10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 11 a.m., and read prayers.
– I notice that the Lord Mayor of Melbourne (Sir William Brunton), who is more sympathetic with distressed men, women, and children than any previous occupant of that office within my recollection, has appealed for homes for the people who have been rendered homeless by the disastrous hush Cres. Following upon a promise given by the Prime Minister last week, I ask the Minister for Defence to arrange for his department to make tents available immediately to homeless settlers and firefighters, and, if necessary, send stores to thom later.
– The information which the Prime Minister gave to the House last week was based upon a statement from the Defence Department that it was complying with every request for help from responsible bodies. The department will gladly continue to do that.
– According to a leading article in the Sydney Morning Herald on 22nd February, the Government proposes that this Parliament shall meet at Canberra on the 26th January, and, after a brief sitting, adjourn until April. Will the Acting Prime Minister inform the House whether that statement is official, and whether any definite date for the first meeting of Parliament at Canberra has been fixed?
– The information is quite unofficial. The matter has not yet been considered by Cabinet.
– Having regard to the vital part played during the war by internalcombustion engines on land and sea, and the fact that every engine required in Australia for aeroplanes and for motor cars is imported, will the Government urgently consider the devising of some financial scheme to encourage experiments in the manufacture of such engines here?
– For some time the Department of Defence has been considering means of encouraging the local manufacture of internal-combustion engines for aeroplanes.
- Dr. Smalpage, speaking at the Rotary Club luncheon on the 4th February, stated that within two days he would have sufficient serum available for the treatment of 2,000 tubercular patients. Three weeks have elapsed since that statement was published, and, so far as I am aware, no serum is yet available. Will the Minister for Health inform the House what has occasioned the delay in the production of the serum, and when supplies will be available?
– At a conference attended by Dr. Smalpage yesterday, the remarks reported to have been made by him at the Rotary Club luncheon were discussed. He informedme that he had been misreported. Some delay in the production of the serum has been occasioned by his illness.From the information made available yesterday, it is reasonable to assume that the serum will be placed in the hands of the specialists on Monday next at the latest. In the interim, all arrangements are being made to commence tests on nine specific classes of cases.
Mr.G. FRANCIS- Has the Minister for Trade and Customs noticed the recent press statement that the Canadian Government is offering a bounty for the production of copper? What action does the Commonwealth Government propose to stimulate the production of copper and other industrial metals?
– I have not read the statement to which the honorable member refers, but I propose to ask the Tariff Board later in the year to investigate the subject of copper production and manufacture.
Southerneuropeans - Medical Examination
– In view of the serious statement reported in, the press this morning as having been made by the Premier of Western Australia regarding the influx of migrants from Southern Europe, will the Acting Prime Minister assure the House that the Commonwealth will take all necessary steps to prevent the indiscriminate immigration of people from Mediterranean countries to the prejudice of immigrants from the United Kingdom?
– I can only repeat the assurance given by the Prime Minister last year, that every step is being taken by the Commonwealth to prevent an indiscriminate influx of migrants from southern Europe.
-The medical examination of British migrants to Australia is particularly severe. The eye test is more searching than that applied to infantryrecruits in the Commonwealth or in Great Britain during the war. No migrant weighing less than 9 stone 6 lb. is seriously considered by the immigration authorities at Australia House. Italian and other Mediterranean migrants are not subjected to any medical examination other than the customary quarantine inspection, which is more or less casual. Does the Minister for Health approve of this differentiation?
– When I was in England, in 1923, I recommended to the Commonwealth Government a system of medical examination of migrants with a view to protecting this country against an influx of people who did not conform to our physical standards. That system is now in force. Migrants who have passed the examination preliminary to acceptance are again examined on the ship, and a third time before disembarkation. I understand that in Italy intending migrants to Australia undergo a careful medical examination, based upon the K form used at Australia House. If applicants do not conform to the standard laid down in that form, they are not allowed to embark. They are also examined on board before disembarkation, and any persons who, in the opinion of the quarantine officers, do not comply with the provisions of form K are reported to the department with a view to their compulsory repatriation. I shall inquire regarding the eyesight and weight standards, and will supply a further answer to the honorable member at a later date.
– Will the Acting Prime Minister inform the House when the bill relating to the Commonwealth grant to the States for the purchase of wire netting will be submitted to Parliament?
– The Commonwealth has drawn up a scheme under an agreement which requires the approval of the State Governments. Copies have been sent toeach State Government, but, so far, the Western Australian Governmentalone has replied.
The following paper was presented:-
New Guinea Act - Ordinance of 1926 - No. 6 - German Missions.
Formal Motionfor Adjournment
Mr. SPEAKER announced thathe had received from the honorable member for Gippsland (Mr. Paterson) an intimation thathe desired to move the adjournment of the House to discuss a definite matter of urgent public importance, namely, “ the effect of the tariff on agricultural implements, and the report of the Tariff Board thereon.
Five honorable members havingrisen in their places,
– I desire to discuss the effect of the tariff on the prices of agricultural implements, and to urge that the present duties be replaced by a bounty. There is a strong conviction amongst the primary producers that the implements required in their industry are more costly than they should be, and that the very high tariff is partly, if not wholly, responsible for that. Their persistent agitation over a number of years for relief culminated in the Prime Minister’s request to the Tariff Board, in 1924, to inquire into and report upon this subject. The board’s report was presented to Parliament last year, not long before Parliament was dissolved, and this is the earliest opportunity I have had to discuss it. WhilstI agree with some of the conclusions in the report, others are open to criticism, and will not meet with general acceptance. At least one conclusion is absolutely ludicrous. The board based its investigations upon four vital and pertinent questions - 1. Is the existence of the agricultural implement industry of advantage to, and in the interests of, the primary producers? 2. Is protection necessary in order to maintain that industry? 3. If so, should the industry be protected by a duty or a bounty? 4. Has the tariff resulted in excessive prices being charged to the primary producers? I entirely agree with the board’s answer to the first question. It is desirable that Australia should manufacture the imple ments required by its primary producers. Therefore, I am wholeheartedly in favour of local production. In moving this motion to-day I am not acting as propagandist for the importing firms. On my own farm I have used Australian implements with satisfaction. I am not pleading for the unrestricted importation of implements; but, in common with other agriculturists, I believe that the prices at present charged are too high. Through the courtesy of the honorable member for Corio (Mr. Lister), I was afforded an opportunity some time ago to inspect the Sunshine Harvester Works. I was agreeably surprised by the magnitude of the operations conducted there, and the facilities for mass production, which, I believe, are not excelled in any other agricultural implement works in the world. I saw men engaged on piecework who appeared to display the acme of efficiency and speed, and I could not help thinking that paying for work done rather than for the time occupied in doing it is better, not only for the men, affording, as it does, opportunity for efficient workers to earn more than they otherwise would, but also, by reducing the overhead expenses, cheapens the article to the consumer. I believe that no men work harder or more skilfully than those employed at the Sunshine Works. I am one of those who believe that the manufacture in Australia of the implements we require is not only of advantage to the workmen engaged, who are our own citizens, but provides opportunities for the invention and perfecting of the best type of agricultural implement for Australian conditions. The second point considered by the Tariff Board was, “ Is protection necessary for the maintenance of the industry?’” I believe that the contention is sound, that protection if it is used not to inflate prices, but to secure the whole of the business to the local manufacturers, and thus enable them to undertake mass production, should mean cheaper implements. So far, there has not been much practical proof of this in the direction of a substantial reduction of prices to the users of implements. If I were asked if protection is necessary for the maintenance of the industry, and to state how much fiscal protection was necessary to that end, I would inquire, first, how much natural protection the local manufacturer received in the way of ocean freight, marine insurance, packing, and loss in exchange. Secondly, I would ask how our wages and conditions compare with those in the countries with which we are competing. Natural protection varies with the commodity. A bale of silk may be described as multum in parco, as it is valuable, hut small in bulk, and consequently the freight on it is small in proportion to its value. Agricultural implements, on the other hand, are not only weight.)’ but bulky. Ocean freights are generally based upon measurement rather than on weight, and hence in regard to agricultural implements there is a great deal of natura] protection enjoyed by the local manufacturers. Sworn evidence given before the Tariff Board showed that this natural protection ranged from 25 per cent, to per cent, on different articles. This was made up in ocean freight, marine insurance, packing, railway freight in the country of manufacture, and also a certain amount for loss in exchange. The last-mentioned item has now almost dropped out of consideration, so that the natural protection at present is actually a little less than it was when the report of the Tariff Board was prepared. I am, however, dealing with the figures considered by the board. Most persons will agree that a natural protection of from 25 per cent, to 41i per cent, is a heavy handicap to overseas competitors, and ought to be sufficient to give local manufacturers a good start in the race for the market. Another question considered by the board was, “Are we under any disability in regard to wages? Do our Australian conditions impose upon us a handicap as compared with our competitors?” I find in the evidence that the scale of wages in Toronto, Canada, compared with that in Melbourne, for 48 hours a week in each case, as follows :- -
I wish to be quite fair in this matter. It appears highly probable, although I cannot prove it, that the Canadian wages paid are probably for piece-work performed during a period of 48 hours, whereas the rates for Melbourne are the ordinary wages board determinations. As a good deal of piece-work is undertaken at Sunshine, it is probable that the men there are earning more than the wages board rates, and are possibly receiving as much as their Canadian competitors. But I think it is safe to say that Canada pays at least as high wages as we do, and, therefore, it cannot be said that our manufacturers are under any disability in that respect. In the matter of material, iron forms the principal portion of an agricultural implement; and, as is well known, we have in Australia some of the richest iron ore deposits in the world, from which as much as 67 per cent, of iron can be obtained. Mr. Gr. D. Delprat, when the general manager of the Broken Hill Proprietary Company, informed his directors that the iron ore which his company was treating was so remarkably rich that it could be smelted in open competition with any other country without protection. I admit that since that statement was made, owing to the increase in the cost of coal and transport, these .conditions do not now obtain. ^Nevertheless, Ave must admit that we are in a particularly fortunate position in having iron ore containing 67 per cent, of iron. I am satisfied that if some of the dairymen in Victoria whom I represent and those in Queensland whom you, Mr. Speaker, represent, could breed cows capable of producing milk- containing 67 per cent, of butter-fat, they would think that the economic millennium had como. In addition to the natural protection which I have mentioned, which, at the time of the Tariff Board’s investigations, ranged from 25 per cent, to 41 per cent., there is a fiscal protection of from 35 per cent, to 57 per cent, on Canadian factory prices. The difference between the nominal percentage as shown in the tariff schedule and the actual percentage is made up in this way: The 45 per cent, on binders is not imposed upon the actual net price of the binders as they leave the factory, but upon a price which includes cost of carriage to the seaboard and various other costs which fluctuate, with the result that at the time the inquiry was held the fiscal protection on a binder was 57 per cent., and the natural protection was 40 per cent., making the total 97 per cent. The average farmer does not mind how high the protection is, provided that it is used to secure the local market, to make mass production possible, and to supply him with implements at rates approximating those charged to Canadian farmers. He would be satisfied if he could obtain an Australian implement at a price remotely approaching that which a Canadian or American farmer pays for his implements.” The objection of the Australian farmer to the tariff, as applied to agricultural implements, is that it is used to maintain high prices. Before dealing /with question 3 asked by the Tariff Board, I shall pass on to question 4, “ Has the tariff resulted in excessive prices being charged for agricultural implements ?” The Tariff Board has in all cases refrained from comparing our prices with those ruling in Canada, America, or ‘Great Britain. The board has invariably used the foot rule of import parity, and compared our prices with those at which our competitors could land their goods in Australia. It has found that our manufacturers have taken full advantage of the natural protection and 12£ per cent, of fiscal protection as well. In other words, they are selling their implements on an average at 12£ per cent, above the import parity. If they sold these implements at, say, 12£ per cent, above the Canadian price, or 12£ per cent, below import parity, which would be much the same thing, we would have little to complain of, but to charge for them at 12£ per cent, a’bove import parity is a horse of another colour, and leaves a good deal of room in the farmer’s mind for believing that this particular industry is an incubus rather than a blessing. I am indebted to the Tariff Board for a particularly good joke contained in its report.
– Is there only one?
– There is one good joke, and it is in regard to the taxation disability which it considers the local manufacturers suffer as compared with the importing firms. Both local and im porting firms pay a company tax at the rate of ls. in the £1, but the shareholders of local firms, who, according to the Tariff Board, appear to be generally in receipt of individual incomes of more than £6,500 a year, pity income tax at the rate of 6s. -5d. in the £1 ; and the board considers it reasonable to deal with the payment of 6s. 5d. in the £1 on private income as a business expense and a legitimate charge against, the cost of producing implements. It says, in effect., that a manufacturer does not really get the benefit of 12^ per cent, of the tariff, but only of 6^ per cent., because the remaining 6 per cent, is used to pay income taxOverseas firms, however, have to pay income taxation in the countries in which they are manufacturing. The Tariff Board should state the position in one of two ways. It should stick to the undiluted statement that the agricultural implement makers in Australia take advantage of the whole of the natural protection and the tariff to the extent of 12^ per cent., or, if it wishes to put the case in an optional way, it should say that the manufacturers charge the farmer only. 6§ per cent, of the fiscal protection, and,, in addition, compel their customers to> pay their income tax at the rate of 6s. 5d. in the £1. My own view is that tho company tax might fairly be described as a legitimate charge against the costof production, which should be borne by the industry; but personal income tax imposed upon individual shareholders should be regarded as remote from the business, and concern only the private life of such shareholders.’ It should not be a charge against the cost of production. If we turn from this attempt to compare our prices with import parity prices, and get right down to what the Australian farmer pays as compared with the Canadian or American farmer, we find, according to sworn evidence given before the Board, that when the price of binders in Australia was £75, a similar implement was sold in Canada for £47, and in America for £45. Our price was 59 per cent, above the Canadian, and 66 per cent, above the American price. The price of a mower was £33 5s. in Australia. £17 7s. 6d. in Canada, and £16 10s. in the United States of America, a difference of 90 per cent, over the Canadian price, and 101 per cent, over the United States of America price. The price of hay rakes was £19 in Australia, as compared with £9 17s. 6d. iu Canada and £9 5s. in the United States of America, a difference of 93 per cent, and 105 per cent, respectively. A 15-hoe grain and fertilizer drill cost £61 5s. iu Australia and £33 ls. in Canada, a difference of 85 per cent. I could multiply those instances. I wish to make it quite clear that the prices quoted were the prices ruling at that time. I said that an Australian binder cost £75 ; its price to-day is £68. I said the Canadian price of a binder was £47; the price to-day in Canada is £42. The proportionate reduction is as great in the case of the Canadian as in the case of the Australian machine, and the proportionate disparity between the two is preserved. Our price has dropped ; so has theirs. It may be said that the reason they can beat us is that they have mass production, while we have not. That argument is not applicable to-day. In the matter of grain and fertilizer drills, we in Australia have greater mass production than all the other countries of the world, and yet there is the difference between £31 ls. in Canada and £61 5s. in Australia, or 85 per cent. The Tariff Board has studiously avoided price comparison on that basis, but makes its comparisons between the Australian and the landed cost. I submit that that is not a reasonable basis. If we give to our implement makers, by means of high protection, practically a monopoly of the local market, we have a right to expect in return a cheapened product. One firm in this country paid a 10 per cent, dividend in each of the five years from 191S to 3922 inclusive, 15 per cent, in 1923, and 20 per cent, in 1924, and in that year it increased its capital from £40,000 to £160,000 by the distribution of 60,000 bonus shares obtained from reserves amassed in the previous few year3. That is surely evidence of great prosperity. The Tariff Board skated very quickly over the question of tariffs versus bounties. To my mind, the reasons that the board gave for its conclusions on this point are about as convincing ‘as the argument often used by children - “ just because.” To grant a bounty to protect this industry would be to follow a precedent created in the case of wire netting, fencing wire, and other commodities. In addition to providing a bounty, it would be necessary to retain some duty against Canada and the United States of America in order to preserve British preference, which I hope will ever be retained. A bounty should be given to the agricultural implement industry for the same reason, when we get down to bedrock, for which it was given to the wire-netting and fencingwire industry - to prevent the inflation of the price of tools of trade used in the production of things that have to be sold overseas against the keenest possible competition. It may be ‘asked - why not include the same means to protect the clothing or motor body industry ? Those industries, however, are on an entirely different footing, for the reason I have stated. As we are 12,000 miles from our best overseas market, our conditions are more difficult than those of other countries.
– Our best market is our home market.
– I hope that it will come to be so. So far as dairymen are concerned, the local market is better than it used to be, but the wheat-grower is in precisely the same position as if he sent every grain of his wheat overseas, because the local price is based on the export parity. The same disability applies to the lamb-raiser, the wool-grower, and, to a certain extent, the fruit-grower. If a bounty were substituted for the tariff in the agricultural implement making industry, the industry would be protected just as effectively as it is today. The importer would have just as big a handicap, but there would be this vital difference, that, instead of the importer being handicapped 100 yards behind scratch, with the Australian implement maker content to move along 40 yards ahead of him, but still 60 yards behind scratch, the manufacturer would start on scratch, and the importer only 40 yards behind. The difference between the two would be unaltered, but both would be placed more- favorably in the matter of prices. Let us by all means foster our agricultural implement industry, and all other efficient natural secondary industries ; I do’ not wish to im- port one additional machine. But by substituting the bounty system for the tariff system, we shall cease to retard the development of our great primary industries. If we are to fill our great empty spaces, if we are to populate the interior of Australia, if we are to encourage cultivation rather than grazing, it is our duty to remove every stumbling block from the’ path of the primary producer. I commend to the House the proposal that it should foster the agricultural implement industry by a bounty instead of by the present tariff, which is much too high, and undoubtedly has the effect of increasing the cost of necessary machinery.
.- The honorable member for Gippsland (Mr. Paterson) has placed before the House some reasons why, in his opinion, bounties should be substituted for import duties on agricultural machinery. I do not intend to be tempted into a general tariff discussion, and I shall confine myself to replying to the observations of the honorable member. The whole subject has been exhaustively investigated by the Tariff Board, which took many months to arrive at its conclusions. Those conclusions have been printed, and have been open to the scrutiny and criticism of all persons affected : but they remain unchallenged, even by the honorable member. I am glad that the honorable member has been moderate in his criticisms. In reply to two or three of those criticisms, I point to page19 of the Tariff Board’s report, and to the board’s report on the profits of manufacturers. Time will not permit me to traverse the whole argument; but I shall add a few observations of my own on the matter under discussion. The agricultural implement industry is a very important secondary industry in this country. It employs 5,000 men directly, and 3,000 to 4,000 indirectly, in supplementary manufacturing processes. The value of its output is nearly £3,500,000 a year, and it pays in wages about £1,500,000 a year. Our total importations of agricultural machinery amount to £893,000 worth, of which £276,000 worth is imported under the British preferential tariff, or can be so imported, entirely free. This great industry in Australia is unique. It is com mon knowledge that the stump-jump plough and cultivators, the combined harvesting machines, and the combined drill and cultivator, are all of Australian invention, and have been of enormous advantage to the producers of this country.
– I readily acknowledge all that.
– It isno exaggeration to say that the strippers and combined harvesters have saved millions of pounds sterling in Australian farming, and have been a means of greatly extending the production of wheat. Stumpjump ploughs and cultivators have saved the farmers in all the States enormous sums of money in clearing their lands, and have enabled them to produce grain profitably over great areas which could not otherwise have been cultivated. The foreign trusts that have been operating in Australia for over 30 years have done nothing of that character; they have merely copied the inventions of Australians, and competed with them in the Australian markets. Striking testimony to the value of Australian implement factories is to be found in bulletin 166, issued in 1918 by the Department of Commerce of the United States of America. I quote that bulletin, which reads -
The enormous increase in wheat-growing in Australia would hardly have been possible had not suitable machinery been evolved capable of satisfactorily handling the matured crop under the climatic and labour conditions prevailing in that country. The entire credit for the development and perfection of the stripper, and later on of the stripper harvester, is due to the Australians themselves, as both of these machines were invented and first perfected and built in that country. When it is considered that these machines, as built at present, are but little different from the first ones built, and that under ordinary conditions they work in a most excellent manner, it must beadmitted that Australian agricultural engineers are second to none when given an equal opportunity.
Bounties are granted for the purpose of initiating and establishing industries, and are largely a temporary expedient; import duties are for the purpose of protecting established industries against the undue competition of outside manufacturers. Also, Customs duties aim at giving, if possible, the whole of the home market to the home manufacturers, subject, of course, to efficiency on their part and reasonable charges being made to the purchaser. The agricultural implement industry is entirely different from those that have so far been granted bounties. The latter deal with simple, single items, whereas there is a very wide diversity in the range of agricultural implements. By reason of its complexity, it would be almost impossible to apply the system of bounties to the agricultural implement industry.
– Because one manufacturer alone has 275 different items in his price-list, and other manufacturers have numerous items, each of which differs in some degree from every other. If we attempted to provide a range of bounties, administration would be rendered impossible. The different reports that have been made in regard to the agricultural machinery controversy have repeatedly demonstrated the fact that the duties are paid by the importer. That is particularly noticeable when a comparison is made with prices in the Argentine and New Zealand. However desirous an importer in Australia may be of getting a higher price, he is unable to do so against well-established local competition. An ounce of fact is worth a ton of theory. I have, therefore, gone to some trouble to ascertain the position of a Mallee farmer in relation to the agricultural implements that he uses.
– The only way in which that can be done is to go on a Mallee block.
– I note the interjection of the honorable member for “Wimmera (Mr. Stewart), and I challenge it with the statement I shall now make. Assuming that a Mallee farmer, on an average 1,280-acre Mallee farm, grew crops of wheat, oats, and some fallow, he would require one tractor, or eight horses. The tractor is free of duty, and nobody will suggest that an Australian horse is an agricultural implement. A further requirement would be a wagon; but that does not come within the scope of our controversy. Other requirements would be one eight-furrow plough, stump- jump, tractor-drawn, the selling price of which in Australia to-day is £115; one set of eight-wing harrows, the selling price of which is £22 10s. ; one 20-combine, which costs £91 4s. ; one 10-ft. header harvester, costing £219 ; one 8-ft. reaper and binder, costing £90; and one chaff-cutter plant, 9-in. mouth, three-knife, costing £66 10s. He would also’ have to purchase sundries from time to time; but I have not taken those into account. The total purchase price of those agricultural implements is £604 4s. It was more or less admitted by the honorable member for Gippsland (Mr. Paterson) that the increased price of those implements, because of the operation of the tariff, was12½ per cent. On a capital outlay of £600, that would amount to £75. I am informed, and 1 believe, that with reasonable care those implements will last for fifteen years.
– Somebody has been pulling the Minister’s leg.
– If we divide £75 by fifteen, we find that the annual increase is £5, which is equal to only 2s. a week. The primary producer has the advantage of the presence of efficient factories on the spot. The prices of Australian-made agricultural implements have, since 1921, been regularly and consistently reduced. The Australian implement makers are not charging excessive prices, nor are they making undue profits. The fullest possible inquiry has demonstrated the fact that the Australian agricultural implement industry is of inestimable benefit to our producers. It leads the world,and to now. change from duties to bounties would not only make administration impossible, but would also be unfair to the industry. The only conclusion possible is that the duties on agricultural implements impose no real burden on the primary producer.
– It was a noticeable fact, Mr. Speaker, that when you asked whether the honorable member for Gippsland (Mr. Paterson) was supported in his proposal to move the adjournment of this House, a few of those honorable members who sit in the corner opposite rose in their places, but the solid phalanx of honorable members who support the Government and sit on the back benches remained in their seats.
Mr.Watt. - They know something of what protection means to Australia.
-That was a demonstration of a distinct cleavage between the two sections to which I have referred. In the interests of Australia, I hope that my assumption is correct. Itis remarkable that Ministers who belong to the
Country party could smile whilst the honorable member for Gippsland was discharging his light explosive. I believe that this act has been staged this morning for the special benefit of the Farmers Union, which is to meet in conference in Melbourne within a week or two. Honorable members of the Country party know full well that they would receive a jacketing at that conference if they had not in this House protested against the duties that are charged on agricultural implements.
– Will the honorable member take a vote on it ?
– The honorable member for Indi (Mr. Cook) ought to be prepared to take his gruel. With his brother members of the so-called Country party he exerted considerable pressure upon the Government to appoint to the Tariff Board a representative of the primary producing interests. The best reply that could be made to the honorable member and those who think with him is the signing of this report of the Tariff Board by their representative, David Masterton. During the election campaign I was addressing the workers in a factory when it was visited by the members of the Tariff Board. I then met Mr. Masterton for the first time, and I said to him, “ I must commend you, as the representative of the primary producers, for having signed the report submitted by the Tariff Board in connexion with agricultural implements.” He said, “ That report, Mr Fenton, is unanswerable.” I believe that he spoke the truth.
– It is the best report that the Tariff Board has submitted.
– Looking for support, the Government acceded to the request of members of the Country party to submit to the Tariff Board the question of the imposition of duties on agricultural implements. The board made an exhaustive investigation, and in its report it has made some very pithy comments. The report, which was signed by every member, favours the protection of the agricultural implement industry in Australia. The Minister (Mr. Pratten) stated that this industry paid out in wages £1,500,000 annually. Approximately 25,000 persons in Australia are directly dependent upon the industry.
– I wish to keep them in employment.
– Practically everything we wear and eat has primary production as its source. If secondary industries are to provide a greater number of consumers for primary producers, not only should existing industries be supported, but others should be established. The board has shown that Australian implement-makers are being advantaged by the tariff to the extent of only6½ per cent.
– That is a joke; it is 12½ per cent.
– From the point of view of the honorable member it may be a joke. From what I know of the Gippsland farmers, he does not represent them on the tariff issue, and it was not upon that issue that he was elected. In the opinion of the Tariff Board, the prices of agricultural implements in Australia, with protective duties added, are much lower than they would have been under f reetrade conditions and no local manufacture. I agree with that assumption. I put in my early years on a farm, at a time when the reaper and binder was not being manufactured locally. The farmers then had to pay a higher price for reapers and binders, and for binder twine, than they have had to pay since the industry has been protected.
– We are not advocating freetrade.
– I do not know what the honorable member and his friends are seeking, and I do not think that they do. If I had to choose between a local manufacturing monopoly and a foreign monopoly, I would unhesitatingly choose the former. We ought to be able to exercise some control over the local manufacturer. If we have not sufficient power to do so at the present time, we should secure it. Will honorable members in the corner opposite support an amendment of the Constitution, if that is necessary, to enable this Parliament to effectively control monopolies? I hope that honorable members in the corner will use their influence to force the Government to submit to the people at an early date a referendum for the amendment of the Constitution.
– Would the honorable member assist us to do that?
– Yes. When the Tariff Board’ commenced its investigations it asked the local manufacturers to submit their books for examination by expert accountants. They did so, and their books have been examined. But when the same request was made to the importers, they declined to submit their books for examination.
– The local manufacturers declined to submit their records to an impartial board.
– The Tariff Board, in its report, said that whereas the local manufacturers submitted their books for examination, the importers refused to do so. I am prepared to believe that report rather than the wild assertions of the honorable member for Perth (Mr. Mann) . I can hardly conceive of the Tariff Board making that statement if it were not true. The importing firms were afraid to allow their books to be examined. The New Zealand farmers have been fleeced by the importing firms. Why did the honorable member for Gippsland not refer to that fact, and to the position in the Argentine? The experience in those countries shows that the importers, assisted by men like the honorable members for Swan (Mr. Gregory), Forrest (Mr. Prowse), and others, would, if they could, wipe out this Australian industry.
– That is not correct.
– Order ! Honorable members must cease interjecting.
– I am not a foreign trader.
– Nor am I.
– I believe the honorable member is, and that honorable members in the corner favour the foreign traders.
– On a point of order. I ask that the honorable member for Maribyrnong be called upon to withdraw that expression, which is most offensive.
-I take it that the honorable member was suggesting that certain honorable members advocated freetrade principles. I do not regard that as being offensive.
– I rise to a point of order. It has always been the practice in this House, in cases in which one honorable member considers that a remark by another honorable member is offensive, for that remark to be withdrawn. The honorable member for Maribyrnong described certain honorable members in this House as foreign traders. That remark we regard as offensive, and we are justified in demanding its withdrawal.
– The honorable member for Swan (Mr. Gregory) has stated wrongly the practice of this House. The occupant of the chair, either in the House or in committee, before catling upon an honorable member to withdraw a remark which is complained of, must decide whether what was said was unparliamentary. The mere fact that an honorable member has complained that a remark was offensive to him has not, in itself, been a ground in this or any other British parliament, for its withdrawal. The honorable member for Swan knows that. If the rulewere otherwise, all the red corpuscles would be taken out of our debates. Personally, I should have no hesitation at any time in describing the honorable member as a foreign trader.
– The honorable member for Gippsland referred to the wages paid to workmen in Canada and in the United States of America. He must know that, once the barriers of Protection are broken down, the door is open to the importation of goods not only from countries where good wages are paid, but also from countries where the rates of pay are low. The honorable member for Swan continually urges that the Australian people should be given the opportunity of purchasing their requirements in the cheapest market. That means purchasing from countries where the workmen are really serfs.
– I do not advocate that.
– Once the barriers of protection are broken down, the door is open for this country to be flooded with goods made in cheap-labour countries. To that I am strongly opposed. I object also to such an important subject as this having been introduced when only one and three-quarter hours are available for its discussion. Possibly, every member in the chamber would be glad to take part in this debate. A subject of such importance to the people of Australia., on with such wide ramifications, could only have been introduced at this stage for a. special purpose. We shall soon have an opportunity to consider the tariff schedule, when ample opportunity will be provided for this and other matters to be discussed. I hope that the silence which greeted the introduction of this subject is a true indication of what this and other Australian industries may expect from honorable members when the tariff schedule is before us.
.- Like the honorable ., member for Maribyrnong (Mr. Fenton), I regret, that this subject has been introduced when such a limited time is available for its discussion. Nevertheless, I commend the honorable member for Gippsland (Mr. Paterson) for the able and thorough manner in which he presented the case. With some of his views I do not agree; but that is not to say that he has not placed the case before us clearly and convincingly. The honorable member for Maribyrnong said that this subject could be discussed when the tariff schedule came before us ; hut I point out that it will be impossible to discuss it then, for the reason that agricultural implements do not appear in that schedule. The honorable member knows that we cannot discuss a subject of this kind, or do anything effective in connexion with it, if there is no such item in the schedule.
– It could be added to the schedule.
– It has been the practice of this Parliament that no honorable member can move for an addition to the schedule.
– He cannot move for an - increase; but an amount can always be reduced.
– The fact remains that we have before us the report of the Tariff Board, which is against an increase of the duty. .We know that the Minister takes action only on the advice of the Tariff Board. * It is questionable whether it would be legal for the Minister to bring in a proposal to decrease the duties on agricultural implements, because to do so would be contrary to the report of the Tariff Board. It is difficult for any private member to raise these issues, and, therefore, the honorable member for Gippsland was forced into the action he has taken this morning. Last year I endeavoured to have this subject considered in connexion with a motion which I moved ; but , after being placed lower and lower on the notice-paper, it eventually met the fate of many other motions submitted by private members. That shows the difficulty which a private member has in ventilating a matter of grave importance. I do not propose to cover the same ground as that covered by the honorable member for Gippsland; I desire only to make one or two additions to the points mentioned by him. The honorable member showed clearly the disabilities under which Australian farmers labour regarding the prices paid for their implements. The honorable member for Maribyrnong was mistaken when he said that in New Zealand similar implements were being sold at prices which compared unfavorably with the prices in Australia. Agricultural implements are being sold more cheaply in New Zealand than in Australia. I do not remember whether the honorable member for Gippsland mentioned the respective prices, and, therefore, I propose to do so now. A reaperbinder which last year cost £45 in the United States of America and £75 in Victoria, was sold in New Zealand for £70. A mowing machine costing £16 10s. in the United States of America was sold for £33 5s. in Australia, and £27 1 5s. in New Zealand; and a rake cosing £9 5s. in the United States of America was -sold in Australia for £19, and in New Zealand for £14 17s. 6d. The price of those machines is still less in New Zealand than in Australia. Unfortunately, that is not all. I do not know whether the honorable member for Maribyrnong is aware of the fact that the prices at which he said that agricultural implements are sold in Australia apply to Victoria only. That is a very common error. The price on trucks at Sunshine, Victoria, is the price usually adopted as the basis for comparisons, without regard to the additional cost involved to the farmers in other parts of the Commonwealth in having the implements transported from Sunshine to their farms. Had the honorable member for Gippsland (Mr. Paterson) taken that fact, into account, he would have considerably strengthened his argument. Let me take one example. A grain and fertilizer drill which is sold for £80 in Victoria costs £86 in New South Wales, £90 in South
Australia, and £95 in “Western Australia. It is manifestly unfair to quote prices at Sunshine, Victoria, and to disregard the cost of transport to the farm, when comparing the price of Australian-made implements with imported implements. Such figures are frequently grossly misleading. The freight from Victoria to Fremantle on a machine completely assembled - the most expensive way to ship it - would be £9 17s, 7d. If the machine were shipped for assembling at Fremantle, the freight would be much less. Honorable members, therefore, can see the tremendous toll demanded of the farming community, and the gross misrepresentation of facts which takes place when prices at the Sunshine factory in Victoria are quoted. The misrepresentation is the greater when it is remembered that a uniform price for all ports in Australia is quoted for imported machinery. The honorable member for Gippsland did not emphasize sufficiently the variation between the tariffs on these machines. He quoted prices only. To show the variation of the tariffs of the different countries with which we are principally concerned, I propose to compare the tariffs of New Zealand, Canada, and the United States of America with the Australian tariff. “With the exception of Australia, the United States of America is the most highly-protected country in the world. Yet agricultural implements are admitted free into that country, and have been admitted free for the last thirteen years.
– Since their industries have developed.
– They were developed under freetrade conditions. Afterwards a duty was levied for a time. It never exceeded 20 per cent., and it was finally abolished; but the industry was established in that country under freetrade conditions. Under the Canadian tariff agricultural machinery, with the exception of a few items of very small significance, is free. In no instance is the duty more than 5 per cent. - I am quoting the British preference rate - and under the New Zealand tariff these implements are admitted practically free. On only three items a small duty - 10 per cent, preference, 10 per cent, intermediate, and 20 per cent, general - is imposed. “While Australia has nominal duties ranging from 10 to 45 per cent., Canada and the United States of America, whose machines we seem to be afraid to allow into Australia, have practically free tariffs. Australian farmers have to compete against men who are engaged in agriculture under conditions which afford them cheaper implements than are obtainable here. Moreover, there is a great difference between the methods adopted in America^ and Australia’ in calculating the amount of duty. “While our nominal rate is, say, 45 per cent., the actual rate amounts to 57 per cent. The duties that I have quoted are ad valorem rates; but the method of arriving at the value for duty in Australia differs from that adopted in the United States of America and Canada. Here, we add to the invoice price the freight to the exporting point and the exchange, and 10 per cent, is added to the total so obtained. New Zealand puts on the exchange and 10 per cent. Canada calculates the duty on the invoice value without any percentage addition. Thus, in every way, the Australian tariff is applied to the disadvantage of the consumer. Even the rates that appear to be comparable are rendered increasingly disproportionate by the method in which the duty is levied and the value for duty calculated. For example, take the purchase by a farmer in Western Australia, of a reaper or binder having an invoice value of £100. The freight and exchange, and the statutory 10 per cent, bring the total value to £127. On that sum the duty of 45 per cent, is levied. It amounts to £57 15s., which means an actual impost of 57 per cent. The honorable member for Gippsland has clearly pointed out that natural and artificial protection, and freight, bring the additional charges to an enormous figure. Another point to be considered is that this protection is alleged to be given for the purpose of fostering infant industries by helping them through initial difficulties. But we never hear of one of these industries, when once established, ceasing to ask for protection. On the contrary, these babies never grow up. The Minister has quoted big figures about their value, the number of men employed in them, and the extent of their output. I do not question the correctness of those figures; hut my argument is that, so far as they are correct, they constitute an argument showing that this extreme protection is no longer required. As a matter of fact, 17.5 per cent, of the total business in agricultural implements in Australia is done through importing firms, while S2.5 per cent, of the implements sold is of local manufacture. If an industry which has control of §2.5 per, cent, of the -total business in the Commonwealth in its particular line cannot do without protection, then I say, without hesitation, that the country would be better off without that industry. The argument in favour of feeding these fat industries has broken down completely. I have before me the balance-sheet for 1922-3 of a firm of agricultural implement makers which started with a capital of £-40,000. In two years it made a clear profit of £40,000, and improved its financial position to the extent of £89,000.
– What was its turnover?
– I cannot tell the right honorable member that; but I am prepared to show him the balance-sheet containing the details. Under our present fiscal policy we are taking money out of the pockets of the farmer and increasing the profits of these manufacturers to an undue extent. It is time the whole matter was reconsidered. I do not propose at this stage to traverse the whole of the reports by the Tariff Board. I shall have something to say later about those reports when we are discussing- the tariff schedule. I propose to reserve a good many of my arguments until that debate is in progress, when I hope that we shall not be so restricted in regard to time as we are now. The honorable member for Gippsland is to be commended for the action he has taken. I am glad to note that at last the representatives of the farmers are showing some concern over this matter.
– Of course. There is a reason for it.
– Yes ; the interests (of the farmers are at stake. The speech by the honorable member for Gippsland had just as much reason in it as the remarks of the honorable member for Maribyrnong. Although the latter has attempted to throw the apple of discord into the Government ranks, I feel sure that honorable members on this side will not pay much heed to him, because they know that this issue has no party significance. Any honorable member may vote upon it as he thinks fit, regardless of party obligations. I hope that a vote will be taken, and there is no reason why even Ministers who believe in the principle I am advocating should not come, out- , and vote for it. .A division would, at any rate, show the sincerity or otherwise of honorable members in their attitude on this matter, which has been a sort of shuttlecock in politics for some years. Let us now place our cards on the table, so that the people may know where we stand. I am certain that the attitude of honorable members on this and other tariff questions that will be considered in the near future will affect considerably their hold on their constituencies.
.- The honorable member who has just resumed his seat has, to use a colloquial term, “ blown the gaff “ on the attitude of the Corner party on this matter. I was prepared to accept the statement of the honorable member for Gippsland (Mr. Paterson), and other honorable members who interjected, that they were not advocating freetrade, but rather wished to prevent the country from being flooded with foreign goods. However, when I heard the speech of the honorable member for Perth (Mr. Mann), who commended the honorable member for Gippsland for tabling this motion, I realized that it was a straight-out declaration for freetrade.
– I am not ashamed of it.
– But those associated with the honorable member are freetraders, and are ashamed of the fact. That is the difference between him and them. We ought to he able to discuss this subject without setting up the interests of the great primary industries in opposition to those of the secondary industries. In my judgment, those interests do not conflict, but are complementary. Honorable members opposite are not acting as they should, if their desire is to bring about harmony and cooperation between those two classes of industries. On the contrary, they seem to be placing them in watertight compartments as though their interests were diametrically opposed. This national parliament ought to do everything possible to protect the great primary industries of Australia; in fact, I think that it has done much to benefit both the primary and secondary industries. The honorable member for Gippsland, however, refused to accept the statement that the best market for the primary producers was the home market. He said that the producers received no greater advantages from the home market than from the markets abroad.
– With respect to some lines I said that.
– If the honorable member paused for a moment he would realize that the biggest market for the primary producers is in Australia.
– We find that 80 per cent. of our agricultural production is consumed within the Commonwealth, and only 20 per cent. of it is exported. The honorable member for Perth stated that if an industry that controls 82.5 per cent. of the agricultural machinery trade in Australia cannot carry on without protection, the country would be better off without it. Why does it control that percentage of the trade? It is because parliament has built up a tariff barrier to prevent the country from being flooded with imports from other countries. The honorable member complains that this baby never grows up. It can never do that while there are sweated industries in other countries that compete with it. The Minister has pointed out what the producers owe to manufacturers of agricultural implements in Australia. In no country has the farming section benefited more from locally-manufactured . machinery than in Australia. The peculiar local conditions of this country have made extraordinary demands on the inventive genius of manufacturers, and, because our predecessors were wise enough to adopt the policy of protection, agricultural machinery never dreamt of in other parts of the world has been evolved here. Without such machinery it would have been impossible for our pioneering producers to open up new tracts of country, and till the mallee lands, as they have done. The stump-jump plough and the harvester are wonders of invention;
They caused a revolution in agricultural methods, and the credit for that is due to the Australian agricultural machinery manufacturers who invented them. What is the case that has been put up to us ? It is strange to find that the honorable member for Gippsland (Mr. Paterson), who says, “I am not a freetrader,” and the honorable member for Perth (Mr. Mann), who says, “ I am,” are united in pressing it. In such circumstances it must be looked atwith suspicion. The honorable member for Gippsland says all that he is asking for is that the tariff be withdrawn and a bounty substituted. But does he desire the same measure of protection under a bounty as is being accorded under the tariff?
– What I want is sufficient protection.
– Now we see the nigger in the wood pile. The honorable member wants the bounty to have the effect of a reduced tariff. But why should he want even that? Really he has no grievance. In submitting his case he quoted the price of agricultural implements in the United States of America and Canada, and then the price of the same implements in Australia. Why did he not quote also the price of similar implements manufactured in Australia?
– I did.
– When discussing this subject on another occasion, the honorable member said that the price of an imported 6-ft. binder in freetrade New Zealand was £72, while in Australia it was £92.
– I also said that the price of a locally-produced similar implement was £75.
– Then where is there ground for the honorable member’s complaint? If a locally-manufactured implement similar to the imported article can be purchased here for £75. as against £72 in New Zealand for the imported article, one would think he would be very glad to advise the use of the Australian-made article. What is a paltry £3 against the fact that Australian workmen are engaged in Australian factories to produce the machine? After all, the binders are not used to produce anything that is exported. I suppose 99 per cent. of the hay that they reap and bind is used in Australia.
– To feed horses used to cultivate and reap wheat and cows that produce butter for export.
– An overwhelming proportion of the goods which these implements are used to produce is consumed in Australia. If we were so foolish as to throw our tariff barriers down, and allow the products of freetrade countries to swamp our markets-
– “We are not suggesting that.
– The honorable member and his followers are trying to achieve that result by a subterfuge. They are advocating the provisions of a bounty which would have the effect of a reduction of the tariff. The report of the Tariff Board on this matter is, in my opinion, one of the most clearly reasoned documents that has ever been submitted to this Parliament. It is one of the best productions of the kind that it has ever been my privilege to read. Those who support the proposal of the honorable member for Gippsland should read the portions of the report that relate the experience of freetrade Argentine. The farmers there are obliged to pay the same price for the imported implements that they use as the Australian farmers are asked to pay for them. But our farmers are in the happy position of being able to purchase the locally made and better implement at a much lower price. It is a striking fact that whenever a beginning is made here to manufacture imported articles the export price of the imported article falls. Split pulleys are a striking instance. As soon as a beginning was made to manufacture them in Sydney the price fell; but in Melbourne, where there was no manufacturing move, it remained high. Half a dozen cases of that kind are given in the report. Assuming, for the sake of argument, that the price of agricultural machinery is too high, and that the local manufacturers are taking undue advantage of the protection afforded them, would they not do the same if a bounty were provided. I recollect the memorable occasion on which the Deakin party and the Labour party went to the country in 1906 with tariff proposals described as “ new “ protection, and won a great majority. Subsequently, when they imposed reasonable conditions for the manufacture of agricultural machinery in Australia, their action was declared unconstitutional, at the instance of Mr. Hugh V. McKay, the very man who was engaged in the business here. If local manufacturers are taking undue advantage of the tariff they will do the same thing with a bounty. A bounty can only be regarded as a temporary expedient to assist the manu facture of articles on a scale not sufficiently large to supply the whole of our requirements. If permanent protection for an industry is desired, tariff protection is essential.
– But must it remain in operation always?
– It must remain effective so long as conditions obtain in other parts of the world which would make it possible for implements manufactured with cheap labour under sweated conditions to be imported at a lower rate than the local article could be manufactured for under good wages and fair conditions. I am not convinced even by the argument that wages in some other countries are as high as those in Australia. Many reasons may influence a country to sell cheaper abroad than at home. It is a common practice for countries to export surplus products, and to sell them abroad for a lower price than they receive at home. On the other hand, some countries will exploit foreign markets in order to be able to sell cheaply at home. Our duty is to build up the secondary industries of our own country. We need a broad national outlook in this matter. The great primary producing and secondary manufacturing industries must be developed side by side in Australia if wo are to make substantial progress. We do not desire our people to be hewers of wood and drawers of water for those in other parts of the world ; nor do we want Australia to be merely a garden plot or a cabbage patch. We want substantial all-round development. I challenge honorable members of the Country party who support the proposal that has been submitted to us to point to a single country in the world that has built up its secondary industries without protection, or that has grown prosperous without building up its secondary manufacturing industries, as well as its primary producing industries.
.- I join the honorable member for Maribyrnong (Mr. Fenton) in protesting against the introduction of such an important matter in this way. The Standing Orders impose such limits to the discussion of a motion for the adjournment that we can barely touch the fringe of the subject brought forward by the honorable member for Gippsland (Mr. Paterson). The sole purpose of our tariff is to encourage the development of Australian industries. After listening to the debate this morning, I am fearful that there are some honorable members of this House who desire to see the tariff totally abolished, regardless of the consequences - consequences that would bring a condition of unprecedented depression upon the manufacturing industries of Australia. The honorable member for Perth stated this morning that no country in the world had developed the important industry of agricultural implement manufacturing under a system of protection. I remind the honorable member that Canada commenced this work under a protective tariff of 35 per cent. As the industry developed, she was able to reduce her tariff. I contend that we must work along the same lines. I have no doubt that the time will come when the industry in Australia will be on such a sound footing that no tariff will be necessary to protect it. Some honorable members said this morning that about 83 per cent, of the implements in use are of Australian manufacture. I shall not be. content until 100 per cent, are manufactured here. There are strong reasons why we should maintain our protective tariff. It has been said that the tariff inflicts a tremendously heavy burden upon the primary producers of Australia. But I do not agree with that statement. I have some figures which are illuminating on the point. In the year 1922-3, Australia produced 109,455,000 bushels of wheat. In that same year the duty on agricultural implements collected from her producers totalled £150,777, or one-third of a penny a bushel on the wheat they produced.
– Why should there be any duty on their wheat? Why should one industry be obliged to support another in that way?
– That is a common practice. The honorable member for
Gippsland (Mr. Paterson) himself has propounded a scheme for the stabilization of butter, which obliges every consumer of butter in the community to pay tribute. Our people have not refused, in any general way, to do- so, for they desire dairymen to work under the best possible conditions.
– The honorable member wants cheap butter at the expense of dairymen’s children who are sweated.
– I want nothing of the kind. We want our dairymen to get a reasonable return for their produce, and for that reason we are prepared to help them. In the year 1922-3 the agricultural production of Australia was valued at £122,425,000. The duty on every £100 worth of produce amounts to 2s. 6d. Surely that is not an exorbitant tax on the consumers and producers of this country. The agricultural implement making industry is employing, directly and indirectly, under the very best conditions, some 30,000 people, including men engaged in the timber, iron, steel, and coal industries.
– Who pays them - the men who buy their output.
– I wish to read a statement by Mr. Juan Home, contained on page 47 of a report that he furnished to the Government of the United States of America, which was issued by the Department of Commerce in 1918. It contains a direct contradiction of many of the statements of freetrade advocates in this House and throughout the country. Referring to the importance of the Australian manufacturing interests in relation to our wheat>growing industry, he said -
The enormous increase in wheat-growing in Australia would hardly have been possible had not suitable machinery been evolved capable of satisfactorily handling the matured crop under the climatic and labour conditions prevailing in that country. The entire credit for the development and perfection of the stripper, and later on of the stripper harvester, is due to the Australians themselves, as both of these machines were invented and first perfected and built in that country. When it is considered that these machines, as built at present, are but little different from the first ones built, and that under ordinary conditions they work in a most excellent manner, it must be admitted that Australian agricultural engineers are second to none when given an equal opportunity.
– That was done under a low tariff.
– That statement was made some years ago, and there has since been a considerable development in the implement manufacturing industry.
– Because of the increased duties.
– I am credibly informed that the imposition of the last tariff has not been followed by an increased price to the purchasers of locally-made agricultural machinery.
– Nonsense !
– That is my information. When seeking facts respecting the price of agricultural machinery I communicated with one of the large importing firms in Australia, asking for its pricelist, and I have not yet received any reply, notwithstanding that my letter was written many months ago. Apparently its price-lists are not available to protectionists. The following table shows the difference between the cash prices of the imported and the locally-made grain and fertilizer drill
Honorable members will note that the Australian implement, although much cheaper, is larger by one hoe or one disc, as the case may be. I am satisfied from practical experience, and from the experience of others engaged in agriculture that the best results are obtained from the Australian implement. Honorable members of the Country party have said that the home market is not the best for our primary producers, and to support their contention they have apparently tried to incorporate the receipts for our wool clip with those for agricultural products. I wish to inform the House that the percentages of our products absorbed by the home market are as follow: - Wheat, 29 per cent., oats, 99 per cent.; maize, 100 percent. ; barley, 68 per cent. ; potatoes, 100 per cent.; onions, 90 per cent.; hay, 99 per cent.; sugar, in most seasons, 100 per cent.; butter, 52 per cent.; cheese, 61 per cent.: bacon and hams, 95 per cent.; and wines, 94 per cent. Notwithstanding what has been said to the contrary, the home market is the best for the Australian producer. Those statistics cannot be refuted, as they have been taken from the CommonwealthYear-Book. We cannot afford to permit the implement combine in this country to extend its ramifications at the expense of our Australian manufactures. Honorable members of the Country party, when referring to the implement manufacturers, are in the habit of citing one particular individual; but it is to the credit of that man that he has by a combination of brains and capital been able to build up the largest implement manufacturing business in the southern hemisphere, if not in the world. The tariff protection that this industry enjoys at present benefits smaller industries. If it were removed, as some honorable members would like it to be, we should play right into the hands of the monopolists .
Motion (by Mr. Prowse) put -
That the question be now put.
The House divided.
Majority . . . . 5
Question so resolved in the negative. [Debate interrupted under standing order 119.]
Assistance to States
asked the Minister for Works and Railways, upon notice -
– A conference of Federal and State Ministers was held in Melbourne on the 2nd, 3rd, and 4th instant, for the purpose of considering certain proposals which the Federal Minister submitted on behalf of the Federal Government. The scheme was discussed, and while, in regard to some of the details, agreement was reached, certain suggestions were made by the State representatives for re-consideration by the Federal Cabinet. As these matters have not been finalized as between the States and Commonwealth Governments, it is not considered advisable to disclose the details at this juncture.
Reparations - Cost to Australia
asked the Treasurer, upon notice -
What was the total cost of the war to Australia in -
– Steps are being taken with a view to obtaining the desired information.
asked the Minister for Trade and Customs, upon notice -
– The information is being obtained.
Conversion into Ingots.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
– On the 24th February, 1926, the honorable member for Wentworth (Mr. Marks) asked if I would look into the matter of a disturbance reported to have been made at Hobart recently by certain sections of the Royal Australian Navy. I am now able to inform the honorable member that, following the arrival of the fleet at Hobart on the 6th February, slight disturbances, due to intoxication, did occur that day and the following day. It is thought that the cases of drunkenness were probably due to the excessive heat, and to the excellenee of the beer, which, I am informed, is of unwonted strength. Since then, with the exception of a few isolated instances, the conduct of the men on shore has been very good. Leave was not curtailed in any way, and this indicates that the disturbances were not of a serious nature. For the information of the House, I desire to quote the following letter, addressed by the Mayor of Hobart to the Commodore Commanding H.M.A. Fleet.-
My attention having been drawn to certain statements published in the Sydney Evening News, relative to the behaviour of the men of your Fleet in this city, I at once communicated with the Police Department, and as a result have this afternoon forwarded the following urgent cable to the editor of the paper referred to: - “ Cabled reports published in your paper regarding conduct of sailors of Australian Fleet in Hobart grossly exaggerated. Small percentage caused little trouble first two days only. Police report behaviour of men generally very good. Statement that citizens desire F leet to leave absolutely untrue and unfounded. On contrary, the city looks forward to and welcomes tha visit of Fleet every year. Glad if you give this special prominence.”
It is very regrettable that the misdoings of a small percentage of men should result in such aspersions being cast upon the whole of the Fleet, and I shall be glad to do anything else in my power to counteract the bad impression which may have been created.
Yours faithfully, (Signed) F. D. Valentine,
In committee (Consideration resumed from 25th February, vide page 1169).
Clause 3 (Validation of refunds).
.- This is the vital clause of the bill, and reads as follows : -
Where the paid-up value of any shares distributed out of taxed profits has been included in any assessment under the Income Tax Assessment Act, as being included within the meaning of paragraph (b) of section 14 of that act, and income tax has been paid on that value, any refund of the income tax so paid made by the Commissioner prior to the commencement of this act shall be deemed to be and at all times to have been as lawfully made as if that value had been exempt from income tax under that act.
The Government having taken the responsibility of making refunds of public moneys to private individuals under circumstances, to say the least of them, and from their own point of view, of grave doubt, and having had the validity and propriety of its conduct raised in a striking manner by a recent decision of the High Court, now seeks from Parliament the full weight of its support to justify it in the action it has taken. The Income Tax Assessment Act of 1915 made it very clear that bonus shares in the hands of shareholders were taxable when distributed, inter alia, from accumulated profits. According to that act, “ income “ includes “ dividends, interest, profits, or bonus credited or paid to any member, shareholder, or debenture-holder of a company “ which derives income from a sourcein Australia. Further on, that general statement is modified in a way which is not important to the purpose of my argument to-day. Nothing could be clearer than the intention of the legislature as then and there expressed in regard to bonus shares distributed out of accumulated profits. I understand that the honorable member for Balaclava (Mr. Watt) has stated that he does not believe that Parliament ever intended to tax such bonus shares in that way, but to my mind it was impossible for the language of the section to have been clearer, and, without hesitation and for a considerable length of time, the Commissioner of Taxation seems to have acted upon the clear expression of the intention of the legislature to tax these shares. In a speech which was quoted by the Treasurer when moving the second reading of this bill, the present Prime Minister (Mr. Bruce1) . when he was Treasurer in the Hughes Government, made himself responsible for the statement that the old acts were not clear on the subject, and that there had been a good deal of litigation. That, of course, was a very fine general statement without concrete facts to which one could turn for verification. If the then Treasurer meant that there was a large number of complaining taxpayers, I should be quite prepared to believe him, for the taxpayer, as such, is not a happy man, but if there had been any litigation throwing light on the meaning of the words of the section, or justifying either by the dicta of judges or by judicial decision, the statement that the words of the section were not clear, the right honorable gentleman might have been good enough to submit them to the House. My view is that there was no judicial decision touching the point until the Webb case, which has already been fairly elaborately dealt with in this chamber. At any rate, the law on the subject remained unaltered, but apparently there seems to have been an itch on the part of the Government to rid certain taxpayers of an onerous responsibility. With all due deference to the generous spirit in which my friend the honorable member for Yarra (Mr. Scullin) dealt with this matter, looking at it coldly and entirely on its merits, I say that there seems to be more than a suspicion that from the beginning the Government was influenced by motives possibly arising from its environment and from its support in the House. There has unquestionably been an influence affecting the minds of the members of the Ministry in the direction of removing this taxation from members of companies. Looking for an excuse and an opportunity to do so, they affect to have found them in the Webb case, and operating, as they did, upon that basis, they succeeded in persuading Parliament that these refunds of taxation were merely effected in the natural order of legal development, and in the light of the improved legal knowledge we were assumed to have. Following upon the Webb case, which came up for decision in June, 1922. the then Treasurer came down with an amendment of the Act to relieve these taxpayers from all similar payments in future. That, of course, was a matter of policy, and the right honorable gentleman took the House, more or less advisedly, into his confidence. But he took a double responsibility. He accepted, not only the responsibility of laying down what should be the policy of the Government in regard to this class of taxation in future, but also of declaring, from his place in this House, that in the case of taxpayers who made application for refunds within six months, there would be a remission of taxation already imposed over the years that had passed between the. passing of, the original act and that of 1922. ‘ ‘ “
– A very generous Treasurer !
– A very generous Treasurer, indeed. As regards the policy of the Government for the future, and the repeal of this taxation, as far as future taxpayers were concerned, this Parliament must take its full measure of responsibility. It is true, and rather unfortunate, that I should have to make the admission twice in the same week, that honorable members on this side were bluffed and misled as to what the legal position really was.
– I rise to a point of order. I want that statement, withdrawn. I have never been bluffed in this country.
– Very well. 1 withdraw it. So far as the position was misrepresented or insufficient I v represented to us–
– lt is scarcely fair to say “misrepresented.” The position was put fairly, though it may not have been put as fully as the honorable member would like.
– I can find no evidence in the facts to support the statement that the position was put candidly or fairly. I shall attempt to justify my statement. If honorable members on this side were unduly influenced by the representations of the Government, backed by the authority of its Attorney-General and the Crown Law Department, as to what the legal position really was, and any discredit attaches to them on that account, an immensely greater measure of discredit attaches to the Government responsible for what was done.. I take the responsibility of saying that there is no justification whatever for the remission of that past taxation, which we are now asked to ratify, and for which this bill asks us to issue an indemnity. The simple fact is that the Webb case, which afforded an excuse and an opening for the Government to remit this taxation, did not deal with bonus shares paid or credited out of accumulated profits, lt simply did not touch the point, except to emphasize the distinction between distribution and reconstruction by pointing out that the Webb case was not one of payment of bonus shares by way of distribution, but simply a case of reconstruction. This makes it, in my view, abundantly clear that the High Court did not even suggest, by its decision, that shares paid in the clear terms of the statute should escape taxation, but said that what was dealt with in the Webb case was something different and distinct from the condition laid down in the statute as involving taxation. The Commissioner of Taxation, it has to be noted, adopted the same view, because, in his report of 28th September, 1924, he states -
I’ll is decision did not deal with bonus shares distributed out of past profits upon which the company had paid income tax.
That appears to me to be a very clear and common-sense statement on the part of the Commissioner of what the High Court had decided. When one turns to the speech of the Treasurer, in introducing this bill, it is found that he commenced by saying that it was necessary that confidence should be maintained in the good faith of the Government. It is desirable that the public should be able to depend upon the good faith of the Government, but I suggest that it ought not to bo able to depend too much on the good nature of the Government. I should like to draw that important distinction. “ The bill,” says the Treasurer, “introduces no new principle.” I agree that it merely perpetuates a bad one, and invites Parliament to cover the tracks of the Government in a most questionable distribution of public moneys. The Treasurer went on to quote the Prime Minister in his speech, as Treasurer, in 1922, in these terms -
The old acts were not clear on the subject. There has been a good deal of litigation. Webb’s case is the latest one, and I find there that the power to tax bonus shares issued against accumulated profits was not made absolutely clear.
I invite the attention of honorable members to those words, “ was not made absolutely clear.”
– Will the honorable member read on.
– I intend to do so in a moment. If the power was not made “absolutely clear” one is- entitled, I think, to infer that it was made nearly clear - that there Avas a certain measure of clarity in the High Court’s decision. The balance of clearness seems in this view ‘to’ have favoured the ‘ tax! It would not be surprising if it was not clear so far as these shares are concerned, because the High Court gave no decision in respect to them. It is not the practice of courts to spread themselves upon income tax or other cases which are not relevant to the particular point r,hey are called upon to decide. It is the practice of the judiciary to decide only as much as is necessary for the decision of the actual point submitted to it. It was not for the court to enter into a discussion of whether bonus shares might in varying circumstances be taxable. Its concern for the moment was to say that in the particular case under review it was a matter not of distribution but of reconstruction, and that the shares dealt with in the Webb case had not been paid out or credited in a way to render them liable to the payment of income tax. I invite honorable members to note what followed upon the statement I have quoted from the speech of the then Treasurer, Mr. Bruce. Sir Robert Best, then member for Kooyong, interjected at that stage -
It was made clear in regard to the reconstruction of companies.
That is all that the court was concerned to make itself clear upon, because the case under consideration was a case of the reconstruction of a company, and that ended the matter. The Treasurer, in a most inconsequential rejoinder to Sir Robert Best, said -
Yes. There is very litle doubt as to what the decision would be.
He had already said that the decision had not made it absolutely clear that there was power to tax bonus shares distributed from accumulated profits. He went back on that statement in the next breath, and said there was very little doubt as to what the decision of the court would be. From which we are to assume that there was very little doubt that the decision would be something entirely different from that which the Treasurer had said was not absolutely clear. He went on to say -
In view of the judgment in Webb’s case, the Government have come to the conclusion that although the point has not been absolutely settled by that case, it would be unable by taking further action in the courts, to establish that bonus shares issued against accumulated profits are liable to taxation under the law as it existed prior to the present act. They have accordingly decided to take no further steps in an endeavour to establish a claim for income tax in respect of such shares, and they are prepared, where any tax has been collected, on the ground that such shares were liable for tax, to make a refund.
It will be seen from that that the policy of the Government at that time was “ Don’t shoot; we will come down.” The present Prime Minister, who was then Treasurer, said that the Government would be unable by taking further action in the courts to establish that bonus shares issued against accumulated profits were liable to tax under the law. My answer to that is that there was no obligation upon the Government to take any further action in the courts. My further answer is that the law stood intact and unassailable under which those taxes were being collected, and the right to collect them had not been affected in any way by any decision of the court. There was no obligation, therefore, upon the Government to take any action whatever except to continue the collection of His Majesty’s revenues, which it was bound to do. If in the collection of His Majesty’s revenues any one of these sensitive gentlemen, who are so privileged as to pay income tax on the higher scale, found himself called upon to pay a tax which he did not think he should pay, he had ready recourse to the courts of the country, in order if possible to establish his claim to exemption. It would then he the duty of the Government to give effect to the decision of the court, and if it was adverse to it to make the refund, but not until then.. In “my view, there is no doubt that the Government had no excuse whatever for saying that because of the decision in the Webb case, which did not touch many other cases in which taxation was paid, it would give up the revenue of the Commonwealth to private gentlemen, who, judging by the rate of tax they paid, were presumably well able te pay it That latter aspect, of course, is not vital to the principle, but it is rather interesting on its political side ; otherwise we need not stress it. The statement of the Prime Minister, when Treasurer of the Commonwealth, was a most audacious statement. It was due, as I have suggested, either to his political environment and the pressure brought to bear upon him, or to a light-hearted carelessness which should not manifest itself in a gentleman charged with the responsible duties of the Treasurer of the Commonwealth, having recourse “to -the advice which the Government can always obtain. lt was in this connexion that the honorable member for Balaclava (Mr. Watt) asked. “ What more could the Government have done than have taken independent advice?” I have suggested that, it was not necessary for the Government to take advice-, in the circumstances. It had only to continue its’ collection of the tax and leave it to others to take advice. As to the advice of independent counsel, I take this firm stand in regard to that : I absolutely, as a member of this House, decline to take any cognizance whatever of any alleged opinion given to the Government, and upon which the Government is acting, which is not submitted to the scrutiny of honorable members. The committee should back up honorable members on this side in such a stand. How do we know what is contained in the opinion? It might be that if put under the searchlight of a public investigation here, it would be found that the opinion meant something quite different, from that which the Treasurer, no doubt, quite honestly, has interpreted it to mean. At all events we know nothing of it, and I decline to take further notice of it. The Government sponsors this legislation upon its own responsibility, and it can gain no additional support or strength from the fact that there is alleged to be in the archives a legal opinion that justifies it in the course it is taking. The announcement in 1922 of the then Treasurer (Mr. Bruce) was quoted by his colleague, the present Treasurer, as most explicit. I do not challenge it on the ground of indefiniteness; but mere explicitness does not invest it with the wisdom of Solomon. A burglar may make an explicit statement that he proposes to make a raid on the Commonwealth Bank to-night at 7.30, but the mere explicitness does not invest his intention with morality or any other virtue. The Treasurer said also that he had given the interpretation of the law as then accepted by the Taxation Department. When was it so accepted by the Taxation Department? According to the quotation I have made, it was not so accepted as late as August, 1924, when the Commissioner clearly pointed out that the judgment in the Webb case did not deal with bonus shares distributed out of past profits. When was the Prime Minister converted to the view that it is within his power to make a declaration in Parliament which will override the discretion of the Commissioner? In connexion with the taxation of leaseholds, he took a very different stand in opposition to the honorable member for Yarra. But in this case apparently all that was necessary in order to clarify the law was for him to announce in Parliament the action he proposed to take, regardless of whether such actionwas buttressed by law, morality, or any other guiding principle. The opinion of independent counsel, which has not been submitted to the scrutiny of this committee, seems to have been diametrically opposed to that of one of the admitted leaders of the Australian bar, Mr. Owen Dixon, K.C., who, when the same matter was under consideration anterior to the James case, expressed a different view, supporting that which was accepted by Parliament and operated by the Taxation Commissioner for a number of years.
The CHAIRMAN (Mr. Bayley).Order! The honorable member’s time has expired.
– With the permission of the committee I shall take my second period now. During his speech on the second reading of this bill, the Treasurer said, in referring to the statement made in the House by the present Prime Minister in 1922-
The right honorable gentleman’s speech was debated by several honorable members, including the Leader of the Opposition (Mr. Charlton), who. although at first disinclined to acquiesce in the Government’s action, expressed himself as satisfied with the course proposed after the then Treasurer had by interjection explained the position more fully.
That was the unkindest cut of all. The honorable member for Yarra has already pointed out the circumstances in which the Leader of the Opposition accepted the apparently candid statement of the Government, and withdrew his opposition to the bill, although he laid down the general principle that bonus shares should be taxed, and in support of that view quoted the minority report of the Taxation Commission. But he was disarmed by the Prime Minister’s interjection that these shares had already been taxed in the hands of the company, and the further interjection by the honorable memberfor Balaclava (Mr. Watt) that otherwise exemption would not be asked for. Accepting those assurances, the Leader of the Opposition, with characteristic fairness and magnanimity, conceded to the Leader of the Government an honest desire to state the position fairly. But the Prime Minister’s interjection had no relevance to the validity of the tax already imposed, and it obscured the fact that the company tax was trifling in comparison with that payable by the individual shareholder. In any case, the policy of this Parliament was that taxation should be levied upon the company, and ultimately upon the shareholder, when the profits reached him, and became part of his income. I am pleased to note that an able member of the commission, who is also a member of my own party, Mr. Duffy, and also Mr. Farleigh, in a minority report, said -
We therefore recommend that bonus shares issued out of current or accumulated profits should be taxed in the hands of the shareholders in the year of receipt, subject to the fact that an adjustment should be made by allowing the shareholders the amount of the tax already paid on the profits of the company.
When the Prime Minister quoted the majority report of the Taxation Commission in support of his proposed action, he was not generous enough to say that two members of the commission dissented from the view therein stated, as a matter of policy. There is no escape from the conclusion that the 1922 bill was presented to the House with a lack of candour on the part of the Government, and a sorrowful lack of information as to the facts and the then existing law. That is warrant enough for strong criticism, but a much more serious feature is the remission without legal warrant of taxation lawfully collected or assessed. I call upon the Government to justify, if it can, the handing back of public moneys which had been properly collected according to a law which has not been successfully assailed. What is the correct term to use when, after the collection of a tax statutorily imposed the Government dips into the public ex-chequer, and hands the money back to the taxpayers? I do not care to use the word which occurs to me as applicable to such conduct, and I ask to be excused from associating myself with this measure to indemnify the Government. As a matter of policy, I am opposed to it, and I regard the conduct of the Government in handing back the money as utterly outrageous. The honorable member for Yarra (Mr. Scullin) said that this bill is not based on law or equity, and can be justified only on the ground of expediency. He generously took the view that, as the Government has got itself into an unpleasant muddle, it must adopt some more or less arbitrary means of escape. Certainly the Government has logic on its side. Having passed the act of 1922 to secure certain taxpayers against further exactions, it promised that it would immediately hand back the moneys already lawfully paid. And it lias done so. Now, being alarmed by the decision in the James case, it naturally seeks parliamentary endorsement of what it has done. It is interesting to compare the decision in the James case with that in the Webb case. One would imagine that the Government was alarmed because the decision of the High Court in the James case, in August, 1924, had in some way reversed the decision in the Webb case in 1922. But the two cases are not parallel. There is not the slightest inconsistency in the two judgments, and the validity of the law is not affected by them. In the Webb case, the Court held -
That no part ot the shares of the new company allotted to a member of the old company was “profits or bonus credited or paid” by the old company to the member within the meaning of section 14 (6) of the Income Tax Assessment Act 1915-1918, and that the member was not liable to assessment for income tax under that act by reason of the allotment to him of such shams.
In the James case, the Court held -
That the proportion of the bonus so credited to each shareholder was “ profits or bonus credited” to him within the meaning of section 14 (6) of the Income Tax Assessment Act ] 91 5-102.1, and therefore was properly included in his income.
There is nothing whatever revolutionary in that decision. It is on all fours with the previous decision. It merely sets out that the facts in each case are different. It has not shaken the validity of the statute itself in the slightest degree, but it has laid down that in one case the shares were taxable, and in the other, on different facts, and for reasons which are mentioned, they were not. On the strength of the original decision, the Government gives away this undisclosed sum of public money - undisclosed because we do not know what the amount is. In view of the later decision, the Government, thinking that the searchlight of public criticism is directed to what it has done, submits this bill in order to validate its action. Do honorable members opposite approve of this? If they intend to support the Government, they should at least justify their positions in the face of the criticism honestly addressed from this side of the chamber. I contend that a strong case has been made out by honorable members on this side, and if honorable members opposite intend to support the Government they should give us their reasons for doing so. This is not an ordinary matter of policy. It cannot be said .to be even a grave matter of policy such as we discussed the other day. This is a matter vitally affecting the integrity and reputation of the whole Parliament, and especially the reputation of the Government, which has taken the responsibility of introducing the bill. It is not for me to say how the Government is to get out of the muddle in which it finds itself, or even that it should once again collect these moneys from the taxpayers. Such a course would presumably be impracticable, as well as ridiculous. The procedure involves, not only the Government, but members of its party, who it may be said are approving of what the Government has done in this regard. Ths suggestion I make, in all good faith, is that the Government should reinstate that statute which was surreptitiously removed from the statute-book. The honorable member for Yarra (Mr. Scullin) pointed out how the number of companies in this State and throughout the Commonwealth is increasing by leaps and bounds, and will continue to do so when, by such easy methods as have been shown., their members can evade taxation. In the Webb case it was shown how a tax- payer escaped because the company, a very wealthy one, of which he was a member, was reconstructed. “We cannot applaud the fact that this taxpayer did escape the payment of taxation. Reconstruction iu that case was an evasion, but the Government, by its action, has applauded the evasion by way of reconstruction, and is bringing others down to the same level. In other words, it has said that since you have evaded the payment of your taxation by the easy method of reconstruction, Parliament will pass an act to make even reconstruction unnecessary in the case of other companies. There was only one way in which these refunds could conceivably and with propriety have been dealt with, and that was by an act of Parliament. Before refunding a single penny, the Government should have obtained, or endeavoured to obtain, the sanction of this Parliament in what it was doing. I venture to express the doubt whether the sanction of this Parliament could have been obtained. I used an expression yesterday, Mr. Bayley, which you regarded as disorderly, when I referred to the docile followers of the Government. I do not believe that if this House had had an opportunity to discuss the question of refunds the Government would have received parliamentary sanction to what it then proposed from even its most loyal supporters.
– The Treasurer definitely stated that he was going to make refunds.
– Does that make it right ?
– The honorable meE.ber said that if the House had had an opportunity to express its opinion at the time it would have objected.
– As proof of the fact 1,hat this House considered the matter, the Treasurer submits that, instead of introducing a bill which would be read a first, second, and third time, and fully debated at its various stages, the fact that the then Treasurer said, in the most offhand way in the course of a speech, that the Government intended to make these refunds, should be sufficient.
– It was said in a most deliberate way.
– The statement was made in such circumstances that the merits could not be investigated.
– The honorable member had an opportunity of debating the matter during the discussion on the Income Tax Assessment Bill.
– If the Minister had introduced a bill which could have been discussed, the position would have been vastly different.
– And submitted counsel’s opinion at the same time.
– Yes, the mysterious counsel’s opinion in which I have no more interest, knowing that as it is an opinion which does not seem to be a very sound one, it has possibly fallen to pieces. “We heard something from the honorable member for Boothby (M’r. DuncanHughes) concerning retrospective legislation. Such legislation is often objectionable from many points of view, but if it is necessary to right a wrong such a course must be followed. It is quite immaterial to me whether retrospective legislation means refunding money to taxpayers or recovering money by the Government, but it may be necessary to employ such a means in certain circumstances to right a wrong, and do elemental justice. In such circumstances I have no unbending objection to retrospective legislation. But that is not the case in this instance. It rests upon the Government to justify its action with much stronger arguments than have yet been adduced. Where is the Attorney-General (Mr. Latham”) ? I should like to hear him. Perhaps he could tell us something about the mysterious opinion of which we have heard. The Prime Minister (Mr. Bruce), of course, is engaged in another part of the Lord’s vineyard whilst his integrity as the Leader of this House is being seriously challenged. I should like to hear the honorable member for Fawkner (Mr. Maxwell), who is usually a purist, on this measure. Up to the present that honorable member has remained doleful and silent. The honorable member for Perth (Mr. Mann), who usually has an independent mind, should give us the benefit of his opinion. Could not the discussion of this measure be delayed for a further week or two, instead of hurrying it, as is being done this afternoon ? The Treasurer (Dr. Earle Page) courteously consented to report progress last night to enable honorable members to further consider the proposal. It is the undue haste with which we have dealt with similar legislation in the past that has led us into the unfortunate position in which we are now placed. I ask the Government to withdraw the bill and discuss the whole matter in Cabinet with the Attorney-General, who will probably produce a framed copy of the mysterious legal opinion.
.- During the debate last night reference was made to the difficulty of properly understanding our taxation laws. It is certainly true that the Federal law is more difficult to follow than the State laws, and the difficulty is accentuated by die fact that, in many respects, the State laws follow different lines of taxation from those adopted by the Commonwealth. For instance, under the Federal law we follow income into the hands of the taxpayer, whereas, under the State laws, it is taxed at the source. The result of this variation, together with the fact that, in consequence of the numerous amendments made from time to time, not one, but many acts have to be studied, is that persons outside, and even laymen claiming to be, in a sense, experts in taxation law, are prone to make mistakes. It would be preferable to have but the one taxation law, which would mean that either the Federal authority should relinquish the field of direct taxation and hand it over to the States, or that the States should hand over the collection of income taxation to the Federal authorities. In the determination of intricate questions of taxation even lawyers differ, and when they cannot readily settle them, how can laymen be expected to do so ? I know something concerning taxation procedure, since I have frequently to deal with it in the pursuit of my profession, but I have often to obtain the advice of a lawyer on certain aspects of it. However expert some lawyers may be in elucidating the meaning of a particular provision of the act I do not think they would be able to prepare an income tax return from the documents and books supplied to them. The interpretation of :he law is one thing; the question of practice is another. I wish to compliment the honorable member for Yarra (Mr. Scullin) on the absolute fairness of the speech he made on the motion for the second reading of the bill last night. The honorable member did not make a single insinuation concerning the good faith of the Government. When honorable members of the Opposition keep clear of the wretched innuendoes in which some of them so often indulge, they are always listened to very attentively by the members of the Government and by honorable members generally on this side of the chamber. The honorable member for Yarra very properly and fairly pointed out that the present Government was not to blame for the position with which this bill deals - that it arose while the last Government was in office; but the honorable member for Batman (Mr. Brennan) clearly inferred that this Government was responsible for what he described as “ the mess we have got into.”
– I was dealing with the same man. He was Treasurer in the last Administration, and is the Prime Minister in the present.
– Yes ; but this is an entirely different Government. In dealing with the issue raised by this clause 1 am not going to follow the honorable member for Yarra and the honorable member for Batman, because I think most of their arguments were based on the question of whether bonus shares should, or should not, be taxed. That is not the question at issue.
– The honorable member will admit that it was only towards the close of my speech that I referred to that matter. In both my speeches I dealt with the action of the Government in making these refunds, and showed that it was neither legal nor equitable.
– I admit the fairness of the manner in which the honorable member stated his case, but, at the same time, a good: deal of his speech was devoted to the question of whether or not bonus shares should be taxed.
– Is not that involved in the consideration of the equity of the action taken by the Government?
– Not in connexion with this particular bill. The measure relates to something that was done in 1922. Whether the action then taken was right or wrong the fact remains that it was taken, and we are now asked to validate it. This trouble goes back to 1922, when the Webb case was decided. We have heard opinions of what the judgment in the Webb case and the James case meant. It was made per- fectly clear by the judgment in the James case that bonus shares should be taxed, but it was not so clear in the Webb case. That, however, was not the question raised in the Webb case. There is no escaping the conclusion that the reconstruction of the company involved in that case was a legal way of evading taxation. It was a distribution to shareholders of shareholders’ interest, but it appeared not as a distribution, but as a sale. I regard it as a sale of assets to the persons who owned them. It is feasible that the Income Tax Commissioner (Mr. Ewing) acted upon the judgment in the Webb case. His position is simply that of an official who has to administer the law, and if he does not do that he is guilty of a dereliction of duty. We must assume that he took every possible means of ascertaining what the law meant; otherwise his only alternative would have been to continue taxing bonus shares. He did not do that, and if he were not clear in his mind that they were not taxable, he did not do his duty. His duty is to tax everything that should be taxed, and he must have been quite satisfied in his own mind that the Webb judgment justified him in not taxing these shares at that time. I should like to direct attention to certain words in the majority judgment in that case - “ There was no detachment of profits from the assets of the company,” and “ The transaction permits the shareholders to retain their interest in the assets of the company.” I do not set myself up in opposition to any lawyer, particularly High Court judges, on these intricate matters, but the words “ retain their interest in the assets of the company “ seem to imply that if a person retains by any form of distribution his interest in the assets of the company he still has a capital interest, and not a profit interest.
– The honorable member must read that in conjunction with the rest of the judgment.
– That is so, but I am taking these words because I wish to speak particularly of them. We know that Mr. Ewing could never be accused of dereliction of duty. I have had a lot to do withhim, and I know that no man in this country is more cursed. Taxpayers say that he always takes the side of the Government, rather than the side of the taxpayer. That opinion of the taxpayer is wrong, but he nevertheless holds it. It is, therefore, not fair or reasonable to assume that Mr. Ewing was not satisfied in his own mind that after the Webb judgment these shares were not taxable.
– The honorable member knows that after the 1922 amendment the Commissioner could not collect this taxation, and that he was not responsible for making the refunds.
– A new policy, which was not his, was laid down by the Government, and he had to obey the law. He had no alternative but to refund the taxation. I should like to follow the honorable member for Yarra (Mr. Scullin) in one of his arguments. In my opinion, when a taxpayer receives bonus shares instead of a cash dividend he still retains his interest. Before those shares were issued he held two classes of capital interest in the company. One class was represented by his share scrip, which every one recognizes is capital, but he held also a capital interest in the amount of the accumulated profits. The accumulated profits held by him were in the same ratio to the whole of the accumulated profits as the number of his shares to the total number of shares in the company. That was really a capital interest, and taxation on it had already been paid. The bonus shares need not have been issued. If the company had continued from generation to generation the interest might still have been held in reserve capital. The holders would not have had to pay taxation; but if, for the sake of expediency, the reserve capital was distributed in the form of bonus shares, which were placed in the names of individual shareholders instead of the shareholders as a whole, there would be no material difference. The reserve capital or shares would still be the interest or property of the shareholder. The honorable member for Batman (Mr. Brennan) and the honorable member for Yarra, are correct in stating that the Webb judgment did not explicitly say that bonus shares were taxable : but the Prime Minister of the day could do nothing, fairly and honestly, but square the past and lay down a policy for the future. Refunds have been made. In the Estimates the taxation refunds are not separated from other refunds. In 1921-2 the amount of refunds, including refunds of taxation, was £731,000 odd; in 1923, £1,191,000; in 1924, £1,003,000; and in 1925, £800,000. What happened previously was done bona fide by the Taxation Commissioner and the government of the day. If the bill is not passed the Commissioner will have no alternative but to obey the existing law, which says that bonus shares are taxable; every penny that has been refunded will have to be re-collected, and companies that have not been taxed will have to be taxed. Many of those companies are no longer in existence, and enormous difficulties would be encountered in dealing1 with trusteeships. I have in mind a case of a widow shareholder who had certain shares bequeathed to her. When the personal representative received the shares he had to pay probate duty, not on their face value, but on their true value, taking into consideration the value of reserves, assets, and other things that affect the value of shares. According to the will the widow could only draw the income, which amounted to £400 or £500 a year. I am quoting, not actual, but supposititious figures. Later, the company may decide upon a division of reserves in the form of bonus shares. The amount of such distribution may be very large, and may, in this case, amount to more than the value of the shares held. If that amount is to be included in her return as taxable income, it is quite possible that the income for ten years will be absorbed in taxation.
– There is a section in the act providing for cases of hardship.
– But that raises other questions. I hold that the action of the Income Tax Commissioner was not wrong. I have my own opinions, in spite of the decision of the High Court ; but I do not think that the Income Tax Commissioner shares them. The Treasurer of the late Government explicitly stated in this House that there would be no further taxation on the same lines, and that the amounts collected would be refunded. If persons have allowed themselves to be influenced b)’ that statement, and they find that a subsequent government can upset the decision, there will be no faith in any government and no stability in any business. We cannot do other than uphold the action that was taken four years ago. What is to be done in the future is another matter. The honorable member for Yarra has stated what he considers should be done. The James case has furnished us with a new aspect, and it will be for the Government to decide what its future policy shall be. We have now to decide whether we shall honour statements that were deliberately made in this House, on behalf of the Government, or ignore them, and act in a contrary way.
.- The question that was raised by the honorable member for Yarra (Mr. Scullin) the other night is one of the most important with which the Commonwealth Parliament has had to deal for some considerable time. Honorable members, and the taxpayers generally, owe him their thanks. The lucidity of his statement, and its exhaustiveness, have no doubt opened the eyes of many taxpayers. Those who move about among the people, as we do, are frequently asked by taxpayers what condition Parliament was in when it agreed to exempt a number of wealthy taxpayers from taxation. The case of a woman taxpayer, mentioned by the honorable member for Maranoa (Mr. Hunter) reminded me forcibly of four cases that were raised some years ago by the late Hon. Alfred Deakin. When he was interrogated upon them, the fact was elicited that those whose case he was stating did not come within the operations of the taxation law ! The woman mentioned bv the honorable member for Maranoa must have been in receipt of £4,000 per annum.
– She received £400 a vear. Certain shares were left in trust to her, and she was entitled to receive only the income from them. If bonus shares are to be treated as income, she will be taxed heavily.
– I was a member of the Parliament which passed the original act. The right honorable member for North Sydney (M’r. Hughes) was AttorneyGeneral in the government of the day. Whenever he had a taxation measure drafted, he was very particular to see that practically everybody was “roped in,” and that no loophole for escape was left. I know that it was the intention of that government and Parliament to tax these people. The Webb case dealt with only one feature. Because the company was reconstructed, the High Court said that the reserves which were issued in the shape of bonus shares were not taxable. The original act was all-embracing. Members of the Labour party in caucus were keen to fmd out whether the proposals of the Attorney-General were so framed that wealthy people would not be able to escape taxation. We, in this Parliament, should carry out the original intention. I agree with the honorable member for Yarra that it would be difficult to re-collect the money that has been refunded ; but in the light of the discussion that has taken place, the Government should be prepared to give a pledge that at the first available opportunity it will bring down a measure for the taxation of these persons. I do not know whether the Government has decided that bonus shares are not to be taxed. If the Treasurer cannot now give the desired assurance, the further consideration of the bill should be deferred until next week, in order to ascertain the views of the Prime Minister (Mr. Bruce). I believe that this Parliament would readily re-impose that taxation.
– It would fall upon a different set of taxpayers, because it would apply to the future recipients of bonus shares.
– It would make the position right. It is an impossibility to pass legislation that will meet with unanimous approval. It is not fair that certain persons should be exempt from taxation, especially when they are wealthy. Those to whom this measure applies have been in receipt of £4,000 and upwards per annum. The poorer classes have to struggle hard to obtain the money with which to pay their tax, and they will have good cause for complaint if the wealthy persons in the community are exempted from taxation. I desire to refer to the secretive method adopted in the Estimates in regard to these refunds. At page 77 of the Estimates for the year ended 30th June, 1923. I find that there were remissions amounting to £1,050,000 on certain items. The footnote reads -
To be applied by the Treasurer in making refunds of duty collected on or after 18th August, 1922, under the following items of the Customs tariff, 1921, viz. :
No. 145 - So far as it relates to galvanized iron ;
No. 158 - Wire netting;
No. 159b - Wire for use in the manufacture of wire netting;
No. 177 - So far as it relates to tractors.
To be applied also in making refunds of amounts which have been collected but which do not properly belong to revenue, such as -
Proportion of cable receipts due to the Eastern Extension Australasia and China Telegraph Company and to the Pacific Cable Board;
Value of postage stamps repurchased by the Postmaster-General’s Department ;
Unexpired portion of telephone fees, and of fees for private boxes and bags ;
Moneys paid to’ revenue in error.
I believe that the last-mentioned is the only indication that was given of the remission of taxation. Why could not the amount of each item have been stated in the footnote ?
– The honorable member does not appreciate the fact that amendments of assessments are continually being made by the Commissioner.
– The amount could be stated approximately. A footnote is of no value unless it sets out the amount of each item mentioned in it. Honorable members would be able to see how the amount wasmade up. I suggest that wherever there is a footnote of that nature the approximate amount should be set out; otherwise the footnote has little or no value. It is not sufficient for the Treasurer to say that we can ask for the information when the Estimates are under consideration.
– The information has not been kept separate, and it would be impossible to get it without several weeks of work.
– In that case, it would appear that the total sum is only a guess.
– A taxpayer may have had his ordinary assessment amended; he may have had a refund on account of his bonus shares; or other adjustments may have been made.
– I do not think that honorable members will be satisfied with this slipshod method of presenting estimates in relation to such a vital matter. The suggestions of honorable members on this side are reasonable. Honorable members generally are agreed that the honorable member for Yarra (Mr. Scullin) was most fair in his criticism. I hope that before this clause is passed the Treasurer will give us, as nearly as possible, the amount which has been refunded to these taxpayers. Surely he can give us some satisfaction; or must he admit that his officers cannot give even an approximate amount ? I hope that before we meet here next week the Treasurer will have obtained some information with which to reply to our questions. Otherwise, he can rest assured that, whether this bill is then under consideration or not, the matter will be further debated. The statement made by the honorable member for Batman (Mr. Brennan) was not made because we on this side doubt the word of the Prime Minister or the Treasurer. We believe, however, that when a legal opinion has been received respecting a matter involving many hundreds of thousands of pounds, it is not sufficient for the Minister to say merely that an opinion to a certain effect has been received. That opinion should be read for the benefit of honorable members, and for inclusion in Hansard. An opinion which causes the Government to change its policy should be worth bringing before Parliament. I hope that honorable members will not rest satisfied with the Minister’s statement that a legal opinion to a certain effect has been obtained, but that they will insist on that opinion being placed before the committee. I suggest to the Treasurer that he reports progress, and that when we next meet he will supply us with the information desired.
[3.52 j. - I should not have spoken had it not been for the suggestion of the honorable member for Batman (Mr. Brennan) that the Prime Minister, when Treasurer, had treated the House with a lack of candour regarding this matter. That charge cannot be sustained. When speaking on this subject in October, 1922, the then Treasurer (Mr. Bruce) made it clear that the Webb case did not deal with the particular ClasS of bonus shares now under discussion. Mr. Bruce, as reported in Hansard, then said -
Webb’s case is the latest one, ami even there the power to tax bonus shares issued against accumulated profits was not made absolutely clear.
– It was made clear with regard to the reconstruction of companies
– Yes. There is very little doubt as to what the decision would be, and, in view of the judgment in Webb’s case, the Government have come to the conclusion that, although the point lias not Wen absolutely settled by that case, they would be unable, by taking further action in the courts, to establish that bonus shares issued against accumulated profits are liable to tax under the law as it existed prior ,to the present act.
There was a definite statement showing the decision of the court and the Government’s position. It explained clearly that the class of bonus shares then being dealt with was not covered by the Webb case. The natural inference, backed up by the opinion of the Solicitor-General and other counsel, was that the effect of carrying a case to the court would be that that decision would be extended.
– Mr. Bruce said that it was not clear that all bonus shares would he exempted.
– Let me read again the exact words which the then Treasurer used - although the point has not been absolutely settled by that case, they would be unable, by taking further action in the courts, to establish that bonus shares issued against accumulated profits are liable to tax under the law as it existed prior ito the present act.
– Prior to that, he said that it did not make it clear.
– He said thai that was the natural inference. Mr. Bruce made no attempt to induce honorable members to believe that the Webb ease settled the matter definitely and conclusively. That was the opinion held by the Solicitor-General and other counsel, and upon that basis the Commissioner of Taxes acted. That being so, it was felt that there was no necessity for an amendment of the law to deal with these cases and to enable refunds to be made. The speech of the honorable member for Batman would have been a valuable contribution to the debate in 1922, as in it he dissected the speech of the then Treasurer and the attitude of other honorable members. But that is not the present issue, which is whether the Government of that time acted in good faith. No matter what Government was in power four years later, that Government would have to decide what was a just and equitable course to pursue regarding this master. The honorable member for Yarra (Mr. Scullin) admitted, as did also the honorable members for Batman (Mr. Brennan) and Maribyrnong (Mr. Fenton), that it would be practically impossible to collect litis money now. The honorable mein- ber for Maribyrnong said that he was prepared to allow the subject to drop if the Government would give an assurance that it would tax bonus shares in the future, and the honorable member for Yarra said that that would be one means of restoring the revenue to its previous position, although he admitted that the same persons who were benefited would not pay. I point out that this bill does not deal with that aspect of the question, which should be determined when the Income Tax Assessment Bill is before us. There will then be ample opportunity for honorable members to express their opinions. By no amendment of this legislation could we do anything which would interfere with the present policy of dealing with bonus shares. I suggest that honorable members, having made their position clear, should allow this bill to pass, especially as Ave all admit the impracticability of doing more than the Government now proposes. If. having been suggested that one reason for the Government’s action is that this legislation applies only to wealthy men, I point out that the Government has. on two occasions during the last two years introduced legislation to prevent the return of money to taxpayers after it had been determined that the law, as interpreted by the High Court, ran counter to the intention of Parliament. Honorable members will remember the Income Tax Assessment (Land Tax) Bill and The manne)’ in which it Avas disposed of in another place. Last session a bill to appoint a board of appeal Avas introduced, because it Avas felt that, although it was retrospective legislation, justice and equity demanded it.
– There was no doubt about the equity in the other case.
– The position is the same here. I ask honorable members to remember that four years ago - whether after full discussion or not is of no particular moment - Parliament decided, without prolonged discussion, and without a division being called for, to adopt a certain course regarding refunds of moneys paid. It is. now almost impossible to trace that money, which has been used in all good faith. The only thing to do is what the Government now proposes.
– And reimpose the taxa-tion?
– That is entirely a different matter, which cannot be dealt with in this bill, but should be discussed in connexion with an income tax assessment bill. I possibly have different views from some honorable members on both sides iu regard to the taxation of bonus shares. When the Government submits its policy on that matter to Parliament, honorable members will be able to say what they wish to have done, and, if their numbers are sufficient, to see that it is done. The clause now before us merely validates the action taken from August, 1922, to February, 1923. The other clause relates to taxes that were assessed but not collected. A long debate on the general question of the taxation of these bonus shares would be of no avail at this juncture.
Construction of Seaplane Carrier - Communism: Mr. Jock Garden and the Shipbuilding Unions.
Motion (by Dr. Earle Page- proposed -
That the House do now adjourn.
.- In the absence of the Minister for Defence (Sir Neville Howse), I ask the Leader of the House (Dr. Earle Page) if he will state what the position is in regard to the construction of the seaplane carrier at the Cockatoo Island Dockyard. Honorable members have heard nothing about the matter for a considerable time. I direct attention to the position that has arisen since the Attorney-General (Mr. Latham), in introducing the Crimes Bill, made a strong indictment of Mr. Jock Garden, secretary of the Sydney Trades and Labour Council. It would appear that the principal shipbuilding unions are affiliated with that council, of which a confessed communist is still the secretary. One of the main planks in the platform of the communist party is that there shall be no increase in the British navy. The construction of a seaplane carrier, which would join the Australian fleet, would constitute an addition to the British navy, and Mr. Garden’s association as secretary with the council with which the shipbuilding unions are affiliated would create a very serious position at Cockatoo Island. The men now employed there are working under happy conditions, but many of them have informed me that, owing to the fact that Mr. Garden is secretary to the Sydney Trades and Labour Council, the shadow of communism is a disturbing factor. In fairness to the men concerned, the position should be closely investigated.
– What does the honorable member suggest should be done ?
– That the men might be appealed to on the ground that their unions should not be affiliated with the council while Mr. Garden remains secretary. I am to a certain extent glad that the construction of the vessel has not been commenced; but I am not aware that any emphatic protest has been made in this House against the starting of that work until this matter has been cleared up.
– “What trouble does the honorable member anticipate ?
– The communist party objects to any addition to the British navy. The shipbuilding unions send delegates to the Sydney Trades and Labour Council, and Mr. Garden admits that his influence as secretary is great. He boasts that eleven out of the twelve members of the executive of that body are communists. Should we proceed with the construction of a vessel that will be a unit of the British fleet while a man such as Mr. Garden holds his present position ? I am raising this matter in fairness to the men employed at Cockatoo Island, many of whom are my friends.
– What does the honorable member suggest ?
– I am making my speech in my own way, and do not wish the honorable member for Yarra to frame it for me. The work has not been put in hand, and I want Mr. Garden removed from his present position before it is commenced.
.- I had no desire to interrupt the honorable member for Wentworth (Mr. Marks) in the course of his speech, but I was curious to know what trouble he was anticipating. I gather that he asks the AttorneyGeneral to take some drastic action before a beginning is made with the con struction of the seaplane carrier, because, as the honorable member says, the policy of the communist party is well known. He contends that, because the shipbuilding unions are affiliated with the Sydney Trades and Labour Council, and the secretary of that council is a communist, something drastic should be done before the work is started. The honorable member ought to be explicit, and say plainly what he means. Does he suggest that, because the unions are affiliated with the council, and the secretary of that body holds political opinions that are regarded as strange, or even dangerous, members of those particular unions are likely to do dangerous things ?
– Mr. Garden boasts that there are from two to twenty communists iu every union in New South Wales.
– What docs the honorable member mean?
– The honorable member may surmise what he likes.
– The honorable member ought to be frank.
– I mean that no communist should be permitted to work on a ship to be constructed for His Majesty’s Navy.
– The honorable member should have made that statement at the outset. The inference to be drawn from his remarks was that, so long as the shipbuilding unions were affiliated with the Trades and Labour Council, it would be dangerous to allow their members on the vessel, but that once the unions ceased to be affiliated with the council, everything would be right. There is no escape from the fact that some members of those unions hold certain political views. Some of them may be communists, although I believe that the great majority of them are labourites.
– If they are communists, they should not be allowed on one of His Majesty’s ships, since it is against their principles to permit any addition to the British Navy.
– ‘Some persons hold communist views, just as others share the opinions of Nationalists. So far as this country is concerned, one is as bad as the other at times. I have not previously heard an honorable member of this House say that a man should be denied the right to work because he holds certain political opinions.
Mr.Marks. - I have not said that. I have said that a communist should not be permitted to work on this seaplane carrier.
– I have put in plain English what the honorable member meant but would not say. I hold no brief for communists, but we should deal with the actions of men and not with their opinions. The Attorney-General (Mr. Latham) himself, in introducing the Crimes Bill, laid that down. Opinions that men may hold about defence, or the necessity for altering the basis of society, are only opinions; and they should be perfectly free to hold them without having their right to work in this country challenged. If they break the law, we can deal with them.
– “What does the honorable member say about non-unionists?
– A man who acts against the best interests of the country should be dealt with, but he ought to be free to hold what opinions he likes. I rose with the object of extracting from the honorable member for Wentworth a definite statement of exactly what he meant. I have succeeded, and I leave it at that.
– In reply to the honorable member for Wentworth (Mr. Marks), I can only say that the Government recognizes that it is the duty of the management of Cockatoo Island Dockyard to see that any work entrusted to it is well and faithfully done, and that it is thoroughly protected while it is in hand. If any acts take place which indicate that efforts are being made to interfere with operations at the dockyard, the persons responsible should be dealt with by the administration in the ordinary way, in accordance with the laws of the country.
Question resolved in the affirmative.
House adjourned at 4.14 p.m.
Cite as: Australia, House of Representatives, Debates, 26 February 1926, viewed 22 October 2017, <http://historichansard.net/hofreps/1926/19260226_reps_10_112/>.