Constitution, is to that extent invalid and inoperative “ re-affirmed.
That was the principle -
An income tax act of a State, insofar as it attempts to tax the salaries of officers of the Commonwealth, is within the above principle.
Such an act of a State is not taken out of the above principle by reason of the fact that the income tax is assessed on salary received during a preceding year.
Held, therefore, that the salaries of a Minister of the Crown for the Commonwealth and of a member of the Commonwealth Parliament, so far as they are earned in Victoria, are not liable to assessment under the income tax acts of Victoria.
The decision of the State Full Court was reversed. The High” Court held -
The liability of a Commonwealth officer to an income tax imposed by a State act in respect to his salary as such officer, is a question as to the limits inter se of the constitutional powers of the Commonwealth and those of a State within the meaning of section 74 of the Constitution, and, therefore, the decision of the High Court as to such liability is final and conclusive unless the court certifies that the question is one which ought to be determined by His Majesty in Council.
The decision of the tribunal, which was set up to be the watch-dog of the Constitution, was that no State had the right to impose a tax upon any member of the Federal Parliament or upon any federal public servant, but feeling that in normal times it was inequitable to expect men to take advantage of all the agencies provided by a State Government and not bear some share of the taxation, the Federal Government deliberately conceded to the States the right to impose taxation on members of the Federal Parliament or of the Federal Public Service.
– Then why take away that right now?
– We are not taking it away.
– This is simply a protective measure.
– The honorable senator has explained exactly the purpose of this bill. It is merely a protective measure. As a part of its policy this Government does not propose to exemptmembers of the Federal Parliament or federal public servants from the ordinary incidence of State taxation. But subsequent to the adoption of the Premiers’ rehabilitation plan, threats were made in one State to impose taxation to the extent of 5s. in the £1. Would it be fair to expect a member of the Federal Parliament or a federal public servant residing in New South Wales to bear a heavier taxation than is borne by a Commonwealth member or public servant living in Western Australia?
– The honorable senator is giving away the case now.
– No. In the balancing of the Commonwealth budget the Commonwealth Government had to keep an eye not only upon the revenue, but also upon the expenditure. By reducing salaries by 20 per cent, we, to a certain extent, destroyed the need for collecting a certain amount of revenue, but is it right that federal public servants living in one State should be forced to bear an inequitable portion of the burden which should be borne by the whole of the people of Australia?
– It is exactly the same as is borne by other citizens of that State.
– The honorable senator should know his subject before making such an interjection. The honorable senator knows that in respect of one industry in New South Wales the men engaged in the secondary production suffered no reduction of wages, whereas the men engaged in. the primary production of iron ore in South Australia for the same industrial concern suffered a reduction of wages from 14s. 3d. to 10s. 6d. a day.
– What has that to do with the position?
– This bill is a breach of the federal compact according to the honorable senator.
– The Commonwealth is dictating to the States.
– I ask the honorable senator to wait until he hears what I have to say. He would have the Commonwealth Government keep its hands off the States. We have no power to dictate what the wages and working conditions should be in any particular State. The honorable senator would prevent us from attempting to dictate in that respect But people in so-called unsheltered industries in a particular State are not subject to certain conditions which have been imposed upon so-called sheltered industries. For instance, Commonwealth public servants have already suffered a reduction commensurate with the burden they are expected to bear in the rehabilitation of the nation’s finances ; yet they are expected to be subject also to punitive taxation such as, at one time, was threatened in a certain State. This, as I have said, is merely a measure to protect them, but anything the Government does in the exercise of the power conferred on it will be subject to review by Parliament.
– It is making a law for one section of the community only. You do not protect all the citizens of a State in this way.
– No. We cannot protect all of them because they are not under our jurisdiction, but we can give a lead to the others. Although certain persons may not be prepared to act fairly it does not justify us in being unfair. There is certainly no intention on the part of any member of the present Cabinet to place any of the responsibilities of taxation on the shoulders of others, Every member of the Cabinet, and I feel sure every member of the Commonwealth Parliament and of the Commonwealth Public Service is prepared to bear his or her share of the responsibility. Having submitted our own public servants to a reduction of 20 per cent., Parliament is surely entitled to place a limitation on the power of the taxation which it ceded to the States - a power to which they were not entitled under the Constitution.
– Ceded? The power is conferred by the Constitution.
– The watchdogs of the Constitution are the judges of the High Court; they have decided to the contrary. Prior to the passing of the 1907 act, the High Court held that the Constitution precluded the States from taxing any member of the Federal Parliament -or any Commonwealth public servant.
– Have the States any corresponding power to protect their servants against the imposts of the Federal Parliament ?
– The Federal Parliament cannot discriminate between States. No State Parliament can prevent the Commonwealth from exercising the powers conferred upon it by the States and expressed in the Constitution.
– The decision of the High Court which made it necessary for the Commonwealth to confer upon the States power to tax federal public servants was unexpected.
Senator DALY. This bill is merely limiting a power which this Parliament could to-morrow, without breach of the federal compact, withdraw entirely from the States.
– This Parliament would not dare do that.
– Whether it would or would not dare, I do not pretend to know, but it has the legal right to do it.
– I am not so sure about that. I quoted a decision of the High Court.
– The honorable senator quoted a decision of the court on a statute of this Parliament which gave to the States a power of taxation which they had not formerly.
– Why? Because the unfairness of not allowing the States to tax federal public servants was recognized.
– For the first 27 years of its existence, this Parliament was located in Melbourne, and federal members and public servants were privileged to enjoy the services and works provided by the expenditure of the Victorian Government. The Commonwealth Parliament, therefore, thought it fair that federal members and public servants should pay their share of State taxation, and because the States have no power under the Constitution to tax them, this Parliament passed an enabling act. Recently, representatives of the Commonwealth and the States collaborated in framing an agreement for the rehabilitation of Australian finance. Certain burdens were placed on different sections of the community, and Commonwealth public servants were subjected to a 20 per cent, reduction of their salaries. Subsequently, proposals were made in one State which would have placed upon federal public servants in that State an inequitable burden, and, as a protective measure, with a view to setting off that 20 per cent, reduction against any punitive State taxation, this legislation has been introduced. The principle declared by Senator Lynch does not arise. This bill is not an attack upon the States. The merits of unification, federation, and secession are not at issue. The sols question is whether this Parliament will declare that State taxation shall not unfairly differentiate between Commonwealth and State public servants.
– There is differentiation between income taxation iu different States.
– There i3 differentiation interstate; we are aiming to prevent differentiation intra-state. If a State Parliament chooses to impose a tax of 33 per cent, on incomes, the 20 per cent, reduction of salaries already effected by this Parliament should be taken into account. The Prime Minister (Mr. Scullin) has stated definitely that the Government does not intend to encourage or assist the evasion of any State taxation that may be generally imposed.
– But this bill gives authority to do it.
– The authority i3 contained in the parent act.
– That is so. If the Government does anything under this legislation to create a sheltered class and harass the States, this Parliament can readily exercise its right to repeal the law. The Government is anxious to spread the burden of taxation equitably over all sections of the community.
– As a matter of fact the 1907 act does not give to the States a free hand; it imposes a limitation upon their power of taxation.
– This bill widens that limitation.
– All that the measure proposes is to give to the Commonwealth Government a voice iu the distribution of the burdens imposed upon its servants by means of abnormal taxation and reductions of salary.
– This is really making the Commonwealth the one taxing authority.
– The gazettal of regulations under this bill will be the evidence of the intentions of the Government. If the Government attempts to abuse this power, Parliament will still be supreme.
– Within the ambit of its authority.
– This legislation is within the ambit of its authority. The High Court decided that the States had not the right under the Constitution to tax federal ministers, members and public servants. This bill is consistent with the enabling legislation of 1907, but if the Senate fears that it may be abused, it can impose safeguards at the committee stage.
Senator Sir HAL COLEBATCH (Western Australia) [9.13] . - Senator Daly has stated that, under the Constitution, the States are prevented from levying taxation on the salaries of federal members and employees. Is there any prohibition of that character that does not apply both ways? Section 114 of the Constitution provides -
A State shall not, without the consent of the Parliament of the Commonwealth impose any tax on property of any kind belonging to the Commonwealth, nor shall the Commonwealth impose any tax on property of any kind belonging to a State.
Quick and Garran, commenting upon the taxation powers of the Commonwealth, say at page 551 -
The Commonwealth is, by section 114, prohibited from imposing a tax on property of any kind belonging to a State. It may be argued, by necessary implication, that the Federal Parliament could not levy a tax on the salaries of officers of aState Government, because it would thereby conflict with the laws of a State made in pursuance of powers reserved to it by the Constitution.
I am not aware of any section in the Constitution which prohibits the taxation of Commonwealth salaries by a State authority, except that section which equally prohibits the taxation of State salaries, by a federal authority. In 1907, when the Federal Parliament passed a measure empowering State Parliaments to impose taxation on Commonwealth ministers, members of Parliament, and Commonwealth public servant’s, no federal income tax was in contemplation. Later, when, because of the war, it became necessary for the Commonwealth Parliament to impose income taxation, the State Parliaments passed complementary laws enabling the Commonwealth to tax the salaries of State ministers, members of State Parliaments and State public servants. I do not know of any provision in the Constitution which prevents State Parliaments from taxing Commonwealth ministers, and members of Parliament as well as Commonwealth employees excepting section 114.
– To be fair, the honorable senator should say that Quick and Garran take the view that the prohibition may be argued, by necessary implication.
Senator Sir HAL COLEBATCH.But it is a fact. I believe that every State has passed legislation to enable the Commonwealth Parliament to impose taxes on the salaries of State ministers, members of Parliament, and State employees. If the view expressed by Quick and Garran is correct, what sort of a rod is the Government preparing for its own back? “What is to prevent the Premier of the State at which this legislation is directly aimed, from passing a law, prohibiting the Commonwealth from taxing the salaries of State ministers, members, or State public servants?
– Nothing except that the Premiers agreed to the insertion of this provision in the federal law.
Senator Sir HAL COLEBATCH.The Premiers may have reached an agreement on the point, but it does not necessarily bind any State Parliament. This bill has been introduced to meet a situation due to the action of a particular State, and I have never yet heard of anything but a bad law resulting from an attempt to deal legislatively with an extreme case. The New SouthWales Parliament has imposed an unemployment relief tax of1s. in the £1, and the Government’ proposes, by means of this legislation, to rescue members of the Commonwealth Parliament and Commonwealth public servants from that imposition.
– That is not suggested or intended.
Senator Sir HAL COLEBATCH.I always understood that this was the chief purpose of the bill. Proposed new sub-section 1 of section 19 enacts that the Governor-General may fix the maximum taxation imposed upon any minister or member of the Commonwealth Parliament, or of any employee of the Commonwealth, under the laws of any State imposing taxes upon income, “whether for a specified purpose or not “. I take it that if this unemploment relief tax had not been imposed in New South Wales, we should not have heard of this bill.
– The original proposal in New SouthWales was to tax certain salaries at the rate’ of 5s. in the £1.
– This Government has, under the Premiers plan, reduced salaries by 20 per cent. If to that were added the New South Wales proposals, the burden on federal members and Commonwealth public servants would be nearer 40 per cent.
– Senator Pearce appears to think it extraordinary that any resemtment should be felt by the citizens of a State, towards such a bill as this. I suggest that resentment may be due to the fact that while the Commonwealth Parliament is protecting Commonwealth members and public servants, it is doing nothing to protect other citizens. I have personal knowledge of one or two citizens of New South Wales, who derive small incomes from investments in Victoria. They arc called upon to pay all taxation, including an unemployment relief tax in Victoria, and in addition to ordinary taxation, the special unemployment relief tax in New South Wales. Naturally, the average citizen would strongly resent a monstrous injustice of this kind, for which apparentlyhe has no redress, and he would be particularly indignant when he saw the highest law-making authority protecting its own members, and its own public servants, against a like imposition.
– Would not the honorable senator protect that class of citizen if he could?
– It is not our job. I do not know that it is within the province of this Parliament to act as the censor of State taxation laws.
– Does not the honorable senator agree that we should protect our own employees?
– I do not think we could. At all events, I shall await with great interest an explanation from the Minister as to what this Government will do if the New South Wales Government turns round and says : “ We no more require a special permit from the Commonwealth Parliament to tax the salaries of federal ministers and members, than does the Commonwealth
Parliament require a special permit to tax the salaries of State ministers, members, and State employees.” Unless the Government is sure of its ground, I do not see how the situation can be met, because, as I have shown, the highest constitutional authority takes the view that this prohibition is mutual. I feel sure, therefore, that if we pass this bill we shall have State Parliaments passing laws exempting the salaries of ministers, members, and State servants from the operation of Commonwealth taxes.
– Because of the misapprehension as to the scope and purpose of this bill as disclosed by the remarks of a number of honorable senators who have spoken to-night. I am afraid the impression will be created that this Parliament is seeking to protect the emoluments of its members and Commonwealth employees, from State taxation. I emphatically repudiate any such suggestion. There is nothing in the bill which lays this Parliament open to that charge.
– What then is its object?
– If the honorable senator had followed, the course of business in this chamber in recent months, he would know that its purpose is certainly not to do what he implies by way of interjection. Let us examine the facts that have led to the introduction of this measure. The Premiers Conference, held earlier in the year, agreed upon a plan for the restoration of financial stability. That agreement, to which all governments, Federal and State, were parties: involved drastic economics in governmental expenditure, including a reduction of 20 per cent, in the salaries of ministers, members of Parliament, and public servants. The Financial Emergency Act, passed during the last session, makes those necessary reductions in Commonwealth expenditure. The Premiers of the various States, with the exception of New South Wales, introduced similar legislation. Instead of effecting an average reduction of 20 per cent, in governmental expenditure, the Government of New South Wales proposed a special tax of 5s. in the £1 on incomes of all citizens above a certain amount. The effect of that legislation would have been to impose an unequal burden upon members of the Commonwealth Parliament and Commonwealth employees living in that State, because they would have been called upon to bear not only the economies authorized by the Commonwealth Parliament, hut also the special taxation levied by the State Parliament. Members of this Parliament at the time were concerned as to the position of Commonwealth public servants in New South Wales. Section 19, which deals with State taxation, provides that the taxation of any State shall not be at a-higher rate or percentage than the prescribed rates imposed under any State law, on the 30th of June, 1930. The effect- of that limitation was to exempt federal ministers, members, and Commonwealth employees from the increased taxation imposed in South Australia since 1930. It was to meet certain cases such as these that the Government introduced this bill, so that’ all this talk about filching the rights of the States and the insertion of provisions for our own protection is contrary to the facts. The right of a State to tax Commonwealth ministers, members, and employees is not affected by this amending legislation. Clause 19 was passed by the Senate Avith practically no discussion and without a division.
– But this bill will widen the scope of taxation.
– It is not intended to do anything of the kind; it is designed merely to remove an impediment to the equitable application of State taxation to federal employees.
– If the measure is passed in its present form it will enable the Governor-General to declare in the Gazette from time to time what rate of taxation shall be imposed on federal members, Ministers and servants.
– That, is true; but surely the honorable senator will accept the assurance given by the Leader of the Government (Senator Barnes) in this chamber, and by the Prime Minister (Mr. Scullin) in another place, that it is not the intention of the Government to fix a rate lower than the rate being imposed in South Australia, which is the highest of any State. Even if it were otherwise, and an objectionable rate were fixed by regulation, the Senate or another place could disallow the regulation.
– It will not be done by regulation, but by notice in the Gazette.
– I now see from the bill that that is so; but honorable senators could take appropriate steps to disagree with any Gazette notice which they regarded as unjust. I think Senator Colebatch is labouring under a misunderstanding, for he has said that the object of this bill is to protect federal members, Ministers and servants against the unemployment tax in operation in New South Wales.
– Is not that intended?
– It is not. I have made inquiries since the honorable senator delivered his speech, and I have been informed that not only is it not intended to- protect federal members, Ministers and servants from the New South Wales unemployment tax, but the Prime Minister has agreed with the Premier of New South Wales that the Federal Government will deduct from the salaries of federal employees living in New South Wales the amount of unemployment tax which they are liable to pay, and will pay the money direct to the New South Wales Government.
– Will that apply also to federal members?
– I understand that it will. ‘ If the arrangement is not in operation at present, it will become operative simultaneously with the passing of this hill.
– What, then, is the object of this bill?
– It is, as I have already said, to remove an impediment contained in section 19 of the principal act.
– There is no impediment there.
– I submit that there is, because under the provisions of that section federal members, Ministers and servants are obliged to pay some such State taxation as was in force at the 30th June, 1930. A number of States have increased their taxation since that date, and, unless we amend the Financial
Emergency Act the very thing that some honorable senators desire to prevent from happening will occur, because federal members, Ministers and servants will continue to be liable to pay State taxation only at the rate in force on the 30th June, 1930. They will be immune from any additional taxation imposed after that date. ‘ I believe that honorable senators opposite who have objected to the provisions of this bill are anxious that members of the Federal Parliament and Commonwealth public servants resident in the various States shall be called upon to pay exactly the same rates of State taxation as the citizens of the States, and that is also the wish of the Government. In these circumstances I hope that the opposition to the bill will be withdrawn, and that the measure will be given a speedy passage through the Senate.
– It is necessary that the second reading of the bill shall be carried in order that we may repeal those parts of section 19 of the principal act which provide that no taxation shall be levied by the States on federal members, ministers, or employees exceeding the rates imposed under the law3 in force in the various States on the 30th June, 1930. Since that date the hospital tax has been imposed in Western Australia, but unless the provisions of section 19 of the Financial Emergency Act, to which I have referred, are repealed, federal members, ministers, and employees, will not be liable to pay the tax, although all other citizens of the State will be called upon to do so. The same is true of the unemployment taxation that has been imposed in different States since the 30th June, 1930. We must, therefore, repeal certain provisions of section 19 of the principal act.
The intention of the Government in introducing this bill has, I believe, been accurately described by Senator Lynch. There can be no doubt that if we go beyond the repeal of the provisions to which I have referred, as desired in this measure, federal members, ministers, and servants will not be liable to taxation by the States in excess of the amounts stated from time to time by the Governor-General in the Gazette. In other words, a privileged class will be set up in the States. The ordinary residents of a State will be fully subject to the taxation laws of the State, but federal members, ministers, and employees may not be fully subject to them. In my opinion, federal public servants are better off now than the State public servants, because, in respect of all the branches of the Service with which I am acquainted, they receive higher pay than that received by the State servants for similar work.
– Has the honorable senator read section 19 of the principal act?
– I have. It is part of the panic legislation passed some time ago. The provisions of that section are just as nauseating to some honorable senators as was the proposal to reduce pensions to the members of the Government.
– It was all part of the Premiers plan.
– I disagree with the honorable senator. When the Government introduced the original Financial Emergency Bill into another place the date stated in this particular provision was the 30th June, 1931, but after the Premiers Conference had ended, and after the plan had been agreed upon, the Government made this mean amendment which gave federal ministers, members, and employees much greater relief than they were intended to have. It meant that they were to be subject to taxation only at the rates in force at the 30th June, 1930, instead of at the rates in force twelve months later. In the twelve months between June, 1930, and June, 1931, taxation increased considerably in some of the States.
– We are taxed at exactly the same rates as the other taxpayers of the States.
– That may be so, but the taxation need not be paid. That position will not continue unless section 19 is repealed. The Assistant Minister (Senator Daly) has said that this provision is part of the Premiers plan, but I think I have shown conclusively that it is not. The antedating of the provision by twelve months had the result of giving additional privileges to a class which was already enjoying a number of privileges.
– It did not give us any privileges in Western Australia. I know that I paid the same rate of taxation as any other taxpayer.
– That was as if should be, and, if I had my way, federal ministers, members, and employees would continue to pay the same rate of taxation as the ordinary citizens of the State.
– No one objects to that.
– But if this bill is passed in its present form the Governor-General will be able from time to time to fix the rate of taxation which federal members, ministers, and employees may be called upon to pay in the different States. I object to that provision.
I have always felt that we receive a good deal of benefit from the taxes we pay to the States. No one likes taxation, but I have paid my State taxation with comparative pleasure, because I knew that the money would be wisely expended. But I begrudge every penny of Commonwealth taxation that 1 pay, because we get comparatively little benefit from the huge expenditure of the Commonwealth Government. This proposal is designed to further the unification ideas of the Government. It represents an attempt to fix the maximum rate of taxation that federal ministers, members, and employees shall pay in all the States, and may tend towards the application of a uniform taxation rate throughout the States for one class only. Irrespective of the desires of the State Governments in regard to the raising of revenue, the Commonwealth Government, if this bill is passed, will be able to say, “ We will determine the rates of taxation to which federal ministers, members and employees shall be liable in the States “. I disagree with that view. Owing to the varying requirements of the States, the taxation which they will have to impose in order to provide necessary public services will always be different. I hope that the Senate will agree to the repeal of the objectionable provisions of section 19 of the principal act, and also that it will refuse to make the Commonwealth Government the censor, judge, and regulator of State taxation in respect of federal public servants.
– I shall support the second reading; but in committee I hope that that part of section 19 of the principal act which limits the powers of a State to impose taxation will be deleted. I did not like the original measure when it was before us, but we were told that as it was a part of the Premiers’ plan, it should be accepted. If section 19 forms a part of the ‘Premiers’ plan, it would appear that, in this amending legislation, the Government is departing from the agreement arrived at by the Premiers, and embarking on a new system of taxation. Under the proposed amendment of section 19 of the principal act, the GovernorGeneral will have full power to fix the maximum amount by which the remuneration of any member of the Federal Parliament or of any public servant shall be taxed by any State. That is a dangerous principle to embody in our legislation. Every honorable senator, I feel sure, -wants to do the right thing by our federal public servants, but what is the position of a State which, for financial reasons, is compelled to levy additional taxation? I remind honorable senators of what took place in Tasmania some years ago, when that State applied to the Commonwealth for financial assistance. The then Federal Treasurer made it a condition of any grant to Tasmania that the burden of State taxation should be increased. He did not take into consideration the ability of the people of Tasmania to pay that additional taxation; he merely compared the taxation levied in Tasmania with that of the other States. The result was that the people of Tasmania were actually subjected to a heavier burden of taxation than were the taxpayers of the other States. Federal public servants are to be found in all the States, in some of which they enjoy privileges which their fellow public servants living in other States do not share. I take it that, if one State imposed excessive taxation on its people, including the public servants resident within its borders, the Public Service Commissioner would take that fact into consideration when fixing the salaries of public servants in that State. It is a dangerous principle that the Commonwealth should legislate to limit the powers of the States to levy taxation upon its citizens. It is possible that federal activities in a State will require an increase in the number of federal public servants within that State, or that the opposite will be the case. As I have said, I shall support the second reading in the hope that, in committee, section 19 of the principal act will be amended.
– This innocent looking measure, which has been introduced to correct something which was done hurriedly a few months ago, has opened up a subject of some importance. It is clear, from the decision of the High Court, that the Constitution, as originally framed, did not give to a State the power to levy tribute upon the employees of the Commonwealth who were resident within its borders. Senator Lynch magnified Red Hill into a Popocatepetl or the Himalaya range. He dealt more with the competency of the Commonwealth to yield up its powers than with the right of the States to impose taxation upon federal public servants. In considering this matter, we must have regard to the possibility of retaliatory action on the part of the States. If my memory serves me rightly, the arrangement which was made in 1907, under which Commonwealth public servants and members of the Commonwealth Parliament were subject to State taxation, was of a reciprocal nature. I understand that the subject was discussed at a conference of Premiers, and that subsequently some of the States at least, passed reciprocal legislation. Doubts were raised whether on a true interpretation of section 114 of the Constitution, State public servants were not exempt from levies made by the Commonwealth. A distinction should be drawn between what is contemplated under this measure and what has been done hitherto. As Senator O’Halloran has pointed out, any levies imposed by this Parliament on individuals must be uniform, whereas the levies of the States vary. I suggest that honorable senators v/ho have any qualms of conscience about this matter, which is likely to impinge on the rights of the States, should consider it from the point of view that every citizen within a State should share the burden of taxation which falls on the community as a whole. “We must remember also that an ordinary citizen can remove from a State if he feels that conditions are more congenial in another State, whereas a public servant cannot do so ; he must reside where his work is located.
– The Public Service Board can make an adjustment to meet such cases.
– I cannot see how it can take cognizance of the taxation which federal public servants have to pay as citizens of different States. If we desire the burden of taxation to be equitably distributed, we should pass this legislation. The Leader of the Senate (Senator Barnes) made it clear that the principal act was directed against New South “Wales, which State, it was believed, contemplated making enormous inroads on the salaries of federal public servants resident within its borders. At that time it was pointed out that these officers are obliged to reside in the State to which they are sent, and where their work is situated, whether they like it or not. I hope that this power will never be exercised, for if it is it may provoke retaliation by the States affected. In that case it would be better, perhaps, to leave the matter alone. On the other hand, there is this to consider : they could to-morrow repeal - the legislation under which the federal service enjoys a measure of protection, and we could repeal the legislation which renders us liable to taxation by the States. Then we should have the position as originally defined under the Constitution. So far as I can see there will be no great harm done by passing this bill. It arms the Government with power which it can exercise only at its peril. If the Government seeks to do any of the things referred to by Senator Herbert Hays, if it uses this legislation as a cloak to shelter members of this Parliament and members of the Commonwealth Public Service, it will have to answer to the public and to both branches of the legislature. If, however, it merely uses this legislation to bring about a measure of justice, I can see no good reason for opposing the passage of the bill. It has been said by some honorable members that this proposed legislation has given rise to a good deal of criticism. If we take notice of all the empty cackling which proceeds from every barnyard regarding what we do we shall have a very unhappy time. For my part. I never hope to avail myself of any of the privileges supposed to be conferred upon us by section 19 of the Financial Emergency Act. Our purpose in passing that act was to save members of the Commonwealth Public Service from having imposed upon them by a certain State burdens which we believed to be intolerable and unjust. We accepted section 19, which has been r> much discussed here to-night, because we believed that thereby we were doing only a bare act of justice. In the form >n which this proposed legislation has been submitted to us it throws a heavy responsibility on the Government, which will have to answer to this and another branch of the legislature if it abuses the provision in any of the ways mentioned oy some honorable senators. Probably none of the possibilities which honorable senators dread will ever arise. This thing will pass by as many such disturbances have passed in the political life of the country. . The Government is merely seeking to arm itself with power to guard against certain eventualities which it previously believed to be imminent, and of which there still may be some risk, though, in my opinion, that risk is rapidly disappearing. Indeed, we have some evidence that it has practically disappeared. I am inclined to vote for the second reading of the bill.
– A most extraordinary position has arisen in connexion with this matter. Several honorable senators this evening have spoken strongly against what they deem to be a proposal of the Government to grant preference to federal ministers and members and Commonwealth employees, and one designed to give them some privilege which is not enjoyed by other sections of the community. It must be patent, however, to any one who reads section 19 of the Financial Emergency Act, that four months ago the Senate did that very thing, and not one honorable senator raised his voice in protest. Those sena- tors who now object to this proposal then acquiesced, in it without a murmur.
– They are simply stone-walling my tariff.
– With all respect to the honorable senator, the tariff is the last thing he wishes to have discussed. He is putting it further down on the notice-paper every day. That is by the way, however. The Government has recognized that this privilege has been given to certain persons, and it now seeks to remove an anomaly. Whether it is going the right way about it or not is another matter. To the extent that I believe the anomaly should be removed I am in agreement with the Government. It is clear that section 19 of the act should be amended, and that is what this bill proposes to doThis piece of legislation is on a par with the bill we dealt with before dinner. We have been forced to take this action, because of the mad tactics of the rogue elephant of Australian politics, the Premier of New South Wales. Half the time of this Parliament is -taken up with considering legislation designed to restrain that political madman.
– Why does the honorable senator insult the elephant?
– A rogue elephant is believed to be one of the most dangerous animals there are. I am not speaking of elephants generally, but of rogue elephants. We were forced to pass tho original act because of Mr. Lang’s threat to impose a tax of 5s. in the £1 on all citizens of New South Wales. Another mad proposal of the same man was that no one in New South Wales should be allowed to retain more than £500 a year.
– And then he engaged a man at £1,750 a year to run a sweep.
– That is so. The Commonwealth Parliament had already passed legislation reducing the salaries of public servants by . 20 per cent, on an average, and if section 19 of the Financial Emergency Bill had not been passed, Commonwealth public servants resident in New South Wales might have been liable to pay another 5s. in the £1 tax on that part of their salary which was left. The legislation was rushed through in a hurry, and resulted in the creation of an anomaly which it is now proposed to remove. I shall support the Government in its attempt to remedy the position. 1 desire to emphasize the fact that no member of this Parliament, nor any Commonwealth public servant, has a right to expect any better treatment than is meted out -to the other citizens of the State in which they live. I desire to use my vote in this Senate to ensure that all citizens of a State shall be treated equally in this time of stress. When the bill is in committee, the Government should carefully review the clause we have been discussing to see that it does not infringe on the principle of equality to which I have referred. While supporting the bill generally, I retain the right to support any amendment I think necessaryto safeguard this principle of equality.
– There is no ground for the fears that honovable senators have expressed regarding the purpose of the bill. No attempt is made to violate the Constitution, or to take from the States any of their present powers. To put the matter in a nutshell - which I thought I did in moving the second reading of the bill - the object is to protect Commonwealth public servants from a grave injustice. After this Parliament had imposed a 20 per cent, reduction in the rates of pay of all Commonwealth em- - ployees, those public servants residing in a certain State were threatened with another reduction aggregating a 45 per cent, tax on their earnings. The whole object of the measure is to protect them from such an imposition. I cannot imagine that honorable senators would be willing to permit such an injustice as that to which I have referred, and I do not know why they have raised the subject of the violation of the Constitution.
Question resolved in the affirmative.
Bill read a second time, and committed pro- forma.
Sales Tax on Spraying Materials and
Motion (by Senator Barnes) proposed -
That the Senate do now adjourn.
– I bring under the notice of the Minis ter in charge of the Senate a matter which is exercising the minds of an important section of the community in the State that I assist to represent. Honorable senators are aware that certain of our primary producers have been experiencing a strenuous time in the last year or two, and the fruit-growers of Tasmania have not escaped from this hardship. In many cases, they have been at their wit’s end to know how to carry on their avocation. Provided that Providence favoured them with a fairly good season this year, they were looking forward to an improved situation, but they were struck by an avalanche in the shape of an additional tax , on a commodity which is essential to successful fruit production. I refer to the greatly increased sales tax recently imposed on spraying materials. Pruit-growers often mix their own sprays by blending bluestone with other substances, and they expected that they would be exempt from sales tax on their spraying materials. This tax is also applied to jam, and the same protest is necessary as regards this. When one realizes the terrible conditionsthat prevail among the growers of small, fruitsin Tasmania, which produces five-sixths of the Australian crop of small fruits, one can only form the opinion that the Government, in refraining from placing spraying materials on the exempt list, either overlooked or ignored what I consider to be its absolute duty in recognizing the important position the primary producers occupy at this stage in Australia’s history. I urge the Minister to bring this vital matter immediately before the notice of his colleagues, particularly the Prime Minister, in the hope that the Government, in its wisdom, will bring down an amendment of the sales tax legislation, this session,’ to provide exemption in the direction indicated.
– The honorable senator would put a sales tax on flour.
– I am not dealing with that commodity, but with the product of a section of the primary producers who have suffered, perhaps, more than any other. I endeavoured to bring this matter under the notice of the Government last week, but I did not have an opportunity to do so.’ I hope that the relief, that I ara asking for will be afforded, and that the action taken will go a long way towards assisting the recovery of a section of the fruitgrowers who have been down and out for the last three years, and, at the same time, help materially the other section of the fruit-growers, who have suffered great disadvantages during the last few years. It is not a large thing to ask for. The amount involved is small compared with the beneficial results that would accrue to those deserving people, and necessarily to the State in which they live, if this concession were granted.
– Before the Senate adjourned in August last, I asked if it was possible to get for the guidance of honorable senators during the discussion of the tariff, fuller information ‘ than has been made available in the past. Previously, we were furnished with information showing the imports during the three preceding years, and the taxation collected upon them. Honorable senators could thus see the effect of the tariff during the years in question. That information has not been made available on this occasion. I think we are at least entitled to have it to enable us to come to a better decision on the tariff items than we otherwise can do with the scant knowledge made available to us on this occasion. I happened to obtain from the library a copy of the volume, Overseas Trade of Australia. Three or four messengers have been asking me for that volume for committees, which are discussing their particular sections of the tariff. It shows how meagre is the material available, and how difficult it is for us to inform our minds on the subject. Very little clerical effort” on the part of the Customs Department would be required to enable the Government to keep its promise that it would do its best to supply honorable senators with the information.
– I should like to know if the presence of Mr. Gunn, the Director of Development, in Canberra to-day has any connexion with the paper pulp industry in Tasmania, a subject in regard to which Senator Daly was good enough to receive a deputation the other day. I hope that the honorable senator will pardon my curiosity, but if he is in a position to make a statement on the subject, I should be pleased.
– I have also to mention a matter which is of great interest to Tasmania. Some time ago, representations were made to the Commonwealth Government asking for some assistance towards the development of the shale oil deposits of the State, but a condition precedent to the granting of any assistance was that there should be an amalgamation of the companies that control the deposits. The people of Tasmania are .anxiously waiting for something to be done with those great oil-bearing deposits to supply a fuel for which huge sums of money are sent out of Australia, and I should like to know if the Government is in a position to give an assurance that assistance will be given towards the development of the Tasmanian deposits.
– During the week-end, I had an interview with the Shale Oil Committee, or such of its members as were in Sydney, and discussed with them the question of making funds available for the exploitation of the possibilities of shale. I have completed arrangements for a representative of the companies concerned to proceed to Sydney, and I am hopeful that, provided satisfactory arrangements can be made between him and the Shale Oil Committee, I shall be in a position to make an early recommendation to the Government which will be acceptable to the committee.
I have discussed with the Director of Development the paper pulp industry, and I can assure Senator Sampson that Mr. Gunn is very enthusiastic in the matter, and that I am hopeful that we may be able to do something for Tasmania.
I can assure Senator Lynch that the Government, during the course of the tariff debate, will present a very strong case on the matter of imports. I do not propose, at this stage, to discus’s the matter, but I may tell Senator Lynch, for his information, that at the right time the Government will be able to prove, for example, that the importation of articles of apparel has been reduced.
ThePRESIDENT (Senator the Hon. W. Kingsmill). - The honorable senator must not anticipate debate.
– I am not doing so. If we had to go into every item, great difficulties would present themselves. But during the course of the debate, I propose to bring under the notice of honorable senators information showing that the importation of articles of apparel has been reduced from £1,000,000to £209,000, and of matches from £119,000 to £1,615.
– The honorable senator is now anticipating debate.
– I am attempting to explain the nature of the offensive the Government will take during the tariff discussion, and that the honorable senator need have no fear that the Government’s attitude will he to entrench itself and act on the defensive. The Government will be able to furnish the fullest information to honorable senators, and I am certain that when they have heard it, they will be very pleased to see the fullest details of it published.
.- I shall ask Senator. Payne to oblige me by providing me with a copy ofhis remarks, which I will bring under notice in the proper quarter. Senator Daly has replied to Senator Lynch: I was about to say that the honorable senator could get all the information he wants from the Minister when he is introducing the tariff items.
Question resolved in the affirmative.
Senate adjourned at 10.30 p.m.
Cite as: Australia, Senate, Debates, 27 October 1931, viewed 22 October 2017, <http://historichansard.net/senate/1931/19311027_senate_12_132/>.