20th Parliament · 1st Session
The PRESIDENT (Senator the Hon. A. M. McMullin) took the chair at 3 p.m., and read prayers.
– Has the Minister for National Development been advised that the New South Wales Government may_ not sign an agreement in connexion with the control of the Snowy Mountains hydro-electric scheme? If that happens, can the Minister say what effect it will have upon the availability of additional water for the Murray and Murrumbidgee irrigation areas?
– An article along the lines referred to by the honorable senator appeared in a newspaper last week-end. I do not think that the report was a well-informed one. A series of conferences between Commonwealth and State Ministers concerned has taken place,- but settlement of the final terms of the agreement is not free from difficulty. The conferences have been spread over a period of time, but I think’ .that, on the ministerial level, the problems will be hammered out and an agreement reached. It will then have to go, of course, to each of the governments concerned for ratification. It would be. at that stage that the New South Wales Government, the Victorian Government and the Australian Government would come to a final decision in the matter. Should agreement not be reached, I expect that the position will be: No agreement, no Snowy Mountains scheme. Should that happen, there would be no diversion of the waters of the Murray River and the Murrumbidgee- River which, in my opinion, would be nothing short of a national tragedy. The Commonwealth is approaching the whole matter in what I think’ is a reasonable way. It is for the State governments to reach their conclusions on the agreement as it is drafted. The New South Wales Government has the responsibility of deciding whether the terms -are reasonable. That is a condition precedent to the irrigation . schemes in both the Mumimbidgee and the Murray valleys coming into effect.’
– Will the AttorneyGeneral inform the Senate how many conventions passed by the International Labour Organization have been adopted by the Australian Government and how many have not been adopted? Will the Attorney-General give details of the conventions concerned in each case? If the Minister has not the information available now, will he make a statement later in view of the fact that Australia is regularly represented at meetings of the International Labour Organization?
– I shall ascertain if the information can be obtained and an appropriate statement made later, but I cannot give the honorable senator a reply offhand.
– Is the Minister for Shipping and Transport yet in a position to supply information in reply to a question that I asked recently relating to the incidence of fatal traffic accidents in Australia and action that has been taken by him and the appropriate authorities for the abatement of such accidents?
– Thu chairman of the Road Safety Committee in the Department of Snipping and Transport has supplied me with the following report in reply to the honorable senator’s question : -
Honorable senators, like other Australians, have no doubt been gravely concerned by the heavy toll of life and limb and the serious damage to property which has been taking place on our highways, particularly since the war. It gives me very great satisfaction, therefore, to be able to report to the Senate that the tide of road fatalities which turned last year has now been forced to recede. During the calendar year 1952 the number of road fatalities was two fewer than that for the previous year. Figures now available for the twelve months ended the 30th June, 1953, show that there were 198 fewer deaths, a reduction of 10 per cent, of the number for the preceding year. The improvement is spread over every State except Queensland.
The most heartening feature is that the reduction in fatalities has been achieved in the face of an increase of 123,000 in the number of motor vehicles using ‘our roads, and an estimated increase of about 500,000,000 vehicle miles. This improvement in the accident rate reflects great credit on those ‘actively engaged in this life-saving campaign, particularly the Australian Road Safety Council, the traffic police, educationists, road and automotive engineers, wise parents, and many others, not forgetting the road users themselves, who by their increased care and courtesy have made the reduction in fatalities possible. In fact, it is estimated that, due to the abatement in the road toll since the Australian Road Safety Council was formed in 1947, over 1,400 Australian men, women and children ale alive to-day who might otherwise have fallin victim to road accidents, and over 27,000 have been spared the physical, mental and economic hardship of personal injury. Based on either estimated distance travelled, or number of vehicles operating, our roads are safer to-day than ever before. The relevant figures are as’ follows: -
– I ask the Minister for Repatriation whether a totally and permanently incapacitated ex-serviceman is eligible to receive the full rate of pension in respect of his disability regardless of the value of property that he mav own or of any income that he may earn? If that is the position, is - it a fact that the Repatriation Department, even in instances in which a pensioner has no other income, deducts from the . full rate of pension moneys that such a pensioner may receive by way of compensation from the government of another country ?
– The full amount, of pension is payable to a totally and permanently incapacitated ex-serviceman regardless of the value of property that he may own. However, such a pensioner is not permitted to earn more than a negligible amount in excess of the basic wage and still remain eligible to receive the full rate of pension. The reason for that provision is obvious. A person who is capable of earning an appreciable amount could not really he classified as being totally and permanently incapacitated. When effect is given to the budget proposals a totally and permanently incapacitated exserviceman will be eligible to receive a pension of £9 5s. in respect of himself plus £1 15s. 6d. in respect of his wife, if he is married, making a total pension of £11 Os. 6d. a week. The honorable senator has referred to a totally and permanently incapacitated ex-serviceman who is in receipt of a pension from overseas. If he will be good enough to furnish me with the full details of the case that he has in mind, I shall look into the matter and inform him of the position.
– Has the Minister for National Development read a. report of a statement that has been attributed to Mr. H. G. Conde, Commissioner of the Electricity Commission of New South Wales, to the effect that power black-outs in Sydney are of the past, and that during the winter months of this year the commission, for the first time since the war, had been able to cope with the demand for electricity without imposing restrictions? Does the Minister consider that the present rate of production of coal is an assurance that the present happy state of affairs in connexion with the supply of electricity in New South Wales is likely to continue?
– I have read the statement in this morning’s press to which the honorable senator has referred. 1 do not think that it would have been unduly generous of Mr. Conde to acknowledge the fact that the availability, for the first time, of adequate supplies of coal very largely eased the difficulties with which he had to contend.
– Has the Minister for National Development read a report of a statement that has been attributed to the Persian Government, that it would be necessary for foreign experts to come to Abadan in order to put some of the oil equipment into operation again? Is it also a fact that the Persian nationalized oil industry has incurred debts totalling £31,563,000 since the Persian Government took over the oil facilities at Abadan, in May, 1951? Does the Minister consider that there would be any likelihood of the establishment of a refinery in Western Australia by the Anglo-Iranian Oil Company Limited being retarded in the event of the Persian Government requesting that company to rescue the Abadan undertaking, from which it was ejected?
– I do not profess to have an expert knowledge of the position at Abadan. However, I have no doubt that the difficulties that were experienced by the Persian Government in its endeavours to nationalize the oil industry of that country were not unexpected by those persons who had had experience of government adventures into commerce in Australia. Previous Australian governments were confronted with many difficulties in connexion with the extraction of oil from shale at Newnes. That was one of the matters that this Government had to clean up shortly. after it caine to office.
– A Liberal government started that undertaking.
– And this Liberal Government finished it. The honorable senator has asked me to express an opinion on the probable effect on the completion of the new refinery at Kwinana of the Anglo-Iranian Oil Company Limited undertaking work at Abadan. Of course, that is a matter for decision by the company. However, I express as my own personal opinion, based on conversations that I had with the executives of the company before they decided to establish the Kwinana refinery, that that work will proceed irrespective of the outcome of events in Abadan. I was informed at the time that the Anglo-Iranian Oil Company Limited had decided to continue operations in Western Australia even if it were able to recover its position in Abadan. I have no information that leads me to think that the company has departed from that policy. Indeed, it is proceeding with its Kwinana venture as rapidly as it can.
– -I should like to preface a question which I address to the Minister representing the Minister for
Social Services by’ stating that I understand that the head-quarters of the Social Services Department in Perth is to be removed to a portion of Wellingtonstreet which is about a mile and a half from the Central Railway Station. Transport between those two points is difficult to obtain. I ask the Minister to give serious consideration to housing all or some of the offices of the Department of Social Services in a building known as the Central Hotel, which is directly opposite the Central Railway Station and is being reconstructed for the Departin en t of Health. In the interests of invalid, age and other pensioners I ask that if the Department of Social Services cannot be completely housed in the Central Hotel building at least pensions bc made payable at that building.
– The Minister for Social Services always has the interests of social service beneficiaries very much at heart. The honorable senator’s question concerns a matter of administration, but I shall request the Minister for Social Services to furnish a reply i.o it.
asked the Minister representing the Minister for Social Services, upon notice -
– The Minister for Social Services has supplied the following information in reply to the honorable senator’s questions: -
– On the 24th September, Senator Armstrong asked the following question : -
Is the Minister representing the Minister for the Interior aware that no adequate map of the City of Canberra is available? In view of the large tourist interest in this city, will the Minister see that a map is prepared that will do justice to Canberra and will illustrate the points of interest which, at present, many visitors are unable to find without assistance?
The following information has now been supplied by the Minister for the Interior : -
A number of maps of the City of Canberra and the Australian Capital Territory are available. However, it is appreciated that a ma]) specially designed to meet the needs of tourists is desirable. Such a map has been prepared and is now being printed. When’ supplies are available the map will be on sale at the Canberra Tourist Bureau and other suitable places.
– In view of the high costs of- telephone rentals and telephone calls will the Minister representing the Postmaster-General consider enabling payment of telephone accounts to be made by means of a stamp system such as that which operates in relation to the payment of radio licence-fees? This would relieve people in the lower income groups of the burden of paying heavy telephone accounts in full when they fall due twice a year.
– I shall be pleased to bring the honorable senator’s question to the notice ofthe Postmaster-General and to obtain a reply as soon as possible.
– Can the Minister for National Development inform me whether it is true that more than £12,000,000 worth of machinery and plant has been imported by the Joint Coal Board? What proportion of that machinery was ordered by the Department of National Development? What is the value of the Joint Coal Board’s machinery still in crates and regarded as surplus? What progress has been made in the disposal of surplus plant and machinery ordered at the direction of the Department of National Development last year?
– I cannot say offhand whether the value of the plant ordered was £12,000,000, but I believe that figure overstates the total. My recollection is that the value is about £7,000,000 or £8,000,000, but I may be wrong on that point. No plant was ordered by the Department of National Development. It was all ordered by the Joint Coal Board. The surplus plant is valued at approximately £3,000,000, of which £1,000,000 worth was ordered by Senator Ashley when he was a Minister, and £2,000,000 worth has been ordered by me.
– I ask the
Minister representing the Treasurer whether it is a fact that lastmonth the Capital Issues Board approved a new share issue of £6,000,000 by the Bank of New South Wales? If so, when was the application first made, and when was it. finally approved? Was the approval given on a Sunday, and was it necessary for the Bank of New South Wales to arrange for the typing of the formal approval ?
– I can say without hesitation that any application by the Bank of New South Wales was made in the ordinary way, dealt with in the ordinary way, and decided in the ordinary way in accordance with the usual procedure of the Capital Issues Board.
asked theMinister representing the Minister for Social Services, upon notice -
– The Minister for Social Services has supplied the following answer : -
This question is covered fully by the answer to the honorable senator given by me on the 22nd September, 1953. The question, as it is framed, gives an incorrect impression of the position, as will be seen by a study of my reply of the 22nd September. The Minister, as stated in that answer, has already investigated the matter and, despite the fact that the private valuer could not have anticipated the developments which have taken place since the applicant purchased the home, the Minister has approved of second assistance to the applicant if he disposes of this property and discharges his liability.
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has furnished the following answers : - 1, 2 and 3. No.
asked the Minister representing the Treasurer, upon notice -
Does the sales tax legislation make provision for any concession in the case of the purchase of a motor car and suitable equipment for an invalid driver or for -the benefit of a person who has been so incapacitated by poliomyelitis as to make it necessary for him to have the car for .personal transport?
– The Treasurer has supplied the following answer: -
Item .135 in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1952 provides for exemption from sales tax in respect of motor vehicles for use in personal transportation, and not for sale, by an ex-serviceman or woman who, as the result of service in the armed forces - (o) has lost a. leg or both arms, or for the purposes of the Repatriation Act is deemed to have lost a leg or both arms; or (6) is in receipt of a special pension under the Second Schedule to the Repatriation Act in respect of blindness, total and permanent incapacity or tuberculosis. There is no similar provision in favour of persons who have not been members of the armed forces. . One reason1 for this is that, as the disabilities of ex-members of. the armed forces are classified and recorded by the Repatriation Department, there is no practical difficulty in carrying the exemption into effect. This does not apply to the general public. There would be considerable practical difficulty involved in implementing any exemption of goods for- disabled persons generally. It would be necessary to give consideration to many classes of disability (e.g., loss of limbs, blindness,, tuberculosis, arthritis, &c.) and these could occur in varying degrees of severity. It has not been found possible to evolve any satisfactory test as the basis of a general exemption of this kind. The law does, however, provide for exemption of a considerable range of goods of a kind used in the treatment of sickness or disabilities or in alleviating their effects. These exempt goods include drugs and medicines, surgical appliances, artificial limbs, invalid chairs, spectacles, hearing aids and dentures. These goods are exempt in all circumstances.
asked the Minister representing the Minister for Air, upon notice -
– The Minister for Air has supplied the following answers : -
asked the Minister representing the Minister for Commerce ‘and Agriculture, upon notice -
– The Minister for Commerce and Agriculture has supplied the following answers : -
asked the Minister representing the Postmaster-General, upon notice -
– The PostmasterGeneral has furnished me with the following information : -
– I present the report of the Public Accounts Committee on the following subject : -
Debate resumed from the 29th September (vide page 278), on motion by Senator Spooner -
That the bill be now read a second time.
– The bill now before the Senate deals with the pay-roll tax and it proposes a remission in favour of taxpayers. The pay-roll tax was imposed in 1941 at the rate of21/2 percent, upon wages paid by employers exceeding a rate of £1,040 per annum or £20 a week. The main purpose of this bill is to lift the exemption in favour of employers from £1,040 to £4,160. In other words the exemption is to be raised from £20 a week to £80 a week. TheGovernment has claimed that the proposed remission will release from payment of the tax about 50,000 employers of the 90,000 employers who are now affected. The bill is to be operative from the 1st October. The Government has claimed that, the bill will result in the remission of about £5,000,000 in a full year and £3,900,000 in the remainder of the current financial year. Despite that claim, it is quite clear that there is to be ft benefit of only £1,700,000 to employers generally this year. The Government collected £40,100,000 in pay-roll taxin 1952-53. It proposes to collect in the current financial year £38,400,000. That is a difference of £1,700,000 and that is the extent of the benefit that employers will reap compared with the last financial year.
– But the amount would be £3,900,000 if the tax had been collected at the present rate.
-The rate has not been altered. I believe that the Minister for National Development (Senator Spooner) means that the amount, would have been £3,900,000 if the amount of exemption had not been altered.
– That may well be the position, but I propose to show that as inflation was allowed to run uncontrolled under this Government, more and more employers had to pay the payroll tax until its incidence to-day is exceedingly severe. I shall return to that argument later. Having regard to the burdens of industry and the needs of the Australian economy, the amount of £1,700,000 concession by which industry will benefit this year is totally inadequate and relatively insignificant. Although the Opposition will not vote against the bill, I record its keen disappointment with the approach that the Government has made to the pay-roll tax in this measure. Honorable senators will be interested to hear a summary of the operation of the pay-roll tax during the past twelve years. When the tax was introduced in 1941-42, total collections were £8,900,000. The following table shows the pay-roll tax collections since its introduction: -
For the current financial year, the tax is estimated to return £38,400,000.
– How does that cor.respond with changes in the national income ?
– The national income, of course, rose during that period.
– The honorable senator forgets that consideration.
– No, I am not forgetting it. That is one of the factors that have contributed to the increase of total collections’ of pay-roll tax. Immigration and the normal increase of population are other factors. At the moment, I am not attempting to deal with all of the factors that have contributed to the increase of the yield from this tax. The outstanding point which I make at the moment is that the figures that I have cited tell the story of uncontrolled inflation in this country. Although other factors are involved, that is the main factor that has led to the enormous growth of this burden upon industry. Other senators may develop other aspects of the subject and show how the importance of those factors varies in relation to the matter that I am submitting. In order to refresh the minds of honorable senators, I now refer to the changes that have taken place in the basic wage during the same period. Commencing at July, 1941, when the payroll tax first became operative, the basic wage, computed on the six capitals basis, payable to an adult male, was £4 6s. a week; and in the succeeding years to 1952 the wage was as follows : £4 6s., £4 10s., £4 16s., £4 16s., £4 17s., £5 6s., £4 14s., £6 4s., £6 15s., £8 16s., and £10 16s. At the 1st July this year the basic wage was £11 14s., whereas at this minute it is £11 16s. Those figures reveal instantly the major factor in the growth of the burden of pay-roll tax on the community.
A significant feature of those figures is the relative steadiness of the burden of this tax in those anterior years. It is apparent that there was some stability about the basic wage from 1941 to 1948. The real damage, of course, has occurred since the end of 1949. In July of that year the basic wage was £6 4s. a week, whereas at the 1st July this year it was £11 14s. There was one item in those increases that was not due directly to increases of the cost of living, but those figures indicate the burden of the pay-roll tax upon the community. It is interesting to note how more and more employers were gradually drawn into the net. The basic wage, on the six capitals basis, was £4 6s. in July, 1941, and at that time the average wage paid to adult males in industry was £5 ls. 8d. It is recognized that then, as now, few people were in receipt of the bare basic wage. That fact is clearly indicated in the statistician’s figures. At that time, employers whose weekly wages bill was less than £20 a week were exempt from pay-roll tax. Thus, when the average wage was £5 ls. 8d. a week, employers became liable to pay this tax when they employed four people. At this moment, when the basic wage is £11 16s. and the actual average male wage is £14 2s. 6d., according to the statistician’s figures, which are available to all honorable senators, an employer is liable to pay pay-roll tax if he employs two adult males. He is liable to pay this tax the moment he employs more than one person.
– That position will be amended as from midnight to-night. .
– I shall deal with the effects of the measure in a moment. At this juncture I am showing how, bit by hit under this legislation and as a .result of the inflation that has been allowed to develop, particularly during the last few years, more and more employers have been drawn into lie whirlpool of this vexatious tax with all its form-filling, the provision of monthly returns and the irritation that it unquestionably has caused. In reply to Senator Paltridge’s interjection, I shall now look at the position as it will exist after this measure becomes law. An employer will be exempt from the tax unless his wages bill for a whole year amounts to £4,160, or an average of £80 a week. On the basis of the average wage of £14 2s. 6d. that is paid to a male adult in industry under this measure, an employer will be liable to pay this tax if he employs more than five persons. The proposed exemption will confer a benefit upon the small employer until he employs more than that number of persons. Disregarding the history of the tax for the moment, the view of the Opposition is that a pay-roll tax is justified only by the most urgent needs of an Australian government for revenue. It is a most irritating tax in many ways. Lt is undeniable that it places a penalty upon employment. The greater the number of persons employed by an individual employer the larger will be the amount of tax that he will be obliged to pay. It is no answer to say that the employer will be able to pass on that tax to the consumers, because two new situations arise in that respect. The first of them is that liability to pay this tax renders it more difficult for the locally produced article to compete with the imported article; and, secondly, as this additional cost enters the general cost structure of industry, it makes our exportable goods dearer and consequently more difficult to sell on overseas markets. In that respect, I need only refer to the difficulties being experienced by the fish cannery at Ulverston and to other canning industries. Dried fruits that are processed with sugar, condensed milk and all forms of processed milk come within this category. Throughout Australia, canneries are in difficulty to-day in relation to their overseas sales because of the high operating costs in their industries. So I reply that it is no answer to say that this tax is not a burden upon the employer in that he can pass it on in the price of his product. As I have indicated, that process would land manufacturers in greater difficulty.
This tax is particularly iniquitous because it is to be paid by an employer whether or not he makes a profit. A man may make a loss on his operations for a whole year, but despite that fact, hewill be obliged to pay this tax. I do not think that any honorable senator can possibly justify that position except in circumstances of the direst need of a government for revenue. As this Government, at the moment, is seeking to grant relief in a full year to the tune of £118,000,000 and to an amount of £81,000,000 in the current financial year in respect of all tax concessions proposed in the budget, the Opposition submits that not sufficient attention has been directed to this tax and its incidence. After all is said and done, this is not a tax on luxuries, but a tax on every conceivable kind of activity by manufacturers and persons who are providing services! It is an inflationary tax. I emphasize again the point that I have made previously, that this tax increases the cost structure. I think that i will be able to show conclusively that the estimated yield of £40,000,000 a year from this tax adds about £100,000,000 to the c«st structure. In the first place, the wholesaler ‘ who pays the tax includes it in his costs, onto which bc adds his margin of profit of from 25 per cent, to 50 per cent. The person who transports the goods has to pay pay-roll tax, as has also every intermediary down to the retailer. Even such a partisan authority a3 the Chamber of Manufactures has stated that in due course the £40,000,000 that the Government collects in pay-roll taxation adds something like £100,000,000 to the cost structure. Although I have no means of checking that estimate, I do not doubt that it is approximately correct.
A Government supporter interjecting,
– An honorable senator opposite apparently disagrees with me. If he would make an inquiry about the margins of profit that are added by wholesalers and intermediaries all the way down to the retailers, he would probably have, no hesitation in accepting the contention that about £100,000,000 is added to the cost structure as a result of the Government collecting about £40,000,000 a year by pay-roll taxation. Inflation is one of the major problems in this country to-day. One would have expected that a government, that claims to be attacking inflation - a claim that was first made when the horror budget was introduced - would direct its attention to this unsolved problem, which is one of the greatest disabilities in our economy. Instead, our cost structure remains at the highest level of all time, and we are burdened with the ills that flow from that fact.
The Government proposes to lift an inconsequential tax burden of £1,700,000 from the employers of this country. It is of no use for supporters of the Government to contend that the burden this year would have been heavier had not this exemption been granted. I emphasize that the burden imposed on the manufacturers this year will be only £1,700,000 less than that of last year. It may be that the Government will receive more revenue from pay-roll tax than it has estimated, and nhat the concession to industry in this financial year will bc less than £1,700,000. The Opposition is strongly of the opinion that the Government should have taken this opportunity to attack the cost structure in Australia by lowering pay-roll taxation far more than it has done. “We believe that State governments and other bodies that provide community services without thought of profit should have been completely exempted from pay-roll taxation. Local governing bodies and municipalities which provide services for the people in their localities, again not at at a profit, should have been completely exempted.
– How much more does the Leader of the Opposition believe would have been added to the cost structure if endowment for the first child in every family under the age of sixteen :-ea.rs had been introduced on the basis of 10s. a week - as Labour sought - instead of the present 5s. a week?
– The matter that has been raised by Senator Wright is not in the least degree relevant to the present debate. To answer his question I should need to embark on a wide discussion about governmental expenditure. An appropriate time to do so will be when the Appropriation Bill comes before this chamber in due course. I point out that State governments and other public bodies, such as universities and educational authorities, which provide community services without profit are in grave financial difficulties. Many of those bodies are unable to do all of the things’ that they want to do for their people, and which the people want done. As one of its first duties, this Government should have spread relief right through the community, instead of obliging State governments to increase their transport and other charges. The Government should have relieved those bodies from pay-roll taxation. It is difficult to understand why the Government has chosen the present course instead of attacking the cost structure. While public hospitals are exempted from pay-roll taxation, community hospitals are not so exempted. This aspect of the matter’ will he dealt with fully by other speakers from, this side of the chamber. Of what use is it for supporters of the Government to say that municipalities and State governments will derive a benefit from the lifting’ of the exemption from £1,040 to £4,160 a year? That relief is only at the rate of 2i per cent, per annum, which is equivalent to £7S a year. In other words, the pay-roll taxation that is imposed on State governments and municipalities will be reduced by only 30s. a week. Even big companies that provide vast fields of employment will be relieved of only 30s. a week in pay-roll tax. I invite supporters of the Government to consider the reaction of a municipality that expends thousands of pounds a week when it learns that the Government has remitted only 30s. a week of pay-roll taxation. I venture to say that the municipalities will be among the most disappointed bodies in this country when they learn the full import of the Government’s proposal, and I give the Government advance notice that at the committee stage I shall move for the complete exemption of those bodies from pay-roll taxation. The Opposition will then invite supporters of the Government to declare whether or not they are in favour of such bodies being exempted, whether they believe that a remission of pay-roll taxation of only 30s. a week to municipalities, many of which expend thousands of pounds a week on wages, is a fitting remission, and whether or not they believe that the Government should continue to impose pay-roll taxation on community hospitals, universities, education authorities and other public authorities. In this instance, as in connexion with another measure on which I commented yesterday, the Minister’s second-reading speech contains not one word of assurance that the relief that is to be granted by this measure to 50,000 employers will be passed on to the public. The employers have not even been requested to pass on the benefit of the proposed remission of taxation, and I think it is fair comment to say that the Government has given no thought to that aspect of the matter. No assurance has been given that those who will benefit from the raising of the exemption will pass on that advantage to the public by way of reduced costs.
– There is a thing known as competition.
– I have heard of it. It is the duty of the Government to ensure that the benefit given to a section of industry by a remission of taxation shall be passed on to the ultimate consumers. It is not even in the mind of the Government that that could be done. It is not mentioned in the Minister’s second-reading speech. Senator McCallum might have made a wiser interjection had he commented that there is some form of State prices control. That would have been more to the point. But this Government is undermining States prices control, after concurring for years in the Labour Government’s policy of providing the States with the cost of operating prices control to the amount of £1,000,000 a year. This Government has withdrawn that grant specifically, claiming that it had made provision for such expenditure in allocating reimbursements of income tax to the. State governments. The Government has aimed a direct blow at the remaining powers of State prices bodies.
– The State governments seem to be relieved at the Government’s action.
– The State governments have acknowledged for many years that they could not effectively operate prices control. The Premiers have acknowledged that that control can be operated only on a federal basis.
The bill provides that this legislation shall become operative to-morrow. Therefore, no matter what the Opposition says, the bill will be passed, through this chamber to-day. The Government will ensure that that is doneWhy the haste for this remission of taxation? Why does the whole field of pensions relief which has been forecast in the budget have to wait until this legislation has been passed? Why cannot those measures which deal with repatriation or social services pensions come before the Senate now if any measure is to be dealt with urgently? But apparently the pensioners must wait until the first pay day after the legislation which will affect them directly is passed through this Parliament. That might be a fortnight after this legislation has been passed. The Opposition has offered to facilitate the passage of such legislation, but we have not been given the opportunity to examine it. Instead,’ we have been presented with a bill for a remission of taxation which the Government does not even intend shall benefit consumers. The Opposition will not oppose the raising of the exemption level in relation to pay-roll tax. Small, inadequate and insignificant as the proposal relief is, we shall not vote against it.
– It is like the pension increase.
– Yes. The Opposition considers that this measure will make no contribution of any consequence to an attack on the cost structure although it could have been made an instrument for that purpose. The bill will give no relief to those public and semi-public bodies that I have mentioned. It is clear to the Opposition from what the Minister has said as well as from what he failed to say that the Government is only concerned about getting some little approval from 50,000 small employers. The bill will not give any relief to the big private employers or to State governments.
– Docs the honorable senator not think that the small employers deserve a little consideration?
– I do. They might well have received, more consideration., .but I am projecting what was in :the .Government’s mind. Seeing an election .approach ing, the Government ascertained how little revenue it could sacrifice in order to please the most people. The relief that the Government has proposed ±’or large concerns is insignificant. But they have no votes. State governments and municipalities do not vote.’ But 50,000 little people do vote and it will only cost the Government £1,700,000 this year to please those 50,000 little people.
– Is that the argument that the honorable senator used in connexion with company tax?
– I am not going to he diverted to the subject of company tax. I am talking about the pay-roll tax. What real contribution will this bill make to the economy of Australia? None whatever. The Opposition will not oppose the motion before the Chair. It will propose amendments when the bill reaches the committee stage in order to test the desire of Government supporters to give wide community relief. The Opposition considers that this bill is designed less to give taxation relief than “to serve the political ends of the Govern.ment
.- I rise to support this measure which is designed to exempt from pay-roll :tax employers paying less than £80 a week in wages. The bill will affect about 50,000 of the 90,000 employers who pay pay-roll tax. I wish to criticize some of the remarks of the Leader of the Opposition (Senator McKenna). It would not appear from his remarks that he is in favour of child endowment. In 1941 when the child endowment legislation was introduced by a government whose poll.tical outlook was similar to that of the present Government, it could be financed only from, pay-roll tax. On that occasion no Opposition senator opposed the collection of pay-roll tax in order to finance child endowment.
– Of course they did.
– If the honorable senator reads Hansard he will. find that no honorable senator opposed the pay-roll tax. The Leader of the Opposition has now stated that the Government should reduce the payroll tax by a considerable amount. Yet Opposition senators have contended on other occasions that child endowment should be increased from 5s. to 10s. in respect of the first child. In 1950, the Labour party opposed the Government’s measure to pay 5s. in respect of the first child until it was instructed by its twelve head men to turn a somersault in this chamber. It then agreed that the amount should be increased to 10s. a week for each child. The Leader of the Opposition lias also stated that the Government has done nothing to check the spiralling of costs and that we are still living in a highly inflatory period.
– That is correct.
– The honorable senator will find that in 1949 the retail price structure rose by 12-J per cent. Inflation existed under the Labour Government and prices control. The Government went, through the depths of unpopularity in order to introduce measures that would check inflation. As a result, the latest report of the Commonwealth Bank announces that the increase in the retail price structure this year is less than 4 per cent. Inflation has been checked. The Leader of the Opposition has announced that when the bill reaches the committee stage, he will seek to have it amended to exempt certain organizations from the payment of pay-roll tax. If the Opposition intends that the revenue from this tax should be reduced as far as possible, it should also be consistent and advocate a reduction of child endowment, because the pay-roll tax provides the funds from which child endowment is paid.
The bill raises the pay-roll tax exemption from £1,04.0 per annum to £4,160 per annum. It also provides for the exemption from tax of certain organizations including the Imperial War Graves Commission, agencies of the United Nations, The South Pacific Commission, and the United States Educational Foundation in Australia. The raising of the exemption limit to £4,160 per annum will free 50,000 out of a total of 90,000 taxpayers from the necessity to make pay-roll tax returns. Undoubtedly this relief will be of great benefit throughout Australia, lt will be welcomed particularly by farmers who employ only four or five men, and by small business and commercial enterprises. The Treasurer said in his budget speech that the budget was designed primarily to benefit the small family man; the raising of the pay-roll tax exemption will make a substantial contribution in that direction. The payroll tax was introduced in 1941 when the basic wage was £4 6s. a week. To-day the basic wage is £11 16s. a week. Therefore, although the basic wage has increased only approximately two and three-quarter times in that period, the pay-roll tax exemption is now being increased fourfold. Proportionately more people will be exempted from the pay-roll tax when this measure becomes law than were exempted in 1941.
It is interesting to note the effect tha: child endowment has had on family life in Australia. In 1941 when the pay-roll tax was introduced, 895,000 children were eligible for child endowment which at that time was payable only in respect of children other than the first. By 1945. the number had grown to 945,000. In 1948, child endowment was paid in respect of more than 1,000,000 children and the total cost was £19,000,000. Most of that money was provided by the payroll tax. In 1951, when the Menzies Government decided to endow the first child of each family, the number of children eligible for child endowment payments was 2,365,000 and the total cost was £43,500,000. Last year, child endowment was paid in respect of 2,493,000 children at a total cost of £46,200.000. In the last year, the birth-rate has increased by more than 130,000. In 1942, 487,000 families were benefiting from child endowment payments. To-day. largely as a result of this Government’s decision to endow the first child, 1,200,000 families are benefiting from child endowment payments.
As the Leader of the Opposition said, the pay-roll tax does increase production costs. That cannot be denied. But in 1941 there was general agreement amongst all political parties that child endowment could be financed only by the imposition of a pay-roll tax. The Labour Government during its eight years of office, made no attempt to alter the payroll tax. It did not even exempt any institutions from the tax. Pay-roll tax payments have always been deductible for income tax purposes. This means that employers who pay income tax at the rate of 10s. in the £1, actually pay only 1£- per cent, in pay-roll tax instead of 2 per cent.
This is the first occasion on which any government has increased exemption from pay-roll tax. This Government believes, of course, in reducing taxes as far as they can be reduced. Since we came to office in 1949, all taxes including income tax have been reduced. The relief that this measure will confer upon a substantial number of pay-roll taxpayers will be enjoyed as from to-morrow. Income tax rates to-day are lower than they were in 1949. The entertainments tax has been abolished altogether. The land tax which Labour is pledged to re-introduce ha* been abolished by this Government, and I believe this measure to be a step in the direction of the complete abolition of the pay-roll tax. I am certain that no political party likes the pay-roll tax. It is not a desirable tax, but its complete abolition at this stage might threaten the continuance of child endowment, and nobody in this country would want to do that. It is the intention of the Government to continue to pay child endowment and thus improve the lot of the family man. However, I believe that if some method can be found to replace the revenue which will be lost by the reduction of pay-roll tax, it should be adopted. Under this legislation, more than a half of the employers of the Commonwealth will be exempted from liability to pay pay-roll tax. I look forward to the day when the tax will be completely abolished.
– Senator Scott stated during his remarks that if pay-roll tax were abolished, child endowment would also have to he abolished. However, the honorable senator did not give the full story. Child endowment was being paid in some of the States of the Commonwealth prior to 1941, but as the result of an application to the Commonwealth Court of Conciliation and Arbitration in 1940, not 1941 as Senator Scott said, the court considered the question of instituting a means whereby the standard of living of employees could be improved without increasing wages. Certain suggestions were made and conveyed to the Australian Government of the day, which was the Menzies Government. The result was that that government saw clearly that it would be cheaper for industry to pay a pay-roll tax than it would be for thebasic wage to be . increased substantially. The peculiar thing is that the big employers did not cavil at the introduction of the pay-roll tax. They thought that they would not be obliged to pay all of it, and that the major portion of it would be paid by individual taxpayers. Accordingly, they said that child endowment should be placed on the statute-book, their motive being to prevent the basic wage from being increased. That is how the pay-roll tax came about.
If honorable senators refer to the judgment of the court, delivered in 1941, they will see that Judge Beeby said -
Child endowment did not emanate from the minds of the Menzies, Faddens’ and Scotts of the Liberal party, or from the minds of members of the Australian Country party. Its introduction was initiated by Labour people in certain States of the Commonwealth, and it was as a result of that initiation that th, court decided in its favour.
Senator Scott was entirely wrong when he stated that the Australian Labour party did not oppose the introduction of pay-roll tax. On the contrary, the leader of the party at that time vehemently opposed the introduction of this special tax. Nevertheless, it was introduced. In the first year of its operation, approximately £9,000,000 was collected, but that. amount was insufficient to meet the cost of child endowment. The Income Tax Assessment Act was therefore amended, and the right of tha people to certain exemptions in respect of children were taken away. The withdrawal of that exemption yielded approximately £1,500,000. The government then made arrangements to secure an additional £1,500,000, and with the total amount it was able to pay child endowment. The collections from pay-roll tax were sufficient to cover only those children of persons em-ployed in industry; they were insufficient to cover the children of people such as farmers and those who did not employ labour. Therefore, additional revenue had to be found to meet the total cost of child endowment.
The court which considered the application to which I have referred, comprised Mr. Justice Beeby, Mr. Justice Piper, and. Mr. Justice 0’Mara. Mr. Justice Piper referred, in the judgment of the court, to the division of profits, or the division of the substance of production, so that the working people would receive a greater percentage of it. He raid that if the Australian Government introduced such a scheme, the court, at a later date, would give its verdict in relation to increases of the basic wage. The result was that the court considered the matter and declined to increase the basic wage. Each of the judges in turn said that the wage was not sufficient to support a family in comfort. Mr. Justice 0’Mar: went further and said that the basic wage at that time was sufficient for a man with a wife and one child, but insufficient for a man with a wife and two -children. He was of the opinion that it would be a hardship for a man with a wife and three children. He went on to say -
The solution of his difficulties is not to be found in the discriminate increase in wages which is now sought, but in a system of child endowment.
It will be seen, therefore, that the Menzies Government did not introduce child endowment because it wished to bestow a splendid social service on the community, -but because it thought that child endowment would be cheaper to industry than would au increase of the basic wage.
The same thing occurred recently in connexion with an application to the court by combined employees’ unions, asking for an increase of the basic wage. After the case had been heard, but before the decision of the court was made known, this Government introduced child endowment of 5s. a week in respect of the first child, with the object of influencing the decision of the court. I arn sorry to say that the Government succeeded in its objective. Everybody knows that instead of five units being concerned in the assessment of the basic wage, only three units, a man with a wife and one child, are considered. Of course, other matters are also taken into consideration in the assessment. That action of the Government saved industry, particularly big industry, millions of pounds, because the basic wage was not increased as much as it otherwise would have been. I have no doubt that it will hot’ ‘be long before honorable senators opposite and their friends will advocate that the basie wage should be assessed on the basis of only one unit, the employee, and that some system of social services payments should he provided to cover dependants.
Honorable senators will recollect that when the budget papers were introduced in this chamber recently, the Minister for National Development (Senator Spooner), who represents the Treasurer in the Senate, stated that the alleviation of pay-roll tax would cost the Government approximately £5,000,000 in a full year and £3,900,000 for the current financial year. From to-morrow, approximately 50,000 employers will not be liable to pay the. tax, and the remaining 40,000 will not commence to pay tax until their weekly wages amount to £81. I have estimated that the average tax paid at present is £18 a head which, in respect of “>0,000 persons, amounts to £900,000. That means that big business, including government and State instrumentalities, will receive a concession of approximately £3,000,000 under this legislation. That, of course, is in conformity with the policy of the Government, which is to give preference to big business. The great publicity, in which the Government has indulged, about reductions of taxes will be found, on examination, to be false, despite the continual references in the press, over the radio and in the House of Representatives to big tax cuts. The big man is giving way a little, but that does not help child endowment payments as Senator Scott has suggested. If all the pay-roll tax were abolished, it would not make any difference to child endowment. Nobody can convince any member of the Australian Labour party that it stands for a special tax on selected industries to consummate some idea behind the minds of a judge or the Prime Minister (Mr. Menzies) to increase social services payments. The Australian Labour party believes that all who can afford to pay shall do so according to their ability to pay.
It is unfair to require any charitable or community organization to pay the pay-roll tax. Some charitable organizations are exempt from the tax, but others do not come within the definition that enables them to obtain exemption. Community hospitals are not exempt from pay-roll tax, although they make no profits and are formed by communities simply to help the sick. The time is appropriate to ask supporters of the Government whether they agree that community organizations of that nature should pay the pay-roll tax. Their only motive is service to the community. The pay-roll tax is one of the principal factors contributing to the deficits of the State governments. Railways throughout Australia, that are owned and operated by the State governments, have to pay the tax.
– How much relief did the Labour governments give the State governments in that respect when they were in office ?
– We did not give the State governments any pay-roll tax concessions, but Senator Pearson has forgotten that when the Labour Government was in office, it was faced with all the problems of World War II., and the post-war period. I am not taking any credit or any blame for overlooking the pay-roll tax in the circumstances. Between 1939 and 1945, other matters were more important. After the war, hundreds of thousands of men and women had to be transferred back to civil life and the transfer was accomplished successfully by a Labour government
Stagnation in rehabilitation matters and the settlement of ex-servicemen on the land has occurred only since 1949, when this Government was first elected. This Government has allowed its attention to be turned to less complex matters, but it did not remember the pay-roll tax until an election was impending. Now it is promising tax concessions so that it can get favorable headlines in the newspapers. If the people of Australia rely on this Government’s promises as they did in 1949, they will be disappointed, as the wool-growers were in 1951. The Government took £120,000,000 from the gross receipts of the wool-growers and in 1952 it altered the system of taxation so that the woolgrowers could not get their money back. Throughout the war and post-war periods, the Labour Government accomplished a great deal and it tried to assist those who were in need. The Labour Government did not give big business interests £3,000,000 in a year and then offer 2s. 6d. a week to war widows.
– The Labour Government did not give the war widows anything in 1949.
– This Government seeks headlines announcing tax reductions, but it pushes needy sections of the community into the background with the promise that it will assist them later. I suggest that the exemptions from payroll tax should be extended to include State governments and municipalities. As the Government claims that it has plenty of money, the time is opportune to help State governments and local governing authorities. The Government could exempt them from the pay-roll tax from the 1st October or, if it is more suitable, from the 1st November. Amendments will be moved to give the Government an opportunity to save the State governments and local government authorities from further financial embarrassment. In many cases the municipalities are doing work with money that is provided by the Australian Government and yet they have to pay pay-roll tax from the same revenue. In a reply to a question, an honorable senator on the Government side was informed that millions of pounds from the petrol tax are paid to the State governments so that they can undertake road work. The State governments, in turn, pay some of that money to municipalities or they set up local authorities to build and repair roads. Immediately men are employed on that work, the responsible authority has to pay pay-roil tax from the money it receives. It is ridiculous.
– That principle has always applied. It applied when a Labour Government was in office.
– That does not prove that the principle was right or wrong. The imposition could be removed and I shall give honorable senators on the Government side an opportunity to say that it is wrong. The Government has a chance to declare that the State governments and the municipalities shall not be subject to the pay-roll tax. Senator Scott claimed that a government of a political colour similar to that of the present Government introduced the pay-roll tax in 1941. In those days, nobody realized the ramifications of the application of the tax to State instrumentalities. During the war period, the Labour Government had no time to examine that matter. This Government did not examine it either until an election was approaching. The State governments are embarrassed because the payroll tax costs them millions of pounds a year, and this is an opportune time to examine the whole subject. Personally, I would abolish the pay-roll tax, but I am only one of a crowd. The Government would be well advised to devise a fairer method; and the fairest method is to impose taxes on those who are best able to bear them.
– I commend the Government for maintaining its reputation as a taxreducing Government by taking advantage of every opportunity to reduce, or eliminate, taxes which hear unfairly on the community or which tend to aggravate inflation and increase the cost of living. I accept the Government’s assurance that in respect of the present financial year it has been able to make provision for only a partial alleviation of pay-roll tax having regard to the generous concessions that it proposes to make to all classes of taxpayers, including an average reduction of tax of 12^ per cent, on income from personal exertion. I trust that during the next three years it will be possible to provide further relief in respect of payroll tax, or even abolish that tax altogether. Senator O’Flaherty referred to child endowment. That benefit was introduced by a Liberal Government in 1941. The reports of the debates that took place on that measure show that the Opposition, which at that time was led by Mr. Curtin supported that bill. Whilst several members of the three parties did not approve of the method by which it was proposed to finance child endowment, they were obliged to concede that the imposition of a pay-roll tax was the best method that could be devised for that purpose, having regard to the fact that at that time the Government was obliged to finance the war effort to the greatest possible degree from revenue.
I am astonished at the objections which members of the Opposition have raised to this measure, the object of which is to reduce the incidence of pay-roll tax. I believe that those honorable senators are really in favour of this proposal. In any event, their predecessors supported the, original measure under which payroll tax was imposed. I cannot understand why Labour, seeing that it was in office for eight years, did not attempt to reduce this tax, particularly as this Government is now able to do so although it has been in office for only a little more than three years. The primary justification for reducing any kind of tax is that the tax bears unduly upon certain sections of the community or tends to increase costs in industry. All taxes that tend to aggravate inflation should be reduced, wherever practicable. Pay-roll tax is a direct charge upon goods and services and upon employment itself. Furthermore, the tax is not related to profits, or to ability to pay it. Under this measure an employer whose weekly wages bill exceeds £80 a week is liable to ‘ pay. the tax even if he should show a loss on his year’s transactions. That provision may check the flow of capital into industry. That is another reason why the tax should be abolished as soon as possible. Insofar as the purpose of the tax is to assist in the financing of child endowment it can be justified. Collections of pay-roll tax during the first year in which it operated amounted to £9,000,000, and the total cost of child endowment in that year was approximately £13,000,000. To-day, collections of pay-roll tax total £40,000,000 annually, whilst the cost of child endowment totals £51,000,000. Originally, child endowment was paid at the rate of 5s. a week for each child in a family under sixteen years of age with the exception of the first child under that age, and in the first year of its operation endowment was paid in respect of 1,000,000 children. The endowment has proved of tremendous benefit to family life, and its provision has been justified in every way. In 1945, the rate of endowment was increased to 7s. 6d. and in 1948 to 10s. a week.
Under this measure, the Government proposes to exempt over 50,000, or 55 per cent, of the 90,000 employers who now pay pay-roll tax. It is important to remember that the 50,000 taxpayers who will be exempted from pay-roll tax, and relieved of the necessity of furnishing returns, are primary producers, small businessmen, builders, and the like, employing six employees or under; in other words, the small man will get the greatest relief. Those employers who will remain liable to pay the tax will, of course, like other sections of the community, benefit as a result of the overall taxation concessions proposed in the budget. They will benefit particularly by the proposed reduction of the rate of company tax. I look forward to the day when the Government will be able to abolish pay-roll tax. I trust that it will do so as soon as the state of our economy warrants the taking of such action. Rising freights and costs are the bugbear of industry throughout Australia, particularly in Tasmania. The abolition of payroll tax, when economic circumstances permit the Government to abolish it, will be sound, not only from an economic, but also from a financial viewpoint.
Senator AYLETT (Tasmania) 5.T].Senator Wardlaw clearly revealed the injustice and unfairness of pay-roll tax. He emphasized the fact that an employer will be liable to pay the tax even if his transactions over a full year result in a loss. That provision, of course, is one of the worst features of the measure. In effect, the Government proposes to say to such an employer, “ Your business has shown a loss over the year, but we will increase that loss by obliging you to pay pay-roll tax at the rate of 2 per cent, of your wages bill “. I challenge any honorable senator to justify such an attitude. Senator Wardlaw said that the imposition of pay-roll tax was the only means available to the Liberal government which introduced child endowment to finance that benefit. Pay-roll tax is a tax on industry and, undoubtedly, it has the effect of increasing the prices of goods to consumers. Of course, any Liberal government that ran true to form could not be expected to finance a social services benefit except by means which obviously must have the effect of increasing the cost of living of the wage-earner and his family. That is precisely the effect of the pay-roll tax, because, ultimately, the tax is paid out of the pocket of the wage-earner. In the last few years, the basic wage has increased by approximately 100 per cent. On that basis it can be said that at present the pay-roll tax represents a charge of 5 per cent, of the cost of production of commodities that are produced in a factory whose management is liable to pay the tax. That increase is passed on in the price charged to the wholesaler, and if the wholesaler is liable to pay tax he must pass it on to the retailer who, . in turn, if he is liable to pay the tax, is obliged to pass it on to the consumer. It is astonishing that a measure of this kind should be introduced by a government which, on the eve of its election, promised the electors that it would reduce costs. The fact is that every action that it has taken since it assumed office has tended to increase costs. It is undeniable that pay-roll tax has contributed substantially to existing inflation.
Government supporters seek to justify the continuance of this tax on the ground that the revenue derived from it is required in order to finance the payment of child endowment. Surely, the Government is not so devoid of common sense that it is content to excuse an unfair tax of this kind on such grounds. If the Curtin and Chifley Labour governments had been equally devoid of com- mon sense in devising means to finance our war effort, this country would now be controlled by the Japanese. If nonLabour governments in the past, particularly during the depression when over 300,000 Australians trudged the roads looking for work, had endeavoured to encourage- industry, succeeding governments would have had available adequate resources from which to finance child endowment without resorting to an iniquitous tax of this kind. Whilst collections of pay-roll tax amount to £40,000,000 in a’ full year, the reduction of tax under this proposal will aggregate only £5,000,000. When that sum is divided among the 50,000 employers who are to be exempt from payment of the tax, that concession will not afford very much relief. In any event, the relief will not be sufficient to persuade recipients of it to return this Government to office. Whilst an. employer whose wages bill does not exceed £80 a week will be exempt from pay-roll tax, an employer whose wages bill amounts to, say, £90, will remain liable to pay the tax. Thus, the former employer will enjoy an advantage amounting to 2% per cent, of the profit made in his enterprise. That is how this proposal will affect small manufacturers. Such a proposal is unfair. The Government, through this iniquitous tax, will tax many industries out of existence. The Mount Lyell Mining and Railway Company Limited is one of the major copper-producing companies in Australia. As honorable senators are aware, we depended very largely on the production of copper to maintain our war effort. Because the price of copper has now fallen alarmingly that company has sought Commonwealth “ assistance to enable it to continue its activities.
– How does the honorable senator reconcile his interest in the activities of public companies with his complaint last week about the Government’s proposal to reduce company taxation ?
– With your indulgence, Mr. Acting Deputy President, I should like to inform Senator Wright- that I made no comment in this. chamber last week about the proposed reduction of company taxation. I leave it to the honorable senator and other company promoters to try to justify the Government’s policy in that connexion. The Mount Lyell Mining and Railway Company Limited is required to pay pay-roll tax at the rate of 2i per cent. I point out that this imposition could result in that company closing down. In the long run the big manufacturers do not lose because they pass on their payments of pay-roll tax to the consumers in the form of increased costs. As has been pointed out by other members of the Opposition, Australia is gradually losing its export markets because of the high costs of production in this country. Yet the Government continues to impose this iniquitous tax. I agree with Senator O’Flaherty’s contention that taxation should be imposed in accordance with the ability of the various sections of the community to pay taxes. Several days ago an American company that had been carrying on business in this country for the last eight years was forced to close down because, as a result of the high cost of production in this country it was unable to withstand the competition of manufacturers of similar commodities in other countries. In consequence; 50 employees of the company were thrown on to the labour market. A spokesman for the company stated that costs had risen by 100 per cent, since its Australian factory had been established. I point out that had that company been relieved of the payment of pay-roll tax at the rate of 2£ per cent., it may have been able to continue in business. Many companies which work on a small margin of profit rely on a big turnover in order to continue their activities. For that reason the continuance of pay-roll taxation will have a detrimental effect on .our economy. Some supporters of the Government have asked how else could child endowment be financed. I point out that the effect of the proposed reduction of income taxation will be that a person who has been in receipt of a net income of £25,000 a year will henceforth derive a net income of £30,000 a year. Why should a man in receipt of such a high income receive such a large remission of tax? That is one instance of the Government relinquishing revenue that could have been utilized for child endowment. The imposition of pay-roll taxation at the rate of 2£ per cent, increases the prices of commodities purchased by the waterside workers and other sections of the community by from 7 per cent, to 8 per cent.
– How many persons in Australia earn £25,000 a year ?
– Several members of the Liberal party do.
– And some members of the Australian Labour party, also.
– Most of the high income earners on the Government side are members of the Australian Country party.
– The amount of pay-roll tax that is paid by the manufacturers of agricultural machinery has a direct bearing on the prices that the farmers have to pay for their equipment. The price of every kind of agricultural machinery is much higher than it would be if pay-roll tax had been abolished.
– Why did not the previous Labour Government abolish payroll taxation?
– I remind Senator Laught that when the previous Labour Government came to office no less than 200,000 members of the community were unemployed and starving, and Labour was confronted with the task of providing employment for them.
The ACTING DEPUTY PRESIDENT (Senator McCallum). - Order! The honorable senator should not introduce irrelevant matter.
– With respect, Mr. Acting Deputy President, my remarks are as relevant as were the remarks of Government senators about child endowment. Three honorable senators opposite devoted almost the whole of their speeches to that subject. I remind the Senate that during Labour’s regime there were approximately 150,000 persons in the armed forces of this country or engaged in the production of war materiel and about 75 per cent, of the Government’s revenue was applied to purposes associated with Australia’s war effort. That- expenditure was unproductive and did not enable us to repay the principal as well as interest on loans. After the war Labour was called upon to finance the rehabilitation into civilian life of about 1,500,000 persons. Prior to the advent of the Labour Government the country had experienced ten years of what I call Liberal depressions.
During the budget debate in this chamber last week supporters of the Government stated that our economy has been stabilized and that the country is now on an even keel. If we have reached a condition of stability, why should not the iniquitous pay-roll tax be abolished ? This Government is not burdened with the cost of a war effort or rehabilitation charges. Despite the claims that have been made by honorable senators opposite I believe that Australia was more economically stable than any other country at the time that Labour relinquished office. If the Government parties had been sincere in their promises to reduce taxation they should have first reduced the forms of taxation that accentuate inflation. As I have already pointed out, pay-roll taxation has increased the retail prices of goods. Instead of trying to curb the spiralling of prices, this Government increased sales tax to 66$ per cent. That was a highly inflationary move. Let us now consider the effect of .pay-roll taxation on municipal councils. It is obvious that this tax is passed on by the councils to the ratepayers in the form of increased rates. Therefore, in many instances the tax is borne finally by the workers who are struggling to buy their homes. Although this measure does not provide as much relief as I should like to see provided, I do not oppose it, but I should like a provision to be inserted in the measure to ensure that the benefit from the remission of tax will be passed on to the consumers.
– How does the honorable senator suggest that the position should be righted?
- Senator Laught has already admitted that the employers who have paid pay-roll tax will benefit from this concession, but as they have passed on the tax to the consumers of their goods, the consumers rather than the employers should benefit from the remission. The consumers should derive the advantage, not the manufacturers who have been deriving handsome profits even after paying pay-roll taxation of 2£ per cent. No speaker from the other side has denied that the advantage of the remission will be gained by the employers, not the employees who are the consumers of goods. When land tax was abolished, rates levied on some land held by me rose by 300 per cent. That is an instance of the persons on the lowest rung of the ladder not receiving the benefit of remissions of taxation. This could be true also in relation to the abolition of entertainments tax. Government senators have admitted that the proposed remission of taxation will benefit about 50,000 small employers whose votes could swing the next general election. The Labour party is concerned primarily with protecting the interests of the people who purchase the goods. We want to stop inflation which, as Senator Scott has mentioned, has risen by 4 per cent, during the last twelve months. According to the Minister for National Development (Senator Spooner) prices rose by 40 per cent, in the year before last. Yet honorable senators opposite claim that inflation has stopped. There is no sign of stability in this country.
– That is silly.
– Wages have been pegged, but prices are still rising.
– Wages have not been pegged.
– The proposed remission of pay-roll tax will not benefit the workers of this country unless a specific provision is inserted in the bill that the benefit shall be passed on to the consumers. If the Government claims that it has no constitutional, power to insert such provision, it should refer the matter to the people by referendum, in order to try to obtain the necessary power. If the Government sincerely wants to stabilize Australia’s economy, and to retain our overseas markets, it should abolish pay-roll taxation. There are plenty of other ways in which the Government could have got money.
– How would child endowment payments be financed ?
– When’ the Government took office the Treasurer (Sir Arthur Fadden) had a complete scheme for financing social services, including child endowment, by taking ls. 6d. in the £1 from all incomes over a certain amount. The Treasurer paid the proceeds of that scheme into Consolidated Revenue and found another way of financing social services benefits. As the Treasurer was clever enough to hoodwink the people by charging them ls. 6d. in the £1 for social services benefits, which he financed from other sources, he should be clever enough to find some other way of financing child endowment, and giving the consumers the benefit of lower prices. That would give a fillip to Australian competition in overseas trade.
– I rise to support the bill before the chamber. Some matters which were raised by Senator Aylett require a reply. It was difficult to follow some of the honorable senator’s arguments, but I want to address my remarks to an obvious oversight of his. Section 70 of the Payroll Tax Assessment Act provides that where an employer has suffered a loss he may apply to the board, which was constituted under the act, for a remission of the tax. The board may then direct that the Commissioner of Taxation shall not extract the full amount of the tax. That provision applies to those cases in which a serious hardship would be imposed by the payment of the tax. Consequently, relief can be given in the type of case that was mentioned by Senator Aylett as instancing the damaging effect of this tax. Senator Aylett called the pay-roll tax “ iniquitous “. From 1941 until 1949 a Labour government was in office. That Government referred to the latter part of its period of office as “ the golden age “. If this tax is so iniquitous, why did the Labour Government not repeal it during that “golden age “ ? The Opposition expressed sympathy for the big companies, which would not be relieved of the necessity to pay pay-roll tax. Apparently, in this debate, honorable senators opposite do not intend to put on the guise of socialists. They have claimed that this tax inflicts great hardship on big companies. Senator Aylett’s remarks concerning the effect on his personal income of the abolition of federal land tax were interesting. He said that after this Government had repealed the land tax, the Labour Government in Tasmania reimposed the tax and he complained that, in consequence, his tax rose by 300 per cent. That statement suggests that Senator Aylett hasbeen a man of great prudence, who has acquired land of the unimproved value of up to £10,000.
Under the provisions of this bill, 55- per cent, of the present pay-roll taxpayers will be relieved of the necessity to fill in pay-roll tax forms and pay tax from to-morrow. This momentousadvance in the taxation policy of the Government will benefit many of the finest people in Australia, including small farmers, small graziers, small businessmen, and professional men. As one who is in close contact with the smaller agriculturists in South Australia, I assure the Senate that this bill will be received with great acclaim, not so much because it will reduce taxation, but because it will reduce the number of man-hours that arespent every year in filling in forms and despatching the tax. The Governmenthas shown great imagination in introducing this legislation and its action has already been acclaimed. The Government has a good record in connexion with exemptions from taxation. Last year the land tax was completely abolished. As a result, hundreds of people no longer have to fill in the rather extensive land tax forms. Now, over half of pay-roll taxpayers will not have to pay pay-roll taxOther significant exemptions from taxation granted by the Government include rather extensive exemptions available for elderly people in connexion with incometax. This Government has gone from strength to strength in its imaginative treatment of taxpayers in the smaller income groups.
The Leader of the Opposition (Senator McKenna) put forward an argument relating to the increased burden of pay-roll tax in recent years. Hequoted certain interesting figures but he failed to quote certain other figures. He said that £S,900,000 had been collected in pay-roll tax in 1941 and that approximately £38,400,000 had been collected this year. He then endeavoured to show that the pay-roll tax was four times as great as it was in 1941. But the honorable senator did not mention the increase that has taken place in the national income since 1941. In the financial year 1941-42 the national income amounted to approximately £800,000,000. The national income for 1952-53 was over four times as much as that amount, it being approximately £3,600,000,000. So the increase of payroll tax has almost kept pace with the increase in the national income. Consequently, the increased collections of payroll tax have not been the tremendous burden that was indicated by the Leader of the Opposition. There is now a far larger working population in this country than there was in 1941. I believe that approximately 800,000 people were performing some form of war service then. Also, the groupings of employees that exist now did not exist then. Many employers then had only one employee. There were groups of two and three employees which would not require the payment of pay-roll tax. Now there are larger groupings of employees in respect of whom pay-roll tax has bad to be paid. So the burden of pay-roll tax on our economy has not been greater to a measurable extent than it was during the term of office of the Labour Government.
The Opposition asked why the Govern ment had not proposed that State government and local government authorities should be exempt from the payment of pay-roll tax. Opposition senators should remember that the employees of State governments and of local governing bodies receive child endowment and the State government or the local government authority, as the employer of these people, is morally and legally responsible to contribute towards the endowment of children of employees by way of pay-roll tax. I agree with honorable senators on both sides of the chamber that it would be nice and gracious to relieve local government bodies of the necessity to pay pay-roll tax. But pay-roll tax was originally introduced for the purpose of financing child endowment payments, and the employees of those institutions have benefited from such payments. It should be remembered that the abolition of pay-roll tax would make great inroads into revenue. If the Government were to exempt local government bodies from the payment of pay-roll tax it would have to deny people some . of the reduction in income tax for which it has provided in the budget. I wholeheartedly support the measure before the chamber. It is in the best interests of government to relieve small employers of the necessity to pay pay-roll tax because this will reduce the cost of collecting the tax. The Government has pledged itself to reduce administrative costs wherever possible and it must have been a very expensive process to have collected the monthly contributions from the 50^000 small payers of pay-roll tax. The Government’s proposal to exempt these people from pay-roll tax will lessen the administrative expenses of this country.
Sitting suspended from 5.45 to 8 p.m.
– Every employer will gain some relief from this legislation, but, of course, the greatest relief will he given to the 50,000 employers whose liability to the pay-roll tax will cease as from midnight to-night. I have compiled some figures to show the incidence of the relief that is to be granted. Take, for instance, the middle grade employer who pays £100 a week or approximately £5,200 a year, in wages. Under this bill, he will pay only £25 a year, or approximately 10s. a week in pay-roll tax. Hitherto he has been paying £104 a year or £2 a week. The employer whose weekly wage bill is £200 has until now paid £234 a year in pay-roll tax. As from to-morrow, he will pay only £156 a year. It will be seen therefore, that even employers who will continue to be liable to the pay-roll tax will enjoy substantial’ reductions of their liability. Large companies in the main have recording staffs to do the detailed work of filling in forms. For that reason such tasks are less of a hardship to big organizations than they are to the small business man. I point out, too, that large employers of labour are usually in the high income tax groups. Payments of pay-roll tax are deductible for income tax purposes. Therefore, although a large employer of labour who is paying income tax at the rate of say 10s. in the £1 may have a gross pay-roll tax liability of £500, his net commitment, in the light of his income tax concession, will be only £250. The provisions of this bill will give great encouragement to the business community generally and particularly to the proprietors of small businesses and commercial enterprises.
This Government has a well defined policy of tax reduction and abolition. The raising of the pay-roll tax exemption is not an isolated move. The socialists now on the Opposition benches were in power in this Parliament from 1941 to 1949 and towards the end of that period we were told that Australia was enjoying a “ golden age “. Therefore, there was no reason why the Labour Government could not have done something about the high taxes then imposed upon the community. But did the Chifley Government abolish any tax? It did not. Did it increase the pay-roll tax exemption? It did not. This Government can truly claim to be a tax reducing government. Indeed, so far as the land tax is concerned, it can claim to be a tax abolishing government. I was amused to hear Senator Aylett say that when the Commonwealth land tax was abolished the Tasmanian Labour Government introduced a State land tax which raised the honorable senator’s liability by 300 per cent. I remind the Senate that the Labour party is pledged to re-impose the Commonwealth land tax if it ever gets the chance.
– It will never get the chance.
– I agree. Would a Labour government also reduce the pay-roll tax exemption from £80 a week to the old limit of £20 a week? Would a Labour government re-impose the entertainments tax which this Government has abolished? In the income tax field, the Menzies Government has exempted from tax elderly couples whose income does not exceed £15 a week. That was an important step in the progress that the Government is making towards the complete abolition of income taxon small incomes. I could go on giving instances of the Government’s tax reduction policy, but I shall cite only one further amelioration. The Treasurer (Sir Arthur Fadden) announced in the budget speech the Government’s decision to increase the exemption from estate duty from £2,000 to £5,000. All those liberalizations are part of a plan which was clearly placed before the people by the Prime Minister at the last Senate election. On that occasion the right honorable gentleman related tax reductions to production. He said -
This relationship takes two forms : The first is that as production increases, and the national income grows,, rates of taxation can be reduced without reducing the total yield.
As I pointed out earlier, our national income has almost doubled in the last four years. The right honorable gentleman continued -
The second is that in certain cases a reduction of tax may act as an incentive to increased production or greater business activity.
The freeing of 50,000 taxpayers from the pay-roll tax will certainly act as an incentive to increased production and greater business activity. I remind honorable senators also ‘ of . the following now famous words of the Prime Minister in the Senate election campaign: -
We shall act upon both of these principles to the limit of our capacity. We shall make important and valuable tax reductions in the next budget. In doing so, we shall not act in a conservative or over-cautious spirit. We shall, on the contrary, go as far as we can, or as any other responsible and honest government could. The limits will be found when we reach a point at which to go further would be to impair the financial soundness of government or to weaken the attack upon inflation.
That promise has been given effect to in the budget in general, and in particular in the measure now before the Senate.
– There is little opposition to this measure. I should have refrained from making any criticism of it but for the fact that honorable senators opposite, on every possible occasion, and regardless of the subject under consideration, loudly proclaim what a wonderful lot of chaps they are and what wonderful things they have done. They delight in telling us how this Government has saved the country. The Opposition is getting a little tired of those boasts and I am sure that they must be nauseating you, Mr. President. I feel I should not be doing honorable senators opposite justice if I did not say I believe they know very well that the economic position of this country to-day is due solely to a run of excellent seasons coupled with high prices on overseas markets for our primary products
Our economy is in a fairly good position -I do not say it is stable - not because of this Government, but in spite of it, for it is the most blundering Government this country has ever had. If the Government really wants to get on with its business, it should instruct its supporters to be a little more modest in their claims about what they have done for this country. My impression is that they are whistling to keep up their courage. I remind them that on the only occasions in recent months when the people of Australia have had an opportunity to express their views on the work of this Government, they have unhesitatingly returned Labour administrations in five States out of six. In the State from which I come, the Government parties in this Parliament gained a majority. However, I assure them that, in the last eighteen months, they have lost 80 per cent. of that majority. The electors are not as enthusiastic about this Government as honorable senators opposite seem to think they are. Senator Laught claimed great credit for the Government because it has reduced taxes. I have no desire to hold a post-mortem on the actions of the Government. If honorable senators indulged in such a pursuit in relation to every bill debated in the Senate, it would take us a long time to get through our business. But everybody knows that the present Government parties, by means of the most deceitful and lying propaganda
Government senators interjecting,
SenatorCOURTICE. - I can prove that the Government parties resorted to such propaganda in 1949. I do not accuse Senator Robertson of having done so; I shall he gallant and exempt her from the charge. However, I say that the Government parties, after careful planning and conspiracy, decided on a policy with which to defeat the Labour Government of the day. Behind the Government parties, as all honorable senators are aware, are the large financial and banking institutions. A tremendous effort was put forward to have the Liberal party and the Australian Country party elected to office. One of the means used towards that end was the promise that, if they were elected, they would reduce taxes.
If honorable senators opposite claim that this is a tax-reducing Government, my answer is that almost three years elapsed before any substantial reductions were made. Nevertheless, in 1949, the government parties promised to reduce taxes and so help to stabilize the economy. Honorable senators opposite must know that the economic policy of the Government has brought the country almost to disaster. I do not wish to paint a gloomy picture, but if an economic recession should occur to-morrow, due to bad seasons, we should find it difficult to maintain our standards of living and to avoid slashing social services payments. When the Treasurer (Sir ArthurFadden) was making his budget speech recently, he said that a run of good seasons was indicated. I suggest that the right honorable gentleman knows nothing about the matter. A season may commence auspiciously and appear as though it will be a good one hut end in disaster, not only to industry, but also to the economy. I am tired of hearing honorable senators opposite claim that the present Government parties stand for reductions of taxes. If they do, all I can say is that they are very recent converts to that belief and that it has taken them a long time to make up their minds.
I do not propose to enter into a discussion concerning the sins of the Government, because if I were to do so I should be here all night. In my opinion, the pay-roll tax is an iniquitous tax. A tax which is not based on income is not a fair and just tax. Consequently, I am of the opinion that the taxes which have to be imposed on the people must be fair in their incidence and be based on fair and just principles. The pay-roll tax is not so based. In some walks of life, hardly any labour is required to produce great incomes. The commercial houses and big businesses of Australia are able to pass on the tax to the consumers of the commodities with which they deal. But other industries, such as the pastoral industry, have no opportunity to do so. In that way the tax is not fair. I welcome the proposal contained in this bill. However, if the Government thinks that the alleviation of the pay-roll tax will help to restore the economy or stimulate industrial output, it will be disappointed.
It seems to me that, in some respects, we are living in a fool’s paradise. There is urgent need for a rapid stimulation of industry and development in this country. If we wish to hold Australia and to preserve our way of life, we shall have to develop the country and do so quickly. There is no substitute for work. Energy must be applied in order that the country may be developed. I know from experience that a great deal can be done. I also know that thousands of people could be employed in northern Queensland, and that industry in that area could be made to operate profitably by the wise application by this Government of the funds which the people of Australia allow it to use. When the Labour government was in office in 1949, the then Prime Minister said to the Queensland people, in effect, “Whatever you can do to develop this State, you should do, and money should not be allowed to stop you. If you have the men and material, the Australian Government will ensure, on a fifty-fifty basis at least, that industry is developed “.
At the present time the Queensland Government is undertaking great national works which will result in thousands of people being settled on profitable, farms. In that way, the wide spaces of the country will be developed. But this Government does not believe in such a policy. It holds that private enterprise should do the job. Private enterprise might, perhaps, be able to do it in Canada or the United States of America, where big financial institutions provide the necessary backing, but I suggest that if it is to be done in Australia it must be done by public enterprise. The Menzies Government must appreciate that fact as soon as possible. It must also appreciate that the development of the country depends on its co-operation with the governments of .the States. There are now 70,000 fewer people in employment than there were two years ago. Does that suggest good government ? When Labour was in office, thousands of people were being brought to the country from overseas, because the government of the day had been advised, oh the highest authority, that it was necessary for Australia to acquire a larger population as soon as possible. Yet, the present Government is reducing the intake of immigrants.
There has been a constant feud between the Australian Government and the various State governments ever since this Government has been in office. During the days of the Labour regime, very friendly relations existed with the States. There may have been certain differences of opinion, but there was certainly no consistent feud. The members of this Government are fond of saying, “ We give so much money back to the States Where does it obtain such money? Do not the State instrumentalities carry out the major part of developmental works on which such money is expended? In my opinion, it is most regrettable that the National Government is unable to maintain friendly relations with the State governments, or to co-operate with them in the public works which they undertake.
– Is that the fault of the States or of the Commonwealth?
– I do not know whose fault it is, but it seems to me that the Australian Government must accept a share of responsibility for that state of affairs. An unusual situation certainly exists which should not be allowed to continue. This Government has not taken one step to bring about better relations between the Commonwealth and the States.
I have already intimated that I think this bill is a good one as far as it goes. However, in my opinion, it is a case of too little too late. I appreciate that it will relieve many people of the irritating duty of filling in forms. I also appreciate that if the tax were to be completely abolished it would be necessary to impose some other form of taxation. Anybody who has considered our economic position knows that we are costing ourselves out of the markets of the world. It is only necessary to pick up the newspapers to see that there is grave danger of a recession of prices in respect of our major exports. If that should happen, the inflationary conditions, which this Government has permitted to come about,, will become most serious for the community. In 1949, the cost of living was half as high as it is to-day. The £1 note is now only worth 10s. In a way, I can understand why honorable senators opposite are makingsuch ‘ a great fuss about this bill. The ^Government has done so little to strengthen’ the economy that its supporters must clutch at straws. In my opinion, when the people get the opportunity to express their disappointment with this Government, which has promised so much and done so little, they will do so in no uncertain fashion. The sooner that opportunity comes, the better.
– Senator Courtice has conceded that the economy is in a sound position, that the bill is a good one, and that if the pay-roll tax were abolished entirely, it would have to be replaced by another tax which would have to be borne by the community :generally. Those are the three propositions which the honorable senator found 4o be incontestable. Of course, they give the lie direct to the Leader of the Opposition (Senator McKenna), who made out a hypocritical case in the Senate this afternoon’ based upon arguments which were a direct contradiction of his contentions of a week ago.
The bill before the chamber proposes ito amend the pay-roll tax legislation. Specifically, .it proposes to relieve of pay-roll tax every employer in the country whose expenditure on wages is £80 or Hess a week. Not only does it propose ;to relieve those taxpayers of the liability ito pay the tax, but it also proposes to exempt them from the obligation to fill in the ever-recurring forms associated with taxation. As we have been told, approximately 50,000 taxpayers, of the total of 90,000 concerned, will obtain such relief . Anybody who breathes the Liberal spirit will derive great encouragement from the reflection that the direct benefit of this tax will go to the small businessman, the farmer, the builder, the plumber, and the small shopkeeper. It is a very creditable feature of the bill that the small businessman, who is conducting his own business and employing others in his enterprise, will be the direct beneficiary of this taxation relief. Despite the fact that Senator Courtice conceded that the bill is a good one, and that he found it difficult to criticize any of ite objectives, it may not be unprofitable for the Senate to examine the measure closely. In Australia, the position in connexion with the wage structure as complex. The level of industrial wages expenditure is the product of the Commonwealth Court of Conciliation and Arbitration. Under the limited power that is vested in the Parliament, an arbitration court system has been constructed, and the court’s determinations fix the wage expenditure that industry must hear. If the court declares that the payable wage is to be £12 a week, this Parliament and all the State parliaments are impotent to add or subtract from that figure. It was in circumstances of that kind that the legislature of this country was faced with a particular situation in 1941. The Chief Judge of the Commonwealth Court of Conciliation and Arbitration, Judge Beeby, had recently heard an application for an increase of the basic wage. He refused it. At the same time he indicated to the Australian government of the day that unless some scheme for financing child endowment were brought forward by the government, he would probably consider an increase of the general wage level. An indication was given that the increase might be 6s. a week. At that time, Australia was at war. Wages were pegged by a Liberal government and the regulations were not eased until a Labour government removed them after the war.
Because of the attitude of the court to which I have referred, the Menzies Government of the time adopted a proposal that was novel in the United States of America as recently as 1937. That was a pay-roll tax. It was introduced into the United States of America to alleviate unemployment, but the Australian Government used it to supply an adjunct to the Commonwealth Arbitration Court’s wage level to meet the cost of child endowment to families with dependent children in excess of one. From the inception of the pay-roll tax, 6d. was collected for every £1 of wages paid. At the time, the Labour Opposition was led with responsibility, in marked contrast with the present less creditable times in which we live; and the late Mr. John Curtin, who was then the Leader of the Opposition, plainly stated the opinion of the Opposition. He supported the method of finance for child endowment that the Government had adopted. The effect of the innovation was that an additional charge of £10,000,000 was imposed upon industry and £10,000,000 was paid to the mothers of Australian children by way of child endowment at the rate of 5s. a head for each dependent child after the first child. In 1950 the Commonwealth Court of Conciliation and Arbitration added £1 a week to the basic wage by a majority judgment that will be written into the history of Australia as one of the most momentous mistakes of the postwar era. From the date of that artificial addition to the basic wage, the previous loading figures were brought into the adjustable wage basis for the first time.
In 1945-46 the average weekly wage bill in Australia was £11,000,000. By 1949-50, after wage pegging had been lifted, the weekly wages bill had risen to £22,000,000. That is the record of achievement of the Chifley Government which was ousted from office in 1949. The Leader of the Opposition emphasized in this chamber to-day that the wage cost is the chief expense that industry incurs. I remind him that the figures that I have given to honorable senators reveal a rise of 100 per cent, in the Australian wages bill between 1945-46 and 1950. At the end of 1951-52, total wages had risen to £34,000,000 a week, and I invite honorable senators opposite to work out the ratio represented by those figures to determine for themselves whether there ‘has been uncontrolled inflation in the period that I have mentioned.
As I have said, the cost of wages in Australia is the direct responsibility of the Commonwealth Court of Conciliation and Arbitration over which this Parliament has no control. That is one of the most important factors in Australian Commonwealth politics. It is a factor to which direct attention should be given immediately, but that is not my argument now. As the cost of wages rises, obviously the revenue from the pay-roll tax increases also.
Australia is now committed to the annual expenditure of £53,000,000 for child endowment. It is agreed that the adjunct to wages to meet the cost of child endowment is added to every £1 of wages. How can honorable senators opposite justify the abandonment of that structure of the social programme now? The Leader of the Opposition to-day selected this one item from the budget proposals and asked what could be done with a mere item of £38,000,000 that will be collected by way of the pay-roll tax. That approach lacks realism. Child endowment now costs £53,000,000 a year. Having put our hands to the plough in that field of social welfare, we are irrevocably committed to finding the finance. It is true that this bill will open the way to a reduction of taxes which will amount to only £5,000,000 ; but it is only one item of proposed reductions which will amount to £116,000,000. Let those who criticize the smallness of this reduction be candid enough to credit the Government with concessions on individual income tax which amount to £64,000,000. Those who claim that the . budget benefits the big man should be fair enough to concede that a taxpayer on an income of £1,000 with a dependent wife and two children will get a reduction of taxes of 22 per cent., but if he receives a salary of £12,000, his reduction will be only 10 per cent. Other reductions proposed are £29,000,000 in company tax, £12,000,000 in sales tax, £5,000,000 in pay-roll tax, and £7,000,000 in entertainment tax. As Senator Courtice conceded in an unguarded moment, if the pay-roll tax is foregone, finance for child endowment will have to be supplied from another source. Honorable senators opposite who avidly advocate increased expenditure in practically every item of government service should indicate which of those items could be reduced and financed if the payroll tax were abolished. Do members of the Opposition’ suggest that the Government should reduce its proposed expenditure of £100,000,000 on capital works, and thus cause unemployment and stint the development of this country, to which the Opposition gives a superficial advocacy ? Do honorable senators suggest that the proposed expenditure of £200,000,000 on defence should be reduced?
– Chop that one.
– Let members of the Australian Labour party advocate openly that our present expenditure of £200,000,000 annually for defence should be chopped, and that we should sell out the country. Then these apostles of the newly irritable States do not give credit to the Government for the fact that in this budget it proposes to make available to the States the sum of £189,000,000 for their own purposes and the sum of £184,000,000 for social services. Expenditure under the four headings I have mentioned totals £647,000,000 for the current financial year, and not £1 of that sum can be saved except by those who would be irresponsible enough to curtail the programme for the defence, of this country. To that total must be added sums, in respect of the Government’s commitments for war and repatriation pensions which total £116,000,000. That makes an irreducible commitment on the part of the Australian Government of £790,000,000 for the current financial year. Yet, some members of the Opposition are irresponsible enough to look at the pay-roll tax in isolation and say that that tax, which is estimated to provide revenue of £38,000,000 for the current financial year, should be abolished. That argument stamps those who advocate it as being completely irresponsible.
The next matter which members of the Opposition stressed was that the Government proposes to remit company tax to an amount of £29,000,000. Honorable senators opposite who advanced that argument were not candid enough to concede that that proposed concession, in effect, means remitting additional tax that was imposed on companies in 1951 under the budget which they are pleased to call the horror budget. Those honorable senators wish to convey the impression that Mr. Eddie Ward and others of his ilk would convey, dishonestly of course, that this remission is a straightout gift to large companies, such as the Broken Hill Proprietary Company Limited, when, in fact, it will simply relieve those organizations of additional tax that was imposed upon them in the preceding year. I remind the Senate that those companies are the chief employers of labour in this country. When the Government decided to reduce the rate of company tax by 2s. in the £1, it recognized that the pay-roll tax would be maintained in respect of companies whose wages bill exceeds £80 a week. So, in order to belie the argument advanced by the Opposition, I emphasize that whilst the Government proposes to remit the additional company tax that it imposed in 1951, at the same time, under this measure, it proposes to give benefits to employers whose wages bill is less than £80 a week. Those facts give the lie direct to the impression which the Opposition desires to convey that the budget is intended to benefit only big business.
The next matter to which I address myself is that the pay-roll tax is integrated in the cost structure and, therefore, must inevitably be passed on to consumers. Of course, that will be so. If I pay to an employee a wage of £10 a week, that cost will go into industry as a part of the cost of the article that my fellow citizens purchase; and if, in order to supply an additional benefit to a married wage-earner in respect of his children “at the rate of 6d. in the £1, I pay a wage, not of £10, but £10 5s., it is obvious that that addition also is integrated in the cost structure of the economy. We must recognize that this payment is an inseparable adjunct to the wage itself, and is imposed in the form of a tax only because the Commonwealth Arbitration Court preferred not to increase the general wage. Consequently, the Government, as it had no power to fix wages, adopted the method of taxing the employer in order to finance child endowment in respect of the children of married employees. Obviously, the proceeds of this tax are completely indistinguishable from ordinary wages.
I now advert to the great political manoeuvre that has been resorted to by these strategists who strut on the Opposition side of the chamber. Again, we are to have the delectable experience of being invited to a display of sympathy on the part of members of the Opposition with the categories of people who, they submit, should be exempt from the payment of pay-roll tax. First, like a good preface to a bad book, they propose that State governments should be exempt from payment of the tax; secondly, they propose that municipal corporations should be exempt; and, thirdly, that universities or other education authorities recognized by State governments should be exempt. Then we come to the sting in the tail. Honorable senators opposite propose as a fourth category, seemingly insignificant, that trade unions should be exempt from payment of pay-roll tax. Let us have a look at those propositions. Apparently, members of the Opposition are prepared to resort to any stratagem for the purpose of ‘Conveying a certain impression with respect to their attitude towards the vested interests, which in fact, are largely responsible for their presence in this chamber. That is why they have dragged into their proposal, universities and municipal corporations as well as their unreluctant, irritable Labour States in order to obtain an exemption for trade unions from the payment of the pay-roll tax. The exemptions proposed by the Opposition would represent a loss of revenue from this tax of £6,500,000 for the current financial year. That loss must be made good in some other way. Let us consider the justification for such a proposition. The States have recently been represented in pro.cedings in the Commonwealth Court of Conciliation and Arbitration in respect of applications for alterations of the present basic wage. In the course of those proceedings, the representatives of the States strongly advocated that the Australian economy could sustain the payment of the present basic wage. The States know that to every £10 of wages an increment of 6d. is attached in order to finance child endowment. Those are the States for whom we are asked this evening to show our sympathy by exempting them from the payment of pay-roll tax to the tune of £6,500,000 annually.
As I have already pointed out, the Government is carrying the States to an amount of £189,000,000 and it is providing a sum of £37,400,000 to those very States over and above the amount that it is legally obliged to provide for them under a formula that was originated by the Chifley Government and which was subsequently revised but adopted by the Labour State governments themselves when they agreed to the introduction of uniform income tax, which, indeed, they now insist should be retained. This Government is paying £37,400,000 over and above the amount of tax reimbursements which it is legally obliged to make to the States; and by a happy coincidence that is practically the amount of revenue that will be derived from the pay-roll tax during the current financial year. Therefore; if the States for whom the Opposition pretends to speak to-night seek a reduction of the pay-roll tax it can readily be conceded to them if they are prepared to forgo that additional assistance. Anybody who is so superficial or specious as to believe that the proposed amendment will deceive even the tiddlywinks in politics is really a novice of the first order. If any member of the Opposition believes that Government supporters would distort the budget by supporting the amendments that honorable senators opposite intend to propose, I can only say that such an honorable senator has allowed his imagination to run wild. As we live in a world where, if we are to pay welfare benefits such benefits have to be paid to the Treasury before they can he made available to the people, the Government has made a very just proposal primarily for the relief of the small businessman; and, regarding that concession as one of a number of concessions that are contained in the budget, I believe that the bill displays a sympathy with the small businessman, which is highly creditable and deserving of the unstinted support of every honorable senator.
– The Senate has just listened to a remarkable speech by Senator Wright. It was remarkable because whilst the honorable senator made a lot of assertions he did not produce any proof to support them. He said that the speech of the Leader of the Opposition (Senator McKenna) on. this bill was hypocritical, but he did not say in what respect specifically my leader’s speech was hypocritical. A broad assertion unsupported by any evidence of proof should not carry weight in any serious assembly. The second assertion that Senator Wright made happened to be true. He said that the Government proposed to exempt from pay-roll tax small businessmen, such as plumbers and other artisans. I was waiting for him to mention some professions as well as trades, but I suppose, that would not be the correct thing for the honorable senator to do at this juncture. Next, he referred to the budget proposals generally although, with due respect to you, Mr. President, I thought that such matters were not related to this measure, but will properly be discussed when the bills to implement them come before the Senate, or at least when the Appropriation Bill is being considered in this chamber. This measure has had a very fair airing.
I am very worried about the cost structure of this country. I believe that all honorable senators, irrespective of their party affiliations, should consider seriously how costs may be reduced, otherwise we will be confronted with mass unemployment in this country. Let us consider whether the proposed remission of pay-roll taxation will assist to reduce costs in our secondary industries as well as in our primary industries. Only last week I heard a statement that was broadcast over the national network that Australia, as a nation, is consuming 9 per cent, less butter than formerly. That does not indicate that our people do not want to eat butter. Of course they do, but the price of that commodity is now beyond the resources of many people. In place of rationing by the coupon book there is now rationing by the purse. I have never liked pay-roll taxation in principle. However, I approach the subject by a consideration of whether the remission provided by the bill will be reflected in our cost structure, and whether the consumers will derive an advantage from it. The exemption will apply to employers having a pay-roll of under £80 a week. It is true that employers having a pay-roll of £100 a week will derive a proportionate reduction, but they will still be required to pay this tax. I ask honorable senators to consider whether commodities produced by a company having a wages bill of less than £80 a week, which will be exempt from pay-roll tax, will be any cheaper on the market than commodities that are manufactured by a company having a pay-roll of £160 a week. One honorable senator has stated that the proposed remission will help the small builders. I shall be very pleased if it does, but will those builders pass on the advantage to the persons for whom they construct houses ?
I remind the Senate that this tax was introduced so that the Commonwealth Court of Conciliation and Arbitration would not increase the basic wage over the whole of the wage structure, because such an increase would have applied to unmarried people of both sexes as well as to married workers. Therefore, from the point of view of money, it effected a saving to the employers of this nation. I have been somewhat of a lone wolf in certain councils within the Labour party, because I believe that the basic wage should be fixed in relation to one unit, and that the wives of the workers should receive endowment in the same way as they receive endowment for their children. I believe that purchasing power should be placed in the hands of the people who buy essential goods. Unfortunately, tremendous purchasing power is now placed in the hands of young people, a section of whom spend the greater proportion of their money on things that they would be better without. Many young people do not prepare adequately for marriage. If that were not so, many big time-payment furniture stores would not now be in the millionaire class. As far as I can see the remission provided by the measure will benefit only about 50,000 employers. They will be pleased of course, because most people are pleased when they receive a remission of tax. However, I do not consider that the nation as a whole will benefit from the proposed remission of pay-roll tax. Supporters of the Government have asked, “ Why did not the previous Labour Administration abolish this tax?”. It is futile to ask or consider such questions, because the tax did not affect the cost structure of this nation until 1949, when the average basic wage for the six capital cities was £6 14s. a week. To-day it is £11 16s. a week. Irrespective of the political colour of the government in office, we must find a method to combat rising prices, and that method must not be the method that was adopted in 1931. I refer to the starving of our people. We must not revert to the conditions of those days, because it must be remembered that the people of this country did all that was asked of them during World War II. The best brains of this nation should be applied to evolving a formula to maintain the employment of the people of this country. I do not consider that the amount of the basic wage is the important factor, because money is good only for as much as it will buy. It is only a medium of exchange. We must endeavour to provide employment for our people and maintain for them a decent standard of living. “Recently a company with premises in a big Victorian city announced at lunchtime on a Friday that 300 of its employees would have to seek other employment after the end of that week.
Some honorable senators have stated that the proposed remission will benefit only individuals, and they have asked why should not profit-making concerns pay pay-roll tax. I point out that this tax is a part of the wage structure. It is obvious that if an employer has to pay pay-roll tax of 2 per cent., he will increase the cost of the articles that he manufactures by that amount. Senator Wright stated that the Opposition was trying more or less - to use the honorable senator’s own expression - to get in underneath. If he does not know any more about his own avocation than he apparently knows about the trade unions of this country, a lot of people who have spoken to me about him must have been wrong when they said that he was a very able lawyer. I have an intimate knowledge of the trade unions of this country, and I believe that, with one exception, they will be relieved of the obligation to pay pay-roll tax as a result of this measure. What is wrong with that? They exist to assist their members, not to make profit, and in that respect they are somewhat similar to the institutions to which Senator O’Flaherty has referred. It is wrong for the Commonwealth to impose pay-roll taxation on State governments and State governmental instrumentalities. On the one hand the Commonwealth collects revenue of about £0,000,000 a year by means of the pay-roll tax, and on the other hand, under the uniform taxation system, it makes taxation reimbursement grants to the States. It is not possible for the bodies that I have mentioned to pass on the tax. Year after year the Premiers of the States come to Canberra to seek money to enable their States to carry out public works, but they have not obtained the amounts that they required. In giving relief from payroll tax the Government should have given some thought to the non-profit making concerns which pay the tax. Whilst this relief from taxation will be greatly appreciated by those who receive it I do not think that its effects will be noticed in the price of goods offered for sale. I do not think that the benefit of the remission of tax will be passed on to purchasers. It cannot be passed on by the bigger firms because they will not receive the benefit of the legislation and I doubt if it will be passed on by the small firms.
Honorable senators supporting the Government have stated that the amount of income tax collected by this Government has been reduced. The basic wage has been designed only to keep a man and his wife and one child in frugal comfort. In 1949, it amounted to £6 14s. a week and it is now £11 16s.
– It is not fixed on that basis now.
– If the honorable senator had any experience of trying to raise the standard of living of the workers he would know that prior to 1941 the basic wage was computed to cover the living costs of a man, his wife and three children. Since 1941, when child endowment was introduced, the basic wage has been computed to provide for a man, his wife and one child. In 1949 no income tax was payable by a man on the basic wage with a wife and child although 17s. was payable as a social services contribution. The amount of tax payable on the basic wage by a man with a wife and one child is now £13 ls. and it is necessary for such a man to pay about £8 a year in order to benefit from the government medical scheme. I sincerely hope that the inflationary spiral has finished. But if it continues for the next four years to rise as fast as it rose from 1949 to 1953 it is possible that the basic wage will be about £18 a week in 1957. I do not see how the Government’s taxation policy can benefit people on the basic wage.
I do not like this tax. I consider that it is paid, ultimately, by the consumer. If the people who finally consume products are to receive any benefit from this legislation it will be necessary to insert additional provisions in the bill. During the last three and a half years prices have increased by 57 per cent. From 1949 to 1951 prices increased by 28 per cent.
Senator Wright mentioned the amount of money that was collected by way of payroll tax from 1946 to 1949. Surely he will admit that during those post-war years when people had to adjust themselves to changing industrial conditions there were shortages of nearly every commodity, not because a Labour government was in power, but due solely to the fact that this country had passed through a war. In discussing such matters as this let us forget that a general election will be held next year. That election will be held irrespective of what honorable senators say. I ask honorable senators not to put forward hypocritical cases which must bring this chamber or, at least, cer- tain honorable senators, into disrepute. I hope that, irrespective of the government in office, it will be possible to abolish this and other indirect taxes which cause increases in prices. I am concerned with keeping people in work irrespective of the government that may be in office. I hope that in future the Senate will give serious consideration to the country’s cost structure because if we do not this nation will be in tremendous difficulties.
.- The further this debate proceeds the more evident it is that honorable senators opposite are experiencing very great difficulty in addressing themselves to the measure and in criticizing it in any effective way. That feature has been characteristic of the several debates that have taken place in this chamber as a direct result of the introduction of the budget. Honorable senators opposite who have addressed themselves to this measure have done everything but discuss the bill. I suggest that their difficulty arises from the fact that nothing can be said by way of serious criticism of the measure. I give this bill my hearty support. Senator Kennelly, in a very good speech from the Opposition’s point of view, accused honorable senators supporting the Government of bringing hypocritical arguments into this chamber. He said that this bill would confer no benefit on anybody and was introduced to help the Government in approaching the electors next year. I think that that is very unfair criticism because this measure cannot be fairly treated in isolation. This bill is part and parcel of a series of bills which will come before this chamber as a direct result of the introduction of the budget. Associated measures which will come before this chamber and which will confer a benefit on the people include a bill to effect reductions in income tax and a bill to reduce sales tax. This bill concerns a small part of the total concessions that have been given by this Government and which total £200,000,000. The budget will give taxation relief, direct and indirect, to the amount of £120,000,000. Last year, the Government gave relief from taxation to the value of £80,000,000. Taxation concessions granted during the last two years, therefore, amount to £200,000,000.
This bill is a practical measure which will give relief from taxation in a practical way. It will grant total exemption from pay-roll tax to at least 50,000 small employers, consisting mainly of small farmers, professional men and small businessmen. It will give welcome relief to one very deserving section of the South Australian community in which I am particularly interested. Recently I visited the soldier settlement areas along the River Murray. Those settlers are exservicemen of World War I. and World War II. In the course of my visit, their spokesman pointed out to me that whereas originally the average soldier settler had not been liable to pay-roll tax because his wages bill was below the exemption limit, now most farmers had taxable payrolls. Many ex-servicemen of World War II. are just getting on their feet, and it is surely the desire of every honorable senator to help them as much as possible. We do not want to impose heavy burdens upon them at a time when they are endeavouring to establish themselves on their land. Indeed, every possible encouragement should be given to them and I am gratified indeed to know that when this legislation becomes effective, few soldier settlers will continue to be liable for the pay-roll tax. That surely is one answer to the continued assertion by honorable senators opposite that the bill will not give worthwhile relief to any section of the community.
Most of the ex-servicemen to whom I have referred will be among the 50,000 employers who, with the raising of the exemption from £20 to £80 a week, will cease to be liable to pay the tax. I am informed that in the past the pay-roll tax on those 50,000 employers has yielded revenue amounting to only £1,935,000. That represents an average payment by each taxpayer of £38 a year. I believe, therefore, that at least in respect of that section of the taxpaying community, the pay-roll tax has been expensive to administer and to collect. First it has been necessary to have in the Taxation Branch a staff to examine the wages returns of employers to ascertain whether or not they are liable to pay pay-roll tax. In addition, there must have been a substantial staff engaged on the work of sending out circular letters reminding employers that they were now subject to the pay-roll tax and asking them to furnish returns showing wage payments and so on. Finally, a staff must have been engaged on the work of examining pay-roll tax returns and assessing the liability of taxpayers. Apart from the man-hours involved in that work, the filling in of payroll tax forms undoubtedly caused many heartaches and headaches to small employers. I say, therefore, that the payroll tax must have been costly to administer and collect. Therefore, whilst the raising of the exemption will mean a loss of some revenue to the Commonwealth, a substantial saving will be made in other directions. We must bear in mind also, as Senator Laught pointed out, that the passage of this legislation will eliminate much of the worry and labour that has been the lot of employers who have found themselves liable for the first time to make pay-roll tax returns. Therefore, I deny absolutely the contention of honorable senators opposite that the raising of the exemption will not confer any worthwhile benefit on the community. It will confer an appreciable benefit not only upon the 50,000 employers who are to be exempted completely from the tax, but also upon employers who will continue to be liable to the tax. I shall not repeat Senator Laught’s figures because I am sure all honorable senators understood the force of his arguments.
Some honorable senators opposite have expressed the fear that the concessions provided for in this bill may not be passed on to the consumers. That argument was adequately answered by Sena- tor McCallum who said by way of interjection that there would always be competition. Already there is evidence that competition has. led to an immediate passing on to the general public of tax eoncessions announced in the budget. Ins Adelaide, the city to which I am .proud-‘ to belong, sales tax reductions withoutactual compulsion, as advocated by. Opposition senators, were passed on to> the public immediately by many leading, stores. Last week-end my wife and I noticed in many Sydney shop windowsannouncements that sales tax reductionshad already been applied.-
– Bead what thehonorable member for Bass (Mr:. Kekwick) has said about that matter.
– I am speaking: of what I have seen with my own eyes. I do not have to be told what somebody else thinks about it. I know what is going on in Adelaide and Sydney. There is noneed for me or any other honorablesenator to tell the general public that tax concessions are already being reflected’ in prices. Every member of the public,, who has visited shopping areas, knowsthat full well. One Adelaide firm employed a staff solely to write down prices- in accordance with the sales tax reductions announced in the budget. It isnonsense for honorable senators opposite to deny that those concessions are being passed on to the public. Even if the Government could compel tradespeople topass concessions on, there would be no need to do so because, as Senator McCallum has said, competition will take care of that. If one or two people in every line of business reduce their prices’ the rest must fall into step.
The Opposition intends to move certainamendments to this measure at the committee stage. One of the amendments isdesigned to exempt State governments, State governmental authorities, local’ governing bodies, and various other-, organizations, including trade unionsfrom the pay-roll tax. It was astounding,, indeed, that after the Leader of the Opposition (Senator McKenna) announced the Opposition’s intention to move for the exemption of trade unions from thepayroll tax, Senator Kennelly, whoseknowledge of trade union affairs is undoubted, should say that so far as he- was aware, only one trade union was not already exempted from the tax. What humbug and arrant nonsense it is for the Opposition to mention trade unions specifically,’ when trade unions are already exempted! Once again the Opposition is completely irresponsible. I have made that charge on several occasions. I have been a member of the Senate for a little more than two years and, whenever a financial measure has been under discussion, members of the Opposition have said in one breath that the Government must reduce taxes, and, in the next breath, that the Government must increase expenditure. We have heard that from honorable senators opposite in season and out of season. But they cannot have it both ways, and if they were members of the Government they would appreciate that fact.
This bill will confer very practical benefits on approximately 50,000 employers who would otherwise come within the ambit of the present legislation. In addition, the bill proposes to confer a benefit on the remaining 40,000 employers in the community. I think that those employers will give the Government the credit which it deserves for introducing this measure. As I have said, the bill cannot be considered in isolation but must be looked at in conjunction with the other very material tax reductions which the Government has already conferred and proposes to confer. Land tax has been abolished, I hope for all time. However, I am doubtful whether that will be so, because the Opposition is pledged to reintroduce the tax if it should ever regain office. The alleviation of pay-roll- tax must be considered in conjunction with the abolition of land tax and entertainments tax and, indeed, the overall tax reductions which have amounted to approximately £200,000,000 in two years. I think that the people of Australia will give the Government the credit that it deserves for making those reductions possible.
.- It is rarely indeed that we hear such an extraordinary statement as that made by the Minister for National Development (Senator Spooner) when this bill was introduced in the Senate recently.
Honorable senators may recollect that on that occasion the Minister said -
It appears, furthermore, that some of the smaller employers have found substantial difficulty in meeting their obligations under the law, because of inadequate office facilities and pressure of business operations generally.
I think that that statement was an extraordinary one, in the circumstances. The Minister was asking the Senate to accept, as a reason for the introduction of thi3 bill, the fact that certain employers were experiencing substantial difficulty in meeting their legal obligations. One of the reasons for that difficulty, according to him, was inadequate office facilities. Could anything be more absurd? What would be the position of a wage-earner who found himself in arrears in respect of income tax, or any other tax, and who said, in excuse of such arrears, that he lacked proper office facilities to complete his returns? I suggest that that statement of the Minister may be conveniently brushed aside on the ground that it fails to satisfy any honorable senator. How vague is the reference of the Minister to the pressure of business operations generally! Does he suggest that an ordinary wage-earner, or in fact any one receiving income other than by the employment of labour, who offered that as an excuse for not complying with the law would be relieved of his obligations?
This bill is not without importance, because it proposes to exempt . approximately 50,000 employers from liability to pay pay-roll tax. Of course, that is a large body of people. We all know that a general election will be held next year, and we also know that by conferring a monetary benefit on 50,000 adult employers the Government may profit politically. It, no doubt, hopes that these 50,000 employers will rally to its support in 1954. In the same way, the 60,000 or 100,000 whisky drinkers of Australia are to be given the benefit of a reduction of £1 ls. a gallon in the excise payable on whisky. Perhaps the Government also hopes to win votes by that reduction.
During this debate, child endowment has been, referred to repeatedly. When the history of the legislation is examined, the relationship between pay-roll tax and child endowment will be readily seen. The National Welfare Fund Act of 1945 provided that -
There shall be payable out of the Consolidated Revenue Fund, which is hereby appropriated accordingly, for the purposes of the National Welfare Fund, in each financial year, a sum equivalent to the collections of tax in that financial year under the Pay-roll TaN Assessment Act 1041-42.
The same legislation provided for the payment of certain pensions, including invalid, age and widows’ pensions, and child endowment. The members of the Government have preened themselves because of the action of a government of their own political colour in introducing child endowment. Honorable senators opposite have claimed that that is one of the great social measures which the present Government parties have introduced. One might be pardoned for thinking, after listening to them, that they were solely responsible for introducing child endowment, that it was something which occurred to them one week and which they introduced the next. However, that is far from the truth. For at least twenty years the question of child endowment was canvassed by certain authorities in Australia, particularly those commissions and boards which were established by the various governments for the purpose of investigating wage fixation. It is interesting to read some pf the comments of the gentlemen who made those investigations. I wish to refer to comments made by the late Mr. Justice Piddington in a book called The Next Step. Speaking about an investigation that he had made regarding the payment of child endowment, he said -
It is a circumstance of happy augury for the solution of our economic questions that the value of any class of society is now habitually measured in terms of its economic value to the community. Prom this point of view, the truth has to be recognized that the mothers of working-class families are indeed the salt of the earth.
In his conclusions he stated -
It has now been shown that it is necessary to provide a family basic income, that is, a basic wage, equal to the needs of man and wife, phis an auxiliary wage for mothers, paid in the form of an endowment for each child.
That comment was made in 1920, and child endowment did not begin to operate in the Commonwealth until 1941.
We all know that governments are more or less compelled to make concessions to the masses. Capitalism, which is the form of society under which we live, becomes too severe for them, and, therefore, they must make concessions to the masses. Child endowment was such a concession. The Government which made the concession did not do so out of the goodness of its heart; it did so because of economic compulsion. There had been many investigations concerning the basic wage and its impact upon the various industries. Honorable senators may recollect that some of the bodies which furnished reports concerning the basic wage and its operations in those days pointed out that there were in the community mythical children and also mythical husbands and wives in the community in respect of whom the basic wage would be paid. They also pointed out that many single men, who had no liabilities in respect of families, would receive the wage, and that therefore it would be paid to them wrongly. The government which introduced child endowment did so partly to avoid an increase of the basic wage. It thought that if it were to pay child endowment to the mothers of Australian children it would have a method of circumventing the basic wage. One of the things which the Government did not appreciate fully was that as the basic wage increased, prices also would increase, because they would be written up by manufacturers and traders. Throughout Australia, as elsewhere in the world, there are expert costing systems in operation, and it is not possible for a government at the present time to introduce an indirect tax which will not be followed by an increase of the cost of living. Every manufacturer and employer is able to add such a tax to his costs and so recover the amount paid by way of tax.
The decline in the value of money during recent years is most relevant to this matter. In 1949, the basic wage in Queensland was £6 9s. a week. At the present time, it is £10 19s. a week. In other words, in a period of four years during which this Government has been in office the basic wage has increased by £4 10s. a week. In my opinion, that increase demonstrates the degree to which the currency has declined in value. There has been inflation in Australia, and this Government has been fully cognizant of the fact. With every increase of the basic wage since the Government took office there has been a corresponding increase of income tax and other taxes, including pay-roll tax. By reducing taxes in the way which the Government proposes, it will not really be giving anything away from the coffers of the Treasury. As a matter of fact, it will collect only £2,000,000 less from taxes this year than it collected last. year. Next year it will collect £2,000,000 more than it collected last year. It can, therefore, be seen that the Government is anticipating a further wave of inflation. In other words, the Government, by its proposed collections of revenue, is providing against inflation in the community. The Government is making no effort to release State governments and local authorities from the pay-roll tax.
At various times, the Government makes tax reimbursements to the States so that they can maintain ordinary services. Recently, the Government has accumulated so much money that it has paid more than it has been required to pay in tax reimbursement under the approved formula. In 1949-50, the Government paid to the States £S,000,000 more than it was required to pay under the formula, because it knew that inflation was rife and that wages and costs affecting the State governments were increasing. In 1950-51, it paid an additional £20,000,000 to the States and the additional sum was increased to £33,000,000 in 1951-52. This year the total additional payments amount to £27,000,000. Since this Government took office, it has paid £88,000,000 extra to the States because it was unable to control inflation. Now it can say to 50,000 employers that it has so much money in the coffers that it can release them from the obligation to pay pay-roll tax. At the same time, it is asking those employers to remember that a general election will be held next year. If the Government really desired to do some good, it would increase unemployment and sickness benefits and so help those who have become unemployed because of the Government’s ineptitude.
– Where are the unemployed?
– There are thousands of unemployed in Australia, and a study of the economic structure of the country indicates that their numbers will grow in the near future. The Government should help them instead of giving a handout to 50,000 employers. I do not propose to raise a strong objection to the tax. It is a bad tax that was introduced by a Liberal government in 1941. The Government has had ample opportunity to reduce the rate of the tax or abolish it. In 1950 it repealed the legislation setting up the National Welfare Fund, but it failed to take similar action in the case of the pay-roll tax. Honorable senators have referred to the increase of wages in recent years and their effect upon industry and costs. If I had more time available, I would prove conclusively that the marked increases have occurred during the life of this Government. In 1943 the basic wage in Queensland was £4 17s. When this Government was elected to office in 1949 the wage’ was £6 9s. Since then the cost of living lim risen and the basic wage in Queensland has risen to £10 19s. The people of Australia have no assurance that the cost of living will fall while this Government occupies the treasury bench. Australians are apprehensive about the trend of the cost of living. If the Government genuinely desired to do good, it would increase unemployment benefits even though it allowed no reduction at present in the pay-roll tax.
– in reply - In the bill that is now before the Senate, the Government proposes to reduce responsibility for the payment of the pay-roll tax. The tax is now paid by employers at the rate of 2-J per cent, on wages of £20 a week or more. In future the tax will be payable only on wages of £80 a week and more. In Australia to-day, 90,000 employers collect and pay the pay-roll tax. Under the provisions of this bill, that number will be reduced by 50,000 to 40,000 employers. The bill makes a worthwhile contribution towards a lowering of the taxation level. It will also reduce the demands that are made upon the time of small businessmen in the never-ending task of completing forms for government departments.
The Opposition has stated that it will not oppose the passing of the bill, but it has decried and criticized the measure. Honorable senators opposite have stated that receipts from pay-roll tax have grown year after year. Figures showing increases of the basic wage have been produced in an endeavour to prove the growth of inflation and consequent instability in the national economy. Honorable senators opposite have claimed that as a result of uncontrolled inflation, more employers have become liable to collect pay-roll tax. They are generalities to which I shall reply. They are built around the theme that inflation is abroad. The charges associated with them are in accord with the Opposition’s usual destructive approach to so many national problems. The Opposition has failed to offer any constructive criticism. Honorable senators opposite have asserted that the proposals are inadequate and that they do not reduce the burden of costs sufficiently. They have suggested that the proposed concessions should be increased so that the cost level may be reduced. They have also argued that there is no provision for passing on to the public the benefits of the pay-roll tax concessions. Their final criticism was that the Government was out to catch the votes of 50,000 employers.
The Leader of the Opposition (Senator McKenna) and honorable senators opposite who followed him reeled off a string of figures to prove increases of the basie wage and higher collections from pay-roll tax. They endeavoured to prove that uncontrolled inflation was abroad and that nothing was being done by the Government to curb it. They claimed that as a result, Australia was on the brink of a financial precipice. A government expects criticism from the Opposition but such criticism should be reasonably fair. Honorable senators opposite produced figures to show that there had been an increase of collections from payroll tax, but they made no reference to the increase of the Australian population and the national income, or to the tremendous strengthening of national stability and prosperity in recent years.
The Opposition has tried consistently to cause alarm and apprehension in the community. It has raised one bogy after another in an endeavour to show that Australia is not the bright, prosperous and happy land that it really is. That policy has been pursued by the Australian Labour party consistently since the election campaign of 1949. The Government was accused of planning to start a pool of unemployed and reduce social services benefits. Those prophecies have failed to achieve their purpose of frightening the electors. A series of dismal forebodings have emanated from the Opposition. The Leader of the Opposition said to-day that inflation was uncontrolled. A number of honorable senators opposite have alleged that unemployment is growing. No sensible person in Australia believes that line of propaganda now. The employment figures are healthy and they are improving every month. During the Senate election campaign, the Australian Labour party alleged that industrial expansion had suffered a setback while this Government was in office. The truth is that in the last three years there has been record expansion in secondary industries in Australia and record investment of overseas capital in secondary industries here. Members of the Opposition have now cried wolf so often that the people will not believe them. If I may presume to offer them a little advice, it is that if ever they desire to be returned to the treasury bench in this Parliament they must exhibit a little more courage and optimism than they have shown as an Opposition since the present Government assumed office. Whilst I have answered that argument, I shall not be so foolish as to deny the possibility that inflationary trends may continue. Here, again, I say that in all national circumstances the main ingredient required in the make-up of any government is to he of good heart and good cheer and to act confidently and soundly in its approach to national problems. I remind those who are so apprehensive of inflationary trends that whereas in 1950-51 retail prices increased by 20 per cent, and wholesale prices by 24 per cent., ‘ last year retail prices increased by only 4 per cent, whilst wholesale prices dropped below the level of such prices in the preceding year.
Whereas in 1951-52 the average “wage level rose by 17.4 per cent., last year it rose by only 5.7 per cent. What are the reasons for that improvement? One of the main reasons has been the financial and economic policy that the Government embodied in the budget before last. That budget set out a progressive and sensible policy that was aimed at correcting weaknesses in our economy and improving the supply of materials upon which all secondary industries are based. The net result is that whereas, on the political side of the picture, members of the Opposition constantly decry our economic stability and claim that things in this country are going from bad to worse, while they fail to make one constructive proposal to improve the position which they allege exists, on the other side of the picture there is not one responsible financial institution in Australia which has not within recent months recognized and applauded our increasing stability and the strengthening of our economy. The Opposition is in the unfortunate position that even its own prophets of gloom cannot speak with one voice. In contrast to the speeches that we have heard from honorable senators opposite in the course of this debate, I shall quote an extract from the speech of the Premier of New South Wales when he brought down his budget a few weeks ago in the Parliament of that State.
– I rise to order, Mr. Deputy President. I submit that for some considerable time the Minister has not been replying to the debate, but has been making a second-reading speech. I might even add that as a part of a secondreading speech his remarks have not been relevant to the question before the Chair.
The DEPUTY PRESIDENT (Senator Reid). - I rule that the Minister is in order.
– On the occasion to which I refer, the Premier of New South Wales, who, apparently, is now a false prophet of gloom in the Australian Labour party, said -
By world standards our level of employment, our production and our living standards ave very high. The Government’s approach to this year’s financial problems has been based on the belief that the buoyancy and development of our economy must be sustained.
No sensible person will disagree with that statement. Another criticism made in this debate was that the proposal embodied in the measure is inadequate and will not lighten the burden of costs. The pay-roll tax was established primarily for the purpose of financing child endowment. Whereas in 1952-53 child endowment cost £53,000,000, collections of payroll tax in that year totalled approximately £40,000,000. If the Government abolished pay-roll tax it would need to impose some other tax in order to finance child endowment. The Government would have no alternative unless it was prepared to reduce its provision for defence. I make that point, because I have heard the terrifying suggestion made by honorable senators opposite during the course of this debate that it should follow that course. I heard the Leader of the Opposition advocate the reduction of the provision that was made for defence in the 1951-52 budget. That fact can be verified by reference to the Hansard report of the debate on that budget. Any Australian who would advocate, in the troubled clrcumstances that exist in the world today, that any appreciable reduction should be made in the defence vote shows a strange lack of realism.
The Government desires to reduce costs of production and retail prices. Will not the budget proposals help us to achieve that objective? Those proposals are matters of comparison. Will not the proposed reduction of sales tax and of taxes generally result in a reduction of costs? The proposal embodied in this bill is only one of a number of proposals to which the Government is seeking to give effect under the budget, and no one proposal can be considered in isolation. A proposal to reduce a particular tax must be considered in relation to taxation as a whole. If a businessman is able to retain a greater proportion of the profit that he earns, he will readily devise ways and means to reduce his costs and expand his business in order to increase his income. The Government’s objective is to stabilize our economy and provide better and happier living conditions for all Australians. With the object of achieving that end, it has had the courage to sponsor unpopular measures. Fortunately for this country, those measures have proved to be effective. The present budget proposals represent the third stage of the Government’s programme. Its first budget stabilized the economy. Under its second budget, it reduced taxes in the aggregate by £80,000,000, and on this occasion it proposes to reduce taxes in the aggregate by £118,000,000. What is more to the point, it- is carrying out its programme in a sensible and proper way by reducing taxes in directions in which such concessions will yield the best economic results for the nation as a whole. The Government’s programme will have the effect of reducing the burden of governmental expenditure. Last year the Government abolished land tax. This year it proposes to abolish the entertainments tax and also to exempt from the payment of pay-roll tax 50,000 out of 90,000 employers who now pay that tax. Members of the Opposition have criticized the last-mentioned proposal. I reply to that criticism in the phrase used by Senator Benn, who was one of the honorable senators who made it, that the small business people with small wages bills are the salt of the earth commercially in Australia. All national progress is based upon the efforts of those people who have the initiative, courage and guts to establish businesses and make their way in the world.
Honorable senators opposite have submitted that pay-roll tax should be abolished because it has the effect of increasing costs. All taxes have a similar effect. It is the Government’s responsibility to examine such matters in their proper perspective, and to handle them in a sensible and sound way. What is the effect of a pay-roll tax upon .manufacturing businesses? Honorable senators should peruse the copy of the magazine National Development that was issued by my department- to-day. In that journal an examination is made of this and other problems, and the conclusion is reached - I agree with it - that, by and large, wages represent 25 per cent, of the operating costs in a manufacturing business. That is as distinct from the percentage of wages which is employed in the production of raw materials and the making of machines for industry. Payroll tax represents 2£ per cent, of that 25 per cent, of total cost of the manufacturing process. That means that wages represent 25 per cent, of every £100 of operating costs and of the 25 per cent, payroll tax represents 2 per cent., or 12s. 6d. Thus the pay-roll tax accounts for 12s. 6d. in every £100 - of manufacturing costs. I am of the old school which says that even 12s. 6d. is too much. I make that point because honorable senators opposite have made exaggerated claims with respect to the effect of pay-roll tax on industry. We must approach this problem in a sensible way and realize that pay-roll tax collections totalling £40,000,000 a year are used to finance the cost of child endowment, which amounts to £53,000,000 a year. I suggest to those who criticize the bill on that score that the great majority of those who are responsible forthe conduct of businesses agree that the Government has acted soundly in its approach to this problem.
The last point that I make is in reply to the criticism that the Government did not take steps to ensure that the concession . embodied in this bill shall be passed on to consumers. That criticism pin-points the basic difference between the policy of the Opposition and that of the Government parties in this Parliament. The whole thought of honorable senators opposite leads, by some process, to the belief thai some set of rules must be devised before any economic measure can be proved to be satisfactory. The Leader of the Opposition said that this proposed concession would not work in the absence of prices control, which, of course, members of the Australian Labour party regard as a panacea for all our economic ills. It if the old story, which reveals the opposing political philosophies of the Opposition and of the Government parties. Are we to achieve efficiency in the future by stimulating competition or by relying upon artificial controls? I know where I stand on that issue. The Government’s aim is to work out its programme upon arrangements which will cause the least possible worry and anxiety and hamper in the least possible degree the ordinary man in his ordinary occupation. This measure implements a budgetary proposal, and is aimed at strengthening the economy of this country, just as were last year’s budgetary provisions andthe provisions that were made in the budget of 1951, although that budget was not popular. The Opposition has criticized the Government on the ground that this bill will win votes for the Government parties at the next general election. Of course it will win votes for us. Any sensible and sound legislation must enhance a government’s prestige in the eyes of the electors. This legislation, in conjunction with other legislation to implement the budget, will gain for us added respect in the community, and will enhance our popularity and election prospects. However, that is a comparatively small factor compared with the valuable contribution that the provisions of this measure will make to the strength and stability of the Australian economy, without which the dreadful things that the Opposition has predicted may well come to pass.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 agreed to.
Clause 4. (1.) Section fifteen of the Principal Act is amended -
Section proposed to be amended -
– The provisions of this Partshall not apply to wages paid -
– During the debate on the motion for the second reading of the bill, I stated that I would move amendments at the committee stage. I accordingly move -
That, before paragraph (a) of sub-clause (1.), the following paragraph be inserted: - “ (on) by adding at the end of paragraph (b) the words ‘or a community hospital’; “.
However, before I address myself to the amendment, I should like to say that I did not know that we were still discussing the budget, to which the Minister for for National Development (Senator Spooner) addressed himself a moment ago.
-Why did not the honorable senator tell the Leader of the Opposition (Senator McKenna) that?
– I did not discuss the budget.
– Order ! The honorable senator will address himself to the clause.
– I shall do so, Mr. Temporary Chairman, and I shall not discuss the budget as the Minister did. I pointed out in my speech during the second-reading debate that in some communities people band themselves together and establish a community hospital to care for the sick members of the community. Although it is necessary for them to employ nurses and domestic staff, they carry out their work without fee or thought of reward. There are many community hospitals throughout Australia. I therefore urge the Government to accept the amendment, which is designed to exempt community hospitals from payment of pay-roll tax. I point out that this tax is imposed on employers and is calculated on the amount of wages paid. An employer may be a government, a company, or a person engaged in an industry.Funds to conduct community hospitals are usually raised by means of voluntary contributions by residents of the locality in which the hospital is situated. As community hospitals are not conducted for profit, I consider that they should be exempt from the payment of pay-roll tax.
– I point out to members of the committee that the fact that the amendment has not been moved by the Leader of the Opposition (Senator McKenna) indicates that he considers it beneath his dignity to utter such hypocrisy.
– I rise to order! I take strong exception to Senator Marriott’s remarks about the Leader of the Opposition. Members of the Government and the Government Whip well know that our leader is attending an official function which he was obliged to attend. Although, on occasions, in the heat of debate, strong words are sometimes used by honorable senators on both sides of the chamber, the fact that Senator Marriott has seen fit, so soon after becoming a member of the Senate, to make such an insinuation against the Leader of the Opposition is contemptible. I hope that the Chair will see fit to remind the honorable senator that the principle of fair play is always respected in this chamber.
– Order ! Senator Marriott has merely expressed his personal opinion. However, I ask honorable senators to address themselves strictly to the clause, and not cast reflections upon other members of the committee.
– I rise to order! I direct attention to Standing Order 418, which reads -
No Senator shall use offensive words against either House of Parliament or any Member of such House, or of any House of a State Parliament, or against any Statute, unless for the purpose of moving for its repeal, and all imputations of improper motives and all personal reflections on Members shall be considered highly disorderly.
– Order ! I am familiar with the provisions of the standing order that has been cited, and I rule that no offensive words have been used.
SenatorCritchley. - With respect, Mr. Temporary Chairman, I have already objected to the words that were used by Senator Marriott.
– Order ! Senator Marriott was in order. The question is - “ That the words proposed to be inserted be so inserted Those in favour say “Aye”, and those against “No”. I think the “Noes” have it.
– Surely, Mr. Temporary Chairman, you do not think that you can get away with that ?
– Mr. Temporary Chairman-
The TEMPORARY CHAIRMAN.Order! Senator Critchley will resume his seat. However, if he wishes to state a fresh point of order he may continue.
– I have, already stated that Senator Marriott’s remarks were offensive to me, and, in conformity with the Standing Orders, certain action should be taken. With due respect, sir, as you did not see fit to call the honorable senator to order, I registered my objection.
– I rise to order ! Will the Chair be good enough to indicate whether any standing order provides that remarks must be withdrawn merely because an honorable senator claims that they were offensive to him?
– Order ! I have already ruled that the words that were used by Senator Marriott were not offensive, and I do not consider them unparliamentary. We shall resume consideration of the clause.
– I rise to order. Senator Marriott’s remarks were offensive to me and I ask for their withdrawal.
– Order ! I have already ruled that the honorable senator’s remarks were not offensive.
– Then,. Mr. Temporary Chairman, I move -
That the Temporary Chairman’s ruling bc dissented from.
The TEMPORARY CHAIRMAN.Order! Standing Order 270 provides -
If any objection be taken to a decision of tha Chairman of Committees, such objection must be stated at once in writing.
As objection has not been stated in writing, we shall resume consideration of the clause. The question is “That the words proposed to be inserted be so inserted “.
– But Senator Marriott was on his feet.
– Order ! I have already put the question, and the “ Noes “ have it.
– I call for a division on my amendment.
– Senator Marriott was on his feet at the time.
Order! Ring the bells.
Question put -
That the words proposed to be inserted (Senator O’Flaherty’s amendment) be so inserted.
The committee divided. (The Temporary Chairman - Senator J. A. McCallum.)
Majority . . . . 6
Question so resolved in the negative.
– Clause 4, paragraph (1.), sub-paragraph (c) of this bill reads as follows : -
Honorable senators will observe that that provision is retrospective. , I should like to ask the Minister for National Development (Senator Spooner) whether any payments will be refunded to any of the bodies mentioned in paragraph (f).
-No payments of payroll tax have been made by the groups to which the honorable senator has referred up to this date.
– I move-
That at the end of paragraph (c) of subclause (1.) the following paragraphs be inserted : - “ (i) the crown in the right of the State; (j) a municipal corporation or other local governing body or a public authority constituted in any State;
any university or other educational authority recognized by a State government; or
In moving this amendment, I am fortified by the statement of the Minister for National Development (Senator Spooner) that foreign agencies are giver some privileges in respect to the payment of pay-roll tax. It has been proposed in this bill that those agencies shall be completely exempt from the tax. Paragraph (i) of my amendment refers to a State. Senator Wright, in criticizing the speech of the Leader of the Opposition (Senator McKenna), mentioned that the Government would only collect £6,000,000 in pay-roll tax from the State governments. But in addition to having to pay that amount, State governments incur a tremendous expense in calculating the amount of pay-roll tax that they have to pay. There is evidence of that fact in the Minister’s second-reading speech. Paragraph (j) of the proposed amendment concerns municipal bodies and public authorities which are sometimes financed by the Commonwealth. They are also financed by the collection of local rates. Sometimes they are financed by loan moneys which are raised through the Australian Loan Council and distributed by the State governments to the municipal bodies. It seems ridiculous that these bodies should incur pay-roll tax in spending money that has been supplied partly by the Commonwealth and State governments and which has been obtained partly from rates paid by the residents of the municipality. Less than £6,000,000 would be collected as payroll tax from municipalities. Paragraph (7c) of the proposed amendment concerns universities and other educational authorities recognized by State governments. A great amount of money would not be involved in this case. But the Government could make a good gesture to these authorities by saving them the trouble of calculating their pay-roll tax because such authorities will probably have pay-rolls totalling more than the exempted amount.
The Opposition proposal to which most objection has been taken in the vicious speeches that have been made by honorable senators opposite has been the exemption of trade unions from pay-roll tax.
A trade union is an association that has been formed for the purpose of helping its members to obtain particular benefits in industry. Its members pay fees for the purpose of presenting their case in an arbitration court or before a conciliation tribunal. Their representatives also negotiate with employers in order to make agreements. The money collected from trade union members is not used for manufacturing purposes but for the protection of members of the association. The amount of pay-roll tax paid by trade unions would be small indeed but certain expenses are incurred in calculating and arranging the payment of the tax. My motion will give honorable senators opposite the opportunity to exempt their State governments from pay-roll tax. Honorable senators opposite who have complained that local government bodies have not been fairly treated will also be given an opportunity to exempt those bodies from pay-roll tax. The Opposition will call for it division on this amendment.
– I support Senator O’Flaherty’s comment on this motion. Not one of the bodies mentioned in the proposed amendment is a profit-making concern. Most States are in financial difficulties at present particularly as far as their transport and railway facilities are concerned. Under the pay-roll tax legislation, they have to pay a tax of 2£ per cent, on all wages. In speaking on the budget the Minister for National Development (Senator Spooner) said that wages took 25 per cent, of the transport costs of the States. I venture to say that more than 25 per cent, of transport costs is incurred in the payment of wages. The Minister cleverly avoided supplying details of the balance of 75 per cent, of costs. Considerably more than 25 per cent, of transport costs would be taken up by the payment of wages. A similar state of affairs applies to every activity carried on by the States including the construction of roads, the maintenance of forests and the development of hydro-electric power. It even applies to aluminium works. The obligation of the States to pay pay-roll tax adds to the cost of every State undertaking. A big sum of money is represented by 2-J per cent, of the wages paid in generating hydro-electric power. Interest also has to be paid on the capital expenditure involved in such projects. Such costs are ultimately paid by the consumer and most consumers are average working men. Tasmania, like other States, is in financial difficulties. Probably the States will find themselves in greater difficulties as time goes on. A remission of pay-roll tax would be a great relief to the States and would result in a reduction of prices which in turn would affect the basic wage.
Consideration interrupted .
The TEMPORARY CHAIRMAN.Order ! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question -
That the Chairman do now leave the chair and report to the Senate.
Question resolved in the negative.
– Paragraph (j) specifies - a municipal corporation or other local governing body or a public authority constituted in any State.
The same problem is presented here. Any member of this chamber who has had experience of local government administration will understand the difficulties of those bodies. Almost every local governing authority to-day is in financial difficulties due mainly to soaring prices. Insufficient money is available for such important work as the construction and maintenance of roads. The liability of local governing bodies to the pay-roll tax accentuates this problem, and the result is, of course, the imposition of higher charges on ratepayers including primary producers about whom the Governmental ways professes to be so concerned. Any honorable senator who toured country districts during the recent election campaign will know that most of our roads are in a. state of disrepair. This, as I have said, is due to the financial stringency now being experienced by all local governing authorities. I believe therefore that the pay-roll tax is hitting the taxpayers in two ways. First it is robbing municipal and shire councils of the money they need to construct and maintain roads. Secondly, it is necessitating increases of rates and so is penalizing the very section of the community which, we are informed, the Government is seeking to relieve by its budget proposals.
Paragraph (7c) provides for - any University or other educational authority recognized by a State government.
The collection of. pay-roll tax from such institutions is a reflection upon a country which prides itself on its system of free education. Lastly, the Opposition’s amendment is aimed at exempting trade unions from the pay-roll tax. Is there any justification for collecting payroll tax from a great union such as the Australian Workers Union? Here again, the tax is increasing the burden of the unskilled worker. He has to keep his union going, and it cannot be kept going unless its officials are paid and I assure honorable senators opposite that big unions such as the Australian Workers Union employ more than four or five men. The 2-j per cent, pay-roll tax that the union has to pay is passed on to the working man in the form of increased union dues. We are not asking for anything that is not fair and just. We are asking only for equitable treatment in a country which claims to be a democracy. Surely a sectional tax such as this cannot be regarded as democratic. As I have shown, one section of the people is asked to pay the tax three times. The worker pays it first in increased prices for manufactured goods; secondly, in increased local government rates; and thirdly, in increased union dues to help the cause for which working people have fought against successive Tory governments over the years.
– I wish to deal specifically with paragraph (7c) of the amendment which refers to universities and other educational authorities. The justification that has been advanced throughout this entire debate for reducing the pay-roll tax is that the reductions will be carried into the cost structure. The cost structure in this country is important at any time from the point of view of the national economy, and, directly or indirectly, from the point of view of the welfare of the citizen within the national economy. Only so far us those tax reductions are reflected in the cost structure and so are passed on to the people, will this legislation be effective at all. The imposition of the pay-roll tax on universities and other educational authorities, is, in effect, the imposition of a direct tax on parents who have children attending those institutions. In’ other words, by refusing to exempt the authorities mentioned in para- graph (&) at least, the Government is contradicting the very theme that it has adopted in .presenting the legislation. All kinds of appeals to sympathy have been made in this debate. We have been told that no matter how much we may dislike the pay-roll tax, it is levied in the interests of mothers and children. If the tax has any justification at all, it rest. on that claim; yet the Government is insisting upon the retention of a levy which is directly affecting the parents of children attending educational institutions. Clearly there is an obvious contradiction in the Government’s case and I believe that it should accept paragraph (7c) of the amendment at least.
– Senator Byrne has made out a very good case for the exemption of universities and other educational authorities from the .pay-roll tax. I wish to deal with the measure from another angle. I refer to the arguments advanced by Senator Wright. The pay-roll tax is an irritating imposition, and its administration is costly and cumbersome. In the final analysis, as Senator Wright has pointed out, the States are given a sum of money over and above that which the Commonwealth is obliged to pay. Chen the Commonwealth takes it back after cumbersome administrative procedure. Surely much of the dead wood could be cut out by giving the States, say, £6,000,000 less and eliminating all those costs that are necessarily involved in collecting the tax.
– Does the honorable senator have the authority of the States to make that proposal?
SenatorCOURTICE. - I do not think there would be any difficulty about that. Undoubtedly municipal authorities, hospitals and so on are involved in a terrific amount of work. I believe that there should be closer co-operation between the Commonwealth Government, the State governments and local governing authorities. I hope that the Government will examine that aspect of the measure.
Question put -
That the words proposed tobe inserted (Senator O’Flaherty’s amendment).beso inserted.
The committee divided. (The Temporary Chairman - Senator J. A. McCallum.)
Question so resolved in the negative.
Clause agreed to.
Clause 5 (Annual Adjustment of Tax).
– I wonder whether the Minister could arrange to make provision in this clause for the remission of tax to be passed on ? Unless that is done, I suggest that the law of supply and demand, which is really the law of the jungle, will operate. It will then be a matter of the survival of the fittest. I have always opposed the law of supply and demand, because, in my experience, when it operates the strong survive and the weak go under. The employer who refuses to pass on the benefit of this tax remission will, in effect, be able to put the money in his pocket. If that happens, those who are competing with him on equal terms, and who pass on the effect of the remission to the consumers of the goods they produce, will ultimately be forced out of business. That is surely the law of the jungle.
The TEMPORARY CHAIRMAN.Order! I am afraid that I cannot see the relevance of the honorable senator’s remarks. I remind him that we are now in committee.
– I shall do my best to explain the point that I wish to make. In my opinion all traders are entitled to a fair deal. I suggest that that is not possible if one man adds 21/2 per cent, to the price of the commodity he produces and another does not do so. Let us consider, for instance, two men who are manufacturing the same article and are obliged to meet approximately the same costs, but the output of one is double that of the other. If the man whose output is double that of the other is obliged to pay pay-roll tax because he employs more labour, he will not be able to put his commodity on the market at the same price as his competitor.
The Minister has completely ignored the requests made by Senator O’Flaherty. I suggest that he did so because he had no answer to them. Those requests were logical, as are the matters that I am putting to him now. He apparently thinks it right that certain employers should be given an advantage over others. Yet this Government professes to believe in fair competition ! I suggest that he is trying to laugh this matter off because he cannot answer the points that have been raised.
Clause agreed to.
Clause 6 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Motion (by Senator McLeay) agreed to-
That the Senate, at its rising, adjourn to Wednesday next, at 3 p.m.
Motion (by Senator McLeay) proposed -
That the Senate do now adjourn.
– I wish to refer to an incident which occurred earlier to-night. I know that many Government senators, as well as those on the other side of the chamber, do not know who is paired with whom when pairing is necessary. During the consideration of a bill in committee to-night, the absence of a. certain honorable senator from the chamber was referred to. I wish to make it clear to you, Mr. President, and to other honorable senators, that it was necessary for certain pairs to be arranged this evening, including one for the Minister for Repatriation (Senator Cooper), who was invited to attend an official dinner at Government House. The Leader of the Opposition (Senator McKenna) was also invited to attend that dinner, and he was therefore paired with the Minister for Repatriation. Not all honorable senators on this side of the chamber were aware that that pairing had been arranged ho fore the Senate mct this evening.
– I thank Senator Annabelle Rankin for her explanation. 1 very much regret the incident which occurred to-night. For the first time in a fairly long political career, that incident provoked in me something resembling heat. It was distinctly unfair and I hope flint, a similar occurrence will never again be witnessed in this chamber. I feel sure that it would not be tolerated by the majority of honorable senators. Ti was unworthy of the Senate, and I regret very much that such an incident occurred.
– T have no doubt that you, Mr. President, and, indeed, all honorable senators, will agree that during the current sessional period the standard of debate in the Senate has risen considerably, and I am sure that all honorable senators are glad of the fact. However, an incident which occurred to-night, when you were not in the chamber, illustrates the need to observe the provisions of Standing Order 419, which provides i hat -
No Senator shall digress from the subjectmatter of any Question under discussion
– If that were so, it would be bad luck for some honorable senators opposite.
– Senator Kendall always makes low-level attacks. 1 am attempting to deal with this matter in a non-party political way. I point out that a standing order exists in this connexion, and I have yet to learn that anything is ever lost by sticking to the hook. Honorable senators may perhaps remember the incident to which I refer, when an honorable senator in an unseemly manner shouted across the chamber at the Minister for National Development (Senator Spooner) something to the effect that his contribution to the debate was irrelevant, whereupon the Minister, in just as unseemly a manner, shouted hack cross the chamber–
– Order! The honorable senator is not in order in referring to what happened in committee.
– If anything 1 have said should, in your opinion, Mr. President, be withdrawn, I withdraw it. I suggest, however, that honorable senators who deal with the subject-matter under discussion will bo penalized by doing so if others are to be allowed to stray completely from the subject. I pride myself on always endeavouring to keep to the subject-matter of the bill before the Senate, but if other honorable senators are to be allowed to make sporadic raids into other territory. T also shall be tempted to do so. T arn not pointing at any particular person. As T have said, I. believe that the standard of debate has been raised, and unless the Standing Order to which I have referred is observed, that high standard will suffer.
– Senator Willesee has referred to an honorable senator without mentioning his name, so perhaps I had better rise to defend that unnamed senator. I asked the honorable senator to look at the speech that was made by the Leader of the Opposition (Senator McKenna).
– I dealt with the matter in a general way. I referred to the incident in which the Minister was concerned merely in order to illustrate my point.
– I am not usually a sensitive man, but I have a feeling that the criticism was not so much general as particular. I take much pride in my association with the Senate and I like to do what I believe to be proper. I do not speak with heat or feeling.
– The Minister does not deny the allegation either.
– I do not deny it and I did not rise to do so. I ask the honorable senator to study the speech that was delivered by the Leader of the Opposition (Senator McKenna) in reply to my second-reading speech. Whatever may be the imperfections of both speeches, I believe that I can claim fairly that I combated the allegations of the Leader of the Opposition to the best of my ability. I think that that is a reasonable. attitude to adopt in any debate. If I was wrong in the tenor of my remarks, I submit that I erred in good company with the Leader of the Opposition.
The PRESIDENT (Senator the Hon. A M. McMullin). - I appreciate the references that have been made by Senator Willesee to the high standard of the debates in the Senate in the past three weeks. The bill that was before the Senate to-night dealt, with an important subject with wide ramifications, and it is difficult to determine when to call an honorable senator to order for departing from the subject-matter under consideration. I have purposely allowed a good deal of latitude because I believe that a debate that is not restricted will proceed freely, hat does not mean that I shall permit the debate to move away completely from the bill that is before the Senate at any time. Honorable senators can assist me considerably by using their own good judgment. Some honorable senators who have spoken to-night knew that they were wandering from the subject that was before the chamber. It is not wise to do so. I do not want to call them to order if I can avoid it. They are experienced members of the Senate and should know when they are exceeding the bounds of a debate. I suggest to honorable senators that they should discipline themselves to keep their speeches well within the range of any measure that is before the Senate. If they do so, we shall work together amicably and to good effect.
– I believe that some reference has been made in the Senate to-night to my absence from the chamber during the evening. I thank the Government Whip for having stated the facts in connexion with my absence. In the circumstances, I believe honorable senators will understand that it was not only a matter of pleasure for me to attend a function at Government House to-night; it was also a matter of obligation and duty. I say, in all charity, that honorable senators who may have referred to my absence would be completely ignorant of the reason for it, and I accept that position. However, I believe it is proper that I should observe that when honorable senators do not know the facts, at least they should extend the benefit of the doubt until they are made cognizant of them. The fact that my absence was broadcast throughout Australia does not redound to my credit or to the credit of the Australian Labour party, although it was a matter of obligation. I merely wish to put on record the reason for my absence. I leave the matter at that point without any sting and in the belief that, honorable senators who referred to it had no knowledge of the true circumstances.
Question resolved in the affirmative.
The following papers were presented : -
Explosives Act - Regulations - Order directing the berthing of a vessel.
Pearl Fisheries Act - Regulations - Statutory Rules 1953, No. 84.
Senate adjourned at 11.36 p.m.
Cite as: Australia, Senate, Debates, 30 September 1953, viewed 22 October 2017, <http://historichansard.net/senate/1953/19530930_senate_20_s1/>.