7th Parliament · 1st Session
Mr. Speaker took the chair at 3 p.m., and read prayers.
Bill returned from the Senatewithout amendment.
The following papers were presented: -
Public Service Act -
Promotions of -
H. Evans, P. Mitchell, J. E. Allen, and C. A. Stinaon, Department of Defence.
L. Sullivan, Postmaster-General’s Department.
Dr. Gilruth’s Travelling ExpensesRepresentation.
– The honorable member or Grey asked me a short time ago what travelling expenses had been received by the Administrator of the Northern Territory since his original appointment. I have ascertained that Dr. Gilruth has been paid £2,161 16s. 3d. for travelling expenses, of which amount, £1,375 7s. 3d. was paid in connexion with travelling in the Northern Territory. An allowance, at the rate of £2 2s. a day, was given formerly ; but the rate now is £1 a day within the Territory, and 30s. a day when away from it.
– Is the Minister aware that on Monday evening a. monster meeting was held at Darwin to protest against the re-appointment of Dr. Gilruth to the position of Administrator of the Northern Territory, and to demand from the Government direct representation? Have the Government any intention of granting direct representation to the people of the Northern Territory?
– All I know of what took place at Darwin last Monday is what appeared in the newspapers. I understand that a reception was arranged, and that there was a counter demonstration. I have had in mind the advisability of associating with Dr. Gilruth - and I told him of this - a council, which would bring knowledge of the administration home to the people of Darwin. I have prepared some notes on the subject, and shall, in due course, bring the matter before the Cabinet.
– Will the Minister for Trade and Customs have prepared, and laid on the table, a return showing the quantity and value of the apples exported from each State during the last five years?
– Is it a fact that the English mail via, America did not leave Melbourne until this morning? If so, why were the receiving-boxes in Melbourne closed at 5 o’clock yesterday afternoon ?
– I shall makeinquiries and let the honorable member knowthefacts.
– Following up the matter referred to by the Honorable member for Corangamite, I desire to ask the Postmaster-General whether he cannot arrange to give the public longer notice of the departure of the mails for the Expeditionary Forces? In Monday’s issue of the Herald there appeared an intimation that these mails would close at 5 p.m. yesterday; but yesterday morning’s newspapers stated that they would close at noon. That was obviously an unfair notice to give to the people of the city, much less to those of the suburbs .
– I can only give the honorable member the answer that I furnished to the honorable member for Corangamite. I have no knowledge of the particular case to which he refers, but shall have inquiries made, and give him a reply as soon as possible. The Department can have no object to serve by failing to give the public every facility possible to enable them to get their mails away.
– Has the attention of the Prime Minister been directed to a report in the Sydney Daily Telegraph, of the 31st July, of a meeting of the Sydney City Council, at which Mr. Alderman Joynton Smith stated that a number of business firms have refused to reinstate former employees who have returned from the war?
– I had not seenthe paragraph which the honorable member has handed to me.I do not know that there is power vested in the Government to punish those who refuse to reinstate returned soldiers, but I should be glad to see a return of such persons, because I think that their names might very well be publicly pilloried. Weshould then, at least, know what their patriotism is worth.
– Is the Prime Minister aware that the price of cornsacks is daily rising? What steps are being taken to prevent trade juggling in this commodity such as took place last year ?
– The Government have publicly announced that it guarantees that a sufficient supply of cornsacks will be in Australia in time for next season’s harvest, and that these sacks shall be sold at their landed price, less duty. I am not sure whether anything has been done regarding the price of cornsacks already in Australia.
– There has been a very sharp rise in the price of cornsacks.
– We have no control over the market at Calcutta, whence the sacks come. If merchants there choose to put up the price, we cannot interfere with them. But this Government, so far as it can do so, will see that the farmers obtain cornsacks at the lowest price, and will prevent speculators from juggling with the market - to use the honorable member’s expression.
– I have been supplied with the following answer to the question which the honorable member for Capricornia asked on Friday: -
The agreement with the two wool-top manufacturers - Whiddon Brothers Limited, and The Colonial Combing, Spinning, and Weaving Company Limited - is dated 1st March, 1917, but its provisions were settled about two months earlier.
This agreement provides that, in consideration for permission to fulfil existing contracts and to carry on their business, the topmaking companies shall -
Pay (not the appraised prices for their supplies of wool as provided in the Wool Regulations War Precautions Act, as is the case with other woollen manufacturers ) , but the full actualflat rate, whatever addition to the appraised price that might mean. (This addition now turns out to be 9.5 per cent., or, on the quantity of wool that will be consumed to fill the contracts so far entered into, about £70,000 sterling. On purchases made to date, the amount is £17,000 sterling/)
Pay to the Commonwealth Government, practically as a licence-fee, 50 per cent, of the profits. The agreement further provides that, if a war-time profits tax is levied, the controlled companies shall not have more than two-thirds of their profits taken from them under the levy imposed under the agreement and the war-time profits tax.
Sell tops only through or with the consent of the Commonwealth Government, so that operations shall be effectively controlled.
Pay the. cost of a special continuous audit of their books and accounts by an auditor appointed by the Commonwealth Central Wool Committee, who has full power to disallow any items of expenditure.
– Is that agreement with Whiddon Brothers Limited, and the Colonial Combing, Spinning, and Weaving Company Limited specially privileged, or is it possible for any person, firm, or company, in the possession of combing, spinning, or weaving machinery to obtain the same concessions in order to make and export the tops?
– An agreement cannot be made to cover persons who are not parties to it. By no device of the law can that be done. The honorable member is in error in saying that the agreement gives a privilege to the topmaking firms mentioned. In reality it takes privileges from them. It takes half their profits, and compels them to pay in the aggregate £70,000 per annum more for raw material than other manufacturers. The latter get their raw material at less than the appraised price, whilst the firms concerned in this agreement are obliged to pay the appraised price, representing an aggregate difference of £70,000 per annum. That is a condition under which those firms are carrying on a controlled business. They are managing their own business, subject to the control of the Government.
Position of Officers
– I wish to ask the Minister for Works and Railways - (1) Are the officers responsible for the extraordinary waste of public money, neglect of supervision and reasonable administration, as exposed in the report of the Royal Commission on Wasteful Expenditure at Canberra, still employed in the Public Service of the Commonwealth? (2) Is Mr. W. B. Griffin now in full control of all works within the Territory, and what is the date of his appointment?
– The honorable member did me the courtesy of intimating that he proposed to ask this question, which resembles one that I answered about a week or a fortnight ago, and I have made some inquiries on the subject. With the exception of Colonel Miller, who, up to the time of the inquiry, was Administrator of the Federal Capital Territory, all the officers dealt with in the Royal Commissioner’s report are to be found either in the Works Department or in the Department of Home and Territories. Having had an opportunity of examining the Royal Commissioner’s report, and of testing it by certain expert advice and analyses, I am bound to say that I do not altogether share his views. I am not one of those who believe that a Minister should hand over to a Royal Commission the responsibility for his Department. I propose, when the Cabinet has had an opportunity to examine the very voluminous data and evidence connected with the inquiry, to submit the matter to my colleagues for consideration, and then to make certain recommendations. As to the second part of the question, Mr.. Griffin has been for some time - under the direction of the exMinister for Home Affairs, Mr. King O’Malley - in complete supervision of all works in connexion with the Federal Capital. His agreement with the Commonwealth Government is dated 18th October, 1913, and it was renewed for three years as from 18th October, 1916.
Bill presented by Sir John Forrest, and read a first time.
– Is the Treasurer aware that, notwithstanding the promise he gave last week, that he would take steps to see that income tax forms were obtainable at all post-offices, very many applicants in the northern districts of New South Wales have been unable to obtain them? In view of the fact that returns must be sent in by the end of the month, will theright honorable gentleman see that these forms are at once made available’?
– I shall be glad to make inquiries, and have the matter remedied. Is the honorable member certain that the omission relates to Federal and not to State income tax forms ?
– Yes. It is the Federal income tax forms that’ are wanted.
– I was informed that the form that was missing related to the State income tax return. I shall at once make inquiries.
Case of Mr. T. P. Lyons
– Has the Minister for Works and Railways received information that one T. P. Lyons, general organizer of the Australian Workers Union, in consequence of information received from a “ junta “ official, had knowledge that suspicion attached to a Government employee in regard to having “faked” his time? Further, is it true, that this Mr. T. P. Lyons, under a” bogus name, sent to the person who is under suspicion, a telegram advising him to be on the alert? If so, what action have the Government taken to deal with this flagrant breach of the regulations of the Post and Telegraph Department?
– Some months ago it was reported to me in the Railways Branch of the Department that an organizer in connexion with the eastern section of the east-west railway - a man named Lyons - had been in somewhat improper touch with one of the station staff of timekeepers, and that this involved the sending of certain telegrams - one of which, at all events, was under a bogus name - which were supposed to warn the official of an approaching visit by the inspectors. I asked for the opinion of the Crown Law authorities as to the law on the question, and, having ascertained it, I sent it on to my colleague the Postmaster-General, with a recommendation that the man be prosecuted. I think that the matter is still in the hands of my honorable colleague.
– In view of the fact that some landlords are raising their rents from 20 per cent. to 30per cent., will the Prime Minister induce his Government to bring in a measure that will prevent the raising of rent during war time?
– This matter has been dealt with on several occasions, and has been considered very carefully by several Governments of which I have had the honour to be a member. There are many difficulties, as every one knows, in fixing prices; but the difficulties in the way of fixing rents are, I think, if anything, more serious. Short of the creation of a number of rent boards or courts, I do not see how it could be done.
With the object that the honorable member has in view, I am entirely in sympathy. I have nothing but the most supreme contempt for men who, while not giving a better return for the money, raise rents in time of war. If, of course, a man spends £1,000 on renovating a house, he has a right to a higher rent. If it were laid down asa hardandfast rule that no landlord shall raise his rent, then a man who improved a house so as to increase its value from £500 to £1,000, would be unable to get any more for it. That is not what is wanted. What is required is that men shall not exploit the public, and particularly the widows and dependants of our soldiers, I confess I do not know how it can be done by law, except, as I have said, by the creation of rent courts, which in themselves would not be an unmixed good. I see no other way of dealing with the evil than that of holding such landlords up to public contempt. They certainly deserve it, and should receive it in ample measure. I wish I knew of some more effective means. If I did, I would immediately adopt them.
– Will the Government consider the advisability of introducing a Bill to create fair-rent courts on the lines of those in Sydney?
– I do not know what the Courts are in Sydney. My own experience of Sydney is that the rents there are certainly not a good example to the rest of Australia. If rents in Sydney are to be taken as the outward and visible manifestation of what Bent Courts are doing, then God save us from any more such courts !
– They are reducing the claims of landlords and preventing the raising of rents during war time.
– Very likely the reason they are able to do that is that landlords in Sydney have raised the rents so high that they are not able to raise them any higher.
Assent to the following Bills reported : -
Appropriation Bill 1916-17.
Appropriation (Works and Buildings) Bill 1910-17.
Unlawful Associations Bill.
Wheat Storage Bill.
– Can the Minister for Home and Territories give the House any information as to what has become of the suggested ordinance for the control of the Northern Territory in reference to workmen’s dwellings? Is it intended to have a Board, representative of both sides to control the matter?
– The honorable member mentioned to me that he intended to ask this question. . A rough draft of an ordinance was prepared, but as it is in Darwin I have not seen it. Inquiries are being made as to the necessity for passing an ordinance on the lines of the Queensland Act, which makes provision for grants to workmen for the construction of dwellings. The inquiries are as to the extent to which men really desire assistance of the kind ; and when a report comes to hand I shall be able to tell the House the intentions of the Government.
– Some days ago thehonorable member for Capricornia asked me the following question: -
How many pounds of wool tops on which bounty was paid were exported from Australia to Japan during the period from 1st January, 190S, to 31st December, 1915?
The answer to the honorable member’s question is - 16,228,017 lbs.
– Will the Prime
Minister lay on the table the conditions governing the importation and distribution of cornsacks, and also inform us as to the way in which the Government propose to remit the duty paid on these articles ?
– I have already, in reply to the honorable member for Wannon, explained the manner in which we are going to import cornsacks. As to the manner in which we propose to remit the duty, I personally think the better way would be by a resolution laid on the table of the House. Of course, it is quite immaterial, so far as the farmer is concerned, as to how it is done. If the Government is the buyer of the cornsacks, or even if they are bought by private firms, we shall take them over on board, and they will legally become our property. It will then be a matter of a mere bookkeeping entry as between one Department and another, and the bags will be landed free of duty. It will all depend on the arrangement whether we shall retain the property, or hand the sacks over to the private firms which imported them; but in any case the bags will be distributed by those firms at a price fixed by us.
– Does that mean that the sacks already sold will not have any duty remitted ?
Mir. HUGHES. - I am talking about the cornsacks to be imported.
– I am referring to those now being distributed.
– We cannot interfere with cornsacks which have paid duty, and are in Australia.
– I am alluding to those cornsacks now being sold for next year’s crop.
– All those to be imported for next year’s crop will, of course, be duty free; the mere matter of how we do this is not very important.
– Many farmers have made inquiries from me with a view to ascertaining whether sound second-hand bags will be allowed to be used during the coming season. Such bags were not allowed last season.
– No second-hand bags will be allowed to be used. It is considered that the risk is too great; and we shall take every precaution to see that we get new bags as cheaply as is humanly possible. These bags will be duty free, and, in the long run, the farmers will be better off with new ones.
– Is the Minister for
Works and Railways prepared to make a statement as to the condition on which this line is being constructed, so far as concerns the land to be the property of the Government on either side? We ought to understand, before the railway is opened, the, conditions on which it has been constructed.
– I think that such a statement may appropriately be made when the measure concerning this line is next before us.
– By what authority, and for what national purpose, was a notice issued to the press to the effect that no reference was to be made to the conference between the Commandant at Sydney and the Sporting Clubs, about the reduction of sports meetings, until the matter had been submitted to and revised by the Censor?
– I am unable to say, but I do not see anything unusual or improper in the notice. What it’ means is that until the conference makes its report to the Minister the proceedings shall not be made public; and that is quite usual, as in the case of the reports of Select Committees and other reports. There is nothing in this to prevent the discussion of the question of a reduction of sport, and it did not prevent the newspapers anticipating what the conference mightsay . The newspapers were only prevented from saying what ithe report actually was.
– The press had not to say anything about the matter.
– I think the press thought that the notice meant more than it really did. All it meant was that the press had not to use the Commandant’s report before it had reached the Minister, and I think that is quite right.
– As Mr. Clarke is about to resign his position as Food Prices Commissioner, have the Government yet decided to appoint a competent man in his place to carry out this very important work?
– The Government have decided to appoint a competent man, but the difficulty is to get such a person. Does the honorable member know of a competent man ? It is a standing disgrace to the Public Service of Australia that it is paying a man like Mr. Clarke a small salary when a private firm can offer him twice as much, a six years’ engagement, and prospects amounting to three times the salary he receives from the Commonwealth. If the Commonwealth were to pay Mr. Clarke £2,000 per annum, his services would be cheap -at the price.
– A statement was made which gave the farmers the impression that they are all to pay a unir formprice for their cornsacks. Many forward sales have been made at prices, varying from 8s. 9d. on the 18th June, to 9s. 3£d. on the 27th July. Do the Government propose that any arrangement shall be made with respect to future requirements, other than sales already made, or are the farmers to make their own private contracts ?
– They are to make their own private contracts. One reason for the advance in the price of cornsacks is that the jute market in Calcutta, probably in anticipation of heavy buying in. Australia and elsewhere, has’ advanced sympathetically, as they say, although it is very unsympathetically from our point of view. The result is that the farmer, by holding back, has now to pay 9s. 3½d. I see no prospect of the jute market falling between now and the period during which we shall purchase the whole of the sacks required for the next harvest, and I advise farmers to buy. So far as I can see, there is no prospect of their getting sacks cheaper than at present. If the local market, however, tries to exploit the farmer, we shall know how to deal with it, but so far as the Calcutta market is concerned we can do nothing.
– I rise, to make a personal explanation. On Friday I quoted a newspaper which stated that the honorable member for Grey had convened a meeting at Port Augusta some time ago to arrange the rates of pay and working conditions in the Commonwealth Railway Department. The honorable member assures me that he knows nothing about such a meeting beyond what he has read, and I regret my unintentional misrepresentation. I understand that the convener of the meeting was Mr. J.J. Poynton, of the Commonwealth Railway Department.
– I wish to make a personal explanation. On the last day of sitting I addressed a question to the Prime Minister with regard to that well-known organ of Liberal publicopinion, ‘The Nation, which I distinctly asserted, if that were necessary, was published and printed in Great Britain. I referred also to the Labour Leader. The Prime Minister was good enough to reply, but, owing to the number of interruptions by those honorable members sitting behind him, who apparently knew less about the matter, if that were possible, than the Prime Minister, I did not quite catch what the honorable gentleman said. I now find that, despite the perfect clearness of my question, he attributes to me a reference to a revolutionary organ said to be circulated in Ireland, and named The Nation. I doubt if such a paper has circulated in Ireland for 100 years, but I am not sure on that point. My reference was clearly to that organ of public opinion, The Nation, well known in Australia, and printed and circulated in Great Britain. I asked the Prime Minister if he approved of such newspapers as The Nation, which was circulating in Great Britain, being prevented from entering Australia. He will see that the answer he gave to my question was irrelevant and useless.
– In New South
Wales patriotic funds are utilized to supplement the payments to the wives and families of men at the Front. When public subscriptions were obtained in Victoria and South Australia it was understood that the money would be applied to the same purpose. In Victoria that has not been done. Will the Prime Minister say if there is any chance of the Government commandeering the funds in order that they may be applied as was intended when the money was given by the public?
– The Minister in charge of Repatriation, Senator Millen, has this matter in hand, and it has been the subject of deliberation by the Ministry. The Minister has a clear and definite policy which he has recommended to the Government, and which, I think, will be satisfactory on the whole. I prefer to allow the Minister to make his statement in his own way.
– Has the Prime
Minister yet completed his promised investigations into the increased price of fertilizers?
– Up to the present we have not been able to get the information we require, but I hope to have it in a day or so, and I shall then make it available to the honorable member.
Mr. SPEAKER notified the receipt of messages from His Excellency the GovernorGeneral recommending appropriation for the purpose of the following Bills-
Invalid and Old-age Pensions Bill.
– Can the Minister for Works say whether any expenditure is being incurred by the Government in connexion with that wild and extravagant scheme of ‘the Minister for Defence - the erection of an arsenal at Canberra?
– I do not know whether that is a fair way in which to ask a question.
– The honorable member was certainly not in order in submitting his question in such terms.
– I have discussedthe matter with the Minister for Defence, and, so far as I know, no expenditure is being incurred in regard to the arsenal at the present time. Certain plans have been referred to the British munition authorities for consideration.
– Has the Prime Minister read an article which appeared in this morning’s Age advising us that it is his intentionto depart for a higher plane? I would like to know whether the article was inspired and correct? If it is not correct, will the Prime Minister prosecute the Age under the War Precautions Act for having raised false hopes in our breasts?
– I have not been informed officially that the chariot of fire is at hand in which, like Elijah of old, I am to depart. When I get that information, I shall make it public if I do not depart during the interim.
– Is the Prime Minister prepared to make ‘a statement as to the intentions of the Government in regard to those organizations which are passing resolutions prejudicial to recruiting, and which are practically setting themselves up in opposition to the law?
– I have noticed recently only one resolution of the kind to which the honorable member refers, and that was a resolution which was passed by the Trades Hall, Melbourne. I have written to that organization asking whether the report which appeared in the press is correct, and I have been informed that in substance it is correct. The Government is now considering what its next steps shall be. When a decision is arrived at, I shall inform the honorable member and the public.
asked the PostmasterGeneral, upon notice -
– The Acting Public Service Commissioner has furnished the following replies: -
asked the Minister for Home and Territories, upon notice -
What has been the total Commonwealth expenditure on the Capital site for (a) lands,
-The answers to the honorable member’s questions are as follows : -
There are also some 4,000 acres lying to the east of the Military College land known as the Majura Valley, which could be irrigated from the Molonglo or Queanbeyan River.
The total Commonwealth expenditure on the capital site is as follows : -
No estimate has been prepared, as it has not been decided that any particular stage must be reached before the erection of public buildings is begun.
Auditor-General’s Staff and Postmaster-General’s Department
asked the Prime Minister, upon notice -
Whether there are any officers on the State staffs of the Auditor-General on loan to Departments under the jurisdiction of the Public Service Commissioner; and, if so, how many, and for how long ?
– The answer to the honorable member’s question is as follows : -
Four officers of the Central Staff, AuditorGeneral’s Office, and two officers of the State branches of that office are on loan to the Defence Department, while one officer of the Central Staff and one officer of the State branch are on loan to the other sections of the Prime Minister’s Department. The term for which the officers will be employed in their temporary positions is indefinite, the necessity for the transfer having been caused by war conditions.
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows : -
asked the Minister for Trade and Customs, upon notice, will he stale what is -
– The answer to the honorable member’s questions is as follows : - 1-6. The information desired as to the number of gas mantles imported into Victoria from the countries and during the years mentioned is given in the following statement : -
asked the Minister for Works and Railways, upon notice -
– The Treasury has no information on this subject.
askedthe Minister repre senting the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follows : -
Miners’ Corps - Unfit Men
asked the Minister representing the Minister for Defence, upon notice -
– The answers tothe honorable member’s questions are as follows : -
asked the Minister representing the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : - 1 and 2. The information asked for has not been compiled, and as it would involve considerable expenditure to compile the same, it is suggested that the honorable member should not press these questions.
Debate resumed from 25th July (vide page 431) on motion by Sir John For- rest -
That this Bill be now read a second time.
.- Any proposal of the Government to impose taxation tomeet the deficit in the Commonwealth revenue should be considered, not piece-meal, but as a whole. The Treasurer should have informed the House at the earliest opportunity what the sum of his taxation proposals is. That he has not done. We are being asked to consider a proposal which should be discussed in relation to other financial proposals, so that we might know what it is likely to return in the way of revenue. We have heard of a super-tax on, incomes, but do not know what the Winthewar Government propose in that direction, or what other burdens are to be placed on those who have not earned war profits, or any profits, but have fixed incomes.
The war-time profits tax is not to affect incomes from personal exertion. It is a tax upon wealth which is being used for the production of further wealth, and wages,, rent, light, power, and all other expenses are to be deducted from profits before they are to be subject to taxation. The measure is a proposal to tax the capitalist pure and simple, and is a revelation to the people of the manner in which the Win-the-war party proposes to treat the capitalist in war time.
This Win-the-war Government, which is so profuse in its lip loyalty to the men at the Front, is going to allow the capitalist 10 per cent, profit, plus £200 exemption, and 25 per cent, of all the excess profit that he can squeeze out of the public in addition. The Treasurer looks at me with mild surprise. There is no clause in the Bill which says that the taxpayer shall have 25 per cent, of the excess profits that he may be able to squeeze out of the public - that will be provided for in another Bill, which the
Treasurer is to give us later, fixing the rate of the tax. I do not wish to be too severe with the right honorable gentleman; he does not know as much as the Prime Minister knows about the matters to whichI am going to refer. His lot has been cast in very pleasant places. I do not suppose that he has ever been in the house of a very poor man. Not so the Prime Minister. The Treasurer laughs. If the Tight honorable gentleman is Teally acquainted with the life that is lived by the very poor, I shall have to include him in the censure that I hope to inflict on the Prime Minister.
The Win-the-war party had an opportunity to bring about equality of sacrifice. Speaking at Bendigo, the Prime Minister said, “ Wealth must also bear its burdens, and make sacrifices.” What sacrifices is the Win-the-war party requiring wealth to bear? Ten per cent., is an . extraordinary profit to make out of a business. If any one will look at the share lists issued by brokers prior to the war, he will see that millions of money were then available for all kinds of investments, returning, in some cases, as little as 4¾ per cent. People were ready to invest, according to their ability, in businesses which would not average a return of 5 per cent. A man who then bought shares in the Australian Bank of Commerce got only 4$ per cent.; from the shares of the Bank of Australasia a return to the investor of 5¼ per cent, could have been got, and from certain other bank shares a little more; but millions of money were available for investment in companies whose returns did not average more than 5 per cent. ; and to-day millions of money . are available for investment in industrial and other concerns whose returns do not average more than 6 per cent.
– You can get 6 and 6½ per cent. on mortgage.
– I have here a list showing the prices of shares during the month just passed. It shows that persons were then prepared to invest in the shares of the Bank of Australasia, although the return was only 5f per cent.; the Teturn from an investment in . City Bank shares being 6½ per cent. new issue, and 6f per cent. original issue. From shares of the Commercial Banking Company of Sydney 5f per cent. could be obtained; from those of the Commercial Bank of Australia preferential, 6¾ per cent. ; from English,Scottish, and Australian Bank shares, 6f per cent.; and from the London Bank of Australia shares, 7 per cent. The Teturn from an investment in Bank of New Zealand shares would give only 4 per cent. These figures show that a profit of 10 per cent. is excessive, and to tax only profits beyond that amount is to call for no sacrifice from wealth, such as. the general public expected this Winthewar Government to Tequire, and, therefore, returned it topower.
– A return of about6¾ per cent. is about the average on present market quotations.
– The average rate of return at the present time is slightly higher than that which could be obtained prior to the war.
I regard this Bill as a mockery. It mocks and jeers at the men in the trenches. Our soldiers are suffering at the present time. Their sufferings are so horrible that the Government will not allow any of the newspapers to describe them, nor will it permit a returned soldier to state what they are from a public platform. This Win-the-war Government is going to allow the capitalist, who is not in the trenches, and who is not! suffering at all-
– But who is raising prices.
– Quite so. This Winthewar Government is going to allow such capitalists who make these profits to escape this taxation. In his personal letter to wives and mothers of soldiers at the Front - a letter which he addressed to those whom he knew, as well as to others whom he did not know - the Prime Minister made the statement that the Win-the-war Government would not desert our soldiers or their dependants either now or after the war. I contend that the Government are deserting both, since they are allowing the profit-mongers to make their 10 per cent. profit, and a further 25 per cent. over and above that, by raising the prices of foodstuffs and commodities which the people require.
There was a way of protecting the dependants of the soldiers at the Front, and that was the course we proposed in our manifesto which was described by the Prime Minister as “ a spineless and emasculated thing.” I well remember that the right honorable gentleman spoke in the same way of the Liberal manifesto of the year before.
– Why did not the honorable member go on with his Bill?
– Let the honorable member take his gruel kindly. Our manifesto set forth that we would allow big companies to make a profit of 7 per cent., and that, as a Government, we would take all profits over and above that amount. That would have been the right way to protect the wives, the children, and the mothers of our men at the Front, since it would have made it unprofitable for these big companies to raise prices.
Nearly all the excess profits made during this war are the result of high rents and excessive prices charged for foodstuffs and the other necessities of the general public of Australia. No one knows that better than the Prime Minister. Did he not say to a reporter at Bendigo, “ For forty years I was like the Israelites wandering in the wilderness. I am now in the promised land.” No one knows better than he does what it costs the poor to live. It may be that because he is in the promised land he forgets; it would be more charitable to say that he does not forget, but is powerless, inasmuch as he is now in the hands of the Liberal party, and must do what that partyfells him to do.
– How should we help the poor by taking all these profits?
– By taking all profits over 7 per cent. we would make it useless for exploiters to raise prices. I propose to invite honorable members to consider for a moment what was said by tihe Prime Minister when leader of a great party which was very kind to him - a party which overlooked a lot of those personal failings with which we are all more or less afflicted, and which was kinder to him than a mother to her babe. As leader of that party he spoke of “ These unscrupulous persons who are heaping up war fortunes.” It will be interesting to hear what he has to say as leader of the Winthewar party if he ventures to defend this Bill. In 1915 he issued a pamphlet, at the request of our party, to explain the necessityfor the proposed amendment of the Constitution, and in this he said -
We are fighting a great war; the greatest the world has ever seen. Millions of men have died; many millions have been maimed, wounded, or have suffered from the frightful horrors of modern warfare. . . . No one must be allowed to shirk his duty, and no one must b.e allowed under cover of this war to exploit his fellow citizens.
To-day, as leader of the Win-the-war party, he says, in effect to the profiteers, “ I will allow you to make a profit of 10 per cent. Further, I will allow you a £200 exemption under this Bill, and 25 per cent, of excess profits, or, in other words, all that you can squeeze out of the public in excess of 10 per cent.” In 1915 he said -
Yet it is certain that this awful war that has brought death and suffering to millions already, that has plunged the peaceful world into a very inferno, has ruined industries, made countless thousands homeless and destitute, has brought to some huge profits.
He knows what is happening. He knows that this war has brought to some huge fortunes.
– Did not the War-time Profits Bill which the honorable member brought in, as Treasurer, provide for an exemption of £200?
– I observe that those who have long entered this House with the support of the commercial classes, are not to be found trying to put me off the track. It has been left to one of the new supporters of the capitalist - one who also wandered in the wilderness for many years, and is now in the promised land - to attempt to do so. He deems it his duty now not to stand by the poor, not to stand by the mothers, the wives, and the children of our soldiers at the Front, but to stand up for the exploiters and other unscrupulous persons who are making fortunes during the war.
– That does not alter the fact that the honorable member’s Bill provided for a £200 exemption.
– The exemption of £200 is neither here nor there. What would such an exemption mean to the treasurer of the National Federation who possesses a million of money, and is allowed by the Prime Minister to make 10 per cent, on his million? It would be to him as nothingas so much dust, such as’ that thrown up by the newly found supporter of the capitalist, the honorable member for Grey, who seeks to disturb me.
The Prime Minister said in 1915 that this war had brought to some huge fortunes. Those who made huge fortunes then would not allow their capital to remain idle. They have probably invested it once more, and the Prime Minister proposes to allow them to make a 10 per cent, profit, and 25 per cent, over and above that amount if they can get it out of the general public. The right honorable gentleman said in 1915 -
Many have made and are still making great fortunes out of this war. Many more are making higher profits than in peace time, and, despite protestations to the contrary, surprisingly few great companies and capitalists have been seriously affected by the war.
It is true that the Prime Minister may say, “ I wrote that statement as one of the leaders of the Labour party in 1915. I am now in the promised land, and, as the Treasurer said the other day, circumstances alter cases !” We might well cry, “Alas for the dominating personality which has ceased to dominate any one !” Three months ago the Prime Minister was full of fire. He was eager for battle. Did he not say, when speaking at Bendigo on 28th March last -
There is only one way to deal with a tiger that springs at your throat. It is not to offer him tracts. You want to rip his bowels out.
How does this little god of battles propose now ito deal with the capitalist, and his fortune, amassed in war time by preying upon the mothers, the wives, and children of soldiers at the Front?
In order to show that the Prime Minister knew what has taken place, let me quote another extract from one of his utterances in 1915. He said -
We all know how the cost of living has increased, so that it is with the utmost difficulty that the bulk of the community are able, even with the greatest economy, to make both ends meet; and, making every allowance for the effects of the drought, there can be no doubt whatever that this is due very largely to the manipulation of the market by unscrupulous persons at the expense of the community. These persons frequently pose as patriots. They subscribe £50 to the patriotic funds and fleece the public by high prices. Under cover of the war they are dipping their hands deeper into the pockets of the people. They are making huge profits at the expense of the community.
That was all true in 1915, and it is true to-day; and the Win-the-war Government have nothing to say about the matter, further than to allow the capitalist, with the limitations proposed, to squeeze all the excess profits they can out of the people. While the wives of our soldiers and others are suffering from high prices, millions of bags of wheat are stacked in our railway yards and other places, thousands of crates of rabbits, thousands of carcasses of lamb and mutton, and thousands of tons of butter are in cold storage. In the face of all this the Win-the-war Government will do nothing to protect the public against exploitation.
– There is only three days’ supply of meat in cold storage for this city.
– Then I presume that the stock-owners have done what the Prime Minister told them to do, namely, not slaughter their stock but allow it to remain on the hoof. The honorable member for Hume, who is one of the largest pastoralists in the community, has to laugh at that suggestion of the Prime’ Minister, who, while saying that he would protect the wives of our soldiers at the Front, at the same time suggests that the stock should be allowed to remain on the hoof and not killed to supply the public with cheap food.
At the present time, some of these unfortunate wives of our soldiers, with four, and even up to eight children, are expected, with the high prices, to clothe and feed their large families on something like £2 10s. per week. Probably a woman with four children would, with her separation allowance and all pub together, find herself with not more than £2 8s. per week.
– You are entirely wrong. A woman with seven or eight children would get more.
– I say that a mother with four children would probably not get more than £2 8s. per week in some of the States.
– She gets considerably more in Western Australia.
– I find that a woman with one child receives up to 38s. 6d., and with two children, up to 42s. 6d., and half-a-crown more for each additional child.
– That is from the Defence Department.
– The honorable member may be able to show that in Western Australia a wife with four or five children may get a little more than I have stated; but I ask him to tell us how much a mother with four children gets in the way of allowances, and to prove that, with all she gets, she can bring up her children, even respectably, in the face of the prevailing extortionate prices which the Prime Minister will do nothing to lower.
The right honorable gentleman was asked to-day whether he would take steps to prevent landlords to refrain from increasing rents, and his reply was, “ We can do nothing.” The Prime Minister knows, that under the War Precautions Act he has power to do anything in war time; and it would be a very easy matter for him to pass a regulation providing that no landlord in the Commonwealth shall increase rents without showing cause. What does the Prime Minister propose to do?. What does this gentleman, who has a certain method of dealing with the “tiger,” propose? He said today, “ I have the most supreme contempt for such a landlord, and I propose to hold him up in the public pillory.” At this point, however, an honorable member interjected the question, “What does the landlord care for that?” We may place the landlord in the public pillory, but we cannot get a newspaper in town to publish the name of one who has increased his rent. What do these gentlemen care for the good or bad opinion of the Prime Minister so long as they are permitted by the Government to levy extortionate rents and charge extortionate prices for all kinds of foodstuffs?
Let us look for a moment at the increases which have taken place in the prices of some of the main items of household commodities. Bread was 3½d. a loaf before the war, and is now 4d., although there is no dearth of flour or wheat ; butter, which was1s. 3d. before the war, is now1s. 7d. ; and meat has risen from 6¾d. to 10¾ d. In the case of meat we know there are various cuts, and, of course, various prices, but the poorest quality, which couldbe bought at 5d. before the war, is now11d.
– What are the prices in the Old Country?
– The honorable member will find it very difficult, indeed, to act up to his win-the-war promises to the people of Australia; and I suggest that he tries to frame up some kind of defence, and not content himself with asking what prices are paid in the Old Country.
There has been an all-round increase of 30 per cent, in the prices of commodities since the commencement of the waT, and we might ‘ask the question why the Win-the-war Government are so tender to the capitalists at the present time. The reason is clear. The Win-the-war party is now prepared to reward the men who helped it to place and power. At Geelong, in January last, the Prime Minister said ‘he would only ask one question of any one <who wished to be a member of the National Federation, namely, “ Do you put your country and Empire first ¥ If so, in God’s name, come in.” It will be seen that the Prime Minister had the daring to launch bis political barque in the name of the Almighty,. and he invited all good capitalists to come in. This the capitalists did, and they put liberally into the political plate. They “ cast their bread on the waters,” and, after a few months only, it is to return to them.
Had the Labour party been returned to power we should, as we said, have taken the whole of the excess profits; and the gentlemen who supported the Win-the-war party knew perfectly well that if we got back again we would do so. They, therefore, subscribed to the National party’s funds in huge donations, which enabled that party to engage publicity secretaries at high salaries, display huge posters, and insert in the daily press large advertisements, costing, in some cases, £50 an issue.
– ‘One advertisement in the Sydney Morning Herald cost £110, and another in the Daily Telegraph cost £84.
– I dare say the honorable member is right. These huge sums, which were used to successfully smash the Labour party, were not found by the general public of Australia, who have not the necessary wealth at their command. The money was subscribed by capitalists, who knew that war-time legislation was impending, and they, therefore, assisted to put in power a so-called Win-the-war party, which, when returned, would protect them.
– Why did the honorable member, when Treasurer, abandon his wealth levy ?
– That is another matter altogether. A levy on wealth might have very disturbing effects, especially in those cases where the wealth is not used for the production of other wealth. The Bill of which the capitalists were afraid was the Bill that the Labour party, if returned, would have introduced to take over the whole of the excess profits.. Honorable’ members opposite are to get their reward.
I really do not think it worth while giving any attention to the machinery clauses of this Bill, because where such a large profit as 10 per cent, is allowed, together with such numerous exemptions and deductions, hardly anybody will be touched.
– If a tax on all profits above 10 per cent, will not touch anybody, what becomes of the statement about the huge profits, amounting to 2,000 and 3,000 per cent., which these extortionists are said to be making?
– Ten per cent, on the £1,000,000 of which the treasurer of the National Federation is said to be possessed would represent to that gentleman a profit of £100,000. If the Treasurer allows 10 per cent, profit on the capital invested throughout Australia, he will find that his estimate of a return of not more than £900,000 in two years will be fairly accurate. I do not propose to say any more at this stage on the Bill. If the measure passes’ the second-reading stage, I may propose two or three amendments in Committee, but, as I have already said, the Bill is a mockery, and is regarded as a joke even by the Melbourne Age, which supported the Win-the-war party during the last election.
– Did your Bill provide for the exemption of insurance companies and the other companies exempted in this Bill?
– This Bill allows more modifications than did the measure I brought forward. The Bill introduced by the Labour Government applied to insurance companies, and for the life of me I cannot see why proprietary insurance companies should be exempt. If a life insurance company is distributing its profits amongst the people who have insured their lives in the interest of their families, there is some excuse for exempting them, but proprietary companies, which are making war-time profits and dividing them amongst their shareholders have no such claim to consideration.
– I regret the attitude adopted by the honorable member for Capricornia. Hia attack was one of the most pitiable exhibitions I have seen for some time. I want to remind him that vituperation is’ not argument, and it does not advance matters. The honorable member has indicated very clearly his utter innocence of the provisions of the Bill itself.- He has shown himself to be quite ignorant of the mere rudiments of trade, and he has approached this subject in a way that is not worthy of himself. The taunts and reproaches which he flung at this side of the House in regard to deserting the men in the trenches were in execrable taste. The only persons who have deserted the men in the trenches are the honorable member and his supporters. We on this side are making appeals for recruits. The honorable member dare not. go on the platform’ and aid in getting recruits, because outside organizations with which he is connected have passed resolutions instructing members of the Parliamentary Labour party that they are not to go on the platform to assist the Win-the-war party.
– That is not true.
– A few members of the Labour party have gone upon the platform to assist in recruiting, but they are precious few. The Trades Hall party has passed resolutions forbidding them to do that. I regret to be obliged to make a reflection of this kind, but the honorable member for Capricornia would persist in reproaching the party on this side with having deserted the men in the trenches. That was a most unworthy taunt, and entirely unmerited. A totally different attitude should be adopted by both sides at a time like this. We must aid the men in the trenches, not only by enlisting recruits to support them, but also by finding necessary funds for the purpose of securing them as much comfort and solace as is possible under the circumstances.
– The men cannot get justice when they return from the Front.
– Then I hope the honorable member will find those on this side of the House helping him to secure justice for the returned soldiers. It is by securing recruits that the Winthewar party hope to succeed, and I ask the honorable member to assist us.
The whole burden of the speech to which we have just listened, so far as it referred to the Bill at all, was that a 10 per cent, trade profit is excessive. The honorable member himself supplied the answer to that argument. From ordinary investments of a gilt-edged character, involving no risk whatever, the investor is able to secure to-day between 6 and 7 per cent. The slightest inquiry would have enabled the honorable member to discover that to-day the risks of trade are very serious indeed in consequence of tha fluctuations in prices, and particularly because of the difficulty in securing stocks.
– The prices are always fluctuating upwards.
– At this time, traders must be excessively cautious. They dare not overstock because of the possibility of the war terminating in the not remote future, and a consequent immediate slump in stocks. If it were possible to so frame a measure as to secure the excess profits made by those who have exploited the public, and made money out of the war, our energy should be bent to that policy. Those are the people whom we are all anxious to reach, and honorable members opposite should assist us to do that. But the honorable member for Capricornia has made a fundamental mistake. This is not a War Profits Bill, but a War-time Profits Bill; and it is the alteration of it from a war profits tax to a war-time profits tax that has brought about the serious anomalies that are incidental to the Bill now before us. I may say that the Bill is an infinite improvement on the rather crude measure introduced to the previous Parliament by the honorable member.He made his Bill especially anomalous by reason of the fact that he made no attempt to discriminate between the conditions under which the English Act was introduced and those which exist in our own community.
I ask honorable members, in approaching this subject, to bear in mind this fundamental fact, that the War Profits Bill in the Mother Country ‘was introduced because of the war -conditions’ obtaining there, for the purpose of discouraging the expansion: of trade and industry, and concentrating the efforts of manufacturers on the production of armaments and munitions. To-day the Mother Country is practically a huge arsenal.
Fully three-fourths of the business community is directly or indirectly engaged as war contractors or agents, or in some other capacity in dealing with munitions and armaments and other material used in the conduct of the war. Those people are making considerable profits out of the war itself, and whilst there may be some justification for the attempt made to levy a tax on them, we must realize that in. Australia no such conditions exist. A War-time Profits Bill is absolutely inapplicable to the conditions of the Commonwealth. I would assist honorable members in passing a War Profits Bill for the purpose of getting at those profiteers who have made money out of the war; but this Bill goes farther and hits in a most cruel and relentless manner those who have been carrying on business in ordinary legitimate channels, and are seeking to develop their operations under conditions altogether unrelated to the war.
– Do you say . that the Bill is cruel and relentless?
– Yes. Many of the businesses, which this Bill will reach are in no way affected by war conditions. In Australia, we are carrying on business as usual. Only to a very limited extent are we affected by the war. A few people are making money out of the war; but whilst I am anxious to reach those persons by special taxation, I am equally concerned to protect those who are engaged in ordinary legitimate trade. The suggestion of the honorable member for Capricornia that the modifications in this Bill indicate that we on this side are standing by the capitalist is too outrageously absurd for serious consideration.
As I have already said, we are called upon to assist the Treasurer in his endeavour to secure additional revenue, but there will be considerable difference of opinion as to what is the best means of getting it. The Treasurer has evidently been allured by the vast sums of money which have been received under the provisions of the British War-time Profits Act, but even that measure has not been a complete success. On the contrary, it has been a source of disappointment, and has resulted in the cost of the war having been increased by millions of pounds sterling. Raymond Radclyffe, the writer of an article in the English Review, gives valuable information upon this point, and in one passage says -
It was a hideous blunder, and has acted in a manner that none of us foresaw.
He adduces facts of a most striking character in order to establish that position.
– That is because the tax is being passed on to the public.
– Of course that is the case, and the honorable member will be remarkably clever if he can show how that position of affairs can be avoided.
– It cannot be stopped until prices are fixed.
– What is the main point that the writer of that article makes?
– His object is to show the folly of the taxation. In his opinion the tax should be abolished, and other means of raising revenue resorted to.
It is quite true that an Excess Profits Bill was passed in Canada some twelve months ago, and that Dominion has been able to raise revenue to the extent of between £2,500,000 and £3,000,000 from this source, but Canada has no income tax, and this Bill was brought in to meet that circumstance. If we are anxious to get a parallel to Australian conditions, let us turn to New Zealand, where a similar measure is in operation, though it differs from the Bill before us to the extent that not more than 45 per cent, of the profits are taken. The New Zealand measure has also been a source of the utmost disappointment, and in its operation has created a great number of injustices to a vast section of the community. Furthermore, it has been costly to administer and has not produced the amount of revenue that it was contemplated it would produce. In fact, I am justified in saying that the tax has proved such a failure that it is now about to be repealed, and my prophecy in that respect will probably be verified within the next few days. I asked a friend of mine to secure information as to what the New Zealand tax was likely to produce, and as to what the cost of collection was, and the cablegram received in reply from a reliable source is as follows : -
No definite information pending Budget which is to be delivered on Thursday. Almost certain to be repealed. Universally condemned. Most inequitable. Probably be replaced by graduated. Endeavouring to ascertain cost of collection.
I presume that the “graduated” refers to a graduated income tax. This information as to the probable repeal of the New Zealand tax, owing to its having been a failure, was confirmed by a statement in the Melbourne Herald last night to the effect that it had been decided to repeal trie “War-time Profits Act in New Zealand. I believe that there will be a definite announcement on the subject tomorrow.
– The New Zealand tax is not on the same basis as that which is proposed in the Bill before us.
– So far as principles are concerned, the two measures are practically the same, except that in New Zealand the Government collect 45 per cent., whereas our Bill proposes to collect 50 per cent, and 75 per cent, of the excess profits. I ask the Treasurer to pause and consider the significance of the repealing of the New Zealand Act. I know, as a matter of fact, that the repeal is due to the heavy cost of collection, and the unfairness of the incidence of the tax. Those whom the Bill before us will hurt mainly are the proprietors of new businesses, and those who are engaged in developing struggling industries, whereas they are the very people whom our legislation should seek to encourage.
– Does not the honorable member think that an allowance of 10 per cent, over a.nd above all taxation is a very fair thing in these times?
– It is certainly a vast ‘improvement on the provisions of the Bill which ,was introduced by the honorable member for Capricornia.
– In dealing with new businesses, the Government are not confined to anything like 10 per cent.
– In dealing with new businesses, the Government will be obliged to take 10 per cent., because the profits will seldom reach that figure. I commend the honorable member for Grey on the way in which he proposed dealing with this measure. It is not my intention to be ungenerous in my criticism. I. am merely giving honorable members the benefit of my investigations. I recognise *hat there is a genuine effort in the Bill to render some aid to new businesses generally. It was one of the anomalies of the Bill introduced by the honorable member for Capricornia that no such effort was made, and I know that the honorablemember for Grey proposed tq amend the measure in that direction. The Bill before us does so, and the amendments effected are of a useful character, but,, for the main part, they depend on the discretion of the Commissioner of Taxation.
– Only to the extent of what he considers to be the financial stability of the business.
– He is limited1 by what he regards as the financial stability of the business. I agree with the Treasurer that we are fortunate in having an able and fair-minded Acting Commissioner, and I believe that he will strive to do justice. I also realize the value that will be derived from the Board1 of Referees for which provision is made. At the same time, however, the smaller business men feel that they should be granted further certainty in the Bill itself. In the Bill submitted by the honorable member for Capricornia, and in the present Bill, the manufacturer who has been making profits ranging from 50 per cent, to 100 per cent, over a great number of years will probably not contribute ls. to the taxation collected under a WartimeProfits Act, whereas the man whose business has been gradually developed will be called upon to contribute 50 per cent, or 75 per cent, of his profits over and above the statutory percentage set out in the Bill. This provision will create gross, hardships upon the proprietors of growing businesses. They have to compete with the wealthy competitors who have been in business for a great number of” years, and yet they will suffer the serious disadvantage of being penalized by a war-time profits tax from which their wealthy competitors are entirely free:
– If the wealthy competitor is not paying any war-time profits tax, he cannot be making any wartimeprofits.
– The whole thing hinges on the. establishment of at pre-war standard. That may be based on 50 per cent, or on 100 per cent, which, I think, should satisfy him.
– If the old-established company is not making increased profits^
It cannot be said to be making war-time profits.
– That is exactly what I say. The old-established businesses may maintain their heavy percentage of profits on the pre-war standard. They are certainly not war-time profits, and hence they are not affected by the Bill.
In clause 10, an effort is made to assist new industries, and in clauses 14 and 15,’ as well as in one or two other provisions, the same attempt is made. I do not propose to refer in detail to these clauses, but I desire to make a few comments on clause 10. The Bill introduced by the honorable member for Capricornia contained a very fair provision which I am sorry to say is not in the present Bill. Clause 10 of that Bill provided for the setting-off of losses against profits, and read as follows : -
Where a person proves that in any accounting period, ending after the thirtieth day of June One thousand nine hundred and fifteen, his profits have not reached the point which involves liability to war-time profits tax, or that he has sustained a loss in his business, he shall be entitled -
– What would be the result of adopting such a provision ?
– A new or growing business would be able to average its profits.
– But the Treasurer would never know where he was.
– The provision which I have read was taken from the British Act, and has been copied in the Canadian Act.
– And in the New Zealand Act, too.
– I think so. It is significant that it has been omitted from this Bill. The object of the clause was to permit of the averaging of profits and losses over a number of years. In one year a man might be able to dispose of his stock at good prices, and thus make a targe profit, and next year, through various causes, he might incura loss; but under the Bill as it stands, he would have to pay on the profits which he had made, no averaging of profits and losses being allowed.
– No such averaging is allowed in connexion with income taxation.
– I am not dealing with income taxation. Had the honorable gentleman given attention to this matter, he would have discovered that the provision which I have read has stood the test of experience in Great Britain.
– We do not know yet what its effects there have been.
– The provision has not been repealed, and it has been copied in the Canadian legislation. To my mind, it is fair and reasonable. Pastoralists are seriously interested in this matter, having regard to the fact that a pastoralisb may make a large profit one year, and, because of drought, may incur losses in the next year or two.
With a view to carrying out what I consider the spirit of clause 10, I suggest certain amendments. That provision reads -
Where it appears to the Commissioner, on the application of a taxpayerin any particular case, that any provisions of Parts IV., V, and VI. of this Act should be modified in his case, owing to -
I suggest the insertion in paragraphf, after the word ‘‘remunerative,” of the words, “or was in process of establishment and growth,” and I suggest, too, the addition to paragraph g of the words, “ and to secure the percentage standard on the average during such process of establishment and growth.” I think that those amendments accord with the spirit of the provision, and should be adopted to give needed relief.
Another matter to which I desire to refer is the rates of the proposed tax, namely 50 per cent. and 75 per cent. As the result of inquiry and discussion with men highly qualified to speak, I am of the opinion that a tax of 50 per cent, would produce more revenue than the rates proposed. That should be obvious on this reasoning: What we must avoid is the taking away of incentive to enterprise. The result of the announcement of the honorable member for Capricornia that he would allow a standard percentage of only 7 per cent., confiscating practically the balance of the profit, was to stifle enterprise, and to prevent men from launching out in connexion with their businesses. This was particularly disastrous because of the unemployment which it caused. No one can go through centres of population in which factories are situated without realizing how manufacturers were frightened by that proposal, which, as I say, caused a vast amount of unemployment. If these manufacturers could have had a definite announcement of some generous consideration or relief, they could have arranged their business accordingly. But the announcement that was made had the effect of stifling enterprise, and prevented them from launching out. I have already said#, and now repeat, that excessive rates destroy all incentive, and one of two things will happen: there will be no excess profits, made, because manufacturers and traders will not take -the necessary risks, which in war time are considerable, knowing that three-fourths of any profits that may come to them will be taken by the Government. Either that will happen, or the manufacturer or other taxpayer will pass on the tax to the public. Mr. Raymond Radclyffe says -
Traders do add taxes to the cost of the goods. It can lie seen in the annual reports of the thousand and one limited companies which appear eery year.
Every manufacturer has made more money than lie ever made before, and has made it after paying all sorts of preposterous tuxes.
He concludes -
It was a hideous blunder, and has acted in a nian ner that none of us foresaw. .
– Yet since then the British Government has increased the rate.
– Not since then.
Another-very important principle which was not in the old measure is introduced by this Bill; I refer to part IV., which deals with the computation of profits. In sub-clause 3 of clause 14, provision is made for a process of double taxation, which we in Australia have always protested against and objected to. It is provided that -
Deductions shall not bc allowed on account of the liability to pay, or the payment of, wartime profits tax, but a deduction shall be allowed for any sum which has been paid in respect of the profits on account of any wartime profits tax or similar tax imposed in any country outside the Commonwealth.
It does not say that there is to be permitted a deduction of the war-time profits tax paid elsewhere; the only deduction allowed is a deduction from the profits of the amount of tax paid elsewhere. In Canada there is a special exemption regarding war-time profits taxation paid elsewhere, section 3 of the Canadian Act, paragraph c, providing-
The amount of any tax paid by a person under the provisions of the Finance Act, No. 2, 1015, passed by the Parliament of the United Kingdom of Great Britain and Ireland, or under any legislation for raising revenue for the present war in force in India, or any colony or dependency of His Majesty, or in France, Russia, Italy, Belgium, Japan, Servia, Montenegro, Portugal, and any other country that may hereafter become an ally of His Majesty in the present war, or the colonies or dependencies of any of these countries in respect of any business liable to taxation hereunder, shall bc deducted from the amount of the tax that would otherwise be payable by such persons under this Act.
The Government should consider the wisdom of permitting 1he deduction of wartime profits taxation paid in the Mother Country or in the other Dominions, even though a certain amount of revenue may thus be lost.
– That is, tax paid on profits earned in Australia?
– Yes. British merchants carrying on business, not only in the Mother Country, but also in Aus- tralia and other parts of the Dominions, will otherwise be doubly taxed, that is to say, income will be taxed twice.
– There is a provision which deals with those cases.
– I think that the Bill does what the honorable member desires.
– The Bill provides only for deductions from the profits of any war profits tax paid out of Australia. It does not provide for the deduction from the tax payable in Australia of the tax already paid elsewhere, a vastly different thing. Double taxation should be avoided.
The Prime Minister, when in the Old Country, was among those who appealed to the British Government to put an end to this process of double taxation. He now comes back to Australia, and attempts to enact’ the same process.
– Could not the taxation be apportioned between the two ?
– The British Government have endeavoured to move in that direction in connexion with the income tax. They have enacted that where income tax has been paid in a Dominion, the British tax shall be reduced to a minimum of 3s. 6d. in the £1. In other words, where a merchant is liable in Great Britain to pay income tax to a greater extent’ than 3s. 6d. in the £1, and has also to pay income tax in a British Dominion, he may make a deduction of all over and above that 3s. 6d. in the £1, which they have fixed as the minimum.
– They have compromised in part.
– It, was a very excellent compromise - a move in the right direction.
I propose to give an example of the operation of this clause which will at once appeal to honorable members.’ We are anxious, I think, to encourage British merchants to carry on business here, and to establish new industries in Australia. Let- us suppose <that such a merchant, who is also carrying on business here, makes an excess profit of £10,000. He pays the British Government 80 per cent. en that amount,- namely, £8,000. That leaves him with a balance of £2,000, and of that amount he will have to pay the Australian Government 75 per cent., or £1,500, leaving him with a balance of only £500 out of his total excess profits of £10.000.
– Where the money is made it surely ought to be taxable. We are nob responsible for the double taxation.
– I am showing that we propose to enact, double taxation.
– Is the illustration which the honorable -member has given in respect of a profit of £10,000 made as the result of Australian trade ?
– I am illustrating the position of a British merchant, carrying on business in both Great Britain and Australia, and I am now speaking of his business as a whole. I shall deal later on with the taxation of profits made here. This Bill provides that, in respect of excess profits made in Australia, there shall be a tax of 75 per cent. : As I have stated, the British merchant who makes an excess profit of £10,000 has to pay the British Government 80 per cent., which, leaves him £2,000, and of that £2,000 he has. to pay to the Commonwealth 75 per cent.T or £1,500, making a total of £9,500, and leaving only £500 to cover all risks of trade in connexion with the year’s transactions. That is the position from the London stand-point. Let me now deal with the position of the same merchant from the Australian standpoint. Let us assume, for instance, that the excess profits of his business in Australia amount to £1,000. In that event, he will be called upon to hand over to the Commonwealth 75 per cent., or £750, and when he forwards the balance of £250 to London, the British Government will take 80 per cent., thus leaving the merchant with only £50.
– We cannot) be responsible for what, the British Government does.
– Certainly not. My complaint is that there should not be this process of double taxation.
– But it does not take place, so to speak, at our end.
– It will do so under « sub-clause 3 of clause 14 of this Bill. It must not be forgotten that! British merchants who will be called upon to bear this double taxation have to compete with local merchants having their head offices here? and that whereas the British merchant would retain only £50 out of every £1,000 of excess profit, the local merchants would retain £250 out of every £1,000. That places British merchants at a disadvantage, and must necessarily discourage them r I am glad to say that in May last there was an indication that the British Government proposed to reconsider the whole process of double taxation. I trust that they will do so. Sir Joseph Ward, when in London last year, was able to make a reciprocal arrangement with the British Government that excess profits should be taken - as a correspondent of mine points out - as follows : -
The higher rate declared in either Great Britain or New Zealand should be taken as the rate of excess profits, and half should be paid in Great Britain and half in New Zealand. For instance, for this year in England the excess profit is 80 per cent. New Zealand will pay 40 per cent, and England will pay 40 per cent., so you will see that houses like ours trading in New Zealand will contribute SO per cent, of its excess profits to the war. The houses we have trading in Australia will, on the 75 per cent, basis here and the SO per cent, in London, have to pay 95 per cent, of its excess profits. This is a manifest injustice.
I think it is.-
– Is it not due to the fact that these firms have their head offices in “Great Britain instead of in Australia?
– The effect of a British merchant carrying on business in the Old Country and here is that all profit made out of those sources within Australia is liable to a tax of 75 per cent, by the Commonwealth, while the balance, on being sent to the Old Country, is liable to the further taxation to which I have referred.
– That is their own concern.
– Quite so, but the fact is that the same income is taxed by both the British and the Australian Governments and the British merchant is thus penalized for trading here.
– Why do they not conduct their business in Australia? If they had their head offices here they would avoid this double taxation.
-.- It should be our aim to- encourage British merchants to establish industries here. Mr. Fenton. - Is it not a fact that the New Zealand tax is to be repealed ?
– I believe so, but the arrangement to which I have just referred related, to income tax.
– We- cannot be blamed for the- double tax.
– T contend that the Government are introducing this system of double taxation under the very Bill we are now considering.
– It provides only for the taxation of money earned in Australia. It does not apply to profits made outside the Commonwealth.
– I have already shown that profits made by a British merchant carrying on business in Australia and Great Britain are liable to double taxation amounting to 95 per cent.
Another important provision to which I desire to refer relates to the question of the accounting period, which I understand the Treasurer has under consideration.
– I shall be glad to hear the honorable member on that point.
– I do not for one moment, discount the difficulty which the Treasurer has to overcome in dealing with this matter, but it is undeniable that under this Bill and the British law the most extraordinary anomalies will occur. There are two aspects of this question of the accounting period which must Be considered. The taxpayer who balances on 31st July will be taxed for the year ended 31st July, 1915, whereas if his aor counting period ended on 31st May or on 30th June, he would not be taxed at kil until his accounting period ended the 30th June, 1916. Reference has already been made to this anomaly, but I again bring it before the Treasurer in the hope that he will provide a remedy. Firms balancing their books on 31st July will be taxed for the year ended 31st July, 1915, but firms balancing on 30th June, the 31st May, or earlier, in 1915, will not be taxed at all until their accounting period in 1916. This differentiation will be an undoubted hardship. A correspondent points out that there are many firms, as any accountant knows, who balance on 31st July, and they should not be penalized by having the tax made retrospective by more than two years, as k will be if it be dated back to August* 1914.
– Is it not possible that that provision will cut both ways ?
– It will. Those who will suffer a- great hardship in- one direction will receive a certain benefit m another. They will get the benefit probably of the years 1912-13-14, which would be better years than that of 1911, on which those who balance on the 30th June would have to pay. There are some advantages in either direction, but the benefits are unequal, and people are treated differently. We have these men properly complaining of unjust treatment, but now there comes the man who balances on the 30bh September, and he bitterly complains, because he is deprived of his best pre-war year. The position is a very extraordinary- one, and is only another aspect of this difficult question.
I should now like, by way of example, to refer to a company which does a large business throughout Australia and New Zealand, and makes up its accounts to the 30th September in each year. In a communication I have received regarding this company it is stated that its accounting period, as defined in clause 7, sub-clause 3; would, according tlo sub-clause 1, be the year ending 30t.h September, 1915. The communication goes on to state -
The tax is to be levied and paid on the excess of the profits for that period over the pre-war standard, i.e., the amount of the profits, on the average, of any two of the last three prewar trade years selected by the company. Section 15, sub-section 3.
Section 15, sub-section 10, dennes “the last pre-war trade year,” a”nd the “ year ending at the end of the last accounting period before the 5th August. 1014,” and “the last three pre-war trade years “ as “ the three years ending’ at the three corresponding times.”
The result of this is that the company’s profits for the accounting period being the year ending 30th September, 1915, are to be compared with the average of two, of the three years ending 30th September, 1911, 1912, and 1913, leaving out the year ending 30th September, 1914. as it did not end before the 5th August, 1914.
This is bitterly complained of as a- hardship. The communication proceeds -
As the company’s business has been progressive since its incorporation, it would thus be placed at a disadvantage in comparison with a similarly progressive business which makes up its accounts to the 31st July in each year, and whose accounting period inder the Act would he the year ending 31st “July, 1914, which it could compare with the average of two of the three years ending 31st July, 1912, 1913, and 1914.
Wo would respectfully suggest that the date “the 5th day of August, 1914,” in sub-section 7 be altered to a later date. The first three months of the war period under no circumstances nan bc said to contain war profits, and we would ask that the Commissioner be givenpower to accept the accounts of a company over an accounting period covering the twelve months ending not later than three months after the 5th day of August, 1914. This would get over an injustice to many companies, this one included. The balance-sheet of this company was made up to the 30th September, 1914, and because it contains less than two months of war period Ave would not be allowed to take this period in arriving at our pre-war standard.
– All these people are looking at the matter from their own immediate stand-point.
– That may be true, but where there is difference of treatment we must take it into consideration, and endeavour to place all on a uniform basis.
– Is that not rather an individual case?
– My only object is to place all taxpayers on a uniform basis. I should now like to direct the attention of the Treasurer to an extraordinary position that arises under the Bill. An accountant friend of mine, who has looked into the measure, has discovered an anomaly that is created by clause 7. He points out that sub-clause 2 of clause 7 provides that the allowance of £200 shall be reduced by £1 for every £2 by which the excess of profits over the prewar standard of profits exceeds £200. He goes on to point! out that this means that there would be no allowance on an excess over the pre-war standard of profits of £600.
– I rise to a point of order. We are now debating the motion that the Bill be read a second time, and I sub*mit that honorable members should not be permitted to deal in detail with the clauses.
-The honorable member for Kooyong is quite in order.
– As I say, this accountant points out that there would be no allowance on an excess over the prewar standard of profits of £600. .
– That is the intention.
– I know it is the intention. My correspondent proceeds -
Therefore, an excess profit of £600 would, after the first year of taxation, pay a tax of £450, leaving £150 as the profit retained by the -taxpayer. Had the taxpayer, therefore, made an excess profit of only £200, he would not be taxed, and would retain £200. Therefore, under the present provisions of the Bill the business which makes an excess profit of £200 would be better off than that which makes an excess profit of £600, the tax on any such profit between £200 and £000 being at the rate of £112 10s. per cent.
Should this lie altered to provide -that the allowance of £200 runs out at £800, the result would be that a taxpayer making a profit of £800 would, after the first year of taxation, have to pay tax to the amount of £600, retaining £200 for himself, so that he would bo in exactly the same position as if he had made an excess profit of only £200. In this case, any’ excess profit between £200 or £800 would be taxed at 100 per cent.
– The honorable member’s time has expired
.- The honorable member for Kooyong, at the commencement of his remarks, cast some reflection 011 many honorable members on this side of the House, inasmuch as he said they were afraid to go on the recruiting platforms in consequence of a resolution that had been carried by some Labour body. I wish to say at once that there is absolutely no foundation in fact for such a statement. Honorable members on this side do go on the recruiting platform, and will continue to do so so long as the Government carries on recruiting in a voluntary way and does not attempt to exert economic pressure. That is the D0S1tion of this party, and I wish to make it quite clear. Considering that I have addressed, perhaps, as many recruiting meetings as has the honorable member for Kooyong, I do nob intend to allow the reflection he cast to remain.
This measure, I take it, is introduced, among several others, for the purpose of assisting the Commonwealth in this hour of crisis. We all recognise that the war is nob over yet, and that to-day we owe something over £160,000,000, with a growing interest bill every year. The war itself is now costing us something like £1,000,000 a week, and, therefore, the financial position is a very serious one. This position was placed before, the people by both parties during the recent elections, and the people were promised that, whichever party was returned, sufficient revenue would be raised to meet the requirements of the Commonwealth. This, as I say, is one amongst other measures introduced with a view to assisting us to defray the cost of the war; but, judging from the measure itself, and from the speech of the honorable member for Kooyong, it would appear that honorable members opposite are mostly concerned about passing a Bill which will not, more than is absolutely essential, affect the wealthier people of the country. With the exception of two vital principles, this is a machinery Bill, and one really for consideration in Committee, and, consequently, my remarks at the present stage will be short.
The Bill sets up two positions. In the first place it states that any company or business or person - and “ person “ includes “company” - who in any two years of the three pre-war years makes no more than 50 per cent, or 60 per cent, on the capital invested, shall not pay a shilling of taxation. Yet we talk about raising money from profits for the purpose of defraying the cost of the war, and as far as possible removing the load from the shoulders of the great masses of the people. Then, whatever the pre-war profits may have been for any two years out of three, if these can bie shown to have been bad years, the taxpayer is permitted to go back another couple of years in order to decide what are his taxable profits. That provision, in my opinion, is a wrong one. I agree with the honorable member for Kooyong that this is a war-time profits tax, and not a war profits tax, and my quarrel with the Bill is that it should be one to provide for a war profits tax. ‘ Any concern that earns anything like 10 per cent, at a time like this is earning more than it is entitled to. This is a time of distress, when we hear honorable members on both, sides, and also the people outside, urging how necessary it is to do everything possible towards the successful prosecution of the war. However, we do not hear much nowadays of that declaration by Mr. Lloyd George that, in order to attain success, it is as essential to have the “ silver bullet “ as to have the men. On the contrary, we see every effort made to protect people who are amassing considerable wealth at the present time. In my view, if we are able to live comfortably at a time like this, it is just about as much as we can expect, but we know that there are people who have increased their banking accounts most rapidly since the outbreak of the war. This fact is proved by statistics and the banking returns, which can lead us to no other conclusion than that there are people who are now making more money than ever before.
– Many industries have had to suspend the use of their capital for the time being.
– I am not saying that there are not exceptions. I am now speaking in general terms, and the facts must guide us to a large extent. According to the Bill a new business commenced since the outbreak of the war may be permitted to earn 10 per cent, with a £200 exemption, and the honorable member for Kooyong apparently contends that, by this provision, such new businesses are placed at a disadvantage. I ask, however, how many new businesses established in normal times can show a profit of 10 per cent, in the first two years? If there are such businesses they ought certainly to be asked to contribute something towards paying the cost of the war. After all, when we are borrowing money at 4½ per cent., in order to carry on the war, it seems absurd to allow tothose who speculate in other ways a profit of 10 per cent. before they are required to pay any taxation. To my mind, a profit of 7 per cent. is quite adequate at a time like the present. It must be borne in mind that this Bill will operate only during the period of the war. It relates to profits made during war time, and when peace is declared it will cease to have any application. But we are creating for the purpose of collecting these war-time profits machinery which will cost a considerable sum of money, because it will be necessary to set up a large staff; and if the tax will raise only £450,000 per annum, will it be worth while? Shall we get out of it any money to assist in prosecuting the war and pay our interest bill ? In view of the statement made by the Treasurer, that he estimates to get only £450,000 per annum under this Bill, we are not justified in making the people believe that we are passing it as a means to raise money to assist in carrying on the war. Compared with our requirements, the revenue it will raise will be infinitesimal. Throughout the measure an endeavour is made to assist to escape taxation those who should be paying something out of their profits towards financing the war. There is exemption after exemption, which permits persons who are making profits in any industry to escape paying any tax at all. Indeed, if the Bill is agreed to in its present form, very few people will pay the tax.
Certain reductions’ are to be allowed for all mining companies other than those raising coal, and the Treasurer explained that coal mines are not exempted, because they have a considerable life. I tell the honorable gentleman that there are many silver, lead, copper, and zinc mines that have a longer life than coal mines. There are mines of that description in operation in Australia to-day which have outlived many coal-mine propositions. After all, the life of a coal mine depends on the area available for working, the thickness of the seam, and the percentage of coal obtained from it. I fail to see why we should give exemption to companies that are doing particularly well. Let me draw the attention of the House to some mining companies which are not raising coal, but which will be entitled to make considerable reductions in connexion with this tax. The Mount Lyell Mine, for instance, has paid in dividends £3,940,000; it has 1,289,195 shares at £1 each, and its value to-day is £1,650,000. That mine has won in dividends considerably more than the amount of money invested in it, and it is still a good proposition; yet, under the Bill, it may claim certain exemptions. The Mount Morgan Mine has paid in dividends £9,033,000; it has 1,000,000 shares at £1 each, and its present-day value is £1,625,000. The Wallaroo and Moonta Mining Company has paid in dividends £2,435,250; it has 160,000 shares at £2 each, and its present value is about £440,000. There, again, the dividends are considerably in excess of the capital invested. Silver, lead, and zinc mines are also entitled to certain consideration under the Bill. I find that the Broken Hill Mine has paid in dividends £2,115,000; it has 130,843 shares at £1 each, and its value today is £1,657,000. Whilst the Broken Hill Proprietary has paid in dividends £10,169,552; it has 1,181,006 shares at 8s. each, and is reckoned to be worth today £2,598,200. No coal mine in Australia can show a return equal to any of those I have just quoted, and many of our coal mines have started later than the silver and lead mines, and will finish sooner. Those copper, silver, lead, and zinc mines ought not to have any more liberal exemption than is permitted the coal mines, because they are better profitearning propositions.
When the honorable member for Capricornia was speaking, another honorable member interjected in reference to the wealth tax. Repeatedly I stated on the public platform, when it was unpopular to hold such views, that I did not approve of a wealth tax, because by taxing the wealth of the country we should be hitting the worker engaged in the different industries. My ideal form of taxation is a tax on income, and let it be sufficiently stiff to raise enough money to pay interest on the war debt, and also something to liquidate the principal. I have never advocated a wealth tax, because I know that such an impost would have a boomerang effect, and that the workers would feel it more than any other section in the community. It appears to me that the tax proposed in this Bill will work out in this way : Pre-war profits can be established at 20 per cent., 30 per cent., or 40 per cent., and perhaps to-day 70 per cent, and 80 per cent’, is being made. The Government may take a percentage of those earnings, but that will not prevent! a company or firm still further raising the prices of its commodities. The poor consumer will not be helped, because it is clear that, if the firm increases its prices, although the Government will take 50 per centi. the business will still have 50 per cent, for itself. A certain amount of money will go to the coffers of the Treasury, but the community will be so much the poorer because of inflated prices. In my opinion, that is not sound legislation. This Bill is only a skeleton. It will not assist to any great extent in financing the war. Therefore, I shall reserve for the Committee stage any further remarks I have to make. There are many clauses which ought to be re-modelled, so as to reduce the number of exemptions, and secure a tax which will raise something like £2,000,000 or £3,000,000 per annum, instead of the £450,000 which the Treasurer estimates.
.- At the outset of my remarks I should like to congratulate the Treasurer on the vast amount of effort he has applied to the drafting of his Bill. I do not know that a more complicated and intricate measure has ever been introduced to Parliament, for it touches all industries developed and carried on under war conditions. Any person having an inside knowledge of the working conditions of businesses ‘ and their ramifications must approach a matter of this kind with considerable care. I think the Treasurer has done this admirably. Previous drafts of the Bill also gave evidence of very careful consideration, and the different Treasurers, having regard to the views of their respective parties, tried to meet a very difficult situation. The present Bill, being largely a copy of the English Apt, necessarily deals with conditions that are not manifest in this country to any great extent. I have three main objections to offer to it in its present form : firstly, that it circumscribe. the area of the tax altogether beyond what, in my judgment, is fair and reasonable; secondly, that its retrospective operation is grossly unfair ; and thirdly, that it will allow businesses which were making large profits before the war to escape their fair share of the burden of taxation whilst their competitors are heavily mulcted. That last objection may be ‘inseparable from a war-time profits tax, and I agree with the honorable member for Hunter that the weakness of this class of taxation is that in trying to reach the war profiteer we may injure the whole community. If we could reach the men who are making money out of the war I should not care what percentage of their profits the Government proposed to take, but a war profits tax and a war-time profits tax are two totally different and distinct propositions. Yet the exemptions in the Bill in some cases apply to actual war profits made under war, conditions and subject to taxation profits that are not in any way due to the war. This creates conditions that make the measure extremely complicated and likely to be unfair to a large section of the community.
– Then the Bill is not what it pretends to be.
– It pretends to be a wartime profits tax, but what honorable members desire, I think, is a war profits tax. The only reason for inserting the word “ time”* in the title of this and similar measures is so that everybody may be roped in within its ambit. The Treasury officials have adopted this method of simplifying their work because they realize the difficulty that faces them in deciding what are war profits and what are war-time profits.
There would be an excellent reason for circumscribing the area of the tax, if it were a war profits tax; it1 could be confined to those people who are making war profits, while those who are carrying on their ordinary businesses could be eliminated from its scope. It is a fundamental axiom which is accepted by the great bulk of honorable members on this side of the House just as strongly as it is by honorable gentlemen opposite that no person is entitled to make money out of the war. If any person is supplying the troops with clothing, food, or munitions, he is entitled to payment for his services to cover the expenses of his establishment, bnt he is certainly not entitled to pile up huge profits.
The worst feature of the Bill is the exemptions that are provided. The interest of many honorable members in the Bill ceased when they learned that their constituents were exempted from its operation. Those who represent farming areas pure and simple, knowing that their constituents have been exempted, are displaying no further interest in the measure.
– That should not prevent them from endeavouring to frame a Bill that will provide revenue.
– It should not; but those who have been in public life for some years know the habits of honorable members. It is very irritating to have to listen to a dozen speeches on such a subject in one day, and honorable members are very glad to get rid of a Bill in which they are not interested when they have heard three or four speeches upon it. They are glad to get out of the chamber for a spell; but if there is a Bill of interest to their constituents they are always here, especially if it might affect their constituents detrimentally. If the Bill does not affect their constituencies they feel that there is no call for them to be in the chamber - that is a principle that any honorable member could stand to on a public platform - but even though an honorable member’s constituents are not affected by a Bill there are plenty of others whose constituents are affected and who are prepared to give consideration to it.
The great weakness of this measure is the exemptions which prevent honorable members from being interested in it, and from having regard to how their constituents are affected. Exemptions are provided in regard to agriculture, the mining industry, and professional occupations. In fact, the only people who will be affected by the Bill are the commercial community, or those who are running businesses. I wish to test the farming community and professional gentlemen by the principle that I have laid down, that no persons who are making profits out of the war should be exempted. The farmer is receiving 4s. 9d. per bushel for his wheat.
– That is the f.o.b. price. He does not get that amount at his railway station!
– Then we will say that he is getting 4s. 6d. per bushel. In prewar years the average price of wheat was about 3s. per bushel, and the difference between that price and the present pool price is purely a war profit.
– Is the honorable member taking into consideration the increased cost of production ?
– The increased cost of production has to be taken into consideration, as well as other additional charges, but they do not contradict my statement, they merely serve to modify it.After we have allowed every deduction in relation to increased cost of bags, increased cost of labour and extra railage charges, and every additional cost in the carriage of his wheat to the market, the difference between the pre-war cost of wheat and the pool price is a war profit ; and I fail to see any good reason why the farmers should be exempted from a Bill that is put forward for the purpose of raising money in order to defray war expenses. If therewere no wheat pool, what would be theprice of wheat for which the farmer is now getting 4s. 6d. per bushel?
– It would be 2s. per bushel.
– The honorable member’s argument is a very poor one.
– It may appear to bea poor one to the man who has wheat to sell, but I am not putting it to him. I do not expect him to support me in a proposition, to abolish the exemption as applied to farmers. Nevertheless, I want my argument answered in such a way as to shovr that it will be unfair to tax these people who are certainly making war profits.
Now let me turn to the professional men who are exempted. I saw a statement the other day in a Sydney newspaper that some medical men were earning £15,000 and £16,000 a year -those were the topnotchers - while others were earning from £5,000 to £6,000 a year. These men’s earnings have only gone up to the figures mentioned because so many doctors have gone on active service. Competition has been so much reduced that those who have remained at home, possibly by personal exertion and probably by working longer hours, have been enabled to earn these fabulous fees, which would nob have been earned if there had been no war. Is it not a war profit? I do not think that it can be denied that it is a war profit. Are not the dentists in exactly the same position? Many of us have had friends who have walked out of their businesses, and gone to the Front, and been killed. Their practices have gone to those who remained behind, and the latter have made war profits.
– In justice to the medical profession in Western Australia, it should be said that the doctors there in many cases are preserving the practices of those who have gone away.
– I hope the honorable member will not think I am making an attack on the medical profession, or on any profession. I am merely discussing the question in its relation to the Bill.
I feel that the Bill will not accomplish what the House desires to do, nor, in the words of the honorable member for Hunter, will it be worth while to go on with it unless it be amended. There are the members of the profession to which the honorable member for Wilmot belongs, the lawyers, with whom no one has any sympathy, and who, fortunately for them, need none.Their income has been increased by the war for the same reasons. So, too, with the architects, accountants, engineers, and other professional men. The lessening of competition has given them more work, and the extra income earned is purely and simply war profit, which a War Profits Bill should tax.
Every one, I think, is of opinion that gold-mining is an industry the profits of which should be exempted, because the price of gold, which is the standard by which to measure the values of all other commodities, cannot be increased.
– If a store of hidden treasure were unearthed, would it not be fair to levy a tax upon it?
– I shall deal with that point later. The profits from all mining operations, except gold-mining, are taxable. No one knows better than do the honorable members for Hunter and Newcastle, and myself, that a coal mine is a wasting asset, and that the waste of a coal mine proceeds at a more rapid rate than that of a gold, silver, or copper mine. Nearly all the coal mines at Newcastle itself are now worked out. The coal from the district is now being won in mines away from the town. With the facts of that case in mind, how can any one say that a coal-mine is not a wasting asset? The Victorian State Coal Mine is an asset that is wasting very rapidly. They are now working there small, narrow seams, and that is so costly that last year there was a deficit of £30,000.
– During the dinner adjournment, there is to be an exhibition of pictures of the transcontinental railway, and with the concurrence of the House I propose to suspend the sitting till 8 o’clock, or until such time thereafter as will enable honorable members to see these pictures. The bells will be rung five minutes before the House reassembles.
Sitting suspended from 6.28 to 8 p.m.
– I have discussed the exemptions proposed by the Government, but have not dealt with the latter part of subclause 1 of clause 8, which, after exempting offices or employments, proceeds to declare in regard to agencies, that the businesses to which the measure applies include -
The business of any person taking commissions in respect of any transactions or services rendered, and of any agent of any description (not being a commercial traveller, or an agent whose remuneration consists wholly of a fixed and definite sum not depending on ‘the amount of business done or any other contingency).
I propose to read two letters I have received from agents who come within that category. They are worthy of the attention of the House, because they put the position of a man who was earning a salary and who subsequently became a commission agent. In the first of these letters the writer points out how he will be affected under the Bill as it stands -
The present basis of the war profits tax does not give any exemption to the business which makes its profits entirely on a commission basis, or, in other words, from “personal exertion.” 1 was employed some eighteen months ago on a salary, but decided to commence on my own account as manufacturers’ agent and broker. The business is conducted purely on a commission basis, which vendors pay on a sale being made. I have not received any profits from a sale of goods other than my commission. As the Bill now stands, if during the present year my business shows a profit of £1,000, £450 will have to be paid to the Government as profits tax. This would be a hard hit, considering that some little time ago I was offered a position of £800 per annum, which, of course, would not be taxable. It would appear to be an oversight in the Bill that a business worked on purely a commission basis is subject to taxation. Any increase in my earnings is really due to my getting the full benefit of my own personal exertions.
Another man in exactly the same position writes -
Up to this year, I was employed at a fixed salary which, under the Act, would not have been taxable. Recently I was given a share in the profits of the business, and my earnings are now taxable.
I consider a hardship has been imposed on me, inasmuch as I have been striving for years to obtain my present position in order to lay < by a reserve fund. In the present form of the Act I would have been better off if I had remained on a salary, quite apart from the fact that the other members of the firm have had the benefit of my energy, and have secured their positions, whilst 1 am denied all profit. I have ho desire to shirk my responsibilities iu regard to taxation, and am ready to pay my share under any reasonable measure brought forward.
– The point is that he is doing all this during the war, while other men are in the trenches.
– The honorable member may pub it as he pleases, but the burden of this writer’s complaint is that men in the professions, who are earning thousands a year, and whose increased incomes have been’ due entirely to war profits are exempt, whereas an agent, whose income is derived from purely personal exertion, is taxed. He shows that he could have drawn a salary, equally large,, which would not have been taxable. These letters show that it is impossible to draft a War-time Profit Tax Bill which will be equitable, all round, in its incidence, and it is for that purpose that I have quoted them.
I come now to the second part of my argument, and that is as to the retrospective operation of this Bill. .1 consider it to be the duty of Parliament to provide for the financial needs of the country during each financial year. If the obligation to find money to meet! the needs of the country extends beyond the estimated revenue, then it should be the duty of Parliament to raise by way of additional taxation sufficient to cover the deficit whatever it may be, so that we may close the financial year without any loss. The year 1915-16 - that is the year in respect of which this tax will commence to operate -closed with a surplus of £3,000,000. Will any one say that in such circumstances there is any call on us to impose additional taxation to meet the financial obligations of that year, which closed with a surplus of £3,000,000 ?
– Was that in respect to ordinary revenue?
– No. The actual revenue for the year 1915-16 was £30,762,000, and the expenditure £23,984,000, showing a surplus of nearly £7,000,000. Out of that surplus about £4,000,000 was devoted to war purposes, thus leaving an actual surplus of £3,000,000. In view of such a financial position, Parliament is not justified in extending this tax beyond the financial year in which the additional revenue is required. The Treasurer has submitted a statement setting out that he anticipates that the present financial” year will close with a deficit of £2,600,000. If that be so, it is the duty of the Government to raise £2,600,000 to meet the prospective deficit. But the principle of taxing back, beyond the financial year, is one of the worst that could be introduced in a democratic or any other Parliament. In the first place it is immoral, and if Parliament is going to be immoral how can it expect the taxpayers to be moral ?
– A War-time Profits Tax Bill was introduced last year, but the Government of the day found that the revenue proposed to be raised in that way would not be required, and they did not go on with it.
– The honorable member for Capricornia, when Treasurer, last year,, introduced that Bill. Why did he not push on with it? He failed to do so because the money was not .required. If the honorable member, as Treasurer, had felt that he was absolutely in need of additional revenue to balance his accounts, is it likely that we should have devoted months to the consideration of other matters that could have been left over for another session, when that Bill could have been dealt with ? The honorable member, as Treasurer, knew, however, that he did not want the money, and that was the chief reason why he did not) push on with his Bill. Had he needed the money he would have pushed the Bill through, and in such circumstances no one could have taken exception to it.
– The House knew that the Government Sid not want the money.
– That is so. The principle against which I am now contending is that the Government propose now to carry back this taxation to the year 1915-16. If that principle be once conceded - I say this with all earnestness - what is to prevent a new Government coming into power five years hence and, if this war is still going on - and no one can say when it will be over - bringing forward further legislation which will tax back to the year when the war began.
– If the war lasts for another five years there will be nothing left to tax.
– Quite so. Our friends df the Official Labour party submitted to the country a proposal to carry the war profits tax back over three years, and they were going to pub the tax into effect this year. If that tax had been accumulated, as the honorable member for Capricornia proposed, then, in respect of the three years, it would have amounted to 125 per cent, of the profits. How is a man going to pay 125 per cent, out of 100 per cent. ? Yet that was the proposal solemnly pub forward in the manifesto dot the Official Labour party at the last elections.
– The honorable member is aware that a lot of big companies have already set aside moneys to meet this tax.
– If this Bill dealt only with big companies that would be all very well; but the difficulty is that it hits every man in the community who has made any profit whatever in his business. If we were proposing to levy this tax on only one set of people it might be very easy sailing, but .the ‘fact that we are proposing to impose it upon the whole community - and in the shape of a war-time profits impost^ - complicates the issue and makes the situation m ore difficult to deal with. The business carried on by most people is a growing one. When a business is developing, the man who is conducting it must PUt some of his profits into it in order to keep it going; otherwise it will become stagnant. A growing business requires capital, and every extra pound that is put into a business means the employment of additional labour. Every profit that is made in a business is generally dealt with on scientific or business lines. A man who is carrying on any business concern draws out of it a certain sum per annum as wages or salary. The rest of his earnings are left in the business, in order to develop it. Perhaps 90 per cent, of the business community carry on their enterprises upon, overdrafts - money borrowed from the banks.
That goes to show that men, in the conduct of their businesses, are generally a little bit ahead of their capital; the fact that overdrafts continue year in and year out shows that the businesses are always a little ahead of the man who earns the capital to work with. In a young country like this, which is developing its natural resources, that must always be so. But the banks’ capital, . which is the capital invested by the great bulk of the people in banks for safe keeping, is utilized by business men, and, thereforesgives employment to a considerable number of people: and if that source of capital is cut off, the employment of the community is injured very materially. If we take the year 1915-16, which this tax proposes to cover, we realize that a man who has made his profit in that year has drawn whatever allowance he was accustomed to, and has naturally spent it. The balance has gone into machinery, stock, or plant of different kinds ; but once it. has gone into machinery, this machinery cannot be sold to meet the tax without, injuring .the business and throwing men out of employment. To demand a tax of 50 per cent, now, two years after the money was earned, is a ridiculous proposition.
– The community has had notice.
– Notice is nothing. The best answer I can give the honorable member is that the gentlemen who gave the notice that they were going to impose the tax have since been before the electors, and have met their doom.
– The Prime Minister was leader of the party at the time, and he has not met his doom.
– The gentleman who introduced that proposition was “the exTreasurer - the honorable member for Capricornia.
– You do not suggest that, this was an issue at the election?
– No; but it was just as much an issue as any other question. When we ask for a decision from the electors at a. general election we have to take a verdict on a whole policy ; there is no way of disentangling the issues out, and saying that the contest, has been on this principle or that. The fact that a party is elected or thrown out is the only thing by which we can judge.
Let me give you the case of a man who earns £1,000 a year, and has drawn a sum of £s00 for his personal use, putting £200 as capital into his business to extend and develop it. If, before the war, he was earning only £500, he is now in such a position that he has to pay 50 per cent, as. the 1915-16 tax, and 75 per cent, as the 1916-17 tax. That means that he has to find £150 as taxation for the year before last, £225 for the last year; or £375 out of his £1,000 for this year. It is all very well for honorable members to fix their minds on men who are drawing hundreds of thousands of pounds a year, but there are mighty few ‘of these, if any, in this community.
When we pass a Bill of this nature we have to remember that it affects everybody who comes within the area, and that it reaches, among others, the man who is earning £1,000 a year. Is it equitable to say that a man earning’ £1,000 a year should be taxed to the extent of £375. while a man who earned £20,000 a year before the war, and is now earning £18,000, shall not be taxed at all? That is what the proposition really is. In the case of the mau who is earning £1,000 a year, and who has spent £800 of it for his personal use, he, instead of allowing the £200 to go into the development of his business, will ha vo to’ use it to meet this taxation - he has to find £175 out of the money he put into machinery or stock for the development of his business the year before. This means that we are going to force him to sell his goods or to curtail his business, or, of course, borrow from the bank on an overdraft.
Let me give honorable members another case. We are going to impose on agents here, for businesses conducted in other countries, the responsibility of fixing what profits these businesses have made, and what tax shall be levied. An agent here for a firm at Home or in America receives goods on commission. When they arrive he is told that the selling price is £5; and he, perhaps, sells at £5 5s. or £5 10s., and thus makes his profit. He does not know what was the cost of manufacture, or what was the price in the country from which the goods were shipped; all he knows is the cost landed here. Yet he is to be held responsible for making a return showing the profit made by the firm in America or “in the Old Country. The thing is manifestly impossible. In the first place, he has not the information, and if he asked for it he would be promptly told to mind his own business. Of course, it might be said, “Let these people take their business away”; but if that answer were made, what is the position? Take petrol as an illustration.
We are developing, or trying to develop, our oil-fields, though we have not got very far yet. I know that the honorable member for Barker is deeply interested in this matter, and I am sure we wish him all success, not only for himself, but for the benefit of Australia, and we should be glad to classify him as one of the oil kings in the future. At present, however, we produce no oil, but’ are dependent for the motive force of all internalcombustion engines on the petrol that comes from abroad. If the Bill were to operate in such a way that the representatives of the shippers of petrol were told that they must give a return of the profit made in Australia by the sale of the goods, they would be told by their principals, ‘ ‘ you can tell your Australian Government, with our compliments, that if they do nob want our business we shall withdraw our goods.” What would be the result? Do you think they would suffer? We should be the sufferers, for all the works operated by internalcombustion engines would be closed down, and men thrown out of employment. The ramifications of these businesses are much too intricate for Parliament to deal with, for we do’ not, and cannot, know the whole of the circumstances connected with them.
Let me give another illustration of an old-established firm, which may have been making huge annual profits before the war. Such a firm is not taxable at all under the Bill.
– All the honorable member’s arguments would apply to an income tax.
– No, they would not.
– I mean as to ramifications of business, and the difficulty of deciding what tax ought to be paid.
– Let us take the case of two men, A and B, both in a big way of business, and A making £60,000 a year before the war. In the accounting period that income goes down to £40,000, while competitor B, who pushes his business, and owing to some fortunate circumstance, raises his income from £20,000 before the war up to £40,000. At the present time two such competitors would be on the same plane, earning exactly the same income. One of these men has lost £20,000 of his business, and the other has gained a like sum.
– That sort of thing occurs every time.
– I am glad the honorable member admits the facts, for he shows that, it is an ordinary illustration, though my figures, of course, are fictitious. What happens? The man who has increased his business has to pay for 1915- 16 a tax of £10,000 out of his £40,000, the next year he has to pay the 75 per cent, tax of £15,000, and, as iti has all to be paid in one year, he is called to pay £25,000 out of his profit. Each of. these men is earning the same amount of money, but one is taxed to the extent of £25,000, while the other goes scot free.
– Why not, if he lost £20,000?
– He has not lost £20,000 - he has made £20,000 less, and it might be on the turnover, in a case where there is not such a large capital. A Bill that operates in this way operates unfairly. Why should men wilh big incomes not bear their fair share of the burden of the war, along with men of smaller incomes?
Parliaments as a rule copy one another’s legislation, and the Bill is almost a re-draft of the British measure. ‘This latter r as the Treasurer told us, waa introduced in the British House of Commons because of the huge profits that were being made by munition makers. That could not be prevented, because the munition makers were employed in the very midst of -the war, manufacturing and supplying goods for the troops, and putting on practically what prices they liked, until they were checked and controlled by the Government. Their position was totally different from the position here. The British Government then came down with their war-time profits tax measure, and, through it, got at the whole of these people. The munition manufacturers of England are the men who pay the great bulk of this taxation. We have been told that for the first year this taxation at Home realized £86,000,000, the next year £120,000,000 with a 60 per cent. tax, and that this year an 80 per cent, tax is expected to raise £200,000,000.
By means of this Bill the Treasurer says he expects to raise £450,000. The war-time profits tax at Home raises revenue representing £5 per head of the population each year. That is an enormous sum, and it means that a man with a family of five pays an equivalent of £25 in taxation. Now what is the effect of this wonderful measure of ours in Australia? It means revenue averaging ls. lOd. per head of the population. In other words, the British tax yields fifty-five times more per head of population than will the tax proposed iu this Bill, and I do not wonder that the honorable member for Hunter interjected, when the Treasurer was moving the second reading, “What is the good of going on with a Bill like this?” That disappointment is based on the idea that general profiteering is taking place in Australia.
– There is no doubt that there is some profiteering.
– I am prepared to admit that there are special cases of profiteering, in which men are making money out of the war, and if it could be done I would tax them for the benefit of the State to the extent of all the money they are making in that way.
– Some of them are old businesses, too.
– True; but many men who are making money out of the war are being exempted because of the difficulty of framing an Act which will include all people. That there is any general profiteering in this country is disproved by the remarkable admission of the honorable member for Capricornia when he said, ‘‘If you impose a profits tax with an exemption of 10 per cent, you will get nothing.” If« that statement is true, and I am prepared to admit that it is very close to the mark, it explains why, under this measure, the Treasurer expects to receive only £450,000 per annum. Is it worth while Parliament imposing a tax of this kind if we can get the money we require in another and fairer way? Is it worth the trouble of placing upon the community the obligation to prepare returns in relation to their business dealings? It is possible that, in some cases, returns for eight separate years will require to be prepared. There will bethe returns for the war years, and for the three years before the war in order to arrive at a pre-war standard, and, if the taxpayer can show by his balance-sheets that those three pre-war years were abnormally poor, he is entitled to give a return for the three preceding years. The Commissioner may say, ‘ You can give me your balancesheets.”
– They ought to be in existence.
– They ought, but in some cases they may not be in existence, and it is possible that some men may be compelled to prepare and submit to the Taxation Commissioner balance-sheets for eight years.
In objecting to a Bill of this kind, it is necessary to show how a sum of money can be obtained equal to that which the Bill is estimated to raise. I say that the most equitable form of taxation I know is the New Zealand system of imposing a super-tax on all profits made above a certain standard. By adopting that system we should ensure that every penny of the tax would go into the coffers of the Treasury. Under the Bill, however, the Government will require to create a new department, the cost of which will be at least £50,000 per annum. Honorable members may be surprised at that figure, but investigation will show that a department to collect £450,000 per anuum from this tax will cost about £50,000 a year. In time of war, when we all believe in economy, when it is undesirable to create now billets, and when the present machinery is capable of collecting the tax, we ought to allow’ it to be collected in such a manner that every penny it yields will reach the Treasury. In dealing with a return it is just as easy for the assessing officer to say that the taxpayer shall pay £50 or £75 as to say that he shall pay £10. Only the one calculation is required.
Extension of time granted.
– Will not this tax be administered by the Income Tax Commissioner and his staff?
– That is the intention of the Government, but there is an effective, answer to that proposal. If it is contended that the present Commissioner and staff can, in addition to the work they now do, administer the hundreds of thousands of returns that will come in from the commercial community all over Australia, the Department must be underworked or over-staffed to-day. I am quite sure that this tax cannot be collected unless a new Department is created, and the creation of a new Department will mean the employment of expert accountants. Every man’s business differs from every other, and lawyers who have to deal with complicated business suits sometimes have to spend days in getting a grip of the intricacies of’ a business before they can argue the case in Court. We shall require to have in the Taxation Office men who will deal fairly with the taxpayers, and at the same time be able to analyze the statements in such a way as to secure a fair deal to the State.
A lot of people, including myself, thought that this tax would yield a huge sum of money, and I was rather startled when the Treasurer told us what he estimated to get from it. But when one applies his mind closely to the subject, and looks about to discover where the revenue is to come from, he realizes that his former expectations were not justified. The average man’s mind at once fixes on the squatter as a man with big revenues who can afford to pay this tax. But what are the facts in regard to the squatting industry? The year 1914 was a year of drought, and the flocks and herds were depleted. In many cases half, and in other cases more than half, the stock was lost. The price of wool in the pre-war years was from 10d.- to11d. per lb. ; the price to-day is 15id. per lb. Before the war a squatter may have derived an incom e of £40,000 or £50,000 from a certain number of stock. In 1914 he lost a big percentage of his stock, with the result that, although he gets 4d. per lb. more for his wool, he has only half the quantity to sell. Therefore, he has not anything like the income he had before the war, and as a consequence he will pay next to nothing under this Bill.
– More men have failed in the squatting industry than in any other industry.
– All these arguments show that we shall getlittle or nothing from the squatter as a class by this taxation. In other countries the persons who pay huge sums to the national exchequer by way of war profits are the manufacturers of munitions. In Australia we have no manufacturers of munitions, consequently we have no body from whom we can get huge war-profits taxation. It must be remembered that although a man may appear to be earning large sums of money, wages, interest, and raw material have all risen in price; he may be turning over a huge sum in his business compared with his pre-war turnover, but he may not be making a greater profit.
The main ground upon which this Bill is based is the general feeling throughout the community - and a very legitimate feeling it is, too - that the cost of living to the working classes has risen so much that -some people must be making a huge profit, and those people ought to pay special taxation. By what is the cost of living represented ? The , staple products of life are bread, butter, sugar, milk, potatoes, eggs, and onions.- All those commodities have risen in price, but the men who produce them are exempted under this Bill.
– Because they are paying all the increase for labour.
– Whatever the reason may be, these are the items that affect the cost of living, and the men who produce those articles are exempt under this Bill.
– Coal is a necessity about which the honorable member knows something. Does he think that £3 5s. per ton is a fair retail price?
– No one pays that price. Recently a big strike in the coal industry was settled by the Judge giving the men what they demanded and allowing the employers 3s. per ton extra to cover the increase in wages. The employers were satisfied, the employees were satisfied, and the poor, suffering public had to pay.
Mr.- Higgs. - The public are paying 3s. 3d. per cwt.
– That is the consequence of the act of the Court. The allegation of profiteering, as some honorable members are in the habit of calling it, is based upon the increase in the cost of living, and if the position is analyzed it will be found that men are not making the profits that some honorable members think are made, and the Treasurer will not get the millions that some honorable members thought he would get from this tax. Of course his estimate is only ( a rough one; his officers cannot calculate the revenue with any accuracy, but I consider that it would be far better to utilize the provisions of the Income Tax Act, and impose a super-tax on the excess profits that have been made, rather than create a new Department for the purpose of imposing a war-time profits tax. 1
I am reminded very much of a story with which the Minister for Works and Railways is very fond of entertaining his hearers. A professor once asked a lad if he could get him any frogs. The boy replied, “Yes; there are thousands of them in our pond.” The professor told the boy that he did not need thousands of frogs, but he would be pleased if he could bring along two or three hundred for his classes. Subsequently the boy arrived at the college with a cart and some kerosene tins, and said to the professor, “ Here are your frogs.” But when the professor examined the tins he saw only four frogs in them. Thereupon he said to the boy, “ I thought you had hundreds of thousands of frogs in your pond?” “ So did I,” replied the boy; “ I judged so from the amount of row that they made.”
It is the same in regard to this profiteering. There is a lot of noise made, but when we come down to solid facts and to the calculation which the officers have submitted to the Treasurer we find that, instead of the revenue from a war-time profits tax being millions, it will be a paltry £400,000.
In reference to the 75 per cent, aspect of the matter, if I offered an honorable member certain work, and told him that I would give him £1 for doing it, I would be in danger of personal violence if, after he had done the work, I said that I was going to take back 15s. But that is exactly how it is proposed to treat the manufacturer, the producer, or the businessman. We expect him to expend his energy in developing his resources, and give up 15s. out of every 20s. he makes.
– Why not?
– If that is the idea of some honorable members they will be sadly disappointed. No man, so’ long as he carries on his business within the law, will be anxious to expend his energies in earning money, knowing that 15s. out of every pound he earns is to go to the Government.
– Do not threaten to “ slow down “ !
– It is not a question of “ slowing down.” The man will say to himself, “I am making a very comfortable living; why should I break my neck or take any undue risks if I am to get little or nothing for it V The effect of this legislation will be to induce men who are carrying on businesses and making money to “ slow down “ - if honorable members like to so term it - their energies and keep their profits down to what they were prior to the war, and invest them in gilt-edged securities. A man takes a certain amount of risk in trying to earn money. Immediately we propose to tax him to the extent of 15s. out of every 20s. he earns he will cease to take risks. The result of his ceasing to take risks will be that a large number of people will be thrown out of employment, and those who will be thrown out of employment will soon be crying out about depression in the community, and wondering what has hit them. In fact, there are already many out of employment today owing to this proposed taxation. Its effect is now operating. Immediately Parliament threatens to do anything people become scared, and endeavour to get to cover. Immediately business people are threatened with the imposition of taxation that will levy 15s. out of every 20s. they will not continue to develop their businesses.
– The Bil] does not do as the honorable member suggests.
– It will take 15s. out of every 20s. of the extra profits that are made.
– It allows 10 per cent, profit to be made, and then takes 15s. out of every 50s.
– It does not allow 10 per cent. If the pre-war standard was higher, it does not allow anything. I have perused the Bill, and I am prepared to stake my opinion against that of the honorable member for Grey.
I thank honorable members for the courteous attention that they have given to me, and for the extension of time which I was granted. In conclusion I say that it is the duty of Parliament to get the money necessary to meet the expenditure that we are incurring in connexion with the war, but it can get that money in another way. Levying a super-tax under the income tax would be a fairer way and moreover all the moneys raised in that way would go into the Treasury instead of a large percentage of it going into the pockets of the people who are employed in attending to and collecting a war-time profits tax. The Government would be well advised to withdraw this Bill and raise the money by extending the provisions of the Income Tax Act.
– I have not yet gone to the Front, as honorable members can see, but I pub in all my time in making myself ready for the job when it does come along, so that I have not had the opportunity of reading this Bill. Nevertheless I wish to put on record my views in connexion with the principles of it. There is no doubt the honorable member for’ Henty has gone into the matter fairly thoroughly. He has shown that it will take us all our time to catch the “profiteer,” and that if it is so desired businesses can be juggled with so that it will be made out that they are really run at a loss each year. I am positive that that will be the greatest result of the application of the provisions of this Bill. - I believe in taxing profits if we can find them. When the Treasurer was moving the second reading of the measure the honorable member for Wakefield interjected that there was not the “ profiteering “ going on that some people imagined there was, and the honorable member for Henty has endeavoured to point out in his concluding remarks that people simply imagine that there is “ profiteering “ because the cost of living has increased. What becomes of the higher money that is paid for ‘the necessaries of life ? It certainly does not go in wages. If it does, then our statistical records are bad. Knibbs does not bear out the statement that the extra price is balanced by increased wages. If it is said that there are no profits being made Knibbs proves the contrary. The honorable member for Grey pointed out on the hustings the splendid position of Australia, and showed what a great increase there was in the de- ‘ posits -in the Associated Banks, and the figures that he gave are borne out by our statistical review, which shows that the increase in bank deposits in the Associated Banks during the period of the war has been no less than £35,000,000. It may be argued that neither the squatter nor the manufacturer nor the farmer i» getting the ex’tra money that the consumers are compelled to pay, but at any rate the fact remains that some one is . getting it. There is certainly a balance after all costs of manufacturing or production are paid, and that balance is absolutely pure profit. It is against thai profit that the people of the country express their dissatisfaction.
Of course everything that comes from the present Ministry is supposed to be something calculated to assist in winning the war and paying for it, and I understand that the intention of the Government is to bring about equality of sacrifice, but I wish to know from honorable members opposite where there can be equality of sacrifice on the part of the wealthy and the poorer section of the com .munity. We may give to the wife of a man who goes to the Front anything we like in the way of sustenance; we may even attempt to give her luxuries, but we cannot replace the husband who loses his life or returns crippled. That woman makes a real sacrifice, and it is a sacrifice that she will always feel while she lives. I challenge honorable members opposite to show where the wealthy members of thecommunity make any sacrifice, let alone a .sacrifice equal to hers. I have been told by some one who has just returned from Adelaide that the return from the Australia Day appeal in that city is going to exceed that of the two preceding Australia’ Days. All honour to those who have generously given. We can see a long string of names in the papers of those who have given their hundreds, but when it comes to a matter of balancing the gifts there is always that £35,000,000 increase of deposits in .the Associated Banks of Australia to be considered. If the wealthy people merely stood still and neither lost’ nor gained in the matter of their deposits in the banks they could not say they were hurt by the war, but I cannot see where the sacrifice of the wealthy comes in when we have this increase of £35,000,000 in the deposits of the Associated Banks.
– What are the Savings Bank figures t
– The increase in Savings Banks deposits over the pre-war period on the 30th September, 1916, totals £13,475,676, or 5s. lid. per depositor. The figures for the Savings Bank deposits show the amount at credit per depositor and per head of population, but there is no means of ascertaining the amount to the credit of each depositor in the trading banks ; there is nothing to show how much each of them has made.
– Many small men have accounts in the Associated Banks.
– All poor men carry cheque-books. of course ! I met such men when I was working in a factory, all drawing cheques to pay their weekly bills! Let us compare the deposits for the year 1913-14 with those for the year 1912-13. The difference - I am speaking now of the Savings Banks - was 5s. lid. per depositor, and the difference between the deposits of the year 1911-12 and those of 1912-13 was 6s. 8d. per depositor; but if the deposits of 1910-11 are compared with those of 1911-12, it will be seen that there was a difference of £1’ 9s. between them.
– In those years, there was a smaller number of depositors.
– At any rate, there was an increase at that time of £1 9s. per depositor. The working classes are not making huge fortunes out of the war. Let us go back to the trading banks. Their deposits increased in ‘the year 1911- 12 by £6,359,687, and in 1912-13 by £20,971. In 1913-14, which takes in three months of the war period, there was an increase of over £14,000,000. Prior to the war the deposits in the trading banks were not increasing anything like so rapidly as they have increased during :the war. These figures show the money earned, or gained in some way or t another, by those connected with the Associated Banks, in other words, by the wealthy commercial community. Between 1914 and 1915, the increase in the deposits in those banks was ‘ over £14,000,000, and from 1914 to 31st March, 1917, to about £35,000,000.
– That includes £20,000,000 of war money deposited in the Commonwealth Bank.
– Very few of those who have deposits in the Savings Banks are drawing 4$ per cent, from investments in war loans; the war loan investors are those who own the £35,000,000 deposited in the Associated Banks. It is not the workers of Broken Hill, of Sydney, Melbourne, Adelaide, Brisbane, Perth, or Hobart, who own the £35,000,000 in the Associated Banks; the money at credit in the Associated Banks is that of the profiteers. That is the money that they have made notwithstandingtheir lavish patriotic gifts to war chest funds, Red Cross funds, and other collections, which have been so well advertised. The Minister for Works and Railways has said that all taxation, in the last analysis, falls on the worker, and, as a matter of fact, all taxation at last comes on him. It was pointed out. by the honorable member for Henty that that is so in regard to imposts on the coal-mining industry. No doubt this war profits tax will be passed on, where the profits cannot be hidden ; but in most cases the profits of one year will be balanced against those of another, and so many reasons will be advanced to secure exemptions that, in the end, the Commonwealth will lose rather than gain by the imposition of the proposed tax. The balances in the Associated Banks show that the commercial community has made big profits during the war. My desire is that the sacrifices of the people shall be equal. While the working community is pouring out its life blood, the wealthy community is making money out of the war. Yet the workers are vilified for attempting to keep things normal, and trying to escape the profiteering or bleeding process.
We hear a great deal about “ go slow “ methods, and about the increase in wages and price of materials, but what has Knibbs to say about that. On page 14 of his bulletin, he gives information covering the years 1913-14-15. The figures there given show that, whereas in the year 1913 wages and salaries amounted to 20.80 per cent., in 1915 - the latest year for which figures are available - they were only 19.24 per cent., taking the manufacturing operations with which Knibbs deals; the hands employed decreased from 337,000 to 321,000, a decrease of 16,000 odd. The material used in 1913 was 59.67 per cent., and, in 1915, 60.78 per cent., but it must be remembered that the various sets of profiteers rob one another, the last man passing on the cost to the general community. If materials rose, the same gang of swindlers took the extra money. The output of our factories in 1913 was £161,000,000, and in 1915, £169,000,000- that is, despite the “go-slow” policy and the walking delegate, of whom the honorable member for Wimmera is so much afraid - with less wages to pay, and fewer hands to employ, the manufacturers increased their output by some £8,000,000. There was a slight increase in the cost of materials, but that did not matter to them. Some of the gang of swindlers gain in each turningover process. The working man, however, gets only one cut, that is, each Saturday nighty and for that he gave an extra output. Let these figures judge between the commercial community and those who keep it going by submitting to the bleeding process. Honorable members perhaps will object that the growth of profits has been very small. Knibbs puts the margin for profit and miscellaneous expenses at 17.532 in 1913, and at 17.69 in 1915. But the wheels of industry, of which we have heard so much, have been kept going so well that the output of our factories is greater now than it was before the war, and the balances in the banks have increased.
– The balances in the banks are not to be regarded as profits.
– If I had £100 tomy credit in a bank last week, and £150 to my credit this week, am I not £50 better off!
– You may nob be.
– Your liabilities may have increased more rapidly than your balance.
– The honorable member might have sold a property for £50, and have made a loss on the transaction, yet his bank balance would be swollen to the extent of that £50.
– There are a lot of” ifs “ and “ ands “ and “ pros and cons “ raised by a man who is asked what money he has. A man might have a pocket full of money, and yet, when asked for the loan of a shilling, might declare that he had nothing but a trousers button. I do not base my argument on mere assumption I base it upon a statement made by an ex-Treasurer of the Commonwealth - a statement which was calculated to secure his return. I shall quote it as reported, and shall offer no comment as to its correctness or otherwise. If, as the honorable member for Henty suggests, my argument is wrong, then the deductions drawn from the same facts by an ex-Treasurer must also have been wrong.
– Even the ex-Treasurer might have been wrong.
– There are times when even a Liberal Treasurer shows a gleam of intelligence, and it is on such occasions that I seize upon his utterances.’ In this statement the honorable member to whom I refer said -
As an indication off the stability of the country itwas interesting to note, notwithstanding the £80,000,000 borrowed in Australia, that savings banks deposits now stood at £100,000.000, and in 1914 the total deposits represented only £84,000,000.
That he declared to be an indication of the stability of the country. He went on to say -
The deposits in the Associated Banks in 1914 were £ 103,000,000, and the latest figures obtainable show that they have increased to £183,042,000.
The newspaper report at this point has in brackets the word “ cheers.” The statement must have been considered highly cheering, and it should reassure us in calling upon capitalists to honour their promise to make sacrifices in the interests of the Empire. It should encourage us to call upon them to contribute something to help the dependants of our soldiers, so that the Government may not be forced to raise loans at 4½ per cent. from pocket patriots. I admit, with the honorable member for Henty, that there are a hundred and one ways in which profits may be made, and so hidden as to be difficult to get at for taxation purposes. I do not know why Mr. Knibbs places the business of conducting a newspaper under the heading of manufacturing industries.
– Some newspaper offices are “lie factories.”
– I think the honorable member is very near the mark. I have little to do with advertising, although the honorable member for Grey recently said that I took advantage of my position in the Army to advertise myself. He knew at the time that he was a prevaricator, and I now call his attention to the fact.
– I ask the honorable member to withdraw that statement.
– If it is offensive to the honorable member I withdraw it. I wish to draw attention to the fact that the scale of charges for newspaper advertisements has gone up. The increased charges for advertisements announcing “end of the season “ sales, and so forth, are passed on to the general community. Every time a woman buys a skein of wool in order to knit a pair of socks for a soldier, she has to pay her little bit towards the increased cost of advertising drapery establishments in the Age, the Argus, the
Adelaide Advertiser, the Register, the Sydney Sun, or other newspapers. But I wish to deal more particularly with the increased advertisement charges which cannot be passed on - which are squeezed out of the agony of the people. In prewar days the Adelaide Advertiser and the Register charged 2s. 6d. for a funeral notice of five lines and 6d. for every additional line. Since the outbreak of war the Advertiser has published this announcement -
Death advertisements in which a funeral an nouncement is made are charged foras if the death and funeral were separate announcements, namely, the minimum charge of 2s. 6d. in each case.
Do honorable members see how in this way they catch them coming andgoing? The newspaper proprietors do not stop at that. This announcement goes on to say-
In memoriam and death advertisements con taining references to more than one deceased are charged 2s. 6d. for each deceased mentioned, as if they were distinct and separate announcements.
We hear a lot of talk about our soldiers who are “ doing their duty in the Empire’s cause.” Such phrases are common on the part of speakers on “ patriotic “ platforms. But we cannot get away from the fact that where two boys in a family have been lost at the Front- and there are many such cases - the father and mother wishing to advertise their deaths are called- upon to pay 5s. for an advertisement which before the war would have cost only 2s. 6d. And so in respect of a young man who is wounded at the Front, and who on his return to Australia succumbs. If his parents announce in the one advertisement his death and the hour, at which his funeral will take place, they are called upon to pay double rates. The death notices have increased . enormously in consequence of the war. In the newspaper which I have in my hands there are two columns of “ death “ and “ in memoriam “ notices.
– Is that a copy of Truth?
– No Liberal paper contains the truth. If the honorable member wishes to know whether this paper is Norton’s Truth, I may sav at once it is not. It is Bonython’s Advertiser. It is a newspaper owned by a Knight of the Garter, who during the war period has doubled the rates charged for death notices. What have honorable members to say now about the men who are bleeding the community? These newspapers talk of the injury that results to the community from a strike, and yet they double their advertising rates in this way. It is profiteering, pure and simple. These special rates did not exist before the war. In respect of each class of advertisements to which I have referred an additional 2s. 6d. is wrung out of the agony of the people. Three out of every four of these advertisements include two or three verses in which the bereaved friends speak of the virtues of the dead, and for every deceased mentioned in each advertisement an additional 2s. 6d. is demanded by this man.
– What man ?
– “ Johnny “ Bonython - Adelaide’s knight. I have heard my party maligned and vilified because of its efforts to preventthe war being used to lower the conditions of labour. When I hear men declare that it is impossible to tax war profits, and when I see money being squeezed out of the agony of the people, I feel wrathful and like an Industrial Workers of the World man.
I am not familiar with the provisions of this Bill ; I have risen only to discuss the principle involved. It may be said that it is all very well to criticise, but that I should come forward with suggestions. I offer to the Treasurer the suggestion I made to the honorable member for Capricornia when he was in control of the Treasury - a suggestion which forms a plank in the platform of Labour, not only here, but in America and Great Britain. The suggestion is that the Government should commandeer all the financial institutions of the Commonwealth for the currency of this war. They should commandeer and use them. After all it is only a matter of turning over your own money. A man in camp recently said to me, “ The Commonwealth note issue up to date amounts to £46,000,000. The bulk of the notes are held by the banks. Everything is all right now, but as soon as the war is over the Government will have to float loans to redeem them. In other words, we shall have to pay 4½ per cent. on loans to redeem our own credit.” When the Devil drives, needs must. The note issue was introduced bv a Government that was brave and bold enough to take action, and if the Government of to-day would bravely commandeer and run the financial institutions of the country it would do well. Such action could be taken if the Government had behind them a following possessing the requisite backbone. We on this side of the House have not the necessary following, and I doubt whether, even if we had the power, we should have the men to run these institutions. I hope, however, that the day is not far distant when the community will realize that we are in the hands of financial jugglers, who resort to financial legerdemain. We watch the money being turned over just as a fisherman watches the gentles in the box by his side turning over and over, but takes out only one at a time. The rest eventually become flies, and breed again, and the owner . claims the increase.
– The honorable member will reach the position he desires in about a thousand centuries.
– I think the honorable member is in error. There will be a rude awakeningafter this war is over and when the people ha,ve to foot the bill. We are told that it would be impossible to commandeer and run these institutions. I say that we should at least make the attempt. When a number of ladies were riding in Maribyrnong Camp a few days ago, some one remarked on the fact that they were all astride their horses and that they looked well. There was a time when every lady rode side-saddle, which was bad for the horse and uncomfortable for the rider. To-day they ride properly, but a few years ago if a woman had thrown a leg across a horse she would have been declared to be something awful, yet to-day her actions are approved. Therefore, I cannot agree with: the honorable member for Henty when he says that we cannot control our financial institutions for the benefit of the country.
A reference to the debates on the proposal to create the Commonwealth Bank and a Commonwealth note issue will show that the attitude I am taking up is the correct one. We had all sorts of wild-cat stories as to what would be done with the note issue; we were told that it was to be a source of cheap money for members of Parliament, and so forth. But we have forced the banks to take our notes; and only a little more forcing is required to have our affairs and conditions put on a more equitable basis in the future. This Governmentis not sincere or honest unless they straightway equalize the sacrifices of the community.
I heard the Prime Minister assure those who then followed him that there need be no fear of the method he would adopt in regard to the conscription of wealth - in regard to making the wealthy members of the community pay for the war. I challenge either the press or any of the ex-Treasurers to say who have paid for the war up to date. It is certainly not the commercial community, which is better off than ever; it is certainly not the bank depositors whose increase in deposits’ is not less than normal ; and it is certainly not the worker, because their wages now are lower and fewer hands are employed. If the Government arc sincere, they will throw this and other taxation measures on one side and commandeer or conscript - call it what we may - the wealth of the nation in this time of stress. Great Britain has gone beyond the wildest imaginings in the way of war credits. “We have just recently heard of one of £600,000,000, and there will be more similar votes if the war continues for another couple of years. God knows where the money is coming from, or what is meant by these “credits,” if it is not merely juggling with what money is already there. It is certain that no more money has been coined.
– I suppose they simply played “ two-up.”
– Well, they are the best “speilers” I know of; for an- ordinary “ speiler “ only goes for you when you are “ caught napping,” while the Government are at it every day. More money has been called into existence, while our indebtedness is increasing with the possessions of those who control the wealth of the country. There is no doubt that when, after the war, the position has to be adjusted, the worker will demand a better home than he has had previously; and if the Win-the-war Government is sincere, they will inspire the workers with the belief that proper conditions will be achieve^ and kept intact, and that there is something to fight for.
Mr. POYNTON (Grey) [9.451.- I do not intend to follow the honorable member for Adelaide in his wild dreams.
– It is too awkward - that is why.
– I admit it. One would think from the honorable member’s utterances that we had done nothing in the way of direct taxation in order to meet the cost of the war. I have always held that our first duty in the way of taxation is in connexion with the present conflict, and that we should have direct taxation to pay interest, provide a sinking fund, and pay pensions to the soldiers. We have imposed taxation to the extent of 6s. ?d. in the £1 by way of income tax, and we have taken three-fourths of the economic rental value by a land tax of 9d. in the £1, and these two forms of taxation, together with the probate and succession duties, realized something like £9,000,000 last year, while our liabilities in regard to interest, sinking fund, and war pensions were slightly under that figure. It will be’ seen, therefore, that up to the present we have resorted to direct taxation to meet the cost of the war.
I was rather surprised to hear the remarks of the honorable member for Henty. That honorable member spoke of the £3,000,000 surplus in 1914-15, but he omitted to mention that we. closed the last financial year with a deficit. Had the War-time Profits Bill introduced by the honorable member for Capricornia been in existence during that year, there would not have been that deficit; and it is somewhat singular to hear that honorable member complaining of the negligence of the present Government in regard to this form of legislation. As a matter of fact, the honorable member for Capricornia had that War-time Profits Bill under his pillow for nearly twelve months, and it is longer than that since he introduced it in this House, when he had behind him a majority almost as large as that behind the present Government. If there is any blame for the absence of legislation by which to secure for the country some of the war-time profits, the honorable member must take his share.
I wish to impress on the honorable member for Henty that there is grave reason for further taxation. I do not know whether the honorable member is aware that we owe over £22,000,000 to the Imperial Government for money expended on our troops abroad. As I said on a previous occasion, I think some effort ought to be made to pay our way in this connexion. I again remind the honorable member that we closed the last financial year with a deficit of a little over £1,000,000, and with the shrinkage at the Customs, which is a natural corollary of the decreased shipping, there will be a still greater shrinkage this year. Everything points to the necessity for increased taxation ; but, though not opposed to taxation, the honorable member for Henty is opposed to that form of it presented by the Bill. In his opinion, an income tax would be preferable; but I would point out that an income tax applies to every one.
– I referred to the New Zealand method of placing under the income tax a super-tax on increased profits.
– I have never been very closely wedded to the proposal contained in the Bill, but at present I cannot see anything to take its place. This proposed taxation is cumbersome, and will be very costly to operate. I should not like any one to run away with the idea that the staff in the Taxation Department is not now fully employed; and I agree that the administration of the Bill will mean an additional expenditure of £40,000 to £50,000. The question really is as to how the Government are to get at these war-time profits. The honorable member for Henty is wrong when he said that the Bill proposed to take 15s. in the £1. In my opinion, the Bill is most generous in allowing those concerned to retain 10 per cent.
Mr.Rodgers. - That is really only a 3 par cent. profit over and above the standard rate for the risk and expense of carrying on the business. I am referring to the 10 per cent, on all paid-up capital.
– I know many companies which do not pay 10 per cent., coal-mining companies, for instance. On the whole, I think that the Bill, if it errs atall, errs on the side of liberality. The honorable member for Henty tried to make out that this is retrospective legislation ; but is he aware that he had to pay two income taxes in one year?
– Will you answer my point as to the 15s. in the £1? If a man’s business earned 10 per cent, before the war and earns 12 per cent. now, is there not a tax of 1 5s. on the extra £2 ?
– That is on the second year. But should any one make profits out of this war? I agree that during this period we ought to be thank ful if we can keep abreast of our former position. I have no doubt that profits have been made in various directions, but, of course, under the amendments in the Bill much of the profit is being whittled away which we ought rightly to get.
There are, perhaps, half-a-dozen fundamental principles which really govern the Bill, and have a most important bearing. There is, for instance, the definition of capital and the provision as to its decrease, increase, and withdrawal, and in regard to capital employed for a first time in any particular business. Under the Bill as introduced by the honorable member for Capricornia the provisions as to withdrawal of capital would have meant something less in the accounting period than in the pre-war period, and most alarming results would have followed. Then no provision was made for a shortage, the result of drought, flood, or fire, and taxpayers would, in this connexion, have been penalized. In this regard there was certainly great need for an amendment. Then the honorable member’s measure made the statutory percentage 5 per cent. in the first year, and 7 per cent. and 8 per cent, in the second year. Personally, I would favour a flat rate of8 per cent. as a fair compromise, because I believe 10 per cent. goes too far on the side of liberality.
Of course this is a Bill simply for Committee, but, as I have had something to do with proposed amendments of it, the Bill having passed through three different hands, I should like to briefly refer to those made by myself and by my successor. On the very first page there is an amendment in regard to the period for which the Bill shall operate. The original measure provided for its cessation on a date to be fixed by proclamation. The Government of the day could at any period issue a proclamation to terminate the operation of the Act. Under this Bill the tax is to have effect only till the end of the accounting period ending 30th June next after the declaration of peace, but I do not believe for a moment that this tax will cease twelve months after the cessation of hostilities. Either a war-time profits tax or some other form of taxation will be required, but the Bill in its present form places the responsibility upon Parliament of passing another measure to continue this one inoperation.
The BUI bequeathed to me by the honorable member for Capricornia contained no provision for what is termed a wasting asset. Every ton of ore that is taken out of a mine decreases the life of the property. Every expired year of a lease, whether of a forest or a business, makes the asset of less value, and such properties . are quite different from an established business which continues from year to year. A limited business lease in a city comes within the same category, and it is. fair to credit the firm holding it with a wasting asset, for at the end of the lease the money invested in it; has disappeared. The honorable member for Hunter spoke of the exemption of c’oal mines. I conf ess that I do not know why they should be exempt. Coal mines also may be regarded as a wasting asset. In the case of those which have long leases the allowance for wastage would be very small. The Bill which I introduced to this House did give exemption to gold mines, because I could not discover that gold has been enhanced in value as a result of the war. The value of copper, lead, tin, and many other metals has been enhanced, and the high prices at present ruling for them are a direct result of the- war. As a matter of fact, gold mines have been at a considerable disadvantage since the beginning of the war, because the cost of material used in their working and development has been much higher.
– The same remark applies to coal mining, the machinery for which is much higher in price.
– I believe that very few coal mines will pay any war-time profits. This Bill grants exemption to life insurance companies. I fail to see why proprietary life insurance companies should receive that consideration. There may be justification for the exemption oi mutual societies, but I do not believe iu the general exemption of life insurance institutions.
– Is not the risk greater in war time?
– It is; but the companies charge an extra premium to cover that greater risk. I allowed an exemption to the fruitgrower, but not to the vendors of fruit. Another innovation contained in this Bill is the allowance to be made for the maintenance of dairy herds for the supply of dairy products. That provision will lead to all sorts of complications. If dairy farmers have made war-time profits, why should they not pay the tax ? I doubt whether one in a thousand will be required to pay taxation on war profits, because the prices of dairy produce have been limited more or less, and the industry was hit pretty hard by the drought in the years 1914-15.
– Why load up the Bill by including them if they are not likely to pay anything?
– Because these exemptions create ill-feeling on the part of other people, who are not exempt. The Bill also exempts profits from land first used since the war for pastoral purposes,
– Nobody will claim exemption for that.
– But cannot honorable members see that the difficulties of administering the Act will be increased by these provisions? I do not know of any land first used for pastoral purposes since the war that should be exempt, but if the persons holding such land have made war-time profits in excess of the standard, why should they not pay the tax ? There is no doubt that the pastoralists have had a good time during the last two years, and they are prepared to pay taxation on their war-time profits. In fact, a number of pastoral companies have set sums aside during the last two years to meet this form of taxation.
The Bill introduced by the honorable member for Capricornia provided that if a man had one business in Adelaide, another in Melbourne, and another in Sydney, each should be treated separately. If one business showed a profit, it was taxed on that, but the owner was not credited to the extent of the loss on his other businesses. The Bill I brought before Parliament amended that provision so as to treat the three branches of the business as one concern, and the owner was required to pay a tax on the net aggregate profit of the several branches. One of the greatest difficulties which I found in formulating this taxation was in dealing with new businesses. There are some businesses that) were started two or three years prior to the war. and at the commencement of the war had just about reached the stage of earning income. Prior to that date they had been living on capital. There are other businesses which have been started since the war, and provision is made in this Bill to treat them very liberally, because, notwithstanding the fixing of a statutory percentage of pre-war profits, the Commissioner is given power to increase the pre-war standard so as to lessen the taxation payable for the accounting period. The taxation under this Bill depends entirely on the pre-war standard. As the pre-war standard rises the taxable profit for the accountingperiod decreases, and provision is made that in instances where the tax is likely to act detrimentally by affecting the stability of a business, the Commissioner may increase the pre-war standard and treat that business upon a different basis. As a further guarantee to the taxpayer, I provided for the creation of a board of referees, to whom the taxpayer might appeal direct. I had in mind a board of similar composition to the Inter-State Commission. Whether the Commission could have devoted sufficient time to these appeals I do not know.
– Did you intend to create a new department?
– No; but the imposition of this tax will involve a big increase in the staff of the Taxation Department, particularly at the commencement of the operation of the tax, because it is possible that in some cases returns will be required for six pre-war years, in addition to the three years in the accounting period. I admit that if we could impose this tax by some other means, say a supertax on the income tax, our problem would be infinitely simpler, but there has been so much talk of war profits that, from the point of view of members on this side of the House, the dropping of this Bill would be a very dangerous procedure. Although we might raise more money by some other means, yet the abandonment of the tax on war profits would be the finest political capital which our opponents could have for use in future elections. The main feature of this Bill is the name “war-time profits.” Everybody agrees that war profits ought to be taxed, but when we attempt to put such a tax into operation we find it is not so easy as some people think. We differ from the Old Country in the matter of new businesses. In Great Britain nearly all of the war-time profits taxation has been derived from the munitionmaking companies. Recently Mr. Bonar Law, when introducing an amendment to the War-time Profits Act, increasing the amount to80 per cent., gave an instance of the profits made by shipping companies. There is no doubt that the weakness of this system of taxation is its relation to the established businesses. Any business which earned 20 per cent. prior to the war and has not exceeded 20 per cent. since then will pay no tax under our Bill.
– Are the Australian shipping companies making very much heavier profits than before the war ?
– I do not know, but I venture to say that the revenue we derive from this Bill will be in excess of what has been indicated by the Treasurer. A further protection to those who are supposed to be harshly treated under the Bill is the fact that there is an appeal from the Commissioner to a Board of Referees, and beyond that to the Courts. So far as I am able to judge, the interest of the taxpayer will be amply protected by the simpler method of. appeal to which no law costs will attach. It is not my intention to make a speech on the second reading of the Bill because this is a most technical measure that will require close investigation in the Committee stage. It is at that stage that amendments have to be made, and there is no doubt that amendments will be necessary, because this is one of the most complicated Bills the House has ever had to deal with. While I was Treasurer I made certain amendments to the draft of the Bill. In fact the larger proportion of the alterations made to the original Bill introduced by the honorable member for Capricornia were inserted by me, and when, we are in Committee I shall be only too pleased to supply honorable members with information as to the bearing they have on. the general provisions of the measure.
Debate (on motion by Mr. West) adjourned.
Transfer of Troops for Training: Recruiting - Handling of Wheat - Arsenal - Wool-top Agreement - Increase of Rents.
– I move -
That the House do. now adjourn.
Last week the honorable members for Hunter and South Sydney drew attention to the fact that certain soldiers were being trained outside their particular State. I have referred the matter to the Minister for Defence and I find that, as I said at the time, generally speaking, the. arrangements are that men are trained in thi States in which they enlist, but owing to the necessity for special training in certain arms of the service it is essential to have special training camps in different States. The necessity for concentrating a small quota of certain arms from the States where they are raised is due to their having been allotted to these States as a matter of fairness, often at the request of State Recruiting Committees, to stimulate recruiting, and in order to give men in other States a chance of being engaged ‘li other arms of the service than the infantry. It is necessary to concentrate all the reinforcements for the artillery, engineers, signallers, machine gun companies and flying corps. Men for these arms require training in their special work which it is not possible to provide in separate schools in each State, as the number of instructors specially suitable for the particular work is not sufficient to staff more than the central schools, and a central school has the advantage of greater efficiency and economy in the instructional staff and of providing uniform training. Besides this it would be very difficult to form monthly reinforcements made up of a number of small quota, without officers, from different States unless they could be brought together under their officers long enough before embarkation to ensure that the reinforcement is complete, with all the necessary records for each man. It is for this reason that the tunnellers are brought together shortly before embarkation, bus not for a long period of training. Al! - other reinforcements than the artillery, engineers, signallers, machine gun companies, and flying corps train in and embark from their own district, so that there can be no complaint about the majority of the recruits being moved from their State. I find on inquiry in regard to concentrating recruits for training from New South Wales to Victoria that it is not done until the recruits have been clothed, vaccinated and inoculated in their own States. This takes about a month, and the concentration is only carried out in the case of reinforcements for machine gun companies, signal companies, tunnelling companies, and flying corps. In regard to the machine gun companies alio signalling companies the men require thorough training in their special work, which it is impossible to give in separate schools in each State. We could not provide each State with instructors specially trained. New South Wales has three ot the central schools for special arms, namely, artillery, engineers, and wireless operators. As regards the flying corps, recruits have to be concentrated at the Plying School in Victoria for the same reasons, and because it is the only place where they can learn their work.
The honorable member for Hunter also -raised the question of leave in the case of men’ concentrated in Victoria for specialist training. Before they are brought to Victoria they are allowed to have their final leave in order to say good-bye to their relations, and they are informed that they cannot obtain further final leave as their specialist training is of the utmost importance, and must be carried out. There are men from Western Australia, South Australia, and Tasmania, as well as New South Wales, and it is impossible to allow them further leave after concentration in order to return to their homes. In special cases, where it is shown that there are distressful family circumstances, sufficient leave is allowed in order that the soldier may return to his home to adjust his family matters, but this privilege cannot be allowed to all, as the time taken up would seriously interfere with their training, for which they are brought to Victoria. Of course in Victoria they receive the same evening and week-end leave as all other members of the Australian Imperial Force get.
.- There is a matter to which I must draw the attention of the Minister, and I regret having to do so; but I feel it necessary to speak regarding it, both in the interests of recruiting, and also in defence of constituents whom I represent. This is a report published in the Newcastle Morning Herald of a recruiting meeting recently held in West Maitland -
Lieutenants Harold Murray and Elsworthy and Organizer Herren addressed a meeting at the West Maitland Post Office corner on Friday evening and appealed for recruits, four volunteers responding. Lieutenant Murray read out the names of some young men who had not enlisted, but it is doubtful if such a procedure will assist recruiting. There appears to be some bungling in the organization of the recruiting campaign. The DirectorGeneral urges recruiting officers not to revile, but at least three recruiting officers visiting Maitland have used the terms “ curs,” “ mongrels,” “ bludgers,” “ living on prostitution,” &c. Another officer threatened to adopt Prussian methods if he chanced to command certain men in camp.
Lieutenant Elsworthy and Organiser Herren are two good officers. I have addressed a large number of meetings with them, and have never heard them give utterance to an offensive word, but let me quote the report of the Northern Times, the evening newspaper published at Newcastle, dealing with Lieutenant Murray’s address. It is as follows -
Lieutenant Murray, a returned hero and former resident of West Maitland, was the principal speaker, and, to use a sporting phrase, he “ lashed out hot and strong.” He pointed out that the census taken on 1st March, 1917, showed that there were 14,200 eligible men in the Hunter electorate between the ages of 18 and 45 who had not- enlisted. In East and West Maitland alone there were 3,500. Since March less than fifty recruits had been obtained from the two towns. That, he said, showed there were a lot of curs in both places. He had been told to be careful, but ha. was going to speak plainly as he was afraid of nobody. He denounced all who had been married and had not enlisted since the outbreak of the war. They were, he held, bigger cowards than the remaining single eligibles, as they were hiding behind the skirt of a woman. He asked why a certain person had not enlisted, also two others he named, one of whom is in the employ of the military authorities. This caused a sensation, and a brother of one of the men referred to, addressing Lieutenant Murray, said that hi3 brother had stayed at home to look after him, owing to’ His indifferent health. Proceeding, Lieutenant Murray appealed to all eligibles to join the Forces. For those who could, but would not, he advocated a dishonour roll. Hie warmly resented the attitude of many business people, who, he alleged, would not give returned soldiers a chance to earn an honest livelihood. “ We don’t want cripples, was their cry,” he went on. Lieutenant Murray next attacked the papers, which, he contended, were wrong from tile first. Men in that town, he continued, were dealing in German goods and boasted about it. What was really required was a bomb to explode in the crowd he was addressing to make them fully realize the true position. It would, he said, have been an excellent thing if Sydney and Newcastle had been blown up long ago - the cold-footers would then have had to go to fight.
No one will say that remarks like those assist recruiting; on the contrary they injure it- by disgusting the public, and preventing its attendance at recruiting meetings. However well fitted the speaker may be for soldiering, he is not suited for addressing recruiting meetings. I ask the Minister to take action to prevent him from addressing further meetings, and to prevent the use of similar language by others..
.- Recently a section of the community decided that it would not handle wheat unless certain conditions on which it insists are agreed to. It demands that the price of wheat for home consumption, about which the Crown has taken a certain attitude, shall be reduced. That one section of the. community should deliberately adopt a line of action designed to frustrate the decision of the Government in a matter like this is very serious, and the difficulty is increased by the fact that at a public meeting held last night in the Melbourne Town Hall a motion was moved by a member of this House upholding and supporting the determinations Ito which I have referred. I think that I would fail in my duty did I not call the attention of the House, the Government, and the country to this flagrant exhibition of disloyalty upon the part of one who has sworn an oath of allegiance to the Crown. The matter claims the earliest attention of the Government, which should at once assert its authority, and demonstrate once and for all that the management of the affairs of the country is vested in this Parliament, and through it in the Executive. I hope that prompt and earnest action will be taken to bring to book any man, whether a member of Parliament or private citizen, who inter- . feres thus improperly in the management of our public affairs.
.- I wish to know if the Government is committed to the site which has been chosen for an arsenal in the Federal Capital Territory. The building of the proposed arsenal will cost millions of pounds, and although Australia should do her share in providing for her own defence, I am of opinion that the arsenal could be of no use during the war, and that the war itself may necessitate such changes in the construction or location of arsenals that we ought to wait until it is over before settling anything in regard to it. When we proceed to build the arsenal we should employ the best experts to choose a site, and get the best opinion on all the questions involved. Otherwise we may take the wrong track at the start, and gain nothing by an early commencement.
– Why not leave it at Lithgow ?
– The history of the Small Arms Factory at Lithgow convinces me that many as are the mistakes which can be made in connexion with a factory, still bigger errors are possible in connexion with an arsenal; and that nothing would be gained, and much might be lost; by committing ourselves to an enterprise like this without proper information. Parliament has not approved of this work, though it should have a say in regard to such a big and serious expenditure as is contemplated.
– Is there any idea of carrying out the work without consulting Parliament ?
– I am afraid, from answers given to questions asked in another place, that the Government may have decided on the arsenal site. I wish to know if that is so, and if the Government intends to proceed with the construction of the arsenal before Parliament has been consulted?
.- I am sorry that the Prime Minister is not present, because he did not replyto the question I asked to-day as to whether any person, firm, or company in possession of top-making machinery, or prepared to introduce such machinery into Australia, could make the same bargain with the Government as Messrs. Whiddon Brothers Limited and the Combing, Spinning, and Weaving Company Limited did. He said that these companies had no special privilege. If they have no special privilege why didhe not answer my question straight out, and say whether any person in possession’ of such machinery could make a similar agreement? I ask the business members of the Government and of this Winthewar party to look into this matter, and let ussave possession of the terms under which the two firms are permitted to get a concession which is not open to other members of the public in Australia, and which, I venture to say, is a breach of the understanding with regard to the handling of the wool. I hope that the Honorary Minister will bring the matter under the notice of the Government.
– Where are the tops going to?
– They maygo anywhere, but I believe that they aregoing mostly io Japan. We certainly ought to know what the agreements are. I am sorry that the Treasurer is not here, because I should like him to tell us what control his Department has overthe funds which will accumulate under this new partnership by the Government with two firms. Surely there is some explanation required. Was there any advertisement put in a newspaper when the Government proposed to enter into an agreement of this kind, or was the thing done by logrolling ?
– What do you mean by thatremark ?
– I mean to say that some gentlemen with political influence may have been able to get from the Government a concession which is not open to the general body ofthe public.
– Do you. know how long this agreement has been in existence?
– According to the Prime Minister’s reply to-day, it was entered into about January last. That is not the way to do business. If the Government has any privilege or concession to offer, the public ought to be invited to enter into an agreement with the Government for the making, sale, and export of wool tops on the best possible terms and conditions for the general public, and for the wool-growers. It seems to me that, to the extent to which these two firms get the benefit of this understanding with the Government will it be to the disadvantage of the wool-growers who we were led to believe are to get the full benefits of the wool pool ? The thing looksas if it requires some ventilation. I suggestto the business supporters of this Win-the-war Government that they should make an inquiry into the matter. I do not suppose that we would have much influence with the Prime Minister and his colleagues. Certainly, as honorable members on the other side have a two to one majority, they ought to be able to get anything they like out of the Government, at. least in the way of information. I hope that they will help me to get copies of the agreements placed on the table of the House.
.- I have received a letter from a constituent) who belongs to an association that is not allied with the Labour party, pointing out a matter which occurred in Adelaide, and to which he thinks the attention of the Defence Department should be directed. I should like the Minister representing the Minister for Defence to inform me at a later date whether the statements made in this letter are true. The writer says -
You will probably remember a Mr. J. B. Siddal’s shop, at the entrance to Bowman’s Arcade, in King William-street. It was a shop where picture post-cards, stationery, and fancy goods were sold. It seems that the landlord, Mr. Bowman, was anxious to raise the rent, and Mr. Siddal objected. Tin then had notice to leave at the expiration of his lease. The father is really managing the business for two sons who went to the Front; one is now dead. Being disgusted with the action of patriot Bowman in attempting to get an increased rent, he had a streamer printed, giving the particulars, and displayed at in his shop window. T understand Bowman’s solicitor demanded to havethe streamer removed, but Siddal refused to shift it. Apparently the Military authorities were next moved in the matter, as the streamer has been token down, and the following notice is now to be seen in the window instead: - “In compliance with the Military Regulations, I have taken down the streamer. It has served its purpose.
My son as a soldier has taken the oath of loyalty to his King.
I represent my son’s interests here, and must be loyal too.
God save the King.”
I have seen the above notice in the window myself, but did not get a. chance to see the streamer; but those who saw it tell me that it read somewhat as follows: - “ This businessbelongs to my sons. I have two sons who enlisted in 19 15. One is buried in Egypt; one is fighting in France. This business belongs to them. The rent we are paying is £7 10s. per week. Thetotal paid in rent is £3,000. Toe landlord has refused to renew . the lease, which expires on August 29th, and has let the premises to a foreigner for £0 per week. This shows the landlord’s loyalty and patriotism.”
I am given to understand from one of our members who went round to see the streamer that he was just in time to see it being taken down, and that Senator J. Newland was standing in the doorway of the shop.
It would be Interesting to know why the Military interferes on behalf of a landlord who wants more rent.
I submit the letter without comment, but it does seem to me thati at this time, when we are wondering where profits are going . to, and which is the best way to nail them, if the military authorities have been moved to safeguard the interests of the owner of this property to the detriment of a lad who is now fighting in France, they are being used in a manner in which they ought not to be used. I Bhould like the Minister, in his reply, to inform me at the same time whether tine’ moratorium does not have some effect in. stepping the rapacity of a man who will take advantage of even a dead man, and the other person who is at the Front, that is, of course, if the inferences are correct. I leave the matter at that for what it is worth,
– Will you give the letter to me?
Question resolved in the affirmative.
House adjourned at 10.40 p.m.
Cite as: Australia, House of Representatives, Debates, 1 August 1917, viewed 22 October 2017, <http://historichansard.net/hofreps/1917/19170801_reps_7_82/>.