7th Parliament · 2nd Session
Mr. Speaker (Hon. W. Elliot Johnson) took the chair at 3 p.m., and read prayers.
– Has the Acting Prime Minister read the press cablegram
– Is the Acting Prime Minister aware that one of the questions which is being asked by Mr. Barnett, the Police Magistrate who is making inquiries concerning those of alien birth in the Public Service, is: “Have you been to enlist ;’ and, if not, why not?” Is he also aware that when Mr. Barnett gets an answer in the negative to that question, he tells the person concerned that he had better have another answer to give him by the time he comes round again ? Is the Acting Prime Minister also aware that one of those to whom Mr. Barnett put this question is of French descent, his grand- father having come to Australia when only two months of age? Is the Magistrate asking this question at the instance of the Government?
– I am not aware that the question was being asked, this being the first that I have heard of it. A com-, mission was given to Mr. Barnett to investigate the position of persons of alleged alien birth or descent in the employment of the Commonwealth, and he is to report on the subject. I do not think that the question which ‘has been stated is, if it has been asked, a proper question to form part of the inquiry.
– Is it intended to do anything to regulate the prices of secondhand chaff and corn bags? It is complained that at the present time chaff bags, which were formerly £2 a 100, are now 45s. a 100, and cornsacks, which were formerly 45s. a 100, are now £4 5s.
– I shall be glad to look into the matter.
– In regard to the requests that are being made to Admiral Clarkson, as chairman of the Shipping Board, for permission to the State and certain firms in Victoria to enter into coal contracts with certain mines in New South Wales, will the Minister for the Navy advise Admiral Clarkson to withhold consent to such contracts until the Transport Board is in operation, and the Government policy concerning the production and distribution of coal determined ?
– Has any arrangement been made by the Government in connexion with freights on fruit between the different States? If so, will the Minister in charge of the matter tell us what the arrangements are?
– This is a question which concerns the Apple Pool. I shall inquire of the Minister in control of it, and let the honorable member know his answer.
– Is it the intention of the Government to introduce, before the return of the Prime Minister, a measure for the scientific protection of Australian industries? When is the Prime Minister likely to return?
– I thought that, having received answers to two other questions on the subject, the honorable member would have been satisfied. Last week the honorable member asked if the Government proposed to introduce at once a Tariff for the scientific protection of Australian industries, to which my reply was, “ No.” The honorable member also asked whether this would be done in the lifetime of the present Parliament, and I said that, as temporary Leader of the
Government, I could not pledge the Administration for the life of the Parliament. In reply to the double-barrelled question which he has just asked, I wish to say that, in the absence of the Prime Minister, it is not the intention of the Government to introduce a Tariff measure; and I cannot say how long the Prime Minister will be away.
– Will the Acting Prime Minister say whether his financial and other arrangements enable him to make an announcement regarding the making of further cash payments in connexion with the Wheat Pool?
– I returned from Sydney only to-day, and have not had an opportunity to carry the negotiations to completion, though I hope to do that tomorrow, if the opportunity is given.
– Is the PostmasterGeneral aware that there is general dissatisfaction throughout the country districts with regard to his policy of building up a surplus by a process of dismantling existing facilities, reducing the status of offices, curtailing services, and generally declining every request from a country district?
– The statement contained in the honorable member’s question is not in accordance with the facts.
-Is the Acting Prime Minister aware that a number of petitions prepared for presentation to this House have been seized at the Italian Club by military officers? Is it a fact that the immemorial right of petitioning Parliament is also subject to the censorship and to the military power?
– I was not aware of the occurrence -until I heard it alleged a moment ago by an honorable member whom’ the Honorary Minister requested to give notice of a question in regard to the matter. As far as I know, the censorship has no . influence on the immemorial right of petitioning Parliament ; neither should it have.
– Does the Acting Prime Minister propose to make a statement with regard: to what took place at the Conference of State Premiers in Sydney ? The only report We have had of those proceedings would indicate that the honorable gentleman was impudent to the State Premiers. Was the ‘alleged impudence supposed to be contained in a suggestion that he made to them, and which they did not like, that’ there was a feeling growing up in Australia in favour of one Parliament only ?
– I presume that in a measure I am a judge in my own case. I am not conscious of having been impudent to the State Ministers. As in the case of the honorable member, sagacity and wisdom are sometimes mistaken for impudence. I was endeavouring to show the State Ministers what I conceived to be the true Federal situation to-day. I was doing so in opposition to the expressed views of some Ministers. When we are considering the Estimates I shall take the opportunity of stating exactly what are the Commonwealth- views in reference to the matters dealt with at the Conference.
– Has the PostmasterGeneral seen a statement made by the Postmaster-General of New Zealand, that the Dominion has, or will have before the war is over, a postal system second to none in the world ? As the credit of the Commonwealth and the Minister’s own hitherto unblemished reputation are involved, will the honorable gentleman accept the challenge of the New Zealand Government ?
– I oan only say that what the honorable member refers to is unbelievable.
– Has the Minister in charge of the fixation of prices obtained the information which I asked for a week ago in reference to the production and export of butter during the last four producing years?
– I hope to be able to, make a full statement on the subject tomorrow.’
– I desire to supply some information in regard to a matter inquired about in the House by the honorable member for Cook (Mr. J. H. Catts) in relation to wool. The secretary of the Central Wool Committee, in a ‘communication dated the 14th May, has supplied the following facts;: -
With reference to your minute of the 10th instant, relative to a question asked in the House of Representatives by Mr. Catts regarding wool held in -Australia on behalf of American clients, by direction I have to advise that the Central Wool Committee - were in possession of the information, as a result of the census of unappraised wool and sheepskins, taken at 30th June, 1917. Repeated applications for permission to ship this wool have been made to the Central Wool Committee, and on each occasion the request has been refused. In order that the wool so held may be made available for use, a recommendation has been made for the promulgation of an amendment of the War Precautions (Wool) Regulations, under which the Central Wool Committee will be enabled to direct that all such wool shall be submitted for appraisement, and this, it is considered, will have the effect of bringing under their control all wool now in Australia.
– I notice in today’s newspapers a reply given by the Acting Prime Minister to Colonel Gerald Campbell and Colonel J. T. Wilson in Sydney in reference to the restoration of kilts. The Minister said that any workable scheme would be proper ground for reconsidering the answer given in the House of Representatives, and that he saw no objection to furnishing a statement of the military objections. Does the Minister expect the different associations and Caledonian societies to present a workable scheme to the Minister for Defence, or does he expect the scheme to come from the Defence Department, seeing that none can be put forward without the authority of the Minister for Defence?
– Yesterday I had an interview with the chiefs of the Highland clans of New South Wales. It was not a deputation, and the proceedings were not made public, because if that had .been done, they would have taken too long when one was hurrying to catch trains. I presented to the gentlemen some of the difficulties which the Defence Department had raised against the proposal to raise a Highland Brigade. I stated that there was no prejudice against the wearing of the kilt, a fact which should comfort the honorable member for Barker, even though the cold weather is approaching. I said also that the objections of the Department were purely military. Some members of the deputation, with military titles, and, I understand, military experience, undertook to meet those objections. I said then that I would undertake to furnish them with the objections advanced by the Defence Department, and they, on their part, offered to meet them as far as they could. That is how the matter now stands.
– Are the Ministry aware that the Defence Department are discharging members of the Australian Imperial Force who have lost their limbs at the Front before the men have been fitted with artificial limbs ? That is not the practice in England. There, men are not discharged until they are supplied with artificial limbs. Will the Government undertake to see that no man who requires an artificial limb is discharged from the Australian Imperial Force until he has been fitted with one?
– I am not aware of the fact, as put by the honorable member, but I shall submit, his representations to the Minister for Defence, and give him an answer later on.
Purchase and Price
– Shearing operations have started in Northern Australia, and I should like to know whether the Acting Prime Minister is in a position to say whether negotiations have been opened up for the purchase of the wool clip? If so, have those negotiations been concluded, and is the honorable gentleman in a position to state the price and the general terms of the acquisition?
– I should prefer not to answeT that question to-day. Later on in the week, perhaps, I may be able to furnish the information, and I shall do so with pleasure.
Taxation of Non-participants.
– Will the Acting Prime Minister instruct the Commissioner of
Taxation not to collect the nonparticipants’ special income tax? Further, when does the honorable gentleman propose to repeal the Act imposing that tax ?
– Answering the last part of the question first, all financial measures will come on in the new financial year. The Commissioner, by understanding with the Government, is abstaining from enforcing the collection of the tax.
-Has the attention of the Acting Prime Minister been drawn to a statement made by Mr. Baillieu with regard to the sale of Australian zinc concentrates, and, if so, can the honorable gentleman give the House any information as to the transaction?
– I have not seen anything of the statement referred to, owing, probably, to my absence in Sydney. I shall be glad to look at the statement if the honorable member will show it to me.
– Some communications have been addressed to me by parents, who point out that their sons, who had been previously rejected for service, are now offering themselves, and, in some cases, are being’ accepted under the new regulation. I desire to ask whether the regulation, which sets out that the consent of the parents is no longer necessary, is to be interpreted to mean that protests on behalf of parents are not entertained, considered, or weighed by the Cabinet and the Defence Department?
– I really am not able to answer the question in the spirit in which I should like. I am not aware exactly how the regulation is being operated by the Department, but if the honorable member will give notice, I shall have an answer for him to-morrow.
– Can the Minister for Home and Territories say whether compulsory voting finds a place in his new electoral scheme, and, ifnot, will he favorably entertain its introduction?
– That is a matter for the Cabinet to determine, and I cannot at present say what the decision on tha point may be.
– Last week I asked the Acting Minister for the Navy a question about Cockatoo Island Dockyard, and he promised he would make a personal visit of inspection. Has he done so, and, if so, will he tell the House whether he proposes to make any alterations?
-I made a visit of personal inspection on Monday last, and I have arranged for some additions in connexion with shipbuilding. At the proper time, and in the proper place, I shall give full information as to the shipping programme.
– Has the Acting Minister for the Navy any information as to why the soldiers employed at Cockatoo Island Dockyard were not paid on Anzac Day, when they had leave? The Minister last week promised to make inquiries.
– I regret to say that I have not an answer to the question, but I shall undertake to have one by tomorrow.
– I should like to know when the first shipment of jute goods from. India is expected, and when the Government will be able to give the House information as to the cost of wheatsacks and woolpacks ?
– I think there is a shipment of jute on the way now, and I hope soon to be able to give some information as to prices.
– When these jute goods do come from India, will the Department be careful to see that they are distributed in fair proportions amongst the States, so that one State may not take up the whole, to the exclusion of other States which require bags badly ?
– I shall ask Senator Russell to see that that is done.
– In the absence of the Assistant Minister for Defence (Mr. Wise), I wish to read the reply to the following question asked by the honorable member for Dampier (Mr. Gregory) on the 3rd inst. : -
In view of the complaints of the Returned Officers Association with respect to eligible officers being retained here on home service, will the Minister representing the Minister for
Defence endeavour to see that those eligibles are compelled to go to the Front, or get out?
The answer is: -
Soon after the outbreak of war, it was de cided that every permanent officer of eligible age should be given an opportunity of seeing active service. To prevent disorganization, it was essential that this should be gradual. This policy has been carried out, with the result that very few now remain. These will be going on active service as soon as they can conveniently be relieved of their present duties. Should any refuse to go, the question of terminating their commissions will be considered.
In regard to Citizen Force officers who were called up and employed on the large number of extra appointments caused by the war, as soon as suitable officers began to return invalided, steps were taken to replace them by these officers who had seen service. - This policy has been carried out to the extent that at the present moment the only officers employed who have not been to the Front are those holding appointments for which the District Commandants are unable to find suitable returned officers. As soon as returned officers capable of carrying out the work are obtainable they will be employed, and the present occupants demobilized.
Henceit will be seen that every endeavour is being made to have no one but returned officers called up for duty. As some of the positions require technical and special qualifications, it is naturally not easy to obtain returned officers possessing the necessary qualifications.
Further, action has been taken to cancel the commissions of officers of the Citizen Forces who, without good reason, have failed to offer their services in this war with the rank they hold. In this connexion, it is intended to shortly submit an Order in Council terminating a large number of Citizen Force officers.
– In view of the glaringly unequal distribution of voters in the various electorates of New South Wales, when does the Minister for Home and Territories intend to propose a redistribution so as to remedy the existing disparities ?
– I have inquired into tins’ matter, and I assure the honorable member that in war time, having regard to the number of men who are absent from Australia, one has to be cautious in dealing with questions relating to redistribution. I do not think the present time opportunefor a redistribution, and I cannot say definitely when any steps in that direction will be taken. My opinion is that we should delay action until after the conclusion of the war and the taking of the next census, which will be in about 1921. No doubt there are in New South
Wales some districts in which the number of electors is in excess of the quota, and the same condition of affairs obtains to some extent in all the States.
– Will the PostmasterGeneral arrange to have exhibited in a conspicuous place in all post-offices, both country and town, full details of the prices fixed for the surrounding district, and also details of the penalties incurable for overcharging?
– The whole of that information is obtainable in the Postal Guide.
– Is it true, that the whole of the prices fixed by the Price Fixing Board are published in the Postal Guide and on view in each post-office?
– The information can be found in the Postal Guide.
– I should like to ask the assistant Minister in charge of shipping whether it is a fact that there is a serious shortage of kerosene in Australia owing to the scarcity of shipping space? If so, will the Minister arrange to stop large shipments of whisky and other spirituous liquors, in order’ to provide space for kerosene ?
– I have no doubt that every effort is being made by the Shipping Board to provide space for all essential commodities, but I cannot be expected to answer the honorable member’s question without notice.
– I should like to ask the Acting Prime Minister whether it is the intention of the Government to alter the present conditions attaching to the granting of permits for horse racing? If so, will they in future grant permits only to such clubs as give their profits to Red Cross work? ‘
– The whole question of the regulation of horse racing for the coming season is at present receiving the close attention of the Minister for Defence and his staff, and when a report is ready I expect that it will be submitted to Cabinet for consideration.
– On the 11th April I asked the Prime Minister a question relating to the arrival and departure of Germans since the declaration of war. I was promised that the inf ormation would be obtained and furnished as soon as possible. Will the Acting Prime Minister say when .that information will be available ?
– I do not recollect the question, but I shall have the matter inquired into.
– Is it a fact that letters between Ireland and Australia, and vice versa, are being heavily censored at the present time? If so, where does the censorship take place?
– I have endeavoured to make quite clear to honorable members who are especially interested in the eccentricities of the censorship that I know nothing at all about the work. If notice of the question is given I shall see that a reply is given by the Defence authorities who control the censorship.
– On Thursday last the honorable member for Barrier (Mr. Considine) asked the Minister representing the Minister for Defence (Mr. Wise)-
The following answers have been supplied : -
asked the Minister for Trade and Customs, upon notice -
Whether he will take steps to commandeer so much of the knitting wool shortly to arrive in Australia as may be necessary to supply (with wool at or near cost price) the Red Gross, War Chest, and similar organizations providing comforts for soldiers?
– Action has already been taken by this Government with a view of relieving the shortage of woollen yarns. Negotiations with the Imperial Government are now complete, and sufficient yarn to meet the immediate “Red Cross “ and ordinary commercial requirements is assured. The question of allotment and fixing of prices is receiving the attention of the Government.
asked the Acting Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister representing the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Treasurer, upon notice -
In view of the alleged huge profits of the present time causing a great increase on the amount of dividends being paid during the war, will ho bring before the Cabinet the necessity of restricting’ all dividends to 6 per cent., with a view of building up large reserves to meet the aftermath of the war?
– No. It is not considered desirable to restrict dividends in the manner suggested, because of the unequal incidence of the restriction, and because it would be inequitable to those persons who, in certain cases, have purchased shares at prices based on dividends at present paid.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follow: -
These concessions were made in order to avoid monetary loss to importers who were committed by firm orders, and also for the reason that local manufacturers were not in a position to immediately supply Australian requirements.
It may be explained that the excess of complete cars over chassis is accounted for by the admission of cars for which a firm order was placed prior to the date of the proclamation, viz., on or before 10th August, 1917.
Deferred Pay - Unattached Infantry Officers
asked the Assistant Minister for Defence, upon notice -
Mr. POYNTON (for Mr. Wise).The answers to the honorable member’s questions are as follow: - 1 and 2. A branch ; of the Commonwealth Savings Bank has been established in the Returned Soldiers’ Pay Office in each State.
All amounts due to returned soldiers, except the amount of £2 payable on disembarkation and payments at hospital and camp, are paid to their credit in the Commonwealth Savings Bank.
The object of this system is to encourage soldiers to leave at feast portion of their moneys in the bank, but should they desire to draw the whole of the amounts at their credit, the bank officials have no option but to act in accordance with the wishes of the soldiers.
asked the Assistant Minister for Defence -
Will he lay on the table a return showing -
The name and rank of the unattached infantry officers who left Australia recently by the Nestor and Ormonde?
The date on which they enlisted in the Australian Imperial Force?
The date on which they received their commission?
Mr. POYNTON (for Mr. Wise).Particulars required are being obtained, and will be made available as early as possible.
asked the Acting Prime Minister, upon notice -
– The proper channel is through the Consul in Australia representing the particular country concerned. In the case referred to by the honorable member, the representations should be made through the Italian Consul.
Message recommending appropriation reported.
The following papers were presented: -
Australian Institute of Tropical MedicineHalfyearly Reports from 1st January te 30th June, and from 1st July to 31st December, 1917.
Ordered to be printed.
The following papers were presented, pursuant to Statute: -
Customs Act - Proclamation Prohibiting Exportation of Empty Glass Bottles (except under certain conditions) - Dated 1st May, 1918.
Defence Act - Regulations Amended - Statutory Rules 1918, No. 107.
Northern Territory - Ordinance of 1918 - No. 2 - Crown Lands.
War Precautions Act - Regulations Amended -Statutory Rules 1918, No. 108.
Motion (by Mr. Glynn) proposed -
That the Bill be recommitted for the reconsideration of clauses 12, 14, and 48.
.- I move -
That the figure “ 8 “ be inserted before the figure “ 12.”
– I do not know that the honorable member should have submitted that amendment without consulting me.
– I consulted the Minister who was in charge of the Bill at the time, and he promised to consider the matter.
– May I ask what the honorable member proposes in connexion with the clause?
– Clause 8 relates to the method of taxation. I do not wish to go into details, but would point out that we have a report of the Conference of Taxation Commissioners, who dealt with this phase of the question, and who were unanimous as to the necessity of taxing company dividends at their source, before distribution. I do not think there need be any lengthy argument on the question.
– But that is the whole argument of the Bill. I dealt very fully with the matter on the motion for the second reading.
– Some of us were temporarily absent from the chamber at the time, and were in consultation with some gentlemen in regard to this very phase of the question of taxation, when clause 8 was passed.
– This question was amply debated in the earlier stages of our consideration of the Bill. I gave a definite promise to recommit two clauses, but I did not promise to recommit clause 8!
– The honorable gentleman said he would consider the matter.
– That was a considerable time after we had passed the clause. If it were open to honorable members to take this course at will, our work would be largely duplicated. The question mentioned by the honorable member is a basic one. It separated the Commonwealth and State Ministers at the recent Conference, and was apparently tie unbridgeable gulf between us. We took rigidly the view that we should not be justified in taxing dividends at their source. That view is expressed in the Bill, and it would be scarcely correct to re-open the question now after it has been debated and settled. On the motion for the third reading, the honorable member for Dampier (Mr. Gregory) will have an opportunity to discuss the matter. I would remind him that the Bill has already been before the Committee for many days, and that no attempt has been made by the Government to shorten discussion. I hope my honorable friend will not press his proposal, to recommit the clause, but will avail himself of an opportunity at a later stage to discuss the question.
– I shall press my amendment.
.- I support the honorable member for Dampier (Mr. Gregory) in his desire that this question should be discussed. It appears to be one of the means of securing uniformity in State and Commonwealth methods of taxation.
– But we will not pay that price. I have told the States plainly that we will not do so.
– That is to say, the Commonwealth will continue to have a form of taxation different from that adopted by the States generally?
– In that particular respect, yes.
– I believe that in all the States, company dividends are taxed at their source before they are distributed.
– No; but that is what they propose to do.
– I am afraid that uniformity in these matters will prove impossible of accomplishment. There are other reasons why the States should stand aloof from us; and from the amenities that were exhibited at the Conference we have some idea what those reasons are. It might, after all, be as well to await the Prime Minister’s pleasure regarding the further consideration of this question.
Question - That the figure 8 proposed to be inserted be so inserted (Mr. Gregory’s amendment) - put. The House divided.
Majority . . . . 7
Question so resolved in the negative.
Original question resolved in the affirmative.
In Committee (Re-committal) :
Section seventeen of the principal Act is amended by omitting paragraph (b) and inserting in its stead the following paragraph: - “(b) in addition to any other deduction allowed by this Act, there shall be deducted so much of the income of the financial year as is appropriated for development or new plant:
Provided that any of the money so appropriated which has not been expended for that purpose at the end of the year for which it was appropriated shall be liable to tax as income of that year.”
– The section of the principal Act which the clause amends deals with the taxation of a mining company. Paragraph b of that section provides that -
The capital expended by the person carrying on the mining operations in necessary plant and development of a mining property from which income has been received (less the distributed and undistributed income derived by that person prior to the financial year in and for which income tax is being levied) shall be divided by the estimated number of years during which payable mining operations may be expected to continue under normal conditions, and the quotient thus obtained shall in addition to any other deductions allowed by this Act be deducted from the income.
For that paragraph the Bill substitutes, the paragraph set out in the clause. I am afraid, however, that the new provision may work unequally. In effect it will allow the deduction of only the expenditure on plant or development during a particular year. The Act, as it stands, allows credit for expenditure on plant and development, from which is to be deducted the income of the previous financial years. If the expenditure on plant were, say, £10,000, and in previous financial years the income had been £1,000, the difference between the two amounts, namely, £9,000, would be allowed, and apportioned over the unexpired term of the duration of the mine. That works out fairly where small companies are concerned.
– How does it affect the war-times profits tax?
– I am not dealing with that tax now, though the provision in the War-time Profits Tax Act is similar to that in this Bill. A young company may have had but a very small income, or no income at all, during previous years, and would, therefore, get credit for the whole of their expenditure. The proposal in the Bill is that the amount allowed shall be the amount appropriated for new plant if it is spent in the year. If it is not all spent, that portion which is not spent will be taxed.
– A struggling company that cannot appropriate anything at the commencement of the year has no chance of being recouped.
– That is so, though the provision in the Bill will help the larger companies, which are not much benefited by the provision in the Act. Under the Act, a company that has had a large income for several years, if it expends money on plant, gets credit only for the difference between that expenditure and the income of previous financial years. In the case of a big company like the Broken Hill Company, the deduction of income from expenditure on plant would practically leave no credit at all. The Bill, however, would allow the company to be credited with its expenditure during the year. If it did not spend the whole of the money appropriated for development work or plant, the amount unspent at the end of the year would be taxed, but it could be appropriated in the following year, and would then get the benefit of the exemption.
– Is a call defined as income ?
– No; that is dealt with in another provision. We propose to allow mining companies to avail themselves of either the provision in the Act or the provision in the Bill. They may choose whichever they like. The smaller companies will fall back on the provision in the Act, but the larger companies will probably avail themselves of the provision in the Bill. I move -
That all the words after theword “ by,” line 2, be omitted and that the following words be inserted in place thereof: - “inserting after paragraph (5) the following paragraph: - * (bb)* as an alternative to the deduction allowable by the last preceding paragraph, thereshall, at the option of the taxpayer, be deducted so much of the income of the financial year as is appropriated for development (the cost of which is not deductible under section 18 of this Act) and for new plant:
Provided that any of the money so appropriated which has not been expended for that purpose at the end of the year in which it was appropriated shall be liable to tax as income of that year.’ “
If a sum of £10,000 is appropriated for plant, but only £5,000 is spent during the year for that purpose, then only £5,000 is exempted, but it will be competent for the company to appropriate the other £5,000 in the next financial year, and if it is so spent they will get credit for it; that is to say a deduction will be allowed.
– Many small companies allow their profitsto accumulate from year to year until they have sufficient money in hand with which to buy plant. Will those companies be required to pay income tax from year to year on the money which they are holding for the purpose of investing it afterwards in plant ?
– We cannot deal with what has happened in the past. All I can say is that as soon as they appropriate and spend the money they will get credit for the whole of that expenditure. If money is accumulated for the purpose of expenditure on plant, and it is so entered on the books of the company, it must pay taxation on it - I assume it would not be converted, into fixed capital - but if the money is afterwards spent on plant the new clause which we are seeking to insert will cover it by the words “ in addition to any other deduction allowed by this Act there shall be deducted so much of the income of the financial year as is appropriated for the development of new plant.” That applies to the financial year in which the appropriation takes place, but if there has been money accumulatedfor five years, Ido not think it could be properly credited against any particular year. We propose to allow the proportion of the taxable income during the year which is spent on plant as a deduction for that year. We cannot cover everything. I trust the Committee will recognise that the clause in the form in which it is now proposed will be a fairer adjustment of the matter.
.- I am sorry that the Minister has not allowed the recommittal of another clause, because it is essential that we should have uniform income taxation throughout Australia. There has been an extreme demand for years that the difficulties of having various forms of Commonwealth, State, and municipal taxation should be obviated, that all the forms should be brought as far as possible into line. Yet here, where there was a possibility of doing so, and when the Conference of heads of the Taxation Departments throughout Australia made recommendations for uniformity between all the States and the Commonwealth, we have before us a proposal which departs entirely from that object and from those recommendations.
– Order! That question is not before the Committee.
– I am sorry that the recommendations were not given effect to by the Treasurer. I cannot imagine how clause 12 could have passed through the Committee. If it had not been for information brought to us, it is quite possible it would have become law in its present form, and so have brought disaster upon the mining industry. Those mining companies who were in the know would make their appropriation for development or new plant, but those who were not in the know would make no appropriation, and where no special appropriation had been made the companies would have been called upon to pay taxation on all the money spent on development work and on new plant. It was a monstrous proposal.
– That was the old proposal.
– That was the proposal that was brought before the Chamber the other day. Unless a special appropriation was made by a mining company at the end of its financial year appropriating a certain sum of money for development and for new plant, the Crown would say,” You must pay taxation on the amount you spend in development and on new plant.” When honorable members asked for a little further consideration in regard to the matter it was refused. It is no wonder people talk about the class of legislation which we put through this Chamber.
– The question was before the Chamber for days.
– Does the honorable member approve of companies being called upon to pay taxation under those circumstances ?
– I have heard the Minister’s explanation.
– He has made other explanations’. He told me that if I made noise enough he would recommit the clause about which I complained, but apparently he has forgotten his promise. I do not say that he deliberately misled me. This is aruling which has been given by the Commissioner of Taxation -
The question has arisen as to the application of section 15 (76) in the calculation of the profits of the pre-war and war-time periods.
The word “appropriation” in the section is the controlling force, and that word is to be interpreted as meaning, first, the ascertainment of profits, and then the definite allocation of a portion of those profits for the specific purpose of development or new plant.
If there has not been any such action there has not been an appropriation within the meaning of the section.
The practice of definite appropriation by companies for these purposes is not common, and it will probably be found that there is no deduction in many cases under the section in ascertaining the pre-war standard of profits.
Actual expenditure on new plantand development which has not been definitely appropriated for the purpose within the meaning of appropriated,” as mentioned above, is not a deduction in either the pre-war or the war-time period.
In face of that ruling a Bill was brought here including a clause which made expenditure ondevelopment taxable unless specially appropriated. It is difficult for a mining company to judge what its expenditure for the year will be, or to realize what money must be appropriated at the end of its financial year for development and new plant. A big company would immediately appropriate its profits, and whatever was unexpended at the end of the year would be liable for taxation; but there are many small companies, who are probably spending on development, or in the erection of new plant, all they earn, together with whatever money is received from calls, and under the clause in the Bill they would be taxed upon the amount so expended.
– The honorable member is not speaking on the clause proposed to be inserted.
– This matter was dealt with by the Conference of Taxation Commissioners as follows : -
Commissioner Downie (Tasmania) moved, Acting-Commissioner Ewing (Commonwealth) seconded: - “That in lieu of section 16, sub. section (1), the following sub-clause be inserted : - ‘ Except as hereinafter provided, the assessment in the case of companies shall be based on the total taxable income, without deductions on account of any distribution of the assessable income to the members or shareholders of the company.’ “
– The honorable member is not dealing with the proposal before the Committee. He is dealing with the point rejected on the proposal for recommittal.
– On page 12 of the report of the Conference of Commissioners of Taxation we have the following: -
Acting-Commissioner Ewing ( Commonwealth) moved, Commissioner Owen (Western Australia) seconded: - “The omission ofother than coal mining, and that the following be substituted in lieu of sub-section b : -‘ The money expended during the year of income in necessary development of a mining property from which income has been received shall, in addition to any other deductions allowed by this Act, be deducted from the income.’ “
That unanimous recommendation from the Commissioners does not find a place in the Bill. We all know that there is a limit to the lifetime of every mine, and provision is made in the War-times Profits Tax Act for a method of amortization. Mining companies ought to be placed on exactly the same basis, so that, in the case of a profitable venture, the people who provide the capital shall, at least, get their money back. I have received a telegram from a prominent association in Perth on this point; and the fact that the Government haveagreed to the reinstating of the provision will improve the position from a mining point of view. We ought to do everything possible to encourage primary industries; and to that end companies should be induced to build up reserve funds, instead of being taxed on funds they do accumulate. It is one of the finest features of a mining company to have a reserve; and I know dozens of mines in Western Australia which have been abandoned simply because the companies got through their payable zone and had no resources on which to fall back. In many cases in Western Australia, the companies, realizing that their mines are nearing an end, have spent anything from £5,000 to £10,000 in proving new mining propositions; and, under the Bill, unless there be a special appropriation, the reserves ereated for such a purpose will be taxed. I do not suggest that companies should be allowed to place large sums to reserve with any ulterior purpose, or allowed to invest such reserves outside of Australia, but reserves are commendable, and should be encouraged within proper limits. I realize that to carry out the amendments I suggest would involve a good deal of re-drafting in the measure, but I hope that, either here or in another place, provision will be made to meet the objects I have in view. The present is a critical time, and I wish the Minister to go even further than he has already done. Do honorable members realize the value of the mining industry? On the Kalgoorlie fields alone there are 6,000 to 7,000 men employed, and the population of . over 30,000, supplemented by enormous numbers of people in city and country is engaged in furnishing supplies ; indeed, I feel certain that every producing miner there carries five or six people on his back. We ought to be very careful, indeed, not to do anything to cripple an industry of the kind; and it is difficult to understand why, in the case of this, the most speculative of all enterprises, it is always sought to impose the most restrictions.
– I hope the Minister will give this matter very careful consideration. The taxation of reserves is altogether wrong, so long as those reserves have a legitimate object. The honorable member for Wide Bay (Mr. Corser) has cited an instance such as must have come under the notice of every honorable member connected with mining. If a company desires to put a certain portion of its profits away yearly, with the object of sinking to a greater depth or procuring additional plant, it is. certainly unjust to tax that reserve. Of course, there ought to be some safeguards; we ought not to allow a company to build a fictitious reserve in order to escape taxation; but if the money is intended to carry over a bad period, or, it may be, to open up new country, it ought to be free from taxation.
– What would you do with such a company as the Wallaroo arid Moonta Copper Company, which has been paying over 30 per cent. dividends each year while putting £250,000 into reserve? The War-time Profits Tax Act does not touch that company.
– I think the honorable member is mistaken, for that company has paid the war-time profits tax.
– I regard the war-time profits tax as one of the most unfair ever proposed in a British Parliament.
– It is a silly tax !
Mr.Mcwilliams. - The word “silly” is scarcely strong enough. We find an old company which has been paying huge profits year after year escaping the tax, while a new company, with only small profits, has to pay half of these profits in taxation. That tax is based on no principle, andi the sooner it is repealed the better it will be in the interests of fair taxation. As one interested in mining for some years, i would prefer to see companies compelled by law to build up honest reserves, so as to prevent the abandonment of ventures immediately unprofitable country is reached. This i. regard as one of the results of what i call the curse of legitimate mining, namely, the no-liability law, which causes companies to grab the inside out of mines for the sake of immediate profit, and to leave themselves without any resources.
– What about mining companies which, on account of the extraordinary price of metal, have reduced their output by half?
– If companies adopt such a practice they ought to be dealt with quickly and stringently. We ought to realize the enormous indebtedness there will be on this country when the war ends; and, in order to meet it, we ought to encourage the establishment of companieswith the object of wringing all the wealth we can out of the earth. In my opinion, the restrictions which the Government place on the formation of companies is absolutely preventing the development of Australia. I know of cases in which it is impossible to float a company merely because of the restrictions under the War Precautions Act. Of course, it is difficult to make amendments in a Bill at the table, but I hope that the Minister will give these matters his consideration,, realizing that the more companies create legitimate reserves for the proverbial “rainy day” the better it will be in interests of successful mining and the development of the resources of Australia.
– How would you distinguish between a company which creates a reserve with a legitimate object and a company which creates one in order to escape taxation?
– That is very easily provided for. Every mining company has each year to send a copy of its balance-sheet to the authorities, and I should compel a statutory declaration showing the object for which a reserve is being created. . If a company falsifies its books in this connexion, there is only one place for it. I believe, however, that for one or two companies which would build up fictitious reserves for the purpose of escaping taxation there are ninety-nine legitimate companies which would create reserves with the most worthy motives.
– Have no-liability companies to send in their balance-sheets ?
– Yes; all companies. I am sure that the Minister does not desire to inflict injustice, but rather to help the mining companies; and I hope that when the Bill reaches another place some steps will be taken to effect the amendments that have been suggested.
.- I congratulate the Government on the way in which they have met the representations of those who spoke in behalf of the mining interests. Undoubtedly, the original proposal would have been detrimental to mining interests; but Ithink the worst objections have been removed by the proposal which the Government have put forward.
– Only so far as large companies are concerned.
– I think the small companies are advantaged more than the larger ones by the reversion to the original provision in the Act. The point mentioned by the honorable member for Franklin (Mr. Mcwilliams) in regard to the disadvantages under which goldmining labours deserves emphasis. I suggest thatfor many years to come it is most desirable that Australia should get out of the ground every ounce of gold that can possibly be obtained. There will be a grave scarcity of gold, and Australia will be expected by the whole Empire to do its best to provide gold reserves in support of the enormous credit which is being piled up on account of the war. If the Government will remember that, they will probably be able to conceive of some relief in the direction which the honorable member has indicated. Every legitimate support that can be given to goldmining at the present time should be given.
– To all mining.
– The remark applies with greater force to gold mining. Undoubtedly, the defect which the honorable member has pointed out affects goldmining more than other mining, because of the precarious and almost gambling nature of gold-mining. Most other minerals can be mined on almostan ordinary commercial basis, but that is not possible with gold. If the Commissioner or the Government can see some way of enabling gold mines and other mines to put aside legitimate reserves, taxing those that are not intended for developmental purposes, they will undoubtedly do a great deal to assist this very important industry.
.- If the opportunity is afforded, we are only too glad to encourage mining. Nobody is more conscious of the necessity for doing so than I am, because of having such a place as the Northern Territory within my sphere of control. At the same time, one has to remember the principle of the income tax, and not give such exemptions as would be inconsistent with the principle of taxing the profits of a particular year. One must assume that in goldmining the wasting of capital is taken into account by themen engaged in it. We have given as much encouragement to mining as is possible consistent with the principle of the Act, but I shall be only too glad to give consideration to the suggestions made by honorable members who are much more expert in mining matters than I am. I think we have protected the small companies, because paragraph b of the Act allows past expenditure on development and plant to be taken into account. I think that provision will meet the case mentioned by the honorable member for Wide Bay (Mr. Corser). Such expenditure would be apportioned for the unexpired portion of the lease as a deduction to be allowed against taxation. The honorable member for Dampier (Mr. Gregory) has objected to the use of the word “ appropriation “ in clause 12. The Act uses the word “ expenditure,” the reason being that the old paragraph b deals with “ past expenditure.” That covers a good many companies. We are adding a new clause to meet the case of the few big companies which appropriate money with a view to future development. I cannot see how companies suffer by the use of the word “appropriation.” Paragraph b of the Act provides that the capital expended in necessary plant and development “of a mining property from which income has been received, shall be divided,” &c. That relates only to past expenditure. In dealing with future expenditure, the new paragraph b provides that in addition to any other deduction allowed under the Act there shall be deducted so much of the income for the year as is “ appropriated “ for development and plant. Most of the big companies provide for such expenditure in the early part of the year. They will be given credit for the appropriation, but if it is found that the money has not been expended, the deduction will not be allowed. If next year the amount is expended, they will be credited in that year. We have to ascertain! whether the expenditure is incurred or not, and the best way for the Commissioner to tax is to deal in the case of large companies with appropriations, and not follow up from moment to moment the amount of the expenditure. I think this provision attains the end we are seeking, namely, to give fair play to the mining industry. But I shall consider the suggestions which honorable members have made.
.- The Wallaroo and Moonta Mining and Smelting Company paid a dividend of per cent, in 1914, the year the war began. In 1915 the company paid a dividend of 18 per cent., and put aside £136,000 for the payment of the war-time profits tax. In 1916 that amount was put back into the accumulated reserve, and the company paid a dividend of 37J per cent. In 1917 the dividend was 31£ per cent. The company has increased its reserves by over £250,000, and has paid in three years dividends totalling 87 per cent.
– Nobody desires to protect such reserves as those.
– The facts were published in the Bulletin on the 4th April of this year. The profits of the company have been made absolutely out of the war, because, the big demand’ for copper was caused by the war. That company has been piling up huge war profits at the price of the people’s misery.
– Seventy-five per cent, of that profit must be handed over to the Crown.
– Not one penny has been paid in war-time profits taxation yet.
– It will be.
– What is the good of talking like that?. The batchelor tax, which honorable members opposite supported almost unanimously, has not been put into operation, and we have been practically told that the Government do not intend to put it into operation.
– Many honorable members on this side assumed that there -would be an amendment of that tax when it reached the Senate.
– The Minister would now tell us that honorable members opposite said of the Bill, “ We did not know it was loaded; have it altered in another place.” Not a penny has been collected under the War-time Profits Act yet, and I take exception to that. Companies are piling up immense profits and paying huge dividends. I believe that the Broken Hill South Mining Company is only treating about half .the quantity of ore that it treated before the commencement of the war, but is making a larger profit on the smaller turnover. The profit in 1914 was 16s. 4d. per ton, and in 1917 it was 47s. 2d. per ton. What action do the Government propose to take in regard to that company.
– We are not allowing reserves to escape taxation.
– I know that.
– The secretary of the Wallaroo and Moonta Company called on me and said that the honorable member’s figures were wrong.
– He did not call on me to point out that the figures were wrong, and he did not contradict the paragraph published in the Bulletin.
– He said he wrote to the Bulletin, and his denial has not been published yet.
– The honorable member does not desire to tax small legitimate reserves ?
– I do not, but I wish to deal with the companies which are putting away huge reserves and paying enormous dividends. Unless we tax those people we shall not be doing our duty.
– We have taxed them.
– But they have not paid a single penny yet on account of the wartime profits tax. I ask that the same treatment be meted out to those companies as is dealt out to every Labour supporter who infringes the law.
– Is the war-time profits tax yet due ?
– I do not know, but I complain of the time that has been lost in collecting the tax and of the failure of the Government to deal with these companies, which are paying big dividends and piling up huge reserves. We are told that certain companies are reducing their output of minerals, and are thus adopting a “go-slow” policy, which has been denounced by the supporters of the Government. I understand that minerals required in connexion with the manufacture of munitions are being exported, although the shipping of other products is restricted, and I certainly think that any company which is reducing its output ought to be dealt with. We have been told that the output of the Broken Hill South Company is about only one-half of what it was before the war, but that the company is obtaining a larger amount of profit than before.
– I was not in the House when the Leader of the Opposition (Mr. Tudor), during the secondreading debate, referred to the Wallaroo and Moonta Mining and Smelting Company, but I saw in Hansard the report of his speech. It is only right that I should mentionthat the secretary of the company called on me, and said that the statement made by the honorable gentleman, and which apparently was based bond fide on a paragraph in the Bulletin, was not correct.
– It was based on a statement which appeared in the Bulletin of 4th April last in regard to the position, of the Wallaroo and Moonta Mining and Smelting Company.
– There is a responsibility upon us all if we do not test the accuracy of statements made when they impugn the honesty of other persons.
– I did not impugn the honesty of any person.
– We are told that a company has no soul, and that therefore it is impossible to impute dishonesty to it. The secretary of this company, however, told me that returns had been prepared in the ordinary course, that they were not evading the war-time profits tax in anyway. As a matter of fact, the tax waa not payable until 15th June next.
– I did not say that the company had evaded payment, but I do say that the Government have evaded their responsibility.
– The statement that the Government have evaded their responsibility because they have not made the tax payable until 15th June next is such a loose one that it would be a waste of time to say anything more about it.
.- I am surprised that the Leader of the Opposition (Mr. Tudor) should make such a reckless statement as that in’ which he has just indulged. He declares that nothing has yet been paid in connexion with our war-time profits taxation, but he makes that statement without the slightest knowledge of the facts. The records of the Taxation Department are not open to me, but I should not be surprised if they disclosed that certain persons had already paid the war-time profits tax. The tax was imposed only in September last, and is not payable until the end of the current financial year; but I know that certainpeople have already made up their returns and are trying to secure assessments, while others have actually paid the tax. The honorable gentleman has had a wide experience both as a Minister of the Crown and as the leader of a party, and he should not try to mislead the Committee in this way.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 14 -
Section eighteen of the principal Act is amended -
.- I move -
That after paragraph d the following paragraph be inserted: - (da) by inserting in paragraph (e) of sub section (1) thereof, after the word “ any “ first occurring, the words “buildings, fences, telephones, yards, water improvements, cattle dips, and sheep dips.”
I also intend to move that after the word “ repairs,” at the end of paragraph e, the following words be inserted : - “ but a deduction shall only be allowed under this paragraph in respect of buildings, fences, telephones, yards, water improvements, cattle dips, and sheep dips in the case of leases from the Crown.” The object of my amendment is to encourage the making of permanent improvements on lands leased from the Crown. Under the law as it stands, the position is that, in setting out items of expenditure against income, the taxpayer is allowed to include depreciation on such items as agricultural and farming implements, harness and saddlery, motor lorries and cars, boring plant, dairy plant other than power, wooldumping, bores, windmills, &c., buggies, sulkies, drays, and waggons on farms and stations, shearing machines, scouring machinery, loose tools, station plant, stable implements, galvanized rain tanks, and various other things. But, for reasons which have never been made apparent, the Commonwealth Act does not permit of deductions being made in respect of depreciation on the items included in my amendment, which are of even greater importance in the development of this country and in bringing about an increased output of primary products.
I regret the temporary absence of the Acting Prime Minister, because this is a question of grave concern to the whole of the people, and has a most important bearing on the finances of Australia. I am glad, however, to see present my honorable friends, Mr. Higgs and Mr. Poynton, both of whom have held office as Treasurer, and will, therefore, realize the importance of this matter. We are all aware of the extent to which the late drought reduced the number of cattle and sheep in the Commonwealth, but there is one aspect of this question which has never been fully considered by the general public, but which is well known to the honorable member for Maranoa (Mr. Page), the honorable member for Kennedy (Mr. McDonald), the honorable member for Darwin (Mr. Spence), the Honorary Minister (Mr. Poynton), and others who have spent the greater part of their’ lives in districts where Crown’ leases are the rule, and where, without an enormous expenditure of capital, such leaseholds would have to be abandoned. Crown lands which were originally waste areas have been made useful only by the improvements made by lessees. If, ten years ago, these Crown lands had been as fully developed as they ought to have been, we should not have suffered anything like so. heavy a loss of stock, and particularly of cattle and sheep, as that which resulted from the recent drought. To a very large extent, the Crown leaseholds of Australia are the breeding grounds of our cattle and sheep, and the loss of stock on these Crown leaseholds which follows a drought such as that of 1914-15 is largely responsible for the difficulty that our farmers, and holders of freeholds generally, experience in stocking up and re-stocking.
This question of enabling cattle and sheep to be carried on the Crown leaseholds of Australia is largely wrapped up with the matter of improvements. In the more favoured coastal lands of Queensland, and also, perhaps, in the north-west of Western Australia, cattle raising can he carried on upon Crown lands to a certain extent without a very substantial expenditure on improvements. The ravages caused by tick make it absolutely necessary to provide for cattle dips, and also to erect fences to separate clean cattle from those which are ticky, so that even in respect of cattle stations it has become necessary to expend considerable sums in improving Crown leaseholds. Before Crown lands in any part of the Commonwealth can be devoted to sheep raising, it is imperative to make very extensive improvements. The great bulk of our cattle, and a very large number of the sheep of the Commonwealth, are running on Crown leaseholds, and, but for extensive improvements to those leaseholds, they would have to be abandoned..
– How do the State Governments treat Crown leases in this regard?
– I thank the honorable member for his interjection. In Queensland, where there are a great many Crown leaseholds, a taxpayer is allowed, under section 14 of the Queensland Income Tax Act, to deduct from the gross amount of his income such sum as the Commissioner thinks just and reasonable - as representing the diminished value, by reason of depreciation during the year on the income of which the assessment is based, of any building, machinery, implements, rollingstock, utensils, and articles used by such person for the purposes of his business, and also by depreciation of any bore, well, dam, or other improvement made for the conservation of water, or for any fence - and so forth. The Queensland law has from the beginning realized the importance of lavish expenditure on improvements on Crown leaseholds, and has, therefore, allowed depreciation to be taken into account. There is, of course, a wide impression that a man has only to take up Crown land, no matter what the circumstances, to make a fortune; but, as the honorable member for Capricornia (Mr. Higgs), who represents a large and important electoral division in Queensland, is aware, the line of demarcation between Crown lands which are worth taking up and improving and those which are not worth taking up is very fine. In Australia, about 850,000,000 acres of Crown lands are under lease, and about the same area is not under lease, no one thinking it worth while to spend money in utilizing it. Of the land under lease, it would not take much to make the leaseholders abandon a considerable area, and of the land not under lease there is a considerable area which, with favorable conditions, such as allowance for the depreciation of improvements, among other things, would be taken up. It is all a question of prospective profits. I ask Ministers to take this matter into their fullest consideration. While a certain amount of revenue may appear to be lost by allowing for depreciation on improvements, the increasing of the production of the primary industries of the country is a more important consideration. I know, from personal experience, that a considerable area of leased land in Queensland is being abandoned owing to the increased ravages on the part of wild dogs. West from Rockhampton there are large tracts of country where, during the last four or five years, the wild dogs have become so bad that, although the land at one time carried large numbers ofsheep, the flocks must actually be withdrawn altogether unless the lessees can erect extensive dog-proof netting fences. Nothing will enable sheep to be run in these districts without this protection. Messrs. Stuart, Henderson, and Edgeley, who have a run named Jedburgh, near Judah, which was on the point of being abandoned, by some means or other were able to secure wire netting, though at an enormous price. Of course, if your means permit, it is better to pay highly for wire netting than to allow your sheep - especially at present prices - to be eaten by wild dogs. These gentlemen have wire-netted their property, and have thus made it a good one. But on a very large number of runs in the same locality, and in other parts of Queensland, the dogs are becoming so bad that it will be impossible to keep sheep there without protecting fences. All fencing material is at least three times as dear as it was before the war, and, in addition, freights and other charges have increased. Furthermore, it is extremely difficult to procure the material that is needed. Even if there were no other reason than to obtain the maximum amount of revenue, the Government should strive to bring about the utmost possible improvement, especially of Crown lands. The 850,000,000 acres of Crown leaseholds carry by far the greater number of cattle run in Australia, and perhaps a third or two-fifths of all thesheep in the country. I have discussed this matter fully with experts, and have Heard no valid or satisfactory reason for not allowing depreciation of improvements on Crown leaseholds to be taken into account. It might mean the loss of a certain amount of revenue; but this Bill is concerned with the principles of income taxation. We are trying to lay down broad and sound lines on which to base the tax. The English legislation jealously guards the principle that income taxation must be levied on real, not on imaginary, income. Taxation is not levied on real income when you refuse a deduction in respect of expenditure in an industry which cannot be carried on unless large sums are expended on improvements. It may be replied on behalf of the Government that the Crown lessees in Queensland enjoy tenant right in their improvements, and that this is a sufficient compensation for those improvements. In theory they enjoy that right, but in practice its value is very much diminished. In Queensland, from time to . time,, portions of runs are resumed and thrown, open to selection. Those who select on resumed areas have to pay for the improvements that have been made, but the valuation of those improvements is not based on their cost or their value to the Crown lessees who made them, but on their value to the selector. Therefore, an improvement which was made in perfect good faith, and at considerable expense, may be resumed within a few years for very much less than it cost, or than its value to the man who made it. In October, 1910, at a place near Vergemont Creek, I put up some cattle yards, which cost £280, and in April, 1913 - two and a half years later - when the country was selected, the Court decided that the value of these cattle yards to the selector was only £40, notwithstanding that the Crown lands ranger, who represented the Crown, not the pastoral lessee, had valued them at £269 2s. 6d. I do not complain of the decision of the Court or of the law. Possibly the yards were not worth more to the selector. I should complain, however, if the Queensland Government Income Tax Department were to refuse to allow anything for depreciation of improvements, while allowing for depreciation on carts, implements, and other things that can be taken off the land. The Queens-
Mr. Jowett. land Government, however, does allow for depreciation; it is only the Commonwealth Government that does not, and that is due to a complete lack of appreciation, of the real position, and of the importance of stimulating ‘ the improvement of the Crown leases of Australia. I impress on the Minister for , Home and Territories the necessity for giving serious reconsideration to this question. I know that there is a general impression that the various States will oppose the proposal; but, as a matter of fact, I do not think that there will be any real opposition on the part’ of the people of the States when they come to give it serious consideration The Income Tax Commissioner of Queensland has approved of it, the various Governments of the State of Queensland have approved of it, and I believe that the various Treasurers of that State have approved of it. Queensland is the State mostly affected. The lessees of the western lands of New South Wales are already allowed depreciation for improvements under the Federal income tax.
– Would not an allowance for repairs be equal to the pro- , posed allowance for depreciation of improvements ?
– An allowance for repairs would be totally inadequate. There are no repairs practicable to an artesian bore, which might cost from £2,500 up to £6,000 or- £7,000. It keeps on flowing until it ceases to flow.
– Repairs should bring an improvement to its original state.
– In the vast majority of cases repairs cannot bring any improvement back to its original state. What is the condition of a fence which has been patched up for twenty years? One could not lean against it - for all practical purposes; one could hardly strike a mat:h ou it. The same remark applies to buildings, cattle dips, and sheep dips. No repairs could restore their original value. I hope that the Minister will allow depreciation for improvements on Crown leaseholds.
.- I have visited the Central Queensland districts, to which the honorable member refers, on several occasions, particularly the neighbourhood of Longreach. None of those districts could be brought up to their full carrying capacity without the improvements to which the honorable member has drawn attention. A great deal of that country had to be abandoned at one time because of the absence of permanent water, but eventually the lessees hit on the brilliant idea of sinking artesian bores, and now there are no less than 2,816 of such bores in Queensland. It was one of the best investments which have contributed to the success of the pastoral industry of the State. Thousands of acres of rolling downs, covered with Mitchell grass, had to be abandoned before artesian bores were sunk.
– Was. not the absence of permanent water taken into consideration when the rents were fixed 1
– That may have been so, but the fact that the leaseholders have effected improvements by sinking artesian bores will lead to the State Government getting a great source of revenue when the leases come to be renewed.
– Is it not a condition attached to many of the leases that the lessees must put down artesian bores?
– That may be the case, but the lessees should have some allowance made for the depreciation of the value of their improvements. A man in business is allowed to deduct something like 10 per cent, for depreciation on his fittings, but the man who goes out into the bush, and commences operations on Crown lands, is not allowed any depreciation. That is not the way to encourage the settling of our outlying districts. The improvements effected not only increase the carrying capacity of the land, and thus add to the taxable income of the Commonwealth, but also give employment to thousands of workers. The Shearers’ Accommodation Act of Queensland compels the pastoral lessee, who may not have tenant rights “m. regard to his improvements, to provide certain accommodation for his shearers. Is it right to compel a man to provide certain accommodation if he is not also to be allowed a deduction for the depreciation on those very things which he is compelled to provide?
– Do they not increase the . value of the property?
–I am dealing with the case of Crown lessees, who get nothing for the improvements which they effect. The life of a fence depends on the material used, or on the presence, of white ants in the district, but the ordinary, life of a fence is not more than 25 years, and, before a lease has expired, it may have no value at all. I am very pleased that the honorable member has brought forward this matter, > and I shall support him. v
.- I have been endeavouring to make up my mind as to whether the honorable member for Grampians (Mr. Jowett) is a man of sublime modesty or one who is possessed of amazing cheek. He asks for the insertion of a clause to allow for depreciation to the buildings erected by one section of the community only, namely, leaseholders. I .consider that the freeholder is just as much entitled to be allowed to deduct for depreciation on hia property. I have had a good deal to do with butter factories. Since the introduction of1 the factories system, the health authorities have condemned many wooden buildings, and my experience leads me to put down the life of a wooden butter factory as about ten years. I had intended to move an amendment to insert the word “ buildings “ where the honorable member seeks to have his proposal inserted. However^ if the honorable member will divide his amendment, and submit it in two parts, I am prepared to support the first part of his proposal in lieu of my own. The honorable member is a little greedy in regard to claiming an allowance for depreciation on water improvements. A bore may be a very costly thing, and it may be an absolute failure, but it is provided in another part of the Bill that depreciation will not apply to any defects which may be made good by repair. I cannot imagine how any one can improve a water scheme except by repairs.
– Artesian bores.
– In the case of artesian bores, if the pipes give way they must be repaired.
– They cannot be repaired.
– Fresh ones could be put down, and that comes under the heading of repairs.
– That is allowed for under the present Act.
– I observe that the Bill strikes out of the principal Act a proviso which allows a taxpayer a set-off for the labour of his family. So far as
I can see, the Bill makes no provision in this respect, not even for -wages paid to a member of the family.
– If wages are actually paid, they are credited.
– Is the Minister quite sure that such cases are provided for in the Bill?
– Previously, there has been an allowance, but under the Bill there must be actual payment.
– The honorable member for Grampians (Mr. Jowett) was modest enough to confine his amendment to a certain section of the community, which happens to include himself; but I should like to see it extended, and some allowance made for the depreciation of all buildings used to create income.
– I am willing to support an amendment to that effect.
– Like the honorable member for Moreton (Mr. Sinclair), I am prepared to support the amendment if freeholders are included. Leaseholders in Queensland, about whom the honorable member for Grampians (Mr. Jowett) is so much troubled, do not, in many cases, pay more than 2d. per annum per acre, whereas similar land-holders in Victoria and New South Wales graziers have to pay at the rate of 4s. or 5s. an acre. The * honorable member for Calare (Mr. Pigott) did not impress me with his argument when he submitted that, although, an allowance is made for the repairs to a dam, that same dam is not so good as it was when new. Such an argument does not “ hold water.”
– I did not say that at all.
– It seems to me most unfair to withhold this allowance from the freeholder, and to give it to the leaseholder, who is on such a “good wicket.” We all pride ourselves on the fact that a Britisher’s “home is his castle,” but we know that a leaseholder iu the grazing industry is in a much better position than is a freeholder. As the honorable member for Moreton has pointed out, dairy farmers pay high rents, and I know that in my own district they are called upon to pay £2 a year. Such men ought to be allowed for the depreciation of buildings, which, according to the honorable member for Moreton, do not last for more than ten years. Unless freeholders are included I shall oppose the amendment.
.- In regard to exemptions for depreciation, men on the land are treated very harshly under the present law. I agree that a much better case can be made out in this regard for the freeholder than for the leaseholder. When a man takes up a lease he pays particular attention to the extent of his tenure, and the conditions as to tenant right and improvements. If he undertakes to carry out certain improvements in order to increase the grazing capacity, his operations, under sound management, will be limited by a sane consideration of those conditions. I do not agree with the idea that the leaseholder should have a special concession which is withheld from the freeholder. I know quite a number of holdings in New South Wales which carry a mortgage debt of, perhaps, £1 or £3 ah acre. It is true that the interest on the mortgage debt is allowed for by the Commissioner, but there might be an equal sum, or nearly so, of the capital of the owner invested for which no allowance is made. An allowance is made for depreciation of actual plant, as distinguished from buildings, although there is huge deterioration in regard to buildings, fences, water conservation plant, and so forth which are not allowed for. Something ought to be done to remedy the anomaly, but it is ridiculous to single out the leaseholder for special consideration. One gentleman, who had paid £70,000 for a huge leasehold in Queensland, told me that in five years he had cleared off the whole of the debt, and was several thousands to the good. I do not see that the freehold competitor of such a man. should be denied a concession that is proposed for the latter. It would be infinitely better to try to meet the case of those men under amending Land Acts than to afford an opening for them to solidly entrench themselves, and secure exemption for a large portion of their income. A man is allowed no exemption at all if, for instance, on a large freehold, he spends £2,000 or £3,000 in erecting fences, and in completely eradicating the rabbit pest, for that is regarded as capital expenditure. On the other hand, if a man worries along in a sort of haphazard way, spending £300 or £400 a year in similar work, the holding being always infested, he receives an allowance. We ought to make a serious attempt to remove these inconsistencies. It would he dangerous to follow the example of the first Income Tax Act in New South Wales, and allow a man 5 per cent, on the capital value of his incomeearning property, for that is a principle very difficult, to apply, inasmuch as it would compel the Government to estimate, for example, how much capital had been expended in fitting a man, professionally or otherwise, to earn a large income. That principle has been departed from in New South Wales, and is not adapted in Federal legislation. We are at war, and people who earn incomes, large or small, must pay taxation according to their means. Under the circumstances, we ought to be very careful not to afford an opportunity to persons, some of whom aire now earning the largest of incomes, who might endeavour to practically hide those incomes under real or affected improvements. I spent many years in making improvements on the land, especially in the matter of tanks and dams; and I know that the utility of such works largely depends on the capacity of the man who has to - choose the site. If the wrong soil be chosen, ,and the dam proves a self-baler, it is worthless from the first, and all such expenditure is simply wasted, and should not be allowed for under any sane regulation. A freeholder who spends his capital in this way is faced with an absolute loss, whereas a leaseholder may have an opportunity to repay himself under the terms of his lease. On the income tax form we are told that we are allowed to deduct depreciation of plant, not including buildings; but no wool-grower or farmer can carry on his industry without the use of buildings, and these have as much to do with the earning of his income as has almost any other class of improvement on his holding. We should set ourselves to correct these anomalies in a reasonable spirit, and without opening the door to anything that would be subversive of the best interests of the country.
– One has to recognise the plausibility of some of the grounds advanced in support of the exemption of these improvements. We are all anxious to encourage the development of leaseholds and settlement on the land, but one has to consider the fact that we are dealing with taxation for Federal purposes only, and freedom of leaseholds from Federal .taxation will directly affect beneficially the States rather than the Commonwealth. Some of the disabilities in connexion with leaseholds mentioned by the honorable member for Grampians can be rectified by an amendment of the State laws. The State Parliaments have power to lighten the position of a lessee so long as there is no breach of the moral obligation. The honorable member for Grampians stated that the total area affected by the amendment he proposes is 850,000,000 acres. I should think that the bulk of that area is held in leases under the Crown.
– The great bulk of the working improvements are on alienated land.
– It has been said that any principle is best tested by an extreme case. Immediately the question of these exemptions was advanced, the logic of it was applied to buildings. All sorts of improvements are to come under the proposal for amortization,, or allowance for capital expenditure, that is included in the principle of the honorable member’s amendment, and the result of the amendment, if carried, would be a tremendous blow at the income to be received by the Treasurer from taxation. Once we allow this principle of amortization in regard to leaseholds, it will apply not only to the large’ leaseholds included in the total of 850,000,000 acres, mentioned by the honorable member for Grampians, but to all petty leaseholds in the cities and elsewhere throughout the Commonwealth, and to freeholds upon which .the same class of improvements has been effected. This would mean a tremendous leakage of revenue. The principle of the Act is not to allow any deduction from income except in relation to improvements that are in direct association with the annual income. Of course, we cannot logically carry that out in all respects. If we did we could not give exemption to expenditure on mining plant. But there is some association between mining plant and mining income. We do not recognise in the Act the principle of an allowance for wasting assets. That is not accepted in regard to repairs. The principle of the Act is to allow such deductions as are directly applicable to the production of the annual income that is taxed. We do not recognise amortization, and it is not allowed under any State Act except in Queensland. That State does allow for the amortization of capital generally, and particularly allows this exemption for leasehold estates. When the matter was raised at the Conference of Taxation Commissioners, they rejected the principle of making such allowances. I ask honorable members to bear in mind these points - that amortization is not in accordance with the principle of the Act, and that it does not apply in any State except Queensland; and that most of the evils pointed out by honorable members in relation to Crown leases can be rectified by the State Parliaments if they choose to do so. We already allow a deduction for repairs required to maintain improvements, and I submit that that is all we should allow. Improvements are capital expenditure that help to produce certain results, and we say that we will allow the taxpayer to deduct from his taxable income the amount he has spent in repairs to maintain the value of the capital expenditure. In the case of a leasehold this means that when the lease expires the assets have not been wasted, because the Commonwealth has not touched by taxationthe repairs necessary to maintain the improvements at their full value.
– But we cannot prevent old age setting in.
– That does not alter the general law. It is impossible for repairs to re-establish the original value, but the principle of this Act is one that is applied to expiring leases even in connexion with tramway concessions. The allowance in connexion with the tramway leases is only in respect of repairs. I ask honorable members not to introduce into the Act a new principle that will mean a. tremendous release of income from taxation, extending over a wide area of Crown leases, and affecting even freeholds and the capital reserves of companies. I am sorry that I cannot agree to the amendment.
.- I shall be only too glad to accept the suggestion that the principle contained in my amendment should not beconfined to Crown leaseholds. I think the principle ought to apply to all lands utilized . for primary production, whether they are Crown leaseholds or private property. The amendment was only drafted in the form in which I have moved it, because I was told that if the term Crown leasehold was not used the amendment might be taken to apply to city properties on which large buildings have been erected, and in respect of which leases have been entered into on conditions which were fully understood By both parties. I therefore propose to move to omit the second part of the amendment.
– It will not be necessary for the honorable member to do that, because I shall put the two parts of the amendment separately.
.-I find that the proposed . exemptions are getting wider and wider, and yet they are omitting industries which are of just as great importance as are any other industries in Australia. If the principle of the amendment is to be accepted, why should it not extend to foundries, shipbuilding yards, saw mills, and sugar mills ? Often the buildings utilized in connexion with these industries do not last as long as buildings on a station, because of the corrosive action of the acids on the iron roofs. Nothing is allowed for depreciation on that account, yet large buildings, covering acres of land, depreciate substantially every year. If we are to continue increasing the exemptions and deductions we shall be reducing the taxation at a time when we are told by the Treasurer that we shall have to face heavier taxation in the near future.
– We are seeking to establish sound principles.
– Then the honorable member will have to carry his amendment further than he now proposes.
– If the amendment is carried it will apply to all industries.
– The honorable member for Grampians said that the amendment would apply only to the primary industries, and not to the secondary industries.
– I merely mentioned the primary industries as an illustration.
The effect of the amendment is not what the honorable member believes.
– We ought to carefully consider how far we should be justified in reducing in this way the area of taxation.
.- The honorable member for Grampians (Mr. Jowett) had, a better case when dealing with the position of Crown lessees than is to be found in the larger field which has been opened up during the discussion. The proposal that these deductions in respect of repairs should apply all round requires to be very carefully considered. In regard to Crown leases, there are several aspects that demand attention. For instance, no one can say what the lifetime of a bore will be. It cannot be kept going for all time by repairs, and the same may be said of fences. There comes a time when, notwithstanding repairs that have been made, an entirely new fence is necessary. A case might be made out for allowing deductions in respect of repairs to certain improvements on leaseholds, but the position of a freeholder is very different from that of a leaseholder. I was a member of a Commission on whose recommendations the law relating to Crown lessees in New South Wales was based. I worked for twelve months on that Commission, which took the view that the securing of improvements to Crown leases was more important than the mere obtaining of a rental. One of the most costly improvements necessary in respect of many Crown leases was not mentioned by the honorable member for Grampians. I refer to clearing lands of noxious scrub. That is a very expensive work. In New South Wales some Crown lands were overrun with box seedlings, which are costly to remove, although they grow on the best of soil. The Commission to which I have referred endeavoured to do justice to lessees by having regard to the cost of putting land into good working condition, and the lessee is expected, at the expiration of his lease, to return his holding in an improved condition to the Crown. That principle operates in New South Wales and also in South Australia, and has been very successful in relation to land that is subject to drought. I am speaking now more particularly of country where it takes as much as 9 and 10 acres to carry a sheep, and where the minimum is 3 acres to a sheep. In the case of such lands, the New South Wales Parliament decided that, in fairness to lessees who had expended large sums in making improve-, ments, an extension of their leases should be allowed. Where land has to be cleared qf suckers, and has also to be ringbarked and scrubbed, great expense is incurred, but such improvements axe not included in this amendment. As the honorable member for Grampians has said, many improvements made to Crown lease-, holds are of no value to the lessee who succeeds the person responsible for them. The incoming lessee may say, “ I do not want the buildings that have been erected, and will be glad to have them taken away.” That means a loss to the former lessee. I know of cases where a man, on taking up a lease with the object of carrying on pastoral pursuits, has found that the improvements made by his predecessor were either out of date or badly situated for his requirements, and he has been able to satisfy the Court that they are of no value to him. In that respect, there is something to be said in support of the plea made for Crown lessees, but I am not prepared to support the application of this proposal to leaseholders and freeholders generally. The owner of a large city freehold reaps the benefit of the increasing unearned increment,- and has a vested interest that the- lessee does not enjoy. The business of a Crown lessee is often a losing proposition. With good seasons he has a big return, but with bad seasons he is faced with ruin. I think that the Minister for Home and Territories (Mr. Glynn) has advanced sound reasons why we should not enter the larger field that has been, suggested in connexion with these proposed deductions. Matters requiring adjustment in connexion with Crown leases will have to be left largely to the consideration of the States. In New South Wales leases have been extended for forty-two years, so as to enable Crown lessees to obtain some return from their improvements, but having regard to the vested interests of freeholders, I think their position is altogether different.
.- The first part of this amendment would appear at the first glance to have a greater value than it actually possesses when we come to consider the Act as it stands, and the allowances permissible under it in respect of the maintenance of improvements. Assuming that the amendment were carried, it would cast upon the Commissioner the most difficult task of ascertaining first of all the difference between the value of an improvement, plus the expenditure for the year, and the diminished value by reason of the increasing old age of an improvement. I appreciate that difficulty, and recognise thatto a great extent an endeavour is made in the Act to meet a taxpayer’s attempt to preserve his improvements as effectively as possible for the carrying on of his industry. Another phase of this question has been brought forward by the honorable member forWide Bay (Mr. Corser) and by the honorable member for Darwin (Mr. Spence), who have pointed out that this provision would apply , to every industry in the Commonwealth. While the honorable member for Grampians (Mr. Jowett), in submitting it, had in mind, no doubt, only the pastoral industry, he must recognise that it would apply to every industry in the Commonwealth, and would narrow down the field of collectable income tax. Taking everything into consideration, I think it would be well if the amendment were withdrawn.
Amendment, by leave,withdrawn.
.- I move -
That the following new paragraph be inserted after paragraph d: - “da. by inserting in paragraph e ofsub-section 1 thereof, after the word ‘ any ‘ first occurring, the word buildings.’”
The members of the Committee will understand the amendment if they read paragraph e of the section of the original Act in this way -
Such sum as the Commissioner thinks just and reasonable as representing the diminished value per centum by wear and tear during the year in which the income is derived on any buildings, machinery-
And so on. My object is to allow for depreciation of buildings, as well as for depreciation of machinery and other implements used in the production of incomes. That, I think, the Committee will agree to be fair. The amount of depreciation to be allowed will be for the Commissioner to decide. With brick and concrete buildings, there will be very little depreciation.
– The same objection applies to this amendment that applied to that of the honorable member for Grampians (Mr. Jowett) ; it is against the principle of the measure. To give an exemption in respect of depreciation would be really to allow credit on capital spread over a certain number of years. The consideration of these matters was not overlooked during the preparation of the measure. Among the notes that were made is a statement to the effect that “ depreciation is in no sense an expense incurred in the production of income. It is essentially an appropriation of profit to recoup capital. The principle underlying the allowance in taxation laws for depreciation in respect of plant and machinery, &c., is that these items are all subject to manipulation in the production of income. Buildings are nol manipulated in the same way. Moreover, effective repairs will always restore a building to its full income-bearing capacity. It is not so with all plant and machinery.” A building in this connexion is similar to a railway, which is always maintained at full efficiency’ by regular repairs and maintenance. No allowance is made for depreciation in respect of the permanent way of a railway. This matter has not -been brought into consideration merely by the amendment of the honorable member for Grampians (Mr. Jowett).
– The Minister is prepared to allow an exemption for depreciation in the value of machinery; yet machinery often depreciates less rapidly than the building in which it is housed. After ten years an engine might be a saleable asset,whereas the building in which it had been working would have had to be renewed in that time. This matter may have been considered in the preparation of the Bill, but it has not been considered in such a way as to do justice to the persons concerned. I do not object to the rate of the tax being made heavier, because the Government need money ; but we shouldnot impose the tax unfairly. We should give exemptions where they are justly claimed, and allow for depreciation, especially where primary producers are concerned. In the Wide Bay district, as the honorable mem- ber (Mr. Corser) who represents it, is aware, galvanized-iron roofs have disappeared in ten years, because of the action of fumes upon them. Would not the honorable gentleman allow for depreciation in a case of that kind ?
– There would be an allowance for repairs. New iron could be substituted’ for the old. An engine cannot be
– Consideration should be given to the depreciation of buildings in dairying districts. I would be prepared to double the income tax, if necessary; but I am not prepared to stand by the Minister when his only argument against the amendment is to say that it is opposed to a principle, and when we ask him what the principle is, he says that it has not been overlooked.
Question - That the words proposed to be inserted be so inserted - put. The Committee divided.
Majority . . . . 21
Question so resolved in the negative.
Sitting suspended from 6.35 to 7.50 p.m.
.- I move -
That in paragraph (f) the words “of not less than Twenty pounds “ be omitted from the proposed new paragraph (h) (1).
The proposed new paragraph allows a deduction to be made for gifts of not less than £20 to charitable institutions in
Australia, if the gifts are verified to the satisfaction of the Commissioner. In the two succeeding paragraphs, payments made during the continuance of the war to any patriotic fund or contributions to the Department of Repatriation are to be allowed as deductions. I congratulate the Government upon making that provision, but I cannot discriminate between a contribution made to a patriotic fund or the Department of Repatriation and a gift to a public charitable institution. The people of New South Wales have contributed considerably over £3,000,000 to patriotic funds, and if we can measure the benevolence and charity of the people of Australia by the magnificent sums which have been donated to Red Cross and patriotic funds, we must realize that they have very big hearts indeed. They have certainly contributed more in this respect than the citizens of any other country in the world have done. But I cannot see why a man should be commended for donating portion of his income to Red Cross funds, and allowed to make a deduction in his income-tax return for the amount so donated, while the person who contributes to a charitable institution is not allowed to make any deduction in that respect unless his gift amounts to more than £20. Any reasonable person must agree that the amount which has been so contributed to patriotic funds must lessen the ability of the taxpayers to contribute to public charities, such as hospitals, institutions for the blind, orphanages, and such like institutions. In every part of Australia we find citizens banded together for the purpose of raising funds for these institutions. It is not democratic to discriminate between a man who gives £20 to a public charity and a man who gives his £1. It may be a greater sacrifice on the part of the one to give £1 than for the other to give his £20. Our nurses who have shown such heroism behind the battle line have been drawn from our hospitals. Those people who have been contributing towards such institutions for the last twenty years have not only been maintaining hospitals for the relief of the sick and maimed, but they have also been providing organizations for the training of those nursing staffs upon whom our military hospitals have drawn. Therefore, they are institutions which should be encouraged as much as possible, and one way of encouraging them would be by giving this modicum of exemption that I am suggesting. It was not until 1855 that nurses accompanied British armies. The conditions prevailing in the hospitals in the Crimea were so deplorable that England was stirred to its depths, and public subscriptions poured into the Treasury for the purpose of alleviating the suffering and distress of our soldiers. Synchronizing with that movement, Florence Nightingale raised a corps of nurses and went to the Crimea. The day after she and her thirty-seven . nurses landed there, 600 wounded soldiers went into hospital from Balaclava, and on the following day 600 more entered from Inkerman. In a very few weeks there were 10,000 soldiers under treatment. Prior’ to the arrival of Florence Nightingale and her nursing corps, the losses through death, from wounds and sickness, in the hospitals in the Crimea .were 44 per cent. “Within twelve months after her arrival the percentage was reduced to 2 per cent. We have nurses on the battlefield to-day who are doing equally good work, and they are recruited from the hospitals which are supported by public contributions. We should do all we can to help those institutions, which provide training for those magnificent women who are doing- such valuable work at the Front. I cannot discriminate between the man who contributes to a public charity and the man who contributes towards Red Cross or patriotic funds. Therefore, I ask the Minister to consider my amendment in the light of the few remarks I have offered.
– Will you include ih& striking out of the word “ public “ ?
– No; I think the clause in that regard is all right as it is.
.- The honorable member for Calare (Mr. Pigott) has advanced very good argument in favour of striking out reference to the item of £20. I have never been able to reconcile the other provisions of the Act with the portion under review. One man may not be able to give his £20 on one occasion to any particular institution. Like honorable members themselves, he may give a guinea here and a guinea there, which, in the twelve months, may amount to more than the £20. He may have to contribute so to a dozen or a score of hospitals within his constituency. And yet, because the gift does not amount to £20 to any one particular institution, he is not allowed to make the deduction. The Minister might well accept the amendment. It would mean no great loss of revenue, and would place the deduction upon a democratic basis. Any sum given on behalf of repatriation or patriotic funds may be deducted. Yet a donation to a charitable ‘ institution does not come within the exemption.
– According to the drafting of this clause, which is not perfectly ‘ lucid, the intention is that one’s gifts to a particular institution, upon totalling £20, may be deducted. It does not say, “ A gift of not less than £20,” but it will be interpreted in the sense I have indicated; and I believe the draftsman intended’ to express it so. That is, that if the total gifts to public charitable institutions during the year amount to £20, the exemption will be granted.
– Why not put it in then?
– If necessary, I shall see that it is inserted in another place; but before doing anything of the .sort on the spur of the moment one has to compare the clause with that for which it is substituted. It states in the repealed section - “ Gifts exceeding £20 each to public charities.” That is a different thing altogether, and is amended now to mean that if the total gifts to public charities amount to not less than £20 there is an exemption.
– Suppose a poor man gives £15 or £19, is he not entitled to consideration?
– It means that a man has to give £20 before he is entitled to make the deduction. An exception is made in connexion with patriotic funds, which, of course, should appeal most strongly to all. But this is general legislation with which we are. dealing, in connexion with public charities that will outlast the duration of the war. If provision were made similar to that as regards war funds, it would mean a loss of at least £50,000 a year in revenue. The desire, in making the exemption of £20, was to ‘strike a fair balance’ under all circumstances. If we accept the amendment of the honorable member for Calare (Mr. Pigott), it will mean a loss, as I have indicated, under this one clause alone, of at least £50,000 per annum of taxation. We cannot afford that, and there is no sufficient justification for it.
– I cannot accept the Minister’s view. If his stand-point is correct, it would be better to strike out the exemption altogether, because, after all, I suppose no one cares whether the deduction is allowed or not. But if a man makes a gift of one sum of £20 and is entitled to consideration, then surely another person who gives £5, and who does not possess one-tenth of the income of the other, should be able also to claim some exemption. The man giving the lesser, sum may rightly say he is suffering an injustice, and that an unfair distinction is drawn. We all know that it is the poor man who gives the best; it is noteworthy in respect of every public fund. The man who gives his humble “bob” is often giving more, proportionately, than the person presenting a £10 note. I protest against the amount stated1 in the Bill. Let us have the proposal in the manner proposed by the amendment, or not at all. It is a matter of principle.
.- I support the amendment, and I am much more impressed with the necessity for that course after having heard the explanation of the Minister, for it appears that the intention of the Government was not that only individual gifts of £20 and upwards should be exempted, but that if a person gave, in the aggregate during the year, the sum of £20 or over, he should be allowed to deduct that from his income schedule; whereas, if a man possessing much less gave, say, up to £19 through the year, he would not be entitled to make any deduction. It is an invidious distinction and quite unjustifiable. If the Government had proposed to permit deductions for gifts to charitable institutions in proportion to one’s income, . and that no deduction might be allowed to a person who gave less than his due proportion, I could better appreciate -the position. But under this clause the deduction is to be arbitrary, no matter whether one’s income is £300 or £30,000. In all the circumstances, the better plan would be to delete this objectionable portion of the Bill altogether, and to make provision in the sub-clause immediately following to include the words “ any patriotic fund or to any public charitable institution.’.’ That would be sufficient.
There is apparently no justification for any distinction between those who subscribe to public hospitals and those who give to war funds. Both are absolutely necessary. As to the statement of the Minister, that £50,000 per annum would be lost to revenue, some such charge as that is brought forward in regard to very many amendments proposed in legislation of- this character. We are continually told that we would be sacrificing so much revenue. Our duty in dealing with this legislation is to endeavour to lay its foundations on broad, sound, and equitable principles, so long as they do not interfere to an undue extent either with the flow of charity or the establishment and maintenance of great industries.
.- The proposal of the Government is condemned on two grounds. Reference has been made to the discrimination granted by this clause to those whose means enable them to give donations during the year amounting to £20. That in itself would lie condemnatory of such a proposal as the Government now present, and surely, ‘in connexion with taxation proposals in such times as these, we do not wish to make discriminations against the section of the community which is the least able to bear imposts of that character. The whole trend of public finance is that those best able to bear the impost of taxation should be the most heavily loaded. But the effect here is to relieve those best able to carry the burden and to pass the burden on to others in a less happy position.
Another point may be established. The succeeding clause makes no discrimination in regard to contributions to patriotic funds. There is no limitation. Contributions to patriotic funds are all exempted, but here a discrimination is made against institutions which are not only doing extraordinarily useful work in these times, but work which is permanent. Members of Parliament seem to be particularly subject to claims for support from charitable institutions.
– We have a number of privileges.
– Including the privilege of paying up; and the claim of the charitable institutions is the one we are least inclined to disregard. These are deserving of every support, especially in view of the fact that they are feeling the extra load laid on them because of the war, and require all the financial support we can give them. The great demands on behalf of the patriotic funds are prejudicially affecting the annual incomes of the charitable institutions, and certainly the proposal in the Billwill afford the latter no assistance, tending, as it will, to throw the contributions of the charitable into patriotic funds. All payments to charitable institutions should be allowed for in the same way as are all payments to patriotic funds without any restriction as to amount.
.- I hope the Minister will abolish the exemption altogether, for it will only be a means of whittling away the money so much needed for the prosecution of the war. These charitable donations have been made for years, and those who make them have no idea of receiving in return any direct advantage. My own belief is that 95 per cent. of those who contribute to patriotic funds do not desire any exemption on that account. If the exemption were abolished, I do not think it would in the slightest degree reduce the amounts contributed for either charitable or patriotic purposes.
– It would be more logical to abolish the exemption altogether than to accept the suggestion of the honorable member for Calare (Mr. Pigott). If it is the feeling of honorable members that we should strike out the allowance, I have no objection; it would certainly put all “ in the same box.”
– I am quite agreable to that.
Amendment, by leave, withdrawn.
Amendment (by Mr. Glynn) agreed to-
That paragraph (f), sub-paragraphh 1, be left out.
.-I move -
That the following paragraph be inserted after paragraph (f) : - (fa) by omitting from paragraph (k) of subsection (1) thereof the words “ twenty-six “ and inserting in their stead the word “ fifty,” and omitting from that paragraph the word “sixteen,” and inserting in its stead the word “eighteen.”
This amendment increases the allowance for each child from £26 up to sixteen years to £50 up to eighteen years. At this particular juncture, in view of the wastage in manhood, not only in Australia, but in all the Allied countries, we must take steps to maintain our population. This need is the more pressing in Australia, where population is so sparse and so valuable. Until lately we spent large sums, through various agencies in England, Italy, and other European countries, in securing immigrants, but there is no better immigrant than the child born in the country. In order to assist as far as we may in encouraging an increased population, parents ought to be afforded some relief from taxation. A married man, like the single man, has to provide everything for himself; but, in addition, and unlike the single man, he has to maintain a wife and children. There are many poor men with large families; indeed, I knew a poor fellow of 75, who, when he died the other day, left a family of seventeen. That man, who was truly an asset to Australia, had to spend all his earnings in supporting and educating his children; and, at length, had to apply for an old-age pension, which, by the way, I had great difficulty in securing for him. That is not the sort of man to single out for extra taxation; on the contrary, he should be relieved as far as possible. My proposal does not mean that £50 will be deducted for each child from the amount paid in taxation, but from the taxable balance. In the case of a man with £500 per year, this is 6d. in the £1 or £25; and as we already allow £26, the increased exemption is only £24. As the average rate of tax for 1916-17 was1s. 5d. in the £1,the exemption of £50 means £3 10s.10d. or an increase of £1 15s. 5d. on the amount allowed under the principal Act. I am pleased to think that in the mother State of New South Wales, where the State Income Tax Act has been amended since the outbreak of war, an exemption of £50 up to eighteen years of age is allowed.
– The “mother” State naturally looks after the children.
– Quite so. The exemption in New South Wales had been £26 up to sixteen, but, as in the Old Country, there was seen the necessity for an increase. In Great Britain the increase in the exemption has been no less than 150 per cent. Everywhere is felt the great wastage at the Front, and, further, the high cost of living calls for special concessions iri the case of parents. In Tasmania, Victoria, Western Australia, and South Australia there is no exemption in the case of the State income tax; in Queensland the exemption is £15 up to sixteen years of age; New Zealand, £25 up to sixteen years of age; and iri South Africa, £20 up to sixteen years. The Government should follow their example. It is true that, during the first year of the war, this Parliament passed an Income Tax Act. But as the struggle has progressed, we have found that the value of money has diminished, and that, consequently, the position of parents with large families has been rendered a very difficult one indeed. I have no hesitation in saying that some relief should be afforded them. I now wish to touch briefly upon the cost of living. I gather from the February number of the Nineteenth Century, and also from the Fortnightly Review, that the cost of living in the Old Country has increased by 331/3 per cent.
– By a great deal more than that.
– Honorable members may differ from me, but I am stating facts which I have gleaned from the publications in question.
– If the cost of living has increased to a greater extent, that circumstance serves only to strengthen the honorable member’s argument.
– Exactly. The difference between the cost of living in Great Britain to-day and the cost of living in Australia is a very small one indeed. A man in the Old Country who was in receipt of an income of £300 a year in 1913 has had his income cut down to the equivalent of £200 at the present time. That is to say, he was able to purchase with £200 in 1913 as much as he can purchase with £300 to-day. From Mr. Knibbs’ Bulletin for August, 1917, I gather that, taking 20s. as the base in 1911, the purchasing power of the sovereign had been reduced in 1914 by 3s.1d., and in 1915 by 6s. 8d. In October, 1915, the purchasing power of the sovereign had been reduced by 7s. 2d., and in March, 1917, by 6s. These figures approximate to the increase in the cost of living in Great Britain, where, taking 1911 as the base, the purchasing power of the sovereign, according to the latest returns, has been reduced to 14s. So far, I. have been dealing, more or less, with direct taxation. I wish now to consider the question of indirect taxation through the Customs, because I have always held that the more
Customs duties are increased the harder it becomes for the man with a large family to live. To me it is clear that, proportionately as our Tariff duties are increased, the shopkeepers and merchants increase the price of their goods. The Leader of the Opposition knows that what I am saying is absolute gospel.
– Absolute rubbish!
– The working man would receive no wages at all in the absence of Protective duties.
– If the honorable member ever becomes Prime Minister, and introduces a Protective Tariff, I should like to take him down to the shops in Collinsstreet
– The workers do not buy in Collins-street.
– If a duty of 40 per cent. be imposed upon goods which are consumed by the working man, the price of those goods is immediately increased, not merely by 40 per cent., but by an additional 20 per cent.
– Will the honorable member please hand in his amendment, because he appears to me to be getting very wide of it.
– I am arguing the point which I say is involved. I maintain that, in addition to the increased cost of living, we need to take into consideration the indirect taxation that is paid by people through the Customs House. The amount collected by the Commonwealth from this source has ranged from £12,500,000to £15,000,000 annually. This year it will probably amount to £13,500,000. It is obvious, therefore, that a man with a wife and six children, for each of whom he has to contribute £2 15s. per annum through the Customs, will be called upon to pay in indirect taxation under this heading to the extent of £22 yearly. As against that sum, a single man has to pay only £2 15s. In the light of these figures, the Government should extend sympathetic consideration to my amendment. “We have been told that the hand which rocks the cradle rules the world. If that be so, we should do all that is in our power to strengthen that hand, and in no way can we accomplish that object better than by reducing the burden which is imposed upon parents with big families.
.- I rise to support the amendment of my honorable friend and leader, if I may so term him, who, in my judgment, has raised the most important question, apart from the war, which any Legislature among the white races of the world can consider at the present moment - the question of how in the future those races are to maintain their position. I would remind honorable members of one fact connected with this great struggle, namely, that forty-Jive years ago, when the Franco-Prussian War terminated, the difference between the population of France and that of the German Empire amounted only to about 1,000,000 souls. The exact figures I have not. been able to ascertain, but, roughly speaking, France finished that war with a population of about 39,500,000, and Germany with a population of 40,500,000, or, at the most, 41,000,000. During the forty-four years which have elapsed since the close of that war the population of France has remained practically stationary, whereas that of Germany has increased by < 26,000,000. Do honorable members suppose that if in July, 1914, the population of France had been 46,000,000, Germany would not have hesitated to make the attack upon France which she did?
– Not she.
– I hold the opinion that if in August, 1914, the population of France had been 46,000,000, Germany would not have inflicted this war upon the world.
– The honorable member does not suggest that the difference between the population of the two countries was due to taxation?
– I say that if, during the- first six weeks of the present conflict, the German army had succeeded in capturing Paris, there would have been but one cry on the lips of every French man and woman, namely,’ that the Germans were too many, whilst they were too few. That is the position which I desire to put before the Committee, and which I cannot too strongly impress upon honorable members. The white population of the British Empire, including the. Dominions, cannot by any reckoning be made to equal the 66,000,000 people of the German Empire. Our own population is still under 5,000,000, and every year we are experiencing what a distinguished statistician, my friend Mr. R. Price Williams, referred to “ as the law of decrernental rate of increase.” That is to say, whilst the increase in population may be greater in numbers, in one decade than in a previous decade, the rate or percentage of increase is less. This decremental rate of increase continued throughout the last century from decade to decade, amongst all the white races, with the exception apparently of the German people. . If after the war we have to endeavour to lay again the foundations of national greatness on what basis can we hope to build, if we have a population that is stationary, if not actually diminishing? We must face the position fairly and squarely.
– The birth-rate amongst the working class is greater than amongst other classes.
– I am prepared to face the position fairly, and I shall be glad to receive whatever assistance is offered by other honorable ‘.members. We shall never face the position squarely until we are prepared to consider the enormous monetary disadvantages suffered by married people who have children in comparison with those people of both sexes who are too selfish to marry,, or, being married, commit the offence, for reasons of pleasure or comfort, or else suffer the misfortune of having no children, or at most one or’ two. This matter is fundamental to our existence as a nation, and we cannot deal with it completely unless we are prepared to give some relief, at the expense of those less patriotic or more unhappy people who fail to have children, to those who undertake the financial burden of. bearing and rearing children. The honorable member for Calare (Mr. Pigott) has proposed that the exemption per child shall be increased from £26 to £50 to taxable income. Possibly before they had heard the remarks of the honorable member, the Government would have said that they could not afford to lose the revenue which the amendment would entail.
– I am afraid £hat will be their answer still.
– I have great hopes of a favorable answer from the Minister in charge of the Bill.
– The States recognise the principle of the amendment.
– As the honorable member for Calare pointed out, the State of New South Wales has already recognised this principle “to a greater extent than has the Commonwealth. The Government may say that the amendment will mean a loss of revenue. Why cannot they afford that revenue! Because they will not take the burden from the shoulders of those who have children, and put it on the shoulders of those who are childless.’ The issue raised by this amendment is the most important that could be put before the people of Australia, and indeed before the white races of the world. ‘ Will honorable members to the extent that lies in their power as legislators, reduce the burden placed on the fathers and mothers, and place that burden, to some extent, upon the shoulders of men and women who have been unfortunate enough not to have been able to discharge their national duty ?
– -One must agree with a great deal of what has been said both by the honorable member for Calare (Mr, Pigott) and the honorable member for Grampians (Mr. Jowett). Most people will agree with the remark of the Vicar of Wakefield, that the man who got married and brought up a large family did a greater service than the man who remained single and simply talked of population. We shall have to emulate the’ Greek mother, whose greatest manifestation of patriotism, according to some historians, was her contribution to the number of living souls. At the same time, I cannot agree with the honorable member for Grampians that the increase of population, which is so vital to all communities, and particularly to a young one like ours, will be materially affected by raising the exemption per child from £26 to £50.
– Every little helps.
– No doubt;’ but we have to judge the actual effect of what we are doing, and set off against the loss in income the incentive to the recognition of moral obligations which will be given by the proposed amendment. The bearing and rearing of children is purely a matter of domestic morality and obedience to the dictates of religion. It will be found that in the poorest countries the biggest families are to be found. The honorable member for Grampians, re ferred to France. France, I think, has had the lightest income tax of all great European countries, and for some time had no such tax. A return presented a few years ago showed that in those districts of England where the working classes were most numerous, and where, therefore, the incomes were smallest, the size of the families was greatest. We know, as a matter of fact, that the actual number of children does not progress with the increase in income.
– It is only fair to say that this amendment is the only means which the honorable members who are promoting it have of showing their earnestness.
– It may be a means of showing their earnestness, but it is certainly not a method of accomplishing their ends. As regards the effect of this proposal, the position is that the deductions for children allowed to taxpayers in 1916-17, at the present rate of £26 for every child not over sixteen years of age, totalled £5,756,5184. If the allowance had been £50, the deductions would have totalled £11,073,354. In other words, the releasing of £5,313,770 of additional income from taxation would have meant a loss to the revenue, taking the average tax at ls. 5d. in the £1, of £376,392. There would have been an additional loss due to the reduction of the rate of tax on the whole income. So that, according to the estimates which have been supplied te me, the total loss would have been over £400,000. It is also estimated that the continuance of the exemption until children were eighteen years of age would increase the loss to £600,000. In addition to those amounts, the deductions allowed to non-taxpayers, in 1916-17, in respect of children of sixteen years and under, totalled £7,172,849. I think these figures will show honorable members that the raising of the exemption to £50 per child would scarcely be justified on the grounds alleged, under the existing conditions of finance.
I quite agree with a good deal of what was said by the honorable member for Calare (Mr. Pigott) in regard to the incidence of taxation, but we cannot deal with that matter in a clause like this. As a matter of fact, some effort has been made to overcome the disparity of incidence” on certain classes. For a time, the Customs duties fell with most disproportionate incidence upon the masses.
– Is the Minister in accord with what the honorable member for Calare (Mr. Pigott) said about the Customs duties?
– Generally, there is a great deal of force in what he said, but we cannot deal substantially with that question on a debate of this sort. By raising the allowance for children from £26 to £50, we cannot, so far as the law has not recognised the desirableness of equality of incidence, cure it by means of this Bill, although we have made an attempt to cure it by the progressive incidence of taxation. I have not the figures with me, but it can be shown that a few years ago the average tax paid by people receiving under £200 per annum did not amount to more than about £1 each per year. Therefore, the people with smaller incomes were not very heavily hit by the income tax, but when we get up to £300 there is a substantial increase in the per head , contribution from the income tax, and the bulk of the tax is paid by men with incomes of £500 and upwards. So that whatever inequality of incidence may be brought about by the Customs duties is, to some extent, counteracted by the progressive character of the income tax itself. I cannot, therefore, on the reasoning advanced now, agree to the proposed increase in the exemption in view of the great” loss that it would cause to the revenue.
– It means, on your own figures, that you are giving only 34s. of relief for each child.
– It means, in the aggregate, a very large sum - a loss of about £350,000 a year without raising the age to eighteen. That is a sum which, considering the state of our finances, we can scarcely afford. The incidental moral or economic effect would not justify the loss of revenue. The question of population has been raised in other countries, particularly in Canada. There, instead of making the allowance in respect of taxation, actual bonuses were given in proportion to the number of children. I think the average family in Quebec, where the military spirit is not very strong - and this, to some extent, discounts the argument of the honorable member for Grampians (Mr. Jowett) - was proportionately large. L
– Would intending parents have any guarantee that the bonus would not be subsequently repealed?
– We can never in Parliament give a guarantee of permanence in regard to policy. I ask honorable members, however much one may sympathize with the arguments put forward,-‘ not to agree at this juncture, owing to the state of our finances, to increase the) exemption.
.- 1 congratulate the honorable member for Grampians (Mr. Jowett) on his excellent speech, and exceedingly regret that the Minister for Home and Territories (Mr. Glynn) has not seen fit to agree to the amendment. I shall vote for it. As to the reasons given by its mover (Mr. Pigott) as regards Customs duties, I shall deal with them as far as you, sir, allow me. The honorable member puts me in mind of his predecessor in the representation of Calare (Mr. Brown) who, apparently, held the same peculiar views on the fiscal question. The honorable member for Grampians said that there had been a decline in the birth rate- . in various places, and I regret that that is so. The Minister stated that there were 221,407 children whose parents had the advantage of the exemption It is only fair that we should extend that exemption beyond the £26 per child, at which it now stands. Those of us who happen to have growing families know it is impossible to keep them to-day on 10s. a week per child. No one in the community can bring up a child decently and respectably for 10s. a week. As. a rule, the bigger families are not to be found in the aristocratic areas. They reside in the workingclass areas, such as Brunswick, Footscray, Collingwood, or Fitzroy.
– Every other big city is the same.
– That is so, and it is not in the residential areas that they have the big families. The parents of many families over six have never had to pay income tax because, unfortunately, they have never earned enough to come under the tax. There are two classes of people who object to the income tax: - the man who does not have to pay it, because he does not receive enough to have, to pay it, and the, man who does pay it, because he regrets that he has to pay, and the more he has to pay the greater are his regrets. It would be an act of justice at the present time to grant the increased exemption-
– The honorable member .is arguing that it would be an act of justice to the richer members of the community.
– Not to the richer members. Although the purchasing power of the pound note is much less today than it was, there are a greater number of persons in the community coming within the income tax area on account of the increase in nominal wages, though not in actual wages. Probably there are a greater number of people in Australia to-day receiving more than £156 per annum, which will bring them within the income tax area, than there were a few years ago; but that nominal income is largely reduced on account of the decreased purchasing power of the pound note. They have, however, to pay the income tax just the same, and it would be only an act of justice to put those people where they were previously when the spending power of the pound note was greater than it is to-day. The cost of living has, undoubtedly, gone up. The Prime Minister (Mr. Hughes) said, in a booklet which he wrote in connexion with the 1915 referendum for the alteration of the Constitution: “The cost of living has so increased that it is with, the utmost difficulty that a great number in the community are able to live to-day.” He spoke of the effects of the drought, and said that, independently of that, it was the rings and combines that had made it difficult for those people to live. He went on to point out that there were men in the community, posing as patriots, who gave £50 to a patriotic fund, and fleeced the public of £5,000 by means of increased prices. Those were the Prime Minister’s words thirteen or fourteen months after the war broke out; and great as was the increase in the cost of living then, it is much worse to-day.
– I thought you wanted to forget the Prime Minister.
– The honorable member has never heard me say so. I am quoting him as I have quoted him elsewhere, and as I will quote him every time it suits me. I am not dealing with him personally. The honorable member for Calare argued that the allowance for each child should be increased on account of the Customs duties. I disagree with his line ‘ of reasoning there. I notice that the Acting Prime Minister (Mr.’ Watt) has just come in. He will wonder what has struck him when “he hears the debate on Customs duties going- on. I may inform him that there have been three speakers on the amendment of the honorable member for Calare; the Honorable member for Grampians has supported it, and I am supporting it also; but the Minister for Home and Territories is considering the effect of it. I hope he will be able to convert the Acting Prime Minister.
– I hope the honorable member will give me a little time to tremble.
– I trust honorable members generally will’ vote for the amendment, which cannot be taken by any Minister as hostile to the Government.
– Why do you call this a Tariff debate?
– The new leader’ of the Bolsheviks on the other side (Mr. Pigott) argued that an increased allowance should be granted because people with large families were already paying by way of Customs duties more than they ought to pay. I disagree with that argument entirely. If that is the opinion of honorable members generally on the other side, I shall look with interest for what the newspapers will say of them to-morrow. I should also like to know whether that is the reason why the Government refuse to bring down the amendment of the Tariff that has been promised from time to time.
– Order !
– I said I would go only as far as you, sir, would allow me on that subject.
– On the principle that the manufacturer pays the tax, does not the British manufacturer pay. the cost of the upkeep of these Australian families?
– As the honorable member for Grampians pointed out, this is not a matter for joking. It is a serious thing to bring up a family in this community to-day, and the higher the cost of living goes the harder it is for any householder who has a large family. As many workers have within recent years been brought within the ambit of the tax, if we can give them some relief by increasing the allowance for each child before the children go to work we should do so.
The honorable member for Calare suggests raising the age to eighteen. That is fair, because it will give an opportunity to keep the children at school a little longer. Some allowance should be made for them when they are not able to earn enough to keep themselves. The cost of clothing and food is enormous. Only those who keep track of how things are going in different communities and watch how prices are rising realize the actualeffect of present-day conditions. I trust the Government will accept the amendment, which I am sure will not have so detrimental an effect on the revenue as the Minister for Home and Territories has stated. I know that the Minister is showing the figures to the Acting Prime Minister, who, of course, will be more interested in. the question from his point of view as Treasurer than as the father of a growing family.
Mr.Watt. - I do not know about that. I am not sure yet.
– I assure the Acting Prime Minister that members feel very keenly on this point. Before the suspension of the sitting for dinner a number of us supported the Government in order that too many exemptions should not be allowed, but I amsure that there will be a large amount of support for this amendment from the Government side, and every member on this side will vote solidly for it, in order to give a measure of relief which is absolutely necessary in the interests of the community.
.-I regret to find the Committee in a state of insurrection. I have just been trying to launch the new recruiting offensive in one of the suburbs, and return to find the Committee trying to whittle away the revenue upon which the country depends.
– Trying to increase the population.
– I am sure the honorable member’s efforts in that direction need no encouragement. The Leader of the Opposition (Mr. Tudor) placed me on the horns of a . dilemma. On the one hand he pictured me as an avaricious Treasurer grasping after the last penny in order to increase the revenue, and on the other hand as the ambitious father anxious to obtain a bigger allowance for myself. I admit that it means a lot to all of us who are doing our duty in that respect. I am looking now conspicuously and particularly at my friendthe honorable member for the Barrier (Mr. Considine). I hope that the honorable member for Calare (Mr. Pigott) will not press his amendment.
– I hope he will.
– He may think it encouraging when he finds support for his proposal coming so unexpectedly from men who represent the opposite poles of political thought - the honorable member for Grampians (Mr. Jowett) on the one hand, and the Leader of the Opposition on the other - but I am influenced only by the consideration that the carrying of this amendment would create a huge gap in the revenue. That in itself is a most important consideration at the present time. In moving the second reading of another measure, as well as when submitting this very Bill to the House, I informed honorable members that researches at the Treasury make it abundantly plain that heavier additional taxation must shortly be faced, by the people. I have already told . the House and the Committee as plainly as I am permitted to do that a financial session must commence early in the financial year, and that in that session problems such as this and others associated with various forms of direct taxation will have to be presented for the consideration of Parliament. In the meantime, I think it would be unwise - I was about to say improper - to so affect our income taxation in a downward direction that the upward incidence which must be undertaken very shortly will not be fully appreciated. The proper time to deal with a proposal of this kind is when we are determining what revenue we are going to raise by means of income tax.
Under the Victorian Act there is, I think, speaking from memory, an allowanceof £13 per child, whereas under the Commonwealth Act we have an allowance of £26 per child. If that allowance be increased by 100 per cent., as is proposed by this amendment, I am assured by the Commissioner of Taxation that it will probably mean a minimum loss of £400,000. I ask the Committee, therefore, not to carry the amendment. I invite them to put aside for the time being the merits of the case, and to deal with the question of remissions of this kind when we are determining what revenue shall be obtained from income taxation. This is not a Bill to increase or reduce the rates. I mentioned that fact when the honorable member for Hunter (Mr. Charlton) suggested, by way of interjection, while I was moving the second reading of the Bill, that we would raise a lot of money by means of it. I told him that, so far as I was able to judge after consultation with the Commissioner, there was as much give as there was take about the Bill. It does not affect the revenue, and when an honorable member submits an amendment which would reduce our revenue from income tax to the extent of something like £500,000 per annum, it is a matter for grave consideration by the Treasurer.
I beg honorable members on both sides not to deal with this as a political question, as there is always a temptation to do, but to view it from the stand -point of the rigid requirement of financing the growing responsibilities of the war. I promise the Committee that when we are obliged to introduce new taxation - and that will be done as early in the financial year as the preparation of the necessary measures will allow, so that the country may get ready for it - this, as well as many other questions of income taxation, will be open for consideration. It is in that spirit that I ask my honorable friend, Mr. Pigott, to withdraw his amendment.
.- I do not think the honorable member for Calare (Mr. Pigott) will ask for leave to withdraw his amendment, but if he does I shall certainly object. Had the Acting Prime Minister (Mr. Watt) been present while the honorable member for Grampians (Mr. Jowett) was speaking, I do not think he would have dealt with this amendment in so jocular a style, although T recognise that a clever speaker and keen debater with the saving grace of humour can with a few witty remarks very often obscure the serious side of a question.
This is a most serious matter, and I compliment the honorable member for Grampians on the speech that he delivered. The honorable member touched upon the’ greatest curse in Christian lands to-day. It is only in the so-called Christian nations that high rates of infant mortality and decreasing birth-rates rule. According to Webb’s Dictionary of Statistics, Ireland is the only European country where the birth-rate is on the increase. This authority shows that the number of births per 1,000 married women from fifteen to forty-nine years of age in Ireland, was 250 in the’ decade from 1876 to 1885; for the period, 1886 to 1895, it fell to 245; but in 1896-1905 it rose to 264. With, the exception of a slight increase shown in the case of Austria, Ireland is the only country in the long list in Webb’s Dictionary of Statistics in which an increase is shown in the third decade. If the number of births per head of population is taken, Ireland stands very low on the list. That is due to the fact that most of her virile manhood and womanhood have left her shoves, so that instead of a population of 16,000,000 she has to-day only some 5,000,000 people.
I doubt very much the accuracy of the estimate given by the Minister for Home and Territories (Mr. Glynn) as to the effect which this amendment would have on the revenue. The Acting Prime Minister adroitly mentioned, that the allowance per child under the Commonwealth Act was £26, as against £13 under the Victorian Income Tax Act, but he did not mention that under the New South Wales Act there is an allowance of £50 per child. The Honorary Minister (Mr. Poynton), when Treasurer, intimated that he proposed to take a certain course, which I am sorry he did not persist in. Wholesale prices have greatly increased, but there has been no concurrent increase in the taxation of the goods so affected;, in fact, there has been no taxation of such increases. The Treasurer could easily obtain an extra revenue of £400,000 by means of an excise duty on wine. I regret to say that only a minority of my constituents pay income tax; I wishthat every head of a family earned such an income that he had to pay the tax. A point which the Ministry should bear in mind is that most of our recruits are coming from the large families of Australia. What is the use of the Acting Prime Minister addressing recruiting meetings, and asking large families to continue sending men to the Front, when he is not prepared to make this little concession to those who have a number of children to maintain? The workers alone have the -big families. The rich, with their large grounds, fine gardens, and healthier homes for the rearing- of children, too frequently have but very small families. This is a time when we can speak plainly, and I do not hesitate to say that to interfere with the current of life is to commit murder. There is more murder of that kind committed in Christian countries than in any land populated by so-called savages and barbarians. The honorable member for Grampians is a rich man, and he may be able to persuade his wealthy friends to realize that, in the words of Ruskin, “life is the only wealth,” I have often wished that when the rich go to the place where wings are served out, they had to carry with them their wealth in gold. If they had, they would not fly very far.
I should like to give the history of one family. It is that of a mother who, oh three occasions, gave birth to triplets, and on six or seven occasions gave birth to twins. She had altogether thirty children, but her husband never received more than £2 15s. a week. Is it any wonder that she was able to rear to the age of sixteen only some fourteen of those children? I asked the State Premier to give the father of that family a billet of £3 a week, but it was refused him. Our decreasing birthrate is a problem that will have t<* be faced. I loathe 48 brutal man who was responsible for this war, for the reason, aroona others, that but for it we should have had child pensions in operation in Australia to-day. Mr. Andrew Fisher, when Prime Minister, promised me that he would bring in such a scheme. We all know that he is a man of his word, and but for the war that scheme would have been in force to-day. When a mother feels that she has not enough with which to. provide for the proper feeding, clothing, and housing of her child, she should have the right to demand a Dension, not as charity, but as a matter of justice. Every year, owing to the decrease Iti births, the United Kingdom loses 380. 000 children - a death-rate greater than has occurred in connexion with the war. I shall gladly vote with the honorable member. I hope he will not withdraw his amendment, but if he does I shall object to that course of action.
– I would certainly support the amendment if I could see how it would be possible otherwise to obtain the . necessary revenue, but at present that is impossible. Honorable members have had this assur ance from the Treasurer (Mr. Watt). The Leader of the Opposition (Mr. Tudor) has had long experience in Ministerial office, and I feel sure that he and other honorable members must be well aware that we cannot now spare this amount .of revenue.
– Let the Government increase the rate, then.
– I view with considerable alarm the prospect of the growth of a new party, to include the honorable .member for Calare (Mr. Pigott) and the honorable member for Grampians (Mr. Jowett). Possibly the honorable member for Calare will be the Prime Minister, the honorable member for Grampians Treasurer, and perhaps the Leader of the Opposition, the Minister for Customs ! What an unholy alliance ! We are at war; but it seems that some honorable members fail to realize the fact. Fancy a change in the Government at the present time ! I feel sure the prospective new Prime Minister *will not be able to deal with the situation, even with the experience and assistance of the honorable member for Yarra (Mr. Tudor). How many pay the income tax ? According to the figures given in Lord Forrest’s Budget speech 1917-18, and supplied in a return furnished by the Commonwealth Statistician, it appears that for 1915-16, £4,436,997, or 84.2 per cent., was paid by 13,372 persons in receipt of incomes of £1,000 or more per year, that 52,491 persons who have £200 a year and less than £1,000 a year, paid 12 per cent., and that 167,833 personswho have less than £200 a year paid 3.8 per cent, of the tax. These are the people who are to be befriended by honorable members who intend to vote for the amendment. .But I warn honorable members who, for political purposes, are supporting the honorable member for Calare, with the object of putting this Government in a hole at this particular time, who are prepared to fall on the neck of the honorable member for Calare and the honorable member for Grampians, to consider what will happen. Who will be relieved of taxation if the amendment be . carried ? Certainly not the people they say they represent.
I am glad to be able to state that Australia is the only Dominion in the British Empire in which there is no tax on n tea. The Minister for Customs (Mr. Jensen) interjected recently, when one honorable member was speaking, that there was a tax of 2s. per lb. on tea in Great Britain. Do honorable members want to see that in Australia? There is a tax of 9d. per lb. on tea in Canada, and there is also taxation on tea in New Zealand. If the amendment is carried the Government will be forced to look elsewhere for revenue, and it must come from indirect taxation, that should -be a last resource, because the burden will then fall on those who are very poor. I say, therefore, that this unholy alliance to-night ‘ is deplorable. I have already shown that 84.2 of the income taxation is paid by the richest people of Australia. And these are the people who will be relieved by the amendment. I fancy, therefore, that the Leader of the Opposition acted on the spur of the moment when he entered into an alliance with the honorable members on this side who are supporting the amendment. If it is carried we shall have to get revenue from other sources. Will the honorable member for Calare, supported by the honorable member for Grampians, bring down a measure for increased land value taxation? That will have to come, then, because revenue will have to be obtained ‘by that or some other means. I am just reminded that the Leader of the Opposition, by his adhesion to the amendment proposed by the honorable member for Calare, is supporting a Free Trader.
– No, I am not.
– After .all, this amendment is only a side issue, and will be the prelude to the introduction of a Free Trade measure, in which’ the Leader of the Opposition, as a Protectionist, will be supporting the honorable member for Calare, a Free’ Trader. Therefore, I do look with alarm upon this unholy alliance entered into for the purpose of enabling members to get on to the Treasury bench.
– Is this a vote of want of confidence ?
– Of course it is ! No self-respecting Government could sit on the Treasury Bench if an amendment like this were carried against them, and nobody is more seized of that fact than is the Opposition. I hope, therefore, that honorable members will realize the gravity of the situation. I think I have made myself clear’ upon this most important question. I do not want to take from the people a cent more than is required to insure the financial stability of this country. The only way to get revenue is by direct taxation, so that the people will know what they are paying.
– It is not my intention to delay the Committee for very long.’ I tried to get an answer to a question from the Acting Prime Minister (Mr. Watt), but he would not allow me, hence I am bringing the matter before the Committee. The argument of the honorable member for Denison (Mr. Laird Smith), that we cannot get revenue without resorting to indirect taxation, is an entire fallacy. If we want more revenue, we should increase the incidence of the income tax as it stands at present. I am in entire accord with the honorable member for Calare (Mr. Pigott) and the honorable member for Grampians (Mr. Jowett), but not so much for the reason advanced by the latter. I am prepared to admit that the £50 exemption will not materially increase population in Australia, or be an incentive to an increase of population. If the honorable member is sincere in connexion with that matter, he should support an amendment of the maternity grant and give mothers a pension of £26 or £50 a year for each child, so that they may be able to keep the children properly. At present a man in receipt of £250 a year would come within the operation of the Income Tax Act, and as the purchasing power of the sovereign has receded to 13s. lid., £5 per week is only equivalent to £3 10s. a few years ago. That amount is scarcely enough to keep a man and his wife comfortably, so that with children life becomes a mere struggle for existence. It appears, therefore, that such a mau would be taxed upon money that he never handled. I do not see any unfairness in a proposal to fix the minimum at £300 or £400 a year and to then tax a man upon the whole of the amount in excess of that. This would provide sufficient revenue to carry on. I know honorable members on the other side of the House will say that this would stifle industry, and they may quote financial opinion by the mile in support of their argument, but they do not take into consideration t>? fact that a man with an income of £”50 a year would have to find extra money to pay the amount of taxation d” demanded of him. As it stands at present ge Act is utterly unfair, and if it is necessary - and I agree that it is - to get more money, we should- place the burden of taxation on the shoulders of those best able to bear it. Let the amendment stand at £50 for each child, and, if necessary, bring in an amending Bill to increase the incidence of the tax on incomes over and above a certain sum. I am quite prepared to support that.
– The Committee has been amused by the speech of the honorable member for Denison (Mr. Laird Smith), which from start to finish was merely so much bluff. With considerable ‘gusto he quoted a statement from a speech made by the last’ Treasurer (Lord Forrest), to the effect that about 230,000 persons only pay the Australian income tax. The honorable gentleman did not tell the Committee how this taxation was passed on. As a witness to this passing on of taxation, of which I have always complained, I cite the present Treasurer (Mr. Watt), who, when Mr. Fisher introduced the first Income Tax Bill, iu 1914, said that it would drive capital out of the country. Now the same honorable gentleman tells us that any one who says that no more taxation is needed is an arrant fool, ‘or words to that effect. I myself have heard the honorable member for Denison speak from the public platform of the passing on of taxation, which happens in this and in every other country, and the Treasurer, when in Opposition, said that the great mass of the community would pay the proposed income tax, because in all human activities there is a filtration process which causes taxation to gradually sink down to the bedrock of the community, namely, the working men and women who cannot pass .it on. To say that 230,000 persons only pay the Australian income tax is to misinterpret the facts, as the honorable member for Denison knows. If the honorable member for Grampians (Mr. Jowett) and the honorable member for Calare (Mr. Pigott) wish to relieve the fathers and mothers of large families, and the mass of the community, they should evolve some scheme for preventing the rich from placing their taxation on the shoulders of those less able to bear it. The wealth Of a community is its human beings, its thriving men and women, and its healthy boys and girls. Once you get the population the money will follow. What the
British Empire .needs to-day is people, not £ s. d. It is the mass of the people, who pay taxation, and until they are relieved and treated fairly, we shall not bedoing our duty.
– The honorable membersupported the £13 exemption in the original Income Tax Bill.
– I have always supported every measure of relief for the family man. Honorable members opposite are running away from their own proposal, because of the bluff of the Acting Prime Minister (Mr. Watt) or the cracking of the whip.
– What is the honorable member going to do about a tea tax?
– I do not think that any Treasurer will propose a tea tax, although the Minister for the Navy (Mr. Cook) once said that there are worsetaxes. It is the passing on of taxation: that cripples the masses. They do not receive assessment notices, and their names do not appear in the registers of the Taxation Department, but it is they who pay the taxes. -When a Flinders-lane, merchant receives a notice to pay so much income tax, he - simply laughs, and adds the amount on to the price of his goods, treating it as one of the expenses of running his business.
– How is an unimproved land value tax passed on?
– Men and women drawing t fixed salaries, and land-owners, cannot pass on taxation, excepting, of course, the owners of valuable city properties, who can increase their rents. Writing in the English Review of November last, Mr. Raymond Radcliffe, a financial authority, says that in the year 191S he carefully examined the balance-sheets of forty big concerns in Great Britain, whose total profits then amounted to £60,000,000, and ‘that in June,, 1917, beagain examined their balance-sheets, and. found that, notwithstanding the war, their profits had increased to £80,000,000. He was staggered at that increase, and asked How it could be possible, seeing that these firms had been called on to pay an income tax of 5s. in the £1, an excess war profits, tax, and other taxes, for them to increase their profits by £20,000,000. He points out that the only way in which it could have been done was by charging the> public of Great Britain and other customers more for their goods, the customers paying all taxation, and something in excess. The taxing agencies of this country are not the Federal and the State Parliaments, but the manufacturers,merchants, and others, who, by increasing the price of commodities, pass on the taxes to the poor. The problem we have to solve is how to prevent this. If we do not set to work on this problem, we shall bring a hornet’s nest about our ears.
Mr. LYNCH (Werriwa) 1 9.53].- I was at first disposed to support the amendment; but when the honorable member for Calare (Mr. Pigott) announced his belief in the lamentable heresy of Free Trade, I asked myself, Why should we encourage the rearing of large families in. Australia, if the coming generations are to be merely “ hewers of wood and drawers of water” for the sweating dens of Europe and Asia ? If we are merely to produce raw material, is it necessary to provide a stimulus for the increase of population? Speaking seriously, I am ofthe opinion of the Minister for Home and Territories (Mr. Glynn) : that exemptions such as that proposed, maternity bonuses, and the like, are not the incentives that operate with a truly moral people. In the early days of this country, large families were reared under the greatest disabilities, by parents travelling from one gold-field to another, suffering hardships, and often not knowing where the next meal would come from.
– Should not those with family responsibilities get relief ?
– Asa supporter of the Fisher Government, I voted for a £13 exemption in the first Federal income tax, and for the £26 exemption proposed by the honorable member for Capricornia (Mr. Higgs). At the present time, a married man with one child may have a net income of £182 a year before being called upon to pay income tax. We must consider this question in the light of the position in which we find ourselves. It is of far more importance to the mass of the people, with large families, in the industrial centres, that there should be some reduction in the cost of living than that they should have a greater concession, in the shape of an exemption from income tax, in respect of children, and which would largely exempt rich people. I do not think that, in submitting the amendment, the honorable member for Calare is proceeding upon right lines, or will, if successful, assist to any appreciable extent the people in this country who have the hardest row to hoe. We should, in my opinion, concentrate our efforts upon reducing the cost of living and putting an end to the exploitation that is going on throughout the country. I recently read a statement in one of the Sydney newspapers that the increase in the bank balances and incomes of the people throughout Australia since the war began aggregates over £123,000,000. That goes to show that we have lamentably failed in our duty, and that, instead of trying to carry a catch vote in the way now proposed, to please tha unwary or the foolish outside, we should devote ourselves to the other and greater problem which still remains to be solved. Whatever may be said in favour of the amendment from an academic point of view, it is, in the present circumstances, an impracticable proposal, and I hope the Committee will turn it down.
.- The Acting Prime Minister (Mr. Watt) informed the Committee that it was not the intention of the Government, by this measure, to interfere with the revenue to any extent. That may be so, but I am very doubtful that honorable members will be given a later opportunity to deal with the question raised by the amendment. The honorable gentleman told us that next session will be a financial session, and that these matters will then have to be dealt with. If that be so, why are the Government taking up the time of the Committee in dealing with this particular measure? In view of the fact that the income tax for this year is now being collected under the existing law, any amendment involved in this measure must apply to future taxation. The financial measures to be considered in the coming financial session must, if this matter is to be then considered, include an amendment of the Bill we are now dealing with. If the measure then to be introduced is one dealing with the assessment of the income tax, we shall, in considering it, be unable to interfere with any of the principles of taxation which we are now laying down, though we may be able to fix any rate o.£ tax that we please. I have already stated that I believe that the exemption should be of income of £200 or under. The present exemption is far too low, and, taking into consideration the high cost of living, the exemption allowed for children is also too low. We should derive taxation sufficient to enable us to manage the affairs of. the country in this time of war from those who, are able to. pay it, and not. from those who have a struggle to exist, and are called upon to pay really more than they can afford. There are very many persons who, under the existing law, have to forego something that they require, to meet the income tax. That should not be. It is all very well to talk of the high cost of living, but that is due, to some extent, to the fact that we make it so easy for those in receipt of over a certain amount to pay the income tax. I am one of those who, in time of war and of national necessity, believe that the income of every person, over” a given amount, should go into the Treasury, for the purpose of meeting the expenses of the war, and that we should not take all that we possibly can from those with whom it is a struggle to make ends meet. We should draw our revenue rather from those who can afford to pay, and still retain enough to enable them to live in decent comfort.
– The amendment will relieve a lot of those persons.
– I am pointing out to honorable members who believe that there should be an increase in the exemption in respect of children that it is probable that they will not have an opportunity to deal with this matter again. The Bill which we will be called upon to consider in the financial session will be a Bill dealing with the assessment of the income tax, and though we shall then be able to fix the rates of tax, we shall not be able to deal with the principles of taxation. The Acting Prime Minister was careful not to mention that. Why should we be considering this amending measure now if we are going to deal with the same matter in two or three months’ time?
– Because there have been n lot of disputes in connexion with the income tax,
-I remind the honorable member that this Bill will not affect the income tax which is now being ‘col lected. I believe that the amendment should be carried, as I think the amount” of the present exemption in respect of children is far too low. I hope the honorable member for Calare (Mr. Pigott) will not be persuaded to withdraw his amendment.
– The honorable member for Werriwa (Mr. Lynch) has stated that since the war began there has been an increase of £123,000,000 in- the savings of the people. No better argument could be used to show that some persons should pay more taxation than they are paying ‘at the present . time. I believe that there are very few members of the Committee who fall in with the view expressed by the honorable member for Hunter (Mr. Charlton) as to the amount to be exempt from income tax, but I notice that, in a late Budget speech, Mr. Bonar Law stated that he was of opinion that no one in Great Britain should be subject to income tax who was in receipt of less than £500 a1 year, as he was a contributor through the Customs and Excise. When the Treasurer (Mr. Watt) introduces his new taxation proposals, I invite him to consider that the taxation might be placed upon a graduated scale, or there might be a super-tax imposed on incomes of over £1,000 or £1,500 a year. I cannot agree with the proposal of the honorable member for Hunter that in these times no one should receive an income of more than £400 a year. .If the proposal of the honorable member were given effect to, it would lead to a great deal of unemployment, because it is not reasonable to expect that a man would keep up an establishment on an income of only £400 a year. If we make the exemption £50 for each child I do not think it will tend to increase the birth rate, but I claim that it is an exemption to which a man with a family is entitled. The purchasing power of a sovereign was much greater when the first proposal was put forward to grant an exemption for each child, and if we cannot alter our legislation to meet different circumstances as they arise, we are not fit to have the power of imposing taxation. We can only tax those who have the means of paying taxation. Surely we do not expect a man with five or six children to pay more taxation than the man who has no family. The man with a family of six is a larger contributor to the Customs taxation than the man who has only himself and his wife to keep. It is useless to say that another opportunity of dealing with this matter will be presented. I feel sure that the people of Australia will be in accord with the amendment, and it is a pity that the Government will not allow its supporters a free hand in dealing with the matter, because I know that a majority of the Committee are in favour of the amendment submitted by the honorable member for Calare (Mr. Pigott). Next session we shall have ample opportunity of dealing with the question of taxation, direct or indirect.We must all admit that there is further taxation ahead of us, however disagreeable it may be, but we must have increased revenue, if only for the purpose of paying interest on our various loans.
– It is a serious matter to propose exemptions where the revenue is. involved. A good deal has been said about the effect of taxation on the masses of the people. All comparisons in regard to taxation, direct or indirect, generally relate to those whose incomes are comparatively small. We must remember that there is already an exemption of £156, which gradually decreases the higher the income is. If a man with an income of £250 has three children, his general exemption is something like £136, and when the deductions for his children are added, he pays income tax on £36 only. Therefore, the inducement to such a man is practicallynugatory, and from that point of view the proposed amendment is not worth considering. A man with an income of £300, and a family of five children for whom he would be entitled to claim a deduction, would have a general exemption of £124, and when the deduction of £130 for the five children is added, he would have a taxable income of not more than £46. When the first proposal to exempt children was before this House the exemption was fixed at £13 after the matter had been gone into very carefully.
– The money bought more then than it does now.
– For that reason the exemption was afterwards fixed at £26. Practically none of the men for whom honorable members are speaking, those with small salaries, will be affected. In any case, the Commonwealth cannot afford to lose £600,000 a year in revenue.
The Treasurer (Mr. Watt) mentioned £400,000, but his figures were based on an age of sixteen years. It is not an overestimate to say that £600,000 may be involved.
– The existing exemption does not benefit those who are entitled to the advantage of securing deductions. When an effort is being made to relieve those who have to carry the greatest share of. taxation, the sameold objection is raised that the Government cannot stand the loss of revenue which would be involved. If the Government require further taxation, there is plenty of room for imposing it. An increase in the rate generally need not prevent them from apportioning the incidence of the taxation equally as between those with large families and those with no families at all.
– Would it not be possible to abolish the exemption for families where the income is large, so that the Government may help the poor man with a family, and not greasethe fatted pigs with large families?
– I do not agree with that principle. IfI had any plums to give away I would rather throw them to the rich man who had a large family than to one who had none; but, generally, nowadays the rich folk will not be bothered with big families. Now, when we consider the increased cost of living, we might well grant this concession to those who are frequently the most affected thereby.
As,for the sum of £600,000 cited by the Minister, I believe those figures to be largely overdrawn. Where we should be helping the persons who form the great majority of those who have supplied boys for the Front, we meet with the old objection, chiefly on the part of honorable members who have none of their own in the firing line. We have heard one honorable member make a most remarkable speech, in an endeavour to draw a red herring across the track - a gentleman who looks quite eligible himself to go to the war, yet who does not offer. He taunts others Who desire to make a genuine effort to grant relief by allowing this concession to those who have done the most on behalf of the war.
.- I do not think the figures quoted by the Minister for Home and Territories (Mr. Glynn) will bear actuarial investigation.
– A loss of £600,000 is too absurd.
– Just at a time when I was casting about for statistics that would aid me, I had to thank the honorable member for Denison (Mr. Laird Smith) for the figures which he supplied. He pointed out that 13,372 taxpayers paid 84 per cent, of the tax, that 52,000 persons paid 12 per cent., and 167,000 persons 3.8 per cent, of the taxation. That means that 15 per cent. of the taxes will be borne by 220,000 persons - and those, too, who have practically all the children. Assuming that they have an average of five, children per family - which is the average given by the statisticians - we have 1,100,000 children represented by the 15 ‘ per cent, of the taxation which their parents pay.
– On what figures do you base that?
– On the honorable member’s own figures there are 220,000 persons, the parents of 1,100,000 children, who pay 15 per cent, of the taxation; whereas 13,372 persons represented by 65,000 children pay 85 per cent. I consider the calculations made by the honorable member in arriving at his true deductions certainly apply as an average to the taxpayer, but they do not apply as an average with, respect to the children. In working out this estimate, it comes to only about 3d. a child, and not to an average of ls. 7d. The representatives of the 1,100,000 children pay 15 per cent., and the representatives of the 65,000 children pay 85 per cent.
No one can tell me that my amendment is going to involve a loss of £600,000. If that figure is divided by six, it will more c closely approximate the true position. As for the Acting Prime Minister’s statement that Victoria had allowed only £13 ex- emption, I point out that New South Wales has granted £50,. Mr. Watt mentioned the difficulties in the way of the Federal Government financing ite undertakings, but the difficulties which the Imperial Government have to face are insuperably greater, and whereas I propose an increase of not quite 100 per cent., the Imperial Government increased the exemption by 150 per cent.
In his remarks, the honorable member for Denison (Mr. Laird Smith) led the Committee to believe that I had aspirations for very high positions in this House. I may say that I -consulted nobody upon this matter. When the subject of the> income tax came- before the- House o£ Representatives some two years ago, I had prepared an amendment to the same, effect. Unfortunately, I lost my opportunity to present it, but was told that there would be another chance later on. It never came, however. I have only oneobject in view, and that is to relieve people who, 1 consider, ought to be relieved.
.- After the speech of the honorable member for Denison (Mr. Laird Smith) one ought tobe perfectly sure, before adding anything, what are the intentions of the Government if the amendment should be carried. Is the amendment regarded as a. motion of want of confidence ? After recent experience we ought to know. In advocating a principle an honorable: member may make perfectly harmless remarks, such as those made by the honorable member for Calare (Mr. Pigott) with no intention of aspiring, in the words of the honorable ‘member for Denison, to the position of PrimeMinister. The honorable member for Calare was entitled to put his views, and he put them . very clearly. I must admit that I did not hear the honorable gentleman, but several honorable members who did hear him, have told methat he made an excellent speech, and I take their word. The whole case was* given away by the speeches of the ActingPrime Minister (Mr. Watt), the Minister in charge . of the Bill (Mr. Glynn),, and the honorable member for’ Denison. The figures submitted by the late Treasurer (Lord Forrest) and quoted by the honorable member for Denison, bear exactly the opposite construction to that put upon them by the honorable member. I have worked the figures out, and if 13,372 people pay 84 per cent, of the taxation, then, for the year 1915-16, of the total £4,436,000, the amount of £3,726,000 was paid by those earning over £1,000 a year. That amount was paid by 13,372 men in a community of 5,000,000 people. The men with incomes between £200 a year and £1,000 a year number 52,491, and they pay only £532,320; but the great bulk of the men who pay income tax earn under £200 a year, and, though they number 167,853, they pay only £168,768, or, on a rough average, £1 a head. Then, if we take the estimate of the Acting
Prime Minister, and say that each family consist of the parents and three children-
– Not enough!
– That is another matter; I am not now arguing high morality, but figures. I was unable to ascertain from the Commissioner the number of women who pay income tax, but I suppose it would be a fair estimate to take them at 25 per cent. Deducting those women, and allowing that the remainder are fathers of families ofthree, and that the exemption asked for is allowed, the difference will be £72 per annum, seeing that there is already an exemption of £26 for each child.This means £177,600 in revenue. If we take the whole of the taxation paid by the 167,000 people, who pay 3 per cent. of the tax, we get only £168,000, and, adding all these figures together, we find that £346,000 is the amount that the Treasurer will lose.
– You are not allowing for the difference in the ages.
– I am taking the whole of the children, whatever the ages may be. In any case, the interjection rather helps my argument. If we average the families at three children each, with the father and mother making five, we get 1,000,000 families, or our population of 5,000,000. It is true that I do not take into consideration the ages, but wherever the age exceeds eighteen, those persons do not come within the concession, and that reduces the amount involved in the exemption. With all in, however, we only reach £346,000, although the Acting Prime Minister said he would lose £600,000 by this proposed exemption.
– The Acting Prime Minister said he would lose £400,000, referring totheage of sixteen, and I said the loss would be £600,000 with the age at eighteen.
– I suppose the figures supplied to the Minister-
– I have other figures of my own to test -them with.
– The figures I am quoting I worked out for myself, and they may be wrong, but I venture to say that they are not far short of the truth, if the family be taken as consisting of three children, and the ages are not considered. Personally, I do not see that the age comes into the calculation.
– Of course the lower we make the age the less will be the sum involved in the exemption, and the greater the sum brought into the taxable area. Iam not particularly wedded to either sixteen or eighteen years of age, but, personally, I think that sixteen is old enough in times like these. But I am quite certain that the figures supplied by the Minister in charge of the Bill are a long way in excess of the revenue which will be lost if theamendment be adopted. Personally, I feel inclined, in the interests of the people with large families who are struggling at the present time with heavy taxation, to support this proposal. One of the most vital points made during the debate came from the Leader of the Opposition (Mr. Tudor), who alluded to the depreciation in the value of the sovereign . It is true that, whilst a man in receipt of £3 or £4 a week has had his wages nominally increased, on account of the increase in the price of commodities, he is not as well off as hewas before prices began to rise, and before is wages were increased. He will be brought within the ambit of the Income Tax Act as a result of receiving a nominal increase of wages, notwithstanding that he has received no actual increase. That being the case, we shall be hitting a greater number of persons by this tax than we were hitting when prices were low and wages were comparatively low.
– How does the honorable member suggest that we should get the revenue?
– My experience of taxation measures is that a thousand and one reasons are always advanced why we should not deprive the Government of a penny of the taxation that is proposed. I have previously said that the most iniquitous principle in this Bill is embodied in the provision which makes its operation retrospective in regard to money earned in previous years. For example, many men have spent the income earned by them in 1914 and 1915, and yet, under this measure, they will be taxed upon that income. The argument advanced as to why the Bill should be made retrospective is that if its operation be made otherwise we shall lose a revenue of £500,000. That argument is not worth salt. The principle of taxation is that the tax should be collected during the year to which it applies. Nobody can object to that principle. If by increasing the exemption in the case of children, and cutting out the retrospective portion of this Bill, we lose a certain amount of revenue, we all know that that revenue must be made up in other directions. We all recognise that the Treasurer must have money to carry on the business of this country? But that is no reason why he should get it inequitably. I am prepared to give the honorable gentleman whatever money he requires to carry on the business of this country, and every honorable member is prepared to do the same thing. The question we have to consider is, Which i3 the most equitable way to do it? To make taxation retrospective is certainly not the most equitable way.
– Is that issue raised in this clause?
– No; I am merely using it as an illustration. In my judgment, this amendment provides a reasonable method of affording relief to persons who are struggling under conditions which make it difficult for them to get along.
– If it be adopted, we shall relieve a great number of persons who are not struggling.
– Is that a reason why those who are struggling should not be relieved ? We all recognise that we cannot pass legislation without injuring some persons. But are we going to enact legislation which will injure the great mass of the people? I shall support the amendment.
.- My sympathies go out to those persons in our midst who have families. My objection to the amendment is that it will afford no relief to the poorer members of the community. But it will, I believe, give some relief to those ‘who have families, and are, perhaps, making an income of £500 per year. Now, if we are going to grant substantial relief to people with families, we should adopt an equitable scheme under which the poorest in the community will be equally benefited. For that reason I shall vote , against the amendment. If the honorable member for Calare (Mr. Pigott) can show me that his proposal will afford relief to those who are in the greatest need of it, I shall be with him.
The eloquent speech of the honorable member for Grampians (Mr. Jowett) was based on the supposition that if the amendment be adopted we shall encourage people to have larger families. I venture to think that that argument is entirely beside the question. The amendment, if adopted, will not have that effect, and I am disinclined to hamper the operations of the Government by supporting it.. Both the Acting Prime Minister (Mr. Watt) and the Minister for Home and Territories (Mr. Glynn) have told us that its adoption will mean the sacrifice of a revenue of £600,000 a year if the age of the children exempted is increased to eighteen years. Despite the figures advanced by the honorable member for Henty (Mr. Boyd), I believe that the statistics quoted bv the Acting Prime Minister are substantially correct.
.- I understand that recently a conference took place between taxing officers representing the Commonwealth and the States, with a view to securing a uniform income tax schedule, . and I expected from the Minister in charge of the Bill (Mr. Glynn) a statement as to what had been agreed upon in that connexion. Honorable members should also bear in mind that some of the States, as well as the Commonwealth, make an allowance for the upbringing qf children. In New South Wales there is a general exemption of £250 and a reduction of £50 for each child. By the process of aggregation there is, on the whole, a much greater allowance in respect of children than is proposed by the amendment, and’ the deductions by the States should be considered by honorable mem1 bers when dealing with this matter. Additional revenue must be obtained. I agree that that is no reason why an evil should be perpetuated, and it- does not justify us in allowing inequalities to continue. But, in view of the liberal allowances made by the States and the stringent requirements of revenue by the Commonwealth, I urge honorable members not to press the amendment. Experience does not justify the high hope of the honorable member for Grampians (Mr. Jowett) that affluent circumstances will produce large families. That is not sufficient reason for anybody .to say that those who desire to bring forth large
Australian families should not receive further assistance. If times were normal, I should be glad to support the honorable member for Calare (Mr. Pigott), but, in view of the financial requirements of the Commonwealth in this time of war, I regret that I must oppose the amendment.
– Honorable members are forgetting the actual bearing of the present tax on the people. Atpresent, there is a general exemption of £156 and an allowance of £26 for each child. A man with two children and in receipt of . £208 would not pay any tax. A man with a family of three would require to have . an income of over £234 before he would pay taxation. A man with four children would be exempt until he was in receipt of more than £268, whilst a man receiving £300 and having four children would be taxed on only £40 ; and, at the rate of about 4d. in the £1, his actual contribution to the revenue would be about15s. The argument has been mainly based on the claim of the poor man. It must be remembered that there is a graduated scale by which the tax ultimately reaches 6s. 3d. in the £1.
Mr.Fenton. - There are few children in the families of persons in receipt of large incomes.
– If we increase the income tax, as we must do next year, the loss of revenue from the persons of big incomes will be much heavier if the amendment is agreed to. If this amendment is to bc adopted at all, there should be a limit fixed to the incomes to which this exemption is to apply. The tax in its present form does give a considerable advantage to men in receipt of small incomes.
– The amendment will not assist the poor man with a large family.
– Of course it will not, but it will assist the rich man with a large family.
Question - That the amendment (Mr. Pigott’s) be agreed to - put. The Committee divided.
Majority . . . .5
Question so resolved in the negative.
.- The honorable member for Kooyong (Sir Robert Best) has given notice of an amendment to insert in clause 14, at the end of paragraph i, the following: -
All interest actually paid by the taxpayer in the year immediately preceding the year of assessment upon money borrowed and actually used or invested in Australia.
I regret that the honorable member is unavoidably absent. I understand that his object is that borrowed mortgage moneys invested in the Commonwealth shall be set off against income. I believe also that according to therulings of the Commissioner, all taxpayers may be under obligation to state the disposition of all mortgage moneys sought to be set off. Without this amendment of the law, this would possibly involve every taxpayer being called on to explain how his mortgage money had been invested in the past. As honorable members have other amendments, I should be glad if an opportunity was afforded to the honorable member for Kooyong to state his own case fully. One important point would be the effect on moneys invested in war loans.
– The amendment means that interest paid in the year before the taxation year is to bo credited. That is contrary to the principles of the Bill, and what the honorable member has said shows itsweakness. A man may have borrowed money to put into the war loan, and, although his interest from the war loan is free from taxation, it is now sought to allow him to deduct alsp the interest he pays on the borrowed money. That seems a ‘ double relief of taxation to men of competence. As the retrospective clause may require a little elucidation,I shall agree, in the circumstances, to report progress.
Billreceived from the Senate, and (on motion by Mr. Wise) read a first time.
Motion (by Mr. Glynn) proposed - That the House do now adjourn.
– Will the Acting Minister for the. Navy (Mr. Poynton) lay on the table of the House all papers connected with the chartering of rice boats, and the charter parties thereto?
– I shall be glad if the honorable member will ask that question to-morrow.
.- In addressing a question to the PostmasterGeneral(Mr. Webster) to-day, I fear I made too sweeping a statement in attributing to the Minister the policy of the suppression of country services by a process of dismantling. I was actuated In putting the question by the receipt of a notice to-day refusing what I thought a reasonable facility to a district. This came at a time following on another refusal. I assure the Postmaster-General that I do not regard his policy as one of studied deprivation of the country districts of reasonable services. I hope an opportunity will be afforded the House generally, in the midst of the war, particularly when the country districts are rent from end to end, to consider the policy of increasing the facilities in the Country instead of reducing them.
Question so resolved in the affirmative.
House adjourned at 11.6 p.m.
Cite as: Australia, House of Representatives, Debates, 15 May 1918, viewed 22 October 2017, <http://historichansard.net/hofreps/1918/19180515_reps_7_84/>.