17th Parliament · 3rd Session
The, President (Senator the Hon. Gordon Brown) took the chair at 3 p.m., and read prayers.
– Will the Acting Leader of the Senate give consideration to the need for the granting of additional clerical assistance to honorable senators? In South Australia wo each have a secretarytypist to assist us with our correspondence, but when we cometo Canberra only one is available for from 20 to 25 senators. This is unfair to the official and unsatisfactory to honorable senators.
– I shall bring the matter to the notice of the appropriate authority, and ascertain whether further clerical assistance can be granted.
– I present a statement by the “War Expenditure Committee of subjects on which confidential memorandums have been addressed by the committee to the Prime -Minister.
asked the Minister representing the Minister for the Interior. upon notice - 1.Is ita factthat unsatisfactory conditions obtain in Western Australia, whereby passengers desirous of travelling on the TransAustralian railway, to the eastern States, have to wait unduly long periods for accommodation*
– The Minister for the Interior has supplied the followinganwers: -
Minister for Supply and Shipping, upon notice -
Can the Minister give any information us to whether it is now possible to hare placed upon the market for motoristsa higher grade of petrol than that of the present “ pool petrol “.
– It is not yet possible to have placed upon the market a motor spirit with an octane rating higher than that of the motor spirit now being supplied. The grade now being marketed was determined upon by the overseas authorities as being that which would enable overseas refinery production to be maintained at the highest level and so make the greatest possible supply available for civilian consumption. It. is not anticipated that conditions will permit of a higher grade being marketed for some months at least.
asked the Minister representing the Minister for Post-war Reconstruction, upon notice -
– The Minister for Post-war Reconstruction has supplied the following answers: -
asked the Acting Leader of the Senate, upon notice - 1. (a) What was the total cost of the Parliamentary Standing Committee on Broadcasting, including printing, &c, for the year ended 30th June, 1945? (b) What the total cost of the allowances paid to individual members of the committee for the same period. 2. (a) What was the total cost of the Parliamentary Standing Committee on Public Works, including printing, &c., for the year ended 30th June,1945? (b) What was the total cost of the fees and allowances paid to individual members of the committee for the same period ? 3. (a) What was the total cost of the Joint Committee on Social Security, including printing, &c, for the year ended 30th June, 1945? (b) What was the total cost of the allowances paid to individual members of the Committee for the same period? 4. (a) What was the total cost of the Joint Committee on War Expenditure, including printing, &c. for the year ended 30th June, 1945? (b). What was the total cost of the allowances paid to individual members of the committee during the same period?
– The answers to the honorable senator’s questions are as follows : - 1. (a) £1,941 14s. 8d., (b) £458 2s. 2. (a) £1,736 0s.6d., (b) £584. 3. (a) £681 19s., (b) £407 15s. l1d. 4. (a) £6716s.1d., (b) £441 15s. 7d.
Date of Commencement
asked the Minister representing the Minister for External Affairs, upon notice, -
– The Minister for External Affairs has supplied the following answers : -
Debate resumed from the 2nd April (vide page 843), on motion by Senator Ashley -
That the bill be now read a second time.
.- There are a number of bills awaiting the consideration of the Senate which are related to the Government’s proposal to continue the uniform tax legislation passed during the war. It is not my intention to speak at length on all of them but to confine rny remarks to the measure before the Senate. The object of this bill is to perpetuate the system of the collection by the Commonwealth of all income taxation and its distribution to the States in accordance with a formula agreed upon between the Commonwealth and the States. When the uniform tax legislation was first.’ introduced, the Government indicated that it was to be merely a war-time expedient applicable for the duration of the war and one year thereafter. Now, however, the Government is presenting a pistol at the head of the Parliament and has demanded the continuance of this special legislation indefinitely. By its action the Government has turned what was a bad sore on the body politic into what can only be regarded as an incurable ulcer. Apparently, it is intended that this legislation will remain on the statute-book as long as this Government remains in office. It has always been accepted as a. principle of government that those who expend money taken from the people should also be entrusted with the task of collecting it. The effect of this bill will be to place all of the States in the position of mendicants, dependent on the bounty of the
Commonwealth. This chamber is charged with the responsibility of maintaining the State rights, and, whilst honorable senators generally consider matters submitted to them from the broad national viewpoint, they also have prominently in their minds an interest in seeing that the States receive proper consideration in any laws passed by the Commonwealth Parliament. It is apparent from a brief glance at the bill that the method of distribution proposed is, to say the least, very complicated. The earlier legislation provided for the payment of certain specific sums to each State. Whilst that principle has to some degree been followed in the bill now before us, provision is also made in it for increasing the reimbursement to the States according to some obscure formula, f should like the Minister representing the Treasurer to explain how this formula, will be applied. It is apparent that there are certain discrepancies in the amounts to be paid to the States. .For instance, according to the explanation furnished by the Minister the amount to be paid to New South “Wales is to be increased from an original allocation of £15,356,000 to £16,477.000, and in the case of Victoria ‘from £6,517,000- to £S,860,000. Yet, we are told in the Minister’s speech that those differences have been reduced with the result that Victoria, instead of receiving ££’,343,000 more than it previously received, will actually receive only £1,970,000. ‘I understand that the apparent discrepancy in these figures is due to the fact that collections of entertainments tax, which were not included in previous reimbursements, are to be included. At first, glance at the reimbursement payments to be made to the respective States I thought that there was a discrepancy ; but that is accounted for bv the fact that the entertainments tax legislation ba.s been repealed. The Minister, in his second-reading speech. did not make that explanation.
Although we protested at the time against the proposed method of reimburse:’ent of the States, and urged that a fairer method would be on a population basis, we now find that the Government at last recognizes the population basis to be the fairest. However, the Government, apparently, is not prepared to adjust this unfairness in a straight-out way. It prefers to effect this adjustment gradually over a period of ten years, so that at the end of that period, that is by 195S, the reimbursements will virtually be made on a population basis.
– And proportionately on a wages basis.
– I should like the Minister to explain that aspect of the scheme. It seems to involve complex calculations, whilst the provision- itself requires a Philadelphia lawyer to interpret it. Under the previous arrangement, about 22 per cent, of the total tax collected in New South Wales was returned to that State, whilst only 12-£ per cent, of the total tax collected in Victoria was returned to that State. Under the bill, however, New South Wales is to receive 23-i per cent, of the total tax collected in the State, whilsi Victoria will receive only 15-J per cent, of the total tax collected in Victoria.
– The honorable senator knows the reason for that.
– The alleged reason i- that Victoria did not expend nearly so much, as New South Wales on the provision of social services. However, Victoria raised a high revenue not only by income tax but also by other means. But the Government now takes up a strange attitude. It says that Victoria previously failed to provide liberal social services” and, therefore, that State shall be prevented from righting that wrongby liberalizing its social services to the same degree as other States. Thus, instead of helping Victoria which has allegedly been behind the other States in this respect, the effect of this legislation over the last four years - as it will continue to do in the future - has been to prevent Victoria and South Australia from increasing the. wages of their civil servants and from liberalizing their social services such as hospital treatment and educational facilities. Another argument used was that New South Wales provided widows’ pensions, whereas Victoria did not do so. The responsibility for making these payments has been removed from the shoulders of New South Wales. By introducing this amending legislation, the Government is admitting al last that it has not been fair in its distribution of money to the States. It is proposed that Victoria shall receive 15£ per cent, of the total amount of income tax collected within that State, but in the case of New South Wales, the figure is to” be 2’oi per cent. No fairminded person can argue that this is an equable distribution.
– The arrangement was agreed to by the Slate Premiers.
– No. The Commonwealth Government said to the States, “ We shall take over from you all income tax revenue. Yon may still collect an additional income tax if you wish, but in that event you will not receive a grant from the Commonwealth “. With the pistol pointed at their heads, the States had to comply.
– Does not the honorable senator believe in uniform taxation?
– Not this type of uniform taxation, which in effect is rot. uniform taxation at all. It may be uniform income taxation, but that is all. A peculiar feature of the Government’s taxation proposal is that, although _ the Commonwealth will remain in the entertainment’s tax field, the collection of additional entertainments tax by the States will nol deprive them of the right to Commonwealth reimbursement. Why this differentiation is being made I cannot understand. By this legislation, the Commonwealth Government is acknowledging t that during the last four years it has been robbing Victoria and South Australia, as the Opposition alleged when uniform taxation was first introduced. The Goverment now admits that the reimbursement of those States has not been sufficient, because it proposes to increase its grant to those two States by £2.000.000 each.
Son a tor Gibson.- An obvious admission of robbery.
– Yes. For the last four years, Victoria has been robbed of £2,000,000 per year for the benefit of the other States and, of course, of the Commonwealth. But does the Commonwealth Government propose to compensate the States that it has robbed? No. It will not permit itself to be convicted of its crime of robbery.
It merely says, “ We shall not rob you to the same degree in future “. The robbery is to continue, but on a considerably reduced scale.
There is another matter which requires some elucidation. The official explanation of this measure indicates that Commonwealth grants, which in the past have been made to Tasmania, South Australia and Western Australia, are to be reduced because of the additional reimbursements made. It is true that any State may appeal to the Commonwealth for an additional grant, but that right has been enjoyed in the past. What is the policy of the Government in regard to this matter? Does it now say that the three claimant States which have been granted large sums of money every year are to be deprived of them under the system which the Government is now inaugurating? The grants may be increased in certain circumstances as the result of increases of population, and in accordance with the increase of wages paid in those States, but I should like an explanation from the Minister on the matter. The population is to be determined in various ways. First it is to be considered from the point of view of whether there are one, two, or three persons to the square mile. Where there is only one pe:son to the square mile, he is to be regarded a– three-quarters of a person; if there are two individuals to the square mile, they are each to be regarded as hal: a person, and in more thinly populated areas an individual will be regarded as only a quarter of a. person. We are ‘.o perpetuate, apparently, a vital difference between the thinly populated and the more closely populated States. Such action should not be contemplated in calculating the amount of the grants to the Stages. South Australia and Western Australia are large in area and large portions of those States are not populated at all, or are only sparsely peopled. Why should an inhabitant of such a State be regarded as three-fourths of a person, and another living in an area very thinly populated as only one-four:h of a person? Sufficient explanation of the bill has not been given. No doubt the Minister has further details at his disposal, but he did not choose to furnish them to the Senate, knowing that he ha= the necessary support in the chamber to enable the measure to be passed. The bill provides that from 1948 to 1958 the grant shall be calculated on a population basis, with a 10 per cent, reduction each year, so that, in 1958, the grant will be 90 per cent., calculated on a population basis, and 10 per cent, on the present proportion. Is that calculated according to the total amount allotted under the bill, or is it a calculation based on increased population?
– The honorable senator will have to study Euclid.
– Whatever we do in this Parliament, we should endeavour to simplify legislation. This bill resembles a Chinese puzzle. The aggregate annual grant for the period from 1948-49 to 1956-57, ‘ inclusive, is £40,000,000, and varies in accordance with the increase or decrease of the population of the six States between the 1st July, 1947, and the 1st July of the year in respect of which payment is to be made. In 194S-49 the aggregate grant will be £40,000,000, divided by the population of the six States at the 1st July, 194’7, and increased according to population by 195S. At the end of .1,958 will the grant be made entirely on a population basis? - We are told that the amount so calculated will be further increased by a percentage equal to one-half of the percentage increase of the average wages paid during 1947-48 over the average wages paid in 1946-47. What does that mean? If the average wage was £5 a week, and it rose to £6 a week, the increase would be 20 per font. Under the bill, consideration has to he given to half of that increase, or, actually, a 10 per cent, increase. Let us assume that the workers in a particular Stale number 500,000. A percentage rise based on their numbers would represent £12,500,000. On the other hand, if the 1.0 per cent, were based on the total amount that is to be paid to the States under this bill. New South Wales would receive an increase of £1,647,700, Victoria £SS6,000 and each of the other States one-tenth of the respective amounts set out in the first, schedule. Which calculation is correct? The Minister does not see,nl inclined to offer an explanation.
– I shall do so in duc course.
– Does the bill mean that a State will receive 10 per centof its total increased-, wages or is the average increase of wages to be calculated on the present grant of £40,000,000 ? Legislation of this kind should he so clear and simple that we could understand it. In my opinion, the principle underlying the bill is wrong because it tackles taxation in a wrong way. An authority which expends money should also be responsible for raising it. A State which manages its finances wisely should not be treated worse than a spendthrift State. I do. not believe that any honorable senator should swallow a measure of this kind without first obtaining from the Minister a clear exposition of its meaning. It has been said that the States have agreed to this arrangement. That is not so. The Commonwealth held a pistol at their heads and said, in effect,. “ Take this, or you will get nothing Naturally, in- such circumstances, th<>States accepted the little rather than receive nothing at all. For four yearsVictoria and- South Australia., particularly the former, complained of the treatment meted out to them by the Commonwealth Government, but no sooner was. there a change of government in Victoria! than the Commonwealth adopted a different attitude towards that State. Byits actions it said, “It is one thing to rob Victoria while a non-Labour government is in office there, flout it is another thing to rob that State when it has a Labourgovernment “.
– There is ti lot of truth in that. ‘ Senator LECKIE.- Accordingly, the Commonwealth Government suddenly decided to pay to Victoria an extra £2,000,000. that was indeed a friendly gesture by one Labour government to another. I wonder whether honorable senators opposite who approve that action would be of the same mind if a Liberal government in the Commonwealth had discriminated against a State Labour government. It stands out clearly that Victoria is to be granted a larger sum because it has a Labour government. Such misuse of moneys provided hy thetaxpayers constitutes a scandal. I can understand strange things being done in. war- time.-
– Does the honorable senator think that the action taken is in the nature of retribution for sins committed in the past?
– Yes. It is strange to find Government supporters approving the expending of Commonwealth revenue to help a State merely because a Labour government is in office there. I presume that the Minister will insist on the passage of this bill through the Senate, but I hope that he will at least have the grace to explain the meaning of some of its clauses, and will show how certain calculations have been arrived at, and will also explain why a simpler method of calculation was not chosen. The bill is most complicated-
– lt is scientific.
– I thought .that the Minister would be able to give an explanation of the measure offhand, but as he has not done so I hope that he will do so when he replies to the debate. On behalf of the Opposition, I protest against the casual way in which the bill has been presented to us. The Minister has said, in effect, “ You can take it or leave it. I do not need to explain its meaning, because we on the Government side are determined that the. bill shall pass “. That is not the way to present legislation to this chamber.
– Did not governments of which the honorable senator was a member put bills through at the rate of one a minute ?
– They were not bills like this one. This .measure seeks to perpetuate an entirely new system of finance as between the Commonwealth and the States. The latter are to become the playthings of the Commonwealth. Every honorable senator is charged with the responsibility of guarding in this Senate the interests of the State he represents. I trust that the Minister will deal with the point I have raised so that we may be more fully informed as to how the machinery devised for reimbursement of the States will work. I am not at all sure that the Premiers of the States had a clear conception as to how the proposal put before them would work out in practice. I have no doubt that the Premier of Victoria returned from the conference of the Commonwealth and
State Ministers, and, throwing his hat into the air, said, “ I am toget an additional £2,000,000 for Victoria ; ‘see what influence I have with the Commonwealth -Government “. I strongly object to the revenue of the Commonwealth being used to bolster certain political parties in the State sphere. I have never known a government of, this or any other country to say so openly and boldly, as this Government has done, “ We are out to help our own party and the revenue of the Commonwealth will be used for its benefit “. It is obvious that Victoria is to be given an additional £2,000,000 solely because the Premier of that State is of the same political complexion as the Government now in office in the Commonwealth sphere.
– The honorable senator is surely being facetious.
– Is the honorable senator able to say why this additional amount was not paid to Victoria earlier? If he believes that it should have been paid earlier, then he must believe that Victoria has been robbed of £2,000,000 a year during the last two years.
– I have not said anything of the kind.
– Then how does the honorable senator explain the Government’s sudden decision to increase the allocation to Victoria ? The States agreed to the formula for distribution of the proceeds of the uniform tax under compulsion. I do not condemn uniform taxation as such, but I object to the statement that this is, in fact, uniform taxation. It is nothing of the kind. It is uniform income taxation, but nothing else. The Government, for some reason or other, differentiates between income tax and entertainments tax. Surely, they pre both in the same category. I trust that the Minister, either during this debate or during the committee stage of the bill, will furnish replies -to the points which I have brought to the notice of the Senate.
.- I had thought that the great importance of this subject was rivalled only by its dryness, but I am delighted to find ho much levity introduced by Senator Leckie into the debate. I propose to review briefly the history of the introduction of uniform income taxation, to deal with some aspects of it, and, perhpas, to answer some of the questions raised by Senator Leckie. I suggest, however; that some matters brought forward by the honorable senator could be more appropriately dealt with in committee. In some respects I am afraid 3 shall be obliged to correct the honorable senator. Uniform income taxation was the concept of a committee appointed by the Treasurer in March, 1942, consisting of Professor Mills, the right honorable member for Yarra (Mr. Scullin) and Mr. E. S. Spooner. The committee’s report, which is available in printed form to every honorable senator, was submitted in the same month. It is an important document and forms the basis of the proposals submitted by the Commonwealth to the States at a conference of Commonwealth and State Ministers held at Melbourne in April, 194.2. It was represented by the Commonwealth to the States that if they would vacate the field of income taxation for the period of the war and one year thereafter, the Commonwealth would ensure that they were reimbursed fairly for their vacation of that field, and that the scheme would terminate one year after the war had ended. The point I ask Senator Leckie and other honorable senators to remember is that the proposal was rejected in its entirety by the Premiers of all of the States. The honorable senator cannot have it both ways. The offer made by the Commonwealth was rejected by the States and accordingly the Commonwealth cannot now be held to it.
– The States were told that the unif orm taxation legislation was to be a temporary measure.
– That was intended by the Commonwealth Government at the time, but the States rejected the Commonwealth’s proposal.
– The first bill brought in to deal with the subject definitely laid down that the scheme would operate for the duration of the war and one year thereafter.
– Under the terms of the existing act the scheme of uniform income tax cannot cease at the earliest until the 30th June, 1947. In order to show that the whole matter is completely under control of this Parliament that period is being terminated by the bill now before us at the 30th June, 1946. Senator Leckie has claimed that the Government embarked on the legislation without reference to the States and in the teeth of their opposition. Let us examine the facts. The four bills implementing the present scheme were based by the Commonwealth largely on its defence power, the Commonwealth not realizing at that time the amplitude of its peace-time powers to deal with . such a subject. That there was no agreement then between the Commonwealth and the States cannot be demonstrated better than by quoting the fact that four out of the six States attacked the legislation in the High Court and that the attack was unsuccessful. The Commonwealth, by .utilizing section 109 of the Constitution, which invalidates State laws inconsistent with a law of the Commonwealth, was able to give priority to Commonwealth assessments and, under the powers conferred upon it by section 96 of the Constitution, was able to make grants to the States with or without conditions. That position was set out plainly by the High Court.
– What is the honorable senator endeavouring to prove?
– That there was no’ promise by the Commonwealth that the uniform taxation legislation would endure for only one year after the war. That, I submit, was part of an offer which was made to the States but which they rejected. It was not a broken pledge at s.11 on the part of the Commonwealth. The position is different with relation to entertainments tax. The financial power of the Commonwealth having been demonstrated as I have explained, the States in August. 1942, agreed to vacate the entertainments tax field and accepted a scheme of reimbursement proposed by the Commonwealth. Because that was a matter of agreement between the States and the Commonwealth, the Commonwealth is not now imposing the condition that the States shall remain out of the field of entertainments tax when the period of the agreement has expired. The arrangement under the bill is free of the con,dition that the States must stay out of- the entertainments tax field. That obligation is no longer imposed upon them. I was present at the last conference of Commonwealth and State Ministers when the whole subject was discussed. I also attended the various conferences between advisory and statistical officers of the Commonwealth and the States on the subject. I say without hesitation that at these conferences all of the States completely rejected uniform income taxation as a permanent scheme. Prior to that conference each Premier had expressed the utmost hostility to it in letters to the Treasurer, and the Premiers repeated those objections very vehemently on the first day of the conference, taking the whole day to do so. Their attitude at the conference was given prominence by the press. But I put it this way: When the Treasurer intimatedto the Premiers that, whether they liked it or not, uniform taxation was here to stay, they recognized the virtue of the old Chinese proverb which counsels relaxation in the face of the inevitable. On that basis they agreed with the Commonwealth on two points : First, the total amount of the reimbursement and how it should be expanded ; and, secondly, how the reimbursement should he distributed among the States. Those matters were clearly matters of agreement after the Commonwealth intimated to the States that despite their opposition uniform taxation was here to stay.
– The States had to accept the best terms that were approved by the Commonwealth.
– I do not agree with the honorable senator on that point, because, in fact, the States did not accept the proposals made by the Commonwealth. At that conference the Commonwealth had proposed to the -States that they should be paid grants commensurate with their expenditures on social services. That proposal was completely rejected by the States. The proposal that the grants should be based on increases of population and varied according to increases of national income emanated from the State, and was virtually agreed to by the Commonwealth after a good deal of discussion; but there was agreement between the States and the Commonwealth both as to the total amount of the grant and the basis on which it should be distributed. From the conference of experts emanated two formulae which have caused concern to honorable senators opposite; but those formulae were evolved in the first instance by the States and were submitted by the States to the Commonwealth which agreed to them with modifications. And, ultimately, there was complete agreement in ‘respect of both those matters. These facts demonstrate, if the need for further demonstration exists, that the Commonwealth and the States did not agree upon the broad principle of uniform taxation. Let me say that the Premiers of the States have been consistent in their attitude. Since the last conference of Commonwealth and State Ministers, the Treasurer has asked the various States to meet him in the matter of plant, office accommodation and equipment as from the 1st July next, as the States have been compelled to do up to date. However, each Premier refuses to commit himself on that point. Further, the Premiers decline to meet the. Treasurer’s proposal to cancel the agreements under which the States are collecting Commonwealth taxes. They are taking no step that would indicate acquiescence in uniform taxation until Commonwealth legislation is, in fact, placed on the statute-book. Therefore, even to-day, there is no agreement between . the Commonwealth and the States regarding the principle of uniform income taxation.
Senator Leckie raised the point that the government which expends revenue should be responsible for raising it. With that as an abstract principle one must agree; but right from the inception of Federation we have failed to apply that principle in practice. The Braddon clause, the per capita payments, the Financial Agreement, grants paid through the Commonwealth Grants Commission, alterations of the Financial Agreement, and the income tax reimbursements that have been made for the last three or four years are not in accordance with that principle. And what is true of Australia is true of every federation where major responsibilities, particularly responsibility for national defence, fall upon the federal body; and, of course, and wisely, the dominant financial power must be vested in the body that carries those responsibilities. Accordingly, it is not possible as a practical measure, however wise it may be theoretically, to separate State powers and revenues in one class and Commonwealth powers and revenues in another class.. Inevitably, there is a dove-tailing between the pair of them. That dovetailing has gone on since federation, and will continue indefinitely.
I now propose to address myself to a more or less abstract consideration of the justification for uniform taxation in Australia, As the Minister has pointed out, prior to 1942 there were 26 separate taxes on income in Australia; and that does not mean only 26 separate acts dealing with the subject. There were as well many assessment acts and qualifying acts apart from the acts which, in fact, imposed income tax, But there were 26 separate taxes prior to 1942. That is an absurdly high number of taxes in relation to one subjectmatter in a country as young as ours and in a country which has. a population of only 7,000,000. The extraordinary position which arose under the scheme of joint Federal and State intervention in income tax was this: Owing to the fact that State tax, which was in fact paid, was allowed as a deduction in calculating income subject to federal tax, taxpayers with the same income, the same responsibilities and in all other respects situated quite similarly paid entirely different taxes to the, Commonwealth. Honorable senators will be interested to hear from figures dealing with that matter. For instance, on an income of £300, the Federal tax paid by a Victorian amounted to £26, whilst a South Australian receiving the same income paid Federal tax amounting to £24. On an income of £800. a Victorian paid £131 Federal tax, and a South Australian £120. On an income of £1,500 a taxpayer in Victoria paid £388 Federal tax and a Queenslander £347. And so on, until we ‘find the extraordinary position that on an income of £40,000 a Queenslander paid Federal tax amounting to £20,074 and a Western Australian paid Federal tax amounting to £25,395, or a difference of £5,321. And this difference graduated down the various ranges of income. I put it to the Senate that the old system set up the absurd position that taxpayers similarly situated as I have indicated paid different amounts to the national exchequer. This bill will rectify that anomaly. In future, taxpayers will pay exactly the same income tax regardless of the State in which they live so long as their income, family responsibilities and general situation remain similar.
A third point in favour of uniform taxation is that henceforth we shall have only one taxing authority, one return, one basis of assessment, one set of rates, one set of allowances and concessional deductions, and the innumerable separate State income taxes will be abolished. I am sure that honorable senators will agree that that is a vast advantage. The fourth advantage of this scheme, and of this scheme alone, is that it permits a “ pay-as-you-earn “ system of tax collection. This is not practicable where the States are in the income tax field as well as the Commonwealth. It would be far too embarrassing to industry and to taxpayers generally, if the States were to operate “pay-as-you-earn” taxation, necessitating separate returns throughout Australia. Another important advantage of the new scheme is that with only one collecting authority reciprocal arrangements with other countries to prevent double taxation on Australian incomes will be greatly facilitated. I ask honorable senators not to overlook that point.
Uniform income taxation was born of the Commonwealth’s responsibility in time of war. With the high taxes that the Commonwealth had to levy to finance the war, and to meet its other obligations, there was no room for State taxation.
– Most people agree with that.
– I am merely pointing out the origin of the scheme ; but perhaps I need not pursue the fact that the’ Commonwealth had no elbow room as between State taxes. Income tax rates varied considerably throughout the Commonwealth. In South Australia, for instance, the rate ranged from Is. 3d. in the £1 on an income of £100, with allowances for dependants, to 5s. in the £1, whereas in Queensland the range was from 6d. in the £1 on £100, up to 9s. in the £1. With high State taxes on high incomes, and various rates on lower incomes, there definitely was not scope for the Commonwealth to impose income tax at the heavy rates required to. finance this country during the war. That justified the introduction of uniform income taxation. The position has not altered greatly since then, because, arising’ out of the war, the Commonwealth has enormous commitments. In respect of new war debts alone, its commitments total approximately £50,000,000 a year. l.’n addition, it has embarked on an expanded social services programme, which I contend is most, desirable from the point of view of the people of the Commonwealth. The Commonwealth Government is also facing heavy expenditure to provide for the defence of this country, and is called upon to make a substantial contribution to the relief of other countries which are suffering great distress from the war. In view of the high rates of tax that the Commonwealth must henceforth impose, as compared with prewar levels, there will not be room for the Sates in. the income tax field with any degree of comfort.
– But the States are not expending any less money to-day than they were before the war.
– Unquestionably the States are expending much more money to-day than they were before the war. That answers Senator Leckie’s complaint about the generosity of the present reimbursements. .That is a factor which the honorable senator apparently overlooked when he complained that justice was not being done to the States * under the present basis of reimbursement - I am not speaking now of the reimbursements proposed under this measure, [f the grants of which .Senator Leckie complained were inadequate, surely it is surprising that, throughout the period of heavy income taxation, the States have had record surpluses, record cash resources, and, in addition, have developed their social services to an extraordinary degree. I shall endeavour to convey to honorable senators the position regarding State surpluses during the past three years. There are two sets of budgetary figures that relate to the finances of a State. First, there are the published results, and then there are the results as finally adjusted, taking into account revenue used to pay off loans, and amounts transferred from consolidated revenue to trust funds and ear-marked foi- specific purposes. Broadly, according to State budgets for the financial years 1942-43 to 1944-45, inclusive, surpluses, as published, have totalled £5,735,000. “When adjustments are made for repayment of loans, and amounts transferred to trust funds, the surpluses total approximately £56,000,000. Confirmation of that may be found in the report of the Commonwealth Grants Commission.
– Did every State have a surplus?
– All except Tasmania, and with a qualification, South Australia. For the three-year period , Tasmania had a deficiency of £99,000 net. South Australia’s budget was balanced last year, but with the aid of a grant of £553,000 under section 6 ‘ of the States Grants (Tax Reimbursement) Act. “With these two exceptions, I say without fear of contradiction that all States enjoyed substantial surpluses.
– They lacked the opportunity to expend money.
– That is so ; but I am submitting in reply to Senator Leckie that the States were actually quite well off during the period of the taxreimbursement grants of which he was complaining. Moreover, the cash resources of the States at the 30th June, 1945, were phenomenal. They amounted to approximately £75,000,000 of which approximately £40,000,000 was immediately and readily available to the Treasurers of the States.
I shall say a word or two now about the progress of the States in regard to social services during the same three-year period. During the years 1942-43 to 1944-45, inclusive, all States increased their expenditure on. social “services considerably. In New South Wales, the per capita expenditure on social services in 1942t43 was S3s. 5d. By 1944-45 it had risen to 92s.- 5d., an increase of 9s. In Victoria the increase during the same period was 17s. 3d. per capita, Queensland 2Ss. 10d., South Australia 20s. 6d., and Western Australia, lagging a little behind, 6s. 6d., whereas for Tasmania, we have the record figure of 33s. lid. Those increases occurred during the period in which, according to Senator Leckie, the grants to the States. were entirely inadequate. This demonstrates beyond all doubt the adequacy of the grants made to the States under the present system. I shall deal later with the adequacy of the grants now to be made.
– I was not speaking of the inadequacy of the grants. I was speaking of their inequity.
– There cannot be inequity in a basis of reimbursement which enables States to accumulate huge surpluses, build up vast resources, and simultaneously develop considerably * their social services. It is interesting to note that the Leader of the Opposition in the House of Representatives (Mr. Menzies) who is Senator Leckie’s party Leader, is in complete opposition to the honorable senator’s view that the States which are better placed financially should not contribute more generously to Commonwealth revenue than others.
Something has been said regarding the infringement of State sovereignty by uniform income taxation. It is hardly necessary for me to point out that this scheme has been inherent in the Constitution since federation. Section 109 of the Commonwealth Constitution Act which gives to the Commonwealth priority in income tax assessments, has not been changed, nor has section 96. Again I point out that the States are not forbidden to enter the income tax field, although they do suffer the sanction and the penalty that if they do so, they are not. entitled to the Commonwealth grants provided for under this measure.
– What hope would they have of getting anything after the Commonwealth has had its “ cut “.
– I have already said that there is little room for them in the income tax field. When we talk of State sovereignty we deal with a legal concept. There cannot be an infringement of the sovereignty of the States when, as a matter of fact, the power being exercised now’ was in the Constitution from the beginning.
– That was not known to either the Commonwealth or the States.
– I concede that up to a point it was generally unsuspected that the Commonwealth had such vast power; but Alfred Deakin, seeing the taxing power in the hands of the Commonweal’.h and recognizing that section 96 was put into the Constitution for some purpose, said in the early days of federation that the States were financially bound to the chariot wheels of the Commonwealth. Even if we moderns did nor realize that that power was latent in the Constitution, the founders of federation knew it and were aware of what they were doing. I suggest that they were sufficiently far-sighted to recognize that the needs of :he Commonwealth might force it into all kinds of activities. They probably visualized the defence .requirements, but there are far more emergencies than war, and we have had bitter experience of some of them. The fathers of federation made provision as far as they could see the necessity lor it, and we, like wise men, thank them and build on their efforts.
I shall refer briefly to the flexibility of State revenues, despite the fact that we are embarking on the States’ field of income taxation. The grants hitherto made are on an average 33-3r per cent, of the total revenue of the States in 1944-45. In determining what is the total revenue of the States I am including only the net result of business undertakings. I am allowing for gross receipts less expenditure, and taking the grants as a percentage of net revenue. They represent 33-i per cent, of the total revenue of the States. In other words the States are getting about 66 per cent, of their revenue from sources not connected with income tax at all. Even on the basis of the grants we are now proposing, they will represent about 37 per cent, of the total net revenues of the States. That means that the States will still derive about 60 per cent, pf their revenue from sources completely under their own control. I suggest, therefore, that the States’ flexibility is not gravely impaired. We should remember that the Commonwealth entry into the field of higher income taxation gives them very little scope in that direction, but there are new fields of taxation which they could enter. Not all State expenditures vary with prices, costs, wages, &c. For instance, about one-third of the States’ expenditure dealing with fixed debt charges, interest on loans, and sinking fund payments remains comparatively static. It does not increase with rises of the prices of commodities or increases of wages.
The grants provided in the bill have been increased by £5,745,000. There is an element of generosity in the treatment of the States by the Commonwealth, and, far from deploring that, I welcome it. The Commonwealth, of course, faces the reality that costs have increased in the intervening years since these grants were first made, and that the needs of the States in providing adequate social services have increased. The population is steadily increasing, and the needs of the people must be catered for. About £2,000,000 of the increase of £5,745,000 goes directly to South Australia, Western Australia, and Tasmania, and to that extent the cost to the Commonwealth will be no greater than formerly, because the grants normally payable by the Commonwealth Grants Commission are in the neighbourhood of £3,000,000. These increased grants so far as those States are concerned have the advantage of relieving the claimant States of their dependence on the Commonwealth Grants Commission to an appreciable degree. I think that it will, be agreed that that, too, is very desirable. After all, the increase is merely proportionate to the increased responsibilities and costs of the States, and £2,000,000 of. it may be offset against the amounts that would otherwise be paid by way of grants under section 96 to claimant States.
Referring to matters which caused Senator Leckie some difficulty, I point out that the formulae to determine the aggregate amount of the grants and their distribution to the States were both evolved by the States. I do not imply that the States were given carte blanche in the matter. It would have been easy for them to agree upon it, had they been allowed to fix their own amounts, but the Commonwealth could not allow them to fix and distribute the total grant as they wished. They might have allocated very little to the claimant States, and thrown the whole burden on the Commonwealth of making increased grants to those States through the Commonwealth Grants Commission. Whilst the allocation of the total amount between the various States was .left largely to the States, the Commonwealth and its officers kept a close eye on what was happening. They watched very carefully the effect of the formula submitted for providing for gradual increase of the total amount of the grant. As to the grant itself, both the Commonwealth and the States were agreed that, if uniform taxation had come to stay, £40,000,000 was adequate in the two years lying immediately ahead, that is, 1946-47 and 1947-48. After that period they considered that regard should be had to two factors - ‘the increase of population and the need -for giving to the States the benefit of an expanded national production. I suggest to Senator Leckie that there is nothing complicated about dividing £40,000,000 by the number of the population at the 30th June, 1947, which gives the per capita basis, and then multiplying the result by the increased population at the later relevant date. That is a simple approach to the problem, and. I know of no other practical way in which provision could be made for the increase-
– That method was agreed to by the statisticians.
– The statistical’ officers of the Commonwealth and the States conferred at considerable length in determining this formula, and, after i great deal of thought, they discarded other methods of approach. We have to accept these formulae as being the considered product of the best statistical intellects that the Commonwealth and the States have at their disposal. Although they are complicated in their expression in print, they resolve themselves intosimple factors.
Take the second element that determines the increase of the grant. I haveexplained the need for some addition to the grant on account of the increase of population. It will be readily conceded that the Commonwealth should not give to the States an amount proportionate to the full increase of the national production. ‘ A great many factors in State- budgets are fixed, and the expenditures in respect of them do not increase. In any event, the Commonwealth needed to keep some control of the position, and it is giving to the States, by way of an additional gross amount, what is, in effect, a sum equivalent to about one-half of the increase of the value .of the national production. That is determined by having regard -solely to the movement in wages as determined by the pay-roll tax. That does not take into account all wages, and it does not allow for Commonwealth employees or for employers paying less than £20 a week ; but the statistical officers have agreed that that is the best approach to the determination of the increase of the national income. It is impossible to determine exactly what is the value of the national production or the gross national income. We can arrive at many factors of it, but there are corners and pockets the assessment of which are a matter of judgment. In calculations of this kind it is necessary that as simple and as accurate a formula as possible should be available. The statisticians have shown great understanding and keenness in evolving this simple system. If wages as shown by the pay-roll tax were to rise 20 per cent., as .Senator Leckie remarked, 10 per cent, would be added to the total grant. To the total grant of £40,000,000 it would be necessary to add an amount for the increase of population and ‘then add 10 per cent, to that total. There is nothing complicated about that. I do not anticipate a 10 per cent, increase in the national economy. I hope that the comment by the honorable senator gives an indication of his confidence in the Government’s ability to . provide a soaring economy and full employment.
– Could the honorable senator give an example to show how the formula works?
– I thought that I had made the position clear to honorable senators. Let us assume that there are two people in Australia and that £1,000,000 is to be distributed among them. In the following year the stork makes a present to them, and . there is a third person. In those circumstances, the grant would rise to £1,500,000 because of the increase of population. If in the meantime the income of the community had risen from, say, £1,000,000 to £1,500,000- a 50 per cent, increase - there would be an additional grant of only £375,000 on account of the increase of the national income. I cannot put the matter more simply.
The bill provides that the distribution of the total grant, when it has been ascertained, shall be as shown in the schedule for .the first two years; the total of £40,000,000 will be’ distributed on the basis therein set out. We then come to the problem which seems to worry Senator Leckie. He considers that the distribution should take place entirely on a population basis. In adopting that attitude the honorable senator is standing alone, because the State Premiers and their officers, including statisticians, recognized that, although that was a desirable ultimate objective, it should be reached in gradual stages. The proposal contained in the bill emanated entirely from the States. Senator Leckie is at variance with the States in regard to uniform income taxation and also in regard to the distribution of the grants. An interesting formula has been evolved.”
– How can something which is not right now be right in 1958?
– The States will require time to make necessary adjustments, and so the change will come about gradually. If an immediate change were made, South Australia, Western Australia and Tasmania would be placed at a great disadvantage. The Commonwealth did not desire to place them in that position. I can realize the honorable senator’s desire for the grants to be made on a population basis,- because Victoria has a large proportion of the total population of Australia and would, benefit accordingly. Moreover, Victoria is a comparatively small State, and consequently has not the same administrative difficulties as have the larger States.
Senator Leckie also was troubled regarding the reason for adopting a graduated .scale based on population. The grants will be distributed on the basis set out in the schedule for two years and after that partly according to population until 1958. In determining the adjusted . population the statisticians! had regard to two factors-: First, the fact ‘ that it costs a great deal more to provide social services for a child than for an adult. Accordingly, once the population is ascertained, four times the number of children is to be added to the figure to allow for the disproportionate cost incurred in providing social services for them.
– Costs are also greater in a large State.
– That is the second factor to which I intended to refer. There is provision also for a percentage to bc. added to the population according to the number of people living in sparsely settled areas. Should 8 per cent, of the population live in sparsely populated areas, a percentage will be added to the population in addition to the adjustments made in respect of children. Year by year less emphasis will be placed upon the proportions in which the £40,000,000 is allocated and more and more emphasis will be placed on the adjusted population basis, until in 1957-5S the whole of the grant will be distributed solely on the adjusted population basis, which takes into account the two simple factors which T have mentioned, namely, the number of children in the States and the proportion of people living in sparsely settled districts. Senator Leckie, who is distressed that uniform income taxation has come to stay, should not entertain high hopes that we shall ever revert to the old system. However, provision is made for such an event. If all the States come back into the income taxation field, the Commonwealth will pay to them an amount equivalent to the arrears of State taxes collected during the years. That is in fulfilment of a promise contained in the existing legislation, and it is only fair that that should be done. When the States vacated the field of income taxation they recognized that each year about 20 per cent, of the total collections. represented taxes paid in respect of assessments made in previous years. In other words, only about 80 per cent, of the tax levied in a particular year is, in fact, collected in that year. If the States exercise their sovereign right and decide that they will have no more of this scheme, but will re-enter the field of income taxation, the Commonwealth recognizes that they will be short of that 20 per cent, when they start again, and so it has been decided to give to them in that event an amount equivalent to those arrears. Thus they will be able to finance themselves in the first year of their reentry into the field. That is merely a matter of equity in dealing with the States. However, Senator Leckie should not try to draw any consolation from that fact and think that it is not intended to make uniform income taxation permanent.
– I am not making any mistake about that.
– I am relieved to hear that interjection. The bill also provides for a periodical review of these arrangements. My view is that this is the first time that real principles have been incorporated in a. broad way in Commonwealth and State financial relations. Until now it has been a matter of bits and patches. But here we have agreement in important matters, and there is also an honorable understanding that the new basis shall stand for at least seven years without any specific approach being made by one side to the other. No Commonwealth act can provide that a ‘State may not approach the Commonwealth for seven years, and. this bill does not attempt to do that. The provision dealing with a review is inserted for the sole purpose of placing- on record the honorable understanding between the parties to which I have referred. The Commonwealth Government is not binding this Parliament any longer than this Parliament wants to be bound, and despite the provisions of this bill, there is nothing to prevent the States from seeking a change. Nor is there anything to suggest that the Commonwealth Parliament will not consider any such approach should it -be made. In .that event, the only obligation on the Commonwealth will be to consider the application for a variation; there is no obligation on it to do anything else.
I submit that this bill is the biggest step towards putting Commonwealth and State financial relations on a proper scientific basis that has been taken in the history of federation. It is interesting to note that Canada proposes to do exactly what this bill sets out to do. If time, permitted, I should be happy to read extracts from the Canadian proposals, but
I take this opportunity to review the changed attitude- of the Commonwealth towards the States in recent years and shall cite Tasmania by way of example. Recently that State has been relieved by the Commonwealth Grants Commission of a reduction for effort required on account of claimancy. That represented a loss of £30,000 per annum to Tasmania. That penalty has gone; I hope and believe that it has gone for ever. The Commonwealth Grants Commission will adopt -a new attitude towards States which make application to the Commonwealth under section 96 of the Constitl 011. It ‘ proposes also to consider eliminating Victoria from the social services standard to be adopted for Australia as being unduly below a fair average. That will react with great advantage to the claimant States. Finally, this bill proposes to increase the tax reimbursement grant to Tasmania by £295,000 per annum. I believe tha.t we are entering upon a new era of cooperation and, indeed, generosity on the part of the Commonwealth. State grants certainly will not go by the board as Senator Leckie seemed to suggest when he inquired what would happen to them. Section 96 of the Constitution will still be required by the three claimant States. Last year they needed £3,000,000. This year ‘they will get an extra £2,000,000 under ‘ the. income tax reimbursement arrangement. They will definitely need further grants, and the Commonwealth Grants Commission will continue to function as heretofore, although those States will be less dependent on the Commonwealth under section 96 than before.
The bill under consideration reminds me of the quantity of gold, osmiridium or radium that is left after a vast’ quantity of material has been handled. This bill is the product of a great deal of thought, and that leads me to say a word in relation to the officers who have been responsible for its preparation. I have been in the closest association with officers of the Commonwealth Bureau of Census and Statistics, the Treasury and Taxation :epartments since October last in the preparation of this legislation. I was also associated with them in their negotiations with the States. There have been innumerable conferences during recent months, and many officers have worked on the job until the early morning hours. Their labours involved a thorough analysis of State budgets. I pay a high. tribute to them for their work and their ability, and’ I congratulate the Government on having young officers of such marked ability. They have a bright future before them and the Commonwealth is fortunate indeed to have in its service so many excellent young men. I express pleasure at having been associated with them in connexion with the -uniform taxation proposals.
– The bill now before us proposes an important extension of the Commonwealth’s powers to levy income tax on the people which were first exercised during the war of 1914-1S. In those days the imposts levied by the Commonwealth in the income tax field were but small, but they have grown enormously through the years. During the war just ended, because of the difficulties confronting the nation in its struggle for existence, the States agreed, as a temporary measure, to vacate the field of income taxation in favour of the Commonwealth. This enabled the Commonwealth to impose the tax, thus saving sorely needed man-power in the assessment and collection of the tax, whilst at the same time freeing the taxpayers of the burden of handling the diversity of income tax returns which had been an undesirable feature - of the former system. That was a desirable war-time expedient, but it was never intended that it should become permanent. Honorable senators opposite maintain that no promise was made to the people of Australia that uniform taxation would apply for the duration of the war and one year thereafter, but no longer. That promise was made in definite and clear terms, not only by the late lamented Prime Minister, Mr. Curtin, but also on several occasions by the present Prime Minister and Treasurer (Mr. Chifley), and there is no escape from it. If, as honorable senators opposite contend, no such promise were made, why was such a provision inserted in the bill passed in 1942? I remind honorable senators that at, that time some members of the Government - and the Attorney-General (Dr. Evatt) was one of them - said that that pledge would not be honoured. It is nonsense for honorable senators to claim that, because the State Premiers did not agree to the proposal, no such pledge was made. That is jesuitical reasoning. Evidence of the making- of such a pledge is contained in clear terms in Hansard. At the recent conference of Commonwealth and State Ministers, however, the representatives of the States, realizing they could not override the Commonwealth, had no option but to fall into line with the proposals submitted by the representatives of the Commonwealth, hoping to drive the best bargain they could in the interests of the States which they represented. It was intended by the framers of the Constitution that this Senate should be the protector of the rights of the States. All States were given- equal representation, and it was intended that the members of the Senate should become watchdogs of their own States, and that this chamber should be in every sense of the word a house of review. We all know very well, however, that it has failed largely in this objective. As a step towards the fulfilment of the obligations of the Commonwealth to the States, I suggest that there should be a definite allocation of fields of taxation within their respective spheres. The Commonwealth’s power to tax should he limited to moneys needed for Commonwealth purposes. We have gone far beyond that now, largely because of the exigencies of the war ; but it is not too late to revert to the old system under which the right of the States to raise their own revenues was undisturbed and unquestioned. It was said during the war of 1914-18 that the Commonwealth had entered the income tax field purely as a war measure, but, no intelligent person ever believed -that, the Commonwealth would eventually vacate that field in favour of the States. A definite line of demarcation should be drawn between the respective spheres of the Commonwealth and the .States in financial matters: To-day, however, the Commonwealth has the power of the purse and the efforts of the States to raise sufficient money for their own purposes are being increasingly emasculated. As a war-time measure I did not question the essentiality of uniform taxation, but as a peace-time measure I believe it will eventually destroy the federation and result in further unwanted bureaucratic control of the country.
.– The complex subject of taxation is so difficult to understand that I am always reminded of a crossword or jigsaw puzzle when a measure such as this comes before us. Senator McKenna is to be congratulated upon his lucid speech and the great knowledge which he has displayed of this difficult subject. The honorable senator is obviously to be regarded as the Government’s spokesman on the bill. Uniform taxation was introduced during the war as a temporary measure, but the purpose of this bill is to vest it with permanency. Victoria, which was the lowest taxed State in the Commonwealth, is now being unduly penalized by the incidence of this so-called uniform taxation. I agree that it was essential that the Commonwealth should have sole control of the collection of income tax during the war; but now that the war is over what necessity is there for its continuance ? Let us consider the history of this legislation. When Mr. Dunstan was Premier of Victoria he fought strenuously against, the usurpation by the Commonwealth of the field of taxation which it had formerly shared with the States. Mr. Dunstan, although no longer Premier of Victoria, still fights against this legislation which he regards as discriminating against that State.
– That should make us favour the bill all the more.
– When Mr. Dunstan handed over the reins of government to Mr. Cain the Commonwealth Government took an entirely different attitude, and said, “ We will give you £2,000,000 more than we gave to the Dunstan Government “. If Victoria is justly entitled to an additional £2,000,000- per annum from the uniform tax, then it is obvious that that State is in arrears in respect of past disbursements to an amount of no less than -£8,000,000. The Commonwealth should accordingly increase’ the Victorian quota by that amount this year in order to compensate the State for what it has been deprived of during the last four years. Victoria had been an economically managed State; it has not expended its revenues extravagently
– Certainly not on social services.
– It is possible that Victoria, with its comparatively small expenditure on social services, has achieved as much as, or more than, other States in its contributions towards the welfare of the people. Victorian taxpayers have contributed £10,500,000 per annum to the pool and have received in return £6,500,000, thereby losing £4,000,000. New South Wales, on the other hand, contributed £14,000,000, but received from the pool £15.000,000. On a per capita basis we find that New South Wales received £5 6s.; Queensland, £5 9s.; South Australia, £3 15s. ; Western Australia, £5 5s. ; Tasmania, £3 12s. -. and Victoria, only £3 5s. I agree with Senator Leckie that the allocation to Victoria should be substantially increased. It is proposed that New South Wales shall receive £16,477,000, and Victoria, £8,860,000. That allocation is obviously unjust to Victoria, and,- because of that, I shall oppose the bill.
Sitting suspended from J/..58 to 8 p.m.
– I am sure that all honorable senators were im “pressed with the case presented by Senator McKenna in support of the measure. However, he presented the case from the point of view of the Commonwealth Treasurer. Whilst it is open to question whether the principle of uniform taxation will meet with unanimous approval, the approach of honorable senators to this measure is dictated by their views with respect to unification on the one hand and, on the other hand, the federal system envisaged by the framers of the Constitution. The fact remains that to-day, whether it be by design or accident, the States’ do not possess the sovereign powers which the framers of the Constitution intended that they should retain. The basic principle of federation was that the States, whilst surrendering certain powers to the Commonwealth, for instance, with respect to defence, customs and excise and postal services would retain definite sovereign rights. It was generally understood that the States, in order to be enabled to govern in their respective spheres in their own way, must have the right to collect income tax and the right to raise loans. The question now arises whether the States should retain those rights in the spirit of ‘federation or whether unification should be substituted for the federal system. It is clear that the States no longer enjoy sovereign rights such as existed in 1901. The last atom of independence will be taken from them under this measure. To-day, they have no actual power to raise loans, or to levy income tax; and, that being so, it ca-n truly be said that the federal system envisaged by the framers of the Constitution no longer exists. Uniform taxation is not without merit from the point of view of the individual taxpayer. Its advantages have been enumerated by Senator McKenna; but I do’ not believe that the Government can be commended on the way in which it has brought about this agreement. Senator McKenna said, quite properly, that under the Constitution the Commonwealth was given priority over the States to impose income tax; hut all honorable senators will admit that neither the Commonwealth nor the States believed that to be the constitutional position until the matter was tested by the States in the High Court. Surely no one will deny that the framers of the Constitution had no intention of conferring this power upon the Commonwealth. In view of those facts, the Commonwealth does not do credit to itself by exercising that power in opposition to the will of the States. We must remember that uniform taxation was adopted purely as a war measure, and that the States agreed to it for the period specified in the legislation.
– The States did not agree to uniform taxation in 1942; the Commonwealth introduced it in the teeth of opposition from the States.
– That is so; and the States now are obliged to accept that position. They have no option in the matter because, under the Constitution, the Commonwealth possesses priority over the States to levy income tax. The States, therefore, must bow to the will of the Commonwealth, and do the best they can for themselves in the circumstances. Under these changed conditions we must frankly admit that the States are not able to accept direct responsibility for essential development works, because, financially, they have not the means and are at the mercy of the Commonwealth. . Therefore, whether the principle of uniform taxation is good or bad, the continuance of uniform taxation as proposed under the bill strikes a mortal blow at the federal system envisaged by the framers of the Constitution. I do no,t attempt to say whether,. ultimately, uniform taxation will prove to be good or bad, but simply point out that the circumstances in which the Commonwealth proposes to perpetuate it does not reflect credit upon the Government, whose actions can hardly be described as fair towards the States. I do not suggest for one moment that the States will not receive fair treatment from the Commonwealth under the new system. Senator McKenna went to some pains to point out the advantages which will be gained under uniform taxation. However, the Commonwealth is not responsible for creating wealth because the money which it will be able to distribute among the States will flow from sources within the States. Had the States retained their sovereign powers to collect income tax and develop their own resources in their own way, they would be just as able as the Commonwealth to develop this country. Let us consider the effect of the new conditions upon the development of large States like Western Australia and Queensland which possess enormous potential resources. Neither of those States will be able to raise money for developmental purposes. Would any one suggest that the Commonwealth i . better able to develop Western Australia than the Government of that State? Already, the State Governments, have done .much ‘ to develop States, and they have been able to do so only because they had complete power to raise revenue by income tax and loans. But in the future, the States, however praiseworthy their intentions may be, will be utterly unable to undertake essential developmental works. We. must face these facts. T have no quarrel with those who advocate unification. Under unification a Central Government would be responsible for developmental works, and’ the .States would merely act as agents for such a Commonwealth. But this proposal provides for unification in form only and not in fact, and, therefore, will not confer upon the people the benefits which those expect who believe in unification. The perpetuation of uniform taxation strikes a fatal blow at the principle of federation evolved and established 46 years ago. This measure will remove from the States, I believe for all time, the fundamental power of government.
– And not before its time.
– Obviously Senator Lamp does not believe in the federal system ; he believes in unification. It is idle to argue that this measure i= consistent with the federal- system, of government. It will deprive the States of their sovereign rights, and they will be powerless to undertake any developmental work except at the direction and with the goodwill of the Commonwealth Government. The decision to perpetuate uniform. taxation is being enforced on party lines. It so happens that, in addition to controlling both houses of the Commonwealth Parliament, the Labour movement also controls a majority of State parliaments. Honorable senators opposite are taking this action with their eyes open, and with a full knowledge of the consequences. They are supporting a system which is contrary to the basic principles of federation, and one which, by a process of peaceful penetration and absorption, will remove from the States their right of self-government. That is something of which the people of this country should be made aware. It is clear that all useful authority hitherto possessed by the States with regard to the raising and expending of revenue will cease. This is the action not of a government which believes in the fundamental principle of federation, but one which is unificationist in character.
– It is not my intention to enter an academic discussion on uniform taxation, but Senator Herbert Hays has advanced certain arguments which require an answer. I suggest that the honorable senator should devote some attention to the circumstances surrounding the introduction of this measure, and of the original legislation. He said that the retention of the system of uniform taxation had become a matter of party politics and that as Labour has a majority in both houses of this Parliament, we were determined to establish permanently this form of taxation. Nothing could be further from the truth. It is true that at a time of great stress, when Australia, in common with other Allied Nations, was fighting for its existence, the National Parliament, which was charged with the responsibility of organizing the resources of this country, introduced uniform taxation as a war-time measure. One State which disagreed strongly with the Commonwealth proposals, and was so obsessed with the idea that its bounden duty was to .oppose everything attempted by the Curtin Government, that in conjunction with other States it tested the validity of the uniform taxation legislation before the High Court. I refer, of course, to the Government of Victoria, led by the former Premier, Mr. Dunstan. The High Court, however, dismissed the appeal, and also ruled that since federation the Commonwealth Parliament had had constitutional power to enter the field of taxation to the exclusion of the States. Therefore, responsibility for the intro duction of a permanent uniform taxation scheme rests to some degree, at least, with the Dunstan Government of Victoria. Has anybody objected strenuously to the assumption by the Commonwealth of the sole right to levy income taxation? I have not heard any complaints from the taxpayers. It is true that complaints have been made by other taxing authorities, namely, the States, but following a conference between Commonwealth and State Ministers, an agreement appears to have been reached. The States appreciate the fact that there is a limit to the amount of money that can be obtained from the people of this country by means of taxation and they are prepared to accept the present arrangement. In return for certain reimbursements, they are now prepared to vacate the field of income taxation. Senator Herbert Hays asked how this country could be developed if the States were to be denied the right to impose taxes; but what better authority is there than the Commonwealth Parliament to develop Australia as a nation. It is the duty of .the National Parliament to develop this country. Does Senator Herbert Hays . suggest that the States would be in the affluent position that they enjoy to-day were it not for Commonwealth assistance? The honorable senator said also, I believe, that if the States were- permitted to “ plow their own furrows” they would achieve a greater measure of prosperity.
– I did not say that.
– I am sure that the honorable senator created the impression that in his opinion the States could progress much better if left to their own devices? Let us examine the development of Australia in the past 45 years. It was fortunate that at the time of federation the States surrendered to the Commonwealth the right to impose and collect customs and excise duties, because a direct result of the introduction of a uniform tariff has been the development of secondary industries. Had each State retained the right to implement its own fiscal policy, the great development of secondary industries that has taken place in the last 45 years could not have been hoped for. In view of the rapid progress made by Australia under the federal system, surely we must concede that even greater development could be achieved with the permanent assumption by the Commonwealth of the sole income taxing authority. It is essential for the development of secondary industries, that industrial organisations should be aware of their tax liabilities. If they knew that wherever their factories may be established, whether in Queensland, New South Wales, or any other State, the same company tax and income tax rates will apply, there will be greater decentralization of industry, and, consequently, of population. Therefore, this legislation will benefit Australia, as a whole and not merely one portion of it. In the past, Victoria has been notorious for its failure to provide adequate social services for its people. That, of course, was one reason for the low taxes levied in that State, and I am sure that not many Victorians were proud of it. Victorians as a whole would like that State to provide as high a standard of social services as possible. After all, the people of Victoria are also Australians. Therefore, the introduction of a. permanent system of uniform taxation, even though it may mean that the powers of the States will be somewhat less than they have been in the past, will be for the ultimate good of the country. I aru sure that the creation of one income tax revenue pool, under the control of a Commonwealth government which is prepared to distribute it equitably throughout Australia and to develop this country will be of inestimable value. As Senator Leckie said, the Senate is a States House, elected to ‘ safeguard the interests of the States ; but in my opinion, by voting for uniform taxation, we shall be acting in the best interests of the States ., facilitating the development of the Commonwealth as a whole in accordance with the principles for which the fathers of federation fought. For that reason I have much pleasure in supporting the bill. .
– in re-ply - I appreciate the reception which has been given to the bill. I agree with Senator Leckie that taxation measures are difficult for laymen to com prehend, and I do not claim to have any special qualifications in that direction. This is a complex bill, and I congratulate Senator McKenna upon his excellent explanation of its contents and purpose. I was glad that his valuable service in that respect was recognized by Senator Gibson and. Senator Herbert Hays. Senator Leckie and Senator Sampson claimed that when uniform taxation was introduced’ in this Parliament a pledge was given by the government of the day that the measure would operate only for the period stated in the bill. In 1942, prior to its introduction, a conference was held in Melbourne between the -late Prime Minister, Mr. Curtin, the Treasurer (Mr. Chifley), and the Premeirs of the various States. The Premiers were then informed that if the States during the war vacated the field of income taxation the Commonwealth Government would introduce f measure to provide for a uniform system of income taxation. The Premiers unanimously rejected that proposal, and, when the matter was brought before the High Court, it held that the legislation was within the power of the Commonwealth Parliament.
Another matter which disturbed Senator Leckie is the fact that an adjustment has been made regarding (he allocation to Victoria by which that State receives an additional £2,000,000 compared with its previous grant. It was alleged by Senator Leckie that that additional sum was granted because the present Commonwealth Government was favorably disposed towards the Labour Government in Victoria led by Mr. Cain.
– Is that not so?
– When uniform taxation became law, the Government of Victoria retained office by virtue of the fact that it had the support of the Labour party. The Commonwealth, as Senator Sheehan pointed out. required every available penny for the defence of this country, and a minimum amount was allocated to the States, because they were not then in a position ti> expend advantageously more money than was granted to them. The war being over, however, a totally different position obtains. Victoria will be able to utilize the extra £2,000,000 to be granted to it on such matters as social services and education. Therefore, there was every justification for the favorable treatment which Victoria received.
Senator Leckie also expressed concern about the basis of calculation of the grants, which will be determined to some degree by the population of the States. A redeeming feature of the arrangement as far as the States are concerned is that if the average wage should fall below the 1946-47 level, no reduction of the grant will be made, but if the average wage should rise the grant will be increased by half the percentage increase. Senator Herbert Hays drew attention to the fact that in the early days of federation the States were promised that they would always be permitted to retain their sovereign rights. In that period the people were promised many things, but their expectations were not realized. They were told that the inauguration of federation would result in the abolition of State Governors and the removal of a duplication of taxes.
– They were promised a federal, not a unified, system.
– I agree with the honorable senator. He further said that the States would be unable to launch out on any national works without approaching the Commonwealth Parliament. I have heard him advocate the granting of assistance to Tasmania even for the production of blue peas. Considerable Commonwealth assistance has been given to that State, and only yesterday, Senator Aylett requested the Government to continue its control over the production and distribution of blue peas. Yet the honorable senator declared that the Commonwealth had retarded development -in Tasmania.
– No. I said that in future the States would be agents for the Commonwealth with regard to developmental work.
– Much has been said about the method of distributing the grants to the States, but the calculations concerning them have been made on the advice of the statisticians, than whom no officials are more competent to advise the Government on the matter. When the Opposition was in power it acted on advice received from the same officials as those who have advised the Governiwent with regard to this bill. I thank honorable senators for the manner in which they have received the bill, and I hope that at the committee stage I shall be able to clear up any points on which they may entertain some doubt.
Question put -
That the bill be now read a second time.
The Senate divided. (The President - Senator the Hon. Gordon Brown.)
Majority . . 7
Question so resolved in the affirmative.
Bill read a second time.
Clauses 1 to 4 agreed to.
Clause 5 (Grants to States).
.- This clause reads -
In respect of any year during which this Act is in operation and in respect of which the Treasurer is satisfied that a State has not imposed a tax upon incomes, there shall be payable by way of financial assistance to that State an amount calculated in accordance with the provisions of this Act ….
That is plain and it is well that everyone should know that the States will be prevented from imposing income tax because of the threat contained in the clause that if they do so they will not get any grant at all. Having made that point clear I do not propose to move an amendment to the clause.
Clause agreed to.
Clause 6 (Aggregate grant).
.- The Committee is entitled to an explanation setting out the aggregate amount to be distributed amongst the States, and showing how the distribution will be made in the future. It is clear from the bill -that the grants to the States cannot fall below £40,000,000 a year, but they may rise above that amount, according to increases of population and of the average wage. After 1948 the grants to the States will gradually move towards a population basis, until, in :i9f>8, they will be made entirely upon (he basis of population.
– That is . so.
– It is clear, therefore, that the Government recognizes that that is the fairest ‘basis on which to distribute the grants. If that basis will be fair in 195S, why is it not fair now? In the intervening period certain States are to bo deprived of amounts which would be paid to them on a population basis, which, as I have said, the Government, itself recognizes as fair. I should like to know whether the Minister regards any statement as correct, and, if not, in what way is it incorrect? The total grant of £40,000,000 is to be divided according to the population of the six States on the 1st July, 1947. Let us suppose that on that date the total population of the States is 7,000,000. That gives a quotient of £5.71 for each person. Let us further suppose that at the end of five years the population has increased to 8,000,000. If we multiply £5.71 by 8,000,000, we get £45,680,000.
– There would be more people to pay the amount.
– That is so, but if the present Government were still in office they would be poorer people and not so well able to pay it. I take it that I am correct in saying that the aggregate amount to be divided would bc ‘£45,680,000?
– -That i.= approximately correct-
– At .the end of 1958’, when the distribution will be entirely on a population basis, and the population of each State has to be multiplied by £5.71, or whatever amounthappens to be correct at that time, a State with a population of 2,000,000 would receive £11,420,000, or whatever sum any variation from £5.71 per capita’ would give. In any event, Victoria, which has a population of about 2,000,000 people, would be entitled to receive £11,420,000, whereas under this legislation it will receive only £8,860,000. It will be seen, therefore, that a considerable sum is to be extracted from the pockets of the people of that State. The bill having passed its second reading will no doubt pass its remaining stages also, but I want the people of Australia, and particularly those resident in Victoria, to realize what it contains. . If I have made a mistake in my figures, I shall be glad if the Minister will show me where I arn wrong. Now is the time for him to do so. When I resume my seat 1 hope that lie will supply the information which I seek.
The committee is indebted to Senator McKenna for his illuminating speech, which displayed considerable knowledge of the bill. The honorable senator’s contribution to the debate was clear, and, in my opinion, necessary. Nevertheless, the Minister, not Senator McKenna, is in charge of the bill, and although I am confident that honorable senators generally would accept any assurance given by Senator McKenna, we on this side would like to have the Minister in charge of the bill assure us of certain things. I should like him to say whether my calculations are correct and, if not, in what respect they differ from the true position.
Senator ASHLEY (New South WalesMinister for Supply and Shipping) 8. 57 [. - The calculations made by Senator Leckie are substantially correct, but I remind him that the allocations under the bill were agreed to by the State Premiers. The measure before us seeks to balance the allocations as between States, and the method, of achieving that result is the adoption of the population basis ultimately. That position will not. however, be reached until 1958.
.— The Minister’s statement that this bill is based on a plan agreed to by the State Premiers leaves me cold. Surely the Commonwealth Government accepts responsibility for this bill. It should not try to “ pass the buck “ to the State Premiers. To say the . least, it is not courageous on the part of the Minister to try to get out of a difficult situation by throwing the onus on the States.
– They agreed to the plan.
– That may be; but I’do not call it agreement if a man accepts a proposal when a pistol is placed at his head and he is threatened with violence if he refuses to agree.
– They agreed under duress ; we know that.
– I rose principally to make clear to the people what this bill means. The Minister has acknowledged that my figures are substantially correct. The States will now know of how much they will be robbed by the Commonwealth between now and 1958.
Clause agreed w.
Clauses 7 to 12 agreed to.
First Schedule agreed to.
.- I find’ it very difficult to understand paragraph 3, which deals with the adjusted population of each State. Does this mean that in certain areas, say, in a small town where the population is. compact, separate calculations have to be made in respect of the compact area and of the surrounding district? How does the Government propose to differentiate between what are sparse areas, what are comparatively thickly populated areas, and areas which are crowded ? Is it proposed, for instance, to take the whole of Victoria and regard it as a compact area with a population of more than one person to the square “mile, or is it proposed, say, to take Melbourne, Ballarat, or Geelong, and regard them a* compact areas, leaving the rest pf the State as another area subject to a. different calculation? If that is the Intention the differing calculations will always occasion great complications in the p-,;nd? of those who desire to understand flip statistical calculations involved.
– For the purpose of the schedule areas are generally defined as local government areas. A local government a rea might constitute a municipality or a shire outside the city areas. So much of the area of a State as is not incorporated in a local government- area shall be treated together as one area. Where a local government area with a population of fewer than 5,000 persons- is entirely surrounded by a larger local government area, the area of both is to be combined and treated as one area. The area of any local government area not entirely surrounded by a larger local government area and having a population of fewer than 5,000 persons, and an area of less than 100 square miles is to be combined with the local government area with which it has the longest common boundary, and the combined area shall be treated as one.
.- The Minister is optimistic if he believes he has made the position clear. It is evident that in respect of any particular town in the country, say, Wangaratta, which has a shire surrounding it, there will be separate calculations for Wangaratta and for the surrounding shire. If the number of calculations has to be multiplied by 148 which is the number of municipalities in Victoria honorable senators will readily see the difficulty that lies ahead each year. To say the least of them, the statistical provisions appear to be a clumsy way of -arriving at the desired result.
– May I attempt to explain the paragraph in another way. We are considering in thi? paragraph what constitutes the adjusted population of a State. First, there is taken into the calculation the actual population of the State and then there is added to that figure, f’-ur times the number of children in the t-te. When that result is arrived at the paragraph provides that regard shall be paid to difficulties that arise from the fact that populations in certain areas are scattered. In some areas there is only one person to the square mile, in others there are two, and again, in others there are more than two but less than three. They are the three categories envisaged in the paragraph, and it is proposed to give to a State that has its numbers in these restricted classes some addition to the adjusted population figure. If the number of people living in an area is fewer than one to the square mile, it is proposed to take three-quarters of their number; where there is more than one but fewer than two persons to the square mile it is proposed to take onehalf of their number; and where there /ire more than two but fewer than three persons to the square mile, one-quarter of their number is taken into account. Then the number of people who constitute three-quarters of the first, onehalf of the second, and one-quarter of the third categories are added together. It may be found that they total, say, 100,000 or 200,000 people in a State, and that they represent 5 per cent, of the total population. In order to arrive at the adjusted population it is necessary to add that 5 per cent, to the original figure, which included children. The final result consists of the true population, plus four times the number of children in the State, and it may be found that the percentage calculated in accordance with, the formula relating to scattered population involves an increase of 5 per cent. In order to cover that position it is necessary to define “an area”. Difficulties arise ‘in States where there are no local government areas. In south-west Tasmania there are large areas that, have never been explored, and which, consequently, do not form part of any particular local government area. All those portions of a State not within the boundaries of some particular local government municipality are deemed to comprise one municipality of their own. Another difficulty arises where a fairly thickly populated country town is completely surrounded by a rural municipality. In that case the surrounding municipality is deemed to incorporate for the purposes of calculation, “the rural town in it3 centre, so that all of the people in the. two areas are taken to determine whether the population is not of sufficient density to justify the application of what is known in the schedule as the adjusted population formula. The very best statistical minds in Australia have evolved these provisions as representing the fairest approach to the problem. They have been devised and carefully gone into by the Commonwealth Statistician in association with the statisticians of the various States. One needs to study the schedules thoroughly before it is possible to grasp their true import. Again, I point out that not many people will be concerned with these adjustments; they will rather be the concern of statisticians and of technical officers in the Commonwealth and State Treasuries. They will not demand the consideration of anybody except those technical officers. I am certain that they understand it, and that is all that is strictly necessary in the calculation of a technical formula.
– Senator McKenna mentioned the crux of the whole matter in his concluding remarks. I admit that this calculation is a job for the statisticians; but that is where differences of opinion will arise. How will they determine what are sparsely populated areas? An easier and more effective calculation could be made on the basis of area of a State plus its population. Under the latter system the reimbursement to “Western Australia would be increased. However, it would be more equitable than the system proposed under the measure which will be not only difficult but also costly; and the increase of cost involved will be greater than the increase of the reimbursement that would be payable to Western Australia on the basis’ of area plus population. I appreciate what Senator McKenna has said, but I repeat that under the measure this problem is left wholly and solely to statisticans over whom Parliament has no control. For that reason I am not satisfied with the Government’s proposal.
.- Senator McKenna did not explain fully the point I raised, hut from hia remarks I infer that, under the measure, each municipality and shire in each of the States will’ be required to supply annually its population figures for the purpose of enabling this calculation to be made. I remind honorable senators that there are over 200 municipalities and shires in New South Wales and 148 in
Victoria. As the population of each local government area will vary from year to year, and the reimbursements are to be made annually contingent upon those variations, I can foresee a glorious extension of the forms to be filled in by numerous people all over the Commonwealth. How will the municipalities and shires obtain this information each year? I presume that the Commonwealth will expect them to supply accurate information.
– Cannot the information bo obtained from the electoral rolls?
– No; the electoral rolls contain only the names of persons of 21 years of age and over, and Senator McKenna has explained that the number of children between the age of five and fifteen years will be ascertained and that number will be quadrupled for the purpose of the calculation. I do not know who will count the children annually in each municipality, but, presumably, the count must be accurate. This proposal is silly and is typical of the Government.
– Can the honorable senator suggest a better method ?
– Why docs not the honorable senator move an amendment?
– The honorable senator would not support any amendment unless he got a nod from his leader. In view of what I have said it would be easier to make this calculation on the basis of area plus population of each . State. On that basis statisticians could calculate increases, or decreases, of population annually. Why the Government seeks to use the most complicated method is beyond my comprehension. However, the Government simply says that this is recommended by the ablest statisticians in Australia. The statisticians, of course, like playing with figures. They have been doing so since childhood, and they do not look with favour upon any one who disagrees with their methods. They arc not concerned with the expense of any particular scheme, but we are the representatives of the people and must be concerned .with that’ aspect in the interests of the taxpayers. Even at this stage, the Govern ment should seek the advice of other statistician* with a view to arriving at a simpler method.
Senator ASHLEY (New South WalesMinister for Supply and Shipping) 9.2l. - The fear expressed by Senator Leckie that local government bodies will be burdened with the work involved in supplying information for purposes of this calculation is unfounded. This calculation will be made entirely by Government statisticians who will collect all the information .involved. With respect to population they will make their calculations upon the basis of the last census figures.
Second Schedule agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Debate resumed from the 2nd April (vide page 844), on motion by Senator Ashley–
That the bill be now rend a second time.
.- This measure is consequential upon the parsing of the States Grants (Tax Reimbursement) Bill. It enables the appointment to the Commonwealth Public Service of officers of the income tax de- partments of the States,” and safeguards the rights of transferees. However, I want to be assured that no officer who is transferred from State service to the Commonwealth Public Service will in any way suffer loss of status, rights or privileges. Another point also” arises. The Minister for Supply and Shipping (Senator Ashley) in his second-reading speech said - -
The bill states that the provision of any law providing for preference in employment to ex-servicemen shall not apply in relation to appointments which are made under the provisions of the bill. That is proposed because of the difference between appointments to bo made under the provisions of this bill and appointments made to the Commonwealth Service in the normal way.
The proposition, on the face of it, seems to be very fair; but I want to know whether any officer transferred from a
State Service to the Commonwealth Public Service will displace or be given seniority over any returned soldier who hase been appointed to the Commonwealth Public Service? I want to be fair to both parties.
– Does the honorable senator refer to permanent or temporary appointees?
– I refer to both classes. Perhaps the danger I mention is more likely to arise in respect of tem-. porary appointees because many employees who are nominally temporary are in reality permanent.
– I assure Senator Leckie that no officer who is transferred from a State Service to the Commonwealth Public Service will displace or interfere with the seniority, or other rights of any returned soldier “ appointed to the Commonwealth Public Service.
-Can a temporary officer of a State become a permanent officer of the Commonwealth?
– No, but he can become a temporary officer of the Commonwealth.
Question resolved in the affirmative.
Bill read a second time.
. - Proposed new sub-section 81x prescribes tests for advancement. I should like to know whether those tests will be applied under the existing Commonwealth Public Service Regulations, or whether they will be of the type prescribed by the State regulations applicable to the officers to be transferred. In other words, will the Commonwealth apply the tests, or will the officers be subjected to the tests prescribed by the regulations operative in their own States.
– Regulations will be promulgated by the Commonwealth which will make the tests equivalent to those of the States.
Bill agreed to.
Bill reported from committee without amendment; report adopted.
Billread a third time.
Debate resumed from the 2nd April (vide page844), on motion by Senator Ashley -
Thatthe bill be now read a second time.
.- This measure safeguards the superannuation interests of State officers who are transferred to the Commonwealth Public Service. I understand that it meets with the approval of the officers concerned.
– That is correct.
– Having that assurance from the Minister for Supply and Shipping (Senator Ashley), I shall not say anything further about the measure.
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without amendment or debate.
Debate resumed from the 2nd April (vide page 845), on motion by Senator Ashley -
That the bill be now read a second time.
.- This measure is consequential upon the main uniform income tax legislation already passed by this chamber. Its object is to make permanent a temporary arrangement between the Commonwealth and the States. The Minister for Supply and Shipping (Senator Ashley) said in his second-reading speech -
If a State officer does. not desire appointment to the Commonwealth Service the bill preserves to him his right to re-instatement in the State Service. It also preserves the Commonwealth’s liability to pay to the States its proportion of amounts contributed by the States to superannuation funds in respect of those officers.
Is the Minister for Supply and Shipping quite satisfied that the bill does preserve to a State officer who does not wish to transfer to the Commonwealth Public Service, his right . to re-instatement in a State Service at his former status?
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without amendment or debate.
Debate resumed from the 2nd April (vide page 846), on motion by Senator Ash lev -
That the bill be now read a second time.
.- This measure in effect removes the time limit on the operation of the Entertainments Tax Assessment Act. Reimbursement in respect of entertainments tax revenue is included in the £40,000,000 to be paid to the States. Therefore, the States are not quite so well off as they would appear to be from the figures that have been given.
– The States will have the right to re-enter the entertainments tax field.
– That is a feature of the Government’s proposals which puzzles me. The States are to be denied the right to enter the income tax field, without losing the grant hut no such restriction is proposed in regard to the entertainments tax. Surely that is generosity in excess. The entertainments tax is high a”t present and is a burden to people whose main source of entertainment is the cinema. I cannot imagine any State Government being so foolish as to make an additional imposition of entertainments tax. The Commonwealth’s gesture theefore is “ magnificent “. It says, in effect, to the. States, “ After we have taken all the meat, off the bone, you may have what is left “. By combining the reimbursements in respect of income tax revenue and entertainments tax revenue the Commonwealth is bamboozling the people of the States into the belief that they will be better off because the grant to the States is to be £40,000,000 instead of £35,000,000, but as I have said, the £40,000,000 includes reimbursement in respect of entertainments tax which previously was the subject of special grant.
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without amendment or debate. entertainments tax bill 1946.
Debate resumed from the 2nd April (vide page 846), on motion by Senator Ashley -
That the bill be now read a second time.
.- The original act limits the operation of the entertainments tax legislation to the end of the first financial year after the war. The Government has now decided that “ after the war “ is to be a date that meets it; own convenience. However, this men -ure. enables the imposition of entertainments tax by the Commonwealth in perpetuity. This is an innocent looking measure which was .to continue in operation to the end of the first financial year after the war, but it now appears that the burden which this tax has placed on the shoulders of the people is to be borne by them indefinitely.
Senator ASHLEY (New South “WalesMinister for Supply and Shipping) 9.46]. - in reply - The Commonwealth entered this field of taxation under an arrangement with the States, that it would be the sole authority to impose the tax.
Question resolved in the affirmative.
Bill read a second time, and passed through ite remaining stages without requests or’ debate. adjournment:
Postal Premises: Tasmania - Official
Corresponden c e.
Motion (by Senator Ashley) proposed -
That the Senate do now adjourn.
.- I draw the attention of the PostmasterGeneral (Senator Cameron) to the intolerable conditions prevailing at many residential post offices in Tasmania. I do not blame the present Minister or his immediate predecessor for the present state of the postal premises in Tasmania, but having visited almost all of them I can say without fear of contradiction that their condition is disgraceful. 1 am surprised that the officials residing in them have put up with such conditions for so long. 1 recognize that the department cannot at present do all that is necessary to place the premises in a satisfactory condition. Improvements and additions are required in man; places and in sonic entirely new premises should bc built. Hot water services should be installed and there should be more up-to-date laundry and bathing facilities, but these are not so essential as improved sanitary arrangements. Towns such as Ringarooma, “Evandale,- Bothwell, St. Mary’s, St. Helen’s, Beaconsfield, and Stanley, are not provided with even septic tanks, but still use the antiquated pan system. This is a disgraceful condition of affair!:, ami iii-xt. week I shall brine to the notice of the Government the in- tolerable conditions under which the people in those towns are living. I urge the Postmaster-General to issue instructions immediately to the Deputy PostmasterGeneral in Tasmania that contracts he let for the provision of septic tanks at the postal premises where they are needed, and that attention be given to the need for repairs to postal premises, the provision of hot water services and improved laundry facilities.
-‘iO]. - I have found that one of the best methods of securing information from the present Government is hy directing questions to Ministers. Although we frequently have to wait for considerable periods for the answers, the replies are quite useful. Some of the questions on notice which remain unanswered une submitted as long ago as the 14th “March, “nd T understand that the preparation of the answer to one question was com-meiicp.il only to-day; but there is a delay of a much graver nature in respect of correspondence concerning the rehabilitation of dental officers. ! have a cony before me of a letter which T rent to the Minister for- Post-war Reconstruction (Mr. Dedman) on the 7th November. 1°-4S. and which states -
I forward for your consideration an interesting but disquieting communication received by mi* from the honorary secretary of the “Dental Advisory Sub-committee (W.A.’l of the Depart ment of Labour mid National Service. Without recapitulating the content* of the document, it would seem that of the 47 dental officers still ou service, it will not bo immediately possible tu rehabilitate 30 because rooms ure unavailable unci eighteen will be without professional equipment. All will be faced with considerable initial expenditure on returning tu civil practice.
This grave position culls for special study and subsequent action which I feel sure your department will accord and take.
That letter was acknowledged formally on the 13th .November, with the following concluding paragraph : -
I ahull give consideration to this matter mid communicate with you again at an early date.
On iiic 8th January, I again wrote to ihe Minister as follows: -
Would you kindly inform me if a determination has been arrived ut in respect to the matter raised in my letter to yourself under date of the 7th November last.
I received no acknowledgment of that letter, and on the 13th March, 1 wrote to the Minister in these terms - hjiht 1 nsk for n decision on the matter i- raised in my letter of 7th November? On Seh January last, 1 vcm mod to draw your attention to Hie fact thai 1 was awaiting your direction. 1 have had no reply to that communication, and I suggest that these delays arc grossly discourteous to honorable senators. 1 ask the Acting Leader of the Senate (Senator Ashley) to bring this matter .to the notice of the appropriate Minister.
– In response to the request of Senator Lamp, I shall obtain a report dealing with the conditions at the post offices to which he has directed attention. I paid a visit to Tasmania several weeks ago and inspected as many of the post offices as I possibly could. I was amazed in many instances at the inadequacy of the accommodation provided. Many of the offices are prefederation buildings, which may have ii- n quite suitable when .they were erected, hut are certainly unsuitable at tin- : ireson t time. I was surprised too, in many instances, at the lack of uptodate conveniences tn’ which Senator Lamp has drawn attention. 1 Baree that the conveniences should be modernized. T am surprised also at the aoa thy of the local authorities who have not previously directed the attention of the government of the day and of previous administrations to the unsatisfactory state of affairs. The Postal Department is a large profitmaking undertaking, and so far as I am concerned it has no excuse for having failed to provide the necessary accommodation and kept the conveniences up to (late. In the past the profits of the department have gone into the Consolidated Revenue, mainly to protect the taxpayers against the imposition of additional imposts, and in consequence the departmental services Iia ve been starved. I can say without exaggeration that the state of the postal premises, particularly in country towns, is a disgrace, possibly, in most instances, in not only Tasmania, but also practically every State. I shall obtain » report on the matters referred to by Senator Lamp, and shall supply it.’ to the Senate.
– in reply - The matter brought forward by Senator Collett regarding his correspondence with the Minister for Post-war Reconstruction (Mr. Dedman) will bo brought to the. notice of that Minister. I do not think that the best way to obtain information is by directing questions to Ministers in the Senate.
– It produces the best results at times.
– The honorable senator’s comments will give adverse publicity to tin: Minister, if the facts are as stated by him, but I cannot conceive that the Minister would delay answering correspondence . for the period stated. I fca] confident that he will bc able to furnish a satisfactory explanation of the delay.
Question resolved in the affirmative.
The following papers were presented : -
Commonwealth Public Service Act - -Appoint- ments - Department nf Health - Jr. K Griffiths: K. V. Stone
National Senility Act - National Security (Supplementary ) Regulations - Order - Deferment of banking business
Senate adjourned nl. n.f>H p.m.
Cite as: Australia, Senate, Debates, 3 April 1946, viewed 22 October 2017, <http://historichansard.net/senate/1946/19460403_senate_17_186/>.