10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 3 p.m., and read prayers.
Mr. B. H. CORSER made and sub scribed the oath of allegiance.
The following papers were presented : -
National Debt Sinking Fund Act - National Debt Commission - Fiftb Annual Report, for year ended 30th June, 1928.
Ordered to be printed.
Post and Telegraph Act - Regulations amended - Statutory Rules 1928, No. 62, 88.
Seat of Government Acceptance Act and Seat of Government (Administration) Act- Ordinance of 1928 - No. 18 - National Memorials.
Wireless Telegraphy Act - Regulations/ amended - Statutory Rules 1928, No. 79. I
Commonwealth Bank Act - Balance sheets of the Commonwealth Bank and Common’ wealth Savings Bank at 30th June, 1928’, and Statement of the Liabilities and Assets of the Note Issue Department at 30th June, 1928; together with the Auditor-General’s Reports thereon.
League of Nations - Economic Consultative Committee, First Session held at Geneva, May 1928 - Report of the Australian Representative.
CALIFORNIAN DRIED FRUITS.
Mr. SCULLIN.- The Prime Minister stated recently, in answer to an inquiry, that attention was being given to the question of the importation of dried fruits from California. Will he now say what action, if any, has been taken?
Mr. BRUCE. - The investigation to which I referred on a previous occasion has been pursued, and it has been ascertained that, so far, the value of the importations has amounted to only £20, though there are additional shipments on the water. The Department of Trade and Customs has completed its inquiry, and I shall be in a position to announce, at an early date, what action is proposed to be taken.
COAX MINING INDUSTRY.
Mr. J. FRANCIS.- Has any definite progress been made in the investigations instituted by the Prime Minister, in conjunction with the Premier of New South Wales, Mr. Bavin, into the existing position in the coal-mining industry of Australia?
Mr. BRUCE. - No investigations have yet been made in an endeavour to place the industry upon a better basis; so far, what is being attempted is to ascertain how to bring about immediately a reduction in the price of coal, to enable the industry to retain its present trade, and to benefit other industries that are dependent upon coal, particularly those in the transport group, and certain public utilities. The negotiations between the Premier of New South Wales and the various interests concerned are still proceeding. I had an interview with Mr. Bavin during the week-end, and, in the course of the next few days, he will probably be in a position to state whether any practical steps can be taken to effect the desired reduction in price.
– Great difficulty is experienced by many persons in deciphering signatures attached to official correspondence. In the United States of America and its dependencies the practice has been adopted of typing below the written signature the name of the person signing. Will the Prime Minister cause a minute to be sent to the different departments instructing them to adopt that procedure ?
– The suggestion of the honorable member has my greatest sympathy. I shall, see whether action in the direction indicated can be taken, to insure that all signatures shall be decipherable.
– I have received the following letter from an Australian who is now resident at Geneva -
I am at present residing in Geneva. I am anxious to get employment, even temporary, in the League of Nations. I have been employed there in the International Labour Office during the labour conference in June this year, and have a certificate that I have given satisfaction. I have applied for further work there, but have been informed that jobs are only given now on the basis of each country’s subscription to the League of Nations and that Australia, which subscribes many thousands a year, has only one man’s salary in return. If you could show the Federal Government the necessity of more equitable representation on the administrative staff (which is being granted now to all other nationalities) perhaps you could help me.
Will the Prime. Minister state - 1. Whether, the position regarding employment by the League is as stated in the above letter? 2. What amount does Australia contribute to the funds of the League of Nations? 3. What amount is necessary to secure employment for one person in the service of the League?
– I presume that the honorable member does not subscribe to the view expressed by his correspondent, that the Commonwealth should expect some return by way of employment of Australians by the League for our annual contribution to the League’s finances ; a contribution of about £26,000. I am not in a position to say offhand how many Australians are employed in the League’s offices. What it would cost to maintain one employee, would depend entirely upon the position that he filled.
– Can the Prime Minister say when the new roll for Western Australia will be completed and available for circulation among honorable members ?
– The question should be addressed to the Minister for Home and Territories.
– In view of the importance to Western Australia of a cheap supply of superphosphates, and the danger of an increase in the cost of sulphuric acid, will the Minister for Trade and Customs bring down this session an amendment of the tariff schedule to remove the duties on pyrites?
– The agricultural and pastoral industry in all the States is interested in the cost of superphosphates, of which pyrites is a raw , material. I have investigated this matter on other occasions, and there would appear to be no reason for withholding the exemption sought; but I shall go into the matter, and advise the honorable member whether the action he has suggested can be taken.
– The Prime Minister will remember that in the concluding days of the last period of the session I raised the question of Australia’s supply of superphosphates. I understood the right honorable gentleman to reply that the Government was giving very serious consideration to the question. Is he yet in a position to say what steps have been taken to secure supplies?
– The necessity for providing a reliable supply of superphosphates for Australia has been, and still is, receiving theserious consideration of the Government. With the increasing demand, it is essential that, if possible, we shall secure a regular supply. At the moment, however, I am unable to make a public statement on the subject.
– Some time ago the Postmaster-General intimated that allowance postmasters were to receive an increase in their remuneration. In some cases those increases have not been received. From what date were they to have been paid?
– The increased payment was made from January, 1927, and so far as I know all allowance postmasters who were entitled to the increase have received it. There may be one or two who at the time were receiving an allowance in excess of the higher amount fixed. They, of course, would not be entitled to any increase.
Accommodation fob Visitors.
– Will the Minister for Home and Territories state whether it is intended that Hotel Kurrajong shall be kept open during the next recess for the benefit of members of the general public who may require accommodation? It is rumoured in Sydney that some persons who have come to Canberra have not been able to secure accommodation.
– The arrangements in regard to the use of the hotels of Canberra when this session terminates have not yet been completed.
Statement of Profit and Loss
– Will the Prime Minister state whether it is intended to make available to honorable members a statement showing the profit or loss on the working of the beam wireless system?
– The receipts and expenditure in connexion with the working of the beam wireless system are embodied in the general accounts of Amalgamated Wireless Australasia Limited. I had not intended to obtain a separate statement giving those particulars, and setting out the results of the system, but I shall -inquire into the matter, and if there is no objection, shall arrange to have such a statement placed on the table of the House.
– Is the PostmasterGeneral yet in a position to announce what is the new policy of the Government respecting broadcasting throughout Australia? I understand that conferences on the matter have been held and that Mr. Brown, the Director of Postal Services, whose return the honorable gentleman has been awaiting, is now in Australia.
– The board which was appointed to handle the matter is to meet on Thursday of this week. It is not the practice to indicate the policy of the Government in replying to questions.
– Has the attention of the Prime Minister been drawn to the movement in England, which has the endorsement of the Mayor of Perth, Cr. Franklin, to destroy war trophies? If he intends to follow such a good example, will he take steps to hide the monstrosity that we have in Canberra, which already has cost us upwards of £800, by growing ivy over it?
– My attention has not been drawn to the matter other than by way of press reports. I have no intention of taking the action suggested by the honorable member.
asked the Minister for Trade and Customs, upon notice -
What amounts have been collected by the Commonwealth Government in each State, for each financial year, from the. special customs duty on petrol and motor chassis?
– The reply to the honorable member ‘s question is as follows: -
asked the Minister for Works and Railways, upon notice -
How much petrol tax has been collected in each State for 1926-27 and 1927-28, and what amount has been distributed to each State for roads during each of those years?
– Information in regard to petrol tax collections has been supplied to the honorable member in reply to question” No. 1 on to-day’s business-paper. The following statement sets out the payments to each of the States under the Federal Aid Roads Act in respect of the years 1926-27 and 1927-28:-
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
January, 1927. January, 1928. July, 1928. 11 cents. 9.5 cents. 10.5 cents.
asked the Acting Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : - 1. (a) Nineteen aeroplanes complete with engines; (b) 22 spare engines.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow: - 1 and 3. I would refer the honorable member to returns furnished in this House on the loth December, 1927 (Hansard, page 3209), and the 22nd March, 1928 (Ilansard, page 4048). The additional information required is being obtained and will be made available as soon as possible.
Messes. Kirkpatrick’s Rentals
asked the Treasurer, upon notice -
– The information is being obtained from the Commonwealth Bank, and will be furnished as soon as possible.
Appeals Against Peomotion - Dismissals
asked the Prime Minister, upon notice -
Under £312 per annum.
Over £312 per annum up to and including £408 per annum.
Over £408 per annum up to and including £516 per annum.
Over £516 per annum up to and including £570 per annum.
Over £570 per annum up to and including £648 per annum.
Over £648 per annum up to and including £744 per annum.
Over £744 per annum.
– The information is being obtained.
– On the 30th August the honorable the Deputy Leader of the Opposition (Mr. Blakeley) asked me the following question, upon notice -
Will he state the total number of persons who have been dismissed and afterwards given employment for the years 1925-26, 1926-27, 1927-28, in various Commonwealth departments ?
The Public Service Board has now furnished the following figures: -
Number of temporary employees at 30th June, 1925, 4,645.
Number of temporary employees at 30th June, 1926, 5,007.
Number of temporary employees at 30th June, 1927, 5,120.
Details of the number of persons actually engaged and the number of employees whose services were terminated in each of the years mentioned are not available in the office of the Public Service Board, but the foregoing figures show the variations in temporary employment in those years.
It is regretted that the figures as to temporary employment at the 30th June, 1928, cannot at present be furnished.
Size of Coins and Notes
asked the Treasurer, upon notice -
– The replies to the honorable member’s questions are as follow : -
Mr. D. CAMERON (through Mr.
Duncan-Hughes) asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Treasurer, upon notice -
Does he intend to submit to this Parliament, before it adjourns prior to dissolution, the fifth report of the Public Service Superannuation Fund Management Board?
– I propose to submit this report before the House adjourns if the report reaches me in time. The Superannuation Fund Management Board is, however, now being transferred to Canberra, and the president of the board is doubtful whether the report will be available before the adjournment. I have already promised that the report of the Actuary on his first quinquennial investigation of the fund will be submitted as an appendix to the annual report of the board. The former report is available, and will be circulated separately if the board’s annual report is not available in time.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister for Trade and Customs, upon notice -
– The answers to the, honorable member’s questions are as follow : -
Mission Subsidy - Report by
Queensland Government Officer
asked the Minister for Home and Territories, upon notice -
In view of the extreme difficulties that confront the Finke River Mission in the work it is performing for the aged and infirm aborigines and also for the young aboriginal children of that area, will he sympathetically consider an increase in the grant to that mission ?
– The whole question of subsidizing missions in Central Australia and North Australia is being investigated by the officer loaned by the Queensland Government for the purpose of making inquiry into aboriginal affairs in those territories, and will be considered by the Government on the receipt of that officer’s report.
asked the Minister for Home and Territories, upon notice -
– The answers to the honorable member’s questions are as follow : -
– On 5th September the honorable member for Hunter (Mr. Charlton) asked the Minister for Health the following question : -
Whether he will communicate with the High Commissioner in London asking him to make investigations, in the interests of Australia, us to whether M. Spahlinger has made a number of successful tests, under the supervision of the Prime Minister of the State of Geneva, of the preventive vaccination of cattle against tuberculosis.
I am now in a position to inform the honorable member that no reliable information can be obtained, but so far as can be judged from the information available it appears that no advance has been made upon the results obtained by Dr. Calmette of Lille, in the vaccination of calves against tuberculosis.
– On the 5th September the Honorable the Deputy Leader of the Opposition (Mr. Blakeley) asked me the following questions, upon notice -
I am now in a position to furnish the following reply: -
– On the 6th September, the honorable member for Capricornia (Mr. Forde) asked the following questions : -
I am now able to furnish the honorable member with the following information : -
1927- 28 £194
No bounty has been paid on kapok.
Oil Petrol and Paraffin Used
– On the 30th August, 1928, the honorable member for Hunter (Mr. Charlton), addressed to me the following questions: -
I am now in a position to make available the following particulars: -
The consumption of petrol included the following quantities of alcohol fuel and benzol during the years 1925 and1926, viz.: -
Equipment on Coastal Vessels.
– On the 6th September, the honorable member for Brisbane (Mr. D. Cameron) asked the following question : -
Referring to the question by the honorable member for Brisbane on the 22nd November last, and the Minister’s reply of the 24th November last, regarding wireless equipment on coastal vessels, has any action yet been taken by the State Governments, and has the
Commonwealth Government given this question further consideration as promised; it so, with what result?
I am now able to furnish the honorable member with the following information : -
As regards intra-State vessels, which are outside the scope of Commonwealth law the position remains as stated in the reply given to the honorable member’s question on 24th November last. No State legislation has as yet been passed, on the lines of the Commonwealth Navigation Act, making it compulsory for intra-State vessels over 1,600 tons or carrying twelve or more passengers on voyages of over a certain distance, to carry wireless. On the general question of amending theCommmonwealth Act in the direction of applying the requirement of wireless to smaller vessels, the Government is awaiting the results of an International Conference on Safety of Life at Sea, at which the subject of wireless on ships will be discussed. This conference, at which the Commonwealth will be represented, was to have been held in London within the next few months, but has been unavoidably postponed until next year.
– On the 30th August, the honorable member for Newcastle (Mr. Watkins) asked if the Government, when considering the provision of aerodromes and aviation landing grounds would take into consideration the desirability of providing a landing ground in the Newcastle district. I am now in a position to inform the honorable member that the question of providing landing facilities for aircraft at Newcastle will be considered in conjunction with the proposal for the establishment of an aerial service between Sydney and Brisbane.
– On the 31st August, the honorable member for Capricornia (Mr. Forde) asked the following questions: -
I am now able to furnish the honorable member with the following information : -
Bill received from the Senate, and (on motion by Mr. Bruce) read a first time.
– I move -
That, in accordance with the provisions of the Commonwealth Public Works Committee Act 1913-21, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for investigation and report : - Caulfield East, Victoria - Establishment of automatic telephone exchange.
It is proposed to erect a building on a site already acquired in Waverley-road, Caulfield East, and instal therein an automatic telephone switching system having an initial equipment for 2,000 subscribers’ lines, and an ultimate capacity of approximately 10,000 subscribers’ lines, thereby providing for anticipated requirements to be met for twenty years after the proposed date of opening. The area to be served by the proposed Caulfield East Exchange comprises the eastern and south-eastern portions of the present Malvern Exchange area, and covers the populous and rapidly developing districts of East Malvern, Caulfield East, and Glenhuntly. The existing Malvern Exchange cannot cater for future requirements in these localities, and the new exchange, besides obviating unnecessarily high expenditure on external plant, will enable a cheaper and more efficient service to be provided in the extreme limits of the areas mentioned. The estimated cost of the work is : -
It is intended that the building shall be a brick one, of simple design, and built on the latest fire-resisting principles. For the year ended 30th June, 1928, the average number of subscribers’ lines connected to the existing Malvern Exchange was 8,310, and the actual total revenue was £100,883. It is estimated that at the date of opening of the proposed Caulfield East Exchange - December, 1930, - there will be 1,300 subscribers, with an annual revenue of £15,782, and that in a further five years - December, 1935 - the number of subscribers will have increased to 4,000, furnishing an anticipated revenue of £48,559. I lay the plans in connexion with the proposed work on the table.
Question resolved in the affirmative.
AUTOMATIC TELEPHONE EXCHANGE- EDGECLIFF. Mr. HILL (Echuca - Minister for Works and Railways) [3.33]. - I move - That, in accordance with the provisions of the Commonwealth Public Works Committee Act 1913-21, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for investigation and report: - Edgecliff, New South Wales - Establishment of automatic telephone exchange.
The proposal is to erect a building on a site already acquired at the corner of Kiaora-lane and Anderson-street, Edgecliff, and instal therein an automatic telephone switching equipment having an initial equipment for 3,700 subscribers’ lines, and an ultimate capacity of approximately 6,000 subscribers’ lines, which margin for extension is considered sufficient to meet anticipated requirements during a period of twenty years after the date of opening. Owing to the growth of subscribers’ lines in the eastern portion of the area, the present manual magnetic exchange is not now at the telephonic centre, and it will not be economical to extend the external line plant to the existing site after about December, 1929. The existing building will not permit of much greater expansion of the manual exchange equipment after that date. It is necessary also to provide additional accommodation for postal activities at Edgecliff, and in conjunction with these requirements, investigations indicated that the establishment of a modern exchange on the proposed site would be an efficient and economical arrangement. The estimated immediate cost of the work is -
It is proposed that the building shall be of simple design, and built on the latest fire-resisting principles. The actual revenue for the year ended 30th June, 1928, was £36,958 from an average number of 2,933 subscribers, while the estimated number of subscribers and revenue at the date of opening, and five years thereafter, is as follows: -
I lay the plans in connexion with proposed work on the table.
Question resolved in the affirmative.
Debate resumed from 6th September (vide page 6512), on motion by Dr. Earle Page -
That the bill be now read a second time.
.- This measure, as the Treasurer (Dr. Earle Page) explained in moving the second reading, provides for the granting of financial assistance to Tasmania for the current year to the extent of £220,000. The grant made for the year ended 30th June last was £378,000; therefore the grant now proposed represents a reduction of £158,000 on that previously made. Tasmania has been receiving special assistance from the Commonwealth since 1912, because of the peculiar disabilities under which she has laboured as the result of federation. In 1912 a. royal commission inquired into the position of that State as a member of the federation, and recommended that the sum of £900,000 should be granted to it over a period of ten years. Effect was given to that recommendation, and at the end of the period it was decided to grant assistance at the rate of £85,000 a year for two more years. In 1924 this Parliament remitted the lottery tax, which was estimated to be worth £110,000 a year, and granted £85,000 a year to Tasmania, but the Commonwealth assistance was to diminish at the rate of £17,000 a year. That help was not sufficient to get Tasmania out of her financial difficulties. Therefore a further special investigation was made by Sir Nicholas Lockyer, and as the .result of his inquiries and recommendation, the States Grant Act was amended in 1926 to provide that £310,000 a year, plus £68,000, or a total sum of £378,000, should be paid to Tasmania for two years without diminution. One of Tasmania’s chief difficulties is caused by the loss she sustains upon her railways, which was attributed by Sir Nicholas Lockyer largely to motor competition. It seems that a great deal of money - mostly loan money - has been spent by Tasmania in the making of good roads, and that enables motor vehicles to compete with the railways. But this position has obtained for some years. The present spending of money on roads is not so much the cause of the unfavorable position of the railways of the State as is the past spending, which has left a heavy interest bill to be met. Of course, Tasmania suffers in other ways: because of her isolation and because she does not share in the industrial expansion which the larger States on the mainland have enjoyed. I see by the Treasurer’s calculations that he has allowed £40,000 for last year’s surplus, as a deduction from the sum that Tasmania should receive. The actual surplus was £95,000, but it was estimated that £40,000 would be a fair sum to allow. I gather from the Treasurer’s remarks that that figure was agreed to after consultation with the ex-Premier of Tasmania, Mr. Lyons, but I have received advice from Mr. Lyons that Tasmania is basing its calculations for the current year on an estimated deficit of £30,000. Although to the figures presented by the Treasurer we must attach due weight, on the bare facts of the case I should say that reconsideration might be given to the grant in the light of that estimated deficit. As we have paid large sums of money for so many years to Tasmania, and as that State has done great work in recent years in straightening out her finances - probably no other State has done better in that respect - we ought not to discourage her at this stage by requiring her to budget for a deficit of £30,000. If those figures are correct; - and I do not know that they have been challenged - there is apparently some justification for a reduction in she sum that has been paid in the past, but the proposed reduction of £158,000 on last year’s grant seems to be too great. I think that the amount of the grant ought to be reconsidered, particularly in view of the fact that good work has been done by the local authorities in trying to balance their ledger. It is true that this has been done with the assistance of the Commonwealth, but I believe there has also been very good management on the part of the Tasmanian authorities. The Treasurer has made a comparison between the taxation imposed in Tasmania and that of the other States. On those figures it appears that no claim could’ be made justly by Tasmania for any assistance, seeing that her taxation per capita is lower than the average of the other States; but it has been claimed on behalf of Tasmania that the taxable capacity of its people is less than that of the people of the rest of the Commonwealth. Although this is a matter that cannot be easily demonstrated by actual figures, I believe that on applying common sense and reason we may accept the statement that Tasmania’s taxable capacity is much lower than that of the larger States at least. Australia has rightly adopted the policy of protecting its industries, although not so adequately as I should like. Under that policy a certain measure of indirect taxation is borne by the whole of the people of Australia. The people of Tasmania share equally in that burden with the people of the other States, although they do not share in the benefits derived from protection. Some persons might put forward the freetrade argument, because they come from States or parts of States that have laboured under this disadvantage, that we ought to abandon our protective policy, or reduce the measure of our protection to industries, because of the special disabilities under which they suffer through having to contribute to the consequent indirect taxation. My answer is that that argument is not the correct way to deal with the problem. The national policy is to build up Australian industries wherever they can be built up effectively, and if in the process of achieving that national aim parts of Australia suffer special disabilities, adjustments should be made to meet their particular circumstances. We have to recognize that in the case of Tasmania and Western Australia. We should not make only a comparison of taxation figures per head of population. We must remember that each State bears alike - perhaps in some cases it is difficult to estimate the figures - the indirect taxation of the Commonwealth, and the smaller States naturally do not enjoy the advantages of our system of protection to the same extent as the larger States do. I suggest that before reducing the grant by £158,000 - which is really the object of the bill - the financial position of Tasmania for the current year should be taken into consideration. We are all one people within the Commonwealth.
This is not a question of extravagance. The payment of money from the Commonwealth Treasury to a State is not a loss unless the State expends that money extravagantly, and there has been no evidence of that, particularly in recent years. Tasmania has done wonderfully well to be in its present financial position. After all, we should not hold against that State the fact that it was able to provide a surplus last year. Previously, it had been in a bad state, financially. Tasmania is a small State, and isolated from the other States. The amount of the grant which we are asking for is comparatively small; it does not represent a large sum to the Commonwealth, in fact, it is not as much as the Commonwealth’s expenditure on royal commissions last year. The grant would enable Tasmania to balance its ledger once again. This bill does not require a lengthy discussion. The facts are simple, and have been clearly set out by the Treasurer. The only thing that he omitted was the statement of the Treasurer of Tasmania, and that I have placed before the House. The making of grants to Tasmania and Western Australia, to compensate them for their special disabilities under federation, has never been a party question, and I hope that it never will. This subject will be discussed from all points of view. I have much sympathy with a State that is separated from the mainland, and although this Government is facing a deficit which it should have avoided, we should not hesitate to continue the assistance that has been given to Tasmania during the last few years. I suggest to the Government that it accedes to Tasmania’3 request. That State should certainly not be penalized simply because it has recently improved its financial position.
. - I think it desirable that I should at once say a word regarding the specific point raised concerning the estimated deficit of Tasmania for the current year. We are all familiar with the position of Tasmania, because there have been many debates in this House on this subject. Exhaustive inquiries regarding it have been made for the Commonwealth by Sir Nicholas Lockyer, and by committees appointed by the Tasmanian Government. We all recognize that Tasmania, by reason of its isolation, its entire dependence, upon sea transport, the smallness of its population, and its proximity to great centres of population, is at a great disadvantage. There is not one of us but feels sympathy with that State, and desires that something should be done to enable it to overcome its difficulties, and to ensure to it an era of prosperity and progress which will bring it on a level with the rest of the Commonwealth. Tasmania is one of the oldest settled parts of Australia, and it would be unfortunate if, in the general development of the Commonwealth, it were allowed to lag behind. Accordingly, over the last few years definite action has been taken to assist it. It is not necessary to repeat what has been done, but it must be remembered, because I wish the House to know the facts, that every effort has been made to give fair and just treatment to Tasmania. Between 1912 and 1922 the sum of £900,000 was distributed to Tasmania. In 1922-23 and 1923-24, the Commonwealth gave the State an annual grant of £85,000. At the end of that period we were in close negotiation with the representatives of Tasmania, and the discussion concerned the provision of £200,000 a year for a period of ten years. It was considered that the granting of such a sum would meet the difficulties encountered by Tasmania. In 1924-25 the Commonwealth relinquished its lottery taxation, which was equivalent to an amount of £111,000 a year. That relinquishment of taxation was not in the nature of a grant for an unlimited period, because any succeeding Administration could reverse the policy of this Government, but the amount formerly collected by the Commonwealth was remitted to Tasmania. The grant of £85,000 was gradually to diminish over a period of five years. With that grant and the remission of the lottery taxation, Tasmania received assistance to the extent of £200,000. Despite that assistance, the State did not progress as much as was desired. The flow of population from it to the mainland did not cease, and its financial difficulties were not ended. It was obvious that additional assistance was necessary. Accordingly, the Commonwealth appointed Sir Nicholas Lockyer to make an inquiry into the positionbof the State. As a result of his report, the Commonwealth Government agreed to pay annually for a period of two years an amount of £378,000. But we felt that the finding of that money would not solve the problems of Tasmania, that something more should be done. It was considered that there should be an improvement in her methods of agriculture, but that Tasmania was not in a position to bring that about unaided. Owing to its lack of revenue, it could not do what other States had done in bringing about development, and accordingly we agreed to make available to the State the services of the Development and Migration Commission, and of the Council of Scientific and Industrial Research. Those two bodies co-operated with the Tasmanian Government with a view to solving some of its difficulties. That co-operation has been taking place for the last two years. The more wealthy and more thickly populated States, such as New South Wales and Victoria, have expended considerable sums of money upon agricultural research, including the establishment of agricultural colleges, in order to assist their farmers. Tasmania has not been in a position to do this, and the Commonwealth Government agreed to expenditure on agricultural improvements in certain instances. That expenditure has been made, and I believe that beneficial results are already accruing from it. The grant for the years 1926-27 and 1927-28 was fixed at £378,000, on the understanding that on the expiration of two years the Commonwealth would be prepared to again consider the question of financial assistance. Accordingly, in March of this year, we discussed this subject with the then Government of Tasmania, with a view to determining what would be a reasonable amount to pay to that State. The basis of the present grant was discussed, with this exception, that at the time of that discussion the estimated surplus for the State of Tasmania was £4’0,000, but the actual surplus turned out to be £95,000. But the figure allowed by the Commonwealth was not altered. Therefore, the position of Tasmania is actually better by £55,000 than we allowed for. It must, therefore, be admitted that the Government has treated Tasmania fairly and generously. We recently had a conference with the present Treasurer of Tasmania, Mr. McPhee, and with the Hon. Mr. Grant. They came from Tasmania to see us, with the very laudable intention of getting the grant increased, in the interests of their State. We discussed the position, and pointed out that the basis of the figures which had been taken in the discussion with the ex-Premier of Tasmania, Mr. Lyons, covered an estimated surplus of £40,000, whereas the actual surplus was £95,000. Naturally we, as custodians of the Commonwealth revenue, had to urge strongly that it was their duty to take notice of this position, they being £55,000 really better off than they were when the figures were previously discussed. But, on the strong representations of Mr. McPhee and Mr. Grant regarding the difficulty of their situation, we agreed not to reduce the grant by the amount the actual surplus had exceeded the estimated surplus. That being so, I do not think we should be justified in going farther now. The basis on which the figures were arrived at was given by the Treasurer the other night when he dealt with this question, and I need not repeat what he then said’. It is sufficient to explain that in arriving at our figures we started on the basis that two years ago the Commonwealth grant to Tasmania was £378,000, and that it was our duty to consider to what extent the position had altered since. It was evident that certain changes had occurred which were in Tasmania’s favour. The first big saving which Tasmania was able to effect was in respect of her interest bill, which was reduced by over £60,000 as a result of the operation of the Loan Council. That amount would otherwise have had to be raised by taxation. There was discussion on a proposal to pay £53,000 a year in respect of depreciation on Tasmania’s railways. To that proposal we could not agree. It would be a very good thing if every State in Australia were to deal with its railway situation in the way which Tasmania proposed; but, unfortunately, none of them has ever found itself in a position to follow that course. Therefore we could not pay to Tasmania money that would have to be provided by the other States when those States were not themselves in a position to give effect within their own borders to that financial rectitude which Tasmania wished to follow. I think that the representatives of Tasmania saw this. With regard to the expenditure that has been undertaken by Tasmania as a result of the consideration of their whole economic situation in consultation with the Development and Migration Commission - expenditure such as that on agricultural research - this was accepted, and included in the figures which formed the basis of the grant. Whether the Commonwealth was right or wrong in granting the sum of £378,000 two years ago is a matter which we cannot now discuss. That grant was submitted to and passed by this Parliament; but the Government has indicated that it would use that figure as a basis on which to calculate what would be a fair grant for this year. It was agreed that an examination of the whole financial position of Tasmania should be made, consideration being given to any savings which might be effected, and any additional expenditure which might be necessary to bring about an improvement in agriculture, or in other directions. All these things have been taken into consideration in fixing the sum of £220,000 which it was proposed to grant this year. If we had stuck to the principle originally laid down, we should have reduced the grant by the amount by which the actual surplus exceeded the anticipated surplus ; but as I have pointed out, we agreed, in response to the representation of Mr. McPhee and Mr. Grant, that we should not take that into consideration. They stressed such factors as the limitation of the taxable capacity of the people of Tasmania compared with that of the people of the other States ; a factor which influenced us in deciding to make no reduction. My contention, therefore, is that we have treated Tasmania not only justly, but with considerable generosity. The Leader of the Opposition said that the estimated Tasmanian deficit is only £30,000, a small sum which we might well make up to the State. There are many reasons why we should not do that. The main reason which should influence all of us is that such a payment could be only in the nature of an ex gratia allowance, and without any substantiated merits. I am not speaking now about Tasmania’s general case. We have dealt with that before, and I am not now expressing an opinion on it. But there is no case in regard to this particular £30,000. Nobody has suggested that the payment of that sum to Tasmania would obtain the solution of Tasmania’s difficulty, it is only suggested that it would be a kindly act in view of the fact that Tasmania sees itself faced with a possible deficit of £30,000. Unless on a definite basis and as part of some definitely announced policy, there would be no justification for such a payment.
– The suggestion is that this extra payment should be a set-off against the surplus which was allowed for on last year’s estimate. There need be no interference with the Government’s calculations.
– The Leader of the Opposition is not putting the matter quite fairly. The surplus which we took into account was one of only £40,000. The present actual ascertained surplus is £95,000, and my answer is that we have already taken into consideration the increase in the estimated surplus and have given Tasmania the benefit of it. We have taken not merely £30,000, but £55,000 into our calculations - the difference between £40,000 and £95,000.
– Is not Tasmania asking for more than £220,000?
– I shall say this for Tasmania, that whatever political party happens to be in power, its Government puts the case for that State extraordinarily well. The Government representatives always urge that the Commonwealth Government should increase the amount of the grant. Mr. Lyons desired that the grant should be increased. It was not, however, an ah initio discussion. Tasmania’s disabilities had been fully discussed three years ago, and its representatives had then made out a very strong case, the actual amount asked for being £589,000 a year. We reduced that amount to £378,000. Both Mr. Lyons and his successor were impressed with the fact that our policy had already been determined, and that the object of the present discussions was to discover to what extent the situation had altered since. The point I have been endeavoring, to make is that these payments can be made only on a definite basis. It has to be remembered that there are other States of the Commonwealth which at the present moment are extremely hard-pressed. South Australia is known to be in a difficult financial position. She increased her taxation last year to an extent almost unparallelled in the recent history of Australia. Yet she is still in difficulties, and these she finds so great that she has had to ask for help. Her position is being investigated at the- present time by Sir Joseph Cook, Mr. Herbert Brookes, and Mr. Barton, an accountant. I think that honorable members will see that it would be most unfair and improper for the Government, having determined the amount of the subsidy, to pay £30,000 more on this particular plea. I ask the House to consider all the circumstances very seriously before it supports any alteration of the amount which has been arrived at after the most careful calculation and consideration.
– I should have been content with the statement made on this matter by the Leader of the Opposition had it not been that the Prime Minister’s reply seems to bear out substantially a paragraph contained in a letter received by me, and I presume, other honorable members, from the chairman of the Development and Migration Commission. The paragraph reads as follows: -
The Commonwealth, in considering the question of financial grants to Tasmania, is entitled to assume that the sum devoted to carrying out the recommendations of the commission is true developmental expenditure, designed to free the State from many of its difficulties within a period of years.
Perhaps I did not understand the Prime Minister, but he seemed to hint that the expenses incurred by the Development and Migration Commission in conducting investigations in Tasmania might fairly be deducted from any grant which it was proposed to make to the Government of that State. The affairs of Tasmania have been investigated from time to time. The honorable member for Bass was chairman of a commission which made certain recommendations which were largely agreed to by this Parliament. A further investigation was made by Sir Nicholas Lockyer, and still another by the Development and Migration Commission. One of Tasmania’s chief troubles is the great loss sustained on the working of her railways. Reports on the railways have been prepared from time to time, and experts have been brought from other States to go into the matter. Since then there has been an investigation by the Development and Migration Commission. Men prominent in Tasmanian public life place little value on many of the recommendations of that body; indeed one man has gone so far as to say that the Commission has found out nothing regarding the State that was not well known before. From my knowledge of the State I question whether any other part of the Commonwealth is so well advanced in fruit-growing and dairying, and I know that some of the Tasmanian flocks are equal to, if not better than, those in any other part of Australia. The fact that strikes me, however, is that the Commonwealth grant to Tasmania is to be reduced this year by £158,000. Last year when the grant was £378,000, the State showed a surplus of £95,000, and if its financial affairs are about the same in the current financial year as they were last year, the reduction of the grant by £158,000 will leave Tasmania with a deficit of £63,000. On account of its exceptional difficulties I voted for this assistance to Tasmania in the past, and I am still prepared to take a generous view of its requirements. It is not competent for a private member to move that the proposed grant be increased, but I think that the request made by the Leader of the Opposition is fair and proper. Notwithstanding that the Commonwealth is faced with a big deficit, our responsibility to help Tasmania remains.
.- The claim of Tasmania for a special grant from the Commonwealth has been discussed at great length on many occasions in this House, by the public, and by bodies appointed to inquire specially into the financial circumstances of the State, and there is no need for the case to be restated now. I am disappointed that the Government proposes to reduce the grant for this year. Without agreeing that the basis for calculating the grant is fair or correct, I propose to argue on the figures submitted by the Treasurer that the State has a good claim for a larger amount than the Government has asked Parliament, to vote. I assure the Government that the people of Tasmania are appreciative of what it has done in the past for the assistance of the State; that has been expressed by the Labour Government that relinquished office recently, and by its successor. And I am grateful also for the view which this House has always taken of the matter, and especially for what was said by the Leader of the Opposition this afternoon. I was glad to hear him say that this matter has never been considered a party one ; it is well for Tasmania that that is so. Every argument used by the Leader of the Opposition in support of an increase of the grant by £30,000 in order to enable the State to meet its anticipated deficit for the year was sound ; but naturally honorable members representing the State are more fully informed regarding its circumstances than are other honorable members, however friendly disposed. Figures supplied to us during the last few days enable us to challenge the figures quoted by the Prime Minister and the Treasurer. The latter referred to an amount of £53,000 provided by the State for depreciation of railway rolling-stock, and said that no other State had found itself in a position to make such a provision. I am not sure that that is correct; I am informed that both Victoria and Western Australia have similar sinking funds. However that may be, Tasmania has provided this amount for the last two years, and it is not fair or proper for the Commonwealth to probe into its finances, and attempt to control its expenditure. If such inquisitorial methods were considered proper preliminaries to the making of any grant to the State, the right course for the Commonwealth Government to follow would be to unravel the finances of all the States in order to see what amounts had been provided by others for similar purposes. If we reached that stage we might as well have unification. The Treasurer pointed out to a deputation of Tasmanian members that under the new financial agreement Tasmania would not require to provide this sinking fund, and, therefore, would be in a better position than it is at present. The State, however, will continue its contributions to the fund in accordance with the recommendation of the Commissioner of Railways. It is improper for the Commonwealth to attempt to direct a State in regard to a matter affecting its solvency. Tasmania must budget this year for a contribution of £53,000, or portion of that amount, towards the sinking fund for railway rolling stock, or be faced with the possibility of having in a few years to go on the loan market for funds with which to renew that stock. Another amount mentioned by the Treasurer was the £13,000 provided by the State Government towards the sinking fund for loans to local bodies. Again, the honorable gentleman said that because of the new financial agreement, the State Government would not need to provide that amount, but for the current financial year at any rate, the State is obliged by law to do that; it is a statutory obligation. If the present law is altered, the Tasmanian Government will not have to make that provision in the budgets for future years, but for the present financial year it will be £13,000 worse off than the Commonwealth Treasurer estimated when he was determining the amount of this grant. I will not pursue that matter further, because the facts I have stated are indisputable. The Treasurer also mentioned the amount to be provided for the development and reorganization of the agricultural industry in that State. The Treasurer has said that the amount is £12,000, and that it was taken into account when the special grant was being fixed. The amount of the principal grant is not £220,000, as he has stated, but £205,000. He was also wrong when he said that the sum of £12,000 was to be applied towards giving effect to the recommendations of the Development and Migration Commission in regard to agriculture. The amount necessary to carry out those -recommendations is £36,000, not one penny of which is to be provided by the Commonwealth, although the Commonwealth has insisted upon the work being carried out. That is primarily the reason for the State having had to budget for a deficit. The sum of £12,000 is being granted to enable the State to investigate the position in connexion with mining and forestry. If the Commonwealth considers that the recommendations of the Development and Migration Commission in regard to agriculture should be given effect to help Tasmania to get on her feet, it should provide the amount necessary to carry them into effect. Tasmania did not request an investigation of the position by the Commission. It has made some wise recommendations ; but I do not admit that its knowledge of Tasmania’s industries is greater than that of honorable members who have lived in the State for very many years. I protest against the methods that were adopted to arrive at the amount which should be provided. When a State is obliged to undertake works recommended by a Commonwealth commission, that fact should be taken into account when fixing the amount of a special grant. It is satisfactory to learn that when the Transport Board has reported upon Tasmania’s transport facilities, the whole question will be reviewed, and that the extent of the assistance to be provided after this year will be fixed. I hope that the arrangement will be for a reasonably long term. Annual investigations are not a very satisfactory method of procedure to adopt. Federal members representing Tasmanian electorates were not permitted to attend any of the conferences that took place between the Tasmanian and the Commonwealth Governments, nor were they acquainted with what was done. It was not until the budget papers were printed that we were informed of the method adopted in fixing the grant, and the amount of assistance that was to be given. Had we been kept fully informed of the position, the figures that I have challenged to-day would have been challenged weeks before the budget statement was printed, and probably would have been corrected immediately. I am satisfied that the representatives of the State in the persons of its Premiers, Messrs. Lyons and McPhee, pleaded skilfully and well the case for additional assistance. Though representing different political parties, they have always co-operated for the good of the State. But the people of Tasmania look to us to see that they are treated fairly by the Commonwealth Government. It is a pity, therefore, that we were not kept fully informed of the trend of the negotiations. I appreciate what has been said by the Leader of the Opposition (Mr. Scullin) in regard to Tasmanian governments. Each government that has been in power has done its utmost to place the State financially on a sound footing. I think there has never been extravagance, certainly not in recent years; but on the contrary the expenditure has been kept down to the lowest possible amount. I agree also that it was hardly fair for this Government to take into account the small surplus, considering the special efforts that have had to be made to economize in expenditure. Any Treasurer can budget for a deficit, but in these days few can budget for a surplus. It is desirable that every Treasurer should exercise the greatest care in the handling of the public funds, and keep the expenditure down as low as possible. Everything should be plain and above board. Throughout, the Treasurer of Tasmania has placed all his cards on the table, and told the whole truth about the condition of the finances. The figures upon which the grant has been based were misunderstood by the Commonwealth Treasurer. The Prime Minister replied to the Leader of the Opposition without being fully informed of the position. I am sure that, when he has a thorough understanding of it, he will adopt a different view. I know that he wishes to do justice to Tasmania. I and other honorable members are powerless, under our Standing Orders, to move that the amount of the grant be increased, or to instruct the Government to take into consideration the factors that I have mentioned; but I appeal to the Prime Minister to reconsider the question in the light of what I have said, for he will find- that some of the figures have been misunderstood, and that the Tasmanian Treasurer will verify the accuracy of those that I have given.
.- I am sorry that the Government will not accede to the request of the Leader of the Opposition (Mr. Scullin). It is quite clear now that when this proposal was being framed, the Treasurer was not fully informed of the facts. The people of Tasmania were under the impression that the whole of the cost of the investigations made in their State by the Development and Migration Commission would be defrayed by the Commonwealth, but they now find that they are to be charged £16,000, while the Commonwealth is to pay only £12,000 of the expense incurred. When Mr. Lyons, the ex-Treasurer of Tasmania, interviewed the Prime Minister on this subject, some time ago, he understood that the Commonwealth would meet the full expense of the investigations of the commission. No one with a knowledge of the facts, denies, in these days, that Tasmania has suffered through federation, and it is generally admitted that she should be compensated for the disabilities which it has imposed upon her. She should be assured of a substantial grant for a number of years. The Tasmanian members of this Parliament have known less about the negotiations which preceded the introduction of this bill than about those which preceded any similar measure. Had we been fully informed, we could have made sure that the Commonwealth authorities were not under any such misapprehension as it is now clear they labour under. Mr. Lyons put the case quite fully to the Prime Minister, and Mr. McPhee, the present Treasurer, and Mr. Grant, another Minister, also made definite representations on the matter. From what the honorable member for Darwin (Mr. Bell) has just said, it is clear that at least two amounts mentioned by the Treasurer in introducing this measure, can be successfully challenged. The Treasurer told us that Tasmania would not now have to pay £13,000 annually in respect of certain sinking fund obligations in connexion with debts incurred by municipalities. But that is not so. Tasmania will certainly have to pay that amount this year. The other amount which we challenge relates to expenses of the Development and Migration Commission. It certainly should have been put on the other side of the balance-sheet. Seeing that both the present Treasurer of Tasmania, and the ex-Treasurer, have informed the Commonwealth Government that unless an extra £30,000 is granted to the State, her accounts must show a deficit, we cherished the hope that the additional amount would be made available. Private members may not move to increase an amount provided in a bill of this description, but we sincerely trust that even if the Government will not increase the grant under the bill, it will adopt some other method of making another £30,000 available to the State. The Tasmanian people generally feel that they have suffered more than any other State through becoming a party to federation. The customs tariff has hit Tasmania very hard. While the larger States have benefited through the tariff, because big industries have been established within their borders, Tasmania has suffered in every way. Our people pay a great deal more in customs duties to-day than prior to federation. They also pay more than they would have been paying had they remained a separate community. Hitherto the Commonwealth Government has treated Tasmania generously, and it is regrettable that its good record should be spoiled now for the sake of £30,000. The Leader of the Opposition (Mr. Scullin) informed us this afternoon that Mr. Lyons had represented to him that at least £30,000 would be needed to enable the Tasmanian Government to square her balance-sheet. Seeing that this request has come from both the Government and the Opposition in Tasmania, it should have been carefully considered by the Commonwealth. The Treasurer told us when introducing this bill that the Tasmanian people were paying less taxation per head than the people on the mainland. That may be true, but the main consideration is not the amount of taxation per head that people pay, but their ability to pay. The ability of the Tasmanian people to pay taxation is not nearly so great as that of the people on the mainland. Some time ago when Mr. Lyons made a former request for financial assistance for Tasmania, the Commonwealth Treasurer practically obliged him to impose additional taxation to the extent of £130,000 per annum on the Tasmanian people. After this extra impost had been levied for some time it was found that it made the position worse instead of better, and the burden was removed. The Tasmanian people are not paying as much taxation per head as the people on the mainland simply because they are not able to do so. I sincerely trust that the Treasurer will give us an undertaking that the additional £30,000 required by Tasmania to enable her to balance her accounts will be made available by the Commonwealth. Tasmania understood that the cost of the operations and recommendations of the Development and Migration Commission for that State would be defrayed by the Commonwealth. If the position is re-considered it will be seen that a fair case has been made out by the Premier of Tasmania for an additional grant of £30,000. I cannot take direct action in this matter, but can only request the Prime Minister and the Treasurer to consider the case once more, and see whether, if not by the present bill, then in some other way, they can supplement the grant at least to the extent of the £30,000.
.- I support the remarks of the honorable member for Wilmot (Mr. Atkinson) and the honorable member for Darwin (Mr. Bell). The latter put the case for Tasmania with particular clarity, and so did the Leader of the Opposition (Mr. Scullin). Tasmania has been in financial difficulty for a long time, and a number of facts, other than those mentioned by the Treasurer, have contributed to her present position.Her remarkable hydroelectric scheme has cost £3,500,000. . When the deputation of Tasmanian members of Parliament met the Treasurer last week, he said that the hydro-electric department was paying its way, and that, therefore,, the grant was to be reduced by £68,000. I am given to understand definitely that the department is not paying its way, but that it is showing a deficit of from £40,000 to £50,000. Therefore, the reduction in the grant on that account should not have been made. I agree with the Leader of the Opposition that a State that has done its best to straighten out its finances should not be penalized. The Commonwealth Government offers with one hand a grant which it says will put Tasmania on her feet financially, and with the other hand, it takes some of the money away. The Treasurer said that, under the bill, Tasmania would be better off financially than when it received a grant of £378,000. That is not so, because the Tasmanian Government is now budgeting for a deficit of £30,000.
– Even after effecting a number of economies.
– Yes. Surely the State Government would not be budgeting for a deficit if it had been placed on an improved financial basis. The Tasmanian authorities are in a better position than the Treasurer of the Commonwealth to know the precise state of their finances.
I am not inappreciative of what has already been done for Tasmania. This Government has helped her to a great extent.
– All Federal Governments have done that.
– Particularly the present Ministry. Tasmanian members are alarmed, however, to see the grant cut down at a time when the State authorities are doing their utmost to solve their financial problems, and are reducing expenditure even on essential works. When I asked the Treasurer last week whether £220,000 would be the net amount of the grant, he replied that £12,000 must be deducted. We find that this sum is for forestry work and mining development in Tasmania. The State Treasurer now contemplates having to pay £24,824 for the work recommended by the Development and Migration Commission, and the honorable member for Darwin may well ask whether the results being obtained from the activities of that body are as satisfactory as might reasonably be expected. If we add the £12,000 to the £24,824, we have a total of £36,824, and, therefore, we are asking the Government to grant to Tasmania an additional £30,000. If the Treasurer will assure me that if the present bill is passed Tasmania will not have to pay the sum of £24,824 for the work suggested by the Development and Migration Commission, I shall be satisfied.
– I told the honorable member that £12,000 represented the expenditure necessary for mining, forestry and other works recommended by the Development and Migration Commission.
– The Treasurer stated that £205,000 was the net amount of the grant. It now appears that that is not so.
– But it is.
– The Tasmanian Government has budgeted to pay £24,824 on account of works recommended by the commission, and that sum is to be taken off the grant.
– That is not so. The sum of £78,000 was already available out of the preceding year’s revenue for the first part of the work recommended by the commission, but, for the further work recommended, £12,000 had been provided by the Commonwealth as part of the grant of £220,000.
– That is a different statement of the case. The £220,000 will now dwindle to £183,176.
– No. The honorable member misunderstands the position. I shall explain it fully when I reply to the debate.
– Very well. The Treasurer said that £68,000 had been deducted on account of the hydro-electric plant, because it was a paying proposition ; but I am informed that it still has a deficit of between £40,000 and £50,000. Therefore, the deduction on that account should not have been made.
– The Tasmanian Government informed us that that scheme was returning interest and working expenses, after making provision for a sinking fund.
– Evidently the Tasmanian authorities, after careful investigation, now find, that the scheme stands in a better position than formerly. As the honorable member for Darwin pointed out, it was unfair that neither the Federal Government nor the Tasmanian Government consulted the Federal members from that State concerning the grant. But, putting that aspect of the matter on one side, there is evidently a discrepancy in the figures mentioned. I hope that the whole matter will be further examined before a final decision is reached, and that on reconsideration the Government will see its way clear to make the grant £220,000 net.
– If the Treasurer will not do that, will the honorable member vote against the Government.
– The State from which the honorable member who interjects comes is in a good financial position, but Tasmania is in dire need of assistance. The Prime Minister referred to Tasmania’s surplus of £95,000 last year. He said that £40,000 of that surplus was deducted in fixing the grant, but that £55,000 was not considered at all. As a matter of fact, that £55,000 is nonexistent. I have no objection to deducting the surplus of £40,000 and the interest charge of £60,000, but I ‘strongly resent the deduction of £68,000 in respect of the Hydro-Electric Department, and the reduction of the grant itself. I appeal to this Government to give Tasmania an opportunity to gain some measure of financial stability. The Government of that State has curtailed some very necessary works in an endeavour to improve the financial position. As has already been stated, we cannot move to increase the amount under discussion, but I ask the Treasurer to overcome the difficulty by fixing the amount of the grant at £220,000 net. Tasmania has a good deal of road-making to do, and has to provide 15s. for every £1 granted by the Federal Government for that purpose. The more we improve our roads the greater becomes the competition with our railways, and, therefore, the State revenues suffer in consequence. Tasmania is isolated from the mainland, and frequent stoppages of shipping have seriously retarded its progress. At times our goods have rotted on the wharves, and we have been unable to obtain materials from the mainland. Last week this House consented to the expenditure of £75,000 on the building of a road from Canberra to Goulburn. Roads cost money, and they cost more to build in Tasmania than they do on the mainland. Tasmania has spent more money on roads than has any other State, and that money has been provided principally out of revenue. I urge the Government to give to Tasmania the assistance necessary to enable it to carry out its financial obligations.
– I wish to refer very shortly to two or three points raised by honorable members, in order to clear up a certain amount of confusion which apparently exists in their minds. I understand that the request for an additional £30,000 is based on the assumption that the Tasmanian Government estimates a deficit of £30,000 on this year’s accounts; but let me give to the House the estimated and actual figures for the last three years, so that honorable members may judge whether that estimate is reliable. For 1925-26, it was estimated that there would be a deficit of £100,000, but there was actually a surplus of £28,000; for 1926-27, the estimated surplus was £22,000, and the actual surplus was £185,000; and for 1927-28, the estimated surplus was £18,000, and the actual surplus £95,000. In view of those figures, I think it is not unreasonable to assume that the results for this year will be much better than anticipated. When we discussed this subject with the Premier of Tasmania, he accepted our basis of calculation as reasonable.
– Tasmania has certain commitments this year for which the Treasurer has not allowed.
– It is as well to clear this matter up once and for all. A discussion took place in March last between Senator Sir George Pearce, the Chairman of the Development and Migration Commission, Mr. Lyons, various officials of the Tasmanian Government, and myself. A round-table conference took place, and the position was discussed in detail from various aspects. The notes that I have recording the conversation show that Mr. Lyons stated that the grant had been of great value, but that a grant for a period of two years was insufficient. He suggested that the grant should be for a longer period. He went on to say that there would be a surplus for the year of between £30,000 and £40,000, and indicated that it would be fair for this to be deducted, and a further deduction made perhaps in respect of railways expenditure. He suggested that the amount of the grant should be reduced only where definite savings could be indicated. That is exactly what is being done. We arrived at these figures after allowing for a surplus of £40,000; but the actual surplus for the year has proved to be £95,000, and for the previous year the surplus was £185-,000. The latter surplus was obtained after providing £18,000 to carry out the recommendations of the Development and Migration Commission respecting agriculture. It had never been suggested at any time during the discussions that additional assistance was necessary to cover that expenditure. The figures are based on the assumption that there will be a similar expenditure this year and similar taxation- and the maintenance of the position in statu quo. But in this year’s grant we have made provision for a sum of £12,000 to permit of a further application of the recommendations of the Development and
Migration Commission in connexion with Tasmania’s development. For 1927-28, the expenditure provided for agricultural development was £18,000, and there was a surplus that year. In addition there is to be an expenditure this- year of £1,600 for the State Developmental Board; £5,000 for forestry; £5,000 for minerals; totalling £11,600, or, approximately, £12,000. That expenditure is allowed for in the proposed grant. There has never been the slightest suggestion on the part of the Tasmanian Government or anybody else, with regard to the recommendations of the Development and Migration Commission, that the Commonwealth Government would do more than guarantee, if Tasmania found it impossible to find the money for its commitments, to come to the rescue.
– In arriving at the grant an amount was deducted equivalent to the surplus.
– Nothing of the sort. The actual surplus was £95,000, and we deducted only £40,000. The Tasmanian Government has £55,000 in its accounts on which to come and go.
– The expenditure on the Development and Migration Commission was taken into account.
– The Tasmanian Government, after providing £18,000 for this expenditure in 1927-28, still had a surplus of £95,000. What we have done this year is to give Tasmania the benefit of £12,000 to ensure the carrying out of the further developmental programme suggested by the Development and Migration Commission. We found that £205,000 represented roughly the amount necessary to keep Tasmania’s finances in statu quo. We then estimated that £12,000 would be needed to stimulate development further, which made the total £217,000, and we fixed the grant at £220,000 as a round sum. The only alteration that we are making is that possible definite savings are to be taken into account, and one saving will be the result of the financial agreement, which will permit of a gain to Tasmania of £13,000. It has been suggested that some difficulty may arise in connexion with that £13,000, because it will involve an alteration of the law in respect of sinking fund adjustments; but other States have had to alter their laws in this regard, and, in any ease, Tasmania will have at its disposal the margin of £55,000 between the anticipated surplus and the actual surplus of last year. It is, therefore, a matter for the State itself if it does not feel disposed to alter its law.
– Tasmania must do that this year.
– It is purely a matter for the State itself. There are still several months of the calendar year, and almost the full period of the financial year, in which the alteration can be made. The next point that arises is in connexion with the £53,000 set down for railway rolling-stock depreciation. This matter was discussed very fully with the Commissioner of . Railways of Tasmania and the Under-Treasurer of Tasmania, and we understood that they both thought it reasonable that this amount should be deducted from the grant. Its inclusion was a departure from the general practice throughout the rest of Australia, and the Commonwealth Government saw no justification for asking the taxpayers of the rest of Australia to permit Tasmania to do something which, by reason of the condition of their finances, the other States were unable to do. It was also an entirely new departure in Tasmanian finances, because the provision was not made in 1925-26 and earlier years. The Tasmanian officials whom I have mentioned agreed that it was unreasonable to make this a charge against the other States; and, after all, it would amount to that if it were to come out of the special grant from the Commonwealth. The Prime Minister has explained the attitude of the Commonwealth Government as clearly as possible. For many months the Government has given the position of Tasmania the most sympathetic and earnest consideration, and the Development and Migration Commission has spent a large part of its time in dealing with Tasmanian affairs. After careful investigation the Government has decided that, while the transport investigation is proceeding, it is necessary to maintain the State in the position it occupied last year. At the end of this investigation we hope to be able to deal with the position of Tasmania on a permanent business basis.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages, without amendment or debate.
Bill presented by Dr. Earle Page and read a first time.
– I move -
That the bill be now read a second time.
This bill deals with four matters. The first is the exemption of all lands upon which agricultural shows or shows of a like character are held, provided that the land is owned by or held in trust for a society which is not carried on for the pecuniary profit of its members and is established for the purpose of holding such shows, provided, also, that the revenue of the society is applied substantially towards the promotion or holding of such shows. At present the act exempts only showgrounds which are used entirely as sites for a showground, but in most country towns and even in the capital cities of Australia, showgrounds are frequently used for other purposes, and the income derived from those purposes is used for building up those annual functions which are one of the greatest institutions in Australia, and one of the greatest advertisements we can have for our production - primary and secondary. The Government feels that a technical breach of the act of this character should not compel a showground used for other purposes than the holding of a show to be mulcted in land tax. The amount involved is small at present, but may grow to be very substantial and may impose a severe hardship on societies in control of showgrounds. The amendment really proposes what appears to have been the obvious intention of Parliament when the land tax was first imposed.
The second amendment in the bill is to extend the existing period of six months at the end of which land tax in dispute must be refunded, if paid, and if an objection or appeal against it has not been finally determined. It will be remembered that last year the provision relating to the six months period was inserted in the act, and it is now suggested that there should be an extension of this period to cover the period of delay which may be caused by a taxpayer through his neglect to furnish information required by the Commissioner in connexion with the determination of an objection or appeal. It is quite evident that any delay thus occasioned is outside the control of the Commissioner. At the time of issuing his request for information, the Commissioner will fix a date by which the information should be furnished, having regard to the time that should reasonably be required by the taxpayer to obtain and furnish the information. This period of grace will necessarily vary with the circumstances of each case, but in any case it will not be less than fourteen days from the date of the Commissioner’s request. If the information is not then furnished, any further time taken by the taxpayer in furnishing the information will be added to the period of six months mentioned, so that the liability to make a refund of tax in dispute will not arise until the expiration of the period so extended.
The third amendment is a provision to prevent appellants to courts from delaying indefinitely the final adjustment of the tax by failing to set down their appeals for hearing by the court. As the law stands, the taxpayer is, by the rules of the court, the only person who may set down an appeal for hearing. All that the department may do is to transmit the appeal to the court and await further action by the appellant. The ability of a taxpayer to defer indefinitely the setting down of his appeal has for years past been a source of inconvenience, and the position has been greatly aggravated by the amendment of last year, whereby the Commissioner was required to refund the tax six months after its payment in any case in which the taxpayer had lodged an appeal, and that appeal had not been finally determined. Taxpayers were thus offered a direct inducement to appeal, irrespective of the merits of their case, in order to obtain refunds of their taxes and defer indefinitely the repayment of amounts so refunded. Cases have actually arisen in which taxpayers have sought, in this way, to take advantage of the law. The provision in the bill will enable the court upon the application of the Commissioner to dismiss an appeal for want of prosecution, if, in its opinion, there is an unreasonable delay on the part of the taxpayer in setting down the appeal for hearing.
– Who will decide whether the delay is reasonable or unreasonable ?
– I take it that the court will decide that point. It may, upon the application of the Commissioner, dismiss an appeal.
Finally, power is being granted to a land valuation board to confirm the assessed value in dispute in default of the appearance of the taxpayer before the board for the purpose of the review, with a saving provision, however, enabling the board, upon good cause shown, to re-open any such case within a certain time to be prescribed. It is sometimes found that the appellant has not arrived with his appeal, and as there is no power at present for the board to confirm the valuation, it becomes necessary for it to fix another date for dealing with the case, and incur unnecessary expense in travelling from head-quarters to the place of hearing. In the interests of economy it has been the practice in the past to deal at the one time with a number of cases in any particular State. It would be a great inconvenience to the members of the board if they had to be brought back to deal with one case simply because a taxpayer had not been in attendance to submit his appeal. It is therefore felt that if satisfactory reasons are not advanced by an appellant for his non-attendance, the board should have power to confirm the valuation; but provision is made so that on a satisfactory reason being shown for re-opening the matter the board will be able to re-open it.
Debate (on motion by Mr. Scullin) adjourned.
Sitting suspended from 5.45 to 8 p.m.
In Committee of Supply (Consideration resumed from 30th August, vide page 6229), on motion by Dr. Earle Page -
That the first item in the Estimates under division . 1 - The Parliament, namely, “ The President; £1,300” be agreed to.
.- The budget speech delivered last week by the Treasurer (Dr. Earle Page) contains much self-adulation, but very little consolation for the people of Australia. The honorable gentleman showered upon himself and his government many compliments. In the first few pages a number of selfcongratulatory phrases are repeated again and again - for example, “ rigid control of expenditure,” “ regard for economy,” “ judicious expenditure,” and the like. These may be regarded as nothing more than flora] tributes strewn upon the grave of Dr. Page’s last budget.
Some years ago, when the honorable gentleman was a private member, the present Prime Minister (Mr. Bruce), who was then Treasurer, delivered at Maryborough (Victoria), a speech in which be described him as a “ paralyzing leader,” and said that if he were given the opportunity to run this country he would lead it to ruin. Yet a few months after he had made that declaration the right honorable gentleman handed over the Treasury to him.
I propose to review some of the events that have since occurred. The year which ended on the 30th June, 1923, closed with an accumulated surplus of £7,400,000. At the end of June, 1928, there was an accumulated deficit of £2,600,000, and the accumulated surplus, which was a heritage from previous governments, had disappeared. When the deficit was announced at the end of June last, there was considerable speculation as to what would be proposed by the Government to wipe it out and square the ledger during the current year. The question asked on all sides was, is there to be increased taxation or a reduction of expenditure? No other means of balancing the ledger are known to ordinary mortals. But those who anticipated either one or the other course were not acquainted with the financial wizardry of the honorable gentleman who is the administrative head of the Treasury Department. He would not do anything so common on the eve of an election. He had a brilliant brain-wave, which, as evidenced in the budget speech, is that for the present the deficit is to be held in suspense. The taxpayers of Australia also will be in suspense until the elections have been held.
– Even Micawber did not think of that expedient.
– Nor did Dick Swiveller. I should like the Treasurer to tell me how a deficit is placed in suspense. A surplus is real and tangible; you can spend it, you can place it to reserve, or in a trust account. But how can you suspend a deficit?
– A deficit also is a very real thing.
– This particular deficit is £2,600,000 less than nothing; yet the honorable gentleman proposes to suspend it! In my younger days I gained a smattering of science. I learned that there is not such a thing as an absolute vacuum; that you cannot entirely empty a vessel. But scientists evidently know nothing about the subject. Dr. Page presides over a treasury that contains £2,600,000 less than nothing; and he proposes to suspend that minus quantity! I do not know how the idea originated with him. Perhaps he recalled the story of bis boyhood days about hanging a guinea pig by the tail. Before I saw a guinea pig I did not doubt that it was possible to perform the feat, but after I had seen one I wondered how it was done. Any one who has the slightest knowledge in regard to a deficit will wonder from what end it is to be suspended. The honorable gentleman is no more able to suspend a deficit than to hang a guinea pig by the tail.
Having stated that he proposed to suspend the deficit, he made the declaration that it was to be gradually reduced; and even to effect that purpose he is relying upon an increased flow of imports into Australia. Every person who wishes to see this country make progress is anxious that the imports of foreign goods shall diminish rather than increase. It is estimated that the receipts from customs duties will increase this year by £1,600,000. Actually those for the first two months have fallen short of the estimate by £509,000, and are £797,000 below the figures for the corresponding months of 1927-28. If the present trend is maintained during the balance of the year, the honorable gentleman’s expectations will not be realized. But if he is to get from this source £1,600,000 more than he received last year, our imports during the next ten months will have to be £12,000,000 greater than they were in the last ten months of 1927-28. Even if the estimate were realized, however, we should still have a deficit of £2,615,000 at the end of June, 1929. It is proposed to spend £2,000,000 less from revenue and £1,400,000 more from the loan fund, than was expended last year. That is not economy.
– It is loading up the interest bill.
– The effect of that policy will be to load up the interest bill, as the honorable member for Maribyrnong says.
The Treasurer has endeavoured to show that there has been no increase in taxation. He claims that taxation must be measured according to production and population. He has shown that in 1926-27 taxation, based on production, was less than in 1921-22. Following his usual practice, he has selected for his comparison the particular periods that suit his purpose. The year 1921-22 was one of low production. The proper method is to strike an average over a number of years. In the year 1920-21 the value of production was £40,000,000 greater than in 1921-22; and in 1923-24 also it was considerably more. A comparison with the latter year shows that the percentage of taxation to production in 1926-27 was slightly higher. The Treasurer’s comparisons invariably prove misleading when they are closely examined. Let us scrutinize his comparison on the basis of population. He has shown that taxation per head in 1921-22 was £9 0s. 4d., and that the estimate for this year is £9 4s. 4d. It must not be forgotten that 1921-22 was the year in which the present Treasurer was denouncing the present Prime Minister for being wildly extravagant. He then said that Mr. Bruce ought to go into sackcloth, and put ashes on his head. Yet to-day the taxation is 4s. a head greater than it was at that time ! We have been told that it is not to be increased. That is incorrect. Certainly no increase is to be placed upon those who, according to our taxation theories, are best able to bear it. We grant exemptions which remove from the taxa tion field those who are not in a position to pay. But under a proposal that will be placed before honorable members during the present week, the circle of income taxation is to be ‘ extended to embrace many thousands of persons whose incomes hitherto have not been sufficient to render them liable to pay tax. The proposal is to tax the profits that are derived from the investments of life assurance companies, the bulk of which are mutual companies. They obtain their funds from breadwinners, who wish to make provision for their dependants after their death. When you tax the profits they derive from investments, you either reduce the bonus that is distributed among policy-holders, or you compel the company to increase its premiums. The more the premium is increased, the lower is the sum for which the majority of persons can become assured. Therefore, they cannot make such substantial provision for their dependants in the event of their death. This will have a most detrimental effect upon tens of thousands of persons, many of whom are among the poorest of the community. These persons are being taxed whilst many who are better able to pay are to have their taxation reduced. These are the methods by which the Government is hoping to reduce its deficit next year.
The Treasurer in his budget speech invites us to review the figures of the last six years, but it is interesting to go a little further back. If we compare the period to which he refers with the six-year period preceding it, we at once find a telling answer to the assertion that during the regime of this Government taxation has been reduced. That is a statement which has been broadcast all over the country. For the six-year period 1916-22 the total amount of taxation collected by the Commonwealth was £225,000,000, whilst from 1922 to 1928 the amount was £323,000,000, or an. increase of £98,000,000. For the last six-year period customs duties alone showed an increase of £77,000,000 over the preceding six years. That is the principal source from which the Treasurer has been obtaining revenue. For the six-year period 1916-22 our imports were valued at £606,000,000, whilst from 1922 to 1928 they were valued at £894,000,000, an increase of £288,000,000. The average annual importation to Australia for the last six years “was valued at £150,000,000, whereas the annual average for the previous six years was £100,000,000, an annual increase of £50,000,000, or approximately £1,000,000 a week. The total imports for the last six years averaged £25 2s. per head of the population, as against an average of £19 6s. for the previous six years. In view of these figures, it is not surprising to find that unemployment is prevalent, and that our industries are languishing. We shall never make this country great until those in authority legislate in such a way that we shall manufacture more of our requirements instead of purchasing them so largely overseas.
What has been the effect of this unsound policy? For years we have been faced with adverse trade balances, which have produced a serious financial position in Australia. It is interesting to institute a comparison. In the period 1916-22 our imports were valued at £606,000,000, and our exports at £703,000,000, an excess of exports over imports of £97,000,000. During that period our position was sound, but what are the figures for the last six years?
– There was a dearth of shipping due to war conditions in the earlier period.
– The honorable member can take periods since the termination of the war, and he will get the same result. For instance, honorable members can compare the last four years with the preceding four years, which do not include any part of the war period, and they will find the contrast as great. For the six-year period 1922-28 our imports were valued at £894,000,000, and our exports at £834,000,000, showing an excess of imports over exports of £60,000,000. The Prime Minister (Mr. Bruce) and the Treasurer (Dr. Earle Page) have treated the subject of our adverse trade balance very lightly. We have been told in this chamber, and the statement has been repeated outside, that other countries when in a prosperous state have had adverse trade balances. The Prime Minister stated in this chamber that as Great Britain, which has had an adverse trade balance for years, was prosperous, we had nothing to fear. Any one who has only an elementary knowledge of economics will be aware that it is misleading to cite Great Britain, which is a creditor nation. A creditor nation can have an excess of imports over exports, and still be in a sound financial position. Great Britain receives interest in goods on the millions she has invested abroad, and consequently has an excess of imports. But Australia, which is a debtor nation, is in a different category. We must export more than we import to meet our liabilities in interest on money borrowed abroad. Let me give a simple illustration. If a man earning £10 a week spends at the rate of £12 a week, he will soon be in difficulties; but; if he is receiving a salary of £10, and his investments return him an additional £2 a week in interest, he can still spend £12 a week without getting into debt. Britain can h’ave an excess of imports over exports without incurring any financial risk; but Australia cannot continue to do so, and remain solvent. We have to be guided by what has happened in the past. I should not be alarmed if we had an adverse trade balances for one year only, because an adjustment could probably be made in the following year; but when we have a succession of adverse balances, or when over a period of years our imports are in excess of our exports, we are on dangerous ground. The figures I have quoted are very disquieting, and the whole position should be seriously considered by the Government instead of being treated so lightly. From 1876 to 1892, when there were heavy overseas borrowings, we were faced with a succession of adverse trade balances. During that period our imports represented £100 for every £80 worth of exports. In 1893 Australia experienced a financial crisis such as may occur again if the Government pursues its present policy. I do not wish to cause alarm by saying that Australia is on the verge of a financial crisis such as occurred in 1893, because I think that we are in a much stronger position now than we were at that time. There is, however, a limit to the extent to which a nation, or an individual, can go. After the crash of 1S93, until 1922, there were only five out of 30 years in which there was an adverse trade balance; but since this Government came into office, and permitted a flood of imports into Australia, there has been only one year in which our exports have been in excess of our imports. During the last six years Australia has, in the aggregate, been on the wrong side of the ledger to the extent of £60,000,000.
In dealing with the subject of borrowing and Australia’s debt, the Treasurer made certain statements which he cannot justify. He said, among other things, that one outstanding fact was the effective action which the Government has taken for the reduction of our national debt, he facts are that during the time this Government has been in control of the finances of the Commonwealth the public debt due in Australia on the 30th June, 1923, excluding debts due on account of the States, was £247,000,000, and that due overseas £111,000,000. On the 30th June, 1928, the amount of debt due in Australia, excluding State debts, was £222,000,000, and that due overseas, £150,000,000. A study of these figures shows that during that five-year period the debt due in Australia was reduced by £25,000,000; but that due overseas was increased by £39,000,000. It is easy to. boast about a reduction in what is called the dead war debt when there has been an increase of £39,000,000 in our overseas debt. What is the advantage in wiping out the debt due in Australia when our overseas indebtedness has increased by the amount I have mentioned.
– Our position is worse;
– And the interest is being paid overseas instead of to our own people.
– The interest paid on our overseas loans in 1923 amounted to £5,500,000, and in 1928, to £7,500,000- an increase of £2,000,000. What has been the economic effect of that large increase in our overseas indebtedness? Every one knows that loan money is brought to Australia in the form of imported goods, and that goods to that amount have been imported, and upon them customs duties have been collected. The revenue derived from this source has been responsible for the surpluses which have been announced by the Treasurer from year to year. These surpluses have been possible only in consequence of overseas borrowing. This is what the Treasurer calls sound finance. He has been pursuing this foolish policy for some time, and has failed to make- provision for a rainy day. We have now reached a position when revenue from this source is dwindling. That is why the Government is faced with a deficit.
– Is not a considerable quantity of our exports used in payment for our imports ?
– I have been speaking of our adverse trade balance. Imports are paid for by exports; but a debtor nation like Australia must not only send oi.it exports to pay for imports, but must have excess exports sufficient to pay interest on oversea debts. There is only one way in which a nation can import more than it exports and that is by going on the foreign loan market. That is the policy which this Government has been following for a long while.
The Treasurer had a good deal to say about sinking funds. He suggested that Australia had no sinking fund until the act for which he was responsible was passed in 1923. He paid no regard whatever to redemption funds in existence prior to 1923, to which contributions were made and are still being made from the profits of the Commonwealth Bank and the Australian Note Issue. The profits of the Commonwealth Bank, from its inception to the 30th June last, have amounted to £6,740,000. The profits from the note issue from its inception have amounted to £16,640,000. The total profit from these two sources has reached the substantial sum of £23,380,000. In the financial year ended 30th June, 1928, the profit of the Commonwealth Bank was £708,901, and of the note issue £1,138,000, the total for the year being £1,837,000. Half of the profit from the Commonwealth Bank goes into the sinking fund, three-quarters of the profit from the note issue goes to revenue, and the other quarter to the rural credits account. We may assume that the three-quarters of the profit from the note issue that goes to revenue also finds its way into the sinking fund. That is the purpose to which the note issue profits were generally applied. If we were to take half of the profits of the Commonwealth Bank and three-quarters of the profits from the note issue, which go into revenue, and then into the sinking fund, we should find that the Treasurer would get more than sufficient money in a period of 50 years to pay off £240,000,000 of Australia’s public debt without calling upon the general taxpayer for an extra Id. of taxation. The credit for this is due, not to the present Government, but to a previous Labour Government, which established the Commonwealth Bank and the Australian note issue in the face of the fiercest opposition of its antagonists. These critics sneeringly said that the Labour Party would run the country to ruin; that the bank was a wild cat socialistic scheme; and that the notes would be worthless. It was stated that although the notes would have behind them the financial backing of the Commonwealth, they would not be honored. They were contemptuously called “Fisher’s flimsies “. These people who, for political reasons, damaged the nation’s credit, are now claiming credit for the substantial profits from these two remarkably successful institutions.
The Government last year cut down the vote for public works by £1,200,000 and, in doing so, said that it was conducting an economy campaign. My reply is that to delay the completion of necessary public works upon which large sums of money have been expended is generally a waste and not an economy. Take the Murray waters scheme as an illustration. Something like £6,000,000 have been spent upon that work to date, and our only hope of getting any return at all from the expenditure is by applying water to the land, for irrigation purposes. The longer the completion of the work is delayed the longer shall we have to wait for a return on our expenditure. A delay of one year in the completion of these works will mean a loss of £300,000 in interest alone. It must be apparent therefore that delay is not an economy but an extravagance. We should push on with the completion of the public works that are in hand before embarking upon new undertakings and involving ourselves in new obligations. What justification can the Government show for cutting down the expenditure on these works and so throwing many hundreds of men out of employment? It is said that money is not available, but £400,000 is being provided this year for immigration purposes, and another £400,000 is being handed back to our large land-owners by relieving them of taxation. The Government is also appointing innumerable persons to highly-paid positions of its own creation, many of which are mere sinecures and not reproductive in any sense of the word. Such a financial policy will not appeal to the level-headed people of this country.
The budget that was submitted to us last year was severely criticized by honorable members on both sides of the chamber. The Government was told plainly that if it did not take care it would in the very near future have to face deficits. It was urged to cease extensive public borrowing abroad and thereby prevent, to some extent at least, the flooding of this country with foreign manufactures. It was told that its inflated customs revenue must very shortly be reduced and that it would have to answer for its mismanagement of the nation’s finances.
It refused to take any notice of either advice or warnings. The Prime Minister replied to the criticisms of both supporters and opponents of the Government by asking that specific items of expenditure should be called into question. He said, in effect, “ It is not sufficient merely to make general statements.” The honorable gentleman then dealt with some items of expenditure from different departments and threw out innumerable challenges to the critics of the Government to indicate which specific items they would wish to see reduced. The answer to statements of that kind is that it is not the duty of those who have no Ministerial responsibility to say whether moneys spent within departments are being wisely or foolishly spent. Private members have not a sufficiently intimate knowledge of the inner workings of the departments to definitely state what items are justified and form a reliable judgment on such a matter.
I have carefully examined the expenditure and the proposed vote for the Prime Minister’s Department, and intend to put a series of questions to the right honorable gentleman in acceptation of the challenge he threw out a year ago. It may be assumed that he has detailed knowledge of the expenditure in his own department. He should, therefore be able to justify the items to which I shall refer. I am only taking one department, leaving the others to be dealt with on the general Estimates.
An amount of £906 is proposed to be voted for a liaison officer in London. What work is that officer doing? Are we getting an adequate return for the expense involved?
An amount of £2,000 is to be provided as salary for the Commonwealth financial adviser in London, together with an additional £250 for entertainment purposes. This office was created two years ago. Is it intended that it should be permanent? Is the officer justifying his appointment? How did we get on before we had such an officer ? A few years ago we had to borrow something like £400,000,000 to prosecute the war. Of this amount £100,000,000 was borrowed abroad and £300,000,000 in Australia. We were able to do it without the help of a special financial adviser. Why is this officer necessary now?
Last year an amount of £5,548 was spent by the High Commissioner in advertising, although only £2,500 was voted for the purpose. Will the Prime Minister tell us why the vote was exceeded by £3,000, or more than 100 per cent.? We are surely entitled to an explanation.
Why is £2,000 to be voted for expenses in connexion with the official residence of the High Commissioner in London when last year we provided £9,900 to buy the lease of a residence for him, and for 192S-29 provide £650 to maintain it? Previous to last year we were accustomed to vote £2,000 a year to provide the High Commissioner with an official residence, but having voted £9,900 to buy the lease of a house and £650 to maintain it, why are we still asked to vote the £2,000?
What return are we receiving for the expenditure of £5,000 per annum in salary and allowances to the Trade Commissioner in the United States of America? The Prime Minister should give us some details in justification of this expenditure, to say nothing of the expense of the staff which the Commissioner has gathered round him.
The Development and Migration Commission is covered by the proposed vote for the Prime Minister’s department. This is only one of the many expensive commissions appointed by this Government. The amount to be provided for it this year, on the administrative side, is £127,618, compared with £99,483 in 1926-27. We must add to that £13,250 in salaries for ‘ the Commissioners, and £300,000 provided by the loan- bill for passage money for migrants. It will be seen, therefore, that the total cost exceeds £400,000 per annum. How can this be justified when the vote for necessary public works in Australia is being curtailed for the want of funds and Australians have to remain idle ?
Let us take another item under the heading “ migration “. An amount of £36,000 was provided last year to cover the cost of the Australian end of the administration. It is proposed to vote £42,000 for the purpose this year, an increase of £6,000. Last year the amount voted for the London end of the organization was £31,921. It is proposed to increase that figure to £34,195 this year. Surely we are entitled to some explanation of those items. Under the heading “Investigations”, the sum of £25,898 was spent last year by the Migration Commission, and for the same purpose £25,000 is included in the Estimates for the current financial year. What is the nature of these investigations? In addition to the office clerks, there are about 25 of these investigating officers, receiving salaries up to £1,300 a year. This Parliament is entitled to know what these highly-paid officers are investigating. There is another item of £3,000 for special reports and investigations. What special reports are anticipated? I point out that this amount is in addition to the £25,000 already referred to, thus making a total of £28,000 for investigations.
A sum of £14,900 is set down as a contribution towards the cost of the establishment and maintenance by the States of reception and farm training depots. Have any reports been received regarding these depots, and, if so, what is their nature? We should know whether these training depots are performing any’ useful work. There seems to be an air of mystery surrounding them. For the training of domestics overseas, the sum of £4,000 is provided. Where is’ this training being carried out, and what justification is there for the expenditure?
Another large sum - £11,310 - is provided under the heading “ Subsidies for voluntary organizations for the after-care of migrants.” This Parliament is entitled to know what are these organizations and the nature of the after-care of migrants they are supposed to perform. If any reports on their work have been submitted to the department they should be made available to honorable members.
The salaries of the members of the Development and Migration Commission for 1926-27 amounted to £9,262. In the following year they were paid £10,796, whereas for the current financial year the expenditure for salaries is estimated at £13,250, an increase of approximately £4,000 over the expenditure of 1926-27. What is the reason for the increase?
Last year the sum of £1,356 was expended on the Advisory Committee of National Insurance. I understand this committee is Senator Millen, who was appointed a committee to overcome the legal objection to a member of Parliament being paid in this way. For the current financial year another £500 is to be expended on this committee. There is also an expenditure of £600 last year to provide honorariums for experts in connexion with national insurance. This expenditure is in addition to the cost of the Royal Commission on National Insurance, amounting to £11,495. There is no word of explanation of this expenditure; honorable members have to dig for information which should be made available to them by the Government.
The payment last year of £36,000 to investigating commissions, apart from permanent commissions and boards, shows the cost to the country of the delegation by an irresponsible government of its duties to other bodies.
The sum of £2,271 has been expended in preliminary expenses in connexion with the British Empire Exhibition, Sydney. When the Prime Minister moved the second reading of the bill providing for this exhibition, he spoke in the most glowing terms of the benefits which would accrue to Australia from the holding of the exhibition. But not one member rose to support the bill. Even among his Ministerial colleagues there was not one to champion it. A few days later the bill was withdrawn. Even the Prime Minister’s optimistic estimate of the result of the exhibition showed that a loss of £500,000 was contemplated in connexion with it. The honorable member for South Sydney (Mr. E. Riley), in a careful analysis of the proposed receipts, exposed the unsoundness of the Prime Minister’s figures, and showed that the loss would be much greater. The criticism of the bill lasted only one day, but it was sufficient to secure the withdrawal of the measure. Notwithstanding the lack of support accorded to that measure, the Government incurred preliminary expenses amounting to £2,271 in connexion with the exhibition. I ask on what authority it spent that money. The Treasurer, who authorized the expenditure, talked a great deal when a private member of responsible government and “ dropping the loot.”
– It is a long time since we have heard that term.
– The honorable member will hear it again. Dr. Earle Page, when a private member, criticized governments for spending money without the authority of Parliament, and advocated the restoration of responsible government, but as Treasurer he does the very thing of which he previously complained. Taking it for granted that its legislation would receive parliamentary approval, the Government went ahead with its preparations for the exhibition. Its action in anticipating the decision of Parliament has resulted in £2,271 of the people’s money being wasted. Honorable members who support the Government would be the first to complain if their own money was wasted in this manner. Honorable members, as the custodians of the public funds, have a responsibility to the people of this country. They have a right to protest against the action of a government in spending money in this way without the authority of Parliament.
On the visit of the Secretary of State for the Dominions £2,216 was spent last year. I have no objection to the Government entertaining distinguished guests, but I do object to such lavish expenditure on them.
– Does the honorable member think that these visitors should spend their own money to come to Australia ?
– I do, and I see no reason for such lavish expenditure for their entertainment. Contrast this expenditure with the grant of £1,000 for the relief of distress among unemployed returned soldiers and their dependants. The Government, which expended £2,216 in entertaining one visitor, could find only £1,000 to distribute among needy returned soldiers and their dependants.
Another new item in these Estimates is the sum of £2,000 for the GovernorGeneral because of his having to live at Canberra. This sum is in addition to his salary of £10,000 per annum. The Governor-General is to be paid an additional £2,000 a year because he has to live at Canberra for a few months during the year, whereas public servants, who have to live here during the whole of the year, receive on the average about £50 a year as an allowance ; some of them receive only £39 a year. No honorable member will say that that allowance is sufficient to meet the extra cost of living and the high rentals charged at Canberra. While the Governor-General is treated generously in this matter, the allowance for public servants is cut to the bone.
Repairs to Government Houses during the year are estimated to cost £26,600. Where are these repairs to be effected, and what is their nature? This expenditure is in addition to the £70,000 already spent in repairing Yarralumla.
– Do not mention that.
– Apparently it is a spectre that haunts the honorable gentleman.
– It is.
– The £70,000 has been spent; but the £26,600 provided in these Estimates has not yet been disbursed. What is the honorable member for Fawkner (Mr. Maxwell) going to do about it? Probably the item will be rushed through at 2 o’clock or 3 o’clock in the morning without any explanation being given. A government which is prepared to spend £26,600 in repairing the Governor-General’s residences, in addition to the £70,000 already spent, has money to burn. There has been no satisfactory explanation of the excessive cost of repairing Yarralumla, and there will be no adequate explanation of the further sum of £26,600 to be expended in repairing other Government Houses.
I have referred to but a few of the instances of extravagance in one department. The items I have mentioned amount to over £500,000. If I were to go through these Estimates and analyse the proposed expenditure for other departments, I should probably find further instances of a like nature. There is much in the various departments that requires overhauling. We should know whether we are getting value for the money expended in paying high salaries to certain officers. Ten workmen doing useful work are dismissed for want of funds, in order to provide the salary of one of these highlypaid officials. The appointment of “ big “ men to highly-paid positions seems to have been the Government’s chief activity during its term of office ; apart from such appointments its record is practically barren.
In six years it has collected in taxes nearly £98,000,000 more than was collected during the previous six years. The whole of that extra revenue has been expended, and, in addition, an accumulated surplus of over £7,000,000 which was taken over. Despite that enormous increase, of money available for expenditure amounting to over £100,000,000, the Treasury to-day is empty, and there is a deficit of £2,630,000.
That is a brief review of the financial position of Australia. The manner in which the financial affairs of this country have been conducted would in the end ruin any nation, however prosperous it might be. The Government has borrowed and spent money lavishly in good seasons, careless of the fact that lear. seasons must follow. Last year a setback in parts of Australia turned a surplus of two and a half million pounds into a deficit of a similar amount. Under the present political control, Australia is not in a particularly happy position. Our prospects at present are not bright. We have over 180,000 men out of work, and our secondary industries are crying out against the flood of importations from
Other parts of the world that has been induced and accentuated by the policy of the administration now in power. Progress reported.
Proposed Government Action
– I ask the leave of the House to make a statement regarding the situation that has arisen in connexion with maritime transport in Australia.
– I do not object to leave being granted to the Prime Minister, but I consider that, as Leader of the Opposition, I should have been paid the ordinary courtesy of being told beforehand that a statement was to be made.
– I much regret that the Leader of the Opposition considers that I have been guilty of discourtesy, but the matter is extremely urgent, and I am only at this moment in a position to make a statement on the subject. I suggest that possibly it will be more advantageous to the honorable member if I make my statement now, because that will give him an opportunity to reply to it on the motion for the adjournment of the House, if he desires to deal with any matter arising out of it. This would probably be more convenient for him than to speak immediately my present remarks are concluded.
It is within the knowledge of all honorable members that very grave difficulty has again arisen upon the waterfront of Australia. There appears to be danger that the whole of our maritime transport, both coastal and overseas, will be held up. We had a recent experience of the dislocation of our shipping transport and its disastrous results to the community. Had it continued much longer, it would have been difficult to estimate its unfavourable consequences. Although this happening is only some weeks old, we are again threatened with a similar hold-up, and it is imperative, in the in terests of Australia, that there shall be no such calamitous occurrence as a stoppage of shipping at the present time.
I would remind the House of the circumstances that have led to the present situation. The difficulties in which the shipping industry was recently placed were the subject of consideration by the Arbitration Court. There had been direct defiance of the court, and the Government had no alternative but to take every action in its power to support the court, and to see that the will of the people, as expressed by the legislation passed by this Parliament, was obeyed. An award has recently been given by the court dealing with the shipping industry. There was first an interim award. When it was announced, both parties to it made strong representations with regard to various parts of it, setting out their views, and asking for a variation. Judge Beeby heard the representations of both sides, and, after full consideration, brought down a final award, which came into operation on Monday of the present week. Already there are indications that an important union is not prepared to accept the award, and intends to throw our whole transport system into confusion.
This Parliament recently passed a measure designed to ensure obedience to the awards of the court by all concerned in industry. The present proceedings constitute a direct defiance of the court, and of an act passed by this Parliament. In the interests of the community it is essential that every possible step should be taken to ensure observance of the law. The present time is most inopportune for Australia to be threatened with the dislocation of her maritime transport industry. The season for the shipment overseas of the primary production upon which the financial stability of the Commonwealth and of the States depends, is approaching. Australia has, during recent months, passed through a difficult period, and our finances must at the present time cause serious anxiety to every citizen. It would be impossible to exaggerate the ill consequences of a hold-up of our shipping. Action along those lines must, therefore, be prevented. Our coastal trade, too, is in a difficult position, and it is affected by the award of Judge Beeby, which came into operation yesterday. At Cairns, and other northern ports of Queensland, it is impossible to get produce shipped to its destination. I have to-day received a .telegram from Cairns stating that 7,000 tons of maize lies on the wharf ready for shipment, but cannot be got away. The tenor of the telegram is that unless something is done to get over the present difficulty the growers, who are faced with ruin, will have no alternative but to take matters into their own hands to ensure the shipment of their produce. In a law-abiding country like Australia, where we have tried to regulate our industrial affairs on the basis of law, it is intolerable that the present situation should be allowed to continue. Therefore, there rests on the Government and on this Parliament, the obligation to insist that our laws are observed to save the people of Australia from the dire distress with which they are threatened. To this end, I have communicated with both the overseas and the coastal shipowners, informing them of the seriousness of the situation, and requesting that they shall take every step possible to ensure that their ships shall sail. I have also communicated with the Premiers of the States. This Government proposes to do all in its power to meet the position. The communication that I -have addressed to the Premiers of the States is as follows : -
The action taken by the Waterside Workers’ Federation, because of their objection to some of the terms of an award given by Judge Beeby of the Federal Arbitration Court is already resulting in holding up much of the shipping of the Commonwealth.
As a consequence of this action by the federation, maritime transport is apparently again to be brought to a standstill, and the trade of the Commonwealth dislocated, an action which will cause serious loss and suffering to thousands of our citizens.
My Government feels that this unlawful and reckless abuse of power by the Waterside Workers’ Federation constitutes a direct defiance of the community, which cannot be submitted to by any self-respecting people.
I have, on behalf of my Government, communicated with the representatives of the steamship-owners, calling upon them to make the necessary arrangements for carrying on the industry in the terms of the award made by the Arbitration Court, and assuring them that the Commonwealth Government will do its utmost to maintain law and order by prosecuting those who unlawfully interfere with the peaceful carrying on of the transport industry of the Commonwealth. lt the interference with the legitimate trade and transport of Australia continues, I propose to advise the Governor-General to issue a proclamation under the Crimes Act, declaring the existence of a serious industrial disturbance prejudicing trade and commerce with other countries and among the States. I will take this action in order to arm the Government of the Commonwealth with the fullest power possible under thu law and in order to protect the interests of the people.
Recognizing the serious results that this disastrous strike must have upon the industries of your States and the well-being of its citizens, I appeal for the full co-operation of your Government and especially ask that due protection be given to all those citizens who are prepared to carry on the work of the marine transport industry under the terms of the award made by the Arbitration Court - a court that has been established by the free-will of the people of Australia expressed through their Parliament.
I am addressing the Premiers of the other States of the Commonwealth in similar terms.
I have also communicated with the Waterside Workers’ Federation, pointing out the difficulties with which Australia - is faced and the consequence of the action that it proposes to take; because we must recognize that if there is a disturbance on this great issue, the result will be most serious. It is imperative that our produce shall be loaded and despatched overseas. The award of the court which is being defied was made only after the fullest investigation of all the circumstances, and after the opinions of both sides had been stated to the court. The Government, therefore, must take definite action to ensure that the ships shall be permitted to transport our produce to the world’s markets.
I trust that wiser councils may prevail, and that a conflict will not be allowed to develop. But industrial disturbances of this description cannot longer be permitted in Australia. There cannot be outside dictation which is actuated by a desire to direct the whole of the affairs of the people of this country. Power has been given to this Parliament to determine these grave issues, and Parliament has taken the necessary action. I make it clear that whatever the consequences - and I realize how serious they may be - this Government is determined to go on, because we believe that only in that way will these difficulties be prevented in the future, and that only by firmness shall we be able to conduct our commerce and industry without interruption.
.- (By leave.) - On only one occasion since I have been leader of this party has the Prime Minister (Mr. Bruce) asked leave to make a statement upon which he has not previously consulted me, and on that occasion the subjectmatter was similar to that on which the right honorable gentleman spoke tonight. It is remarkable that the ordinary courtesy that is due from one leader to another can be extended by the Prime Minister on other occasions but that when industrial conditions are in dispute that courtesy is forgotten. I suggest that there is only one motive underlying the action of the Prime Minister, and that is an endeavour to take me unawares, and cause me to make an extempore statement that might be useful to his party at the general election.
The speech of the right honorable gentleman reeked of the subject-matter contained in his last election speeches, when he capitalized the industrial difficulties which then existed, and swung into power on them. It is significant that similar difficulties are being utilized by him to-day for the same purpose, and that threats similar to those that were uttered on the eve of the last election are again being made. I say that not because I disagree with the general expression of opinion that it is a bad thing for a country if its transport is held up; or that I disagree with the statement that the laws of a country must be observed. I have never stood for the non-observance of our laws, and never will. I shall fight to amend the laws of this country, and shall make the amendment of the wretched Conciliation and Arbitration Act, passed recently by this Government, an issue at the next general election, because I want in its place an equitable law that will be welcomed and respected by the people of Australia. From my place in this chamber I have offered to co-operate with the Government, to sink every party consideration, and to stand as one with the Government in an effort to frame a law that will win the respect and support of employers and employees alike. To-day we have an Arbitration Act that has not the respect or support of either employers or employees.
– Order I The honorable member must not reflect upon a statute passed by this Parliament.
– I shall do what I can to have the law amended, and I shall do. all that I can in my responsible position to have the existing laws observed until they are amended. Probably I have done more than has the Prime Minister to settle this present trouble. I put it to him that threats will not achieve anything. The right honorable gentleman apparently does not understand the psychology of the great mass of working men, and particularly of those who perform their arduous duties on our wharfs. The very last thing that will bring peace to industry in Australia is the continual utterance of threats by the Prime Minister and his Government. There is one action that the Government could take, but which perhaps would not be as effective for it at the next election as the action taken by the right honorable gentleman, and that is to ask the Opposition to join with it in making united representations to both sides in this dispute to have a round-table conference in an endeavour to effect a settlement by conciliation. “We have heard a lot about conciliation and arbitration, and the force* that is behind arbitration. I am satisfied that there are too many threats of force on both sides of the industrial field to-day.
– Too much of the politician, too.
– Probably, but not from this side. As members of Parliament, we have refrained from entering the lists and stirring up trouble. And we have been told that we are too cowardly to express an opinion. Let me tell honorable members that my predecessor - who held this position for more years than I have occupied it for months - and I have been more effective in keeping the wheels of industry going in Australia by refraining from publicly denouncing men and by reasoning with them. The Prime Minister seeks to destroy that influence. I took action yesterday, and already I have had people who are best able to assist, striving to bring about a peaceful settlement of this trouble. The issue of a proclamation under the Crimes Act by the Government is a sprag in the wheel of the good work that we are endeavouring to do. I stand for the law of the country, but I shall never give my adherence to the principle that a Crimes Act can be applied to men whose only offence is a refusal of work. To so apply such an act is to place the action of those men in the wrong category.
– They did not refuse to work.
– I shall come to that point. A refusal to work is not a criminal action as we understand the criminal code in Australia. It is an offence against the law as it stands, but it should never be an offence under a Crimes Act. That is where this Government has blundered. Regarding this specific question, let us not exaggerate the situation. Let the Prime Minister be content to say if he will that an award has been made, and that the men are not prepared to observe it; but why should he go further and make the exaggerated statement that he did a few moments ago, to the effect that these men are refusing to work and are threatening to throw the whole transport service of Australia into chaos? That is not correct. It is not merely a misrepresentation, but a distortion of the truth. Give the men a fair deal by telling the whole truth. And the truth is that every morning at 8 o’clock the men offer in every part of Australia to accept work on ships.
– That is as good as no offer when it is not in” accordance with the award.
– That is not so. If the ship-owners were not spoiling for a fight as badly as anybody else they could get all their work done by means of the 8 o’clock pick-up each morning. They could select then all the men they needed for any hour of the day. Their ships are equipped with wireless; so that they are closely in touch with their movements, and know at 8 a.m. each day the exact number of men they, will require for the day. But they insist upon their pound of flesh under the award, and expect the men to come humbly begging for work at any hour of the day at which they like to offer that work. In certain ports one pick-up a day was considered sufficient, but now the ship-owners want two pick-ups daily at every port. The men have resented the innovation. I agree with their resentment against the two picks-up, and regret that such a provision was inserted in an Arbitration Court award. I have never been able to understand why it was inserted, and I hope that an attempt will be made to have it taken out of the award. Let the truth of the position be told. These men are not threatening to tie up the transport services of Australia. They are offering for work every morning and, with one or two exceptions, the ships were handled yesterday and to-day.
– What about the trouble at Cairns, caused by Brophy and his followers ?
– I am dealing with the general dispute. I do not justify every action taken by any little group here and there. I have not heard any honorable member opposite draw attention to the many provocative actions of employers. There are two sides to this quarrel, and only one has been ventilated. I have no time for anybody who is simply endeavouring to make mischief in’ the industrial field. I have always condemned any such mischief-making. I want the truth of the case to be presented. I remind honorable members that the men have invited a conference on this issue. There are ports in Australia where the system of two picks-up daily has operated for years, but there are other ports where it has never been in force. Does any practical individual tell me that the difficulty could not be overcome by mutual understanding - by conciliation ? That is what we should employ. What is the use of the Prime Minister saying that he did his best to bring workers and employers together in conference? A general conference will solve nothing, but a conference on specific questions that are in dispute will almost always bring about a settlement. In this case the men are willing to confer, but have been rebuffed. Let the Prime Minister use his influence with the ship-owners, and I will use mine with the men, so that we may bring them together in a round-table conference, and so settle the difficulty.
The Prime Minister referred to a previous occasion on which the Crimes Act was proclaimed. I assure the right honorable gentleman that it was not the proclamation of that act that settled the last waterside dispute. He well knows that. The Prime Minister knows who took action and brought about a settlement. Only one body can take any credit for that settlement. It was not effected as the result of the threats of the right honorable gentleman. The waterside workers cannot be frightened by threats, and nobody knows that better than the right honorable member for North Sydney (Mr. Hughes), who has a personal and intimate knowledge of these men. The settlement of the last dispute was effected by the influence of organized industrial labour; it brought its pressure to bear, and ended the strife. That influence has settled 90 per cent, of all our industrial disputes, and no doubt it will eventually settle this one.
The Prime Minister has not settled one of these disputes. If he wishes to avert the position that he fears will eventuate, he should co-operate with this party to effect a settlement. I, too, fear what might happen. I do not want the transport of Australia to be held up and thousands of people thrown out of employment because of a dispute which concerns only one section. I do not wish our produce to remain on our wharves when it should be on the high seas, bound for our markets abroad. I do not desire that this country should receive a set back at a time when it should be at the height of its prosperity. I and my colleagues on this side stand for the men who are the backbone of our country, the industrialists of Australia, and I am confident that these men are prepared to negotiate at a round-table conference and effect a settlement of this trouble. A proclamation under the Crimes Act is futile. Not only is it wrong to bring an industrial dispute within the category of a crime, but it is a particularly mischievous method to employ for the settlement of the present trouble.
.- I move-
That the bill be now read a second time.
This is a small amending measure to the Beer Excise Act 1901-23. Provision is made under section 44 of that act that no beer shall be removed from a brewery unless it is in vessels, of quarts, pints, or half pints, There is imported into Australia stout in vessels which contain quarter pints or what are known as “ split nips “. The Australian brewers have represented to the Government that it is extremely unfair that they are not permitted under the Excise Act, to send out of their breweries anything in vessels holding less than half a pint, whilst under the Customs Tariff, importers are allowed to introduce quarter pints. The purpose of this amending measure is to allow Australian brewers, under the Excise Act to do exactly the same as overseas brewers are permitted to do under the Customs Tariff.
Question resolved in the affirmative.
Bill read a second time and reported from committee without amendment or debate.
Bill, by leave, read a third time.
Bill presented by Dr. Earle Page, and read a first time.
– (By leave.) - I move -
That the bill be now read a second time.
The main purpose of this measure is to remedy certain defects in the Estate Duty Assessment Act, which are responsible for a considerable loss of revenue. As the bill is extremely technical I propose to indicate exactly upon what character of estate duty is levied, and the nature of the defects which are causing the- loss of revenue indicated.
Commonwealth Estate Duty is payable upon the estates of deceased persons in cases where the total net value of the estate, after deduction of all liabilities actual and contingent from the gross value, amounts to £ 1,000 or over. The estate which is subject to duty consists of all real and personal property wherever situated in’ the case of a person who was domiciled in Australia, and of all real and personal property in Australia in the case of a person domiciled outside Australia.
The particular property falling to be taxed consists of property which was owned by the deceased at the time of his death, and which passed to other persons under his will, or by virture of the law relating to intestacy, and includes - (a) gifts inter vivos made by the deceased person within one year before his decease ; (b) property which the deceased settled upon other persons within one year before his decease; (c) property in which the deceased had a life interest which was surrendered by him within one year of his decease; and (d) property in which the deceased had a beneficial interest at the time of his decease, which beneficial interest, by virtue of a settlement or agreement made by him, passed or accrued on or after his decease to or devolved on or after his decease upon, any other person.
The terms “ gift inter vivos “ and “ settlement “ are the subjects of fairly elaborate definition in the principal act; but the definitions and the clauses describing the property which is dutiable are in terms which do not enable the department to collect duty on the following property: -
The three classes of property first mentioned have escaped duty because the definitions of “ gift inter vivos “ and “ settlement “ taken in conjunction with the description of certain properties to be included in the dutiable estate, have not been wide enough to make the duty payable. The last-mentioned class has escaped duty because the act applies only to property in the hands of administrators. Where a deceased person has distributed all his estate prior to his death, there is no necessity for an administrator, and therefore the whole estate escapes the duty. These cases are rare, but they exist, and are, therefore, provided for in the bill.
In regard to the first of the three other classes of property which are at present escaping duty, it may be stated that the present definition of “ gift inter vivos? excludes from the dutiable class of such gifts, any conveyances or transfers of property in favour of a bona fide purchaser or encumbrancer for valuable consideration. This exception has made it impossible to include in estates any part of the value of property sold in the technical sense by a deceased person to a relative for quite inadequate amounts and principally on account of natural love and affection. For instance, a man may sell bona fide to his son for £100 a property which is worth £1,000. In such a case there has been a clear gift of value in property of £900 for natural love and affection. If the property had been transferred to the son in consideration of natural love and affection only, and the transfer were made within twelve months of the father’s death, the total value of the property would form part of the dutiable estate of the father. It is considered that there is no reason why the £900 in the example mentioned should not form part of the dutiable estate of the father in such a case. The bill provides for its inclusion in future.
In regard to property comprised in a settlement made by the deceased person under which he had any interest of any kind for his life, the present position is that, if the deceased person should surrender the interest within one year prior to his death, the total value of the property forms part of his estate ; but if he should retain the interest until his death no part of the value of the property can be included in his dutiable estate. There are two anomalies here. In the ease of surrendered interests, the total capital value of the property is taxed, whereas the deceased person had only a life interest, the present value of which at the time of surrender would be very much less than the capital value of the property. The bill provides that instead of the total value of the property being taxed, the duty shall be levied in future upon the total value or amount which would have been received by the person who surrendered the interest if he had not surrendered it, calculated from the date of the surrender to the date of his death. The anomaly referred to exists in the case of life interests under settlements not made by the deceased person. The provision of the law was obviously aimed at surrenders, made prior to death, of life interests held by the deceased person under a settlement made by himself. In such cases the total value of the property rightly falls to be taxed where the life interest was surrendered by the settlee within one year of his death, but it is anomalous that no duty can be charged if the life interest was not surrendered. This anomaly is apparent when a comparison is made between such a case and that of a person who did not settle his property upon himself for life, but held it until his death when it passed to other persons in terms of his will. This latter person retains the full control and enjoyment of his property until his death. So also does the person who settles his property in trust for himself, with remainder to other persons upon his death. The only difference between these two cases is that in one, the property is devised by will to other persons who cannot deal with it until the testator’s death ; and in the other, the property is appointed by the settlement to other persons, who, also, cannot deal with it until the settlee’s death. It should be observed that the person who settled his property in trust for his own benefit for life generally takes care to provide either that he shall be trustee or that some other person who is trustee shall obtain his consent to any proposed change in the nature of the property or its management or control. In the one case duty is chargeable because the property passes according to will; in the other case duty cannot be charged because the property passes according to a settlement. This distinction is inequitable. It cannot be justified, and is being removed by the bill. There has been considerable loss of revenue through the inability in the past to tax property dealt with in the manner described.
In the case of joint tenancies, the act has proved ineffective because, under the law relating to joint tenancies, the property of the joint tenancy passes to the survivor upon the death of a joint tenant. This feature of the law has been extensively availed of by many persons who have created joint tenancies in connexion with various classes of property, including bank deposits, in order that the property which a deceased transferred to a joint tenancy of which he was a member, should not be included as part of his dutiable estate. Property so dealt with might be indefinitely excluded from an assessment for estate duty by the formation of successive joint tenancies in connexion with it. There has been considerable loss of revenue in the past from this weakness in the law.
The bill also contains a provision which will prevent any further loss of revenue through the lack’ of proper limitation of the deduction allowable in respect of duty lawfully paid in any country outside Australia in respect of any property of the deceased person which may have been situated outside Australia. At present the full amount of the ex- Australian duty must be deducted from the total amount of Australian duty as assessed. Sometimes the ex-Australian duty is more than the part of the Australian duty which is attributable to the double-taxed property. In such cases the Commonwealth loses part of its legitimate duty on the Australian property. In other cases the ex-Australian duty exceeds the total Australian duty on the whole of the estate, so that the Commonwealth loses the whole of its duty on the Australian property. The bill provides that the deduction to eliminate double taxation shall be the amount of duty paid outside Australia when it is less than, the duty payable in Australia on the ex-Australian property, or the amount of the duty payable in Australia on the property when that duty is less than the ex- Australian duty.
It has been found necessary to re-state the provisions of the law relating to the settlements, bequests or devises of property for religious; scientific, charitable, or public educational purposes, so as to limit the exemption to bequests for such purposes in Australia, and also to express the intention of Parliament in regard to charitable bequests that the limitation shall apply only to such bequests when made to public charitable institutions in Australia. This re-statement of the law in regard to charitable bequests has been necessitated by a decision of the Privy Council over-ruling the judgment of the High Court in the appeal of the trustees of the estate of Peter Stuckey Mitchell, deceased, in respect of a bequest of the residue of the estate of the deceased upon trusts under which prizes were to be awarded to various classes of persons, military, naval and civil, and of both sexes, the merit of the candidate to be ascertained by various physical, moral and literary tests. The High Court held that this bequest is not a charitable bequest within the meaning of the act, because its character is not eleemosynary, and because the word “ charitable “ was, in the opinion of the court, used in the act in its popular meaning which involves the idea of assisting poverty or destitution. The Privy Council held that the four words “ religious,” “ scientific,” “ charitable “ and “ public educational,” as used in the section, are not mutually exclusive, and that the word “ charitable “ as used in the act must be given its technical legal meaning as used in the Elizabethan sense, namely -
Trusts for the relief of poverty.
Trusts for the advancement of educa tion (although this is already covered by the section).
Trusts for the advancement of religion (already covered by the section).
Trusts for other purposes beneficial to the community, not falling under any of the preceding heads.
When the Estate Duty Act was passed it was intended that the four terms referred to should be mutually exclusive. It is proposed to bring this about by means of the proposed amendment. The bill will also make clear the charitable purposes intended to be provided for. For this purpose it uses the language which was inserted by Parliament for the same purpose in the Income Tax Assessment Act 1927, in connexion with deductions for donations to public charitable institutions. Unnecessary loss of revenueon the one hand and lack of power tomake refunds in proper cases have been resulting from the provisions of the principal act in regard to the time limit forincreasing or reducing assessments. Thepresent act provides in section 20, subsection 1, that the Commissioner may,, within one year after the last payment on account of duty on any assessment,, make all such alterations in or additions to the assessment as he thinks necessary in order to ensure its completeness and accuracy. Unless, therefore, the assessment is actually amended within the time limit, no amendment whatever may be issued either to reduce the assessment or increase it, notwithstanding that the necessity for the amendment may have been discovered by the Commissioner within the limit of twelve months. It is proposed in the bill to authorize the amendment of an assessment if the necessity for it becomes known to the Commissioner within the period of twelve months, subject, however, to the Commissioner informing the administrator as soon as possible after the discovery of his intention to amend the assessment, and subject also to the Commissioner making the amendment and notifying it to the administrator within a further period of six months after the expiration of the first period of twelve months.
– That applies to the whole of the assessment?
– Yes. The bill also provides for making the penalty foliate payment of duty, the same as under the other taxation acts of the Commonwealth - 10 per cent, per annum on the amount of the duty unpaid, instead of 10 per cent, of that duty.
– What does that mean?
– At present the only penalty is 10 per cent, of the amount of duty unpaid. Under the bill it will be 10 per cent, per annum. That obtains both in the Land Tax and Income Tax Acts.
– If the payment of a duty were delayed one month, the penalty would be l/12th of 10 per cent.
– Yes. There is also provision’ for recovery of duty in - cases where there may not be any administrator of an estate, owing to the fact that a deceased person may have disposed of the whole of his property to other persons within one year of his death either by gift inter vivos or settlement. In such cases the property is dutiable as part of the estate of the deceased person, but there is no present power to the Commissioner to obtain returns of the property or to collect duty. The provisions of the act in its present form only apply to administrators, and the definition of “ administrator “ does not cover cases of the kind mentioned. Several cases of this nature have arisen. The bill provides that the persons who received the estate or parts of it from the deceased person shall pay the duty, and that the duty shall bc a first charge upon the properties assessed which shall continue to be liable for it in the hands of any purchaser or holder for the payment of the duty so long as it remains unpaid : Provided that no such charge shall be of effect against bona fide purchasers for value who at the time of purchase made clue inquiry of the Commissioner, but had no notice of any liability for the duty. Right of appeal against the amount of the duty is given to any person who becomes liable for the duty under the circumstances mentioned.
It is proposed to amend the provisions of the principal act relating to the power to obtain information, and penalties for failure to furnish information or answer questions or to make returns or for omission of dutiable property from returns or the making of false returns, so as to bring them into line with similar provisions for similar purposes which were incorporated in the Income Tax and Land Tax Assessment Acts 1927. Uniformity of legislation in this connexion will thus be secured. There are also some small amendments of the principal act on lines similar to those made in 1927 in the Income Tax and Land Tax Assessment Acts in connexion with the office of Second Commissioner of Taxation and the statement of the powers of the Second Commissioner of Taxation.
The bill also contains a provision designed to distribute the burden of the duty among the beneficiaries of the; estate more equitably than is done by the existing law. The necessity for this alteration was brought under notice by the judgment of the Supreme Court of Victoria in the case of Harper v. Harper. That case disclosed the fact that there are at present very great difficulties confronting an administrator of an estate when the assessment for duty has included property which passed from the testator by gift inter vivos within one year of his death, or property which had been settled by the deceased person upon himself for life with remainder over to other persons. Although the administrator in his representative capacity is liable to find the money for payment of the total duty assessed, he has no present right to obtain any contribution towards the duty from the donee of the gift inter vivos, or from a remainderman under a settlement of the kind mentioned.
– Cannot that be done under the law as it stands ?
– No. This bill makes it quite definite that there shall be an equitable distribution of the burden of the duty. The provisions of section 35 of the principal act are being amended so as to cause all beneficiaries, whether or not they are subject to the administrator, to be liable for the tax payable in respect of their particular interests in the estate. The amendment will also provide the necessary machinery for subdividing the duty in an assessment so that each particular beneficiary who desires a separate assessment of the part of the duty applicable to his interest may obtain it. Those are the main provisions of the bill.
Debate (on motion by Mr. Brennan) adjourned.
Bill presented by Dr. Earle Page and read a first time.
– (By leave.) - I move -
That the bill be now read a second time.
This bill is brought down in accordance with a statement in the budget speech, to remove certain anomalies recently discovered in the Income Tax Assessment Act and to close up certain loopholes whereby persons have been able to avoid payment of the same tax as others have contributed to the general revenue. The aim of the Government has always been, as far as possible, to keep the taxation law simple, but the basic principle upon which the Federal taxation law is founded, namely, following the income into the hands of the final recipients, thereby ensuring the greatest degree of equity, involves a considerable amount of complexity. Some of the concessions to taxpayers which have been made from time to time have, unfortunately, been utilized by astute persons to obtain not merely the concession that was being granted, but to make it the means whereby a very considerable reduction of taxation might be obtained in their cases. The present bill deals with certain outstanding instances of this character, which will appeal to the general public as being eminently fair and reasonable to present. The first of these is connected with the liquidation of companies. It is reasonable that profits distributed by the liquidator of a company in liquidation should be liable to tax when received by the shareholder in the same manner as when profits are distributed by a company which is not in liquidation. A provision is contained in the bill to deal with this matter. A widespread practice has arisen in the case of private companies, which have been formed for the purpose of special profit-making schemes and the distribution of the profit among the shareholders, going into liquidation before any profit is distributed to the shareholders. This has been done almost entirely for the purpose of enabling the shareholders to escape income tax on the liquidation dividends, because the courts have held that liquidation dividends are distributions of assets, and, in the present form of the income tax law, they cannot be classed as income even to the extent to which they have been distributed out of profits. It will be generally admitted that shareholders of companies should not be allowed to escape income tax in such circumstances.
The next anomaly dealt with in the bill arises out of the combined operation of section 21, which exempts one-third of a company’s taxable income from special assessment at shareholders’ rates, and section 16 which exempts shareholders from tax on shares distributed to them upon the capitalization of one-third of the company’s taxable income. This exemption of shares was intended to be complemental to the provision in section 21 allowing the company to retain one-third of its taxable income for purposes of the expansion of the company’s activities. Neither the company nor the shareholders would be liable to tax at shareholders’ rates on this one-third if the company merely retained it as part of its working funds without capitalizing it. It was necessary, therefore, to provide that if the company did capitalize it and issue shares to the shareholders, the shareholders would not be required to pay tax upon it.
The provision has, however, been found to operate so as to enable a company to capitalize one-third of its taxable income and issue shares for that amount and also to retain another one-third of its taxable income without being liable for additional tax upon the additional one-third. This result is unavoidable in the present form of the law because the issue of the shares must be treated as a distribution of profit when the Commissioner is comparing two-thirds of the distributable income of the company with the amount actually distributed by the company. The term “ distribution “ covers a distribution of profit by way of shares. When the Commissioner is making a determination under section 21 of the amount of distribution or additional distribution which the company might have made, he first finds the total distributable income of the company, and excludes one-third of it. From the remaining two-thirds he must deduct the amount of the company’s profits which has been distributed to the shareholders in any form. If the company has capitalized one-third of its profits and issued shares for it, that amount must be deducted from the twothirds of the distributable income, because it represents a distribution of profit. In such a case the company is liable for additional tax at shareholders’ rates upon only one-third of its profits. The shareholders thus escape tax on two-thirds of the profits, partly in their individual assessments and partly in the company’s assessment under section 21. This result was never intended, and it is not right that it should be allowed to continue. Provision is accordingly made in this bill to bring it to an end.
Another provision deals with the abuse of the concession to companies affected by section 21, represented by the time limit within which the Commissioner must make his determination that the company could reasonably have made a distribution or an additional distribution to the shareholders. This time limit forces the Commissioner to make a determination within six months after the company’s ordinary assessment has been made. Owing to the necessity to make assessments as far as possible within the financial year for which tax is payable, so that the tax may be collected within that year, the Commissioner is obliged to make many ordinary assessments of companies on the basis of the returns as lodged, without attempting to verify their accuracy. Then within the six months’ time limit action under section 21 must be taken, and once taken, it can never be altered either to increase or reduce the amount covered by the determination, notwithstanding that subsequent investigation by the department to verify the returns might show that on account of discrepancies in the returns the company’s ordinary assessment should have been on a greater amount of taxable income. The practice has grown up of some unscrupulous companies sending in incorrect returns, trusting that the Commissioner will- not be able to verify the data within the six months. After the six months they send in correct returns when it is too late for the Commissioner to alter his determination. The Government considers that where the Commissioner is of the opinion that the company has furnished an incorrect return, or withheld information, or supplied incorrect information for the purpose of evading tax in its ordinary assessment or in the special additional assessment under section 21, the Commissioner should have power to make a determination or amend a determination after the expiration of the time limit of six months. The bill provides this power. In this respect the provisions of the law relating to amendment of determinations after the expiration of the statutory time limit will then harmonize with the provisions already in the law relating to the re-opening of past assessments of individual taxpayers who may have lodged incorrect returns for the purpose of avoiding tax. This will be made possible by the bill.
Another feature of section 21 which is dealt with by the bill is that which is concerned with the ascertainment of the amount of the distributable income of the company. “ Distributable income “ is the amount which is available for distribution among the shareholders. Distribution may take various forms. It may be by way of a cash dividend, or in the form of additional shares issued to the shareholders upon the capitalization of profit, or it may be a transfer of profit to the company’s capital account for the purpose of increasing the amount paid up on the shares. If, therefore, the profits are used in any of those ways, or are capable of being so used, they represent profit which is distributable among the shareholders. There are numerous cases in which companies have been formed with little or no capital actually paid up, but the companies have undertaken liability to pay for the company’s undertaking, business, property or other assets out of profits to be derived by it, and the profits are so applied. These companies have, contended that because they have so applied the profits, the profits were not available for distribution among the shareholders. In all of these cases the company’s contentions have rested entirely upon the belief that distribution means a cash distribution. The profits which have been applied by the company in payment for the company’s undertaking, business, property or assets, have in substance represented transfers of the profit to capital account for subsequent use as paid-up capital towards the meeting of the payments mentioned. The profits have, in such cases, been credited to the shareholders by increasing the amount paid up on the shares, because the true position in the accounts of the company is then represented by a reduction in the amount of the liability of the company to the vendor and a corresponding increase in the amount of the paid-up capital or of reserves available for transfer to paid-up capital. The same position exists also in regard to the use of profit to repay borrowed money. The money borrowed has been used for expanding the business of the company, and thus in expanding its capital assets, so that any repayment of the borrowed money must represent a reduction in the liability to the lender, with a corresponding increase in the liability to capital, which, in turn, represents an increase in the value of the shareholders’ interests in the paid-up capital. The Government considers that profit applied in the manner indicated cannot be allowed to escape additional tax under section 21 merely because it could not have been distributed to the shareholders in cash, since it has, in substance, been credited to the shareholders and represents benefits received by them out of the company’s profit. What the Government is doing is practically to incorporate in this measure exactly what has been incorporated in the United Kingdom’s Income Tax Act to deal with an identical condition of affairs where profits have been applied to the repayment of borrowed money instead of being distributed to the shareholders.
– They are paying debts out of income.
– They are really paying capital out of income as they go along without any distribution. It will be agreed that this is a reasonable amendment.
Another means of attempting to avoid income tax, which is assuming very large proportions, is the creation of family trusts in respect of income-producing property for the sole purpose of having the income from the property assessed to a number of persons at reduced rates, instead of its being assessed to one person at a higher rate of tax. The most common form of these trusts is that in which an owner of property, which is producing a large income, by a deed of trust vests the property in a trustee, usually the person himself, or trustees - usually the person himself and his wife or a member of his family - for the purpose of carrying on the business being conducted on the property or by means of the particular assets, and holding the income therefrom upon trusts either to pay to the beneficiaries specified in the deed the whole or a specified part of their respective shares of the income, or to accumulate the income or a part thereof for the ultimate benefit of the beneficiaries. Without exception,the persons who make these deeds of trust retain the fullest powers of control, management, and disposition of the assets during their lives. Those powers do not differ in any way from those possessed by a person in respect of his own property who has not created a trust in connexion with it. In this manner they do not dispossess themselves in the truest sense of the property, but they have adopted a legal method of distributing their annual income among relatives, so that the amount of the tax payable on it will be reduced.
– Is any differentiation made between these cases and genuine trusteeships ?
– Yes. As I shall show later on, we are making a concession in regard to an ordinary trustee. There is no substantial difference between the case I have described and that of a man who, instead of creating a trust in. respect of his income-producing assets, draws up a deed of trust in which he declares that he holds all his income in trust to divide it between himself and others in specified shares. This individual cannot escape tax by means of his deed, because the income is derived by him in the first instance. All that he has done is to declare that he will distribute his income in a particular manner. The other person who vests his assets in trustees, is doing so merely to distribute his income between himself and others in a specified manner. But because he has vested the assets in trust, the law recognizes only the trustee in his representative capacity as having derived the income. When the trustee in his representative capacity distributes the income in accordance with the trusts of the deed, he has nothing left upon which he may be taxed, and the department must look to each beneficiary for tax on the amount of income received by him from the trustee. The fact that the former owner of the property is also the trustee does not affect the legal position, and, under the present form of the Income Tax Assessment Act, there is no power to aggregate the total income of the trust in one assessment in order that tax may be charged upon it at the rate appropriate to the aggregate income. A similar position was dealt with in 1927 by Parliament, when.it approved of the provision in the Income Tax Assessment Act 1927 whereby an assessment should be made upon the total income of a husband and wife partnership if the Commissioner is of opinion that the partnership was entered into for the purpose of relieving the husband or wife or both from any liability which would have occurred under the act if the partnership had not been formed. The bill contains provisions whereby the family trusts referred to are to be treated as partnerships, and are to be dealt with in the same manner as the husband and wife partnerships if the Commissioner is of the opinion that the trust was created for the purpose of relieving the person who created the trust from any liability which would have arisen under the act if the trust had not been created.
The bill also deals with a number of anomalies in the act, some of which have only recently been disclosed by a judgment of the Supreme Court of Victoria, in an appeal by the Kellow-Falkiner Company Proprietary Limited against a determination made by the Commissioner under section 21 of the Income Tax Assessment Act. The judgment disclosed the following facts: - (a) The law requires the Commissioner to make an assessment of income derived by a taxpayer during a financial year ending on 30th June; (6) if the Commissioner permits a taxpayer to render a return of income derived during an accounting period ending on some date other than 30th June, the return is only evidence which may be used by the Commissioner in ascertaining the income derived in a period of twelve months ending on 30th June, but the Commissioner is still required by the law to make his assessment on the incomes derived during the year ending on 30th June; (c) that in making a determination under section 21 that a company could reasonably have made a distribution or a further distribution of its taxable income among its shareholders, the Commissioner may make his determination only by reference to a taxable income derived by the company during the year ending on 30th June, and cannot base a determination on the income disclosed by a taxpayer’s accounts for any different period of twelve months.
Furthermore, the Commissioner must ascertain whether the company could have made a distribution or a further distribution of its profits during the Commonwealth financial year, in which it earned its profits, notwithstanding the fact that the company may not have known the amount of its profits until some later period.
There were arrangements between the Commissioner and different companies that the ordinary accounting period should be taken and the companies assessed on that basis. It is obvious that the judgment has rendered the whole act extremely difficult of application, and has rendered section 21 totally inapplicable to the great majority of companies, because those companies do not make up their annual balance of accounts for a year ending on 30th June. Furthermore, the necessity for the Commissioner to determine whether or not the company could have made a distribution of its profits during the period in which they were earned, is an additional difficulty in the application of the section, if further difficulty were necessary to prevent the section from operating in the way intended. The judgment was delivered only a few weeks ago. The Government is, therefore, taking the first opportunity it has had to make proper provision to enable the Commissioner to apply section 21 in the manner in which it was intended to be applied. The bill will validate all past assessments and determinations which have been based upon annual accounts for a period different from the Commonwealth financial year.
In the re-casting of section 21, the opportunity is being taken to provide for the calculation of the additional tax which is payable by a company upon a determination by the Commissioner under that section by carrying the notional distribution into the assessments of those particular shareholders who would have been entitled to receive shares of the distribution if the amount determined by the Commissioner had been actually distributed. With rare exceptions, those shareholders are the ordinary shareholders. Preference shareholders usually are not entitled to receive anything more than the fixed percentage payable to them ; only in rare cases are they entitled to a further share of profits. The present form of the law requires the Commissioner to assume that the national distribution is made to all classes of shareholders in proportion to their interests in the paid-up capital of the company. The bill alters this so as to cause the amount of additional tax which becomes payable by a company under the section, to be the same as would be payable in the aggregate in their individual assessments by the shareholders who would have received among them the amount determined by the Commissioner if it had actually been distributed.
Another anomaly which requires to be remedied exists in cases where a taxpayer claims that his income has been derived partly from sources outside Australia. There is no provision in the act at present by which the amount of ex-Australian income may be readily determined in such cases. For the past ten years the Commissioner of Taxation has been applying a general rule formulated by him after consultation with a number of leading business persons in Australia. “With comparatively few exceptions, this rule has been accepted as reasonable. Two appellants to the High Court, however, have secured a basis of apportionment different from that employed by the Commissioner, but the court has afforded the department no guidance which would facilitate the work of dealing with these cases in its various branches throughout the Commonwealth. The necessity for apportioning income between sources in Australia and sources outside Australia has arisen in consequence of judgments of the Privy Council and the High Court in appeals against assessments under the New South Wales Income Tax Act upon money received from sources in London in respect of goods produced in Australia and sold to persons in London under a contract drawn up and finally signed in London. These courts have held that where there is a series of activities by one person in one business transaction, in which the activities are carried out partly in one country and partly in another, each separate activity in the transaction has, in some measure, contributed to the profit or loss finally realized by the transaction. From this it follows that the profit must be apportioned between the activities in Australia and the activities outside Australia, so as to ascertain the amount of profit which has been derived from Australian sources. The Commissioner of Taxation has been informed by a number of taxpayers that they intend to require him to apportion between Australian and ex-Australian sources amounts of profit, which in past years have been treated by them as taxable in Australia in full, as the proceeds of the business conducted by them in Australia.
There are some other taxpayers who are engaged in the sale in Australia of goods obtained by them from exAustralian sources, who are also contending that the profit derived from their business in Australia has, in the light of the judgments mentioned, been derived from activities outside Australia as well as from activities inside Australia. The Commissioner of Taxation has refused to accede to the claims of those persons on the ground that they have established businesses in Australia for the purpose of supplying residents of Australia with goods. This being the object of the business, it cannot be contended that the persons concerned are carrying on business both inside and outside Australia. Therefore the Commissioner of Taxation has insisted upon levying income tax upon the total net proceeds derived by those businesses from the sales of goods by them in Australia. The Commissioner’s attitude in this matter has been challenged. The Government considers that the Commissioner is correctly interpreting the will of Parliament in those cases and that his practice should be continued.
In regard to the apportionment of the proceeds derived from the ex-Australian sale ‘of goods exported from Australia, the position is somewhat different from that described in the case of businesses selling imported goods in Australia. In these cases the goods are exported from Australia to overseas selling agents for general sale upon consignment, in the manner found most profitable by the agent. There is no distributing business being carried on outside Australia by the Australian exporter. He has merely exported his goods for sale abroad.
There is no difficulty whatever in the case of the Australian taxpayer who exports goods in fulfilment of an order which he has received. The whole of the proceeds in such a transaction are treated as having been derived in Australia.
The subject is full of difficulties and complexities, and may only be dealt with reasonably and with all desirable expedition and facility by the granting of special powers of determination to the administration.
The position which has been described has been dealt with in the New Zealand Income Tax Assessment Act in what appears to be a reasonable manner, and the Government considers that the Commonwealth law should be amended so as to incorporate a similar provision to that contained in the New Zealand act. This provision will authorize the prescribing of regulations to decide whether any, and if so, what part, of the income is derived from sources outside Australia in the circumstances mentioned, and will require the Commissioner to decide the matter finally and without objection by the taxpayer where there is no regulation applying to the case.
Subsequent to the passing of the Income Tax Assessment Act 1927, and after the application of its provisions to assessments’ in some unexpected circumstances, it was found that revenue was being lost through the operation of the provisions of the law relating to the elimination of dividends from assessments when the taxpayer’s rate does not exceed the company rate of ls. in the £1, in conjunction with the provisions for carrying forward losses as deductions against subsequent profits, and the averaging provisions of the act. It was found that some persons were escaping income taxation on large amounts of dividends, because they were being eliminated from their assessments through reduction of rate below ls., owing to the deduction of previous losses causing heavy reduction in the average income by reference to which the rate of tax is fixed. Further they were becoming entitled to carry forward their losses still further as deductions against the income of subsequent years. In one case which came under notice, the taxpayer had suffered a business loss of about £9,500 in one year and, because he had no other income in that year, the loss was carried forward to the next year. In that next year his income amounted to about £11,000, being £1,000 income from his business and £10,000 in dividends. When the loss of £9,500 was deducted from the £11,000 of income, and the remaining £1,500 of income was carried into the calculation of the average income of the five year period, it was found that the average income was an amount carrying a rate of tax less than ls. This meant that the dividends of £10,000 had to be eliminated from the assessment of the income, and the department then had to commence again on the assumption that the only income of that year was the business profit of £1,000. The previous loss of £9,500 had to be set against this £1,000, and that left a -residue of loss amounting to £8,500 to be carried forward as a deduction from profit of the succeeding year or years. Thus the taxpayer did not pay anything upon his income from dividends, and had become entitled to a deduction in future years in respect of the residue of his loss. This result was never intended by the Government or by Parliament. The remedy, which is simple, consists of providing that instead of eliminating dividends from an assessment when the taxpayer’s rate is less than ls., the dividends shall be retained in the assessment, but the taxpayer shall be allowed a rebate of the amount by which his tax has been increased by including the dividends in his assessment. There is no necessity to make any alteration in the law in connexion with cases in which dividends are included in an assessment and the taxpayer’s rate exceeds ls. in the £1.
Another matter dealt with in the bill is designed to remove an anomaly, which has been discovered in connexion with the deduction of losses from profits. A number of cases have come under notice in which taxpayers resident in Australia are in receipt of exempt income from Australian and ex-Australian sources, and that in their own personal accounts this income is used by them in assisting them to recoup any Australian loss suffered by them. Under the present law, the
Australian loss is allowed in full as a deduction against any assessable income derived by the taxpayer from Australian sources. This is considered to be an advantage enjoyed by the taxpayer which is unfair to the Commonwealth and to other taxpayers who have to contribute to the revenue. Such cases at once raise the question of the general ability of the taxpayer to pay his tax. That ability may very properly be measured against the total income derived by him from all sources, so that when a concession is granted to the taxpayer in the shape of deduction of losses from profits and carrying forward unrecouped losses against future income, it is proper that the taxpayer’s benefit should be limited to the excess of his loss over any net income received by him which is not taxed by the Commonwealth. The bill makes the necessary provision to give effect to this view. In doing so it is provided that any loss suffered by the taxpayer in carrying on a business outside Australia shall be deducted from the exempt income up to the amount of that income before the Australian loss is set against the exempt income. In the event of the ex-Australian loss absorbing the whole of the exempt income, the whole of an Australian loss would become deductible from assessable income derived from Australian sources.
An important matter dealt with in the bill has relation to the collection of income tax upon freight and passage moneys received by owners and charterers of ships whose principal place of business is out of Australia, in respect of freight, passengers, mails, &c, which are shipped in Australia. Quite recently some difficulties have arisen in the application of the existing section of the act which deals with this subject, more especially in connexion with vessels which are under the control of public authorities in other countries which carry on shipping business under statutory authority granted by the governments of those countries. Cases have arisen where the assessments issued by the Commissioner of Taxation have not been paid. Whilst power has been granted to a collector of customs to refuse clearance to a vessel until he has been paid, the Commissioner has refrained from requiring the Collector of Customs to take that step pending the examination of other means which might be taken. I am advised that recovery of the tax would be facilitated by provision in the act for obtaining an order of an Australian court against the master of the ship for the amount of the tax; upon which the tax would be paid or a guarantee given for its payment by responsible authority located in Australia, so that the Collector of Customs may grant a clearance to the vessel. The bill contains provisions which will enable this course to be taken in future.
It has recently been discovered that the act does not limit deductions of calls paid to companies engaged in afforestation in Australia, but allows deductions to such companies carrying on the business of afforestation in any other part of the world. The intention of Parliament was to encourage this class of business in Australia, and the bill now expresses that intention in definite terms.
Another similar provision relates to deductions of contributions made to public authorities, not only in Australia, but elsewhere, which are engaged in research into the causes, prevention and cure of disease in animals, plants and human beings. In regard to this matter also, the object of the deduction was to encourage persons to assist in this work by public authorities in Australia engaged in it.
The bill will remove another cause of loss of revenue due to the present wording of the act in relation to the amount of the deduction which is allowed by way of an annual sinking fund to recoup the purchase price paid for a lease. There are two phases, of this subject. The first is the necessity to allow a deduction of a full year’s sinking fund in every assessment during the period of the lease, notwithstanding that the lease may have been acquired or may terminate during the course of an income year. There is no present provision in the law whereby the deduction might be a fractional part of the sinking fund in respect of a commencing or terminating year during which the lease was held for part of the year only. This is provided for by the measure. The second phase of the subject refers to the amount of the deduction to be allowed to a lessor upon the sale of his lease in ascertaining the taxable profit on the sale when the circumstances of the case render the profit taxable as income derived from carrying on a business or a scheme for deriving profit by the acquisition and sale of the lease. There are numerous cases in which persons acquire leases for the purpose of reselling them at a profit. In such cases the profit is liable to income tax. In ascertaining the profit in ordinary circumstances, a deduction is allowable for the sale price of the amount originally paid for the lease. Seeing that the department is not aware until a sale takes place whether the vendor lessee is or is not taxable upon such profit, it is bound to allow to him, while he holds the lease, a deduction of the annual sinking fund required to recoup the price he paid for the lease. When the lease is sold the present law entitles the vendor to a deduction of the full cost to him of the lease, notwithstanding that he may already have amortised part of that cost out of his annual income during the time he held the lease. This double deduction is not proper. The bill, therefore, provides that in the assessment of the proceeds of the sale of the lease, the deduction in respect of cost price shall be the cost price reduced by the total amount of the sinking-fund deductions already allowed to the taxpayer.
Another matter covered by the bill arises out of doubt expressed by the Income Board of Review as to whether the present wording of the act, which allows deductions for bad debts, limits the deductions to bad debts of a revenue nature, or applies also to bad debts of a capital nature. The objects of the Income Tax Assessment Act are to levy tax upon income, and to disallow all expenditure or losses in the nature of expenditure or loss of capital. The intention of the relevant section, section 25 (g) of the principal act, and the invariable attitude of the department has been to limit the deduction to bad debts incurred in trading or by businesses engaged in the lending of money. The practice of the department is to see whether the .deduction claimed in respect of bad debts represent amounts which have formerly been brought to account as income liable to tax. In order that there may be no doubt on the subject, the bill contains several amendments which are necessary to attain that end.
The bill also contains a provision dealing with the application of the averaging provisions of the act to the assessments of income derived in the capacity of trustee by trustee companies. The tax payable by a company upon its own income is paid at the fiat rate of ls. in the £1 upon the actual amount of each year’s taxable income. Section 13 (2) of the principal act applies the averaging provisions to every taxpayer other than a company. A trustee company is a taxpayer in respect of its own income, and is also a taxpayer in a representative capacity in respect of the income of a trust estate administered by it. Under the terms of section 13 (2) the trustee company is excluded from the averaging provisions of the law, both in respect of its own income and of the trust estate income. In the case of many trust estates where the income assessable to the trustee is small, the exclusion of the trustee company from the averaging provisions compels the trust estate to pay a tax at the flat rate of ls. in the £1, whereas if the trustee had been an individual, a rate less than ls. in the £1 would have been payable. On the other hand, if the trust estate income assessable to the trustee had been large, it escapes tax at a higher rate than ls., which would have been payable if the trustee had not been a. company. In the great majority of cases the amount of income assessable to a trustee is small, and would be assessable at less than ls. in the £1. It is considered that all trustees should be assessed in accordance with the averaging provisions, and the bill provides for this by a slight amendment of section 13 (2) of the principal act, so that tax on income derived by a company as a trustee shall be assessed in accordance with the averaging provisions of the act.
Another clause of the bill is intended to give statutory authority to a departmental practice established by the Commissioner of Taxation to prevent double taxation upon company profits when distributed to shareholders subsequently to a special assessment of the same profits to the company under section 21. The departmental practice has been based upon the fact that the profit has been deemed to have been distributed at the time of the Commissioner’s determination under section 21 and t.he company lias already paid tax in consequence of the Commissioner’s determination, so that when the profit is subsequently distributed to the shareholders, it would not be right to collect tax a second time on the profits by assessing the shareholders upon it. The Commissioner merely includes the actual distribution in the shareholders’ assessments for the purpose of calculating the average income by reference to which the shareholders’ individual rate of tax is ascertained. This is done because when the notional distribution is taxed in the hands of the company, the notional distribution is not retained in the shareholder’s assessment to ascertain his average income for future assessments. It is necessary and desirable that the Commissioner should have statutory authority for his practice and this is provided by the bill.
Yet another important matter covered by the bill relates to the secrecy section of the principal act. An amendment of that section is proposed in order to prevent publication to an appellant before the Income Tax Board of Review of information contained in another taxpayer’s return when that information has been used by the Commissioner as a basis for the assessment of the income of the appellant taxpayer against’ which he is appealing. There are cases where the Commissioner considers that a taxpayer’s return does not disclose the full taxable income derived by him. Reference to returns of similar businesses enables the Commissioner to form an opinion as to what amount of income might reasonably have been derived by the particular taxpayer whose return is being assessed. The Commissioner then makes his assessment of that “taxpayer’s income upon the basis of the returns of the other taxpayers carrying on similar business. The appellant taxpayer when before the Board of Review has the fullest opportunity of demonstrating to the board what his true income is and cannot be prejudiced in any way by the non-disclosure to him of the affairs of his competitors. At the same time, the Board of Review might consider itself bound to disclose to the appellant the information upon which the Commissioner made his assessment. It is considered that such a disclosure of the affairs of a taxpayer who is not a party in the case before the Board of Review should not be permitted. The proposed amendment will therefore place upon the Board of Review the same obligations as are placed by the principal act upon officers of the department not to divulge to any person any information coming confidentially to their knowledge.
The averaging provisions of the act have been found to require slight amendment so as to remove an anomaly that has arisen in connexion with cases where some taxpayers are escaping full taxation owing to the receipt of unusual income in one year with no prospect of further receipts of the kind. The part of the principal act which produces this result is sub-section 9 of section 13. That section provides that where a taxpayer establishes that, owing to his retirement from his occupation, or from any other cause, his taxable income has been permanently reduced to an amount which is less than two-thirds of the average taxable income by reference to which his rate of tax would be calculated, apart from the provisions of the sub-section, he shall be assessed, and the averaging provisions of the act shall thereafter apply, as if he had never been a taxpayer in a previous year. The taxpayer with the unusual income is first assessed on that and any other income of the same year at the rate applicable to an average income for the five-year period ending with that year of unusual income. In cases which have come under notice, the rate applicable to that average income is much less than the rate which would apply to the income of the particular year taken by itself. Thus the taxpayer escapes full tax on the unusual income in that assessment. In the following year, the taxpayer’s income drops to its normal amount, and in the cases which have come under notice, he is able to show that that normal income is less than two-thirds of the taxable income of the five-year period by reference to which his rate of tax is calculated. Therefore, under the terms of the present sub-section, he is entitled to be assessed on the normal income at its own rate. Therefore he escapes for all time, the full tax on his unusual income. This escape from tax is not equitable. The bill will prevent such losses in future by providing that the average taxable income, two-thirds of which is to be compared with the actual income being assessed, means the average taxable income calculated after excluding any income received by the taxpayer from sources from which he does not usually receive income.
Ohe of the most important provisions of this bill relates to the taxation of life assurance companies. This provision will give effect to the Government’s policy in this connexion announced in the budget speech. Hitherto all life insurance companies have escaped payment of Federal income tax because, in addition to being allowed deductions of all expenditure incurred in gaining premium and investment and any other income, the companies have been allowed deductions of all distributions of the income among members of the companies, which covers bonuses to policy-holders and dividends to shareholders, and in addition, a deduction has been allowed by the act of the whole of the premium income. The premium income has in all cases greatly exceeded the net income from investments, bo that no taxable income has ever remained in the case of any life insurance company. The Government considers there is full justification for requiring life insurance companies to contribute something towards the revenue.
– How much will be received from this source?
– It is estimated that the present proposals will yield about £300,000 per annum to the revenue;
Life insurance companies have been de-‘ riving an average net profit from theirinvestments of 5-J per cent. The majority of the companies make reservations to meet liabilities on a basis of 3£ per cent, compound interest. A few of the companies value their liabilities on a 4 per cent, basis. Therefore the companies are deriving a clear profit of from H per cent, to 2 per cent, on the whole of their investments, assuming that the liabilities amount to a sum equal to the whole of the investments, which is improbable. .
– Does this apply to loans on mortgages?
– Tes. ,.It is considered that the interests of the companies and policy-holders will not be prejudiced in any way by the proposed tax, since the great bulk of the net profit of the companies on investments after providing for risks will still remain in their hands.
The bill proposes that mutual life insurance companies shall be taxed on all net income except income from premiums, and that non-mutual companies shall be taxed on the same class of income together with any other income which the company may distribute to shareholders or add to the paid-up capital of the company. Rebates to’ prevent double taxation will, of course, be allowable on shareholders’ dividends in the same manner as double taxation is prevented in the case of shareholders in other companies.
The bill also contains a few minor machinery amendments and amendments which are consequential to some of the principal amendments already explained.
Debate (on motion by Mr. Soullin) adjourned.
Motion (by Dr. Earle Page) proposed.
That the House do now adjourn.
– “Will the Treasurer give honorable members an indication of when the bills which have been introduced to-day will be proceeded with? Some of these measures contain very intricate provisions, and not only honorable members, but the general public should be given an opportunity at least of reading and considering them before the bill is proceeded with, or of reading in Hansard the speeches made by the Treasurer in introducing them.
.- The Land Tax Bill may possibly be proceeded with tomorrow. It is only a small measure containing minor amendments. The other bills will be dealt with later this week. Honorable members will therefore have an opportunity to peruse them.
Question resolved in the affirmative.
House adjourned at 10.36 p.m.- -
Cite as: Australia, House of Representatives, Debates, 11 September 1928, viewed 22 October 2017, <http://historichansard.net/hofreps/1928/19280911_reps_10_119/>.