23rd Parliament · 1st Session
The PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at 3 p.m., and read prayers.
Assent to the following bills reported: -
Loan (Short-term Borrowings) Bill 19S9.
Customs Tariff Bill (No. 3) 1959.
Customs Tariff Bill (No. 4) 1959.
Customs Tariff Bill (No. 5) 1959.
Excise Tariff Bill (No. 2) 1959.
Excise Tariff Bill (No. 3) 1959.
Appropriation Bill 1959-60.
Appropriation (Works and Services) Bill 1959-60.
– Will the Minister for Repatriation inform me whether it is a fact that Mr. Tom Pendlebury, a totally and permanently incapacitated exserviceman pensioner and the president of the Lake Macquarie Shire Council in New South Wales, is receiving a presidential allowance of £500 for the year? Is it a fact that the Repatriation Department has now questioned his right to fill this office and to accept the out-of-pocket allowance? In view of the fact that Mr. Pendlebury is rendering a useful service to the people of Lake Macquarie, in an honorary capacity, will the Minister see that his rights as a T.P.I, pensioner are protected?
– The honorable senator’s question is a rather difficult one to answer offhand. I have had an opportunity to look into the matter. As the honorable senator stated, Mr. Pendlebury is a T.P.I, pensioner. His case has been reviewed recently, and the medical opinion is that he is still definitely totally and permanently incapacitated. We have resolved that question. He is entitled to a T.P.I pension.
A T.P.I, pensioner, for his own good, is allowed to earn only a proportion of the li(ving wage. The precise amount that he may earn has never been stated, because circumstances vary. For instance, an accountant might be able to work for two half -days a week at his profession. It would be to his benefit to do this, in order to keep his mind active. It would not be injurious to his health. The main factor taken into con sideration is whether the work performed by a T.P.I, pensioner is injurious to his health.
I understand that Mr. Pendlebury has been a member of the Lake Macquarie Shire Council for a number of years, that he is now the president of that council, that he receives an allowance of £500 a year and that he has the use of a motor car and the services of a chauffeur. A report to this effect has been forwarded to the Repatriation Commission in Melbourne for a decision to be made whether the whole amount of £500 can be regarded as an allowance to defray out-of-pocket expenses, or whether a portion of the amount can be regarded as income. Doubtless the taxation authorities will be asked to express an opinion on the matter, and the amount, if any, that they decide is taxable will be regarded as salary. The case will be thoroughly examined by the commission, and I hope to receive a decision one way or the other some time this week. When it comes to hand, I shall let the honorable senator know.
– I direct a question to the Minister representing the Minister for the Interior. Has he read of a suggestion that a transmitting station for television should be placed on Black Mountain? Will the Minister promise that this will not be done and that the wooded slopes of Black Mountain will be preserved as part of the natural setting of Canberra?
– I have not read the statement referred to by the honorable senator that it is likely that a television station will be placed on Black Mountain. I advise the honorable senator that no decision will be made until a licence has been granted to some company to erect a television station in Canberra. Immediately a licence has been granted the company concerned can ask the Government to allocate it a position on which to place its television station. That is the time when the matter raised by Senator McCallum can be discussed. I do not know whether a company would wish that such a station should be placed on Black Mountain. Where the station will be placed will be a matter for the Government to decide, and when an application has been made to the Government for a particular site, any representations about that site can then be made.
– Has the Minister for Civil Aviation seen a press report to the effect that Mr. Reg. Ansett of Ansett-A.N.A. stated that the Government should get out of the airline business? Will the Minister assure the Senate that the Government will not yield further to the demands of this so-called free or private enterprise, which in fact is so free or private that it depends on Government assistance and depends particularly on the Government for the building, repair and maintenance of aerodromes, as well as for all other facilities which go with modern flying?
– There are one or two comments 1 should like to make before I come to the substantial part of the question. The Government has not yielded to Mr. Ansett and will not yield in the future. The Government has its own policy with respect to airlines which it has stated on a number of occasions. Furthermore, the facilities which are available to Mr. Ansett at a cost are similarly available to Mr. Ansett’s Government competitor - Trans-Australia Airlines - at the same cost. As to whether the Government proposes to get out of the airline business I can only say to this Senate, to Mr. Ansett and to any one else who is interested, that the Government stands now where it has always stood. It has always asserted, ever since it has been in power, that it believes in the maintenance of two airlines, one controlled by the Australian National Airlines Commission and the other controlled by private enterprise.
– I desire to submit a question to the Minister representing the Treasurer concerning the all-important current meeting of the International Monetary Fund in Australia. It is the first meeting of the fund that has taken place in this country. Is it correct - I assume it to be so - that Australia is represented at the meeting? Does the Minister know whether the subject of the international fixed price for gold will be raised at this meeting? If it is to be raised, will Australia present a case, as it has done heretofore, for an increase in the price of gold? If the matter is not to be raised, will the Minister exercise his good offices in an endeavour to have that question raised if it is at all possible?
– I will be only too happy to discuss the question with my colleague, Mr. Harold Holt, but I can tell Senator Vincent in advance that on all such previous occasions the Australian Government and the South African Government have jointly pressed for an increase in the price of gold. Accordingly, I have no doubt that if the subject is discussed at the current meeting of the International Monetary Fund, the Australian attitude will be the same as hitherto. Nonetheless, I am prepared to refer the question to the Treasurer, and to discuss it with him.
– My question is directed to the Minister representing the Minister for Social Services. At present many organizations are preparing to improve the lot of our pensioners by making a Christmas gesture. For example, radio station 7HO, Hobart, has raised £4,000 for this purpose, and radio station 2UE, Sydney, has raised £5,000. As Australia is enjoying abounding prosperity and as, apparently, import restrictions can be lifted to the extent of millions of pounds, will the Government show its consideration for the pensioners in the coming festive season, and enable them to share in the prosperity of our nation, by granting them an extra week’s pension, at the present rate? Such a gesture would at least show these people that the Government is not so hard-hearted as would appear from its social services legislation.
– The Government, during the ten years for which it has been in office, has amply demonstrated that it is prepared to consider the needs of pensioners at all times, but especially when the Budget provisions are being discussed. The Government has an excellent record in that regard. The honorable senator’s question is one that I have heard now about ten times in the ten years for which I have been here. At about this time every year it is raised by some member of the Opposition - with a full knowledge, I believe, of what the answer will be.
– In view of rumours, which are still current, as to the future of rifle clubs in Australia, will the Minister representing the Minister for the Army obtain from his colleague a statement which will clear up any doubts existing in the minds of the people chiefly concerned? I refer to the many hundreds of riflemen who are members of such clubs, and who regularly devote to rifle shooting their Saturday afternoons, and other days as well, thus preparing themselves, in their own time, for any national emergency that might arise in the future.
– I will bring the question to the notice of the Minister for the Army. I understand that the matter has been under discussion. I shall be happy to obtain the latest information concerning it and to make it available to the Senate.
– My question is directed to the Minister for the Navy. 1 have discussed with him, and also with LieutenantCommander Hume of the Royal Australian Navy, the differing historical opinions as to the exact date when Captain Cook landed on Possession Island, near the tip of Cape York Peninsula, Queensland, and formally took possession of the east coast of Australia in the name of the then ruling monarch, King George III. Is the Minister now in a position to make an authoritative statement that will resolve al doubts concerning the date in the year 1770 when Cook landed and hoisted the English colours on Possession Island?
– The honorable senator’s question arises from a desire to put beyond doubt the true date on which Captain Cook took possession of the eastern coast of Australia. He has raised the matter with me before. He raised it with me on the occasion that the Navy stated to me that the correct date was 22nd August, 1770, and he did so because that statement was at variance, and is at variance, with the beliefs of members of the Queensland Historical Society, amongst others, who believe that the true date was 23rd August, 1770. Those who believe that it was 23rd August base their belief on the fact that although Captain Cook entered in his journals that he took possession between the hours of 4 p.m. and 6 p.m. on 22nd August, he made no allowance for the fact that, on sailing westward across the Pacific and crossing the International Date Line, he had gained a day; that he made no adjustment for his gain until he reached Batavia; and that therefore what he entered as 22nd August was in fact, according to their reckoning, 23rd August. There is no question as to the accuracy of the entry of 22nd August, or as to the fact that Captain Cook did gain a day and did not make allowance for it until he reached Batavia. But there is another fact to be taken into consideration which ought to alter the beliefs of the Queensland Historical Society. That is that Cook, in his journals, ran his days from mid-day, so that he ruled his journal at mid-day on the day that was 21st August ashore and dated and began the day, which he called 22nd August; so that the time shown in his log as between 4 p.m. and 6 p.m. on 22nd August was, ashore, between 4 p.m. and 6 p.m. on 21st August. If we add the day gained when he crossed the International Date Line, 4 p.m. on 21st August, shore reckoning, becomes 4 p.m. on 22nd August, shore reckoning, which was the date on which Cook took possession of Australia at Possession Island.
I have, Sir, a number of extracts from Cook’s journals, together with explanations of them, which bear on this matter, and with the concurrence of honorable senators 1 shall incorporate in “ Hansard “. They are as follows: -
At 11 a.m. 27 May 1768 Captain Cook hoisted the Pendant and took charge of Endeavour.
Note: at this hour Ship Date and Civil date coincide.
At 12 noon Captain Cook ruled off his diary and commenced a new day May 28th. Thereafter all days begin with P.M. entries and close with A.M. entries.
Note: NOW it continues to be May 27th until midnight for civilians on land, while it is May 28th for sailors on ship.
This manner of Day Keeping continued until 13th April 1769 when Captain Cook arrived at Georges Island, and was resumed when he departed on 14th July, 1769.
Note: He makes his adjustment from Ship to Civil Time by letting Thursday 13th April 1769 run on for 36 hours - P.M., A.M., P.M.
Note: He makes the adjustment by allowing 14th July to run for only 12 hours - from midnight to noon.
– I wish to divert the attention of the Senate from the Navy to the Army. I ask the Minister representing the Minister for the Army whether his attention has been drawn to a leading article in a recent issue of the Sydney “ Daily Telegraph “, which stated -
If the Federal Government accepts the Army’s recommendation and abolishes national military training, the decision will be supported and understood by most people in Australia who give thought to Australia’s defence.
Has the Army made recommendations concerning the abolition of the present method of national military training? If it has, what form did the recommendations take, and is the Government taking cognizance of them? Are the recommendations likely to be altered? If they are, can the Minister indicate to the Senate the type of military training that will be instituted in lieu of the present system?
– It is not usual to discuss matters of policy in answer to questions without notice.
– My question is directed to the Minister for Customs and Excise. Some few weeks ago, I asked the Minister whether it would be possible to assist parents in vetting programmes that their children were to watch on television by having the censor’s classifications flashed on the screen. The Minister answered that it was both possible and practicable. It was announced in the press, and also on television, that as from 8th November, the censor’s classifications of television films would be included in advertised programme schedules. In view of this, can the Minister say why classifications are not appearing in some sections of the Australian press at present?
– I was not aware that the classifications were not appearing in some sections of ‘the Australian press. I well recall that a short while ago it was announced, both over television and in the press, that in future the classifications of programmes would be set out in press advertisements. I am glad the honorable senator has again drawn my attention to this matter. I shall ask the Commonwealth Film Censorship Board to take the matter up with the Postmaster-General and see why this practice, which started in a blaze of glory, is no longer being followed.
– I ask the Minister for the Navy whether he has seen the statement in to-day’s press that President Eisenhower will try to turn the course of history away from war and towards lasting peace and disarmament, which calls for an entirely new relationship between America and the Communist world and which states that the challenge of competition instead of nuclear war will be securely peaceful. In view of the public statements made recently by the Minister on the matter of the recent peace and disarmament conference, will he now have to consider whether he will recede from his previous stand, or is he prepared to follow the example set by the distinguished American leader?
– I think the distinguished American leader and those who were concerned with initiating and carrying on the so-called peace congress in Australia had in their minds two completely different objectives. I believe that in the mind of the American President, as in the minds of all men of goodwill, is a desire for peace in the world based on something which can endure, and the basis for enduring peace involves putting control of the countries of the world in the hands of people who live in them, those people exercising that control through free election of their governments. I believe also that those who base their desire for peace on that thought are right to go further and serve notice that in future they do not propose to be attacked as parts of the free world have been attacked in the past. I believe that those are the only two real bases for peace.
I think that those who initiated - although, of course, not all those who attended - the congress in Melbourne were more concerned with seeking to sap the will of the free world to resist Communist aggression than with obtaining peace based on the sort of ideals that I think the American President had in mind.
– I ask the Minister for Civil Aviation whether Ansett-A.N.A. is negotiating with Trans-Australia Airlines to exchange two DC6B aircraft for three Viscounts. Would it be true that AnsettA.N.A. has only two of these machines in service and that this will serve as an expensive embarrassment so far as spare parts are concerned? Has the Government^ approved of or assisted Ansett-A.N.A. in the negotiations? Is this another idea of the Government’s approval of airline competition when it has previously assisted A.N.A., and subsequently Ansett-A.N.A., in almost every way, and has hamstrung T.A.A. as much as possible? Will the Minister say whether T.A.A. approves of the deal?
– I think the information upon which the question has been based has rather misled the honorable senator. If I may be so presumptuous, I would advise him to check more closely the information that he is given in these matters. It is a fact that in September, 1958, this proposal was discussed at length between the two airlines, but it was not proceeded with at that time because Ansett did not look favorably at it. I am informed that in the last few months it has been discussed again, and that it was discarded on this latter occasion because T.A.A. did not look favorably at it. The Government has had nothing at all to do with the negotiations. It regards them merely as negotiations between the two airlines. It is not right to say that Ansett has two of these aircraft. He has four.
– Two in service.
– He has four in service. The spare parts aspect does not present a problem at all. As for the rest of the question, relating to the assistance given to Ansett-A.N.A. by the Government, ostensibly at the expense of T.A.A., I think I can do no better than to enumerate the current fleets of the two airlines. Both airlines have two Lockheed Electras. Both airlines have six Viscounts. Then there is a gap, T.A.A. having nine other Viscounts and AnsettA.N.A. having four DC6B aircraft. The extent of the assistance given to T.A.A. is well illustrated by the fact that within the last two years the Government has made no less than £1,500,000 available to this airline in extra capital and has facilitated its re-equipment programme to an extent equal to if not greater than the extent to which it has facilitated the reequipment programme of Ansett-A.N.A.
– I ask the Minister a supplementary question. Did not T.A.A. desire to purchase French Caravelle aircraft, and was it not denied the right to do so?
– Yes, indeed. T.A.A. did desire to purchase Caravelles, about fifteen or sixteen months ago. The correctness of the Government’s decision in this matter can probably be best revealed by the fact that the producer of the French Caravelle has sold to airlines of the world no more than 52 of these aircraft to date.
– I direct a supplementary question to the Minister for Civil Aviation. Has he seen a statement made by Mr. Calwell to the effect that the Electra aircraft purchased by both of Australia’s major airlines, Trans-Australia Airlines and Ansett-A.N.A., is obsolete? Would the Minister care to comment on this statement by Mr. Calwell?
– I have seen the statement. I comment on it quite briefly by saying that it is a characteristically stupid and misinformed statement. The best answer to what Mr. Calwell said resides in the fact that twenty of the leading airlines of the world, including our own international airline, Qantas Empire Aiways Limited, have bought no fewer than 170 of these aircraft since they have been on the market. I might add that when Mr. Calwell wants to talk about the nationalization of airlines, I am prepared to listen to him for a long time, but when he wants to talk about airline equipment, I am not prepared to listen to him at all.
This statement does nothing other than to add to his already massive reputation for being a political grandstander.
– I direct to the Minister for Civil Aviation a question that is supplementary to the one asked by Senator Sandford. Is it not a fact that Australian National Airways Limited owed the Government several hundred thousand pounds for ground fees? Is it not a fact that this money was never paid, in full or in part? In view of the talk to-day of people’s capitalism, would the Minister say whether this was a form of capitalist socialism?
– No. It is not correct to say that Ansett-A.N.A. owes the Government any money. It does not. The position is that Ansett-A.N.A. has secured certain advances under guarantee, and, except for a short period after the old A.N.A. company went out of business, it has always remained in front of its commitments in respect of those debts.
– Has the Minister for National Development seen a report in to-day’s press that the Water Research Foundation of Australia held its fourth annual general meeting yesterday? Does the Commonwealth Government assist the foundation financially? If not, will the Government consider granting, some assistance to the research programme of the foundation in respect of changing salt water to fresh water?
– I have no recollection of the Commonwealth Government assisting the Water Research Foundation of Australia, worthy as is the work of that body. I remind the honorable senator that the Government has its own research programme in connexion with this important matter in operation, both within and outside Australia.
– I have noticed that economy class fares are to be introduced on domestic airlines by using piston-engined D.C.6B aircraft. Will the Minister for Civil Aviation give the Senate an outline of this scheme, and can he state whether all the seats will be available for persons paying the economic fare, or will a proportion of the seats be reserved for persons paying higher fares? Should the latter be the case, will the Minister request that such flights be advertised as such, because many people are averse to travelling in such fully loaded ‘planes?
– I am unable to answer the honorable senator’s question at the moment, for the reason that negotiations are in progress, but have not yet reached finality. I do not know what proposals the airlines have in mind, and cannot say how many economy class seats will be made available, and how many seats will be reserved for passengers paying higher fares. As the negotiations develop, if they do, and information becomes available, I shall let the honorable senator know.
– Can the Minister representing the Postmaster-General say whether it is a fact that the townships of Broome and Derby in Western Australia have been connected to the Australian telephone system by radio-telephone? If so, can he say whether the system is working satisfactorily? If the answer is in the affirmative, can the Minister say when it is expected that other outback towns will be connected to the telephone system of Australia?
– At the moment, I cannot answer the whole of the honorable senator’s questions, but I can inform him that the townships of Broome and Derby have been connected with the telephone system of Australia. If the honorable senator will place his question on the notice-paper I shall obtain a full answer for him from the Postmaster-General.
asked the Minister representing the Minister for Health, upon notice -
– The Minister for Health has now furnished the following reply: -
asked the Minister representing the Postmaster-General, upon notice -
As the recently increased telephone charges bear heavily on lower salaried subscribers, will the Postmaster-General investigate the possibilities of introducing a scheme for payment of telephone accounts similar to that operating for payment of wireless licensing fees, i.e., by instalment stamps purchasable at the post office?
Postmaster-General has furnished the following reply: -
Consideration has been given on a number of occasions to the adoption of a system whereby telephone subscribers may purchase stamps of small denominations to be applied against due date telephone charges, but the proposal has always been rejected because it would involve an appreciable amount of additional expenses and labour in accounting for the charges by this (Method and would increase the cost of printing and distribution of the additional volume of stamps required.
Payment by stamps is practicable for a wireless or a television licence fee as the amount involved is known in advance and is not varied by usage. On the other hand, the amount of the half-yearly telephone account varies with the rate of usage of the service, and arrangements would have to be made to process part payments in stamps and for those cases where the stamps paid exceeded the amount due,
There is also the possibility of stamps being lost or accidentally destroyed before payment of an account is due; while this may only cause inconvenience where the amount of a wireless or a television licence is concerned, the loss could be substantial when related to a telephone account.
There are, of course, adequate and safer facilities for setting aside small sums towards the payment of telephone accounts, one such facility being that provided by the Commonwealth Savings Bank in a “ purpose “ savings account. Then too, the Post Office is always prepared to accept advance cash payments of £1 or more for credit to a subscriber’s service.
asked the Minister for Customs and Excise, upon notice -
– I have made investigations, and I now answer the honorable senator’s questions in the following terms: - 1 and 2. Before this film was screened in Canberra, I had been advised by the Chief Film Censor of its controversial nature. A 16-m.m. version of the film “ Operation Teutonic Sword “ was examined by the Commonwealth Film Censorship Board in December, 1958, and passed. It was classified as not suitable for children. The film is of a documentary type and consists almost entirely of news reels, many very old, showing General Speidel’s association with the Hitler regime. Whilst recognizing the propaganda nature of the commentary in many parts, the board did not consider that it contained matter which would justify rejection. The honorable senator will appreciate that it is impossible for the Commonwealth Film Censorship Board to ensure that every incident or comment in a documentary or semi-documentary film is strictly authentic or in accordance with fact. This would involve research which it would be impracticable for the board to attempt. I would bring to the honorable senator’s notice that it is not customary for the board to exercise political censorship. An impartial attitude has been maintained towards both antiCommunistic and Communistic propaganda films.
asked the Minister representing the Minister for Immigration, upon notice -
– The Minister for Immigration has furnished the following information: -
However, those residents of Great Britain who wish to travel to Australia for permanent residence under the provisions of the Australia/ United Kingdom Assisted Passage Migration Agreement, i.e., as assisted migrants, are required to - (a) complete an application form, which includes a comprehensive list of questions, to establish general eligibility for an assisted passage; (b) attend an interview with an Australian interviewing and selection officer; and (c) undergo a medical examination by a prescribed medical officer and, for all persons, fourteen years of age and over, an X-ray examination. The personal interview is undertaken by an officer trained and experienced in assessing a prospective migrant’s suitability and aptitude to embrace a new life in Australia. Each case is carefully considered in the light of the selection and medical officers’ reports before a final decision is given by a senior member of the staff of the Department of Immigration’s representative in Australia House, London.
asked the Minister representing the acting Minister in charge of the Commonwealth Scientific and Industrial Research Organization, upon notice -
Have any experiments been made in Australia similar to those reported to have been made in the district of Llandrindod Wells in Wales, where it is stated that twin calves are being produced by the use of a hormone costing 5s.?
– My colleague has furnished the following reply: -
The basic information on which this service in Wales has been developed is well known. Results have also been obtained in Australia experimentally. No special service to producers is likely to be developed for some time to come.
– In answer to a question without notice asked by Senator McManus on 30th September, I agreed to examine the action taken by the Government of Great Britain in respect of the importation of cheap books into that country.
I now inform the honorable senator that an examination of the relevant United Kingdom legislation reveals that the restriction was imposed under the import licensing regulations. I have also ascertained that the United Kingdom Government very recently abolished this import licensing restriction, and books are now freely admitted into that country without any restriction as to minimum value. In the circumstances, the United Kingdom Government would have to rely on some other legislation - for example, its dumping legislation - to deal with cases such as that to which the honorable senator refers.
– I present the report of the Public Works Committee on the following subject: -
Proposed construction of a Technical High School at Darwin, Northern Territory. 1 am sure that honorable senators will be pleased to know that the Public Works Committee has recommended approval of the proposal to build a technical high school in Darwin. The committee found, when it visited Darwin to inquire into the proposal, that the need for a technical high school in Darwin has existed from 1947. Since that time, there has been a good deal of improvisation to meet the increasing need for high school facilities in Darwin. The committee has found that there is evidence of definite overcrowding in the present school, which is an unsatisfactory state of affairs in the tropics. It is evident to the committee that, in order to provide adequate educational facilities for the rapidly growing population of Darwin, immediate action must be taken to implement the proposal. We have recommended that both the standard and the design of the technical high school should be equal to that of any other similar high school in Australia.
As I have previously pointed out to the Senate, Mr. President, I believe that what might be called a central anchoring point is needed for the people of Darwin. The committee believes that the provision of the proposed new technical high school will help to develop the spirit of citizenship in Darwin. It is expected that by the time the new high school is provided there will be in Darwin 500 high school students. The proposed building will accommodate only that number of students. The committee has recomended that consideration be given to the provision of additional educational facilities in Darwin in the future, even to the extent of providing a university college, lt has been estimated that, by 1970, there will be in Darwin from 100 to 200 duly qualified students in need of university training. However, only the future will determine the need for that.
The high school is to be built on what is known as Vesteys Hill. The historic Vesteys building has been demolished for the purpose of preparing for this high school. The site is centrally situated and will admirably suit the needs of the growing Darwin population. The committee made some recommendations about the position of the school and directed the attention of the Administration to the need to provide a master plan for the future development of Darwin. The school was originally designed to be built close to the seashore on what is known as Bullocky Point or Vesteys Hill, but the committee has recommended that the school be set back 250 feet to enable a scenic road to be built around the hill for the purpose of maintaining the foreshore for public use.
A lot of controversy took place over the provision of an assembly hall. Although the weight of evidence was very strongly in favour of the construction of an assembly hall complementary to the erection of a high school, the Administration itself was in the unfortunate position of having to choose between an assembly hall and the other needs of education throughout the Northern Territory. The committee feels that special consideration should be given in the budgetary considerations of the Northern Territory to the provision of an assembly hall in this school. The committee was confronted with the problem of air-conditioning. As has been pointed out before this is a very expensive item >n modern tropical construction work. However, as a result of the conditions which we noticed the children were subject to. and in view of the need to have conditions that are conducive to getting the b?st results in examinations which take place in November and December - a very hot season in the Northern Territory - the committee felt that air-conditioning is not only desirable but also completely justified.
Finally, 1 feel that the recommendation that has been put forward for the erection of this school, which will cost £455,000, is not unreasonable in view of the fact that costs of construction in Darwin are considered to be 60 per cent, higher than construction costs in Victoria. The committee inspected the Lyneham High School in Canberra and hopes that a school of equal status in design and aesthetic appearance will be erected in Darwin to provide for the needs of secondary education in that city in the near foreseeable future. The committee has much pleasure in submitting its report.
Ordered to be printed.
Motion (by Senator McKenna) - by leave - agreed to -
That leave of absence for one month be granted to Senator O’Flaherty on account of ill health.
Debate resumed from 27th October (vide page 1165), on motion by Senator Paltridge-
That the bill be now read a second time.
.- The bill before the Senate is that instrument which amends the Income Tax and Social Services Contribution Assessment Act by laying down the principles upon which income tax shall be paid by individuals and companies - both private and public - until the act is further amended. The Minister for Civil Aviation (Senator Paltridge), who represents the Treasurer (Mr. Harold Holt) in this place, has been good enough to circulate for the benefit of honorable senators an explanatory memorandum. On pages 3 and 4 of that memorandum ten items are listed which this bill seeks to amend. To many of them the Opposition has no objection. To some of them we would like to make comments, and others we will oppose. 1 think the best course for me to take now is to give the Senate some knowledge of the Opposition’s attitude to this bill, and I shall do so by referring to the items on pages 3 and 4 of the explanatory memorandum. The first item is the provision -
To exempt income derived by residents of Christmas Island from sources within the island.
The Opposition offers no objection to that. lt is merely a machinery amendment bringing Christmas Island to the same level as other Australian possessions, namely, Papua, Norfolk Island, New Guinea and Cocos (Keeling) Islands. Already the residents of the last-named four places are exempt from tax on income earned from working within those places. A further minor amendment exempts from tax income earned during the brief period when the island was under British control. That is the brief period from 1st January, 1958, when the island was released from Singapore control until October, 1958, when it came under the control of Australia. The amendment will merely bring the whole of the period into line with conditions operating in other dependencies of Australia. As I have said, this is something that had to come and obviously there is no objection raised to it.
The next proposal is -
To exempt pensions, annuities and allowances paid by the West German Government as restitution for Nazi persecution.
Already any capital amounts that have been received by these people - it has to be established that they were victims of Nazi persecution - are not taxable, and this bill merely brings further amounts that will be paid to these people into the same category as the capital amounts that have already been paid and which are now exempt from taxation. The Opposition offers no objection, of course. The only comment I make is that I notice that the exemption applies to amounts received on or after 1st July, 1959, and I merely raise the point that the Minister might care to ascertain - in order to make the position completely equitable - whether somebody has been receiving payments before that date. If the principle is to be accepted that payment should be exempted completely, then I suggest that the Taxation Branch should ascertain whether anybody did receive payments prior to that date. A check should be made so that they may be exempted.
I shall leave the third item for the time being. The Opposition has several objections to that and I shall come back to that item later. The fourth matter is -
To allow deductions for gifts to certain organizations in Australia.
Honorable senators already know that the taxation act is being used to encourage people to make gifts to charitable organizations or desirable organizations that may not necessarily be charitable organizations. This provision seeks merely to extend the list. It is quite logical that every one of the organizations mentioned should be added to the list. The national trusts in Western Australia and the Northern Territory are to be added to the list. The national trusts of the other States are already granted exemption, and therefore these organizations should automatically come into line. New organizations that now seem to occupy an important place in the community are marriage guidance councils. If these marriage guidance councils fulfil certain requirements, donations made to them will be exempt from tax. The Council for Jewish Education in Schools is also to be added to the list of prescribed organizations and institutions to which gifts of £1 and upwards are at present allowable deductions for income tax purposes. Exemption is already given in respect of Christian schools and there is no reason in the wide world why the same exemption should not be given in respect of Jewish schools.
I turn now to Clause 8, which will remove, in the case of a person over 65 years of age, the existing limitation upon the amount which may be claimed as a deduction in respect of medical expenses paid by such a person in relation to himself or in relation to his spouse, if she also has attained that age. I do not oppose the provision, which I consider to be very interesting. At present, of course, taxpayers may claim as a deduction medical expenses to a limit of £150 in respect of themselves and their dependents. That includes payments to hospitals, doctors, chemists and so on. It is now proposed to remove that limitation in respect of persons over 65 years. Obviously, this is a concession that will be somewhat restricted in its operation because, to qualify for it, a person must have reached the age of 65 years, must have incurred expenditure of more than £150 in the taxation period, and must be receiving an income sufficient to make the payment of income taxation necessary. Obviously, if a person’s income were too low to attract income tax, or if a deduction of £150 brought him into a non-taxable category, no benefit would flow from this provision.
Our criticism of the Government is that in this Budget especially - though not in this Budget only - assistance is given to the people in the community who appear to need it least, It is strange that the Government has granted a concession which may be enjoyed by some people - even wealthy people - merely because they are over 65 years of age, although their responsibilities in regard to the raising of children, the purchasing of homes and so on would by now have ended. One thing in its favour is that it may open the door so that later the general community also may enter. It seems strange to me that a benefit of this kind should be denied to younger people who are going through the most expensive period of their lives. Surely they are the ones who should receive generous and thoughtful consideration in the matter of taxation. Under this proposal, a wealthy individual may receive a benefit that is denied to a family that is battling along and facing financial hardship. However, by and large, we welcome the provision to the extent that it imports into the taxation laws a desirable feature which may eventually have general application. I realize that not many members of hospital and medical benefits insurance schemes would pay out £150 on medical and hospital expenses in a year, but not every one is a contributor to such schemes. Such persons could very quickly spend £150 during a period of ill health and they should certainly be protected.
I have already had something to say - during my remarks on the Budget - concerning the raising from £300 to £400 of the maximum amount of life insurance premiums and superannuation payments in respect of which deductions may be claimed. I shall return to a further discussion of that clause in a moment or two, because it is one that we intend to oppose in committee, but perhaps we should first try to clear the decks of the matters upon which we are in agreement. lt is proposed to alter the basis upon which deductions may be claimed in respect of the provision of housing and other amenities in mining areas, and the provisions are to have retrospective effect. Whenever I see retrospective legislation, it sets me thinking. As far as I can see, this proposal results from an application by the Mount Isa organization for certain deductions. The application was refused. The claimants went to the High Court, but their claim was rejected there also, lt appears that the retroaction, as the Americans say, of the provision will bring many thousands of pounds to the Mount Isa company. I do not say that that is necessarily a bad thing, but I should like the Minister to comment upon it: I should also like him to say whether my understanding of the position is correct.
The cost to outback mining companies of providing amenities such as dining halls, rest rooms, accommodation and the like, will be met in part by the people of Australia. It is always good to encourage decent working conditions, particularly in the mining industry, where the work is so arduous, but I do not think that it would be beyond the wit of the taxation authorities to ensure that at least a part of the benefit of this concession were handed on in the shape of lower rentals and lower charges for these amenities. I can see the difficulties in the way of doing that, but I do not think they are insuperable. I should not think that the purpose of the Government is merely to pay another subsidy to companies which are already making a lot of money out of mining. Therefore, the Minister might ascertain whether at least some of the benefit of the concession could go to the people working in the mines.
I return to the proposal to increase the maximum amount of life insurance premiums and superannuation payments in respect of which taxation deductions may be claimed. I note that the Minister has stated that this concession will be given to a large number of people - not to a small number, as was alleged when the Budget was presented. He told us that 25,000 people would benefit, but I invite his attention to the fact that there are in Australia 3,806,500 taxpayers. It will be Seen that, in fact, only a comparatively few people will benefit. I am still at a loss to understand why this concession should have been doubled in the last two years, although child endowment, the taxation allowance for wife and other things have been completely ignored. If the Government were to apply the rate of increase of this deduction to all other deductions, it would be imposing taxation on a very different scale this year. It is quite wrong to extend a benefit to the wealthier section of the community only. Any one who can afford to pay £8 a week in superannuation or insurance is obviously not in the lower or even in the middle income group. The benefit of taxation concessions should be distributed more equitably. Surely the Government cannot justify its action in permitting child endowment payments to stand still for ten years - except in the case of endowment for the first child - and in giving increased concessions to people who can afford to contribute quite large sums to insurance and superannuation schemes. The third item in the list of main features of the bill, to be found in the explanatory memorandum that has been circulated by the authority of the acting Treasurer, concerns the most controversial question of all. lt is a matter on which I shall, perforce, have to spend most time. It relates to section 77a of the act which was introduced only about twelve months ago, in October, 1958, shortly before the last general election. That section was incorporated in the act evidently in a great deal of haste. Its object was to make 100 per cent, deductible, for income tax purposes, all moneys invested in oil search, but it did not apply if the investment was in companies owned predominantly by nonresidents of Australia. Now, only twelve months later, that section is to be repealed and a new section inserted in its stead. We on this side will be having something more to say about this matter during the debate. In fact, I shall move an amendment at the committee stage.
I want honorable senators to keep in mind that although the provision to which I have referred was incorporated in the act only twelve months ago, its terms are now to be extended, firstly, so that in cases in which the provision did not apply it will apply in the future. That, of course, indicates the haste with which the provision was originally drafted and incorporated.
There can be no objection to the present proposal. Apparently, in respect of companies floated prior to 1st October, 1958, people were paying calls on shares and were not able to claim the amounts so paid as deductions for income tax purposes, whereas those who paid calls on shares issued by companies floated just after 1st October, 1958, could claim the deduction. In future, even though companies may have been floated before 1st October, 1958, the deduction principle will apply. The deduction will be allowable in respect of companies, whether they are wholly controlled by non-residents of Australia or not. If you invest in a holding company which in turn invests in oil search, provided that the company makes a declaration, the shareholders may receive the benefits of the deduction.
– Is the honorable senator against that?
– I shall deal with the matter in my own time and in my own way. I want to present a complete picture; otherwise the honorable senator may become confused.
The fourth important question relates to share dealing. As honorable senators know, there is a difference between those who buy a few shares, more or less for amusement, and those who are continually and habitually investing in companies with the idea of making a profit. The proposal is a machinery one to ensure that a double deduction is not allowed to stockbrokers and people of that kind. The provisions of the bill take quite a lot of unravelling, but I think I have stated the effect of the Government’s proposals reasonably accurately.
The first point I want to make. Mr. Deputy President, is that section 77a was introduced shortly before a general election. I suggest that it was the kind of proposal which should have properly been left to the incoming government to put into effect, whatever the political complexion of that government might have been. It represents a major departure from the whole of the provisions of the income tax legislation. The Government has no one to blame but itself if people are somewhat apprehensive when they see companies which deal in, perhaps, millions of pounds, getting amendments put through in their favour on the eve of an election. I shall say no more than that, but I repeat that if there is some criticism in this respect, the Government has only itself to blame. Obviously, at the time the provision was inserted in the act, it was a slipshod procedure. If the Government had taken the necessary time to examine the matter as it should have been examined, it would not now, twelve months later, be necessary to repeal the provision.
I emphasize that the proposal represents a departure from normal mining provisions. Normally, mining legislation provides that mines may write off the whole of their capital against profits. If a company commences a mine and loses money, there are of course no profits and nothing to write off. The taxation position is then not very much different from that of a grocery shop, or something of that nature, which loses money. But because of the nature of mining, and the fact that the asset is a wasting one. a special provision is made in the case of mining ventures. I do not quarrel with the provision. Tn fact, from time to time, I have chided the Government for not looking more closely at the Canadian act. But we are now embarking on something different in relation to the search for oil, in that, in the year in which you invest money, you may write off 100 per cent., which means that the Government is subsidizing companies to the extent of one-third of their investment, or 7s. 6d. in the £1, and individuals, depending on the amount of income tax they pay. Normal investors are allowed to deduct a third of their calls, though not of subscriptions and that kind of thing. The concession is being extended to cover every penny invested in oil search, whether through the payment of calls on shares, by way of subscriptions, or deposits. The whole of such funds are to be 100 per cent, deductible.
We hear a great deal about private enterprise and of the fact that as private enterprise must take all the risk, it therefore should be entitled to all the sains. That is rather a good argument for a government that says that it is a completely private enterprise government. But surely, Mr. Deputy President, there has been a tendency for this Government to move into the field of private enterprise and to take from the shoulders of the great private enterprise organizations at least some of their capital risk. In this instance, the Government proposes to do that to the extent of a third of the capital investment, which is not a bad subsidy, even for a risky business such as oil search. Surely the private enterprise argument over the years has been that the Government has said, “ All right. We are going to encourage you in a very risky business. If ever the gamble pays off, you are going to make tremendous profits “. Now the Government is moving into that field and is taking the risk from private enterprise. It is socializing the losses, or socializing the risks. It has always seemed to me that the advocates of private enterprise are dead against socialization of gains but all for socialization of losses. We have seen that tendency in relation to the fishing vessel that is to be used in the Great Australian Bight. When Mr. McMahon was Minister for Primary Industry, he said, in effect, “We will spend £168.000 for this purpose. If it is a failure, that will be bad luck. It it is a success, we will sell it to a private enterprise company “. That is analogous to the attitude that the Government is tak in 2 towards the risks of private enterprise in. oil search in Australia.
– They cannot lose the value of the ship, though.
– Not of the ship I agree, so far as capital expenditure is concerned. The honorable senator, with his knowledge of shipping, would immediately pick up that point. The whole £168,000 would not be lost, but I am merely using that as being analogous to the approach of the Government in taking the risk from the field of private enterprise that we are discussing.
Although I know that the search for oil in Australia is of great importance and something that we must do a great deal to assist, at the same time I question, why the Government has stepped so far out of line and is now bending over backwards in regard to the repeal of section 77a. I am reminded that Senator Arnold frequently advocates the desirability of extracting oil from shale. As I understand the matter, although that process is not a very economical way to procure oil, at least you are certain to get oil from shale. It will not be forgotten that the Government closed the shale oil refinery at Glen Davis, instead of encouraging an industry in which oil is certain to be found, because the processes are now known. Again - and I should like to hear Senator Scott on this - why does not the Government do something about assisting in the search for metals? The one thing that can ensure the development of the outback of Australia is the discovery of metals, and the Government should assist in the search for them. I suppose our friends in the Australian Country Party will ask, “ What about the primary industries, particularly in the marginal areas? “ These are all pertinent questions when we are considering something as radical as proposed section 77a.
At least this proposal is consistent with the Government’s policy, as disclosed all through the Budget, of giving all the concessions to the wealthy sections of the community. After all, in paying subsidies to those who have invested in the search for oil, we are not paying money to the small man in the street, we are subsidising the shareholders of wealthy companies, the people who have a good deal of money to invest.
If the Government really wishes to assist in the search for oil, we would much prefer that it come out in the open and expend more money on drilling teams of its own because they do the important work in the initial stages. There is a tremendous amount of preliminary work to be done. An enormous number of holes have to be sunk and innumerable surveys have to be made. Admittedly oil will not be found in the course of this work, but at least it provides a great deal of the information on which ultimately the drilling operations of the oil companies and the Government depend. If the Government made a direct outlay on this work, its action would not be queried as much as the present proposal is.
The important thing is that this is not a straight out subsidy; it is a concealed subsidy which the Government proposes to pay to a wealthy section of the community. Because of that, the Opposition proposes, when the bill is being discussed in committee, to seek an amendment which, although leaving the present heading to the provision will have for its objective not only the repeal of section 77a of the act. but also the deletion of the proposed section 77a as contained in the bill. The Opposition wants the Government to make a fresh approach to this problem. The Government’s present proposal seeks to pay money to a section of the community which should be able to carry on without any subsidy. The Opposition believes that what is in effect a socialization proposal will mean a loss to the community. Under it, onethird of a huge amount of money expended in the search for oil will be found by the people of Australia. We say that is not equitable, although certainly it is consistent with the whole trend of the Budget to hand money to the wealthy section of the community.
I could say much more, but as this measure might well be one that could best be discussed in committee, I shall reserve further comment until we reach that stage.
– I had not intended to speak on this measure, but I should like to answer some of the questions raised by my friend from Western Australia, Senator Willesee, who led the debate for the Opposition. When discussing encouragement by the Government of large companies to engage in the search for oil in Australia, we must think back to only a couple of years ago when it looked as though the whole search for oil in Australia might be abandoned. I suggest that the only way to induce people to continue the search for oil in any country where it has not been found in large quantities is to give them sufficient financial assistance to enable them to carry on. Two years ago, the company drilling for oil in Papua and New Guinea - I think it was the Vacuum Oil Company Proprietary Limited - said that operations would be abandoned at the end of that financial year. In Western Australia, the Ampol exploration company which was operating there was finding it increasingly difficult to get financial assistance from its overseas principals. Further, the small investors in Australia - the Australian people - were not taking up shares in the companies then operating. As honorable senators know, at one time, Oil Search Limited had a 20 per cent, interest in the company engaged in the search for oil in Papua and New Guinea. It now has only a 10 per cent, interest in the company. Ampol
Petroleum Limited has a smaller interest in the company engaged in the search for oil in Western Australia than it had previously.
The Government, being anxious to maintain interest in the search for oil in Australia, granted certain concessions. First, it provided that 100 per cent, of the money subscribed by private persons residing in Australia to companies engaged in the search for oil would be an allowable deduction for income tax purposes. Senator Willesee says quite clearly that once oil is found in Australia all money invested in exploration work and in installing equipment for obtaining and treating the oil will be an allowable income tax deduction until such time as the companies concerned show a profit on their operations.
Some of these companies have spent up to £15,000,000 in Australia but so far we have not obtained oil in commercial quantities. We must encourage the small investors, Australians who will invest £5 or £10 in shares in oil search companies, to come into the venture.
Senator Willesee says that we should not make concessions to holding companies which are prepared to invest money in the search for oil in Australia. I point out that some of these holding companies might be comprised of thousands of small shareholders who have invested their money in the search for oil. That being so, I cannot see why we should not encourage them. At the moment, the position is desperate, and I am sorry Senator Willesee has decided we are not doing the right thing.
He talks about socializing the industry and asks why the Government does not spend more money in the search for oil. I point out to him that the Budget provides for the expenditure this year for this purpose of £1,000,000 more than was spent last year. I remind him that officers of the Bureau of Mineral Resources are actively engaged not only in drilling operations but also in exploratory, mapping and geophysical work. They are helping wherever they possibly can in the search for this vital commodity.
I emphasize further that it is costing Australia in the vicinity of £120,000,000 a year in foreign exchange to import oil. A tremendous advantage is to be gained if we can discover in Australia sufficient oil to meet our own requirements, and the con cessions which the Government proposes granting will speed up the search for oil here. And we shall find oil! There is not the slightest doubt in the minds of all the geologists in Australia that there is oil in this country. The companies which are searching for oil believe that it is here. They do not say when they will find it, but they are confident it is here to be found, and the more money we spend, the more drill holes we put down in the search for this vital commodity, the sooner shall we find it. This is what the Government has decided to do in order to encourage the industry to keep this vital search going. I would say that these concessions were the only means by which the companies had been kept interested in the search for oil. We have to compete with other countries. I think there are seven or nine big oil companies in the world. They have the whole world in which to search for oil, and other countries are anxious to encourage the investment in oil search of the capital of these companies. We must compete with those countries and we are competing to-day by giving these concessions to the oil companies. We provide a subsidy, on a £1 for £1 basis, for deep stratigraphic drilling on approved new sites. This year, this subsidy will cost the Government over £1,000,000. That is an encouragement to these companies to keep operating in Australia and its territories. For this reason, I think the bill is a great idea. It is of considerable benefit to the oil companies. We must encourage those persons with money, whether they be small taxpayers or large taxpayers, to come forward and and to keep this vital search for oil going.
I think Senator Willesee said that he opposed the allowance as a deduction of money spent on housing in association with mines. He said, I think, that it would affect the plan for building homes in Mount Isa.
– I did not say that I was against it.
– I am sorry; I thought you did. Up to the present time, money spent on providing housing associated with mines in outback areas has not been an allowable deduction. The Government has now decided to allow this expenditure as a deduction, at the rate of 20 per cent, per year for a period of five years. I think it could be said rightly that in the old days mine owners never worried very much about housing for mine employees. To-day, at townships near large mines, particularly at Mary Kathleen and Mount Isa, housing conditions for mine employees are really excellent. The companies themselves expend large amounts of money in providing housing, and sometimes the Government comes to their assistance. A new mine generally has to supply its own houses. The provision will be of benefit to these companies, which will be able to write off over a period of five years the cost of houses provided for their employees.
I think I have dealt with the main objections raised by Senator Willesee. I had not intended to speak, but I wanted to clear up those points, which are of great interest to mining companies and companies engaged in the search for oil. If we can encourage the search for oil and also encourage mining generally, we shall encourage the earning of additional money for Australia and give to people who are living in our cities a better standard of living. The more oil we obtain and the more minerals we produce and export, the higher must rise our standard of living. The measure is designed to encourage mining companies to spend more money on housing and to encourage oil companies to continue to search for oil.
.- I think every honorable senator knows that the tax paid by companies, public and private, and the income tax paid by individuals, totals approximately £600,000,000 per annum. That is assessed after all deductions have been made. When this kind of legislation is under discussion, perhaps the time is appropriate to bring’ to the notice of the Senate some matters which concern people who consider taxation, direct and indirect, in its various forms. As £600,000,000 is paid in tax, approximately twice that sum, that is, £1,200,000,000 is income prior to making of the various allowable deductions. I could have a good deal to say on the matter of deductions in relation to the Income Tax and Social Services Contribution Bill 1959, but that is not the subject to-day.
– How do you arrive at the sum of £1,200,000,000?
– Deductions are allowable for certain expenses. A married man is allowed deductions for his wife, first child, second and subsequent children, and for superannuation and insurance. It will be found that those total approximately £600,000,000 per annum. I do not want to go further with this matter than to mention that the taxpayer whose income is £1,500 per annum, benefits considerably more from the deduction allowed for a wife than does a taxpayer having an income of £800 per annum. When it comes to considering the position in terms of tax, the latter benefits to only half the extent.
We are dealing with a bill providing for concessions to certain taxpayers. One provision relates to the inhabitants of Christmas Island. In the memorandum that was furnished at the time the bill was introduced, it is pointed out quite plainly that no tax will be applicable to income earned on Christmas Island. Persons living on Christmas Island will have to pay tax only on income derived from the Commonwealth, New Zealand, or any other part of the world. Reference has been made to the income received by certain citizens of the Commonwealth from the West German Government. We do not oppose the provision in relation to these people who are, perhaps, entitled to all the concessions that can be afforded to them.
A concession is to be made in respect of donations made to various organizations. These are listed in the legislation and there is no need for me to name them.
I wish now to refer to the increase of the maximum deduction allowed in respect of premiums on life assurance policies and superannuation contributions. It is proposed to increase the amount from £300 to £400. In the Minister’s second-reading speech he indicated that only .06 per cent, of the population would benefit as the result of this concession. If we examine the proposal we shall find that it is a very doubtful concession indeed. If I had a son 21 years of age who was in a financial position to pay a premium of £400 per annum for superannuation or life assurance I should definitely advise him not to enter into any such contract at all, because such a contract would return him an income of only £22 or £23 a week at some future date. The concession must apply to some persons in the community who in the past insured their lives for large sums. Let us have a look at the proposal. As 1 have said, in the case of a young man 21 years of age it is a very doubtful concession indeed. If he entered into a contract involving the payment of a premium of £400 per annum, it would mean that he was insuring his life for a sum of approximately £20,000 to be paid to him when he attained the age of 65 years. In other words, he would for a period of 44 years, pay a premium at the rate of £400 per annum to entitle him to the sum of £19,000 or £20,000, with bonuses, when he reached the age of 65 years. If he then invested that £19,000 or £20,000 at 6 per cent, interest he would receive a weekly income of about £22.
Let us have a look at what has happened during the last ten years. In 1949 the basic wage was £6 9s. a week; to-day it is £13 7s., or more than double what it was ten years ago. No one can say with certainty what the basic wage will be in the year 2003, which is 44 years from now. If the basic wage continues to increase during the next 10, 20 or 30 years at the same rate of increase as has taken place during the past ten years, an income of £21 or £22 a week will be a negligible sum, and will not provide the insured person with sufficient to enable him to sustain himself for even a half of a week, and, therefore, I repeat that the increase of the maximum deduction in respect of life assurance premiums and superannuation payments from £300 to £400 a year is a doubtful concession indeed.
I said earlier, when referring to the value of these deductions, that a married man with an income of £800 a year is entitled to a deduction of £143 for his wife. In terms of taxation that means about £21. To a married man with an income of £2,000 a year the concession in terms of taxation amounts to £42 a year. In other words, the man with the larger income mentioned receives twice the benefit that is derived by the man on £800 a year.
There are other matters covered by this bill.
– If I were you I would not bother about mentioning them now.
– Senator Scott was hopelessly lost when he was trying to impress on the Senate that the resources of companies that were exploring for oil in Australia were exhausted, and that unless some financial assistance were given to them, or they were allowed concessions, they would have to cease operations.
– Did not the honorable senator read statements to that effect in the press about two years ago?
– The honorable senator hopes that by granting these concessions the oil companies will continue to explore for oil in Australia. We are all agreed that the discovery of oil would benefit the economy of the Commonwealth, and that in a very short time Australia would be a different country altogether from what it is now. It would mean the saving of £150,000,000 a year which it now costs to bring oil into Australia from overseas to meet our requirements. That is one of the things of which Senator Scott lost sight. The honorable senator appreciates what the discovery of oil would mean to this country, and he knows what the returns to the company which discovered oil here would be; yet this legislation makes no provision whatever for a return to the Commonwealth! of the concession that is being granted under it. If we are to grant subsidies to companies exploring for oil, and practically exempt them from paying taxes, the Commonwealth should look for a return from them in the event of their search for oil being successful. If they discover oil in payable quantities they will be in a position to refund every penny that they will gain under this legislation. However, I suppose that my proposal is too much to hope for.
As some of the clauses mentioned in the memorandum furnished to honorable senators when the bill was introduced into the Senate will be discussed when the measure reaches the committee stage, and having said what I have already stated concerning this bill, I shall now resume my seat.
.- This bill imposes a form of taxation known as direct taxation. In my view it is a more desirable form of taxation than is indirect taxation, because I believe that it is fairer, particularly to those persons in the community who are not overwell endowed with this world’s goods. I am not very happy about one provision of the bill, namely, that which provides for a slight reduction, or rebate, of 5 per cent, on the tax on incomes.
– The honorable senator is discussing the wrong bill.
– The bill dealing with income tax rates has still to come before us.
– If I may refer generally to the subject of taxation, I shall go back to the point that I was making. In my view, direct taxation is at all times a more desirable form of taxation than is indirect taxation. Most people who have examined the incidence of taxation in our community realize that there are certain forms of taxation to which the Government appears to be wedded. They are forms of indirect taxation which, of their nature, are grossly inflationary. As examples of those forms of taxation, I instance the sales tax and the pay-roll tax. Both of those taxes were originally imposed, we were told, to meet conditions of crisis, but as has happened with many forms of taxation imposed for temporary purposes, they have become practically permanent. They are vicious forma of taxation, in my view, because they are grossly inflationary and have a cumulative effect. They extract from the community far more than the amount of money actually required by the Government for its purposes. Therefore, I say that I believe that it is far better for a government, in imposing taxation, to rely on direct taxation rather than on indirect taxation.
The bill that has been placed before us indicates that the Government is sticking to the system of taxation which has been in operation for many years, the effects of which on the community have been far from good. Tt indicates that the Government has little intention of striking out in the direction of reforming our system of taxation. I believe that it ought to have been possible for a government which has been in office for ten years to devise a better system. I understand that the Government is appointing a committee to examine the field of taxation with that in view. I am sorry that it took so long for the committee to be appointed. I am sorry, also, that it appears to represent only one section of the community. I believe that a committee appointed to examine taxation ought not to consist merely of economic or financial experts; it should include also representatives of the less privileged sections of the community. 1 think that the committee on taxation would have been all the better if it had included a representative of the trade unions, and possibly also of the housewives. The latter could have put forward a novel view, which ought to be considered. If a government imposes taxes, it ought to consider taxation, not merely from the point of view of efficiency and moneyraising, but also, from the point of view of its social effects on the community in general.
I believe, therefore, that this bill represents a view in relation to taxation which has been held by the Government for too long - one under which our community has not progressed as it should have done. I regret that other forms of taxation have not been given greater attention. Having made my point, I shall reserve the other remarks that I wish to make on taxation until the other income tax measure comes before us for consideration. I believe that there is ample scope for improving our methods of imposing taxation, and that the Government could have done a far better job in this field.
– I shall not delay the Senate for very long. I want to discuss some of the features of the bill that is before us. and to support some of the thoughts that were expressed by Senator Willesee. T know that there are a lot of difficulties associated with the search for oil, but I believe that there is a proper basis on which assistance can be provided by the Commonwealth Government in that field. I do not think that, if oil is found in Australia, the Commonwealth should, so to speak, walk out at that point. The French Government, for example, has laid it down that foreign companies which have been given concessions to search for oil in Algeria, must ensure that 30 per cent, of the shareholding is held by French interests. T hope that if oil is found in Australia, the Australian Government will alter its policy and provide that more protection shall be given to Australia’s interests than is at present being given.
I believe, as I think we all do, that it is very important to our national development to encourage the search for minerals and for oil. We differ only as to the way in which encouragement should be given. In the case of mining, we allow expenditure on housing and other amenities provided for the employees of mining companies to be allowed as a deduction for income tax purposes over five years. I agree with that. Of course, as Senator Willesee has said, those companies must make a profit before they can gain the advantage of this taxation deduction. We must remember that modern mining ventures are very big enterprises. When minerals are discovered a long way from the centres of population, the preliminary expense of developing the deposits is tremendous. We all know what has happened at Mount Isa. A city has been built there. An even better example is the case of Mary Kathleen, where uranium is being mined. In that instance, a city had to be on the sands, and rivers had to be dammed in order to obtain a water supply. The whole of the work necessary to ensure that workers brought to Mary Kathleen from populous centres would be provided with good amenities and conditions was carried out within a period of from twelve to eighteen months. I am glad to know that the Government is considering what can be done from a taxation point of view in relation to large expenditures on such projects.
The provision contained in clause 8 in relation to medical expenses is very interesting. By this clause, the Government is removing, in the case of a taxpayer who has attained the age of 65 years, the limitation of the taxation deduction for medical expenses that he may claim. This is good in its way, but, as Senator Willesee has said, something should be done for the fathers of young families, who are carrying a great burden. As Senator Willesee also mentioned, normally at the age of 65 years a person is faced with fewer responsibilities than a young man. In the ordinary course of events, a man of 65 years of age has completed the purchase of his home. In most instances, his children have grown up, have left home and have married. Consequently, his financial commitments are not as great as those of a younger man, who has not yet really made his way in the world. I believe that a young married man who is buying his home and rearing a family is more entitled to taxation relief in this way than a person 65 years of age. I do not disagree with this concession, but 1 think that more consideration should have been given to the people in the lower age groups. I shall reserve my further remarks in that connexion until the Income Tax and Social Services Contribution Bill comes before us for consideration.
I should like now to make some comment in relation to the proposal to increase from £300 to £400 the maximum permissible income tax deduction for life insurance premiums and contributions to superannuation funds, &c. The amazing thing is that a proposal of this kind seems usually to follow an increase of parliamentary salaries. I am convinced that many people outside believe that members of Parliament have an arrangement whereby, when their salaries are increased, the amount of deductions from their salaries for superannuation contributions which is allowable as a tax deduction is increased automatically. I would not think that half a dozen members of the Parliament know about this. I have often wondered why the amount of this deduction for income tax purposes - premiums paid to assurance companies and superannuation funds - seems to be increased automatically about the time members of Parliament receive an increase in salary. There must be a reason why this amount is increased. 1 should like to know just how it happens. Does the Government receive representations from assurance companies from time to time or does it receive representations from selected groups of citizens in the community? Does it receive representations from public servants who have also had salary rises, and consequently increase their superannuation payments, or does it, just by instinct, increase the amount at this particular time with the result that members of Parliament receive the blame for it? If the Minister has available some background information on this particular matter, I personally would be very grateful to get it. I am sick and tired, every time there is a salary rise, of having it said to me when I walk out into Pitt-street or George-street, “I see you are increasing the amount of the allowable deduction for insurance purposes. You are a very smart fellow”. I am not a very smart fellow, but some one else is, and I should like the Minister to tell us the position in regard to this matter.
– in reply. - The big points at issue between the Government and the Opposition in this bill are the provisions relating to the taxation of enterprises engaged in the search for oil and the increased amount of insurance premiums and superannuation that may be claimed as a deduction for income tax purposes. I think that Senator Scott put the viewpoint of the Government correctly in respect of its approach to the oil industry. I am a little surprised at the attitude of the Opposition in this matter because it is only a few weeks ago that another bill was before the Senate relating to the search for oil, and the Opposition charged the Government with not doing enough to encourage the search for oil in Australia. Here is a practical measure which will have the effect of attracting investment of capital to this industry, yet the Opposition opposes it!
This opposition appears to spring from a fear that some one may get an additional benefit, whether it be the big investor who is prepared to put at risk in this very chancy enterprise a large amount of money, or whether it be the small investor who is prepared to invest a small amount in this industry. The dominating fear of the Opposition is that some one may receive some advantage. I submit, with respect, that that avoids the real point at issue. It does not matter if some one who is prepared to put money at risk does in fact receive a dividend as the result of his investment. The real purpose of the legislation is to get capital invested in the oil industry so that we will be able to pursue this very important search for oil with ever-increasing vigour.
– To keep people trying!
– That is the purpose. This particular provision has the advantage of marrying Australian investment with American or other overseas investment, and also of encouraging the importation of technical know-how. Because of that, I thought that the legislation would receive the support of the Opposition, particularly in view of its recent criticism that the Government was not doing enough. I must say that I am sorry that the Opposition is not supporting the measure.
The other point at issue seems to be the proposed increase, from £300 to £400, in the amount of life assurance premiums and superannuation that may be claimed as deductions for income tax purposes. In my second-reading speech I referred to the fact that some 25,000 people in Australia would benefit from this provision. The point has very validly been taken by Senator Benn and Senator Willesee that those 25,000 people do not represent a big proportion of Australian tax-paying bodies. Well, that is true enough; they represent a very small proportion of the tax-paying body. Let me say at once that they comprise, in the main, people who enjoy incomes in advance of the basic wage, and not even small incomes. But I say quite specifically that that is no reason at all why these people should not get the advantage of a deduction of this type. This class comprises those persons who, in the main, by investing in insurance and the like, make provision for their own future. They arc the salt of the earth. They are the people who are able to look after themselves and who do look after themselves. If this provision assists them then it is indeed a very good provision. It assists a category of person who possibly has been too long forgotten by all governments. These are people who do not get concessions and do not seek concessions. This is the sort of provision which operates very much to the benefit of those worthy people, few in number though they may be.
Those were the only points raised by the Opposition about which I think I should speak at this stage of the debate. Senator Willesee did raise a number of minor points, but I consider that most of those can be more appropriately dealt with at the committee stage.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 4 - by leave - taken together, and agreed to.
Clause 5 - (1.) Section seventy-seven a of the Principal Act is repealed and the following section inserted in its stead: - “77a. - (1.) - In this section -
– I move -
Leave out all words after “repealed “.
This, as the Minister for Shipping and Transport (Senator Paltridge) said, is the most controversial clause of the bill. I point out that if the amendment is carried, we shall not only reject the proposed new section 77a, but also repeal the present section 77a, which was placed in the act last year. The Minister treated us to a figment of his imagination and then proceeded to destroy the argument he imagined we had put forward. He said that we completely ignored the fact that there was a need to encourage the search for oil. He said also that we were afraid that some one might receive an advantage from this proposal. That was neither said nor implied. It was a figment of the Minister’s imagination, and did him little credit in the field of debate.
If he will refer to my actual words, he will see that I objected to the fact that this was not even a direct subsidy, but was a concealed subsidy, to a wealthy section of the community. 1 said that we would prefer to see this money used directly in the work of oil search. I said that the Government had its own teams operating in that field. I said that this money could take the form of a contribution towards the oil search work of the Government’s own teams, which are already doing such a splendid job in the field. I am sorry that I have to repeat what I said, but the Minister seems to have been singularly deaf to my words. That is clear from the way in which he described my speech in his reply. I said that, by its very nature, oil search demanded that an organization should go into areas where it was fairly certain that oil would not be found. I said that it was necessary to obtain a mass of information by drilling holes in places where there was not much chance of finding oil. I pointed out that this was a field which the Government was already subsidizing, and that it was certainly an activity where the Government could make a direct contribution rather than provide a concealed subsidy.
Senator Scott said that oil search activities in Australia looked like ending completely, and really needed a lift such as this. I remind him that already between £20,000,000 and £30,000,000 has been spent, by way of private investment, in the search for oil. We are suddenly told now that, under section 77a, we must subsidize these people to the extent of one-third of the investment in the case of public companies, and up to 13s. 4d. in the £1 in the case of the top-line operators. Any one investing in oil search would be paying tax at least at the rate of 10s. in the £1. Even after such large sums have been spent, we are told that we must offer these extensive taxation concessions to help oil search. I throw back in the teeth of the Minister the suggestion that we are worrying about some one getting something out of it. I repeat, this is a concealed subsidy. It should not be concealed. Any money which is spent towards the very desirable end of oil search should be spent directly. Moreover, the Government should stand up to its expenditure and not run away from it, as appears to be the case from this clause of the legislation.
.-1 should like the Minister to enlighten me on one aspect of the proposal, which, as I understand it, gives a taxation benefit, not merely in respect of moneys that are actually applied to the finding of oil, but also in respect of moneys that are subscribed to an oil finance company - whether or not those moneys are passed on to be spent in the actual work of oil discovery. I should like the Minister to tell me whether he thinks that that is an anomalous situation in income tax law. It seems to open a loophole of wide dimensions if, to-day, one can, as a large investor, subscribe money to an oil finance company and have it spent next year or the year afterwards in the payment of wages, the procurement of plant and so on. The provision seems to give expression to a principle that has been sought in vain in many other fields of endeavour - the laying by of part of one’s income so that it can be disclaimed in the fat years and called in for taxation purposes in the lean years.
I am’ not frowning on such a proposition. I believe that we might consider accepting a five-year average of incomes, as being a lesser deterrent to effort on the part of those who are still so misguided as to earn income by effort and must pay the exorbitant taxes that are levied thereon. I should like the Minister to explain whether the simple subscription of money to a finance company entitles the company and the shareholder, or one of them, to a taxation concession such as I have described. If so, is that not anomalous?
– I think it is worth while for the committee to address itself to the very complicated provisions set out in clause 5. Its first purpose is to repeal the existing section 77a, which gave to those investing in the search for oil a favoured position, not occupied by those engaged in mining or any other such activity. The Opposition did not advert to section 77a, on 21st October of last year, when it was before us. The reason could only have been the end of session rush and the fact that an election was in the offing when the measure went through. They are understandable reasons why particular attention was not focussed upon the provision then. 1 would offer a comment about the use of the income tax laws for national and social purposes. Primarily, the tax is one to raise revenues for the general purposes of the Government, but down through the years the legislation has been turned into an instrument for achieving all kinds of extraneous purposes. The promotion of oil exploration is thoroughly desirable in itself, but I question the wisdom, from a parliamentary viewpoint, of using this legislation to foster the family unit, to encourage primary production, to encourage oil prospecting and so on. The difficulty about that approach is that one loses sight in the Parliament of what is really happening, and of the cost to the country of the various benefits that are provided, for defence purposes sometimes, for national development sometimes, and, occasionally, for very good social purposes. One loses sight of the cost. I rather deplore the too free use of the income tax legislation for every conceivable purpose. It is a much more clean-cut proposition if the Parliament brings down a bill to provide a specific amount for particular purposes, and lays down the principles which shall govern its application. In this case, the Treasurer (Mr. Harold Holt), has told us that the cost will be £1,250,000 per annum. Of course, one cannot accept that figure with any confidence. Returns in respect of claims relating to last year’s transactions would not yet be analysed. In many cases, they are only now in the process of being assessed for income tax. The statistics relating to those transactions will not be known for a considerable period and will not be available to us for two years. I suggest that it is almost impossible to forecast with any degree of accuracy just what this concession will entail. I submit to the committee that we are legislating blindly. That is another bad aspect of the purpose that is sought to be achieved by this oblique, indirect amendment of the income tax legislation. We of the Opposition would certainly have opposed section 77a, as it was incorporated in the act in October, 1958, had our attention been focussed on it.
I want to join Senator Willesee in commenting upon two statements made by the Minister. He said that the Opposition appeared to be afraid that some one might receive something from this particular provision, and he also said that we were accusing the Government of not doing enough. He stated that that was not the case. I support the proposition that the Government is not doing enough in relation to oil search, and contradict the Minister’s contention. Senator Scott, in the course of his remarks to-day, indicated that, within the last two years, some of the major oil companies had threatened to withdraw from oil search in Australia. This country has to face the fact that that possibility always exists; that those who spend huge sums in the search for oil, without result, may get tired of the process and withdraw, taking their precious knowledge with them, knowledge that might be available and useful here. That seems to point back to what we have claimed ought to be done. We of the Opposition, I say quite frankly to the Minister, do not care who finds oil in this country - whether it is found by the Government, by overseas interests or by local interests. We would have a preference in relation to that matter, but in truth, what we are concerned about is to find oil and to find it quickly. I shall not repeat all the reasons why the need to do that is a matter of extreme importance and urgency for Australia. I think we all appreciate the need to exhaust every possibility of finding oil, and to do so as quickly as possible. 1 should like to incorporate in what I say now the remarks that I .made in this place, on 1.2th August last, when we had before us a bill to provide £2,000,000 by way of subsidy to oil companies engaged in stratigraphic drilling, work of vital importance in. the search for oil. Our complaint at that time was that the Government, instead of leading in the search, was following on the heels of private enterprise, in a field in which there was completely uncoordinated effort. One finds, on looking at the map and noting the permits that have been allotted, that there are all kinds of companies which hold areas, one next to another, each one working separately and independently, and each doing its best to keep from the others any valuable information that it may get. The viewpoint that I put on behalf of the Opposition, on 12th August last, is still the outlook of the Opposition. It is that each sedimentary basin in Australia should be systematically and scientifically examined, and that all the types of examination that are necessary and all the various kinds of technical surveys, should be made. That would give a lead. Our charge against the Government, I repeat, is that it is not leading in this search. The Government is leaving it to private enterprise just to gamble and take the risks. It is happy to let private enterprise lead in this vital matter. We say that the mapping division and our Bureau of Mineral Resources should be staffed and equipped to do a systematic, scientific job in relation to each of the great sedimentary basins where oil may be found. Those basins are generally known. The quickest way, in the end, is to do the work systematically, thoroughly, and with coordination.
We opposed the oil subsidy of £2,000,000 for the reasons which I gave when the relevant bill was being debated in this chamber. I said that we were merely following on the spasmodic efforts of private enterprise, that there were many companies in the field and that their activities were in no way coordinated. I should like the Minister really to appreciate the view of the Opposition that, above all, we want to help to find oil. We think that the Government is going about the search in the wrong way by providing a £2,000,000 subsidy in a limited field of drilling, a necessary but difficult field which is not attractive to most of the companies doing the actual exploration. I urge the Government not to give this proposed indirect subsidy which is, in effect, saying to the people of Australia, “ If you are a resident and you subscribe to oil exploration you may make a deduction, in the year in which you subscribe, of the total amount that you pay for oil exploration “. That may or may not attract more people to the search. It is not the answer to our need, which is to get on with the job systematically and scientifically. I do not want the outlook of the Opposition in this matter to be misunderstood. I repeat that we would have opposed section 77a, and accordingly, we are opposed to this particular provision. We are prepared to retain so much of the clause as provides for the repeal of section 77a.
When one looks at the purpose of the Government in relation to the amended section 77a, it is difficult to find any logical objection to what is being done. That is, if one accepts the Government’s approach as the right approach to the stimulation of oil search, but we do not. However, assuming that that is the right method, we cannot object to letting in for the full deduction amounts paid after 1st October, 1958, whether or not the shares in respect of which they were paid were allotted before or after that date. We do not object to that. Logically, it is hard to find an objection to the proposition that major oil companies that have established subsidiaries here, which are engaged mostly in the importation and sale of petrol, and which are actually companies resident and registered in Australia, should be in any different position from the individual taxpayer who puts money into oil exploration. I cannot understand why they should be, so I could not oppose the proposition on any logical ground. I think it is quite proper that that extension should be made.
The question raised by Senator Wright is particularly interesting. We have in this bill a long series of provisions - sub-sections (6.) to (13.) of proposed new section 77a - which deal solely with interposed companies, as they are called in the explanatory memorandum of the Taxation Branch. Those are companies that merely collect funds to be passed on to other operating companies. The first matter that I put in regard to the interposed company is that before its shareholders may derive any of the benefits of the proposed tax concessions, the company must be exclusively engaged in oil search. That is set out in proposed subsection (6.). It must be a company formed in Australia for no other business than that of mining or prospecting operations for petroleum, the treatment in Australia of petroleum obtained from mining operations carried on by the company, or the provision of capital to petroleum exploration companies. That company has to make a choice, as has every company engaged in the search for oil in Australia. If it wants to enjoy the benefit of section 123a, as proposed to be amended, which will enable it, out of any earnings or income derived from the winning of oil, to offset its unrecouped capital expenditure, then it cannot allow this benefit to be passed on to the individuals or companies who subscribe its capital. It must make up its mind whether it wants to retain the benefit of section 123a or whether it is prepared to make the declaration set out in the clause and thereby enable those who subscribe its capital to get the benefit provided under the clause.
But if a person subscribes to an interposed company, which Senator Wright refers to as a finance company - and I think that will be the position of the interposed company - then, as I understand the clause, before such a shareholder can benefit, two things must happen. That company itself must make a declaration as to the purpose to which the moneys will be applied, and, secondly, the actual company engaged in the search for oil, and to which these moneys are translated in due course, must also make a declaration.
– Order! The honorable senator’s time has expired.
– I rise merely to permit Senator McKenna to continue his speech.
– I thank Senator Wright. I had almost concluded what I wanted to say at this stage on interposed companies. I have indicated that whether an entity in Australia - one of the overseas subsidiaries or an individual - who subscribes to the interposed finance company is to get the benefit of this deduction, depends in the first instance upon the finance company. If it is prepared to make the declaration specified in the clause, these benefits may flow to the investor but only if, again, the oil search- company in which the funds are invested also makes a similar declaration. Both of them, in making a declaration, deprive themselves of the right, if they find oil and make profits, to recoup the capital amount expended and unrecouped to the extent of the amount involved in the taxation concessions. I ask the Minister to say whether I put it accurately.
The clauses of the bill are complicated and not easy to follow. I should like for a moment to take the opportunity of expressing my very keen appreciation of the method of presentation of bills by the Taxation Branch. Always they are models for every other department in the Commonwealth to follow. They are invariably accompanied by a very full explanatory memorandum. They are not easy to follow, but that is not the fault of the person who drafts them; it is due to the difficult and complicated nature of the matter with which they deal. I take this opportunity to express to the Commissioner of Taxation and his staff my appreciation of the help they give us in that direction.
The only other matter to which I should like to refer is the fact that the definition of “ petroleum “ in the proposed section with which we are concerned confines the benefits that are provided to the search for petroleum in its free state. In other words, it specifically excludes oil from shale, or from brown coal. I put the view that oil from those sources can be of vast importance in this country where, hitherto, wc have found no free oil. Again, on 11th August last, I dealt at length with that matter and said that that type of development should be stimulated. I pointed to America where, despite the existence of vast resources of oil-, the Americans are closing down oil wells, importing oil to conserve their own resources, and spending huge sums on developing oil from shale. I should think that in a country where we have scarcely produced a gallon of oil except from shale or brown coal, those are developments which, above all, ought to be encouraged. We may well be able to drop them if we find free oil, but I think that even in this matter the Government is making a too narrow approach to the great problem of obtaining oil for our needs.
– Dealing first with Senator McKenna’s query as to the accuracy of his description of what happens with relation to the declarations of interposed companies, let me say that his statement of the position is completely correct. Senator Wright’s query relates to much the same thing. He, too, stated the position accurately. It is true that the subscribers to the interposed company which subscribed money to the company actually conducting the search for oil, are allowed a deduction equal to the amount of their subscriptions if declarations are made to the satisfaction of the Commissioner of Taxation. Senator Wright said that that was rather unusual. I suppose it is not usual, but, in order to attract investment, the Government thinks that a departure of this kind from the usual practice may well prove to be really worthwhile and to have a stimulatingeffect! on the investment of capital in the search for oil.
Senator Willesee took me to task for having misquoted him. He then went on to say that our proposal was in effect one to pay a hidden subsidy. My understanding is that if there were a hidden subsidy some one would gain an advantage. And that was the way I put the proposition when 1 last spoke on this matter. I can only repeat that there will be no advantage until such time as oil is discovered. This arrangement is merely a device for providing an attraction, or an incentive, to the investor, large or small, to invest in this important work.
I am well aware, as is every memberof the Senate, of the importance of the very valuable work being done by the Department of National Development in compiling scientific data which is proving so valuable to the oil interests in Australia That programme, which has been pursued with vigour under the administration of Senator Spooner, will, of course, be continued. But that does not meet the requirement of additional capital which will corns only as a result of some incentive of this kind. I put to Senator McKenna who preferred a subsidy to a taxation incentive for this purpose, that a subsidy payment would not have the same effect upon or the same attraction for the individual investor as an arrangement of this type. The heart of the attraction to the investor here lies in the fact that at the time of investment he can get a taxation deduction directly and for himself.
Question put -
That the words proposed to be left out (Senator Willesee’s amendment) be left out.
The committee divided. (The Chairman - Senator the Hon. A. D. Reid.)
Majority . . 9
Question so resolved in the negative.
Clause agreed to.
Clause 6 agreed to.
Clause 7 (Double deductions).
– I rise merely to get from the Minister an explanation of the operation of this provision. I understand that it has application to share dealers. Perhaps he can assist us by explaining just how the amended section will operate.
– I refer the honorable senator to the following passages in my second-reading speech: -
Correspondingly, provision is made, as before, to curtail the deduction of capital expenditure which would otherwise be allowable to the oil exploration company under the special mining provisions of the Assessment Act in the event of the discovery of petroleum in commercial quantities.
In conjunction with these new proposals action is being taken to ensure that shareholders will not be deprived of the incentive to subscribe capital for oil exploration. At present, a share-dealer, in common with other taxpayers, is eligible for the deduction of the capital he subscribes for oil exploration. When however, the share-dealer sells his shares the taxable profit or deductible loss on those shares is calculated on a basis that does not permit of the allowance of the amount he has outlaid in acquiring the shares. Provision is being made accordingly to preserve the allowance to sharedealers in these circumstances.
– Do you know what will be the mechanical application of it?
– Page 16 of the circulated notes explains in detail what is a fairly complicated procedure.
– I suggest that the Minister think about a particular proposal. If a share-dealer, having subscribed £1,000, is allowed the total amount as a deduction, what will happen if he sells the £1,000 worth of shares for, say, £1,500? I hope that the Minister will be able to give the committee the explanation that is sought.
Sitting suspended from 5.45 to 8 p.m.
– Prior to the suspension of the sitting for dinner, Senator Willesee had posed a question to me in respect of clause 7, and had asked how it would actually work out. I now have the information available, and I hope that it will satisfy him. Under section 77a, the long-term investor and the share dealer may each obtain a deduction for capital contributed to an oil exploration company. If the investor sells his shares at a profit, he pays no tax on the profit. The amount allowed as a deduction under section 77a is not adjusted. On the other hand, the share dealer is taxed on any profit he may make.
In the generality of cases, profit is the sale price of the shares less their cost. However, the present law - section 82 of the Income Tax and Social Services Contribution Assessment Act - operates to deny the share dealer this basis of ascertaining the profit on shares taken up in an oil exploration company that makes a declaration for the purposes of section 77a. In effect, the proceeds of the shares, not merely the profit, is taxed. There is accordingly an adjustment that withdraws the benefit of the original deduction, but only in the case of the share dealer. The amendment removes this anomaly.
An example may be given. For this purpose, an average tax rate of 8s. in the £1 is adopted. The investor, who is allowed a deduction under section 77a of £1,000, saves £400 tax. There is no adjustment when the shares are sold. The share dealer, allowed a similar deduction, effects a similar saving. When, however, he sells the shares for, say, £1,500, he pays tax, under the present law, on the whole of the £1,500. The tax is £600, compared with the earlier saving of £400. Under the proposed amendment, the amount to be taxed on the sale of the shares will be £500 - that is, the sale price, £1,500, less the cost, £1,000. The tax imposed will be £200. The net tax advantage to the share dealer is accordingly £200 - that is, the original tax saving of £400 less the subsequent tax payable of £200. The investor who subscribes £1,000 retains the tax saving of £400, even when he sells the shares.
S?nator WILLESEE (Western Australia) [8.3]. - I thank the Minister for his explanation. He took the case of an investor and a share dealer both investing £1,000 in an oil exploration company. Will he inform me whether the share dealer would be advantaged to the same extent if he invested £1,000 in an ordinary mining company? The modern practice in relation to shares in mining companies is that an investor is required to pay, say, ls. a share on allotment. The remaining 19s. per share may be called in at any time, but sometimes the call is made immediately. Why the Government has not got on to this sort of thing before, I shall never know. It is obvious to any one who studies the stock exchange list that this is current practice. I should like the Minister to inform me whether a share dealer would be any better off in handling oil search shares than normal mining shares, when nineteentwenfieths of the investment is on call, on which he would receive only one-third. I realize the necessity to differentiate between a casual investor and a share dealer, but 1 amnot clear whether a share dealer would be disadvantaged by investing in oil search shares instead of normal mining shares.
– I take itthat in the case of ordinary mining shares, to which Senator Willesee referred, an investor or a share dealer would be allowed one-third onlyof the amountsthat he contributed, whereas in relation to oil search shares, under proposed new section 77.A both of themwould get a 100per cent, reduction.
– At the point of time when they contribute the money, in the case of ordinary mining shares they are entitled to a one-third deduction in the year in which they pay it. In the case of oil, they are entitled to a 100 per cent, deduction, as I understand the position.
– Yes, that is so.
– I am obliged to the Minister for the detailed example that he cited. The effect of the proposal is to put the share dealer into exactly the same position as a man who subscribes for an oil investment and lets his shares stand. They finish up in identical positions, in that they both get the full allowance of £1,000. They can deduct that. The result, on the facts that the Minister has put to us, is that the share dealer would get an allowance of £1,000 - an allowable deduction of £1,000 - and he would return £500 as income, not £1,500. The net result of the whole transaction to him is that he gets an allowable deduction of £500, effectively, on his whole income.
– It is not quite correct to call it an allowance. Would it not just be a deduction?
– It is a deduction of £500.
– First, he is entitled to an allowable deduction of £1,000 - the amount he contributed. When he sells the shares and makes the profit of £500, that is included as income. His income tax position is that he gets an allowable deduction of £1,000 and he returns the £500 profit as income. Putting those two items together, he has an allowable deduction of £500. There are actually three propositions in order to reach that stage.
Clause agreed to.
Clause 8 agreed to.
Clause 9 (Life insurance premiums, &c).
– This controversial clause was referred to, not only during the secondreading debate on this bill, but also during the Budget debate. The effect of the clause is to increase from £300 to £400 the allowable taxation deduction for superannuation contributions and life assurance premiums. On two occasions, the Minister has said that 25,000 taxpayers in Australia will be affected, and he has agreed that, as a proportion of the 3,850,000 taxpayers in Australia, that is not a large number. I should like the Minister to tell me how he arrives at the figure of 25,000. Are we to infer from the Minister’s remarks that already 25,000 people in Australia are paying more than £300 a year in superannuation contributions and life assurance premiums, or did he mean that he assumes that 25,000 people, having regard to their incomes, will be able further to invest in this way? Or is it a bit of each? I do not know how the Minister has arrived at the figure of 25,000. I was rather amazed when the Minister referred to these people as the salt of the earth and said that through theirown effort they were providing for their own future. To me he seemed to underline the fact that they were providing for their own future. It appears that because they can provide for their own future the Government then says in effect, “We will give you a helping hand”. It seems that the old poem “ Our paths grow wider as the seasons creep “ is the approach of the Liberal Party in helping a particular bracket of people in contrast to the attitude of the Labour Party.
I think the normal human approach would be that if these people were able to provide for themselves whether it be through their ability, their good fortune or their good health or because of any other circumstances in this fair country of Australia, we should say, “ Congratulations to you, we are glad to see it “, but surely the Australian people should not be expected to make their path any easier.
– They are well able to look after themselves.
– Yes these people are able to provide for themselves. The Minister says that because of that, they aru the salt of the earth and the Government will give them further help along the track.
I should like to know how the Minister arrives at the figure of 25,000 taxpayers who will benefit from this concession. In spite of his eloquence this afternoon I still cannot see how the Government can justify multiplying this concession by 100 per cent. - increasing the deduction from £200 to 400 - in two years and at the same time excluding every other worthy person from consideration. If the Minister is prepared to classify these people who are able to invest £400 a year in insurance as the salt of the earth, I ask him’ how he defines mothers of four, five and six children in this country who have been receiving the same amount of child endowment for the last ten years. I should like to know how he refers to them.
.- I want to make a few observations on this provision because I find it exceedingly interesting. I remind the committee that there is in the Income Tax and Social Services Contribution Assessment Act provision for deduction from income tax in relation to payments made to superannuation funds for the benefit of employees. This is a provision that gives some benefit, not only to the employee class, but also to the self-employed person who makes provision for an annuity, life insurance or superannuation at his own expense, at the Government’s expense if he be a public servant, or possibly at his employer’s expense.
It is now proposed, in the case of the individual taxpayer, to increase the deduction from £300 to £400. I rejoice to hear the Minister’s interest in the encouragement of thrift, but it does disquiet me to some extent to find such a large increase, particularly in the year when the parlia mentarians’ subventions to their retiring allowances fund has crept up to a figure which almost reaches £300. That allows them scope for a little thrift, and enables them to pay insurance premiums on their own account. In all probability quite a few parliamentarians will come into the £300 to £400 bracket in a year in which there has been a most contentious increase in their salaries. As a result of their contributions to the retiring allowances fund a benefit is likely to accrue to them as a result of the increase in this tax allowance.
I was interested to see the position as it affects high salaried public servants. I regret to say that I have mislaid the letter I had containing the relevant figures. I speak from recollection, but I understand that quite a few high salaried members of the Public Service will also benefit as a result of these increased deductions. Because of the two factors I have mentioned I think that anybody should scrutinize this provision with the utmost care. The thirtythird annual report of the Commissioner of Taxation discloses, in relation to life insurance premiums, that the rebates allowed from 1941 to 1949-50 was £100. Then the rebate was increased to £150. Later the system of rebates was converted by Sir Arthur Fadden into the deduction system and the deduction allowed for life insurance premiums during the years 1950-51 to 1953-54 stood at £200 until, if my recollection is correct, in 1956 or 1957 it was increased to £300. The proposal now is .to increase the deduction to £400.
Let us make a comparison with the treasures of family people. They have great treasures in the form of children. In 1941 the rebate allowed for the first child was £75. It was increased to £100 in 1947-48. When the rebate system was changed to the deduction system, the deduction allowed for the first child was £78. That deduction continued until 1956 or 1957, when, I think, an increase of 5s. a week or £13 a year, by way of deduction was granted. I hope I will be corrected if I am wrong. I .understand that the present deduction for the first child is £91. The deduction allowed for the second child in 1951 was £1 a week, or £52 a year, and the deduction at present is £65 a year.
If honorable senators cast their minds back many years, they will remember that a deduction of £50 was allowed in respect of the first child in the old days of 1921-22; and right up to 1940-41 the deduction allowed in respect of the first child was £50. For other children under sixteen years of age throughout that period the allowable deduction was £50. This is an appalling comparison for anybody who places an emphasis on the need for population in this country and the crushing burden of the cost on a family of children’s requirements at the present time, to reflect upon. 1 again speak from memory, but I think we were told when the 5s. increase in the deduction for children was made, that it would cost the Budget £8,000,000. We are now told that the increase in the deduction in respect of life insurance premiums from £300 to £400 will cost the Budget £400,000. I should hate to think that we can be so parsimonious with regard to the deduction in respect of children just because of the Budget expenditure involved. I am pointing out only that I think that the family man has a real grievance when he considers the deduction allowed for children in comparison with the proposal whereby the man who provides for his own future is being benefited by this increase in the allowable deduction for insurance premiums from £300 to £400.
I was glad that the Minister went out of his way at the second-reading stage to inform the Senate that there would be 25,000 beneficiaries from this proposal. That certainly made some impact upon my mind. It relieved me of the disquiet resulting from the thought that the concession might be prompted in the main by its tendency to benefit parliamentarians and highly-salaried civil servants, who as we know, exert such an influence upon budget-making.
I put those matters before the Minister, because I should be very interested if he would be so good as to comment upon that approach. It may be, of course, that the Government has not forgotten these facts, and intends to remedy them. All I point out is that if it is going to give a remedy, not impar congressus Achilli, but on an equal basis with Achilles, in this instance it will have to open its purse pretty wide to cover taxpayer parents in respect of their children in the next, or an early, budget.
I merely wish to add that since I have interested myself in this matter - as I have done since the very first time that it was announced in the Budget speech - it has come to my notice that the legal profession made representations that the limit should be increased so as to enable self-employed persons to benefit. I read somewhere that self-employed persons had also urged that the increase be made. I suppose that every item in the income tax schedule has been the subject of urging by one section or another, but I mention these facts because they detract from an idea that completely possessed my mind in the early stages, lt was that the coincidence of this extraordinarily generous increase - in comparison with the deductions available to other deserving taxpayers - coming shortly after the increases made as a result of the Richardson report indicated that it was felt that those increases should be followed by a further benefit, made under the shelter of this deduction.
– I rise merely to comment on what Senator Wright has said. I am indeed gratified that he now has become aware that the legal profession, and indeed other groups such as the fixed income group, have been pressing for this type of relief for a long time. I can only repeat what I said at the second-reading stage - that the increase represents a very real relief, and a very real encouragement, to self-employed people.
I listened with interest to Senator Wright’s comparison of this concession and the fact that an increase in the allowable deductions in respect of children has not been made for some years. That is true enough, but it should not be forgotten that the Government, through its various social service schemes, has introduced measures that have been of very great benefit to children, and to the parents of children, over a long period.
– It is a long time since they were introduced, too.
– They were introduced in 1949, and we increased them in 1951. We have, ever since, as opportunity offered - and as it has become possible - extended further benefits to children.
– To which benefits do you refer?
– 1 refer to the introduction of a medical benefits scheme which provided for a Commonwealth subsidy to help to meet the cost of medical treatment; the introduction of an extensive pharmaceutical benefits scheme, which has now been extended to include almost all prescriptions; and to an increase from 8s. to a maximum of £1 a day in the Commonwealth contribution to the cost of hospital treatment. I also refer to the provision of free milk for school children under thirteen years of age, to the provision of poliomyelitis vaccine free of charge, to the introduction of special taxation concessions to meet the expenses of education, and to the introduction of the scholarship scheme in 1951 - to mention just a few. Our contribution towards the cost of education has proved of real benefit to the children of Australia. So successful has it been that the £50 allowed in 1952 has since been twice increased, and now stands at £100.
I do not mention these things in an attempt to make an actuarial calculation of the value of these concessions as compared with the value of possible increases in child endowment and the like. I do so lest it be thought that in granting this concession to a very worthy section of the community the Government has lost sight of the need to provide for parents of children - and for children themselves. It has done that progressively through the years.
Clause agreed to.
Clauses 1 0 to 18 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Debate resumed from 27th October (vide page 1166), on motion by Senator Paltridge -
That the bill be now read a second time.
– This bm has two main purposes. Its first purpose is to give effect to the promise contained in the Budget speech of the Treasurer (Mr. Harold Holt) of a flat rate reduction of 5 per cent, in income tax for the taxpayers of Australia. The second purpose is to increase the age allowance. At the end of my remarks I intend to move an amendment in the following terms: -
Leave out all words after “ That “ and insert - “ the Senate declines to give a second reading to the bill as, although it provides for a five per cent, reduction of taxation, it does so on an inequitable flat rate basis which fails to extend an adequate share of the reduction to the lower income groups “.
The Opposition entirely agrees with the second main purpose of the bill, namely, that of increasing the age allowance. That is a machinery measure consequent on the increase of age pensions. The effect will be to increase the age allowance in the case of a single person from £410 to £429 a year, and in the case of a married couple, from £819 to £858.
I think we can discern in this bill the same lazy approach that we saw in the measure with which the Senate has just dealt. After a taxpayer has made the necessary deductions in respect of his wife and his family, he may deduct up to £400 in respect of superannuation, insurance premiums, and so on. When those deductions have been arrived at, he will be entitled to reduce the taxation payable by ls. in the £1, or 5 per cent. As we all know, there are two forms of taxation, namely, direct taxation and indirect taxation, which the Government utilizes in raising its revenues. On this matter of tax-gathering, the Government parties and the Australian Labour Party seem to be poles apart. The Australian Labour Party policy includes the abolition of indirect taxation. We do not think that that can be achieved in five minutes. That is a goal towards which we would like to move and, in fact, it is a goal towards which Labour governments have moved a considerable distance. We wish to approach that goal because we believe that indirect taxation is inequitable taxation. It means that the more goods a person has to buy, the more tax he has to pay. Of course, the amount of goods a person has to buy is determined by the number of mouths he has to feed and the number of bodies he has to clothe. We believe that indirect taxation bears heavily on the families of Australia, whom this Government has forgotten. We are of the opinion that direct taxation is equitable taxation because it places the heaviest burden on those who are best able to carry it. 1 am one of those who do not like citing figures, Mr. President, because when I do so I usually confuse everybody, including myself. However, 1 invite the attention of honorable senators to the ratio that indirect taxation bears to direct taxation. In 1952-53, 30.3 per cent, of the total revenue of the Government was raised by indirect taxation. That means, of course, that 61.9 per cent, was raised by direct taxation. In 1958-59, 40.4 per cent, of the revenue resulted from indirect taxation, while the percentage of direct taxation had fallen to 53 per cent., so that there has been a diminution in the total amount of revenue raised by direct taxation and an increase in the amount raised by indirect taxation. I do not know that I need dwell on the injustice of that position, particularly as it affects family people. Honorable senators will find that that has been the trend over the years. Inflation has almost amounted to a poll tax, because the higher that prices rise the more indirect taxation people must pay, and of course, those who buy the most goods must pay the most indirect tax.
Senator Wright discussed, during the committee stage of the bill with which the Senate has just dealt, the concessions which are allowed to families, and so on. If we examine the concessions that are granted to-day, I think the only conclusion that we can arrive at is that no more than lip service is being paid to concessions for families. If we look at the position of a man who receives £800 a year, we find that he pays income tax of £70. If he takes unto himself a wife, he pays £48. It seems, therefore, that the cost of maintaining a wife in this community is assessed at £22 a year. I should love to meet a young lady who could be kept for that sum. She would certainly be a unique person. If a child is born to the union, the munificent rebate of £13 is allowed. The difference in the allowance for a man with a wife and no children and that of a man with a wife and one child is therefore £13. Then, for some inexplicable reason, if a second child is born the rebate in respect of that child is only £8 a year. If somebody would explain to me why the deduction in respect of a wife should be £22, that for the first child £13, and that for the second child £8, I would be a most intent listener.
There is no doubt that this Government completely neglects the family unit, not only in relation to taxation, but also in relation to social service benefits. The position with regard to child endowment comes to mind. I have noticed that no Government supporter has ever tried to defend the failure of the Government to increase child endowment. 1 remember, a good many years ago, speaking of this matter, and of a Government supporter saying, “ If you increase it you will have the old man sitting around doing nothing “. If any one can sit around on 10s. a week, all I can say is that he must be a champion sitter.
I just cannot understand why the Government has decided to reduce income tax at this stage, in view of the fact that, according to the Budget speech, the Government is budgeting for a deficit of £61,000,000. The more we see of these measures to give effect to the Government’s Budget proposals, the more we realize what a complete mess the Budget was. I am tempted to use the words chop suey, because that is what the Budget reminds me of - everything is thrown in and goodness knows what will come out. Here, on the one hand, we have a 5 per cent, reduction of income tax, and on the other hand, a prospective deficit of £61,000,000. Charges for the carriage of mail and for health services are increased. The result, for the ordinary person, will be a reduction of tax of about lOd. a week. If the Government had been consistent and had said that it did not propose to reduce taxation but would reduce the cost of services for the community, at least there would have been some logic in the proposal and it would have earned support from the Australian people. The Government is adopting a most amazing attitude. In remitting £20,000,000 to the taxpayers by way of a 5 per cent, reduction in income tax, and proposing to give pensioners a mere handout of only £9,000,000, the Government completely ignores the family man and panders to the wealthy.
It is interesting to see how this £20,000,000 rebate is to be distributed. An examination of the proposal discloses that it is to be divided almost equally between two sections of the community. In other words, about 42.7 per cent, of this £20,000,000 is to be paid to approximately 164,000, or 4.3 per cent, of the taxpayers, whilst the balance is to be paid to 95.7 per cent, of the taxpayers. Putting it another way, 91 per cent, of the taxpayers will enjoy a rebate of roughly lOd. a week, while 9 per cent, of the taxpayers will benefit to the amount of 10s. a week. The Government’s proposal reminds me of the story of an American G.I. who wrote to his mother telling her of his journey to the Korean war. He said, “ There is no doubt about the American Army. It is completely democratic. The accommodation on the ship going over was divided equally. Three thousand G.I.’s had half the accommodation of the ship and 300 officers had the other half.” That is exactly the formula being applied by this Government In its tax reduction proposal. It proposes to give 4.3 per cent, of the taxpayers the benefit of just under one-half of the £20,000,000 and 95.7 per cent, of the taxpayers the advantage of the remainder.
I should love to hear the Minister’s explanation of how the Government arrives at the delightfully odd concessions of £143 for a wife, £91 for the first child and £65 for the second and subsequent children. After all, the increases in these concessions over the last few years have been infinitesimal. The whole proposal is completely inequitable. There are many better ways of giving the taxpayers some benefit than that proposed. I cannot understand the Government’s peculiar proposal to increase taxes in some directions and make rebates in others. After all these years of spiralling inflation which has created tremendous difficulties for the workers on lower incomes, surely the time has arrived for lifting out of the taxing field altogether all those in the lower income bracket. If we did that we could hold up our heads and proudly claim that all those in receipt of incomes below a certain reasonable amount were paying no taxes at all.
Of course, this would mean a recasting of a tax scale but, surely, after all these years, it is obvious that the scale should be recast. It must be obvious that a scale based upon a basic wage of £6 5s. a week cannot possibly be justified when the basic wage is between £14 and £15 a week. As I said at the outset, the Government has made a shoddy, lazy approach to the whole problem. The policy of the Treasurer (Mr. Harold Holt) seems to be to give a little pat on the back to everybody except the family man, the forgotten man. 1 shall be delighted to hear an explanation of how the Government came to decide on the one hand to give back to the taxpayers £20,000,000 by way of a flat reduction of income tax by 5 per cent., while on the other hand it increases other taxes in every possible direction. Such a policy completely ignores the real needs of the community. It continues to ignore completely those sections of the community that have been completely ignored for years - to which I referred when dealing with two previous bills to-day.
This afternoon the Minister was asked where the pressure came from for such concessions as the increased allowance for superannuation contributions and so on. I am afraid it was not answered. Whence came the pressure for a 5 per cent, reduction in income? Do not tell me that the people on the higher incomes are going to lap up the 5 per cent., and do not tell me that the people on the lower incomes asked for a reduction of lOd. a week in their taxes! If there is one thing in the field of government administration that is crying out for complete review it is the Government’s taxation policy. Like Senator McManus I am alarmed at the prospect of this proposed review. After all these years there is to be a review of the system of taxation, but I shudder when I look at the personnel of the body which is to make the review.
From studying debates in another place, I note that it has been suggested that the proposed review committee is to make recommendations as to the classes of persons upon whom taxes shall be levied, the extent to which indirect taxation shall be abolished and the extent to which direct taxation shall be lifted. If these matters are to be decided by an outside body, it is evidence of a complete abdication of responsibility by this Government. It is the Government’s responsibility to say how these things shall be done. It should be advised on these matters only by committees consisting of taxation experts.
One of the things that I hope the committee will investigate is a matter about which the Opposition has been complaining for some years. I refer to the need for a thorough investigation of the whole system of concessional deductions. By its alteration of the system in about 1951-52, this Government in allowing the delightful amount of £143 for a wife virtually said to the man paying tax at the rate of 13s. 4d. in the £1 - the man in the top income bracket - “For your wife, we will allow you a rebate of 143 times 13s. 4d. in your income tax “. To the man who pays tax at the rate of ls. in the £1, it said, “You get a reduction for your wife of 143 times ls.” The man who pays no tax gets no benefit. The same system applies throughout the whole tax scale. For instance, I cannot see the wisdom of a system under which the man who is sending his child to a private school, and who is in the top income bracket, receives a rebate of 100 times 1 3s. 4d. while the taxpayer in the lower income receives only 100 times ls. and the man who pays no tax enjoys no benefit whatever. Such a system is a complete travesty of justice. It is another instance of complete concealing of the facts. We have already accused the Government of that to-day. I suggest that it would be far better to allow no deductions at all for educating the children and to pay, in direct child endowment, an amount equal to the cost to the revenue of the education allowances. Under such a system, the poor man with children would receive, in direct child endowment, his fair share of what is now being allowed for the education expenses of those more fortunately placed. All sections of the community would then share fairly in such benefits as are available.
But the Government will not adopt that policy. Instead, it has pegged the rate of child endowment for the long period of ten years and, at the end of each of those ten years it has said to the man paying tax at the rate of 13s. 4d. in the £1, “For the education expenses of each of your children we will give you 100 times 13s. 4d.” To the man on the lowest income, it has said, “ We will give you 100 times ls. “, and to the man who pays no tax it has said, “ We will give you nothing at all “. That system is completely inequitable. Because of that, the Opposition feels impelled to refuse a second reading of this bill. I therefore move -
Leave out all words after “That”, insert - “ the Senate declines to give a second reading to the bill as, although it provides for a 5 per cent, reduction of taxation, it does so on an inequitable flat rate basis which fails to extend an adequate share of the reduction to the lower income groups “.
– I support the amendment moved by Senator Willesee. This bill is famous, or, rather, infamous, both for what is in it and for what is omitted from it. I should say it is far more infamous for what it does not contain. In my opinion, it is the most barren bill that has so far emanated from what is a most barren budget. Let us quickly see what is to happen in the next financial year. The Government will collect in tax from the Australian people £78,000,000 more than it collected last year. The first Liberal Treasurer for twenty years will, out of the bigness of his heart, pay back £20,000,000 by way of the deductions at which we are now looking.
– The total additional amount would be £98,000,000.
– Yes, it will be £78,000,000 net. The Government’s receipts from tax on individuals will be £42,000,000 more in 1959-60 than it was last year. Company tax will increase by £30,000,000, sales tax by £6,300,000, and excise by £9,000,000. The point about the increases in sales tax and excise is that they are increases in indirect taxes.
Mr. Calwell, whose name was mentioned this afternoon in a not very favorable light, has prepared a table showing the tax payable by a basic wage earner during the last nine years. The basic wage is given to a man in order to provide him with a certain standard of living. I think we can safely say that to-day the basic wage does not provide a better standard of living than, even if it is as good as, that which the basic wage provided in 1949. In 1949, a man without dependants who received the basic wage of £6 7s. paid £16 in tax but in 1959 the man who receives the basic wage, which is now £13 16s. but provides, in effect, the same standard of living as it provided in 1949, pays £53. That compares with £16 paid in 1949.
The comparisons follow relatively the same pattern through the whole gamut. A basic wage earner with a dependent wife paid £7 15s. in tax in 1949; now he pays £34. A basic wage earner with a dependent wife and one child, paid £2 18s. in tax then and pays £17 6s. now. Basic wage earners with three, four, or five children paid no tax in 1949; to-day they pay £11 15s., £6 16s. and £3 7s. respectively.
These figures provide a further illustration of the case made out by Senator Willesee that the burdens are not being fairly shared. Just as we see it in regard to income tax, we see it in all the other indirect taxes with which the people have to contend. Would not one have thought that in this year the Government, which talks of such a tremendously high level of prosperity, might have done a little more than it has done with its hand-out ot £20,000,000? The position would have been different if the Government’s income had been only stabilized, but its income is up by £98,000,000.
For instance, would not one think that the Government might have looked at some of the items still subject to sales tax? I do not know how those charges can be justified by the Government. Again the impact is on the family man, about whom we speak so feelingly. There is a sales tax of 124- per cent, on babies’ toys, sweets, and ice cream. Babies’ talc powder, which is most essential in the home, carries a sales tax of 25 per cent. To these items may be added many others. For instance, the handbag that the lady carries and that is just as essential a part of her attire as anything she wears, attracts a sales tax of 12i per cent., as does the umbrella that she does not carry unless she needs it. These are the indirect taxes that we attacked so bitterdly to-night. This was a year of opportunity for the Government, if all it says about the high level of prosperity is true.
One is interested to know that receipts from exports, particularly of primary commodities, in the first few months of this financial year have been very much better than they were last year. So we are facing a position that allows some consideration for the many people who need help so very, very much. One would think that the Government would have got around to look ing at the matter of child endowment with a view to helping just a little the family man who is doing the job that the Government is crying out to be done. He is making his home his castle, rearing his children and giving them the best that his wages will allow. He appreciates every small thing that is given to him, because it is important. But the Government has refused to look at child endowment, which is such a great help to a family these days. It has refused to look at the maternity allowance, which, also, is so important to a family. Government supporters turn their backs on the basic needs of the family man in the community.
The Government is making tremendous efforts, through its Department of Trade, to increase our exports. This is a very important matter. Some years ago the Government established a taxation committee to report on depreciation allowances and other matters that were designed to make Australia’s production cheaper and allow our secondary industries to compete even more favorably in overseas markets. We are opposed in the secondary industry market of the world by strong industrial countries. Amongst these are the Japanese, whose ingenuity, quality of production, and merchandizing are very high indeed.
– And they have a lower wage standard.
– Yes, it is relatively low, compared with ours. In the past five or six years, Hong Kong has developed as a great producer of secondary commodities. Red China is now moving into world trade. It has the advantages of low wages and a state organization which make it a very strong competitor. So it is important that we allow Australia’s secondary industries, particularly those which are manufacturing for the overseas market, every possible advantage to enable them to compete with these countries, because there is in those parts of the world a great and growing market. The skill of the Australian worker is very highly developed. If given an opportunity he could compete in more fields than we have possibly foreseen. We should give him extra opportunity. We should provide the Australian manufacturer with better depreciation allowances, such as were provided by the bill relating to mining companies that we discussed earlier to-day. Mining companies will be able to write off over five years the cost of the homes they provide for their workers. That will be a very substantial help to them. We should be doing something similar in the case of secondary industries in our great industrial cities. We should give them the opportunity provided by more liberal depreciation allowances. We should examine the report that was presented by the taxation committee appointed by the Government some years ago. ft recommended a better approach to the matter of depreciation, and I think it recommended also the abolition of pay-roll tax. It is a burden on industry, whether the industry is prosperous or dying, whether it is making a profit of £1.000 or losing £1,000 a year. The pay-roll tax is automatic and a commitment that must be faced. These are things that the Government should look at now. We are told that our economic situation is stable, and that there is a great increase of the national income and so I say now is the time to do something. The income of the Commonwealth this year is expected to be up by £78,000,000. There is an opportunity to help people now because the Government is in a position to afford it. In 1952, and on every occasion when there has been the slightest hint of adversity, all that the Government could think of was how to add burdens to the backs of the community, both in the homes of the people and in the factories. That was the course followed in 1952, and again in 1956 when the little Budget was introduced. As soon as conditions become a little adverse, impositions of this kind are added, thus making things more difficult. According to the Treasurer our standards are high, and we are enjoying an era of prosperity. If that be so, now is the chance to make things easier for individuals and the community generally, especially for men and women with families. Now is the time also to make it easier for secondary industries to compete in the markets of the world overseas. It is important that our overseas balances should be kept at the highest level. If we have to cut down in fields that are basically important to our manufacturers, we shall face a serious position. Now is the time to encourage them and build up our overseas balances, but, unfortunately, the Government has turned a deaf ear to all demands to look at this matter in a reasonable light. The Attorney-General (Sir Garfield Barwick) said recently that manufactured goods represented 11 per cent, of Australia’s total exports in the financial year before last and that last year they represented 14 per cent. That is a very fine figure, and is one that would have been impossible five or six years ago. As I have said over the last fifteen or sixteen years, there is a big export market for Australia if we give the Australian producer a chance to compete with other countrires on a price level. The Government should look at this position now and see if it is possible for Australia to get more than 14 per cent, of the overseas market.
– I rise mainly to indicate that the Government does not accept the amendment moved by Senator Willesee, and also briefly to controvert the general proposition advanced by Opposition senators that under this Government the working man in receipt of an average wage has not been treated justly. Some interesting figures have been cited by Senator Willesee and Senator Armstrong, but I direct the attention of the Senate to a series of figures which I now propose to cite. It is not a long list. In 1949-50 the basic wage was £340 a year. A married man with two children would have paid £1 in tax in that year on an income of £340, leaving him with £339. In 1959-60 the basic wage is £718. A married man with two children will pay £17 income tax this year, leaving him with £701. That is an increase of 107 per cent. If we take the average weekly earnings, which perhaps is a more usual basis, we find that a married man with two children will show an increase of 111 per cent, in 1959-60 compared with 1949-50.
asked about costs. These have risen by only 81 per cent, since 1949-50, not 107 per cent, or 111 per cent. It is clear from the instances that I have cited that the wage earner in question is better off by 16 per cent, than he was in 1949-50.
If we now turn to some of the figures relating to disposable income, we get another picture showing the position in which some wage earners find themselves to-day. A man without dependants who has an income of £1,000 per year retains 89.9 per cent, of it, whilst if his income reaches £2,000 a year he will retain 82.1 per cent. As a matter of interest, I mention that a man without dependants whose income is £10,000 a year will retain 56.1 per cent, of it. A man with a dependant wife and two children, whose income is £1,000 a year, retains £948 1 6s., or 94.9 per cent, of his income, after paying tax. If we take into account child endowment for his two children, the amount retained represents 98.8 per cent. In the case of a man whose income is £2,000 a year he, in similar circumstances, retains 88.5 per cent, of his income. 1 suggest that if we put these two sets of figures together we shall see the relative position of that wage earner to-day compared with his position many years ago. I realize that figures can be confusing, and even misleading. The figures mentioned by Senator Armstrong can be more misleading than those which I have used.
If we wish to see the physical things by which we can judge the standard of living that the Australian people enjoy to-day, we have only to look around and see the kind of things which are now purchased by the average Australian householder, but were not purchased ten years ago.
– Purchased, but not paid for.
– I shall substitute for things purchased, things available to the people for purchase. They are now purchased over a period and used by the people, but they were not even available for purchase when Labour was in office. If we take the figures for radios, motor cars, refrigerators or washing machines, we shall see that there has been a tremendous increase in the production of these items, and if we ask to whom they have been sold does any one imagine that the answer is that the tall poppies in the country have decided to buy half a dozen washing machines or refrigerators for each house? As we all know, they are going into the average homes in the Australian community, and the Government and its supporters rejoice in the knowledge that the people are in consequence enjoying a higher standard of living. It has been our long-established policy to develop the sort of political and economic climate in which the members of the average Australian household can enjoy these things which make modern living so convenient. It gives us increasing pleasure to know that into the average Australian home is going a number of these things which are of such value to the ordinary people. It means nothing that the Opposition engages in political criticism and asserts that the average Australian is not to-day better off than he was when Labour was in office. The average Australian knows that he is better off to-day. He has acknowledged that fact at election after election by rejecting the Labour Party and its policy and by espousing and accepting the policy that we hold and which we have steadily pursued. Whatever might be said politically as to the comparative values of Labour’s policy and our policy, the final test is the judgment made by the people, who, year in and year out, have returned us as a government and have kept you, like the ancient raven, wandering on the “Nights Plutonian shore “.
Question put -
That the words proposed to be left out (Senator Willesee’s amendment) be left out.
The Senate divided. (The President - Senator the Hon. Sir Alister McMulin.)
Majority . . 4
Question so resolved in the negative.
Original question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without requests or debate.
Debate resumed from 10th November (vide page 1300), on motion by Senator Spooner -
That the bill be now read a second time.
.- This very small bill, comprising only four clauses, gives approval to the acceptance by Australia of the International Wheat Agreement 1959, in which there are 37 articles. Despite the smallness of this measure, it deals with a subject that is most important to the economy of Australia, and with a very important industry. Next to wool, wheat is our biggest earner of export income. The stabilization of the wheat industry has necessitated a lot of discussion over the years. My memory goes back to the time the Senate discussed the question of stabilizing the wheat industry. I am reminded that when this measure was recently in another place the debate was far more placid than was the debate on the first agreement in 1949 during Labour’s regime. The then Minister for Commerce and Agriculture, Mr. Pollard, stated that by some fortuitous circumstance the agreement became the law of the land. A very fine tribute was paid to those members of the Public Service who were sent abroad to deal with this very important question. I feel that the same tribute can be paid to-night.
As I have said the bill is a very short one consisting of some four clauses, but it contains an agreement of 37 articles. On this occasion, the agreement is not attached to the bill, but I understand that if honorable senators wish to discuss the agreement they may do so under clause 4. The agreement is one to which a good deal of discussion could be devoted. That discussion, however, does not come within the ambit of the second-reading debate but is more appropriate to the committee stage.
Having perused the present agreement, and having a knowledge of the previous agreement, I say to-night that we owe a debt of gratitude to those who carried on negotiations in order to bring this agreement to fruition. Whilst there may be some doubt as to the various aspects of it the fact remains that an agreement is in existence. One of the pleasing features of the agreement is the return of the United Kingdom as a signatory to the agreement. On the occasion when the last agreement of 1956, which has been in force for three years, was under discussion, the withdrawal of the United Kingdom from that agreement caused a good deal of discussion, and some heated remarks passed between honorable senators as to the reason why the United Kingdom had withdrawn. The Opposition suggested that it was because Australia had taken sides with the United States of America and Canada and endeavoured to drive a bargain in prices which the Government of the United Kingdom at that time refused to accept. The United Kingdom has again become a party to the agreement and I feel that we are all very pleased with that development. As we all remember, the United Kingdom was one of our largest customers for wheat before she departed from the agreement.
While we appreciate the present position, we still realize that the wheat industry is in a precarious position. The new agreement differs from the agreement it will supersede in some important respects. Under the previous agreement, each exporting country had an export quota, which represented the quantity of wheat which it was obliged to make available to member importing countries at the maximum price and which it was entitled to sell at the minimum price. Under the new agreement, the price may remain much the same as in the old agreement - there is a slight reduction - but the member importing countries undertake to buy from member exporters, at prices at or above the prescribed minimum, not less than a stated percentage of their total commercial imports. These percentages are shown in the annex to the agreement. They vary from country to country, and range from 30 per cent, to 100 per cent. The average is about 70 per cent.
I feel that we should be pleased with this agreement in view of the enormous surplus of wheat there is throughout the wheatgrowing countries. However, when we talk of surpluses we must remember that a very large section of the world still needs the wheat that is grown. We know that there are many undernourished people in the world for whom wheat is a vital commodity. During my study of this bill I came upon a very interesting document. It was an article entitled “ Changes in the Composition and Direction of Australia’s Wheat Export Trade “, published in “ Canberra Comments “, of 15th August, 1959. The article was written by Mr. E. J. Donath, M.A., Senior Tutor in Economic Geography, University of Melbourne. In this very comprehensive statement he has dealt very fully with the trend of wheat disposal and the importance of it to Australia. He has made reference to the fact that wheat is the most important agricultural crop in Australia and that the area sown is about half of the cultivated area of Australia. That shows what wheatgrowing has done to develop this country. We have only to look around the Mallee and Wimmera districts of Victoria at the present time to realize the vast improvement that has been effected over the years in that particular part of Victoria. I can remember when vast areas of these districts were virtually sandy desert growing the mallee tree. Similar development has taken place in New South Wales, Queensland, South Australia and Western Australia. Western Australia is a vast State, and when I travelled through it some years ago I looked upon it as being very similar to our Mallee country. To-day, as a result of the interest that has been taken in this commodity, and as a result of the fact that during the last ten years an agreement has been in existence which has stabilized the industry, great progress has been made in the development of Western Australia. Queensland also is developing its wheatgrowing industry.
Confidence now exists because after years of struggle, years of debate and years of questioning the advisability of placing this industry on a sound footing, we have now achieved something. I know how difficult it was to persuade the wheat-growers to agree to the formation of a pool. There were constitutional difficulties, inasmuch as this Parliament had no power to create an agreement without the co-operation of the State governments. Whatever we might want to do had to be endorsed by the State Parliaments. Honorable senators who have been associated with the wheat industry will recall the difficulties that existed.
A large section of the growers were opposed to anything that was compulsory. To them, the idea of placing their wheat in a pool and permitting it to be disposed of virtually without their consent, was the beginning and end of socialism. Some members of the Parliament who are now supporting this measure were among those who criticized the idea of having a stabilization scheme, or an international wheat agreement. They were very vocal in their protests. The scarcity of wheat led nations that were not signatories to the agreement to ask prices higher than the maximum fixed under the formula, and many of our growers felt that they were being robbed. There are still some wheatgrowers who feel that, because of the prices which then obtained in some markets, a good deal of money is owing to them.
It is interesting to note that before the war 65 per cent, of our wheat went to Europe, and that since the war we have lost much of that trade and are now sending more to Asian countries. Mr. Donath has drawn attention to the fact that we lost a very valuable customer in China. Before the war, that country was a very big consumer of Australian wheat. He states -
Pre-war China took nearly 8 per cent, of our surplus and was, in fact, our best market after United Kingdom. In the post-war years there have been only very small shipments of Australian wheat to China, and the possibilities of this market should be seriously investigated.
Without doubt, any suggestion of investigating the possibility of extending our trade with Communist China would produce am acrimonious discussion, not only in this Senate but in other places also. Mr. Donath, dealing with the question objectively, sees in the East a chance of disposing of more of this very important commodity. No doubt he has in mind the fact that we have lost certain markets in Europe.
The Indian market is not what it was. It is true that India is purchasing some of our wheat, and will continue to do so, but we have to contend with the vast American surplus. American activities under what I believe is called Public Law 480 are having an effect on our sales of wheat there. 1 saw stated in the press the amount of American assistance that was to be given to India to finance imports - mostly of wheat. It was a staggering figure, and I hestitate to quote it lest it should have been a misprint. I have not had an opportunity to check its correctness. That is the kind of thing that is happening in the older markets which we could once say would take so many bushels of wheat when an agreement was signed.
I was particularly struck by one passage in the Minister’s second-reading speech. I have marked a passage which I think is worth emphasizing if we are to understand the new formula. I should like to quote it because it probably escaped the attention even of some honorable senators who are interested in this question. That sometimes happens when a prepared secondreading speech is delivered. The Minister said -
The previous agreements operated through a system of guaranteed sales and purchases for both exporters and importers. Each exporting country had an export quota, which represented the amount of wheat it was obliged to make available to member importing countries at the maximum price and which it was entitled to sell at the minimum price.
That seems to be something of a contradiction. The Minister continued -
Conversely, the quota of an importing country represented the amount of wheat that the country was entitled to obtain at the maximum price, and which it was obliged to buy at the minimum price if exporters called on it to do so. Whilst prices were within the specified range, importers were not required to purchase their requirements from member exporters.
An examination of that formula indicates that it was intended to prevent exporting countries from overcharging or, if there happened to be an abundance of wheat, from under-selling other countries. That was a very good safeguard. Although that is not incorporated in the present agreement, I think there is a protection for us in the fact that the formula is based on a percentage of the overall export figure. Be that as it may, I think it is a good thing that we have this agreement, ‘for in Australia we have a big carry-over. True, the harvest that is about to begin may not be as great as it was last year. I know that in my own State production is well down. 1 think it may be said that South Australia is almost a complete write-off this year, so far as wheat production is concerned. 1 understand that last year the production of that State was about 25,000,000 bushels and that this year’s production is estimated at about 6,000,000 bushels, so that the production will be down about 19,000,000 bushels. Those are figures that I have obtained, but of course the position may have altered. No doubt South Australian senators will have the correct figures.
Victoria’s production also will be down, although the harvest prospects have improved in recent months. I understand that the production in New South Wales, Western Australia and Queensland is likely to be of about the same amount as in previous years. However, by and large there will be a decrease compared with previous harvests. We are dealing with a world-wide problem, Mr. Acting Deputy President, when we are discussing the carryover of wheat. There is a surplus in Canada and the United States of America, and we must not forget Russia’s production. Russia is to-day the greatest producer of wheat in the world according to figures that I have seen. Those figures indicate that Russia’s production of wheat out-rivals that of Canada, the United States of America and other wheat-producing countries. There is no doubt that Russia has a great quantity of wheat that is being disposed of to certain satellite countries, some of which, prior to the war, were customers of Australia and other signatories to the International Wheat Agreement. So, Sir, a major problem confronts this very important Australian export industry.
I want to say, on behalf of the Opposition, that we on this side of the chamber do not oppose this bill in any way. As I have said, honorable senators who wish to discuss particular aspects of the bill no doubt will do so during the committee stage. I congratulate honorable senators opposite who are to-day supporting this type of marketing. As I said in my opening remarks, I well remember the great disputation that took place in this Parliament on this question in past years. The Australian Labour Party pioneered the first agreement. There were amongst the growers, just as there are amongst wool-growers to-day, many men who believed that there should be orderly marketing and that the growers should have protection against the conditions that obtained in the old days. Let us suppose that this agreement was not signed and that we went back to the old conditions under which the individual merchants, the private exporters, had our wheat-growers at their mercy. In those days, there was no indication of what the price for the harvest would be until the representatives of the private firms had gone amongst the growers and had offered them the price that they thought fit. In those days there was cornering of the world’s wheat and exploitation of the people. If this agreement, or an agreement of a similar kind, were not in existence, those conditions would apply again. I remember my own experience in endeavouring to popularize the idea of orderly marketing, when I first became a member of the Senate, in 1938. I was a member of our first parliamentary committee in this respect. Of course, agitation had been taking place from as far back as 1933, and even before then attempts were being made to get the growers and exporters together.
I well remember a debate that took place in this chamber in regard to a scheme brought forward by the late Senator Uppill, of South Australia, and by the present honorable member for Sturt (Mr. Wilson), who was then a member of the Senate. We were even then trying to devise a suitable marketing plan. I am glad that, even though the proposal was deemed to be socialistic in those days, the people who are vitally concerned, namely the growers, now appreciate the merits of that particular form of socialism. I think it has done them good. They have progressed and prospered as a result of having a stable market under the International Wheat Agreement. On behalf of my party, Mr. Acting Deputy President, I intimate that we wholeheartedly support this measure.
– I, too, support this bill with a great deal of enthusiasm. For Senator Sheehan’s benefit, may I say that I have always supported similar legislation so far as the wheat industry is concerned. Not only in this Parliament, but also before I came here, in my days in the South Australian Par liament, I took a similar attitude and, I hope, not an inconspicuous part, so far as the growers were concerned, in the effort to have a stabilization plan introduced. I want to pay a tribute to Mr. McEwen, the Minister for Trade, whose work is so often successful and always is performed with vigour and enthusiasm. This agreement, which I think is meeting with universal approval in the Senate to-night, is largely the result of his work, in conjunction with that of the chairman of the Australian Wheat Board, Sir John Teasdale, and the chairman of the Australian Wheat Growers Federation, Mr. Tom Shanahan, all of South Australia.
The agreement is of great value to Australia. Without such an agreement, it is hard to imagine what the present and the future position of the wheat-growers of this country would be. It certainly would be vastly different from the position they enjoy at the present time. That much we can confidently assert. For, here we are. as wheat-growers, sitting back comfortably knowing that, despite unprecedented world surpluses, we are sure of a guaranteed price for 100,000,000 bushels of export wheat per annum, plus all the wheat that is used in local consumption. That is only made possible by virtue of this agreement. I say that most advisedly. Who would suggest that however anxious the Government was to help the wheat industry and to place it on a sure foundation, it would, or indeed could, guarantee to such an extent without the backing of some international price structure such as we have in this agreement? The Government simply could not afford to do so, irrespective of its desire to help.
The agreement which we are asked to ratify covers approximately 420,000,000 bushels of the world’s commercial wheat which is a significant percentage of world wheat exports. It compares with some 300,000,000 bushels, which was the quantity covered by the 1956 agreement. As Senator Sheehan has said, Great Britain was not a signatory to that agreement. The present position is due almost entirely to Britain’s welcome decision to re-enter the International Wheat Agreement, after a lapse of some three years in her membership. She is the largest importer of wheat in the world, and the largest single market for Australian wheat. She is now committed, under this agreement, to the extent of 80 per cent, of her purchases of wheat. Her decision to participate in this new agreement is indeed most welcome.
Mr. McEwen has stated that the return of Great Britain to the International Wheat Agreement reflects the importance which the British Government attaches to the conclusions reached at last year’s Montreal Conference when, largely as a result of Australian initiative, the Commonwealth countries accepted the principle of working towards stability in international commodity trade. I think we must thank Mr. McEwen for the part he played in this acceptance. That trend in world trading is important and notable in itself, but we may have to await another opportunity to discuss it in its broader sense.
I have made the point, I think, that the guaranteed price which we in Australia enjoy to-day for the bulk of the wheat we produce, and which is proving so comforting to us at this time, has been made possible only because the Government had this agreement in contemplation. It gives some backing to wheat marketing in general and fixes the upper and lower price limits within which some 420,000,000 bushels must be sold. When we contemplate the extent of the existing world surplus, we can only imagine the prices which might be offered for wheat without some such legislation as this. We can only conceive that it might be something in the vicinity of ls. 6d. a bushel, as mentioned by Senator Sheehan a few moments ago. That was the price paid in the 1930’s when similar surpluses existed in exporting countries.
I invite the attention of honorable senators to some of the recent surpluses. They amounted to 2,400,000,000 bushels at 1st March of this year and represent sufficient wheat to supply the expected world need for a two-year period from that date. This is revealed in “Wheat Review” published by the Canadian Bureau of Statistics. These stocks are over and above the domestic requirements of the wheat-producing countries themselves. That is an enormous surplus which in anybody’s language would spell ruinous prices to growers, and it pays us at times to contemplate these things.
We have come a long way since the early 1930’s, which some of us remember vividly. As I have said, the price of wheat fell suddenly, from about 5s., which was approximately the ruling price at that time, to ls. 6d. a bushel, with disastrous consequences to all concerned in this country and, if I might say so, beyond it. All I can say is that the wheat-growers have much to be thankful for to-day in the fact that wheat is not left to the tender mercies of such world surpluses as now exist.
The guaranteed price for 100,000,000 bushels of export wheat, in addition to that quantity used for local consumption in Australia - which is normally from 60,000,000 to 70,000,000 bushels- is 14s. 6d. to-day, based on the cost of production, and it will vary yearly, according to the cost of pro14’duction. I believe that this guarantee which the Menzies Government has given to this industry is possible or practicable only because of this agreement which covers the period ending 31st July, 1962. We have in Australia at present a surplus of wheat estimated on 1st March last at 139,000,000 bushels. That was the carry-over. While this is not unmanageable, it is high. However, because of the freer sales that have taken place since March, 1959, together with the unfavorable season experienced in some States, especially South Australia, and referred to by Senator Sheehan, recent estimates give the likely carry-over as some 66,000,000 bushels. I think that even this might be too high, that an estimate taken to-day might show some lower figure.
– It is between 60,000,000 and 65,000,000 bushels.
– Is that a recent estimate?
– I accept that as being a realistic approach. In my own State of South Australia, I know that we have experienced the driest season for 120 years. Our rainfall was lower than that of 1949. I feel that we may reap a harvest of only between 7,000,000 and 8,000,000 bushels, with perhaps between 4,000,000 5,000,000 bushels likely to be delivered to the Australian Wheat Board instead of the normal delivery of between 26,000.000 and 30,000,000 bushels.
Barley and oats are in a similar position. Barley is estimated to yield only 10,000,000 bushels, and as much more than normal quantities will be retained on farms for local use, deliveries may be down to as low as between 7,000,000 and 8,000,000 bushels this year in South Australia, the chief barleygrowing State of the Commonwealth.
The yield of oats is likely to be only 2,500,000 bushels, and most of this quantity will be retained for local use. When taken into consideration with the wheat and barley crops, the fall in yield is disastrous. I suggest that in those circumstances we can forget any likely problems of wheat surplus in this country for the present. Nature has a way of levelling down our production in this country, even allowing for improved methods of farming, better rotation of crops, and so on. Nature has stepped in in the past when we have built up surpluses in this country, and apparently it is doing so to-day, with disastrous results.
Incidentally, speaking of the drought in South Australia, I point out that the drop in yield will mean a direct decline of approximately £20,000,000 in farmers’ incomes, to say nothing of the calamitous stock losses and low market prices which have been ruling for the sudden surplus, and to say nothing of the reduced wool sales, following the reduced stock numbers. That is the picture facing South Australia.
But we have had an extraordinarily good run of seasons, and I should hope that the farmers generally have made provision for this first year of drought. If they have, this provision, together with the great diversion of industry in general, will, I trust, abundantly justify the optimism displayed by the Premier recently, when he said, “ There is no fear of any recession in the State’s commerce and industry “. The greatest loss, I fear, will be to the State’s treasury accounts, which must bear the direct loss of reduced rail freights on grain. This will be tremendous, and I should not be at all surprised if the State makes a claim for assistance, either by way of a direct grant, or through the Commonwealth Grants Commission, notwithstanding her recent emergence from her estwhile position as a claimant State.
While on the subject of wheat marketing, we must deplore the practice that has grown up in recent years, known as wheat dumping, which was referred to by the previous speaker. This practice is adopted in connexion with wheat grown under artificial price support conditions in certain countries and subsequently dumped on world markets at prices below world parity. It does real harm to such genuine exporting countries as Australia in that the countries which adopt the practice often have little regard to what are known as traditional markets.
This procedure is adopted for a variety of reasons, but has been practised in recent times by the United States of America, France, and, to a lesser extent, Greece and Italy. Sometimes wheat is sold at prices very much below those paid to the farmer who grows it, and this ruins the market for such countries as Australia which depend always on their old-established traditional markets for an outlet. Australia has made her protest to the organization of the General Agreement on Tariffs and Trade and has concluded bilateral trade treaties to limit the effect of this sort of trading. She is continually pressing her case, which is a sound one. Likewise, some difficulty is seen in the desire of some exporting countries to give away some of their surpluses to less fortunate peoples. Let me say at once, Mr. Deputy President, that I believe this to be a very laudable and praiseworthy objective. There is a great deal that may, and indeed should, be said for it on humanitarian grounds. It is a grand thing to see a wealthy country such as the United States of America, with large wheat surpluses, ready to engage in this sort of activity. It is to be hoped that it will do something to win the minds of people in less fortunate countries and to make them feel warmly disposed towards the donors.
The difficulty arises when these gifts compete with Australia’s products in our traditional markets. In other words, I believe that where a traditional market exists in a country that can afford to pay for wheat, it is desirable that this country continue to pay for it. Wheat should be given only to those countries which cannot afford to buy it and which would go without if they were obliged to pay for it. Because it must always be remembered that in the final analysis, it is the farmers’ wheat and he cannot afford to grow it for nothing. Only the government of a great and wealthy nation like the United States of America can even contemplate giving wheat away in large quantities. I say “ in large quantities “, because Australia does give away wheat, and flour particularly, under the Colombo Plan, but only in such quantities as the government of the day considers it can afford to pay the growers for. I repeat that the idea of giving wheat away is to be commended strongly indeed, providing the practice does not impair traditional markets. Indeed, the practice of giving wheat to the starving people of the world may well result in creating markets where they do not now exist, by cultivating a taste and use for flour that may lead the people concerned to like it and to be in a position some day to pay for it.
The Minister for Trade is doing a wonderful job in obtaining new markets. His success is seen, tor instance, in the Japanese Trade Agreement. This year, f.a.q. Wheat purchased by Japan has already exceeded 273,000 tons, or about 10,000,000 bushels, as against 211,000 tons, or 8,000,000 bushels, last year. By our bilateral agreements with Ceylon and Malaya, which, were also negatiated by Mr. McEwen, Australia has gained a valuable and, we trust, an ever-increasing footing in the flour trade with these two countries, after a lapse in this trade. Australia sold 30,000 tons of flour in the last half of 1958 to Ceylon, which has undertaken to purchase 100,000 tons in 1959 and the same quantity in 1960. The Malayan Trade Agreement provides for the purchase of 80.000 tons of flour this year and in subsequent years. Both these agreements are exceedingly valuable to Australia’s export trade, and due credit should be given to the Minister by all concerned. Neither of these countries was a party to the 1956 wheat agreement. I understand that Ceylon has now decided to become a party to the agreement, but the Malayan trade is done outside the wheat agreement and, therefore is valuable indeed.
We are now told that a mission to sell flour is to visit West African countries. This mission is visiting Ghana, Nigeria and the Belgian Congo. Similar missions have already visited the Philippines and Mauritius. All this activity testifies to the effectiveness of the enterprise of the Minister for Trade, and his vigorous approach to the problem of finding markets. These efforts are, or should be, appreciated by all wheat growers in Australia, for these are days when markets are becoming increasingly competitive as costs rise. When we have such huge surpluses as we have to-day, markets are increasingly difficult to get and, perhaps because of the practices of which I have spoken, difficult to hold. Mr. Deputy President, I support the bill with great enthusiasm, and I commend the Minister and the Government upon its introduction.
.- It gives me great pleasure to support this measure, which calls for the ratification of the 1959 wheat agreement. At the outset, I must congratulate the Minister for National Development (Senator Spooner) on his second-reading speech. In fact, I find it so comprehensive and well-founded that there is little I can add to this subject. But the bill itself is of such major importance that, I believe, at least some reference should be made again to some of the features that will be of such benefit to mankind. Senator Sheehan has made a very thoughtful contribution to the debate. There are only one or two points upon which I want to join issue with him. It is a great pleasure to hear Senator Pearson speaking again with such clarity and force on the subject that he knows so well.
One would be using a fallacious argument if one contended that the completion of this agreement would provide a solution to all the problems of the wheat-exporting countries or, for that matter, of the wheat importing countries. But one feature stands out. It proves conclusively that when men of goodwill who are prepared to discuss their problems meet in conference, they can adjust their differences in an international agreement for the benefit of all concerned. The real significance of this agreement is not that it is an agreement, as such. I suggest that it is one of the most important measures that can be considered, because it deals with food, which is the most sought-after commodity in the world. Whatever else is lacking, people must have food. We know that there are in the world to-day two diametrically opposed ideologies, and that a battle is being waged, through the medium of food, for the minds and bodies of men. For that reason, this measure assumes a significance that lifts it out of the realm of ordinary legislation.
Senator Pearson has dealt very fully and effectively with the two schools of thought that prevail regarding the dumping of foodstuffs, with particular emphasis on wheat. He has told us that America has, very laudably, adopted a policy of ministering to the needs of the less privileged. He has made, and made well, the point that that policy should be confined to those countries that cannot afford to pay the normal trade prices for the product. Because of the importance of foodstuffs to-day in the preservation of peace and in raising the standard of living of the under-privileged, we must have a further look at where this policy will get those of us who are interested in this great product. I agree entirely with Senator Pearson’s statement that, although the policy is a very worthy and laudable one, if it is pursued to the ultimate it may well cause an imbalance of economy in other countries, which will thus be rendered a disservice. Our .own Minister for Trade, the Right Honorable John McEwen, was perhaps the first statesman in the world to raise his voice against the intrusion of these dumping policies into traditional markets. He has stated categorically that he is not a critic and that we, as a people, are not critics of a policy that will lift the standards of living of those who are in need. But in order to protect the economy of our own country, we must say where the line has to be drawn here or there. Our traditional markets must not be entered. For that reason, I think it is worth my going on record as saying that the voice of Australia has been heard in the councils of the world and that we may be in a position at least to hold the markets we have. The position has been aggravated because of the French policy. France is sorely in need of foreign exchange. It is prepared to subsidize wheat in order to capture overseas markets and so obtain additional foreign exchange. The same applies to Italy and, to a lesser extent, to Germany. In view -of that background, it is, I repeat, a triumph that men of goodwill are prepared to come together and to complete another agreement, for the benefit both of the -importing countries and the exporting countries.
Perhaps the greatest triumph of all is revealed by the fact that the .minimum price of 13s. 6d. a bushel has been held and the maximum price has been reduced by a mere 6d, That, I think, is conclusive proof that the interested parties to this agreement have not approached the problem with the thought, “ What can I get out of it for myself? Where can I get cheaper wheat or a better market? “ They have decided that this is the best policy that can be pursued in the interests of all parties concerned. That, I believe, Sir, is a great tribute to the men who have met in conference and drafted this agreement.
Senator Sheehan made some reference to the return of the United Kingdom to the agreement. He said, Sir, that he felt that when the United Kingdom was excluded, Australia could have been, shall I say, to some extent blameworthy for her part in the transaction. Such is not the case. A perusal of the history of these negotiations proves conclusively that America and Canada, the major exporting countries, which have a voting strength commensurate with their export bushelage, demanded a certain price. Great Britain said that it would not go up to that level, so Great Britain remained out of the agreement. The voice of Australia was quite insignificant in those negotiations.
The return of the United Kingdom means that another 190,000,000 bushels is involved in this International Wheat Agreement. Great Britain has agreed that she will purchase 90 per cent, of her requirements under the agreement. That adds a very substantial bushelage to the quantity involved in the agreement. Added to that, we have a special agreement with the United Kingdom which calls upon her to take some 28,000,000 bushels from us annually.
I would like to say a word or two about our own wheat industry as it is to-day. I think it -is fair to say that the industry generally enjoys a measure of stability - a stability that has .been to a very great extent made possible by our orderly marketing system. When this Government assumed office in 1949, it made it abundantly clear that it was in favour of the orderly marketing .of all our primary products and that it would pursue such a policy. Orderly marketing under the .control of the growers, the producers, engendered in the industry the spirit of co-operation and goodwill that makes it a force in negotiations to-day. We have made great strides with our handling facilities. Most of the States are on a bulk-handling basis now, and it is worthy of note that the Victorian system is regarded perhaps as the cheapest and most efficient in the world. That goes to show that, although we are only a small country as far as export bushelage is concerned, we have the know-how and the ability to organize ourselves to a very high degree of efficiency. I believe, too, that it should go on record that we acknowledge the contributions that the leaders of the industry have made in assisting us to attain the degree of efficiency that the industry enjoys to-day. It is conceded, I am sure, that our orderly marketing system and our organization and handling facilities are in world class.
– What about droughts?
– There are factors over which we have no control. Even this Government, efficient as it is, has no control over droughts. I believe that there remains to be done in this country a very real job of research. It is true that the growers have, of their own volition, made available one farthing per bushel to go into a research fund, so that we can develop means to conquer the pests and evils that make progress difficult. Unfortunately, Sir, in Victoria a research council has not been set up. It is not my province to traverse the merits or the demerits of that argument to-night. It is a matter for some concern that disagreement among the organizations involved has prevented the body from being set up.
As an honorable senator has mentioned, Victoria is in the throes of a drought, and South Australia is perhaps in even a worse condition. When you drive through the countryside and look at the growing crops of wheat and oats, you see here and there that one crop is outstandingly better than those around it. When you inquire as to the reason, you find that the rainfall in both areas was similar, but that the crop that shows more bloom and more promise is on land that had been spelled for a number of years. That is an indication that, rainfall being equal over spelled land and land not spelled, there is something in some soil that produces a better crop. As we know, droughts recur as surely as night follows day, but if we develop our research into those factors, at least we will have an added insurance against droughts. As we know, droughts come in cycles. I well remember that in the 1930’s we seemed to have more drought years than years of abundance.
I believe, too, that we have got to meet the market. We have been growing only wheats that have been yielding prolifically. No one can blame the grower for that, because he has been given no incentive to produce better quality wheat. He cannot be criticized on that score. Because of the highly competitive market in which we find ourselves to-day, we have to face the issue. There are huge wheat surpluses in the world, and we cannot go on adding to those surpluses. We must develop a product for which we can seek new markets.
As I have told the Senate before, I know of an organization in Japan that imports 22,000,000 bushels of hard wheat annually from Canada. That organization has stated quite categorically that if Australia can produce the same type of wheat - and it has yet to be proved that we cannot do so - it would be an economic proposition for Japan to buy such wheat from Australia. This is only one of the cases that I could cite. Whilst the buyers are demanding a particular type of product, we must, if we are to survive and progress in this industry, be prepared to spend a great deal of money, and undertake a good deal of research, to develop a product that will be acceptable to those buyers.
Sir, another harvest is fast approaching ; a harvest that will be merely a shadow harvest in South Australia and not quite so poor in Victoria. I think that all honorable senators must be concerned about the financial circumstances in which many of the growers will find themselves. I know that it may be argued with justification that a grower who has enjoyed nine, ten, fourteen or fifteen years of good seasons should be in a position to tide himself over a bad year, and I think that many of the growers will be in that position. But what individual in another field of activity could work for twelve months and involve himself in all the costs of running his business or profession, without having an income for that year, and still be in a position to carry on his occupation? That cannot be done in any other industry, and in the wheat industry, in which the costs are tremendously high, there is going to be some economic stress. I have no suggestion to make to the Government to meet that situation except that I ask it to make the first advance for this season’s wheat on the highest possible level commensurate with sound, economic policy. I put it to the Government also that it should consider the credit facilities that could be extended to people who need them. This industry is of such vital importance, not only to our rural areas but also to the secondary industries in our metropolitan areas, that it cannot be permitted to languish in any way.
The implementation of this agreement, and the manner in which it has been concluded by so many countries that are experiencing difficult circumstances, prompt me to suggest to the Senate that the time could well arrive when we will have a world-wide authority charged with the responsibility - and clothed with the necessary authority - of distributing throughout the world where it is most needed the wheat of the exporting countries. I do not want to be misunderstood and have it suggested that I am preaching a policy of give away or a policy of socialism. Such is not the case. As soon as you take away the incentive motive, production must recede.
I believe that this agreement proves that at last we are moving in the direction where commonsense will prevail and where orderly marketing and orderly distribution will play a major part in meeting the needs of the people of the world. The fact that the population of the world is increasing by some 50,000,000 a year is cause for very sobering thought, and one which prompts me to say that instead of talking about surpluses and restrictions, as a few people do, we should realize that the time is at hand when we will have to give consideration to expanding and developing our production. I am quite sure that Australia’s participation in this agreement is irrefutable evidence that this Government is playing, and will continue to play, a major part in stabilizing the wheat industry which is of such tremendous value to Australia.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Senate adjourned at 10.24 p.m.
Cite as: Australia, Senate, Debates, 17 November 1959, viewed 22 October 2017, <http://historichansard.net/senate/1959/19591117_senate_23_s16/>.