15th Parliament · 1st Session
The President (Senator the Hon. J. B. Hayes) took the chair at 11.30 a.m., and read prayers.
– Pursuant to Standing Order 28a I hereby appoint Senator Amour to act as a Temporary Chairman of Committees when requested so to do by the Chairman of Committees, or when the Chairman of Committees is absent.
SenatorFOLL (Queensland - Minister for Repatriation). - I lay on the table the report and recommendations of the Tariff Board on the following subject: -
Motor vehicles. - by leave - In May, 1936, the Government, announced that its policy was to establish in Australia the manufacture of engines and chassis of motor vehicles. To that policy the Government still adheres. In December, 1936, the Tariff Board was asked to inquire into and report upon the best means of giving effect to the policy, giving consideration to the general national and economic aspects. The board has now reported, as honorable senators will see from’ the documents laid on the table, that it cannot at present advise the encouragement or enforcement of the manufacture of the complete motor vehicle in Australia, and that the best approach to this end would be by “ step-by-step “ development. As an important step in this direction, ‘ the board has made a recommendation for the encouragement by means of bounty of the mass manufacturer of radiators in Australia. The Government accepts the bounty recommendation, and will therefore make provision for the payment of a bounty of 10s. on each radiator assembly for the next two years,. before the expiration of which term the board will be again invited to report upon the establishment of the radiator industry and the best means of securing its continuance on a sound basis. As regards further development, the Government invites prospective manufacturers of engines and chassis, or parts thereof, to submit their plans and proposals, together with details of the assistance required, to the Minister for Trade and Customs not later than the 31st March, 1939. Consideration will, of course, be given to any proposition for complete manufacture.
asked the Minister representing the Minister for External Affairs, upon notice -
– The Minister for External Affairs has supplied the following answers: -
asked the Minister representing the Minister for Defence, upon notice -
– The Minister for Defence has supplied the following answers : -
asked the PostmasterGeneral, upon notice -
What is the present position in regard to the post office and automatic telephone exchange promised for South Perth in Western Australia?
– The answer to the honorable senator’s question is as follows: -
The working drawings and specifications for the new departmental premises at South Perth are being prepared, and it is hoped to invite tenders in the near future.
asked the Minister representing the Minister for Defence, upon notice -
In connexion with recent or current camps of continuous training for the Citizen forces, is it a. fact that in one or more States there is a shortage in the issue of rifles and that units, normally armed with that weapon, have had to borrow from one another in order to be able to carry out the prescribed exercises?
– The Minister for Defence has supplied the following answer : -
Some six months ago there was a temporary delay in issue of rifles to some new training centres owing to a shortage of cut-off screws. Rifles issued in peace arc fitted with cut-offs, and it was desirable to restrict the issue of those not so fitted in order to avoid the expenses which would have been involved in freight, cartage, &c, by subsequent fitting. The shortage of cut-off screws has now been remedied and there is no delay in the issue of rifles. There is no shortage of rifles for war purposes or emergency training.
asked the Minister representing the Minister for Commerce, upon notice -
Senator ALLAN MacDONALD.The Minister for Commerce has supplied the following answers to the honorable senator’s questions: -
asked the Minister representing the Minister for. Commerce, upon notice -
In view of the fact that there is now a serious shortage of hay in the Commonwealth, and in view of low export price prospects for next season’s wheat, will the Government confer with the States with a view to encouragingfarmers to cut additional quantities over and above their normal requirements?
Senator ALLAN MacDONALD.The Minister for Commercehas supplied the following answer the honorable senator’s question: -
The Government has had the matter under consideration and will raise the question ‘with the State Premiersto-morrow.
asked the Minister rep resen ting the Minister for the Interior, upon notice -
– The Minister for the Interior has supplied the following answers: -
asked the Leader of the Senate, upon notice -
What amount of money has been allocated to New South Wales, Victoria, and Queensland for research work in the tobacco industry for the year1938-39, and what consideration has been given to Tasmania for the year 1938-39 for the same purpose?
– The answer to the honorable senator’s question is as follows: -
A sum of £3,750 was allocated toeach of the States of New South Wales, Victoria, and Queensland for research and investigation in connexion with the tobacco industry for the year ending 31st December, 1938. The allocation to Tasmania for the same year was £1,250. As I indicated to thehonorable senator yesterday, consideration is now being given to the question of the allocation of funds to the States for tobacco investigations for a further period after 31st December next and when a decision is reached in this regard it will be communicated to him.
asked the Minister representing the Minister for Defence. upon notice -
– The Minister for Defence has supplied the following answers : - 1.-2. - Following on decreased orders for sheet and strip metals from commercial sources and in view of the fact that manufacture of these metals was being undertaken by a firm in New South Wales, commercial activities, apart from clearing up the orders in hand ceased at the Ammunition Factory, Footscray, in January last. Since that date the services of 82 returned soldiers and 27 non-returned soldiers have been dispensed with. The full number employed in January on commercial sheet and strip was 141 and it was found possible to absorb 32 in other work at the factory. Of these28 are returned soldiers. Of the total of 109 men discharged, 50 have been re-absorbed in other branches of the munitions establishments, and efforts are being made to absorb the balance.
Since the 1st July, 1938, the number of employees discharged was 72 of whom62 were returned soldiers. Seven returned soldiers and six non-returned soldiers have been reappointed since that date.
SenatorFRASER asked the Minister representing the Minister for the Interior, upon notice -
In view of the action taken by the Government to stop the development of the iron ore deposits at Yampi Soundon the north-west coast of Western Australia, what course, if any, does the Government intend to take for the future development of the iron ore deposits?
Senator ALLAN MacDONALD.The Minister for the Interior has supplied the following answer : -
An investigation is being undertaken with a view to determining the iron ore resources of Australia. Until this investigation is completed no statement can be made on the point raised in the latter part of the honorable member’s question.
SenatorFRASER asked the Minister representing the Minister for the Interior, upon notice -
What financial assistance, if any, has the Government provided for the construction of a road from the end of the present municipal roadto the Port Moore lighthouse at Geraldton. Western Australia?
Senator ALLAN MacDONALD.The Minister for the Interior has supplied the following answer : -
No financial assistancehas been provided, but representations will be made to the Statu authorities with a view to ascertaining whether any work can be carried out from funds available under the Federal AidRoads Agreement.
Debate resumed from the 27th September (vide page 235), on motion by Senator Foll.-
That the bill be now read a first time.
.- When I obtained leave last evening, to continue my remarks at the next sitting, my intention was to speak at considerable length this morning, but developments have occurred which make it politic that I should not do so. Therefore, I shall defer my further remarks to another occasion.
. In the first place, I desire to express my appreciation of the courtesy of honorable senators on both sides in refraining from further discussions of this measure, which the Government desires to be passed this afternoon.’ That decision is prompted by the same spirit as that which actuates the Government. However, I assure honorable senators, particularly those who have not yet made their maiden effort in this chamber, that they will have other opportunities fully to express their views. To those honorable senators who have broken the ice by making their first contribution to the discussions in this chamber I offer my felicitations. At this stage I do not propose to engage in any controversy regarding the merits or demerits of the Government. The array of new talent on the Opposition benches is so great that I crave pardon for not being able to say with certainty which honorable senators referred to specific matters. Of course, some of the new senators are more easily identified than others, by reason of either their former presence in the Commonwealth Parliament or their physical attributes. For the present, I shall deal with subjects rather than individuals.
My principal purpose in engaging in this debate is to supply information regarding certain matters in the control of my department that have been mentioned by honorable senators. The subject of the remuneration of non-official postmasters has been before the Parliament, on many occasions. More recently Senator Herbert Hays and Mr. Speaker in the House of Representatives brought considerable pressure to bear upon the Government in regard to them. Honorable senators should remember that the arrangement between these persons and the department is in the nature of a contract; these men and women are not in the service of the Government. It is generally known that only a small remuneration is paid to them, but probably not sufficient attention has been paid to what I may describe as the availability allowance. Although some non-official postmasters actually perform very little work, they are required to be on duty between certain hours for the transaction of business, whether or not any business is actually transacted. This matter was examined by a sub-committee pf postal officials, which has recommended payments on a sliding scale. Under the new system the remuneration of a ‘man who hitherto ‘received £1 per annum for his services will be increased by 100 per cent, to £2 per annum. This sliding scale will cease to operate when £50 per annum is paid. Honorable senators who are interested may see for themselves how the sliding scale will work.
As to the granting of annual leave, furlough, &c, to these men and women, I again remind the Senate that a contract, exists between them and the department. The proposal to make a special payment to enable non-official postmasters to obtain relief while they are absent on holidays or during periods of sickness., was exhaustively examined, but it was found that the demands of justice could be met without any alteration of the existing system. Honorable senators may not know that time after time the department has been approached to throw these positions open. That suggests that the conditions under which these persons work cannot be so bad as is sometimes claimed.
During my absence from the chamber, reference was made to the practice adopted by the department in recording the number of telephone calls made by subscribers. The department takes every reasonable precaution to ensure accuracy in the preparation of accounts for calls made by telephone subscribers. Systematic checks of the whole of the recording arrangements and apparatus are made frequently. Moreover, the methods followed in Australia conform to those adopted by leading telephone administrations abroad.
The provision of an automatic exchange to serve the Bankstown district is now under consideration. A suitable site for the building has already been acquired, and the establishment of an exchange there will be proceeded with as soon as circumstances permit. Meanwhile, applicants within a radius of 2 miles of the Padstow Park, exchange can obtain service at the minimum rental. Those who desire continuous service facilities may be connected to exchanges at Lidcombe or Lakemba. . The rentals in each case are based mainly on the radial distance between the exchange and the premises connected with it. Unfortunately, in some cases in which considerable expenditure is entailed in providing the service, it is found necessary to ask the applicant to contribute towards the cost, by paying, his rental in advance. I point out, however, that the amounts so contributed arc rebated, and that the instances in which cash contributions are required are comparatively few. The department is proceeding as rapidly as possible with the provision of additional exchanges in order to obviate the. need for extra mileage charges. I suggest to new senators that, in dealing with the matters which come under their notice from time to time, they should first approach either the departmental officers or myself. If not satisfied with the result, they could then bring the matters forward in the Senate.
To those honorable Senators who have blamed the Prime Minister for not calling a conference in connexion with the coalmining dispute I point out that there are tribunals which are open to every man and woman in this country. Some of them are State tribunals, whilst others have jurisdiction throughout the Commonwealth. Facilities are now being afforded to deal with matters outside the jurisdiction of the Commonwealth Arbitration Court. I do not know whether conditions in Victorian mines are similar to those which obtain in New South Wales and which honorable senators opposite say are so lamentable, but I suggest that during recent months certain organizations have attempted to have their grievances dealt with outside the tribunals which’ the Commonwealth and States have set up for the purpose. It ill-becomes honorable senators to question the fairness, the integrity, or the capacity of the existing tribunals, particularly when expert assistance can always be called in, if required. I commend to honorable senators the report submitted a few years ago by Judge Davidson, and also the evidence on which it was based. It was my duty to study that somewhat lengthy report on behalf of the Commonwealth Government. ‘ The present Premier of New South Wales,
Mr. Stevens, performed a similar duty on behalf of tb” Government of New South Wales.
In a debate which at times was somewhat uninteresting, the remarks of Senator Aylett regarding the Australian Broadcasting Commission were as welcome as an oasis in a desert. I was pleased to hear the honorable senator say that in Tasmania, where, apparently, there is a higher standard of culture than elsewhere in Australia, the work of the commission is greatly appreciated. But the honorable senator indicated that the people of Tasmania were of the opinion that not sufficient encouragement was given to Australian artists. I can assure him that he is incorrect in his assumption. In matters of music and art there are many diverse opinions. In my capacity as PostmasterGeneral, I hear both sides of this question.
– It has ten sides.
– The honorable senator is right. I do not claim to be an authority on musical matters. During my life I have been more associated with the bagpipes than with other musical instruments.
– The sound which emanates from the bagpipes is not music.
– The honorable senator’s interjection is evidence of the diversity of musical tastes. There are many who believe that the commission should not bring to Australia artists from abroad. In this connexion, I desire to relate an incident which occurred in the Melbourne Town Hall some time ago. The building was packed in every part during a performance by Madame Lottie Lehmann, accompanied by an orchestra. During the evening a musician struck a false note. I do not claim to have realized that a mistake had been made, but I did experience what I can only describe as a shiver throughout the audience. That incident convinced me that there are in this country numbers of people who have keen ears and a cultivated taste in music. To those who think that Australians have nothing to learn from abroad. I say that the orchestras which have played under such conductors as Dr. Malcolm Sargent who is in Australia now, regard the experience as a great privilege. I. have received scores of letters urging that the services of Dr. Sargent should be retained by the Australian Broadcasting Commis sion. Another, who made a favorable impression on Australian audiences, was Professor Georg Shneevoigt. In these matters the commission must have regard to the views expressed by prominent members of Australian orchestras. “Without desiring to give an undue advertisement to any one, I venture to predict that, from the fourth row of its orchestra, the Australian Broadcasting Commission has picked a man who, it is predicted, will rise higher and higher until ho is recognized as one of the foremost violinists of the world. The general manager, Mr. Moses, is always on the lookout for new artists and has familiarized himself with the qualifications of all men who have displayed exceptional talent. No doubt honorable senators have heard that young violinist who supported Richard Tauber in his concerts at Melbourne, Sydney, and Adelaide. Although he has yet much to learn the prediction is that he will go far. It will be remembered that Melba, the greatest diva that Australia has ever produced; received her musical training overseas from Madame Marches!. The eminence which Melba achieved as a result of that training redounded to the credit of Australian music and did much to promote culture in this country.
I now come to one or two sordid matters dealt with by the Leader of the Opposition. The honorable senator suggested that the Broadcasting Commission is simply a kind of aristocratic coterie - a happy hunting ground for people who move in the higher social circles. He described it as “ a paradise for social climbers.” Though he usually takes pains to be accurate in his statements, I do not know from what source he gleaned his information regarding the engagement of Miss Gladys Owen (Mrs. John Moore) by the commission. The honorable senator suggested that because she was the daughter of some dignitary in New South Wales, she influenced the appointment of Mr. Moses as manager of the commission. I know that the Leader of the Opposition does not wish to be unfair in his criticism of the commission; he realizes, I am sure, that it has had a very difficult row to hoe. It had to build up an Australian-wide organization, andit was unfortunate enough to lose the services of its first chairman “within a short time after his appointment and also the services of its general manager shortly after its inauguration. . I ask honorable senators to consider what a ta3k is presented in the establishment of an organization of such magnitude which is required not only to cater for the different .tastes in the musical community, but also to control a vast system embracing an ever increasing network of regional stations. It has to present programmes that, in accordance with the legislation under which it operates, will lift the cultural life, of this country to the highest possible plane; at the same time it has to cater for the interests of the man in the street, of whom I count myself one. Its task is not an easy one. When criticism of the activities of the commission is offered I am always at pains to make inquiries. The lady to whom the honorable senator referred was given a part-time engagement in May, 1933, in the talks department. She was considered to have special qualifications by reason of education, knowledge of suitable available speakers in the community, travel experience, and according to my advices “ a gift for broadcast speaking unusual in women “. I had thought that women would be rather successful at broadcasting - by reason of the sweetness of their voices, of course. The engagement was made by the then manager for Now South Wales, Mr. H. G. Horner, who has since left the commission’s service. She continued in this capacity for about three years, giving every satisfaction and gaining in experience, and when the position of talks editor became vacant in May, 1936, she was appointed to fill it. She continued to occupy that position until March, 1938, when she applied for, and was granted, leave of absence without pay to go abroad. She made no application for either salary or any contribution towards her travelling expenses, but the commission decided to take advantage of the opportunity to ask her to investigate special aspects of the activities of the British Broadcasting Corporation and other European broadcasting organizations. She has carried out very full inquiries, and the commission has received from her regular reports filled with valuable and varied information and in consideration of her services, it decided to pay her halfsalary during the period for which she was engaged in carrying out that work abroad. It is not unusual for’ organizations such as the Broadcasting Commission to send senior officers abroad under conditions involving the payment of salary in full and travelling expenses. I have to do it in connexion with the jjost office when it is necessary to conduct research into the highest realms of our technical services. I think it was advantageous to the commission and the cultural life of this country that the services of Mrs. Moore were secured at such very low cost. The Leader of the Opposition said that this lady was “particularly responsible for the appointment of Mr. Moses as general-manager of the commission “. I need not go into the whole of the details ‘because, in my opinion, that statement hardly calls for serious comment. Mr. Moses has beenemployed by the Broadcasting Commission for a considerable time in various capacities, and possesses high qualifications. He was appointed general-manager on probation in the first instance because for a time the commission could not find a man in Australia exactly fitted to fill the vacant post. After a period of probation, his services were found to be so satisfactory that the commission determined to recommend to me his appointment as general manager. He is an Australian of whom we might well be proud, and he is animated by a desire to lift the cultural life of this country. He acted for some time as liaison officer to the commission, and took a very prominent part in connexion with some very controversial matters that were the subject of arbitration. I know of no man who could have given better service to his country and to the arbitrator than did Mr. Moses. I heartily approved of his appointment. Mrs. Moore, so far from having anything to do with the appointment, occupies a subordinate position on the staff of the commission, and has always done so. I am unaware of any officer whose services were “ dispensed with and who was thereupon snapped up by commercial stations at a higher salary “. Mr. Horner, to whom I have referred, received a salary from the commission of about £1,100 a year, but saw fit to leave the commission’s staff and to take control of a B class station from which, I understand, he receives £2,000 per annum.
Another subject of complaint made by the Leader of the Opposition, was that the son of Bishop Moyes, a young man of 23 years of age, was appointed to a comparatively junior position on the clerical staff of the commission. The young man passed his leaving certificate examination and is a graduate of the Sydney University. He applied for appointment to the commission’s staff entirely on his own initiative; norepresentations were made by his father, and. while his parentage did not weigh in his favour, it can be frankly said that it did not weigh against him. The commission does not intend to exclude from appointment the sons or daughters of bishops or judges provided that their qualifications for the work they are called upon to perform are satisfactory.
– Only the sons of working class people cannot secure appointments to the commission.
– What worried me most among the statements of the honorable senator was his reference to a man named Hordern, by whom he meant Gordon. The Albert Gordon referred to by the honorable senator is presumably Alexander Gordon, son of Judge Gordon. He joined the staff of the commission in October, 1932, a few months after its inception. He was engaged by Mr. Williams, the then general manager, and was selected from a number of applicants for the position of announcer, after the usual audition test. The commission makes no class distinctions in selecting its staff; merit is the only test. There is no justification for the statement that the commission is “ a perfect paradise for social climbers “. Although I have refrained from discussing other controversial matters mentioned by honorable senators,I felt that I could not allow the remarks of the Leader of the Opposition to pass without comment.
– Can the honorable senator inform us of the position in connexion with the Brisbane post office?
– Plans of the rear portion of the proposed new building are at present before the Director-General of Works. The rear portion of the building must be erected first in order that the business of the post office may be carried on efficiently. During my speech on the budget papers I shall inform the honorable senator as to the exact position.
– Will the work be completed before 1960?
– I trust that it will be completed some considerable time before the honorable senator and I are compulsorily retired from this chamber.
– in reply. - I associate myself with the Leader of the Senate in congratulating the new senators on the maiden speeches they have delivered during this debate. I assure all honorable senators that the representations they have made in connexion with governmental activities will be communicated to the Ministers in charge of the departments concerned. I appreciate very much the attitude of the Opposition in not carrying the debate further at this stage in view of the disturbed world position at the moment. In reply to the request of Senator Fraser that the occupants of war service homes in Perth be granted some assistance in connexion with the provision of sewerage facilities, I assure him that a sum of money is being made available for that purpose. I shall advise the honorable senator more fully by letter at an early date.
Question resolved in the affirmative.
Bill read a first time.
– I move-
That the bill be now read a second time.
Under the Supply Act (No. 1) 1938-39, which was passed in June last, provision was made under the ordinary services of the Commonwealth for the first three months of the current financial year.
The present measure is for a further amount of £5,349,050, to meet expenditure for another two months under the following heads: -
The provision made in this bill is to meet essential services only. The amounts provided, together with the supply already granted by Parliament, represent the provision necessary to meet services to the end of November. They are based on the rate of expenditure for the previous year or for the current financial year, whichever is the lower, and represent the proportionate amount of the total provision, with the exception of a few instances of heavier expenditure in the early part of the financial year; for example, certain defence services where it is necessary to place orders in the early part of the year; post office mail contracts, &c. ; and provision for conveyance of members of Parliament. The provision for “ refunds of revenue “ is necessary to enable refunds to be made of amounts which, under statutory authority, are temporarily credited to revenue for payment at a later date.
The amount of £500,000, Advance to the Treasurer, is in supplementation of the amount included in the previous Supply Act and is necessary mainly to carry on works which were uncompleted at the 30th June last and for which provision is made in the Additions, New Works and Buildings Bill which Parliament will be asked to approve at a later date. Until this bill is passed, works must be financed from the provision under this lead.In addition, provision is necessary to enable payments to be made to the States of South Australia, Western Australia and Tasmania, pending the parsing of legislation to implement the recommendations of the Commonwealth Grants Commission. The bill makes no provision for any new policy or any new rate of ex penditure which may be provided for in the Estimates now before the Senate.
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without requests or debate.
SALES TAX BILLS (Nos. 1 to 9) 1938.
– I move -
That the bills be now read a second time.
As honorable senators will recall, during my speech on the motion for the printing of the Estimates and budget papers, . I referred to the proposal of the Government that the rate of sales tax should be increased from 4 per cent. to 5 per cent. I do not propose to enlarge on whatI then said, except to state that it is estimated that the increase should result in an additional amount of £1,300,000 being collected for the remainder of the present financial year.
The bills will operate as from the 22nd September,1938. It will be remembered that the budget was delivered on the 21st September. The object of choosing the 22nd September was to prevent the dislocation of trade that would undoubtedly occur if any other than the nearest possible date after the budget was delivered had been chosen. If the end of the month had been chosen there would, I think, have been a definite dislocation of trade, in that there would have been a large turnover in the remaining days of this month to the detriment of the succeeding month’s business. Always in the past, when the rates of sales tax were decreased, the alterations operated as from the day after that on which the budget speech was delivered.
Sitting suspended from 12.28 a.m. till 2.15 p.m.
– There are very definite reasons why the Opposition intends to oppose the passage of this bill which increases the sales tax from 4 to 5 per cent. It cannot be denied that it is not so much a matter of the amount taken from taxpayers by way of taxes as it is a matter of what is left in the taxpayers’ possession when the collecting authority has finished with him. Our experience as members of the working class, and our feelings as members of the Opposition, have been that almost without exception the taxes imposed by the present Government fall most heavily upon the shoulders of those least able to bear them. In the last analysis I believe it to be entirely true and easily demonstrable that those on the lowest scale of income, the working classes, have practically all forms of taxes passed on to them. There are some taxes which it can be argued cannot be passed on. The land tax is probably one, although even in that case it is possible lor matters to be so arranged that the poorer sections of the community have to provide a portion. The members of the Opposition believe that a sales tax is the least desirable form of taxation. Of course, I do not mean that there are any desirable forms of taxation because we all wish to escape paying taxes if possible. Another tax that cannot be passed on to the workers is that on fixed incomes, but such cases arc the exception rather than the rule. I ought to forestall the criticisms which I am sure will come from “ our friends the enemy “ by saying that I am fully aware of tlie fact that the Scullin Government was the first government in Australia to impose a sales tax. But it was definitely slated when a sales tax was first imposed that it was resorted to and agreed to by all parties in the Parliament only us an emergency measure in particularly stringent times, and that all financial emergency legislation would be repealed immediately the revenue of the country warranted it. This is not the first occasion on which the Opposition in this chamber has protested against the continuance of a sales tax. Of course, we all know that there is abounding prosperity in this country! This marvellous composite Government known as the Lyons-Page alliance has abolished poverty from within the confines of the Commonwealth and every one is now basking, as the Prime Minister said, upon the sunlit hills of prosperity. That is cither true or untrue. If it be true there is no excuse for continuing to impose a sales tax, and if it be not true the responsibility rests upon this Government. The Treasurer (Mr.
Casey), in his budget speech, announced an increase of the sales tax. He did not say that he was sorry to increase the tax from 4 per cent, to 5 per cent., but we were allowed to infer that it grieved his heart to have to take this step. To make the proposition more palatable he said -
This Government has been concerned, in the main, to lift the burden of the tax from the requirements of ( 1 ) the basic wage earners.
I do not know how he arrives at that. In looking at a long list of articles which are still subject to the tax we find that a very considerable number are used or consumed by the basic wage earner, and by those destitute who are not fortunate enough to receive even the basic wage. He then includes “ the sick and the destitute “. I am not prepared to argue that point at length because I referred to the destitute in connexion with the basic wage earners. The destitute are not being relieved of the sales tax, but during the whole time this tax has been in operation, I have been endeavouring unsuccessfully to get certain articles used by the sick exempted from the tax. The Treasurer went on to say that the tax has been removed from “ primary production.” I shall allow some of my colleagues more closely associated with the primary producers than I am to say .how much they agree with that contention. Everywhere that I travel in Queensland, I find primary producers anxious to have the tax removed from commodities which they require in primary production, and although I have tried, I have been unable to assist them. The Treasurer then referred to “ Fields which offer particular opportunity for the encouragement of employment. “ I do not know to what the Treasurer refers in that instance. Probably we shall have an explanation from the Minister later; but, as was eloquently stated by . a number of my colleagues yesterday, notwithstanding the alleged attempts to find work for our people, unemployment throughout this Continent is increasing by leaps and bounds. I do not believe that any special consideration is being given to the vital problem of unemployment. This Government has had supreme and absolute control of the National Parliament for years, and in his policy speech in the general election before the last, the Prime Minister definitely declared that if his Government were returned, he would proceed immediately with the standardization of the railway gauges in order to relieve unemployment and provide a uniform railway system for use in a national emergency. Nothing has been done. Therefore, I suspect the Treasurer’s statement that an effort has been made to remove the tax from those fields which offer particular opportunity for the encouragement of employment. He went on then to refer to matters of “ Education, science, religion and the like.” The three concluding words are somewhat intriguing. The Opposition, while strongly opposed to this measure, has a sincere desire to be constructive. We lay it down definitely that direct taxation is the proper way in which to provide the consolidated revenue of this country. If we pay direct taxes we know exactly what we have to contribute. We are very definitely opposed to the imposition of indirect taxes. When the average citizen goes to a shop to purchase, the tax collector’s hands go into all his pockets and by means of indirect taxes he is- robbed. Tt is unfair because he docs not know what is being clone.
– What about customs duties?
– The honorable senator usually submits a “ poser “ when L arn addressing the Senate, and perhaps I may enlighten him a little in regard to our attitude on customs duties. We believe in the absolute protection of Australian industries; but we do not believe in tariffs imposed merely for revenue purposes, because to the extent to which such tariffs become revenue producing, they ure not protective. The amount, of direct taxes collected in the Commonwealth is decreasing and the amount of indirect laKes is increasing by leaps and bounds, if the sales tax were collected at its source, it would not bc so distasteful; but it is not. It is passed on and on until it finally reaches the man who can least afford to pay it. It has to be paid by the men who are rearing families and who arc unable to protect themselves. If the sales tax. levied were the actual amount of the tax, it would not be so objectionable, but when it comes to fractions such as 31/8d. the customer has to pay 4d. The trader reaps a benefit to which he is- not entitled, and conversely tie consumer is cheated. No way can be devised to protect the consumer from having to pay more than the amount of the sales tax imposed by Parliament. Some day, I hope and believe, there will be a different Government in control of this country, and when that happens we shall take power to remedy this state of affairs. I do not want to hear somebody say that any action in the direction of controlling prices would be ultra vires the Constitution. Ways and means will be found to get over the difficulty when there is in power a Government with the will to do so. Living under a Constitution which wc have outgrown, we are like a lad continuing to wear a pair of trousers that reach only half way down his shins. Wc say that the trousers should be lengthened ; the Government apparently believes that the wearer’s legs should be shortened. As I have said, some day there will be a Government in power which will insist that profiteering in food stuffs shall cease. There will be a price- fixing authority to see that the public arc not robbed, either at the point of production, or anywhere along the line to the point, of consumption.
These sales tax bills have been introduced to bridge a gap of £3,1S4,000 in the budget submitted by the Treasurer. Having regard to past events, I shall probably not be unduly optimistic if I say that, at the end of this financial year, the estimated surplus will prove as unreliable as those expected by the Treasurer in the past. Year after year the Treasurer has told us that he expected only a very small surplus, yet the following year a very substantial surplus has been revealed. Every now and then we learn from the newspapers - we arc never told in Parliament - that our trade balance on the other side of the world is going from bad to worse; that imports are exceeding exports by ever-increasing amounts, and then, when the budget is presented, we find that receipts have been greatly under-estimated ; I say deliberately, but perhaps that is too strong tin expression. However, the receipts have keen either seriously under-estimated, or the Treasurer must budget on information which is not reliable, and that applies particularly to the Customs Department. The Postmaster-General’s Department shows a fairly good surplus every now and then, hut I understand from replies to questions in this chamber, that a good deal of the surplus is to be expended on providing improved services and facilities for people in the outback areas. I hope that is right. “
Last year, the excess of revenue over the estimated receipts was £3,494,733, an amount greater than the estimated gap in this year’s budget. However, the Government has made provision to bridge this gap, and £1,300,000 is” to be found by increasing the sales tax from 4 per cent, to 5 per cent. Nine bills similar in character, are now before us simultaneously, .this multiplicity of bills being necessary because of certain drafting difficulties.
I have already mentioned tho fact that exempt commodities consumed by the poor man continue to be exempt if consumed by the rich nian. The Government claims that many articles, which are consumed by the poorer families, have been exempt from sales tax. That does not fairly represent the position, but to the extent that it is true, the same articles an; also exempt from tax when consumed by families of the rich and the well-to-do. That, again, illustrates the inequality of this method of taxation. I admit that the Government cannot exempt articles if i hey are consumed by the workers and tax them if they arc consumed by the rich ; but the Government knows that as well as. I do, and it -must not think that the Opposition is so childishly innocent that it does not realize that the incidence of the sales tax always presses hardest on those who can least afford to pay. .lt must not be forgotten that, though it is proposed to increase the tax by only 1 per cent., the traders will say that they are unable to pass on fractions. When it becomes a question of who is to get the advantage of the fractions, it is always the seller of goods who gets it, and never the buyer.
A further contribution to the £3,1 S4,000 which the Treasurer says must be raised is to be obtained from a 15 per cent, increase of the income tax rates payable by companies, and individuals. This is expected to produce £1,400,000. That is all right so long as we know who the individuals are, and what is the range of their income. The Treasurer has not given us that information in his budget speech, and neither has his representative in this chamber.
– All those matters are set out in the Estimates.
– It is estimated that the increase of land tax rate will produce £.135,000, while increased excise duties are to produce £375,000. I do not propose to elaborate the argument any further, but who, in the last analysis, do honorable senators imagine will pay the increased excise? An interesting feature about ‘these taxation proposals is that every one of the new imposts can be passed on, with the exception of the tax on fixed income. In other words, with the exception of portion of the income tax, all the taxes will be paid .by the working class on salaries or on wages.
During the five years ended 1936-37. roughly £20,000,000 of taxes was remitted by this Government. I ask honorable senators to note that fact very carefully, because on every occasion when the Government brought down proposals for the remission of taxes, the Opposition protested that the reduction was not being made in the proper way. Let us sec how the £20,000,000 of remitted taxes was made up. It consisted of land tax, £6,000,000; property tax, £8,000,000 ; company tax, £3,000,000; life assurance companies tax, £2,000,000; and shipping companies tax, £100,000. If none of those taxes had ever been remitted, not one working-class family in Australia would have been at any disadvantage because the working-class families had never reaped any of the advantages. The fact is that the Government could have found all the money needed for increased expenditure on defence without increasing taxes if it had refrained, over the last six years, from making a gift of nearly £5,000,000 annually to its well-to-do friends, the big land-owners in the cities. Yet the Government is asking us to shut, our eyes, swallow its financial proposals, and pretend that we like them. The Opposition refuses to do, anything of the kind.
In 1931-32, direct taxation yielded more than £17,000,000. In the last financial year it yielded only- £12,600,000, a reduction of considerably more than £4,000,000. During the current financial year, it is estimated that direct taxes will yield £15,300,000. Therefore, we shall collect this year nearly £2,000,000 less by direct taxation than in 1931-32, notwithstanding the fact that we are facing a grave emergency when, according to the. Government, every effort should be made to obtain the maximum amount of revenue. It may be argued that 1931-32 was a depression year. Well, in 1938-39 wo are living in the shadow of a great emergency, and this is how the Government proposes to meet it. It ie relieving its wealthy friends of taxation, and raising the revenue from those who cannot afford it. In the year 1931-32, a total of £36,S00,000 was collected from indirect taxation. I wish particularly to impress these figures upon the minds of honorable senators. According to the budget papers, no less than £56,200,000 will be collected by indirect taxation during the current financial year. The additional amount required for expenditure on defence is £2,000,000 above that already voted, but this year we are collecting by direct taxation nearly £2,000,000 less than we collected in 1931-32. It is against this sales tax feature of the Government’s financial policy that the Opposition is now registering its very earnest protest. According to the Minister in charge of the bill (Senator Poll) we have now reached the stage when “ we find it essential, the world being as it is, to impose greater burdens on ourselves in an endeavour to ensure some measure of security for ourselves and our children”. That might be all right if we knew to whom the words “ ourselves and our children “ apply. I say with a full sense of my responsibility and of my position in this chamber that there is a large section of the Australian people from, whom the Government has not th*e slightest right, or any excuse whatever, to extract more than is .being taken from them at present by indirect taxes or any other impost. This definite statement. of Opposition opinion should be kept in mind. The Minister went on to say that this endeavour to get some measure of security for the nation meant increased taxation, the proceeds of which the Government proposed should be spent in as equitable a manner as possible. I ask Government supporters not to forget that behind every word which will come from this side in opposition to the bill is the knowledge that during the years to which I have .referred £20,000,000 of direct taxes was removed from the shoulders of the well-to-do section of the people. The Government has not the excuse that it was unaware of the complications and impending disagreements among countries in other parts of the world. Ministers must have known, some years ago, that in all probability the Commonwealth Government would one clay have to prepare for a state of national emergency. Foi: many years the Senate Opposition, small in numbers as it was in those days, urged upon the Ministry the need for a wiser financial policy and protested against the continued remissions of taxes on the Government’s wealthy friends. I recognize, of course, that this may have been prompted by political reasons. This money has been, in effect, expended, because if a government remits a tax it virtually hands to a previously taxable individual or company a present of the amount previously collected. It may be as I have said that this course was deemed advisable in order to retain political control, and to placate financial interests which, “while demanding reductions of taxes-, sought protective legislation which must increase the general taxes on the wage earners. Since the Government has made these people a present of £20,000,000, it should now require them to provide the additional funds necessary to carry out its programme for the effective defence of this country.
– Has the honorable gentleman ever considered what these people have paid in taxes?
– I am exceed- ‘ingly grateful to the honorable senator for that interjection. Never having been wealthy rnyself, I am therefore not in a position to say what the wealthy people of this country have paid in taxes.
– The bill which the Commissioner of Taxes has sent the Leader of the Opposition must have pinched him a bit.
– Yes, I admit it was not a very pleasant experience. Like other honorable senators I was given back £25 a year which previously had been stolen from me, but under another tax provision I shall have to pay a further £50 in the present financial year.
– An Irishman’s rise.
– Exactly. Senator McLeay’s interjection indicates that he is in a state of mental confusion against which he should be warned in the interests of the Government and his party. He suggests that because wealthy people have contributed large sums to the revenue, I have no right to oppose remissions of taxes to them. I say in all seriousness that what these people have paid in taxes is nothing compared with the toll that they take from every human being in this community. My advice to the. wealthy people in this land of wonderful distances and glorious sunshine, situated thousands of miles from the troubled centres of the world, is that they should take very great care. I have emphasized over and over again in this chamber that these people are concerned only with what they are obliged to pay into the public revenues and what they can extract from the community. I warn them that to-day it may be only their interest that is at stake, next week it may be their capital. After that it may be their lives and everything which they have, if this policy of enriching the already rich, and of making the poor poorer, be continued. What they pay in taxes is but a miserable and paltry insurance against revolution, fascism and dictatorship which to-day have reduced the world to a state of tension ; it is a bagatelle when measured against the protection which they enjoy in this country. Should conditions become more dangerous, a cry for further protection will go up - protection not of the interests of the toiling masses of this community, but of the interests of the moneyed section. We know how the call will be answered-
– They will want to make a profit out of the war.
– That is so. But perhaps I had better not say too much at this juncture. I point out, however, that in this country there is one form of conscription that is anathema to the wealthy people, represented by Senator McLeay, and his colleagues supporting the Government - I allude to the conscription of wealth. That is the last thing on God’s earth which this Government will stand for, or that their wealthy friends will allow.
We have heard a great deal of talk about the value of democracy. I subscribe to that doctrine. Despite all its faults, I believe that the democratic form of government as we know it in Australia, is the best system in a civilization which, at the moment, may be tottering to its doom. If ever the call to arms comes again to democracy and has to be answered, the first thing to be done will be to eliminate profiteering in armaments and all supplies necessary to carry on the affairs of the nation during a state of national emergency.
I apologize to honorable senators for having devoted so much attention to Senator McLeay’s interjection, which I know was not made with malicious intent. I repeat that his remark indicated a state of mental confusion which should be corrected in the interest of the party to which he belongs.
I recognize that all Ministers cannot be in their places in a time such as this, and, as the Minister immediately concerned in this debate is in the chamber, I am not going to comment on the absence of the Leader of the Senate. In more happy circumstances, however, I should probably be expressing regret that he was not present. At this juncture, that would be ungracious on my part, because I appreciate fully the reasons for his absence.
The Labour party is opposed lock, stock and barrel to the passage of this measure. If, when the motion for the second reading is put to the Senate, the Government finds that it has a majority - I believe that it had a majority of only two in the
House of Representatives last night - nothing more can be clone, because the Opposition will have discharged its obligation to protest against this measure, in the interests of the workers of this country whom it directly represents.
– Meeting as we do in the shadow of a possible world catastrophe, I rise with some diffidence to debate this measure. However, I feel impelled to offer some criticism of the bill. In my opinion, the sales tax is one of the most irritating of all taxes. I ‘know that it was imposed by the Scullin Government, but it should have ‘been repealed by subsequent Tory governments. Instead of removing the tax altogether, it is now proposed to increase it by 1 per cent. There is no reason why the Government should contemplate such an increase. Last year there was a revenue surplus of £3,4.94,000, out of which, I understand, £1,000,000 is to be set aside for expenditure on defence during the financial year 1939-40. Why is it essential that this £1,000,000 ‘should be deducted from last year’s huge surplus and carried forward for expenditure on defence material eighteen months hence? I believe that the total amount to be raised under this measure is £1,300,000. If the Government had not decided to carry forward (his £1,000,000 required it would have to raise only £300,000 which amount could easily have been raised by ordinary income tax methods, which are the fairest of all. The increase of sales tax proposed under this measure will impose a further burden on the trading community. It will result in an increase of the price of commodities, and wc all know very well that an increase of prices means a decrease of wages.
– The Leader of the Opposition said that the trading community would benefit.
– Senator Collings has his own views. My argument is that the trading community will he opposed to this increase. It will be used by profitmongers to -make more money. The sales tax is regarded by the trading community generally as an irritating impost. An increase of a tax of this description means a decrease of the pur chasing power of the . workers’ wages throughout the country. They are, therefore, unjustly afflicted by such measures a» this. I agree with my leader’s statement that honorable gentleman opposite who support this Tory Government are the friends of the rich and that rich men are to be found in their ranks. I am looking at one or two of them now. One of them is hiding behind a newspaper. He was distinctly trembling when my leader advocated the conscription of wealth, if war should occur. Another of the rich supporters of this Government is now leaving the chamber. Of course, these honorable gentlemen are opposed to any increase of income tax. When that subject is discussed here or elsewhere they violently. and virulently resist the proposal. Wo also have in opposition to any such suggestion the lackeys of the rich men in this chamber, who are also vehemently antagonistic to such ideas.
– That is stupid.
– The honorable senator is an authority on stupidity. Senator Collings gave certain figures to indicate the magnitude of the increase of indirect taxation in this country. I shall give some more. In 1931-32 Australia’s revenue from indirect taxation totalled £36,S00,000. In 1937-3S it totalled £56,400,000. The rate per head of the population increased from £5 12s. lOd. in 1931 to £S 4s. 4d. in the last financial year. Yet this Government talks about having lightened the burden of taxation on the community! The fact is that indirect taxation has been increased enormously. Such taxes are paid very largely by the working people. AH indirect taxation of this kind has the effect of diminishing the purchasing power of wages.
Why could not the Government have obtained the additional money it required by some means other than an increase of the sales tax? Other means were open to the Government. The Minister in charge of this bill cannot truthfully declare that it would be impossible to raise the additional money required without increasing the rate of sales tax and so placing a much heavier burden upon the backs of the workers. The honorable gentleman, and also those who support the Government, know very well that other avenues of taxation are available for exploitation.
We are. all aware of the tendency of business to decline. Warnings are being frequently uttered in these days of what is euphemistically called a recession. In other times we should have called this a depression. As the fear undoubtedly exists that in the near future a business, recession may occur, the Government should do nothing to strengthen that idea ; rather should it concern itself with ways unci means to accelerate business. But it has chosen to adopt a dubious means .to assist business - that is, by increasing the rate of sales tax.
My leader said that those persons in the community who can afford to pay additional taxes to provide more money for defence purposes should be obliged to do so. I agree with him. Those who enjoy high incomes undoubtedly stand to lose most if war comes, and they should be required to pay most in order to defend their possessions. I agree with my leader also that the Government should have power, in time of war, to conscript wealth. But in wartime Tory governments, which are supported by the big financial institutions of the country, do not conscript wealth. They really make it easier for financial interests to increase their wealth by permitting them to continue to use the dubious peace time methods of finance to exploit the country. I listened with interest a day or two ago to a speech by Senator Leckie, a gentleman for whom I have the very greatest admiration except in one respect. The honorable senator is a deep-dyed all-wool, yard-wide Tory, and to that extent I arn in strong opposition to him. Although he expresses his views courageously in this chamber and is not afraid to criticize the Government on most issues, and I have the greatest regard for him on this account, he undoubtedly fell from grace when he criticized Senator Darcey.
The PRESIDENT (Senator the Hon. J. B. Hayes). - I remind Senator Brown that we arc discussing the Sales Tax bills.
– I understand that, Sir, but we are also discussing financial subjects. T suggest, with respect, that in the second reading debate on a measure of this description, I am entitled to show that the Government could raise the money it requires by means other than increasing the rate of sales tax, particularly as the adoption of that policy will be detrimental to the interests of both the business community and the workers. Senator Leckie is a manufacturer, and he is none the worse for that. Providence has been just, and probably generous, to him. The other day in the little homily that he gave us on finance and the mechanization of industry he rather deprecated Senator Darcey’s ideas. Senator Darcey is a man of progress who wants to get ahead of the times. Such persons, who have advanced ideas on finance, should not be laughed to scorn when they assert, as Senator Darcey did, that the banks create credit. While I was listening to Senator Leckie, who incidentally, is the father-in-law of Mr. Menzies, the AttorneyGeneral in this Government, I recollected some remarks that Sir Earle Grafton Christmas Page, the leader of the Country party, made in 1924 when introducing an amending Commonwealth Bank Bill in the House of Representatives. I shall ask Senator Leckie to listen to those remarks for they have a bearing upon his false conceptions of finance. The passage to which I direct attention reads -
At this early stage of war finance, a step was taken which never has boon explained fully. I refer to the fact that the Government gave to the banks the right to get three pounds in notes for every sovereign presented by the banks at the Treasury. Two out of every three pounds of notes so issued were treated as a loan to the banks, which were required to pay interest at the rate of 4 per cent, per annum, and to repay the principal not later than twelve months after the end of the war. The reasons for granting these rights to the banks are not recorded, and no good purpose would now be served by surmising what the reasons were. Without being unduly critical of action taken during a period of great anxiety, however, I am permitted to say that this three to one arrangement was more doubtful in character than any other act of war finance. The grant by banks of accommodation by way of overdraft or otherwise makes money available for credit to current accounts and fixed deposits in banks. That is to say, increase of advances entails increase of liabilities. Banks usually keep on lending money until their liabilities are four or five times as much as their cash reserves, but here we sec that the banks were given the power, first to multiply their gold reserves by three, and then to keep on lending until the multiplied reserves formed the base of liabilities equal to twelve or fifteen times as much as the original holdings of gold.
It must be obvious, therefore, that although under our banking system it was possible, at that time, for the banks to create credit four or five times in excess of the reserves, they were then given power first to multiply their gold reserves by three, and then to keep lending until their multiplied reserves formed the basis of liabilities equal to twelve or fifteen times their original holdings in gold. Surely this was the creation of credit, and in war time ! It has never been satisfactorily explained why the banks were permitted to issue credit to that extent to the community. The result of the action taken at that time was that an approved client with £10 could obtain a loan of £90 at a certain rate of interest. He could lend the money back to the Government and draw a larger rate of interest upon it. In other words, the Government, which provided the backing and basis for the credit issued by the hanks, authorized the banks to lend money to approved clients, and these approved clients afterwards lent the money so obtained to the Government at an increased rate- of interest. It will be seen, therefore, that the Government was bolstering up the banking system in order to enable it to provide credit upon which the Government itself operated, but upon which it had to pay interest. This was actually done while the country was at war.
No honorable senator can deny honestly that, the banking system of this country, backed by the Government, created credit and made loans to people which loans afterwards became loans to the Government. In consequence of this inflation, many people are still drawing interest on money which they lent to the Government during the last Avar, and they and their descendants will continue to draw it until the crack of doom. If war breaks out to-morrow, which God forbid, the same financial interests in this country will use their power in the same way, and will batten and fatten on the tears and blood of our citizens. The people of the future will look back upon this period of capitalistic development and ask how it was possible that, while some men gave their lives that their country might be saved, other men battened and fattened upon the country’s needs. In other words, some men gave their all for their country, and other men took all that their country would give them. The same thing may happen to-morrow. The financial system of the nation will undoubtedly be made to fit the exigencies of the situation. Some men will fight and die, and other men will draw illgotten gains from the sacrifices of their fellows.
Senator Darcey was right, when he said that the time is coming when our financial system will be revolutionized, and power will be vested in the people to use the credit of the nation for the upliftment of the whole community. It will then be no longer possible for certain sections to exploit their fellows. That cannot be denied. I shall be interested, at some later stage, to hear Senator Leckie speak on the views which I quoted from Sir Earle Page’s speech in 1924.
Mr. Frank Anstey, one of the most brilliant men who ever participated in Labour’ party politics in this country, wrote a book years ago called The Kingdom of Shylock, in which he showed that the banks, not satisfied with the “ right to draw “ from the Government, notes to the value of £6,000,000, actually forced the Government to give them the. right to draw up to £20,000,000. The representatives of the associated banks met Mr. Bruce and Sir Earle Page in Melbourne, and after three days’ conference gained the right to increase their right to draw notes on which they issued credit. That was the greatest financial ramp ever perpetrated in the history of humanity; but I have no doubt that the same game will be played again if this Government remains in power.
I did not intend to get so hot under the collar on this subject, but I feel very sympathetic towards the views expressed by Senator Darcey. He, and others who hold similar views on finance, are misunderstood, abused and laughed at; but in this Parliament at least wc should try to understand their outlook. After all, the basis of the credit of this country is the social and economic work of the community. Without the work of thousa nds of associatedworking men and women - and their managers - if you like, in the economic arena there could be no credit. It is the communal effort of the people that creates credit. If credit can be established to conduct a war, it can equally be established to meet the needs of peace. I have yet to hear a denial of that proposition by any economist or any other thinking man. In war time, the master class is prepared to use the community to establish credits to safeguard lives and property, but when peace reigns, the capitalists say, “ Let us go back to the old system of private finance “. They tell us then, as we have often been told by the Prime Minister (Mr. Lyons), of what the private banks have done for the people. The subject of what the people have done for the private hanks is scrupulously avoided.
This Government is levying from the people another £1,300,000 by way of sales lax and, in order, I suppose, to salve its conscience and to make the community believe that it is an impartial Government, it proposes also to increase the revenue from the land tax by £135,000 this year! Since 1932, this Government has remitted £7,600,000 of land tax. About 70 per cent. of the land tax is paid in respect of city properties. Consequently, city interests have in recent years benefited by hundreds of thousands of pounds from the Government’s generosity in reducing this tax. It is no wonder that the wealthy city land-owners pour money in the coffers of the Tory party, and that they have in this Parliament men, who though poor, are always available to look after them. The Government has decided to increase the land tax collections by the paltry amount of £135,000. Senator Johnston could pay that himself!
– Do not be a damn fool!
– I hope that I have not said anything to hurt the feelings of my secessionist friend.For six years I have been trying to get under Senator Johnston’s skin and this is the first time that I have done so. I have great admiration for Senator Johnston.
– The honorable senator’s statement is absolutely untrue; it is offensive to me and I ask that it be withdrawn.
– I withdraw it absolutely. I would not hurt the honorable senator for the world.
– Order ! The honorable senator must not make personal observations.
– I do not wish to be personal, and in all sincerity I say to Senator Johnston that I am sorry if I have offended him. If he is in need I shall be ready to lend him a few “ quid “.
– The honorable senator should be more accurate.
– I could be more accurate if I saw the honorable senator’s income tax returns. At any rate he is reputed to be a rich man.
-There are a few rich men in the honorable senator’s party, too.
-There are a good many rich men in the Tory party, directors of companies and the like, whose interests lie in the direction of reducing the income tax so that the tax burden may be placed upon the backs of the working class.
– Lang and a few others that I know in the Labour party have a good deal of money.
– Good luck to Mr. Lang. I am not jealous of him, although I should like to be able to pay the same amount of income tax as he pays. The Tory party is a rich man’s party, supported by rich men, and its parliamentary representatives are always ready to help them. We oppose this bill because we think that it means the imposition upon the workers of a burden which should be laid upon those who are more able to bear it. There is always a time lag between the imposition of a tax and the raising of wages. During that time the workers suffer a reduction of wages. Therefore, as a party we refuse to agree to the imposition upon the poorer classes of a tax which could be avoided. The Labour party, if in power, would recognize that its duty was to move the burden from the backs of the workers to the backs of the rich.
Debate (on motion by Senator Wilson) adjourned.
– by leave-I rise to make a personal explanation. Yesterday I made a statement in this chamber regarding the Australian Broadcasting Commission. The Leader of the Seriate (Senator A. J. McLachlan) replied to that statement this morning, and, if he did not justify my complaints, he did not deny the accuracy of them. There was one matter, however, to which he did not refer, and I have since been advised that my statement in that respect was inaccurate. I, therefore, take this earliest opportunity to withdraw it. The statement that I made was that the son of the Anglican Bishop of Bathurst had been appointed to a position on the Australian Broadcasting Commission. I asked to what position he had been appointed, and why the appointment had been made. I am now advised by friends of the Anglican Bishop of Bathurst that the reverend gentleman is not a married man and that the statement that I made cannot possibly refer to him. I believe that assurance and unreservedly withdraw my statement.
SALES TAX BILLS (Nos. 1-9) 1938.
Debate resumed from page 287.
.-Ihavemuchsympathywiththe LeaderoftheOpposition(Senator Collings) in his criticism of the principle of the sales tax. Most people will agree that insofar as that tax does not accord with the principle of ability to pay, it is unfair. The criticism of the Leader of the Opposition, however, would have been fairer and more accurate had it been directed against the sales tax as it was imposed by the Scullin Government. As the Treasurer (Mr. Casey) has pointed out the exemptions that have been made from sales tax have largely removed the cause for the objections that were first taken to it. Most of the basic necessaries of life, foodstuffs and many articles of clothing, have now been exempted from the tax. Although I agree that it is not by any means the fairest and best tax, it is far less objectionable now than it was when it was first imposed. But the statement of the Leader of the Opposition that the working man is the victim of this tax is definitely and economically inaccurate. It is true that the sales tax is passed on. The tax, in “so far as it enters into the cost-of-living index, automatically causes an increase of the basic wage, and the man who is able to pass the sales tax on most easily is the wageearner. It is not the wage-earner who pays the sales tax, although he may bear it between the periodical adjustments of the basic wage. I do not deny that there is a lag, during which the wage-earner bears his proportion of the tax. But, in due course, the tax is passed on by him, and the passing on continues until finally the burden rests on the man who cannot pass it on any further, the export producer. However much the wage-earner may complain, it is the man who has to sell his commodities in the world markets at world parity that has the greatest grievance against indirect taxation. The man on the land will not be pleased with the increase of the sales tax, but he will not flinch from his responsibility to shoulder his share of the national burden in this hour of need.
The Leader of the Opposition said that the only fair tax was the income tax. On thatI join issue with him.
– I did not say that. I said that direct taxes were the best taxes. I did not specify the income tax.
– I noted the honorable gentleman as saying that all the expenses of government should be met by an income tax. A far fairer tax than the income tax is a tax on luxuries. I would list the taxes in order of fairness thus - First, a tax on luxuries, because everybody who can afford luxuries can afford to pay for the upkeep of the country: secondly, income tax, based on ability to pay; and, thirdly, the other taxes, such as the land tax and sales tax, all of which I admit have elements of unfairness. The Leader of the Opposition said that in the last analysis the sales tax is paid by the wage-earner. I think that I have answered that. Not the wage-earner, but the export producer has in the last resort to pay the tax, because he cannot pass it on.
The Leader of the Opposition suggested that he, never having been a wealthy man, had some complaint against wealthy people. If a man with an income of £1,000 a year is not a wealthy person, according to Australian standards, I do not know who is. We should not complain that the people of this country have large incomes, because 98 per cent, of them have under £1,000 a year. Wealth is more widely spread in Australia than in any other country. In framing any taxation policy the ideal is to tax, as far as possible, according to the principle of ability to pay, and to obtain the taxes by the means which will cause the least disruption. That is why I like the procedure contemplated by this bill. It will not involve the setting up of new machinery; there will merely be an increase of the rate of tax. I do “not think that anybody will take exception to the masterly manner in which the Treasurer proposes to raise the necessary revenue.
The Leader of the Opposition first suggested that there should not be a sales tax, and then he blamed the Government on the ground that the rich ‘ were exempted from it. If we abolished the tax, the rich would, of course, be entirely exempted from it. There is nothing in such an argument. Any form of sales tax must fall, in the first instance, on the user of commodities until he can pass the burden on to somebody else. Senator Brown alleged that honorable senators on this side of the chamber are tories and the rich man’s representatives. We, on this side, represent the working man, but do not talk about it. Honorable senators opposite talk about it, but do very little in representing him. Although I object to the principle of the sales tax, and shall, in more normal circumstances than those obtaining today, use every effort to have the tax repealed, I whole-heartedly support the present, proposal in this time of emergency.
. I register my protest against the proposed increase of sales tax. The Leader of the Opposition (Senator Collings) has pointed out that it was introduced by a Labour government. I remind theSenate of the state of the Commonwealth finances when the tax was first levied. The last loan placed on the London market by the Bruce-Page Government was so heavily undersubscribed that 70 per cent, of it was left with the underwriters. When the Scullin Government took office it found the- Treasury empty. We had a tremendous adverse trade balance, and the money market in London was closed to us. That was the position brought about after ten years of administration by Nationalist governments. The Scullin Government had to find new fields of taxation, and the sales tax was introduced. It was to be a temporary measure, but I understand that about £70,000,000 has been raised by means of this impost. Certain articles and commodities are exempted from the tax, but it is paid by every invalid and old-age pensioner and dole worker, and by the poorer people in the community, on everything they eat, drink, and wear, with very few exceptions. The rich pay this tax as well, but they do it out of their abundance. They can add it to the cost of goods and services, but the poor have no means of passing it on. There” is no need whatever to increase the sales tax in order to bring in new revenue.
– Does the honorable senator propose to show us again how we can get something for nothing?
– I am not responsible for the financial ignorance of the honorable senator.
There is a taxpayers’ association, I believe, in every State. The Victorian association met in conference recently, and the first item on the agenda was a proposal for the abolition of the federal land tax. The matter was discussed, the disabilities of persons owning land having an unimproved value of £5,000 or more were enlarged upon, and the proposal was agreed to unanimously. The next item of business was a motion that all surplus taxation should be abolished, and this was also carried unanimously. The third item-
– I rise to a point of order. Has a conference of a taxpayers’ association anything to do with the sales tax?
The PRESIDENT (Senator the Hon. J. B. Hayes). - I take it that the honorable senator is endeavouring to show other methods of raising revenue.
– That is so. The third proposal to which the conference unanimously agreed was that there should be a 20 per cent, reduction of income tax. Then it turned its attention to the sales tax. It was submitted that this should bc reduced by one per cent, forthwith, and that, in five years, the tax should disappear. This suggestion was discussed from many points of view for a long time, but, eventually, it was agreed that the tax was a democratic one, and should not be interfered with. The Lyons Government was urged to give effect to the proposals, and it was stated that the Government took a great deal of notice of the resolutions of these conferences. Taxation to an amount of £20,000,000 has been remitted to the advantage of big business interests, but this taxpayers’ association said : “ We must not touch the sales tax. It is a democratic measure put on by a Labour Government “.
In addressing the Senate on Monday, I indicated the way an which I proposed that the necessary revenue could be raised without additional .direct taxation, whether income, sales, or land taxation. The Monetary and Banking Commission, on page 196 of its report, advised the Commonwealth Government that, through the Commonwealth Bank, money could bc raised free of interest. When I asked why the Government had not done this, the reply I received was that the Government did not propose to instruct “the chairman of the Commonwealth Balik Board to issue credit, not even for national defence. In the course of a speech in Melbourne recently, the honorable member for Melbourne Ports, Mr. Holloway, suggested that the credit of the nation should be utilized to finance necessary defence measures, but a day or two afterwards a letter was received from the Prime Minister, Mr. Lyons, intimating that there would be no unorthodox financial arrangements in connexion with the defence loan. I explained on Monday how money could be advanced through the Commonwealth Bank for the defence of Australia, and if war comes this method will have to be adopted. Arc we to pay interest at the rate of 6 per cent, for the raising of overseas loans, as was done prior to 1914? When Sir Denison Miller was Governor of the Commonwealth Bank, similar loans were raised at the cost of 5s. 7d. per cent., and yet a profit was made. The great mathematician Einstein, in an address delivered in the United States of America, said - ‘
The misunderstanding of money may well bring about the downfall of our civilization.
Are we to pretend for ever that we have adopted a sound system of finance? Affairs are too serious to-day for pretence. A commission which the Government itself appointed, declared that money required could be made available through the Commonwealth Bank free of interest. Why has that not been done? The main reason why the Government is opposed to the issue of credit through the Commonwealth Bank is that it does not believe in the political control of banking, but was not “that bank established through a political channel?
Why should not the Parliament be in charge of the most important thing in the country - the credit of the nation? Ninety-nine per cent, of the business of the world is done on credit, and the banks have a monopoly of it. They are creating credit, but those who put the Lyons Government in office object to the issue of credit by the Commonwealth Bank in the interests of the nation. The whole of the.money subscribed by the public to a Commonwealth loan never reaches the Commonwealth Bank. If I buy £1,000 worth of Commonwealth bonds, the banks can raise credit for their own purposes to the amount of £S,000 or £9,000. The world is in its present position because the monetary system is wrong, and tens of thousands of people in Australia know it. Although the Lyons Government is in office it is not in real power. No government is in power. High finance likes dictatorship, because it has to control only one man; the dictator controls millions of people. There can be no democratic .government while there is a power greater than Parliament. To-day, through the power of money, countries like Germany and Italy, which have dictatorships, can force their policy on the so-called democratic countries such as Great Britain and France.
– That is new !
– Although I am new to Parliament, I am not a stranger to political economy, for I am a university-trained man.
I sue 11110161’ Professor L. P. Giblin,
Dr. Moulden, Professor Hytten, and Dr. Roland Wilson. I told them that if orthodox methods were pursued there would be an unorthodox end to the world. The only thing that can save the world is community control of credit. We have allowed to grow up a system which has the world by the throat. The great Bank of England, which brought into being the national debt, is paid a tremendous sum every year for administering it. As far back as 1842, when the national debt was under £600,000,000, that institution “benefited enormously on that account. I leave it to honorable senators to reckon up what it is obtaining on a commission basis with the national debt at £10,000,000,000.
– The honorable Senator is getting rather wide of the subject.
– If the Commonwealth Government obtains a proper grip of finance and realizes the necessity to use national credit for purposes of national defence, it will secure - as I propose* that it should - all the requirements of the nation through the Commonwealth Bank, free of interest.
I shall conclude by saying that in my opinion this proposed additional tax is quite unnecessary, because the money required could be raised through the Commonwealth Bank. When honorable senators have heard me a few more times, they too will be convinced that there is something in the scheme that I have propounded. Legislation to alter the monetary system was passed in Alberta, but the central government at Ottawa said that it could not become law because it was ultra vires the Constitution. It will come in time, because it is the one system so far put before the world which would benefit everybody.
.- I should not feel safe in facing my electors did I not offer opposition to this measure. I do not know whether honor.able senators realize the extent to which indirect taxes are increased every day by reason of legislation which is continually exploiting the lower paid workers of this nation. When this tax comes into operation it will definitely have to be passed on. I disagree with the conten tion that it will not be .borne ultimately by the workers. Returned soldiers who are to-day living on a miserable war service pension which is not adequate to keep themselves and their wives in decency, will also suffer under it, because the effect of it will be to lower their present purchasing power.- Others whowill feel its effects very severely are oldage and invalid pensioners who now receive a pittance of £1 a week, and parttime workers, whose income is very low. Their purchasing power will be appreciably reduced.
Reading the debates that have taken place at different times, I have frequently noticed that honorable senators of the Country party have criticized increases of duties which affect primary producers ; yet not one of them has spoken in opposition to this bill, which indirectly will have the effect of increasing the costs of those who are engaged in primary production. I speak in the interests of the small primary producers, who are sometimes worse off than a man on the basic wage. Any commodities that they require, including agricultural implements, will be affected.
– .Such implements are exempt from the tax.
– Then they will have to pay more for their requirements of general commodities. If they are to be exempt, and old-age and invalid pensioners, are to suffer, the position will be worse. It has been said that whenever the cost of living rises, wages are increased. The cost of living will definitely rise when this sales tax comes into operation; but is there any immediate expectation of a rise of wages? It is likely that wages will continue at their present level for quite a number of months. Therefore, wages are not increased as rapidly as the cost of living rises. To me, the strongest objection to this tax is that it is the most unfair and unjust system of raising revenue. It would have been far more fair and just had the Government reimposed some of the direct taxes it has already remitted in respect of personal exertion and big properties, instead of imposing an additional burden which will cause hardship to some of the lowest paid workers as well as the pensioners of this country. A better plan would have been to include the £1,300,000 which the Government expects to raise under this measure, in its loan proposals. I remind honorable senators that when credit is raised for either defence or any other purpose, some asset must be offered as security. Instead of offering the assets of the nation as security for a loan, would it not be more logical to place them against the issue of credit? Under the present system of finance, the wealthy section of the community obtains a large amount by way of interest, whereas if credit were issued by the Commonwealth Bank against the assets of the country, such profit would not bc made. I hope that honorable senators opposite will give a little more thought and consideration to the adoption of fairer and more just means of imposing taxation than spreading it over the whole population and causing hardship to those who are least able to bear it.
– I do not propose to follow our colleagues from Tasmania, and other honorable senators, in their references to social credit and other theories which they have propounded for the avoidance of this tax.
Some references have been made to the attitude of the Country party towards the sales tax. I opposed the principle of the original proposals for the imposition of a sales tax when they were introduced by the .Scullin Government several years ago. .1 then endeavoured, unsuccessfully, to secure a large number of exemptions in respect of machinery and other items which are extensively used by those who are engaged in agricultural and pastoral pursuits. I have never been one to blame the Scullin Government for the action it was forcedto take in the period of the depression. I point out, however, that governments more recently in power, with which the Country party has been associated, have granted exemptions in respect of most of the ordinary requirements of agricultural and pastoral production. Year after year, when restorations of moneys taken from them under the financial emergency legislation were proposed to other sections of the community, including members of Parliament, I objected, on the ground that our first duty was to abolish the sales tax and primage duties. I, therefore, endorse the remarks that have fallen from the Opposition benches regarding the unfair incidence of this form of taxation. Although I have been pleased at the reductions of sales tax and primage duties which have taken place, I desire to see these taxes abolished. I wish to make it clear that members of the Country party tried to abolish these taxes. To-day. however, wo meet under entirely different conditions. When tlie Treasurer (Mr. Casey) delivered his budget speech last week, he described it as a defence budget. Since he spoke, the nternational situation has become much more ominous. Under” ordinary conditions, I should not support an increase of the sales tax, but in view of the gravity of the international outlook I intend to stand behind the Government, and to support those measures which it deems necessary to raise revenue for the defence of the Commonwealth. In view of the war clouds in Europe, we shall all be fortunate indeed if, in. the near future, much heavier demands are not made on all sections of the community than are contained -in this measure.
– I do not propose to cast a silent vote on this measure. It has been said that an .increase of the sales tax will not bear unduly upon the wageearners of this country for the reason that machinery already exists to enable them to pass it on. It is generally admitted that, in the first instance, the wage-earner will have to pay additional taxes following the passing of this legislation, but it is suggested that subsequent application by bini to the Arbitration Court for the fixation of increased wages will” remedy that state of affairs.
– The adjustment is automatic.
– Automatic quarterly or half-yearly adjustments of the basic wage may be made by the Arbitration Court, but I remind honorable senators opposite that there is a huge army of wage-earners who are not. organized and, therefore, do not come under any arbitration award whatsoever. In addition, that section of the community which is engaged in primary production will not have the advantage of those quarterly adjustments. This tax will add to the already heavy burden of taxation on the primary producers of Australia. More especially is this so when we reflect on the warning given by the Attorney-General (Mr. Menzies) and the Minister for Trade and Customs (Mr. White), as well as the Leader of the Country party in the House of Representatives (Sir Earle Page) who constituted Australia’s recent trade delegation that in al! probability there will have to be a curtailment of primary production in Australia. There is, indeed, a probability that legislation will have to bc introduced to peg production in the wheat-growing industry. Honorable senators know that, following an alteration of the financial relations between Australia and the Imperial Government and British trading interests, a rearrangement of the disposition of Australia’s exportable surplus goods must be made. In such circumstances, the additional burden which this legislation will impose on the primary producers of Australia will bear heavily on them. If the Government had no other means of raising money there would bc justification for the introduction of this measure, but that is not the position to-day. There arc other fields of taxation open to it. Honorable senators may smile at Senator Darcey’s advocacy of the use of the credit of the nation for the defence of the nation, _ but I remind the Senate that this is no new thing. Credit amounting to at least £250,000,000 was utilized by the Australian nation during the last war. This is a matter for consideration by the Government, for it must be remembered that there is a limit to the ability of the people to pay taxes. Other nations including Great Britain, have had to adopt unorthodox methods for the general good of the nation. That is the possibility before us now. Frequently during this debate such terms as “ in. the hour of need “ and “ at a time like this “ have been used. The use of those terms carried the thoughts of some of us back 20 years. Such terms have been used by governments when they have desired controversial legislation to be passed speedily; but that is not the position to-day; there is no reason why the Senate should not give proper consideration to the legislation before it. I consider this tax to be unjust. In any case, it is a foreign conception of taxation which was imported into Australia; and although it was first presented to this Parliament by a Labour government, that government had no alternative. A sales tax was the only form of taxation open to the then government because it did not command a majority of members in the Senate. The situation which -faced the Scullin Government does not exist to-day, for the present Government has a majority in both Houses of the Parliament, and can ensure the passage of whatever taxation measures it sees fit to introduce. It would appear, however, that it desires to continue this form of taxation and to increase the rate of the tax by 1 per cent. I add my protest to that of other honorable senators who have opposed this increased taxation. I represent a State whose people, for the most part, are engaged in primary production. Unlike the eastern States of Australia, Western Australia has not many huge manufacturing businesses which create wealth for the community generally. This legislation will have a serious adverse effect on many primary producers who, even now, find difficulty in making both ends meet. In more than one State, drought conditions exist, and many primary producers will have no income at all this year. That section of the community which should lie at call for the purpose of rendering that assistance I was so desirous of securing from the Government only yesterday will have a considerable amount of its income taken away by the imposition of this tax which, in my opinion, is unjust, unwarranted and bad in its incidence. It should be abolished at the earliest opportunity rather than inflicted for a lengthy period upon the people of Australia. I. have no desire to offer further comment at the present time except to remind honorable senators opposite that they also have responsibilities other than to sustain and support the present Government in office. Our primary responsibilities arc to the people whom we represent and, after all, it has been claimed ever since the inception of federation that we should exercise some liberty of action in that connexion. We should look upon ourselves more in the light of representatives of the States, representing the people in the States as n whole, and utilize our voices and our votes in the best interests of the people who make up the populations of the States. Where burdensome taxation such as this is concerned, honorable senators, before casting their votes upon it, should, therefore, give the matter very serious consideration and not forget the huge community of interest outside of the Australian Capital Territory which is looking to them for some relief in this regard.
– In opposing the bill now before the House, I should like to direct the attention of honorable senators to the fact that taxation under existing conditions constitutes the very basis and machinery of government. I do not think that statement of fact will be challenged. Our opposition is directed to the incidence of this tax, which is based on the principle that the workers in the primary and secondary industries who receive the least shall pay the most, and that those who receive the most from social production shall pay the least.
– That is not borne out in fact.
– It is absolutely, and beyond all doubt of contradiction, borne out in fact.
– What does a taxpayer receiving £1,000 a year pay by way of tax?
– If the ‘honorable senator will permit me to develop my arguments, possibly I may be able to accomplish what is the seemingly impossible task of convincing him.
– The honorable senator is indulging in personalities; that is not argument.
– Not exactly. Honorable senators on this side of the chamber are polite; we appeal to reason rather than to prejudice or stupidity, if the honorable senator will permit me to continue for a few moments, I may be able to illuminate what appears to be an impossible position from his point of view. The honorable senator asks what taxes the wealthy pay. The answer is that they pay exactly what the wageearners and the workers in the primary industries make it possible for them to pay, and no more.
– According -to that theory a man who earns money does noi work.
– The man who earns money does not” get all that he earns, and the effect of that is that wealthy people appropriate a great deal to which they are not entitled, out of which they pay taxes. The man on the basic wage paying his tax of 3d. pays a great deal more in proportion to bis income than the man on £1,000 a year. A tax of 3d. means a great deal to the basic wage earner, but a man on £1,000 a year could pay a tax of £1 and not miss it. That is the fundamental and essential difference with respect to the incidence of the tax to which I desire to direct the attention of honorable senators.
– Does the honorable senator know what tax would be paid by a man receiving £1,000 a year?
– I know that nominally he pays more than the basic wage earner, but actually he pays less in proportion to the income he receives than the man on the basic wage. The Treasurer (Mr. Casey) has stated that certain exemptions have been granted which will lighten the burden of the tax. I do not accept that contention. On the contrary I- accept the contention advanced so convincingly, in my opinion, by honorable senators on this side of the chamber that the tax can be, and is, passed on. Not only is it passed on, but it is added to whenever possible. It imposes an additional burden on the workers in primary and secondary industries because it adds further taxing authorities who, in their turn, add to the tax as they pass it on.
– Would the proposed increase of the tax impose a greater burden on the primary producers than the adoption of a 30-hour week?
– That question, to use the expression adopted by Senator Darcey, is based on the teachings of an obsolete and orthodox economic system. We hope to be able to show, later on, that that is not exactly the position. A good deal has been taken for granted by those honorable senators who have referred to automatic increases of wages. What really happens is this: An application, based upon the fact that wages have been reduced progressively, drastically and vindictively by the increasing cost of living, is made to the Arbitration Court or to a wages board, for an increase of wages, and although the increase is granted to some extent, never has there been a full and complete restoration. For example, there has never been a full and complete restoration of what is known as the 10 per cent. cut. Suppose, for the convenience of argument, the Arbitration Court Judge, or the chairman of the wages board and his colleagues, as the case may be, grant an application for an increase of wages. It then appears, according to Senator Wilson, that, the wage-earner has been able to pass it on, but the fact, is that he has never received what was originally taken from him. What actually happens? The moment the increase is granted up go prices again, and the whole process has to be repeated.
– The reverse process takes place when wages are going down.
– The whole process is an ingenious form of trickery which the workers have yet to understand. When they understand it there will be such a reckoning that honorable senators now sitting on the government benches will no longer be in this chamber.
Another aspect in connexion with this matter is worthy of consideration. I submit for the earnest consideration of honorable senators the fact that increasing production of commodities cannot be maintained unless provision is made for increasing consumption ; that is to say, if we increase the output of our factories, or the production of wheat, meat, wool, and so on, we cannot dispose of those commodities without making provision for increased consumption. Unless provision for increased consumption is made we must continue to have the position which faces us to-day of increasing unemployment at a time when, as Senator Cunningham has said, it, may be necessary for the Government to peg the production of wheat, or, in other words, restrict production.
– What commodities have we been unable to sell up to date?
– We have not been able to sell all of our wheat, wool and other commodities at reasonable prices. ‘ As a matter of fact, only a few months ago, thousands of tons of onions in Victoria ‘ were dumped into the bay because of lack of purchasing power among people who needed them. This happened at a time when thousands of our people were living under semistarvation conditions. That emphasizes again the point I wish to make, that, unless adequate and necessary provision is made for increasing consumption, increasing production cannot be maintained. Sales taxation defeats the very object which it is supposed to achieve. The effect of the additional tax proposed in this measure will be to reduce the purchasing power of wages in Australia by £1,300,000.
– Are not the workers covered by Arbitration Court awards?
– Not all of them. If the honorable senator had listened to what has been said by my colleagues he would know that thousands of men engaged on sustenance work, pensioners, unorganized workers and others have no means of redress through the Arbitration Court.
– Will the honorable senator admit that those workers who arc covered by Arbitration Court awards will not suffer through this tax?
– No. I emphasize that this whole process represents an ingenious form of trickery which the majority of the workers have yet to understand. I repeat that as the result of this additional tax the purchasing power of wages in Australia will be reduced by £1,300,000. But the matter does not end there. Reduced purchasing power results in a reduction of the demand for commodities - commodities, the prices of which honorable senators opposite are anxious to maintain at as profitable a level as possible. When that occurs the demand for labour power to produce such commodities is also reduced. This is precisely what has happened in the past in this respect, and, I suggest, is happening at this very moment and causing an increase of unemployment. In such circumstances, honorable senators opposite, in the fullness and goodness of their hearts, are content to offer the dole, or a. few crumbs, to the unfortunate workmen thrown out of their jobs. But the trouble does not end even (here. Assume, for instance, that in der many what is known technically as a balanced economy were established, that is to say, that consumption - the right to consume and use all goods that are produced - were placed in the hands of the wage-earners who are the real wealth producers. If that were so the dictators of Germany would not be in a position to levy taxation to the extent to which they are now doing for the purpose of providing armaments and increasing capital expenditure in preparation for war. If “udi a position existed, Hitler, or any other dictator, would not be able to declare war, because the majority of his workers would not be submissive to economic exploitation and conscription. In that case the power of dictators would be negligible. That, I suggest, is obvious. Thus, if we are going to remove the cause of war in Germany, England, or any Other country, we have no alternative but to do what I have just said - raise progressively living standards, so that economic power cannot be centralized in the hands of the few to be used to the detriment of the people as a whole. In saying that I am merely repeating what the Premier of New Zealand said in England and in the New Zealand Parliament when he pointed out that the only guarantee against Avar is the establishment of a balanced economy wherein the control over the wealth produced is not centralized in the hands of a few people, but is spread over the whole community, if that were done, we should put an end to war, because in such circumstances the cause of war - the need for additional markets and territories - would not exist. Through the purchasing power of its workers, a” nation would thereby he enabled to provide a home market which would be capable of absorbing all the wealth it produced, and the economic equilibrium thus established would be a guarantee against Avar. Under this measure this Government proposes to do exactly what is being done to-day in Germany, threatening to bring about a war in which Australia may yet become involved. The difference between the proposal embodied in this bill and what is being done from the point of view of taxation generally in Germany is merely a difference in degree. As one honorable senator has suggested, this measure represents a de>ice copied from foreign countries.
To Senator Wilson, who suggested that the wage-earner can pass on sales tax, I point out that wageS to-day are fixed by our arbitration courts, not on the value of the wealth produced by the worker, but on the least on which he can live, or is prepared to live, namely, the cost of his subsistence. When workers present their claims to-day before arbitration courts or wage-fixing tribunals, they are not asked how much wealth they are producing as the result of their labour. The question considered is merely how much the workers can live on. If Australian workers were prepared to live on less than they receive to-day; if they were prepared to live on what the workers say, of Japan and Germany and most of the workers in England, are prepared to live on, that is, in respect of food, clothing and .shelter, our arbitration courts and wage-fixing tribunals wouk base their awards on those requirements. I suggest, therefore, that before the honorable senator is tempted again to speak in that fashion he should make a few inquiries concerning the origin of the wage system as Ave find it in Australia to-day. He -will find that it goes back to the days of slavery. He will also discover that the amount which the worker receives in wages as compared Avith the amount of wealth which he produces is a diminishing proportion. When speaking on this matter the other day, I illustrated “my point by taking as the article of manufacture the desk at which I sit in this chamber. If an artisan Avith ordinary hand tools takes a week to make this desk he receives a week’s wages based on the cost of his subsistence, but the same wages in respect of a man whO, Avith modern tools, could make this desk in a day would be merely a day’s Wages The point I emphasize is that, as the productivity of the workers increases through the medium of the machine and improved methods in industry - and in respect of such improved methods I am prepared to give credit where it is due - and wages remain based on the cost of subsistence, the payment they receive is a diminishing proportion. On the one hand we find increasing accumulation of wealth, and on the other we have increasing poverty, and as the result of this position nations are arming to the teeth and using the wealth created by the workers not to preserve life, or to raise the standard of living, or to maintain a democracy true to name, but to slaughter millions of innocent men. women and children.
Che PRESIDENT. - I ask the honorable senator to connect his remarks with the bill under consideration.
– I intend ‘to show that sales tax is a means to an end ; it is not actually an end in itself. It is a means to create here in Australia a position similar to that which exists in Germany, where wealth is being accumulated in order to destroy life rather than to preserve life or to raise the cultural and living standards of society. I was rather surprised .to hear Senator Johnston, like Senator Wilson, say that, whilst he admitted that sales tax is unjust, he nevertheless proposed, in view of the circumstances existing to-day, to support this measure. All I can say to both honorable senators is that if, as the representatives of the people, they are prepared to allow .their better judgment to be overriden by press-created fear, I am afraid they are not rendering the service which those who elected them ro this chamber have a right to expect. If there was ever a time when a proposition similar to that embodied in this measure should bc attacked by Senator Johnston, or any other honorable senator, it is the present, when we find a tendency on the part of men in high positions in public life to be hypnotized and stampeded by fear, and susceptible to all sorts of suggestions which, are designed merely to secure their acquiescence in the strengthening of the position of those who are accumulating enormous wealth by exploiting and robbing the unfortunate workers in both primary and secondary industries. Senator Johnston, apparently, is prepared to leave Australian workers to the mercy of these economic wolves. He said that all of us must be prepared to make sacrifices, and left the matter there. The workers are always willing to make a sacrifice provided that [ll] there is equality of sacrifice; but there is no such equality under a measure such as this, which proposes to place the whole of the burden of the tax upon the shoulders of those least able to bear it.
– Is not the honorable senator willing to contribute 1 1/4d. a week to assist in the defence of this country?
– It would be interesting to know how much those who made such enormous profits out of the last war arc to contribute towards the defence of Australia. I pointed out a few days ago, for the benefit of honorable senators opposite, that the profits made out of the last Avar exceeded its actual cost, and that the amount of interest paid was £33,000,000 in excess of the actual cost of the Avar. Thousands of soldiers who made great sacrifices and who are now denied the right to work, received a great deal less than the money lenders who invested their capital in Avar loans or who benefited under army contracts.
– Is the honorable senator referring to the total cost of the war to Australia?
– Yes. The total cost of the war to Australia Avas £563,000,000. The interest bill Avas £29S,000,000, the actual cost £265,000,000. and £33,000,000 Avas paid in interest in excess of the actual cost. I agree with Senator Johnston that there should be equality of sacrifice, but there must be absolute equality. There can be no such equality under a measure such as this which will increase unemployment and reduce a large number of workers to poverty.
– I cannot allow some of the arguments advanced by honorable senators opposite to pass without comment. It appears to me that this tax bears an unfortunate name. It should be designated a luxury tax, and under that name it would be more acceptable to those who are now opposing it. I believe that from 50 to 75 per cent, of the articles on which the tax is imposed can be regarded as luxuries, and, in view of the huge defence expenditure, those who purchase them should be expected to contribute to the Consolidated Revenue to’ a greater degree than at present. When the sales tax was first introduced by the
Scullin Government it applied to everything which the people consumed, used, or wore; but had it been confined to luxuries and had the tax been 10 per cent, instead of 5 per cent., it would have been equitable. The great objection to the tax when first imposed, so far as I can judge, was that it applied to everything we used. When the Lyons Government came into power one of its first acts was to provide for a wide range of exemptions, many articles of food and clothing being exempted. The following year further exemptions were made, and in the next year the list was increased. Eventually the tax was reduced from 6 per cent, to 4 per cent. I have always been opposed to the tax being reduced below 5 per cent, because I believe that it would be preferable to widen the range of exemptions instead of reducing the rate. A sales tax should be a permanent impositon, but the list of exemptions should be so wide that it applies only to luxuries. Senator Cameron said that the additional burden of £ 1,300,000 will be borne solely by the workers, but he knows that that is not correct. What of the man who purchases a motor car at £400, which is not an unreasonably high price? On a 4 per cent, basis, he would pay a tax of £16, but when this measure becomes operative he will have to pay an additional £4.
– Are not workers entitled to motor cars?
– Of course they are; but I am speaking of cars used solely for pleasure. A person purchasing a car at £1,000 under the present tax, pays £40, and under this bill will have to pay an extra £10. I am not concerned with the man who will have to pay that additional amount, but I am astounded to find that honorable senators opposite, who advocate the claims of the man on the basic wage, are endeavouring to assist those who can pay £1,000 for a motor car; even £3,000 for a Rolls Royce. Their attitude is not consistent with the arguments of the members of the Labour party. As one who wishes to protect the interests of the working man, I am now able to show honorable senators opposite that they are assisting the wealthy rather than those on the bread line. The additional amount to be paid by those receiving the basic wage and by pensioners is infinitesimal. It is the purchasers of luxury items who will have to contribute the most. If 1 am a member of this Parliament when sales tax legislation is next considered, I shall endeavour to extend the list of exemptions rather than reduce the rate. Honorable senators opposite have not suggested an extension of the exemptions.
– Is a motor car a luxury to a farmer?
– Sometimes it is. The honorable senator is not backward in criticizing some of the people who drive around Lithgow in cars. They do not get much sympathy from him. Generally speaking, a car is a luxury.
– To a farmer?
– I am speaking not only of farmers. When I purchased a car, I had to contribute £25 to Consolidated Revenue, and I regarded it as o legitimate impost. In New South Wales 347 new cars were registered last month, which’ is at the rate of approximately 4,000 a year, the owners of which paid a considerable amount in what can bc regarded largely as a luxury tax. I do not complain because such purchasers have been compelled to pay a few pounds while the country is in need of additional revenue. The tax is imposed not only on motor cars, but also on many other articles which can be regarded only as luxuries, on which the great ‘bulk of thu revenue of from £7,000,000 to £8,000,000 from sales tax is raised. It would be very interesting to know on what items the sales tax is collected. Had I that information available, I believe that honorable senators opposite would be more inclined to support the bill. Senator Brown objected to a reduction of £6,000,000 being made in land tax. He said that the Government, in making the reduction, was actuated by a desire to help its wealthy friends. But according to Senator Collings, the man in the city paid the great bulk of the tax because it was passed on. I agree with Senator Collings that 70 per cent, of the land tax is, in fact, passed on to the basic wage earners and consumers. Were it to apply only to the wealthy land-holders I should be disposed to take a different view of it. So far as this measure is concerned, I regret that the Government did not increase the exemptions, even if it were necessary to increase the rate of the tax itself to 6’ per cent. However, realizing that the great bulk of the tax is not paid >.y the working man, I feel justified in accepting the measure as it stands.
.- This matter has been well discussed, and, naturally, anything that I can say must follow closely what has already been said by honorable senators on this side of the chamber. The speech of the Leader of the Opposition (Senator Collings) covered the subject fully in a general way, and set forth clearly the attitude of the Labour party to this legislation. Senator Dein said that a greater number of exemptions should be provided. As n matter of fact, the number is at present very great, but the sales tax still costs the working people of Australia a considerable amount. The Minister admitted that it was as much as 1 1/4d a day, which is 8d. a week.
– It is just over a Id. a week.
– I stand corrected. In any case, whatever the amount it will be passed on to those who already are unable to make ends meet on what they get. I agree with Senators Aylett and
Cunningham that it will be passed on. l t is impossible to police the operations of the sales tax so as to prevent its being passed on, whether the rate be 4 per cent.j i> per cent, or © per cent. This is a further instance of the disinclination of the Government to face the situation which must be met in the very near future. I remind honorable senators that the policy of this party is not Douglas Credit, but we say that the Government, instead of bringing down legislation of this kind now, may as well recognize that, at an early date, it will be forced to adopt other and more effective methods of raising revenue. We recognize that this is a defence measure, and the Labour party admits the importance of defence. The money must be found, but we say that the Government should not proceed in piecemeal fashion, getting a million here find a million there. I hope that there will not be another slump or recession. I was a member of the House of Representatives when the sales tax was first imposed. The matter has been very fairly discussed by honorable senators opposite. They admit that the sales tax was imposed as an emergency measure. When the country was collapsing economically and industrially, when prices were falling and people were being thrown out of employment, money had to be found, and it was found by means of this emergency tax, which was copied from Canadian legislation. I agree with Senator Dein that it would probably bc better if it were made a luxury tax pure and simple, but I am not forgetful of the fact that this method of, raising revenue cannot be much longer continued. Senator Darcey gave an excellent outline of the financial policy which we should adopt, and I support him. I believe that before very long we will be forced to adopt that policy. During the debate on Supply, we on this side pointed out that unemployment could never be successfully relieved except by the institution of a policy which the Government was not prepared to adopt. The contention of the Leader of the Opposition (Senator Collings) that there have been enormous remissions of taxation by this Government is unanswerable, yet taxation per capita has increased from £5 12s. in 1931-32 to £8 4s. 4d. in 1937-38. There is food for thought in that. Now we do not know from minute to minute when we may be in such a situation that a great deal of money will have to be found quickly. During a similar crisis from 1914 to 1918 Australia utilized its credit to an amount of £2S0,000,000, and it was done willingly, freely and without criticism from anybody. The day is fast approaching when it will have to be done again. The Labour party opposes this proposed legislation. Our job is to represent all sections of the community, but particularly those who will be most affected by the increase of the sales tax. Senator Dein and Senator Wilson suggested that Ave were not sincere in our advocacy of the interests of the working people. I deny that suggestion, and Ave are opposing this increase of sales tax now because we know that it will bear most heavily upon the working people of the country.
– I desire to protest against the action of the Government in bringing down in piecemeal fashion legislation dealing Avith the budget. I have, I admit, only a limited knowledge of parliamentary procedure, but 1 understood that when a government introduced its budget, the matter was dealt with as one piece of legislation.
SenatorFoll. - The necessary bills must be brought in one at a time.
– That may be so, but I can see no reason why the Government should have first introduced the budget, and then introduced measures relating to sales tax before the general discussion on the budget had taken place. When this legislation is passed, that will be an end to the matter, and I protest against such procedure.
This proposal has been discussed chiefly by speakers on our side of the chamber. They have made it clear that the burden of the sales tax will be borne chiefly by the consumers. It may be claimed that those in receipt of a regular wage will have that wage increased because of the increased sales tax. In the past, when the sales tax was under discussion, an attempt was made to justify the tax on the ground that, as wages were automatically adjusted each quarter in accordance with the Statistician’s figures, the workers would not, in fact, pay the tax. That may be right in part, but it has no relation to a very large section of the consumers. All authorities on the sales tax admit that it is borne by the consumers. I understand that one honorable senator this afternoon suggested that the consumers were not concerned in this , matter. I have taken the trouble to seek some authority whose views on this subject might carry a little more weight than’ that of a new member of this chamber, and I have found a very eminent one in the person of Clyde L. King, professor of political science at the University of Pennsylvania. He is the author of a very fine work on public finance, in which he deals with taxation in its many phases. It is not my intention to inflict upon honorable senators lengthy quotations from this excellent work, but I commend to honorable gentlemen the conclusions which he has reached with reference to sales taxes method of taxation. He says -
At the beginning of this discussion we noted that the great argument for general sales taxes is that they bring in badly needed tax moneys at low rates. There the argument for them substantially ends. In theory they are said to be paid by the consumers. Tax laws usually provide that businesses may hand the sales tax on to the consumers. This, business interests try to do in any case. They may pass on the tax when prices are rising anyhow. But under the pressure of keen competition, the average retailer or manufacturer will prefer to try to hold his trade and not pass these taxes on. Or if he does pass them on he adds them, to those commodities that, if possible, will bear the total tax. They gel lost in the business of selling. During depression times particularly, when competition is keenest, they will usually not be passed on by at least half the merchants. They serve rather to retard the poorer merchants and to augment the rich. They bear on living standards as do few other taxes. They have been tried out in the past, and have been thrown out when times permitted. We endure them only because other taxes have declining receipts in hard tunes, and there are at hand no other sources of public income equal to the demand for public expenditures. Such taxes tax the poor and let. those able to pay escape.
That is the contention of honorable senators on this side of the chamber.
– The wealthy taxpayers pay sales tax in common with other people.
– Our point is that the wealthy are best able to pay all forms of taxes.
– I understood the honorable senator to say that they did not pay this tax.
– Senator Dein this afternoon mentioned the sales tax on motor cars. I suggest that the money to purchase luxury motor cars is obtained through the exploitation of labour.
– Not necessarily.
– Wheat-growers with wheat at1s. 6d. a bushel may find it necessary to purchase a motor car and, therefore, will have to pay sales tax on it.
– Wheat-growers who may be the owners of motor cars are benefiting from legislation passed by the Commonwealth and State Governments for the adjustment of farmers’ debts. That is the position in Victoria, at all events. I know of many motor firms whose accounts with farmers have been liquidated in this way. The point at issue is that, whilst I admit that by the application of technical knowledge -to industry, the wealthy industrialists have been able to play a more important part, in the production of wealth, when they wish to purchase a luxury motor car they make sure that, in some way, their share of the profits obtained from labour is increased. It may be argued that, to meet changing conditions in industry, there is also an adjustment in a basic wage to provide against higher retail prices, but such adjustment does not include the probable purchase of luxury motor cars by the workers. The basic wage is determined on a formula which takes into account the number of pounds or ounces of foodstuffs consumed by the people over a period of years. The formula adopted by the Commonwealth Statistician takes 1929 as the base year. Our complaint is that it has not been brought up to date. Thus the worker does not benefit from increased production that has been made possible by the greater mechanization of industry in recent years. I again emphasize that the sales tax bears heavily upon the people least able to bear it. The discussion in this chamber and in the House of Representatives when the national insurance legislation was under consideration disclosed that 80 per cent, of the community are in receipt of wages of less than £4 a week. No one can suggest that that is a luxury .income. How many of that 80 per cent, would be in a position to purchase a motor car?
– Not many.
– It should, I think, be plain to every honorable senator that the person who is in a position to purchase such luxuries as motor cars is best able to pay this or any other form of tax.
– But the honorable senator said earlier that the worker did not pay this tax.
– No. I said that it was claimed by some honorable senators supporting the Government that it did not fall heavily on the shoulders of the workers. Our complaint is that the sales tax, as we know it, falls heavily on the lower paid workers, who have no opportunity to increase their earnings. Business people arc in a more favoured position. They can increase the prices of whatever lines they sell, and so add to their profits.
– There is no arbitration in regard to profits.
– That is so. As I said last night, the legislation under which the Arbitration Court is constituted does not take profits into consideration.
– On what items does the honorable senator suggestthe workers are penalized by the sales tax?
– On foodstuffs. The tax is applicable to many such items. Government supporters are endeavouring to cloud the. issue. However, the tax must be paid.. If it did not press harshly upon the working classes, why should Ave on this side demand its abolition? It is the considered policy of the Labour party that the sales tax must be repealed as soon as possible.
– Mainly for political reasons.
– No. As was pointed out earlier in this debate, the sales tax Avas imposed by a Labour government.
– And we have improved it.
– When the Scullin Government announced its intention to introduce sales legislation, strong objection Avas raised by honorable senators then in opposition. I understand that Senator johnston” and other honorable senators representing country interests, who are now supporting this measure, were hostile to the original proposal.
– .Senator Johnston has been responsible for the exemption of many items affecting farmers.
– It is possible that there is some misgiving in the ranks of Government supporters over this measure. Perhaps this is causing the Government some uneasiness, especially in view of the increased Labour representation in this Senate. The Labour party feels that this increase of the tax must be opposed. We believe that the slight additional revenue which it may produce could be raised more equitably by the imposition of additional taxation in other directions.
– Surely £2,000,000 is not a slight amount.
– I understand that the proposal now before the .Senate is to raise an additional £1,300,000.
– Over what period?
– Last year the Commonwealth Government produced a very handsome surplus, and at the last election cited this as a reason why Labour should not be returned to power. Yet it is proposed to earmark £1,000,000 of that surplus for future expenditure on defence. It has been urged by honorable senators supporting the Government that the position of the Commonwealth is such, or it may in the near future be such, that additional taxation will have to be imposed to raise the increased amount of revenue required for defence purposes. If that be so, why is this large surplus not being used now to offset the necessity for increased taxation? The Government should use every means in its power to ease the burden of taxation at present weighing so heavily on the lower paid sections of the community. Senator Cameron this afternoon emphasized that, should a world catastrophe take place, the workers would be called upon to make the greatest sacrifices. If the blast of war is again heard, it will be our duty as legislators to see that workers and their dependants are not subjected to the exploitation which was their lot during the last world war.
Those pseudo-patriots who, while they lauded the sacrifices of the young manhood of this country, -reaped millions of pounds in. profits as the result of that catastrophe, should not be permitted to do so again. The Commonwealth Government should raise the money it requires for defence from those who are most likely to profit by war. Honorable senators on this side of the chamber are not alone in expressing these sentiments. One supporter of the Government in the House of Representatives, Sir Henry Gullett, with, whom I disagree violently on most political matters, claimed that those who were best able to bear the sacrifices of war should be made to do so. “Whether or not this bill is passed - and I suppose it will be passed, for the Government commands a slight majority in this chamber - the Government will have to be very careful in dealing with this form of taxation in the future. I hope that the present budget will be the- last in which sales taxation will figure.
– in reply - The Government makes no apology for the introduction of these bills, for it has, from time to time, made substantial reductions of both direct and indirect taxes. Whenever, in the future, the opportunity occurs to reduce any form of tax - and the Government hopes that such an opportunity will occur soon - we shall not hesitate to reduce it, for we believe that the only way to give real encouragement to industry in this country is to modify taxation. Honorable senators opposite have spoken of the “failure of private enterprise,” and have advocated the socialization of industry as a means to create employment. That is where the line of demarcation occurs between the policies of the two main political parties in this chamber. The Government and its supporters do not ‘believe in the socialization of industry. They believe that the proper encouragement of private enterprise - the wise use of capital, ability, and energy - is a better way to progress than any socialistic scheme proposed by members of the Opposition. The main argument of honorable senators opposite in this debate has been that the sales tax should be reduced because it eventually bears heavily upon the workers. I point out, however, that when a government reduces taxes, the reduction must likewise apply to the workers and thus lighten the burden which they have to bear.
– Can the Minister tell us which items will be exempt from sales tax?
– For the benefit of the honorable senator, I propose to elaborate the information given by Senator Dein to bear OUt the contention of supporters of the Government that the section of the community which will bear the increased burden of income tax and land tax under the present budget proposals will also bear the bulk of the increased sales tax. Senator Collings said that goods for the use of the sick were not exempt from sales tax, and that he had tried many times in the past to obtain such exemption. He did not mention any particular item for which he desired, but bacl been unable to obtain, exemption. Drugs and medicines, surgical instruments and appliances, and foods for infants and invalids, are exempt from sales tax. That surely disposes of the honorable senator’s contention that the sick have not been spared the burden of this tax.
Senator Collings said that the sales tax was imposed by the Scullin Government as an emergency measure. I admit that, but I ask the honorable senator who, like myself, has the privilege of assisting to represent Queensland in this chamber whether the unemployment relief tax in that State was not also imposed as an emergency measure? The Premier of Queensland, Mr. Forgan Smith, has said on numerous occasions recently that unemployment in Queensland has been reduced to the lowest level that has been known for many years. In fact, he has gone so far as to say that it has almost disappeared. But the unemployment relief tax is still in force in Queensland! It is true that it has been reduced from ls. to lid. in the £1, and a promise has been made that, in the next budget, it will be reduced to 9d. in the £1; but to that extent it will still remain even in this financial year.
– But it has been entirely lifted from workers on or below the basic wage.
– Surely Senator Collings must realize that had it not been for the unfortunate necessity to spend a great deal more money annually on defence than was necessary a few years ago, the sales tax woud have been reduced to the absolute minimum, if not entirely discontinued. Let me remind honorable senators of the way in which defence expenditure has leaped upwards in the last few years. First, may I say that honorable senators on this side of the chamber deplore as much as honorable senators opposite the necessity to incur such heavy expenditure for defence purposes. But it is impossible to take adequate defence measures without raising additional money. In the first year that this Government was in office Australia’s expenditure on defence totalled only £3,400,000. In 1933-34 it had risen to £4,163,000. It has steadily advanced since that time until it is estimated that in this financial year an expenditure of £16,796,000 will be incurred. Obviously, additional taxation is essential to cover this very heavy increase.
I wish now to devote a few minutes to a consideration of the sources from which the sales tax really comes. Senator Dein discussed this point, and I shall support his contentions with some additional figures. In a full year the estimated yield from sales tax on motor vehicles at the rate of 5 per cent., will be £1,786,000. The revenue from jewellery and fancy goods will be £150,000 in this financial year. Will any honorable senator suggest that these items represent a very large outlay by the workers? The plain fact is that the bulk of the sales tax is obtained from luxury lines. Confectionery, for example, will yield a revenue of £312,000 this year; musical instruments, £20,000; and alcoholic liquors, £212,000. These are, to a large extent, luxury goods.
– What amount will be obtained from wearing apparel and household linen?
– Some of the ordinary clothing of the people is exempt from sales tax, and nearly all foodstuffs are exempt. I shall not go so far as to say that every item that enters a worker’s home is exempt, but the list of such goods on which sales tax is imposed is extremely limited. Senator Wilson pointed out that the cost of living index figures upon which the basic wage is calculated are reviewed quarter by quarter. The following goods are entirely exempt from sales tax: Meat, buns, scones, cakes, butter, cheese, cream, fish, jams, honey, milk and milk products, breakfast foods, sugar, sauces and pickles. It will be seen, therefore, that foodstuffs are almost entirely exempt from this impost. The Government earlier deliberately selected two classes of goods for exemption. Agricultural implements, articles used in primary production, were exempted because, as was said by Senators Johnston and Wilson, the primary producers have to sell their goods competitively on the world’s markets, and have no means of passing on the tax.
-It would be advisable if the Minister told us on what articles sales tax is levied rather than the goods which are exempt.
– Perhaps the Leader of the Opposition was not present when I told the Senate some of the larger items on which the tax is imposed. They are not items in everyday household use, and they were deliberately selected to relieve the basic wage-earner. I remind the Leader of the Opposition of the fact that he criticized the Government for reducing the income tax.
– I did not.I objected to the reduction of the land tax and other taxes, but not the income tax.
– At any rate, the people who pay the land tax are not all of the wealthy class as the honorable senator would have us believe. If he would take the trouble to read the Income Tax Commissioner’s report he would find that many people appear before the “ hardships “ board and show that they cannot meet the tax that is imposed. The land tax is imposed upon land or buildings whether they be profit-earning or not. It is in the nature of a tax on capital, and during the period of depression which Australia unfortunately suffered prior to the advent of this Government to office, many men found that, not only country land, but also land in the city, was a distinct liability, certainly not an asset. Nevertheless, the land tax was collected.
– The owners of the Sydney Morning Herald, the Brisbane Conner and the other big “ dailies “ are the people from whom the land tax burden was eased.
– They are merely a small section of those who pay land tax. Nevertheless, the Government believes to-day that that section of the community, because of improved conditions and enhanced property values, should pay its proportion of the additional burden imposed by the budget. Consequently, they will have to pay more land tax this year, One of the reasons why the total collections of income taxwere reduced was because the statutory exemption rate was raised. Men earning a small wage - not the basic wage-earner, but men on about £350 a year, were almost entirely exempted from the tax.
Some years ago the rate of exemption in respect of each child under sixteen years of age was increased to £50 a year, so that a man with a wife and three children who earns £350 per annum is not asked to pay income tax at all. I cite that fact to show that the income tax burden is imposed upon one small section of the community.
We are indebted to Senator Darcey for the advance of new theories, the application of which he claimed would solve all of our financial difficulties. It was unfortunate that the honorable senator told us that the professors under whom he studied the intricacies of finance will not now let him enter their rooms to discuss the subject with them. It is equally unfortunate that, whereas on Monday the honorable senator said that immediately loans were floated the private investors and the banks rushed into the market and poured money into the loans so that they could collect it back in interest, to-day he said that 70 per cent. of the last Commonwealth loan was left on the hands of the underwriters. I begin to understand why those professors shut the door on him when he tries to discuss finance with them.
The Government would not have increased the sales tax had it not been for the existing set of conditions which demand additional expenditure on defence.
– Why is the Government not using the £1,000,000 of last year’s surplus which is being held in reserve?
-That money has been placed in the defence equipment fund for payment for goods on order. Some of it represents money collected from the imposition of a tax of . 7d. per lb. on motor car chassis for the provision of a bounty to encourage the manufacture of motor vehicles in this country. Nearly £1,000,000 has been collected from that source.
SenatorCunningham. - What has the Government done with that money?
– The money has been placed for the time being in the defence equipment fund, and it is available there to provide a bounty on the manufacture of motor cars or motor car parts. When I laid on the table to-day the report of the
Tariff Board on the proposal to establish an Australian motor car manufacturing industry, I pointed out that the Government had adopted the recommendation of the board for the local manufacture of radiators as a first step towards the establishment of the complete industry. A bounty is to be paid in respect of each radiator manufactured. The money that has been collected may also be required for the payment of bounties in respect of the manufacture of other motor vehicle parts in this country. Manufacturers have untilthe 31st March next to place before the Government for consideration proposals for the manufacture of motor car parts or the complete chassis.
The desire of the Government in introducing the budget was that all sections of the community, especially those best fitted to pay extra taxes, should bear the cost of the essential additional expenditure on defence.
Question put -
That the bills be now read a second time.
The Senate divided. (President - Senator the Hon. J. B. Hayes.)
Majority . ….. 4
Question so resolved in the affirmative.
Bills read a second time and reported from committee without requests or debate; report adopted.
– I move -
That the bill be now read a second time.
This is the bill passed annually to fix the rates of income tax. It is proposed, as set out in the financial statement delivered by mo in this chamber a few days ago, to increase the rates of tax for the present financial year by 15 per cent. and it is estimated that additional revenue to the amount of £1,400,000 will be thus raised. Apart from the increase of the rate, the bill does not differ materially from the rates bill submitted from year to year.
Debate (on motion by Senator Collings) adjourned.
Sitting suspended from 6.12 to 11 p.m.
. - by leave - read a statement whichwas made simultaneously in the House of Representatives by the Prime Minister (Mr. Lyons) (vide pages 306-326).
Motion (by Senator A. J. McLach- lan) agreed to- -
That the Senate, at its rising, adjourn till to-morrow at 11 a.m.
The following papers were presented : -
Papua Act - Ordinance No. 13 of 1938 - Petroleum ( Prospecting and Mining.).
Post and Telegraph Act - Regulations amended - StatutoryRules 1938, No. 94.
Tariff Board - Report - Motor Vehicles.
Commonwealth Bank Act - Treasurer’s Statement of the Combined Accounts of the Commonwealth Bank of Australia, and Commonwealth Savings Rank at 30th June, 1938, certified to by the Auditor-
Lands Acquisition- Act - Land acquired at Newcastle, New South Wales - For Defence purpose s.
Quarantine Act - Regulations amended - Statutory Rules 1938, No. 95.
Senate adjourned at 1 1 . 32 p.m.
Cite as: Australia, Senate, Debates, 28 September 1938, viewed 22 October 2017, <http://historichansard.net/senate/1938/19380928_senate_15_157/>.