12th Parliament · 1st Session
Mr.Speaker (Eon. Norman Makin) tookthe chair at 2.30 p.m., and offered prayers.
Mr.WATKINS.- Has the Prime Minister been advised of the indignation meeting held at Newcastle in regard to an invalid who for twelve months has been endeavouring unsuccessfully to get a pension? Two leading medical men have been attending this man, and have placed him in hospital, and a proposal has been made that he be publicly exhibited as a protest against the inhumanity of the department in refusing to grant him a pension.
Mr.SCULLIN.- This matter came under my notice a few days ago.I obtained from the Assistant Com- ‘ missioner of Pensions a review of the whole case and forwarded it to the Patriots League at Newcastle on Monday last.
– Is the Prime Minister aware that prohibitive duties have been imposed on sheet glass? This is the glass that is used for domestic purposes, and the new duties have had the effect of approximately doubling its price. Is the right honorable gentleman aware that sheet glass is not manufactured in Australia, and that the potential manufacturer, for whose benefit the duties were imposed, has announced that he does not intend to engage in the manufacture of sheet glass in the near future? If the right honorable gentleman finds that the facts are as I have stated, will he endeavour to persuadethe Assistant Minister for Trade and Customs (Mr. Forde) to remove the duties at once?
Mr.SCULLIN. - I am not aware that the facts are as stated by the honorable member, although, in the guise of questions, he has got in a speech against the tariff. The evidence before the Government is that there has been a good deal of profiteering on the part of glass importers, and I am hopeful that when local manufacture is started glass will be cheaper.
– Is the Prime Minister aware that the Acting Chairman of the Australian Glass Company Limited stated, at its annual meeting held in Melbourne last week, that the company has postponed definitely its proposal to engage in the manufacture of sheet glass ?
– I have seen many press statements, several of which I believe are incorrect ; probably more will be heard of them later.
– There are obvious signs in, outside, and about the House that the Government proposes to take some action in regard to hops. I ask the Prime Minister whether the Government will conserve the interests of manufacturers by ensuring that they will be able to get highclass hops for those processes for which only the best hops are suitable.
– The matter is now under consideration.
asked the Minister for Trade and Customs, upon notice -
How many Rolls Royce motors came into Australia for each of the years 1016 to 1930 inclusive?
– No record is kept of the names of the makers of the differentcars imported, and the information sought is therefore not available.
Property Leasedfrom Laris ton Company.
asked the Minister for Home Affairs, upon notice -
Does the Government lease premises from this company; if so -
– The following information in reply to the honorable member’s question has been obtained from the Department of Works : -
asked the Minister for Home Affairs, upon notice-
To what extent is unemployment relief being provided in Canberra at the present time, and at what rates per person per week?
– At the present time, unemployment relief work is being carried out on the Duntroon-road. During the past eight weeks, employment has been provided on this work for 186 persons, consisting of 118 married men, 66 single men and two youths. Other special work has been provided from fundsmade available by public subscriptions, subsidized on a £1 for £1 basis by the Government. During the last five weeks these works have absorbed 136, persons, consisting of 31 married men, 102 single men, and three youths. The total number of men employed on relief works since their inception is 322. Two thousand, three hundred and eighty-three ration orders to the value of 3s. each have been issued, 1,679 being issued to local men and the balance to travelling unemployed. Relief in the form of commodities is also provided by the Canberra
Relief Society,which is subsidized by the Government on a £1 for £1 basis. Unemployment relief is being provided for six single men, for whom work cannot be found at present. These men draw ration orders to the value of 9s. per week each. Four families are provided with ration orders to the value of 12s. 6d., 18s., 22s. 6d., and 30s. per week respectively. In the case of two of these families, work cannot be provided for the heads of the family at present. The remaining two cases are widows, with sons, for whom work cannot be provided at present. The ration scale for families is graduated in accordancewiththe schedule operating in New South Wales and varies according to the size of the family.
asked the Minister for Trade and Customs, upon notice -
– The list of prohibited books contains the names of some very undesirable books, and it is not advisable to give publicity to such names, as such publicity tends to advertise these books, and may induce a certain class of person to seek to introduce them illicitly by post. I shall be glad, however, to show the list to the honorable member. It might be added that all the prohibitions formerly in force under the seditious literature proclamation were withdrawn in December last, and no prohibitions under the amended proclamation then issued are now in force.
Alleged Destruction of Clothing and Blankets
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : - 1.Yes.
Chinese National Flag
asked the Prime Minister, upon notice -
Whether he will state precisely the reasons why the Civil Administrator at Darwin has refused to allow the Chinese residents at Darwin to fly their national flag; and whether, as theConsul-General for China is reported to have stated, the Prime Minister approved that ref usal “’ on the grounds that, no matter what memorial day it may be, the only flag that is allowed to be flown is the Union Jack “.
– The Government Resident of North Australia has been communicated with regarding this matter. He has reported by telegram that no person in Darwin has ordered the Chinese flag to be hauled down, and that he holds a statement from the secretary of the local Chinese Society that at no time has any direction been received from the Government Resident on the subject of flag flying. The Government Resident, however, states that in May last, the Mayor of Darwin advised the secretary of the Chinese Society that a meeting of citizens had requested that the Chinese, when flying the Chinese flag, should fly the Australian flag alongside.
Dairy Officer in London.
asked the Minister for Markets and Transport, upon notice -
Will he make available the periodical reports of the Australian Dairy Officer in London (Mr. Wigan) since his appointment?
– Information of general interest to the dairy industry contained in the periodical reports of the officer referred to (over 24 in all) has already been made available to the Dairy Produce Export Control Board, the Departments of Agriculture ofthe different States, and the press.
Certain information in these reportsrelating to individual factories has, as a general rule, been treated as confidential in the interests of the industry. This information, however, has. been, made available to. the factories concerned for their guidance.
asked the Treasurer, upon notice - 1.Has the Government any moneys at its disposal which it can apply to assisting goldmining in probably profitable fields, and so relieve unemployment?
– The answers to the honorable member’s questions are as follow : -
Mr.FENTON. - On the 11th July, the honorable member for Indi (Mr. Jones) asked the following question, upon notice -
Having regard to the following quantities and values oforegon imported free into Australia for use underground for mining purposes as prescribed by departmental by-laws : - 1st January, 1928, to 30th June, 1928, 970,217 super, feet valued at £4,341 ; 1st July, 1928, to 30th June, 1929, 8,028,054 super feet, valued at £36,731, will the Minister say whether adequate assurance is given that the
Oregon so imported is used exclusively underground formining purposes?
I am now able tofurnish the honorable member with the following information : -
Yes. Security is furnished by the importer in terms of customs by-law No. 51, and the department exercises a systematic check as to the use to which the timber is put.
On the 28th July, the honorable member for Indi (Mr. Jones) asked the following question, upon notice -
With regard to the8,028,054super. feet of Oregon, valued at £36,731 imported free into Australia in the year 1928-29, for use underground for mining purposes, as prescribed by departmental by-laws, will the Minister say -
Which firm or firms imported this timber, and what were the quantities?
What guarantee or assurance was given that the timber would be used exclusively underground for mining purposes,?
What precaution is taken by the department to see that any guarantee or assurance so given is honoured ?
I am now able to furnish the honorable member . with the following information : -
Mr.FENTON. - On the 24th July, the honorable member for Newcastle (Mr. Watkins) asked the following question, upon notice-
Whether the present imports of galvanized iron amount to 2,000 tons per month; if so, will lie. cease paying the bounty on the Australian product, and place an adequate customs duty on imported galvanized iron in place thereof?
The average imports are much in excess of 2,000 tons, as during the last six months the average importations have been 4,620 tons per month.
The following papers were, pre sented : -
Excise Act - Regulations amended - Statutory Rules 1930, No. 71.
Navigation Act - Regulations amended - Statutory Rules 1930, No. 83.
Motion (by Mr. Scullin) agreed to -
That the House at its rising adjourn until 1 1 a.m. to-morrow.
– by leave - The Commonwealth Government has given close attention to the representations that have recently been made to it by various interests, regarding the sugar embargo and agreement. The Queensland Government and associations of employers and employees, representing the sugar industry, waited on me last week, and urged that the present sugar agreement should be renewed for a period of five years after its expiry on the 31st August, 1931. Other parties have written to the Government in support of the embargo, with or without new conditions. On the other hand, some State branches of the Housewives Association, certain fruit-growers’ organizations, and various individuals, have urged that the embargo be lifted, and that the present sugar agreement he not renewed after August, 1931. Then again, associations representing the jam, condensed milk, and confectionery manufacturing industries have requested that the present price of sugar be reduced under any further extension of the sugar agreement. Taking all the representations into consideration, the Government finds that they comprise a maze of widelydiffering requests, many of them being quite contradictory or difficult to reconcile. Some parties contend that the present price of sugar is an intolerable burden on fruit-growers, manufacturers, and house-holders alike. The sugar interests; however, point to the gradually increasing efficiency of their industry, their present low returns, and the fact that the price of sugar has increased under the embargo system by less than the price of most other commodities, and also by less than the basic wage, which thus leaves consumers in a relatively advantageous position as regards sugar Despite the claims of the sugar industry and the Queensland Government, certain critics claim that the industry is being unsatisfactorily conducted; that land values are inflated, methods can be improved, the industry is uneconomic, and that control is rapidly passing from the British race. In view of the diversity of the many issues raised, the Government has arrived at the conclusion that there is need for a full inquiry into the Australian sugar industry and the operation of the sugar embargo and agreement, and that it is not advisable that the sugar agreement should be renewed until a comprehensive report on all aspects of the question has been received, and carefully considered by the Government. Accordingly, the Government has decided to appoint a committee of inquiry, to commence its task on 1st September next, and to finish by the 1st November. The committee will consist of not more than seven persons, namely -
The Honorable John Gunn, Commonwealth Director of Development, as chairman.
Mr. A. R. Townsend, A.I.C.A., Accountant of the Department of Trade and Customs.
A representative of the sugar employers - to be nominated by the Queensland Government.
A representative of the sugar employees - to be nominated by the AustralianWorkers Union.
A representative of the manufacturers - to be nominated by the Associated Chambers of Manufactures.
A representative of domestic consumers.
A representative of fruit-growers.
The Government will receive nominations from all bodies claiming to represent domestic consumers, from which it will select a representative. The same procedure will apply to the selection of the representative of the fruit-growers.
I hope that the Queensland Government will endeavour to nominate a person who will be not only acceptable to the several employers’ organizations in the sugar industry, but also well-informed on conditions appertaining to cane-grow- iug, raw sugar manufacture, and the business of disposing of the raw sugar. Because of the urgent necessity for restricting the expenditure of public funds, the Government considers that each interest represented should bear the expenses of its representative. The Commonwealth Government, however, is prepared to pay the expenses of the representative of the domestic consumers. It is proposed that the Queensland Government should provide secretarial assistance for inquiries in Queensland, and that the Commonwealth Government should provide such assistance elsewhere.
In the Honorable John Gunn, the committee will have a chairman of wide experience of public business, and of Australia’s industries. As Premier of South Australia for two years, and a member of the former Development and Migration Commission, Mr. Gunn acquired valuable experience which eminently fits him for his new responsibility. Furthermore, his prolonged investigation into the* canning fruits industry on behalf of the Development and. Migration Commission will enable him to assist the committee in dealing with the important question of the effect of the sugar policy on the fruit industry. Mr. Townsend is well known to honorable members as the officer who rook over the duties of Commonwealth Sugar Controller for the last eighteen months of the Commonwealth Government’s control, when the late Colonel Oldershaw relinquished his duties on February, 1922. Since the federal control ceased in August, 1923, Mr. Townsend has been intimately associated with the federal sugar policy, and all operations under the sugar embargo and agreement. In 1924, he and another public accountant represented both the Commonwealth Government and the consumers on the Commonwealth Sugar Tribunal, which investigated the cost of Australian sugar production, and fixed the price of raw sugar for the 1925 season.
The terms of reference under which the committee will work have not yet been finalized, but they will probably include the following subjects: - Efficiency in field and factories, land, values, costs nf production and dis tribution, feasible economies, effect of sugar prices on manufacturing industries, including fruit growing and processing, alien penetration, over-production of sugar, utilization of sugar by-products. The position is that the issues at stake are so important, and the contentions of the different interests so involved and diverse, that the Government believes that they warrant a full public inquiry and that the report and recommendations of the committee will be of great value in assisting it to arrive at a decision equitable r,o all interests concerned. Early consideration will be given by the Government to the committee’sreport when it is received.
– Will the Prime Minister say whether it is proposed to give the committee power to take evidence on oath and require the production of documents?
– That is not proposed. This committee will be a committee of inquiry, which may call for evidence, but not sworn evidence.
– That is to say, the evidence will be voluntary?
Motion (by Mr. Fenton) agreed to-
That he have leave to bring in a bill for an act to enable effect to begiven to a treaty signed at London on behalf of His Majesty and certain other powers and to repeal section seven of the Treaties of Washington Act 1922.
Bill brought up by Mr. Fenton, and read a first time.
Motions (by Mr. Scullin) agreed to-
That he have leave to bring in a bill for an act relating to the imposition, assessment and collection of a. tax upon the sale value of goods manufactured in Australia and sold by the manufacturer, or applied to his own use, and for other purposes.
Thathe have leave to bring in a bill for an act relating to the imposition, assessment and collection of a tax upon the sale value of goods manufactured in Australia and sold by a purchaser from the manufacturer, and for other purposes.
That he have leave to bring in a bill for anact relating to the imposition, assessment and collection of a tax upon the sale value of goods manufactured in Australia and sold by a person not being either the manufacturer or a purchaser from the manufacturer, and for other purposes.
That he have leave to bring in a bill for an act relating to the imposition, assessment and collection of a tax upon the sale’ value of certain goods manufactured in Australia and applied by the purchaser to his own use, and for other purposes.
That he have leave to bring in a bill for an act relating to the imposition, assessment and collection of a tax upon the sale value of goods imported into Australia, and for other purposes.
That he have leave to bring in a bill for an act relating to the imposition, assessment and collection of a tax upon the sale value of goods imported into Australia and sold by the importer, and for other purposes.
That he have leave to bringin a bill for an act relating to the imposition, assessment and collection of a tax upon the sale value of goods imported into Australia and sold by a person other than the importer, and for other purposes.
That he have leave to bring in a bill for an act relating to the imposition, assessment and collection of a tax upon the sale value of certain goods imported into Australia, purchased by a taxpayer, and applied to his own use, and for other purposes.
That he have leave to bring in a bill for an act relating to the imposition, assessment and collection of a tax upon the sale value of certain goods in Australia, dealt with by lease, and for other purposes.
Bills brought up by Mr. Scullin, and read a first time.
– I move -
That the bill be now read a second time.
I ask for your ruling, Mr. Speaker, as towhether it is permissible to cover all these bills in one debate. They relate to one subject, and the only reason for introducing nine bills is to meet constitutional requirements.
– As the bills relate to cognate matters it is permissible for the debate on the first bill to cover the other bills also.
– It is somewhat of a reflection on the Constitution that it is necessary to have nine bills in order to pass one assessment act. It is a remark able fact that though there has been much criticism of our Constitution, very little of it has been directed against section 55, which makes the present proceeding necessary. The bills are now before the House, and it is hoped to have them consolidated in a memorandum for the use of honorable members during the debate, and also for public use.
There is no need for me to emphasize the fact that Australian finances are to-day suffering from a number of ills. The fact that there has been a tremendous loss of customs revenue has been mentioned frequently. The loss of customs revenue, which is an indirect tax, and one which had been growing for many years, has very seriously embarrassed Commonwealth finances. It has, therefore, become necessary for the Government to look for new sources of revenue. The proposed sales tax will tap a source pf revenue very much akin to that exploited by the customs duties.. I propose to give a brief history of sales taxation, though many honorable members are doubtless familiar with the subject from reading of its operation in other countries. Just after the war most European countries were in a very difficult position - worse than we are in Australia or, at any rate, as bad. They were unable to import goods and collect customs revenue; revenue from income taxation had almost disappeared, and the principal countries of Europe turned to the sales tax to fill their empty treasuries, and enable them to carry on. In those conditions, when the income of the people was reduced, and the nations almost exhausted, the paramount need still existed for maintaining national revenue so as to carry on ordinary government services. The European countries adopted the sales tax more as an experiment, although it had been tried out in some countries earlier. It was regarded, however, as an emergency measure, and the first important country to impose the tax was Germany, in 1918. That country imposed what is known as a turn-over tax, applicable to all goods and services, commercial and professional. The rate was fixed in the first instance at½ per cent., and was gradually increased until, in 1924, it stood at2½ per cent. At that time it yielded up to 36 per cent. of the total revenue ‘ of
Germany. Other countrieswhich followed Germany’s example in 1920 were, France, Canada, and Czecho-Slovakia. The following year Belgium, Italy, Hungary, Boumania and Bussia adopted the turn-over tax, and in 1923 it was adopted by Austria and Poland. In 1925, Turkey also imposed this tax. The methods employed in the various countries differed considerably in detail, but I do not propose to enlarge on them beyond saying that in the main they were turn-over taxes - that is, they were applicable to all transactions. In many instances they included services, commercial and professional. In others they applied to every transaction, wholesale and retail, and no matter how frequent the transactions, no matter how often particular goods were sold, the tax was collected every time. In all countries where the tax was in operation the Government received very substantial returns from, it. The measure now before us follows very closely the system in operation in Canada, where the sales tax was first imposed in 1920.
– The Government that introduced it has now been defeated.
– The Government that reduced the tax has recently been defeated.
– I doubt whether that fact had anything to do with its defeat.
– My reply was just about as relevant as the honorable member’s interjection. When the sales tax was introduced in Canada that country was passing through a period of general depression. The financial, economic and commercial conditions were far from good. Customs revenue had fallen, and income taxation yields were greatly reduced. The war times profits tax had also failed as a source of revenue. In 1920 the Government imposed a tax on manufacturers and wholesalers. The manufacturers, when selling articles, paid. 1 per cent. on everything they sold to the wholesalers, and the wholesalers paid 1 per cent. when they sold goods. That made 2 per cent., if the second sale was made direct to the retailer or to the public. If the manufacturer sold direct to the retailer, he paid 2 per cent., but every sale made by a manufacturer or by a wholesale merchant was subject to a tax of at least 1 per cent. In many instances there were several transactions, each of which paid 1 per cent. It became known as the multiple tax, because often the tax was collected several times on the same goods. In 1921 economic conditions in Canada were still very bad. The business depression was acute, but, in spite of that, the tax was increased to 3 per cent. The following year it was increased to4½ per cent., that is, the manufacturers and wholesale merchants together paid a tax of4½ per cent. In 1924, the multiple tax was abolished, and legislation introduced providing for the payment of the tax once only, as we propose shall be done here. Thus, whether the manufacturer sold direct to theretailer or to the wholesale merchant, and no matter how many transactions occurred, only one tax was paid. The rate, however, was fixed at 6 per cent. Later, in 1924 it was reduced to 5 per cent., and from the third or fourth month in 1924 until 1926 it remained at that figure. In 1927 it was reduced to 4 per cent., and it has been reduced 1 per cent. each year since then until it now stands at 1 per cent.
– How much do they get from it?
– I have not the figures here. At one time it yielded as much as £15,000,000 a year, and has provided as much as 24 per cent. of the national revenue. Professor Comstock, a professor of economics at the Holyoke University, in the United States of America, has examined the results of sales taxation, and, in an article contributed to a review, says -
Eleventh Report of the CommissionerGeneral of the League of Nations for Austria.
When financial reconstruction under the auspices of the League of Nations was being carried on in Austria, the turnover tax proved; to be a valuable device for furnishing a dependable revenue at a time when other important taxes were falling behind, because they were not adapted to existing conditions.
The same writer points out that this form of taxation rendered remarkable service to Germany during a period of depreciating currency, financial disorganization, and budgetary distress. He states that it was of great help to the French Treasury, and it was recognized that during a critical period the turnover tax was the most trustworthy tax of all. When, under the auspices of the League of Nations, the financial reconstruction of Austria was being carried on, the turnover tax proved to be a valuable device for furnishing a dependable revenue at a time when other important taxes were falling behind because they were not adapted to the existing conditions. That statement is made in the 11th report of the CommissionerGeneral of the League of Nations for Austria. I have a number of quotations from authoritative sources, and if honorable members desire to study a comprehensive review of general sales and turnover taxes, I commend to them a splendid v work on the subject that has been published by the National Industrial Conference Board of the United States of America. That work contains contributions by a large number of persons, who are representative of commercial, manufacturing and other interests in the United States of America.
– “When was it published?
– In 1929. In the drafting of this legislation, the Government found that the constitutional problem was a serious one, and obtained the advice of outside counsel. Mr. E. M. Mitchell, K.C., advised that, in view of the High Court’s interpretation of section 55, and of possible future interpretations, the safest course was to have an assessment act and a rates act for each subject of taxation. Thus it is necessary to introduce nine separate assessment bills and nine separate rates bill to do precisely what, in Canada, can be done with one assessment act and one rates act.
The sales tax that is to be imposed by these measures will apply to what will be called “ sale value “ in connexion with sales, and transactions which are in the nature of dispositions of goods in the ordinary course of trade, that take place on and after the 1st August next. The term “sale value” is employed instead of the term “sale price,” for many reasons. There are numerous transactions that are not actually sales; for example, goods may be leased in return for a rental or a royalty. In such a case, tie ownership does not change, but the perpetual use of the goods does. In effect, it is a sale, although legally it cannot be so termed. The sale value in those circumstances will be determined by the Commissioner. Further, so as to preserve the protective incidence of the tariff, the tax will be payable on imported as well as locally-manufactured goods. The retailer who imports goods will pay the tax at the time of their entry, and consequently a sale value must be fixed. That value will be the dutypaid value of the goods. It will be upon that value that the retailer who imports will pay the tax. In cases where a manufacturer or a wholesale merchant is also a retailer the tax will apply to the price for which his goods are sold to the consumer.
– Did the right honorable gentleman say that in cases where a retailer imports goods, he pays the tax upon their arrival in Australia?
– Where goods are imported and sold by the importer, he pays the tax; but where the importer sells to a wholesale merchant, who will be registered, no tax will be paid on that sale - it will not be paid until the goods are sold to a retailer. In every case, the tax will be paid on the last transaction, no matter how many hands the goods may pass through. A check will be imposed by the registration of manufacturers and wholesale merchants.
– Will it be paid on the last price?
– It will be paid upon the value of the sale. Any sale that is made to a registered person will not be taxed; but when that registered person sells to an unregistered person the sale will be taxed.
– The tax will not be held in suspense against a registered person.
– No. The turnover taxes in other countries, to which I have referred, are usually multiple taxes that are applicable to all transactions. In such cases, a low rate - becomes a high rate, the original 2 per cent, increasing to as much as 10 per cent. That accounts for some of the early criticism of this proposal. Those who have argued that this tax will amount to as much as 10 per cent, or 15 per cent, have evidently had in mind what has happened in connexion. with multiple taxes in other countries. That does not occur where the tax operates on only one transaction. This proposal is that the tax shall be charged only once. Manufacturers and wholesale merchants will be registered, but retailers will not be. Sales to registered persons for re-sale will not be taxed. Goods and raw materials purchased for use in manufactures will not be taxed at the time they are purchased.
The question of contracts has been raised, and I have received a considerable amount of correspondence regarding it. If a contract for the delivery of goods over a number of months was entered into on or before the 9 th July, those deliveries will be exempt from this taxation. If, however, a contract was entered into after the 9th July, any deliveries made after the 1st August will be taxable as sales. The reason for that is obvious. For example, if, before the notification in the budget speech on the 9th July that it was proposed to impose a sales tax, a firm entered into a contract at a fixed price to operate over a period of six or twelve months, it would have to deliver at that price, and, consequently, it would be unreasonable to expect it to pay this tax. But any contract that was entered into after that announcement is in quite a different category.
The various transactions, acts, or operations that will be covered by the general scope of the sales tax may be summarized as follows: -
In the case of goods manufactured in Australia: Goods that are sold by the manufacturer to an unregistered person will be taxed, the tax being payable by the manufacturer. When goods have been purchased from the manufacturer by a registered person, and then sold by the latter to an unregistered person, the tax will be paid by the registered person who has purchased from the manufacturer. When goods are sold to an unregistered person by a registered person, who is neither a manufacturer nor a purchaser from a manufacturer, the tax will be payable by the registered person.
In the case of imported goods: When goods are imported by an unregistered person, the tax will be payable by the importer at the time of the entry of the goods for home consumption.
When goods are imported by a registered person and sold by him to an unregistered person, tax is payable by the registered person on the sale price of the goods. When imported goods are sold to an unregistered person by any person in Australia other than the importer, tax is payable by the vendor who sells to the unregistered person.
When goods are purchased from local manufacturers or imported : When goods are purchased by a registered person and applied by him to his own use, tax is payable by the registered person on the fair market value at which the goods would have been sold by him in the ordinary course of trade if so sold.
When goods are sold or transferred by the owner to another person subject to payment of a royalty, whether that payment is or is not associated with any other kind of payment in respect of the goods, the royalty is to be taken into consideration in ascertaining the sale value for the purpose of the tax. As to goods which are the subject of a lease granted by the owner, the terms of the lease are to be taken into account in ascertaining the sale value for the purpose of the tax.
In respect of goods produced or manufactured in Australia the exemptions are -
Bags and sacks used in marketing primary products described below. (This exemption also applies to imported goods of this kind.)
Beer (because it is the subject of the special revenue duty of excise).
Boxes, cases, and crates, and wood in shooks for the manufacture of boxes, cases, and crates used in marketing any goods specified in this schedule when the Commissioner is satisfied that the boxes, cases, and crates have been or will be so used within such time as the Commissioner considers reasonable in the circumstances.
Butter, including margarine and similar substitutes for butter.
Fertilizers and raw materials for use in the manufacture of fertilizers. (This exemption also applies to imported goods of this kind.)
Flour, including bran, pollard, and semolina.
Foods for poultry, birds and live-stock.
Gas illuminating or heating, from coal.
Metals as recovered from ores.
Milk products, viz., casein, milk powder, milk, condensed or concentrated.
Pastry, but not including cakes or biscuits. Petrol.
Water, supplied by public authorities.
Wool packs. (This exemption also applies to imported wool packs.)
Goods (imported or Australian) sold for export by the purchaser.
Goods (imported or Australian) exported by the owner whether or not they are for subsequent sale.
Primary products derived directly from operations carried on in Australia in -
Goods sold by or to a government or government authority in so far as they are the subject of a sale by or to that government or authority.
The foregoing exemptions are expressed in the schedules to the respective assessment bills to the extent required by the scope of each bill. As the bills relate to different subjects of taxation, there is necessarily some variation in the extent to which exemptions are specified in each schedule. For example, the bills dealing with goods manufactured in Australia which are the subject of ordinary sales, contain the full list of exemptions of Australian manufactured goods. In the case of imported goods, a shorter list is shown in the schedule, according to requirements.
In respect of all imported goods except those which are subject to the special revenue duties of Customs, the sale value will be taxable. The exempt goods which are subject to the special revenue duties of customs are - Petrol, tobacco, cigarettes, cigars, films, newsprint, and wireless valves. If any person who has imported goods without having been liable to pay sales tax in respect of them at the time of their entry at the customs for home consumption, exports those goods or sells them to a purchaser for export by him, no sales tax will be payable on the sale value in respect of either the act of exportation or the sale for export.
One of the features of a sales tax is the simplicity of its administration. The experience of other countries is that it is administered much more simply than the income tax or the land tax; it is certainly much easier to collect than a war-time profits tax. Vendors who are liable to pay tax will be required to render monthly returns of their sales not later than seven days after the close of each calendar month. The return will be accompanied by a remittance of the amount of tax payable in respect of the taxable sales. We hope that we are avoiding many of the mistakes and difficulties which attended the introduction of this taxation in other countries. Starting later than they, we are benefiting by their experience, and we are indebted to the Government of Canada for the loan of the services of Mr. G. W. Jones, an expert from the Sales Tax Department. He has shown himself a very capable officer, and the Commissioner of Taxation speaks in the highest terms of his qualifications and the assistance he has given to the department. I take this opportunity to thank the Government of Canada for its prompt compliance with my request that it should make an officer available to give us the benefit of the Dominion’s experience in this class of taxation.
The machinery of the Income Tax Assessment Act has been adapted to the sales tax for the recovery of taxes. Machinery similar to that established by existing legislation is provided in regard to objections and appeals. The taxpayer will have the right to refer a matter in dispute to a board of review, and a question of law may be taken to the High Court.
– Will a rates bill be required each year?
– No ; though it may be renewed annually. The Assessment Act will come up for revision only when amendments are found necessary. I regret that I was not able to submit the bills to the House earlier; the delay is due to the difficulties of drafting, caused almost entirely by section 55 of the Constitution.
– Is this temporary legislation?
– It has been introduced because of the state of the Commonwealth finances. How long it will operate I cannot say. I do not assert that it is temporary or emergency legislation. We have to face the fact that we cannot continue to depend upon revenues derived from imports artificially stimulated by borrowing abroad. We have not been conducting our affairs on sound lines. It is sounder toimpose indirect taxation of this kind on goods sold in the country, than to depend on customs duties upon imports artificially swollen by placing our country in debt to the foreign money-lenders. The Government hopes that in the course of time the rates may be reduced and the exemptions increased. That has been the experience of other countries, particularly Canada. I quite expect that honorable members will present many requests for additions to the list of exemptions. I remind them that the list is already extensive. The Statistician has calculated that the wholesale value of sales in Australia is approximately £500,000,000 per annum, and this tax will apply to only half that amount. Whilst honorable members may be able to make out a good case for the exemption of particular articles, we must consider the revenue, and because £250,000,000 worth of sales is already exempt we have had to impose a rate of2½ per cent. on the balance. The calculation of £500,000,000 was made after allowing for depressed prices and reduced values of output brought about by the existing depression.
– Does the honorable member expect to collect £7,000,000 from this tax thisyear?
– In a full year, we expect to collect £6,250,000. This year the estimate is £5,000,000, allowing for the loss of revenue for approximately two months, a month’s delay in applying the tax, and certain extensions of time.
– Is the vendor expected to remit a monthly cheque whether or not he himself has been paid for sales?
– Yes. When he has written off a bad debt he is given a refund. If he subsequently collects that bad debt, he has to repay the tax refunded. The monthly returns are to be made seven days after the close of the month, and cheques to the amount of the tax remitted.
– Does the importer pay on the landed cost?
– If the importer is an unregistered person and sells direct to the retailer or to the public, he will pay upon a duty-paid value, which will be determined by the Commissioner. If he sells to a wholesale firm, then the. tax will be charged upon whatever is the value of the sale. I commend the bill to the House.
Debate (on motion by Mr. Latham) adjourned.
Mr. FENTON brought up his report as Australian delegate to the London Conference on the Limitation of Naval Armaments.
Ordered to be printed.
.- by leave - I move -
That this House approves the treaty between His Majesty the King and the President of the United States of America, the President of the French Republic, His Majesty the King of Italy and His Majesty the Emperor of Japan, for the limitation and reduction of naval armaments, signed at London on the 22nd April, 1930.
My statement in respect of the London Naval Conference will be brief, because the report which I have laid upon the table of the House deals fully with the proceedings of the conference.
– Does the Minister propose that the debate shall take place upon this motion or upon the Treaty of London Bill?
– The debate will take place to suit the convenience of honorable members. A previous debate on naval armaments took place on the motion submitted to the House for the ratification of the treaty, and I think that that procedure might now be followed.
On the Cth February, 1922, there was signed, at Washington, an important treaty, which, to an extent, limited the construction of battle ships and aircraft carriers. Since that conference many moves towards the limitation of armaments have been made by the League of Nations. I refer honorable members to the Locarno Pact, the Kellogg-Briand Pact and the ThreePower Conference held at Geneva between the United States, Japan and Great Britain. No less than 3even attempts have been made, either through the League of Nations or by other means, to come to some arrangement in respect of naval armaments. When the conference at. Geneva, which, unfortunately, met with little success, concluded, the relations between the United States of America, Japan and Great Britain were somewhat strained, and it was therefore considered necessary to make some further move in the direction of reducing armaments, [n 1929; many conversations took place in Great Britain between the Prime Minister of Great Britain, the Right Honorable Ramsay MacDonald, and the Ambassador of the United States of America, the Honorable C. Dawes. Subsequently, Mr. Ramsay MacDonald visited the United States of America, and negotiations took place between him and the President of that nation. It was decided to call the London Naval Conference. That, conference has since been held. Let me say, in passing, that it was recognized at that conference, certainly by the United States of America, that the tour of the Prime Minister of Great Britain throughout that country had contributed largely to the better feeling engendered among the peoples of those two great nations. We all rejoice that the Anglo-Saxon peoples are to-day more in concert than they have been previously, and for that position, we, regardless of our political colour, should be deeply thankful.
The London Conference was held on the 21st January and I attended it as a representative of Australia. It met in an historic chamber known as the Royal Gallery of the House of Lords. The conference was opened by His Majesty the King, who welcomed the delegates. I am sure that we were all glad to know that His Majesty had made a splendid recovery from his long illness, and it was fitting that his first public engagement thereafter should be the opening of a great international conference. His Majesty, in opening the conference, delivered an eloquent speech, portion of which reads -
I believe that you, to whom your governments hare entrusted the high mission of continuing the task begun at Washington, art* animated with the single-minded intention of working not with any selfish and exclusively nationalistic purpose, but with the noble inspiration and resolve to remove once and for all this particular obstacle from the path of order and civilized progress.
All nations have varying needs demanding special consideration, but if each is equally determined to make some sacrifice as a contribution to the common good, I feel sure that your deliberations will confer a great and lasting benefit, not only upon the countries which you represent, but upon mankind generally.
I earnestly trust that the results of this conference will lead to the immediate alleviation of the heavy burden of armaments now weighing upon the peoples of the world, and also, by facilitating the future work of the League Preparatory Commission on Disarmament, hasten the time when a general disarmament conference can deal with this problem in an even more comprehensive maimer. [n this hope I shall follow your deliberation* with the closest interest and attention.
Honorable members will agree that the splendid principles laid down in tha! magnificent address are well worthy of adoption by us. I believe that the representatives of every nation at that conference were inspired by it to bend their energies in the direction of bringing about a considerable reduction in naval armaments. The Right Honorable Ramsay MacDonald was elected Chairman of the Conference. Sir Maurice Hankey was elected secretary-general, and Mr. W. A. Alexander, First Lord of the Admiralty, was elected chairman of the first committee. Not only those gentlemen, but also the public servant? and officers who assisted at the conference, rendered the most admirable service, and they were congratulated by the delegates of the various nations, who expressed their indebtedness to the officials for the assistance that they had received at their bauds. Mr. MacDonald. who made a fine chairman, and Sir Maurice Hankey, who is one of the most valued public servants in Great Britain, greatly assisted us with their advice, and so also did the many naval and other experts who were present.
This was my first experience of a conference of this kind, but other honorable members of the House who have attended such conferences know that a great deal of work is done in meetings and other gatherings which are of a more or less unofficial nature. Sometimes, for instance, the British Government delegation would meet the overseas delegations; and at other times both those delegations would meet the Japanese, the French, the Italian, the United States of America, aud other delegations separately. Many meetings were held between representatives of the British Government and the overseas dominions, at which difficulties, peculiar to them, were threshed out, and agreements reached that made the discussions at the plenary, or open, sessions of the conference much more effective and harmonious.
About 400 journalists representing newspapers in practically every country of the world were detailed to report the proceedings of the conference. Distinguished press representatives were present from the United States of America, Japan, France, Italy and other leading nations, and, of course, many well known British journalists attended the sessions of the conference, which were open to the press. Some of the reports which emanated from these representatives conveyed strange ideas to the public. I do not blame pressmen for obtaining information; it is their business to do so. If official reports are not made available to them they endeavour to secure information privately from delegates, and if. their efforts in that connexion are not successful they sometimes manufacture reports. I do not know what reports were sent to Australia respecting the work of the Australian delegation, but I know that some reports published in certain overseas papers attributed to the Australian delegation inaccurate and unwarranted views. We were blamed, for instance, for causing a certain amount of disruption in the British delegation. I believe that I was set down as one of the exceptionally big navy men. Possibly this was due to the fact that at the plenary session at which the delegates from each country were invited to state the naval needs of their country I directed attention to the fact that Australia was an island continent with 12,000 miles of coastline, and that she had to send many of her exports over a sea route which was 12,000 miles in length. I also reminded the conference that during the war we had great difficulty in transporting our troops, foodstuffs and commodities generally for the assistance of the Allies. The statement of these facts may have led certain journalists to assume that I favoured the building up of big navies; but my object; in making such observations was simplyto direct the attention of the conference to the difficulties which face Australia. While I had no desire to be discourteous it is possible that, at times, I expressed myself forcibly, particularly in the meetings which were attended only by representatives of the British Government and overseas dominions.
– The honorable member certainly seemed to “ ginger “ the conference into arriving at some conclusions.
– The overseas representatives at the conference enjoyed, for the first time, the new status accorded to them by the Imperial Conference of 1920. Doubtless, if we had desired to do so, we could have laid before the conference the exact naval requirements of our own particular dominions.
– What did the honorable member do in regard to the Singapore base?
– That subject was not brought before the conference; in fact, it would not have been in order to introduce it, for the conference was called for the particular purpose of discussing a reduction of naval armaments. The introduction of anything extraneous would have been instantly resisted.
– Surely the Singapore base was a cognate subject.
-AsI have said, the Australian delegates, in common with the representatives of the other overseas selfgoverning British dominions, enjoyed their new status for the first time at this conference. I believe that when the British Prime Minister was negotiating for the holding of the conference, he communicated with the Prime Ministers of all the overseas dominions - the Leader of the Opposition may be able to correct my statement in this connexion if it is inaccurate - his desire being that the British Empire fleet should he regarded as one unit; and all the dominions accepted his proposal in that connexion. Therefore, every request that was made at the conference by the British delegation - had behind it the concurrence of the representatives of the British Government, and of the overseas dominions.
I do not desire to draw into this debate any matters which will be the subject of important discussions at the forthcoming Imperial Conference, but I believe that steps will be taken at that gathering to formulate a definite, and perhaps more constitutional, method in regard to dominion status. But the decisions of the 1926 Imperial Conference were loyally adhered to at the naval conference. I emphasize particularly that the overseas representatives were consulted in respect to every decision that was made, and shared all the work of the various committees. The leaders of. the various British Empire delegations were present at all conferences which were restricted to the principals of the various countries. It is true that when the six representatives of the varipus British overseas dominions, and the three or four representatives of the British Government, were called upon to make a response at the opening of the conference on behalf of their different countries, some of the foreign representatives looked a little askance at us. Perhaps they feared that they would be outvoted on any matter’ that came before the conference. But the conference did not reach its decisions by voting in the ordinary way. “When the momentcame for the making of a decision, . the chairman of the conference wouldlook to the representatives on one side of him and say, “Do you agree?” and then to the representatives on the other side of him and repeat his question, and if there was no dissent, the proposal was agreed to unanimously.
One subject which received very careful and lengthy consideration was the method of recording the naval tonnage of the various countries. The French delegation desired that naval tonnage should be considered as what is known as global tonnage; that is to say, that a nation’ should be called upon to indicate its total tonnage, but not disclose the detailed tonnage and class of the ships which constituted its navy. The British delegation, on the other hand, desired that the tonnage should be reported in categories; that is to say, that a schedule should be submitted showing the number of battleships, cruisers, destroyers, submarines, and so on; and the tonnage of each ship. The Italian delegation agreed partially with the French view. There seems to be an impression abroad that the conference was not in a position to consider such details, because it had not at hand expert naval advice. But every nation had its naval experts present for consultative purposes. In some cases these experts participated in the discussions. The delegates of the United States of America, for instance, had the assistance of Admiral Pratt ; the French, Italian, and Japanese and other delegations had the assistance of experts from their naval departments ; and the British delegation was fortified by the advice of Sir Charles Madden, First Sea Lord, who was present throughout practically the whole of the conference, and rendered invaluable advice. He, . and other experts, were sitting immediately behind the British , delegation in the plenary sessions.
Mr.Maxwell. - Were all the discussions in English ?
Mr.FENTON.-Thelanguages of the conference were English and French, but all languages spoken were interpreted. Sir William Fisher, a very able assistant to the First Sea Lord, was also in attendance to assist the British Empire Delegation. It willbe see, therefore, that the various delegations had at their command the advice of the most expert naval officers who could be assembled.
– Were the sittings of the conference secret, or was the principle of open diplomacy adopted ?
– Every plenary session was held in public. At its first meeting the plenary session appointed certain committees. Questions were remitted, for instance, to the First Committee, which consisted of practically all the members of the conference. That committee met in camera to discuss these subjects, and remitted particular matters to sub-committees of jurists, naval technicians, and the like. The recommendations of these sub-committees were subsequently reported to the First Committee, and, after discussion, passed on with other recommendations to the plenary session.
– The procedure seems to have been fairly involved.
– Nearly all such conferences are held in this way. Perhaps I may be allowed, to say, also, that through the various representatives meeting in social gatherings considerable benefits came. A quiet chat by two or three men in a secluded corner sometimes yields better results than a formal conference round a table.
– Who represented the Australian Navy?
– I had to help me, Vice-Admiral Napier, late First Naval Member of the Naval Board in Australia, and Rear-Admiral Hyde, who received practically the whole of his naval training in Australia, and was recently appointed to command one of the British fleets, a fact of which we were very proud. Captain Cayley and Major Casey were also present. It will be seen, therefore, that we had at our command a galaxy of naval talent.
There is another point to which I shall make some reference without mentioning names, for I do not want to say anything that is likely to cause offence in any quarter. Certain nations made requests which the conference felt that it could not accede to. It will be admitted that the position of a country like France is very difficult, at a conference of this kind, for France has, during the last century, suffered seriously from foreign aggression on two or three occasions. A country which has suffered the devastation of war naturally has a different outlook from that of other countries which have not so suffered. Therefore, they were very anxious indeed to secure some further guarantee of assistance should they be attacked by another nation. During the discussion, I found myself quoting from that document known as the International Treaty for the Renunciation of War, It is otherwise known as the
Kellog-Briand Pact, and the Paris Pact. Article 2 of that document is as follows :-
The High Contracting Parties agree that the settlement or solution of all disputes or conflicts of whatever nature or of whatever origin they may be, which may arise among them, shall never be sought except by pacific means.
I know, of course, that this is what some people would call a scrap of paper, but the treaty has been signed by those nations which took part in the conference, and it now bears the signatures of nearly 60 other nations as well. It is a plain and simple statement, and, as I pointed out to the French representatives, it furnishes them with full guarantees. There is also the Locarno Pact, under which even Australia has certain obligations. I opposed entering into any arrangement for further guarantees, and I believe the people of Australia support me in that attitude. I stated that we are not prepared to give guarantees involving us in possible European entanglements. This was the attitude I took up during the committee discussions, and I would have taken the same stand in open conference, if necessary. It was made plain that we would give no further guarantee in regard to a five-power pact, and little discussion occurred after that.
– What did the Minister do to secure the protection of Australia?
– As regards the effects of this treaty upon vessels of the Australian Navy, I desire to point out that the cruisers Australia and Canberra are each of 10,000 tons standard displacement, and carry eight 8-in. guns apiece. They are therefore included in the fifteen cruisers of 146,800 tons allotted to Great Britain under the cruiser sub-category a in the table given in Article 16 of the treaty. The cruisers Adelaide and Brisbane are of 5,100 tons and 5,120 tons standard displacement, respectively. The main armament of the Adelaide is nine 6-in. guns, and of the Brisbane, eight 6-in. guns. These two vessels come within the cruiser sub-category b of 192,200 tons shown in Article 16. As the Australia and Canberra were laid down after the 31st December, 1919, twenty years from the date of completion in 1928 must elapse before these vessels are deemed over age and due for replacement. The Brisbane and the Adelaide were laid down before the 1st January, 1920, and sixteen years only from date of completion in 1916 and 1922, respectively, must elapse before they are deemed over age and capable of replacement. It will therefore be noted that the Brisbane is the first on our list of replacements.
The seaplane carrier Albatross, of 5,000 tons, is included in the list of vessels given in annex III of part II. of the treaty. This vessel may be retained, and its tonnage is not taken into account in determining the tonnage subject to limitation. If, however, it is desired later on to replace this vessel, then the tonnage necessary for that purpose will be charged against the tonnage of the nearest appropriate combatant category.
For the purposes of negotiation with the other Powers, it was agreed between the dominions and the British Government that the navies of the British Commonwealth should be taken as one unit. The domestic questions of the distribution amongst the various dominions of the total tonnage allotted to the British Commonwealth under the treaty, and the consequent allotment of responsibility for the maintenance and replacement of vessels, remain to be determined. It was agreed that these matters could be more appropriately discussed at an imperial gathering, and undoubtedly they will be brought under notice by the British Government at the forthcoming Imperial Conference.
Other nations have nothing to do with arrangements regarding the disposition of the British Navy among the component parts of the Empire. We have four cruisers, an aircraft carrier, a sloop, some destroyers, submarines, and minor craft, with which other nations have nothing whatever to do.
Of this treaty, it can be said that so far as Australia is concerned, it does provide for a fleet strength which the expert advisers of the British Admiralty were prepared to accept as sufficient to ensure the safety of our lines of communication in the present international situation.
If it had been proposed to extend the term to ten years, I doubt whether the British experts would have sanctioned the arrangement. However, unless amended in the meantime, the present agreement remains in force for a period of five years, when circumstances may be reviewed, and the strength of the various fleets estimated, so that we shall know just what to do.
– Will the Minister explain the moderate enthusiasm with which the treaty was received throughout the world?
– Among those with the fullest knowledge of what took place at the conference, the general opinion is that it has achieved much good. I had a conversation with the President of the United States of America, who expressed himself as satisfied that the conference had done splendid work. I also spoke to ex-admirals of the British Navy, who gave every credit to the Naval Conference for having taken a distinct step towards the reduction of naval armaments.
– The Minister knows what Admirals Beatty and Jellicoe said.
– I do not profess to be a naval expert; I can go only upon what is said by those who are in a position to know. When men of the standing of Sir Charles Madden, First Sea Lord, and Sir William Fisher, who probably stands next to him in knowledge of modern naval requirements, say that they are prepared to vouch for the safety of trade routes under the present agreement, I am prepared to accept their word, even in preference to that of other naval men who may have earned marvellous reputations, but may today be somewhat out of touch with modern movements. Australia, too, is particularly well served by this treaty, inasmuch as it ends, until 1935 at least, all competition in all classes of naval construction between the oceanic powers - Great Britain, the United States of America, and Japan - which are also the three great Pacific powers. This is a fact which I do not think can be too strongly emphasized.
– Will the Minister explain why the Kellogg Pact and the League Covenant were ignored by the makers of the treaty?
– The League of Nations has not yet finished with the matter. The end of the conference, I might say, was the best part of it, because of the good feeling that was created. As a matter of fact, the conference was not ended, but only adjourned for the purpose of allowing France and Italy to conduct negotiations in an endeavour to come to a satisfactory arrangement. The three oceanic powers, Britain, the United States of America, and Japan, will confer with France and Italy at the League meeting at Geneva, and discussions will be re-opened.
– France and Italy are at each other’s throats again.
– One cannot take notice of everything one reads. The following table compares the naval strength of the three principal powers as they were in 1914 and 1929, and as they will be as a result of this treaty: -
The honorable member for Darling Downs (Mr. Morgan) asked me just now how I accounted for the very modest enthusiasm with which the treaty has been received by the peoples of the world.
– Would it be possible to frame any such treaty that would excite more than moderate enthusiasm among the peoples of the world?
– Probably it would not. General Dawes, the American Ambassador to London, stated when he returned to his own country that opposition to the treaty had developed in each of the signatory countries. Certain persons in Japan opposed it, saying that it was inimical to the best interests of Japan. Similarly, it was opposed by certain sections in Great Britain, and by others in the United States of America.
– The United States of America seems perfectly satisfied with it now.
– Judging by the Senate vote on the treaty I should say that they are. Generally speaking, I think the people of Great Britain are also satisfied with the treaty. Lord Derby, speaking at New York some weeks ago, said -
Iam opposed to the party at present in power in Great Britain; but I say it would have been a calamity if no decision had been arrived at. Great Britain must protect her trade routes, for one week without outside food supplies would reduce us to starvation. So you will see that the Navy is everything to us. But I believe the best arrangement, in all the circumstances,has been arrived at, and I will support the treaty.
He is a broad-minded and tolerant man, and on this occasion I believe he expressed the opinion of the great majority of the people of Great Britain. General Dawes puts the matter in this way: The opponents of the treaty in Japan claim that Great Britain and the United States get the advantage; the opponents of the treaty in Great Britain claim that the United States and Japan get the advantage ; and the opponents of the treaty in the United States of America claim that Great Britain and Japan get the advantage. The average man will draw the proper conclusion, as did the Naval Conferenceythat instead of any one of the nations getting the advantage, the treaty represents a common sense settlement fair to all. I regard that as a very true summing up of the position.
When the report is circulated, honorable members will know in. more detail what was done at the conference. A full discussion will take place on the second reading of the bill. I am proud that, as the representative of Australia, I was able, on its behalf, to affix my signature to a three-power treaty. I would prefer that it had been a five-power treaty. Every endeavour was made to obtain such a treaty, but the claims of certain nationalities were of such a character that we could not agree to them, and on those points they for the time being were excluded. I may mention, however, that this treaty was signed by the five powers in regard to certain points.
An important point gained is that there will be a holiday in battleship construction until 1936. In 1935, another naval conference of the various nations will be held. The whole situation will then be reviewed again, and I hope that still further reduction will be agreed to. The reduction in battleship construction and of construction in certain other lines will represent a saving of between £52,000,000 and £70,000,000 to Great Britain during the next five years. President Hoover has estimated that the total saving to the people concerned in the next five or six years will be something like £500,000,000. Surely that must be a wonderful relief to the overburdened taxpayers who would have been called upon to contribute immense sums for this naval construction. The treaty that has been signed by the British Commonwealth of Nations, the United States of America, and Japan, was signed on behalf of 650,000,000 people; and there are favorably affected by that signing, over 1,000,000,000 people. The signing of the Five-Power Pact affects twothirds of the people of the world. Surely, then, the conference was worth while!
I believe that the world is hungry for peace. It may be asked, what can the mere handful of 6,500,000 people in Australia do in regard to the peace of the world? There might have been some justification for that question before the great war; but records speak for themselves, and having contributed what we did on that occasion, surely we can do something to bring about peace! We ought to do all that lies within our power in that direction. We should not only think, but pray for peace. A great deal yet. remains to be done. The world was left broken by the last war; and it is still suffering, and will continue to suffer for many years, from the cumulative effects of it.
Before I left Australia I had given to me figures that showed that war and the preparations for war by the principal nations of the world between 1905 and 1925 involved an expenditure of no less a sum than £61,000,000,000. During the war 20,000,000 men were under arms, and I believe that it is safe to say that 10,000,000 were killed, wounded, died, or were otherwise seriously affected in some way. I hold the view that all war is hell, the last to a greater extent than any that preceded it. If one can believe what one reads, and what one hears from those who ought to know, if there is to be another world war - and God forbid that there should be - it will be 1,000 times more hell than the last. With that fact staring us in the face, can any intelligent man or woman view with equanimity the possibility of another world war? All our efforts, therefore, should be directed towards ensuring the peace of the world. This conference may not have achieved a great deal; it certainly did not come up to my expectations, or the expectations of those who desired a much bigger reduction of armaments; but a step in the right direction has been taken. My prayer and my trust is, that further steps will be taken towards that end, until the peoples of the world arrive at the conclusion that, from whatever aspect it is considered, war is nothing more or less than harmful and wasteful. If we wish our civilization to disappear, we have only to look for another war. I believe that the public conscience has been developed, and that if it is stirred a little more the people of the world will decide, not in favour of, but against war. I had one of my most impressive experiences overseas when four women, representing Britain, the United States of America, Prance, and Japan, presented to the conference petitions containing millions of signatures of the women of their respective countries. Those women delivered magnificent speeches. I believe that they not only spoke from their own hearts, but also interpreted the feelings of the women of the world. I hope the day will soon come when in this and every other country the people will have their backs to the black night of war, and their face? turned to the bright morning of a lasting world’s peace. They will then be able to sing with heart and voice -
Ring out the thousand wars of old,
Ring in a thousand years of peace.
Debate (on motion by Mr. Latham) adjourned.
In committee (Consideration resumed from 29th July, vide page 4886) :
Postponed clause 6 -
Section (sixteen of the principal act is amended -
by omitting from paragraph (b) all the words ‘commencing with the words “(b) in the case of a member “ and ending with the words “ profits of the company: “ and inserting in their stead the words - “(b) in the case of a member, shareholder, depositor or debentureholder of a company -
dividends, bonuses or profits (but not including a reversionary bonus issued on a policy of life insurance) credited, paid or distributed by the company (whether a resident or an absentee) -
Provided that, where the company distributes, to a member or shareholder who is a resident, any income upon which it is exempt from income tax under paragraph (q) of sub-section (1.) of section fourteen of this act as dividends, bonuses, or profits among its members or shareholders, the income so distributed shall not be assessable income of the member or shareholder; “ ; (/) by omitting paragraph (d) and inserting in its stead the following paragraph : - “(d) money derived by way of royalty or bonuses, and any amount received by way of premium, fine or foregift or consideration : “ Provided further that this paragraph shall not apply to - (iii)any lease from the Commonwealth or a State being a perpetual lease without revaluation or a lease with a right of purchase;”; . .
Section proposed to be amended -
The assessable income of any person shall include -
in the case of any person who sells or otherwise disposes of to another person(otherwise than by way of testamentary disposition) -
either as a whole or in separate parts, the whole of the assets of a business carried on by him, for . . .
Provided that the assessable income of the person who has so sold or disposed of assets for the purpose of putting an end to the whole of a business . carried on by him, or in consequence of the acquisition or resumption of land, used by him for a business carried on by him, under the provisions of any law of the Commonwealth or a State which contains provision for the compulsory acquisition or resumption of land, shall not include any amount in respect of anylive stock, included in the assets so sold or disposed of which, in the opinion of the Commissioner or a. Deputy Commissioner,were ordinarily used by that person for breeding purposes except that, when such live stock includes sheep in the wool, there shall be included in the assessable income of that person the amount which, by applying the provisions of sub-sections (2.) and (3..) of section seventeen of this act, is found or determined as the price or value of the wool as distinct from the sheep.
.- I move - the words “or would, if it were a resident, be exempt”, be inserted.
That after the word “exempt”, in the proviso to sub-paragraph b (i) 2, paragraph a,
The amendment is intended to preserve to residents of Australia who are shareholders in absentee companies the existing exemption from tax enjoyed by them on dividends paid to them out of extraAustralian income of the company; subject, however, to the limitation that the income distributed in dividends has been liable to income tax outside Australia, or that the goods from the sale of which the income was derived were subject in the country of their production to an export duty or royalty charge. The present form of the bill in this connexion grants the exemption described to a resident of Australia who is a shareholder in a company which is resident in Australia within the meaning of that term as expressed in. the bill, but it does not exempt a resident who is a shareholder in an absentee company. It is not intended to discriminate between those two classes of resident shareholders. The proposed amendment will remove the discrimination.
Amendment agreed to. [Quorum formed.]
– I move -
That alter the word “ act “ in the proviso to sub-paragraph b (i) 2, paragrapha, the words “ or any income derived from sources outside Australia prior to the 1st July, 1920,” be inserted.
The intention of this provision is that the new liability to tax on dividends shall relate for the first time to income of the kind described, which is derived by a company on and after the 1st July, 1929, and distributed in dividends. It is not intended that dividends paid out of extraAustralian income which has been derived by the company prior to the 1st July, 1929, shall be taxable, notwithstanding that it may be distributed after that date. This intention, however, has not been fully expressed in the bill, and the amendment is designed to make the position clear.
Amendment agreed to.
.- I observe “that, by paragraphf, this clause introduces a provision for the taxation as income of the consideration received for the assignment or transfer of a lease, or for goodwill, or a licence in respect of a business carried on on the leased property, or for surrendering a lease, goodwill, or licence. I can understand the object that is sought to be attained. I am familiar with the methods that have been adopted in connexion with the transfer of certain properties, to diminish the amount payable as rent by assigning an amount to goodwill or a licence. One can also understand the theory which underlies the idea that the payment of consideration for the transfer or assignment of a lease shall be regarded as income. There is some doubt as to whether such receipts are income or capital. Section 55 of the Constitution prevents more than one tax being included in a bill. I assume that the Government has examined this point, and is satisfied that there is no risk of this legislation being declared invalid. When an effort was made to deal with this matter in 1924 the Government proposed to introduce special legislation to tax these particular receipts.
– I assure the Leader of the Opposition that the Commissioner of Taxation has been in consultation with the Crown Law Department in regard to this clause, and they are satisfied that these receipts are commuted rent and not an accretion of capital.
.- I move -
That the following words bc added to subparagraph (iii), paragraph / - “or for grazing or agricultural purposes.”
This paragraph is to ensure that tax is paid on the profit made from the sale of an hotel lease, but I do not think it should apply to Crown lands held under lease and used for the purpose of primary production. I am, therefore, asking that the qualification already contained in the act be extended, in view of the necessity for stimulating export and inducing men to take up these waste areas, many of which would not be held if there were not some stimulus above the ordinary opportunities for profit.
– The purpose of this clause is to remove an anomaly that arose through the action of another place some years ago. The profit on the sale of a lease is spread over the terms of the lease, and is allowed as a deduction “irrespective of the purpose for which the lease is used. We cannot give the concession both ways. The right honorable member for Cowper (Dr. Earle Page) would grant it to the seller of the lease but not to the purchaser, but my opinion is that the purchaser should be encouraged.
– I am referring to leases without a right of purchase.
– If this amendment were accepted, another amendment would be necessary in Clause 12. I cannot accept it.
– I move -
That after paragraph h the following paragraph be inserted: -“ha by inserting in the first proviso to paragraph (h) afterland,’ second occurring, the words’ or by reason of drought, fire, flood, or other adverse conditions over which he had no control ‘ “.
When capital invested in an undertaking is realized, the proceeds are regarded as capital. I desire to provide for other contingencies to which the man on the land is subject. For instance, when on account of drought he is compelled to reduce bis flocks, the sale should be regarded as a realization of capital and the proceeds should not be taken into account as income. It might so happen that in the compulsory realization of his sheep the pastoralist was fortunate enough to get more for them than he actually paid, but as he has been obliged to reduce the capital which produces his income he should not be required to pay income tax on that profit. In one case which came to my notice a pastoralist who was forced to realize his capital through drought would have had to pay income tax on £3,500.
– “ Adverse conditions “is a very general phrase.
– It is already in use in the act in connexion with the provisions for appeal to a relief board.
– I understand that the right honorable member’s amendment, if carried, would exempt from taxation the sale of stock if it were forced upon the taxpayer by drought or other adverse conditions, but what would happen when the taxpayer replenished his stock ? If he be exempt from taxation when he is selling his stock, he must be exempt from deductions when he is replenishing his stock. If the replacement were at a higher value than the forced sale, the amendment would penalize the taxpayer.
– The taxpayer may be forced to go out of business.
– If his business were being wound up, it would be treated accordingly.
– The taxpayer may not, at the time, expect to go out of business.
– That is rather an exceptional case. The amendment, if carried, would penalize the majority of the taxpayers who were forced to sell thei r stock in time of drought and to replenish later at a higher value.
.- The right honorable member for Cowper (Dr. Earle Page) has moved an amendment to meet an exceptional case. The majority of stock-owners do not treat their stock as capital, but there are odd people who do. They do not treat their stock as stock-in-trade. They treat as capital the value of their land, plus stock sufficient to stock the property.
– That is breeding stock.
– Yes. A man in that position may, because of drought, be forced to sell 50 per cent. of his stock. In that case, he would treat the sale, not. as a sale for the purpose of obtaining profits, but as a realization of capital. That is the point which the right honorable member for Cowper has taken. I cannot conceive of forced sales so increasing the taxpayers’ credit as to cause him to show a profit. I have been informed that such cases exist.
– If the taxpayer were forced to sell, and showed a loss, he would be allowed a deduction.
– If this amendment is carried, it will not cause any loss to the department.
– Might it not bear hardly on other stock-owners?
– No ; because the great majority of them do not treat their stock as capital. The amendment, if carried, would do no harm to the Commonwealth, nor would it be of much use.
.- I support the amendment of the right honorable member for Cowper (Dr. Earle Page), fully realizing the force of what the Prime Minister (Mr. Scullin) has said. A taxpayer who treats breeding stock as capital may be forced to sell because of drought. If he is exempt from taxation on that account, then, when he replenishes his stock, he must be exempt from deductions. The taxpayer has made his choice as to what method he will employ in preparing his returns. He has done that with his eyes open. He must realize that on some transactions he may gain an advantage, and on othersbe at a disadvantage. But if the amendment is accepted, it will bring thistaxation under one consistent principle. During the last three or four years, forced sales of stock have been made on a falling market, andhad the stock-owners concerned retained the proceeds until now they would have been able to replace their stock at a sum much less than that at which they realized. Possibly, for the next few years, the effect may be otherwise.
Mr.SCULLIN (Yarra- Prime Minister and Treasurer) [4.57]. - In the first place, there is a deduction, of course, for loss. If this amendment werecarried, there would be grave danger of it producing anomalies in connexion with the averagingprovision and deductions for loss. I suggest to the right honorable member for Cowper (Dr. Earle Page) that the amendment involves a good deal more than appears on its surface, mainly in respect of the averaging arrangements. I feel convinced that it would hit the man whom we are trying to relieve. If the right honorable member can show that the effect of the amendment would be otherwise, I am not averse to giving it consideration, because I desire to give every relief to the taxpayer who is forced to sell his stock in drought periods. If, after considering the amendment, I find that it will inflict no hardship upon the taxpayer, and at the same time not bring about anomalies in respect of the averaging system, I shall be prepared to have it inserted in the bill when before another place.
– I thank the Prime Minister (Mr. Scullin) for the assurance that he will give the amendment sympathetic consideration. I ask him also to give consideration to a further amendment that is standing in my name to insert the words “not being trading stock”. There are in the Income Tax Act certain definite alternatives that have been given to pastoralists in connexion with bringing their stock into account. Where proper books of accounts are kept, and the natural increase of stock has been brought into account, no question would arise in respect of certain purchases or sales of stock, but there are other instances in which a manifest injustice might be done. Take the case of a man who has at the beginning of the year 10,000 stock valued at 10s. each. That would represent £5,000. Then, because of adverse circumstances, he is forced to sell 7,000 at 20s. a head. He then has on hand at the end of the first year 3,000 stock at 10s. a head, and his total turnover for the. year is £8,500. In the second year he has on hand 3,000 stock at 10s. a head. He purchases another 7,000 stock at 20s. a head, so that at the end of the second year he has 10,000 sheep, valued at £8,500. In that event, the stock-owner would have had to pay income on £3,500 because of the sale in the first year. That is an anomaly which should be corrected.I am grateful for the consideration shown me by the Prime Minister, and I withdraw my amendment.
Amendment - by leave - withdrawn.
Clause, as amended, agreed to.
Postponed clause 11 -
Section twenty-three of the Principal Act is amended -
by omitting from sub-section (1.) the words “ from all sources in Australia” (first occurring) ;
by omitting paragraph (b) of subsection (1.) and inserting in its stead the following paragraph: - “(b) all rates, State and Federal land taxes and State income tax (other than taxes which are deductible under section seventeen of the Estate Duty Assessment Act 1914-1928) for which the taxpayer is personally liable and which are annually assessed and are paid in Australia by the taxpayer in the year in which the income was derived:
by inserting in paragraph (j) of subsection (1.), after the word “ labour “, the words “, who is a resident,” ; (ft) by inserting in paragraph (;’) of subsection (1.), after the word “employees “, the words “ who are residents “;
Section proposed to be amended.
– (1.) In calculating the taxable income of a taxpayer the total assessable income derived by the taxpayer from all sources in Australia shall be taken as a basis, and from it there shall be deducted -
all losses and outgoings (including commission, discount, travelling expenses, interest and expenses, and not being in the nature of losses and outgoings ofcapital) actually incurred in gaining or producing the assessable income:
Provided that where a company carries on the business of insurance [other than life insurance) in Australia and re-insures risks with a person or company carrying on a similar business but not in Australia, the company carrying on business in Australia shall be entitled to deduct -
so much of the premiums received on those risks as is credited or paid to that person or company; and
only so much of the losses on those risks as relates to the risks or part of the risks which have not been so re-insured;
so much of the assessable income as is set aside or paid by an employer of labour as or to a fund to provide individual personal benefits, pensions or retiring allowances for employees:
Provided that a deduction shall not be allowed unless the Commissioner is satisfied that the fund has been established or the payment made in such a manner that the rights of the employees to receive the benefits, pensions or retiring allowances have been fully secured:
Provided also that if the Commissioner is satisfied that any part of the assessable income of a person has been so set aside or paid by that person to provide individual personal benefits, pensions or retiring allowances to employees in any business or class of business, the person setting aside or paying the sum shall be entitled to deduct it;
Mr.SCULLIN (Yarra- Prime Minister and Treasurer) [5.3]. - I move -
That after paragraph (a) the following paragraph . be inserted : - ” (aa) by adding at the end of paragraph (a) of sub-section (1.) the following proviso- : Provided further that, where any person who would, but for this proviso, be entitled to a deduction in respect of any premium paid under a contract of insurance or guarantee against loss, damage or risk of any kind whatever (not being a contract of life insurance) with an absentee (herein referred to as “the insurer”) who is not carrying on in Australia an insurance business either in a principal office or by means of a branch or through any other representative empowered to receive and deal with premiums under such contracts on behalf of the insurer, that person shall not be entitled to any deduction in his assessment in respect of that premium.’ “.
The object of this amendment is to withdraw the deductions that have been allowed on premiums for insurances effected with companies outside Australia. There is a great deal of difficulty in getting income tax from insurance companies operating outside of this country, and Australian residents, who are effecting insurances, can surely find enough” Australian companies with which to do their business. If not, they should not be allowed any deduction for the premiums paid. The amendment is reasonable, and I submit it for the approval of the committee.
.- The introduction of this provision into our income tax legislation would open up all kinds of possibilities. The proposal is that if a business man insures his premises or anything else with an Australian company, he shall be allowed to deduct the premium as part of the cost of his business; but, if he insures with a company which has not a principal office or branch here, he shall not be allowed to deduct the premium. It appears, therefore, that our income tax legislation is to be used as a means of limiting insurance business to a particular class of company. That principle could be extended indefinitely. It would be possible, for instance, to disallow deductions of amounts paid to any person of whom Parliament disapproves. If the Government desires to encourage the placing of insurance business with Australian companies, or companies with registered offices in Australia, it should do so by means of an amendment of our insurance legislation. This Parliament has full power to legislate on the subject of insurance. Our income tax legislation should not be used for such a purpose. It may be desirable to assist Australian insurance companies to meet the additional liability which is being imposed upon them by certain other provisions in this bill; but it should not be done in this way. This is not the way to give a monopoly of insurance business to one class of company. To allow income tax deductions because it is desired to pursue a policy of that kind, is an entirely new departure.
– The companies adversely affected could register here.
– That is quite true. My objection to this provision is that it is an attempt to enforce a general policy which, however desirable, should not bo enforced by means of income tax legislation.
.- I associate myself with the protest of the Leader of the Opposition (Mr. Latham) against this amendment. Broadly, the proposal is that Australian insurance companies, or overseas companies registered here, shall be given the monopoly of our insurance business. If the Government desires to pursue that policy, it should do so in the right way. A bill should be introduced which would reveal the policy in all its nakedness. But, in my opinion, it is not wise, on other grounds, to accept this amendment in an income tax bill; for it might create a bad impression in insurance offices in London which do a certain amount of business with Australia. Many British companies which have no office in Australia subscribe largely to Australian loans floated in London - some of them are among our biggest bondholders. Certain of these companies have adopted the policy of investing all the profits derived from their Australian business in Australian stocks. A matter of this moment should not be dealt with in this casual, off-hand manner. I hope that the Government will withdraw the amendment and if it wishes to deal with the matter will deal with it by itself.
.- In support of the amendment, I point out that insurance companies registered in Australia must pay certain taxes in the shape of stamp duties and other charges in connexion with their registration which are not paid by the absentee companies that would be affected by the amendment. This proposal, therefore, appears to bc calculated to equalize the conditions of competition. As the benefited companies are loaded with these flotation costs, if not with other expense, it is only fair that these should be off-set by a provision of this kind, particularly as it will be open for the absentee companies to register in Australia, and so secure the benefit of the exemption which the local companies enjoy. Viewed in this light, the objection that has been raised to the amendment is not forcible.
.- I, too, protest against the amendment.I think that the Government should withdraw it. There might have been some justification for this provision before a means had been devised of taxing insurance companies as they will be taxed after this bill becomes law. It does not seem to me to be fair that some persons should be allowed to regard as a deductible amount payments which other persons will have to regard as income. Furthermore, the subject of reinsurance will be affected by this provision. Some Australian companies reinsure with big British companies.
.- I rather approve of the amendment,which does not give any special protection to Australian companies, but provides, in effect, that, all other things being equal, they shall bc given a preference. I should like the Treasurer to go a little further. J. point out to him that a considerable amount of money goes out of Australia in treaty insurances with foreign companies which have no offices here. I should like to know whether he is prepared to provide in the bill that such payments shall not be deducted. If the premiums paid by companies on business which they unload on foreign companies were not deductible, more consideration might be given to the advisableness of reinsuring with Australian companies, which would mean that the money would be kept in Australia.
– I submit that this amendment imports foreign matter into our income tax legislation, in that the object of it is to give a preference to Australian insurance companies. Such a preference should not be given by this means. As the right honorable member for Cowper (Dr. Earle Page) has pointed out, many insurance companies which have no offices in Australia subscribe large amounts to Australian loans floated in London. The amendment is. in my opinion, far too comprehensive, although I cannot at the moment follow it in all its ramifications.
Our income tax legislation is already highly technical and confusing, and should not be burdened with a provision of this kind, the primary purpose of which is, not to increase the revenue, but to cause a discrimination to be made between different classes of insurance companies.
– Objection has been taken to this amendment, not because it lacks merit, but because it is said to import a new principle into our income tax legislation. But if honorable members will study this legislation carefully, they will see that no departure is being made from the existing practice. The act already provides for many classes of exemption.
– But that is the effect.
– This is an entirely different tiling. This provides for an exemption in respect of income tax. It is a concession under the law to certain people in respect of certain payments. We give special exemptions to men in some cases to encourage them to till their land. Expenditure in respect of such things as fencing, purchase of wire netting and the clearing and draining of land is deductible from income, although it. might really be regarded as capital expenditure. Exemptions are allowed in respect of it because it is recognized that the close cultivation and improvement of land is beneficial to the community as a whole. The exemption specified in this clause is in the same category. Why should there be this objection to deductions in respect of fire insurance premiums, when precisely the same provision is already in the act in regard to life assurance? The exemptions will be limited entirely to insurances paid within Australia. That already exists in respect of life insurance, and it will also apply to the other policies proposed to bc covered by this amendment. No allowance will be made in respect of premiums paid to companies which have no offices in Australia, which pay no rent, rates, income tax or stamp duty in Australia.
– Such companies will have to pay income tax when this bill becomes law.
– We are dealing now, not. with the companies themselves, but with those persons who insure with such companies.
– Does the clause deal with re-insurance? Suppose a local company reinsured with a company in England, would such an arrangement be affected by this clause?
– That would be insurance by a company ; this clause relates only to premiums. paid by an individual. The right honorable member for Cowper said that we had to look to insurance companies for large contributions to Australian loans floated abroad. That may be true, but the same thing applies to an even greater extent to loans floated in Australia. Life insurance companies are the principal investors in both classes of loans.
– The other companies have not the same funds available.
– That is true. Life insurance companies provide a great deal of money for Australian loans. Whatever argument can be advanced iu favour of special treatment to life insurance bond-holders outside Australia is ten times as cogent when applied to life insurance companies in Australia.
.- The Treasurer has said that this clause proposes to import into the law regarding insurance premiums generally what is already there regarding life insurance premiums. That, I submit, is very far from being the case. Section 23 of the principal act, with which this clause deals, permits deduction of premiums paid on life insurance policies subject to the following proviso: -
Provided that in no case shall any deductionbe allowed under this paragraph beyond the sum of £50 in the aggregate, or for any premium or sum paid in respect of any insurance, annuity or other provision effected outside Australia.
That is a. very clear and intelligible provision. It means that if an insurance is effected outside Australia the premiums paid shall not be deductible from Australian income for taxation purposes. The present clause, however, includes insurances effected within Australia with certain companies. It proposes that there shall be a deduction in the case of any premium when that premium is paid to a company which is not an absentee company having these qualification: which is not carrying on in Australia an insurance business either in a principal office, or by means of a branch, or through any representative empowered to receive or deal with premiums under contract on behalf of the insurer. That distinction is altogether different from that drawn in respect of life insurance premiums, where it is laid down that premiums may be deducted if the insurance is effected within Australia, even though it may be made with one of the companies subject to the proviso in the clause now before the committee. The place in which the insurance is effected is the important thing in the existing section. Why should not the same words be used in respect of fire and other insurance premiums as are used in connexion with life insurance premiums, namely, “effected outside Australia”?
– The effect is the same.
– Well, why not use the same words?
– What is the existing law?
– The existing law provides for a deduction in the case of life insurance premiums paid on policies taken out within Australia. It is, of course, obvious that many of the insurances covered by this new provision will be made in Australia. It is highly improbable that any one will seek deductions in respect of any insurances made outside Australia, with the exception of marine insurances.
– But in both cases would not the premiums leave Australia?
– The meaning is the same in respect of both life insurance, and fire and other insurances. Different words are used, that is all.
– In one case the exclusion is effected in three words - “Effected outside Australia”; in the other it runs into seven or eight lines.
– The Leader of the Opposition took exception to this clause on a great principle, that it was introducing something new into income tax legislation. When I pointed out thatsimilar provisions are already in the act, his only objection was that we were proposing to do in seven lines what had pre viously been done in three words. The law says that no deduction is allowable in respect of premiums on life insurance effected outside Australia. In the clause now under consideration we say that no deduction will be allowed if the insurance company does not carry on insurance business in Australia, either in a principal office, or by means of a branch, or through a representative empowered to receive or deal with premiums under contract on behalf of the insurer. That really means that, deductions are not. allowed in respect of insurances effected outside Australia.
– The circumstances of fire insurance are entirely different from life insurance. That is why this clause appears in its present form.
– The right honorable member for North Sydney (Mr. Hughes), being a lawyer, may know that there are special conditions in respect of fire insurance requiring the use of the words appearing in this clause. I am not concerned with the words, but with the effect. In both cases deductions are not allowed on premiums paid in respect of insurance effected outside Australia.
Amendment agreed to.
– I move -
That after the word “ State “, second occurring, paragraph (b ) , the words “ taxes on “ be inserted.
As the clause is at present framed, it would exclude unemployment taxation which has to be paid in practically all the States, and which is just as much a tax on income as the ordinary straight-out, income tax. If there is reason for excluding the one, there is equal reason for excluding the other. In New South Wales, Queensland, and probably other States, a super tax of 3d. in the £1 is imposed on incomes, and is payable in the form of an income tax. I submit that it is reasonable to ask that such payments shall be allowable as a deduction. There is just as much justification for it in the case of those extra impositions as there is in the case of the definite income tax.
– They are income taxes under another name.
– Yes, they are the taxes for the relief of unemployment.
– The man who pays income tax would be benefited, but the man who is below the exemption would get no advantage.
– I admit that the amendment would operate in that way. But that is not a reason for withholding this relief. If my proposal is reasonable and fair, I ask that it be supported on that ground. The statutory exemption in some of the States is so low that practically everybody is compelled to pay income tax. In South Australia, even domestic servants do not escape.
– That is not true of New South Wales.
– Still, the exemption in New South Wales to-day is only £300; and I think it will he admitted that that catches a very large number of people. If it is right to allow State income taxation to be deducted, it is equally right to allow payments that are made on a similar basis. Otherwise, taxation will be paid on money that is contributed to the revenue in the form of a tax. I do not think it is intended that citizens should pay income tax on taxation. These contributions to the revenue have to be made either in the conduct of business, or in the private life of an individual.
Mr. SCULLIN (Yarra- Prime Minister and Treasurer [5.40]. - I cannot accept the amendment. It is not based upon any very sound reason, and it would exempt from taxation taxable income amounting to probably £1,000,000. If this exemption were allowed, the rate of tax would have to be increased to make up the deficiency. The meaning of the term “ tax on incomes” may be open to a good deal of argument; but the term “income tax” is very well understood. Nearly all taxes are taxes on income. The honorable member for Warringah (Mr. Archdale Parkhill) has argued that it was never intended to impose an income tax on taxation. If that is so, we ought to exempt municipal taxes.
– They are exempt in many cases.
– To some extent; not entirely.
– The taxes on business premises are exempt.
– Quite so ; but not on private houses. Take, for example, an unemployment tax. It is imposed for the purpose of raising a sum of money for the performance of a certain social work. It may be an emergency tax, but it is levied in equal ratio on everybody. Under the amendment of the honorable member for Warringah, the man who is in the taxable field would be allowed to deduct a certain amount from his taxable income, while the man who -is not would derive no advantage. That would be an affirmation of a principle the very opposite of that under which unemployment taxation is imposed. At an earlier stage the mind of the honorable member for Warringah (Mr. Archdale Parkhill) was working along other lines. He circulated an amendment that was designed to secure the exemption of motor taxation. The only reason for the exemption of income’ tax paid to the States is that that tax was in operation when the Federal income taxwas first imposed. If we allowed everynew item of taxation to be deducted, we should make confusion worse confounded. I ask the committee to reject the amendment.
.- While we can all appreciate the argument of the Prime Minister (Mr. Scullin), who has spoken from the point of view of the, requirements of the revenue, there are, other matters that demand consideration, in connexion with this amendment. The notes that have been circulated among, honorable members show that the object, of the amendment is to prevent the de-. duction of customs duties by persons who! privately import goods. A man in business who imports goods and sells them,, takes into account the payments that have been made by way of customs duties, in the same way that he takes into account the price of the goods; and he makes up his profit for the year by comparing his outgoings, including customs duties, with his receipts. Because of the existing form of the deduction provision, however, a private individual also is able to deduct from his general income the customs duty that he has paid upon a present that has been sent to him, or upon, some other article that he has imported. The form of the deduction provision is as follows: -
All rates and taxes for which the taxpayer lt personally liable, including State and Federal land tax and income tax actually paid in Australia.
Obviously, a private individual ought not, during .the relevant year, to be allowed to deduct customs duty in such a case.
The ordinary duty stamp that is attached to a receipt is a normal outgoing of a business; it is an expense that is incurred in carrying on the business, and in earning the income. I should say there is no doubt that, in the past, every business man has deducted from his income the cost of those stamps. Under the law as it stands at present, that is clearly authorized. But in future he will no longer be able to do that, because there will be a specific provision limiting the deductible taxes and rates to those which are payable annually. I do not know whether it is the intention of the Government to levy income tax without allowing such a deduction as receipt stamps. It appears to me that that is going rather far.
– Those charges will be deductible under section 23(l)a of this act.
– At the present time they are exempt under section 23(1)& which plainly authorizes the deduction of the taxation that is paid to the States by way of the ordinary duty stamp. It is now proposed to alter sub-section 16 in such a way as to exclude that deduction, while authorizing the deduction of certain other State rates and taxes. The question whether the deduction will still be permissible under sub-section la may be arguable; but having regard to the specific provision of sub-section lb, which permits the deduction of certain annually payable State taxation, it will bc difficult to make out a strong case in favour of the deduction of State taxation that is not annually payable.
– The intention is to deduct. I shall look carefully at the wording in order to make sure that the intention will be realized.
.- Apparently, since the bill and its accompanying papers were circulated, the Government has enlarged its ideas on this clause. It is worth while comparing the departmental explanation of the amendments with the explanation which the Prime Minister has given as to what is intended. The act now provides for the deduction of -
All rates and taxes for which the taxpayer is personally liable (including State and Federal land taxes and State income tax) actually paid in Australia by the taxpayer during the year in which the income was derived, but not including any tax paid under this act or any wartime profits tax.
Evidently the department was willing to continue that, and the amendment was proposed for quite another purpose. The explanatory notes accompanying the bill say-
Quite recently the department has received claims that the present wording of paragraph ( 6 ) of section 23 ( 1 ) allows a deduction of customs duties paid upon privately imported goods, stump duties of all kinds (even when not connected with business transactions producing assessable income) succession duties, and, in the case of a trustee, probate and Commonwealth estate duties.
There is room for doubt regarding the scope of the present provision in the law. The intention of that provision was to base the Commonwealth income tax assessment upon the net amount of income of the taxpayer after the ordinary municipal and State annual taxes had been paid.
It was never intended to apply to such taxes us those specified above which are not in any way connected with ordinary operations of trading for profit. Nor was it ever intended that the concession should embrace death and succession duties.
The remedy lies principally in the omission of the words “and tax “ which follow the word “ rates “. There is also the necessity slightly to re-arrange the wording so that the intention may he made quite clear.
The amendment as drafted will attain the desired end.
The present flat rate tax of 3d. in the £1 for the relief of unemployment in New South Wales is in the nature of income tax. The Prime Minister has said that to allow this payment to be deducted would be to create a certain amount of inequity, because the taxation of the Commonwealth is on a graduated scale. In practically every State the rates of income tax advance in a series of steps; incomes of from £200 to £500 pay a certain amount; those from £500 to £1,000 a higher amount; and so on. Therefore, the deduction of State income tax from the income assessable for Commonwealth purposes leads to inequities at every stage. If we allowed the flat rate unemployment relief tax to be deducted we should merely be continuing a practice that has been in operation for many years.
– Will the amount paid in sales tax be allowed as a deduction?
– The honorable member is not serious.
– I move -
That paragraphs (g) and (A) be omitted with a view to insert the following paragraphs in lieu thereof: - ” (g) by omitting from paragraph (j) of sub-section (1.) the word ‘as’ (first occurring) and inserting in its stead the word ‘which’;
by inserting in paragraph (j) of subsection (1.) after the word ‘employees’ (first occurring) the words as is sufficient under the terms of the constitution of the fund to provide those benefits, pensions or allowances for employees who are residents;’ (ha) by inserting in the second proviso to paragraph (j) of sub-section (1.) after the word ‘ employees ‘ the words ‘(who are residents) ‘; “
This is to preserve to absentee companies with Australian employees the deduction of so much of the assessable income as is paid to a benefit fund for the benefit of employees resident in Australia.
Amendment agreed to.
Clause also verbally amended, and, as amended, agreed to.
Postponed clause 12 (Deductions not to be allowed in certain cases).
.- This clause disallows the deduction from assessable income of party subscriptions to organizations, and is apparently intended to overcome a recent High Court judgment. The proposal in the clause will commit the department to a lot of unnecessary and difficult work. It is obvious that under sub-paragraph iii, an association would have to be practically assessed first so that the deduction allowable to the members might be ascertained. This would mean either delaying assessment of all members until the accounts of the association had been dissected by the department, or assessing members without allowing the subscriptions and then re-assessing them when the amounts deductible have been ascertained. I urge the Government to reconsider this provision.
.- The Prime Minister has been a consistent advocate of organization in the interests of the community. Farmers and graziers’ associations are as necessary as trade unions. The organization of primary producers is essential to provide for the marketing of their products, and subscriptions to associations which operate to that end are a legitimate deduction from income. Those associations are formed to assist the producer to secure and maintain his income.
– A subscription paid to an organization for the purpose of assisting the taxpayer in the conduct of his business is deductible. But if it is not for that purpose it is not allowed. Would the honorable member for Forrest (Mr. Prowse) allow subscriptions to trade unions to be deducted.
– I would.
– I do not think that a subscription to a trade union or a farmers’ organization is properly dedeductible. If we deducted these subscriptions we should also deduct the subscriptions of a doctor to the British Medical Association.
– Of course. The association helps him in his professional work.
– The association gives him a better status, no doubt. Then there are subscriptions to social and semisocial organizations that confer upon the subscriber some advantage. A man might claim that his membership of a gol!’ club improves his health, and that his subscription to it should be deductible because golf renders him more fit to earn his income. Where would the deductions end?
– But a graziers’ association promotes the development of agriculture and stock-raising.
– To the extent that the association does that the subscription to it is deductible. But fees paid to industrial organizations - political, semipolitical, or non-political - cannot by any stretch of imagination be regarded as legitimately deductible from income.
.- This amendment arises out of a recent decision of the High Court in the case of Gordon v. the Federal Commissioner of Taxation. For many years the subscriptions to the Graziers’ Association had been deducted. Finally the deduction was challenged by the Commissioner. The case was heard by Mr. Justice Owen Dixon, and I ask honorable members to compare his judgment with what has been stated by the Prime Minister. His Honour said -
The Graziers Association of New South Wales performs for the appellant important work which arises in the conduct of his business, and affords him assistance in carrying it on. It also attempts to promoe and protect the general interests of the business of grazier and pastoralist industrially, commercially and financially. In doing so, it extends its activity or its influence into politics, but without confusing or impairing the performanceof its main functions, viz., the service of its members in their occupation where combination is effective, and the promotion of their business advantage. I think the subscription was paid to secure these advantages to the business by which assessable income was earned and for no other purpose or reason, and that it was money wholly and exclusively expended for the production of assessable in come.
– That was an extraordinary thing to say.
– The learned judge was dealing with the evidence. There was an appeal from that decision to the Full High Court and His Honour, Mr. Justice Isaacs, held, with Mr. Justice Owen Dixon, that on the facts the respondent was entitled to the deduction and that the judgment should be affirmed. His Honour, Mr. Justice Rich, said -
I have no doubt the learned judge was right in holding that the appellant did so - that is, paid his subscription - to obtain the solid practical advantages which the association gave him in earning his revenue and not the speculative and unreal and doubtful benefits by which his disbursements might be lessened. The appeal should be dismissed with costs.
His Honour, Mr. Justice Starke, said -
The question is really one of fact. The money was paid to secure to the taxpayer’s business the benefits which flowed from membership of the association. It was from his business that his assessable income was derived, and the contribution was made to protect his interests in and his income from this business, and for no other purpose.
Those four High Court judges are all clear that, on the facts, the payment was made for the purpose of making and extending income. Accordingly, I suggest that the matter is notso clear from one aspect as the Prime Minister would have us believe.
– I notice that the income tax form relating to income earned during the twelve months ended the 30th June, 1930, contains this item : “ No. 47. Sums paid to any industrial union of employers or employees, trade or profession, association or agricultural society, not exceeding £50 each; state the name of the union, &c, and the amount.” I understand that the act is now being amended to delete that item. It has little application to the trade unions, because the individual unionist, although he pays income tax, would not contribute £50, or anything like that sum, to the union to which he belongs for the performance of its duties in the Arbitration Court. But it is perfectly reasonable to assume that any sum spent in obtaining awards before the Arbitration Court by the Graziers Association, or any other employers’ association, is just as much an expenditure in earning the income as is the amount contributed by the unionist to his union for the purpose of gaining from the Arbitration Court special advantages such as increased wage3. It has frequently been argued that, because unionists spend large sums in prosecuting their cases before the Arbitration Court, non-unionists should not participate in any benefits conferred by its awards. With that argument I do not agree. But I contend that the employer, or any member of an employers’ association, who contributes money to it for the purpose of protecting his income and his rights in respect of his earnings, should not be treated differently from a unionist. So soon as a taxpayer gains a victory in the courts with regard to his income tax assessment, no matter how trivial an amount may be involved, legislation is introduced in order that the department may not lose revenue. In this case an injustice is being done. This section might just as well remain unaltered, because its amendment in the direction indicated would make no material difference to the revenue derived from taxation. The exemption should apply to the employer as well as to the employee. I admit that there would he no ground for exemption if the contributions were for political purposes.
– Some of the contributions are for that purpose.
– No ; the funds are always kept separately. That has been made perfectly clear. If that were not so, my argument would fall to the ground. If trade unions are entitled to deductions, then organizations of employers should have the same privilege.
– The honorable member for Warringah (Mr. Parkhill) has said that, if trade unions are entitled to deductions, organizations of employers should have the same privilege. Let me inform him that neither of them is entitled to deductions. A deduction has never been allowed, under federal taxation, for these subscriptions. This deduction has been included in assessments again and again; but has always been disallowed. This is the first time that it has been tested. It is true that the case has gone against us. The honorable member for Warringah has quoted from an income tax form relating not to Federal law, but to State law.
– The form from which I quoted relates to Federal and State tax in New South Wales.
– That is a combined form, and the item quoted does not apply to Federal law.
– There is nothing to indicate that on the form.
– The form requires to be altered.
– Perhaps so. The fact remains that there is no such provision in the federal law, and a deduction of this kind has never been allowed.
Sitting suspended from 6.15 to 8 p.m.
.- I am amazed that the Treasurer, who usually makes out a very fair case for the proposals that he advocates, should have turned himself into a whole-hearted Zaccheus, and should try by such ruthless means as these to over-ride the decision given by just judges of the court on this subject in favour of the public. I am sure that the right honorable gentleman has not considered this matter carefully, but has spoken from the brief put into his hands by the bureaucracy, which is behind this proposal.It is incredible to me that the Treasurer and some of his colleagues shouldon the one hand, endeavourto force all persons employed in the PublicService to join the Public Service organizations and, on the other hand, to prevent other persons from deducting from their incomes the amounts they contribute to organizations formed for the sole object of protecting their interests, and, therefore, of increasing their income. If this provision is agreed to, organizations with a small membership and fairly heavy fees will be seriously handicapped. Personally, I agree that just as strong a case could be made ouv for the deduction of subscriptions by members of trade unions as for the making of them by graziers, doctors and others. That implication from the decision of the High Court is, in my opinion, sound. But the Treasurer has also said that following upon that decision members of all sorts of recreational and health clubs may be able to deduct from their taxable income the amount they pay in subscriptions to such bodies ; but if any attempt were made to do that, the law could then be altered to counteract it. By agreeing to the insertion of this provision in the bill the Treasurer has shown almost sordid partisanship. I know that in times like these it is necessary to raise revenue from every available source, but Parliament should act fairly, and not harshly, by the people.
.- It appears to me that the Treasurer does not realize that the association of pastoralists and other primary producers effect valuable economies in respect to their various industries. If a pastoralist employed a private secretary to watch the movements of the market, advise as to alterations of the law, and protect the interests of his employer generally, the Commissioner would regard his salary as an allowable deduction. By forming associations the pastoralists of the various States make possible, out of their subscriptions, the employment of a general secretary, who does for them collectively exactly what a private secretary does for a pastoralist individually. This results in a commendable economy in expenditure, and, therefore, in an increase of taxable income to the members of the association. Such expenditure should, therefore, be an allowable deduction. I agree with the honorable member for Wakefield (Mr. Hawker), that any deductions from taxable income of amounts paid in subscriptions and fees to recreational and health clubs should be disallowed; but that is not the case which we are considering at the moment. In the circumstances I hope the Treasurer will withdraw this proposal.
.- Apart altogether from the legal aspect of this subject, every one who has a knowledge of the work of the various graziers’ associations will agree that the money spent in subscriptions to them is devoted to the specific purpose of increasing business returns. The persons who join these associations, do so because they believe that they will thereby increase their income. I was a district secretary of the Graziers Association of Queensland for a considerable time, and know that that association made it possible for its members to save hundreds of pounds in legal and other expenses. Instead of the members of the association having to spend money individually in legal fees, they paid their subscriptions to the association, which obtained such legal advice as they required in regard to awards, agreements with shearers, and the like. If this money were used for the support of political parties it would be improper to allow it to be deducted from the taxable income of the individual, but the Queensland Graziers Association paid no political levies whatever. In the other States political levies imposed by the Graziers Associations are kept entirely separate from ordinary income, and a return could be obtained from them at any time to ascertain how much money had been received in political levies and how much in ordinary subscriptions. The deduction of these subscriptions does not mean much to a man who owns only a few sheep, and subscribes to the association in proportion to the number of sheep he owns, but it means a big thing to a man who owns many thousands of sheep. These subscriptions are a legitimate deduction, because they tend to increase the taxable income of the taxpayer.
– I sincerely trust that the Treasurer will agree to the withdrawal of this amendment. It has evidently been the practice in the past to regard amounts paid in such subscriptions as legitimate deductions. On page 2 of the joint Federal and State income tax form for New South Wales for this year I read the following line under the heading “ Deductions “ : -
Opposite that line there is a shaded area in the column headed “Federal”, and a blank space in the column headed “ State “, which indicates that such expenses are allowable deductions for State purposes, but not for Federal purposes. But the next line on the form reads as follows : -
Opposite that line there is a blank space in both the Federal and State columns, showing that expenses of this nature are deductible in both cases. It appear.1 also from the words in the bill that such expenses may be deducted. The proviso to proposed new paragraph ea of section 25 reads as follows: -
Provided that in a case to which this subparagraph applies the person shall be entitled to a deduction of only so much of his subscription as bears to the whole of the subscription the same proportion as the losses or outgoings so incurred by the association in carrying out that activity bear to the total losses and outgoings (not being in the nature of losses and outgoings of capital) of the association for that year.
It is therefore recognized in the bill and the income tax form alike, that these expenses are legitimate deductions. If the Commissioner of Taxation is obliged to investigate the exact amount of work done for the purpose of producing income for the individual members of organizations through the payment of these subscriptions, he will need to employ an army of clerks. As the honorable member for Maranoa (Mr. Hunter) has said, all the money subscribed to these associations is spent for the purpose of producing income I am certain that any investigation deducted which are given to any function or cause whatever, though it be only that the Commissioner may make will corroborate the honorable member’s statement. The Government would be wise to leave this part of the act as it has stood for the last fifteen years.
.- I hope that the Prime Minister will not persist in his attitude in regard, to this matter. The Stock-owners Association and the Graziers Association were formed for the purpose of protecting the interests of persons engaged in essential rural industries. The Prime Minister has already recognized the need for doing everything possible to foster the grazing industry, and he might well yield this point. It is not a great matter, after all; but, if this concession be allowed, it will provide some relief for the associations mentioned.
– I am at a loss to find a reason for the persistent clamour for this deduction. It has been tried, and cut out again and again, and it was only recently that the court made it an allowable deduction.
– The judge said that it was right.
– The judge merely interprets the law as it stands. We have the right of saying what the law shall be.
– This amendment is merely for the purpose of legalizing a practice.
– Exactly. The right honorable member for Cowper (Dr. Earle Page) followed up the attack of the honorable member for Warringah (Mr. Parkhill), by producing an income tax form, upon which he based his whole argument. He says that the law must be in accordance with something which he pointed out on that form.
– It is a fair indication.
– My answer is that that form was printed by direction of the Deputy Commissioner of Taxation in New South Wales, and it is wrongly printed. The Federal Commissioner for Taxation absolutely disowns the document.
– Will the Treasurer also disown all the other forms throughout the Commonwealth?
– No. The Federal Income Tax Commissioner will disallow the deduction on incomes assessed according to the form circulated. This is a combined form for Federal and State income tax purposes. It is printed by the New South Wales Commissioner for Taxation, and includes the provisions of both Commonwealth and State income tax legislation. The words referred to by the right honorable member for Cowper do undoubtedly apply to the State law. The only point made by him is that there is, under the columns, a shaded mark employed by the printer to indicate the particulars in respect of which the deduction is not allowable. In that particular instance cited the shaded mark does not appear in respect of Commonwealth taxation, and that has the effect of making it appear that the deduction is allowable. We cannot be held responsible for the mistakes of the printer.
– Will the Treasurer refuse to accept taxation collected under this form?
– Certainly not. All the deductions are set out in the schedule to the act, and that is what guides us. The right honorable member for Cowper endeavoured to back up the evidence of the misprint in the form by quoting from the act a proviso referring to subscriptions, his inference being that subscriptions are permitted as deductions. That is not disputed, but they are allowable only under certain conditions. The subscriptions must be for an organization that assists a person in carrying on his business or earning his income. If the contention of the honorable member for Maranoa (Mr. Hunter) be correct, and the taxpayer can persuade the Commissioner of the accuracy of his representations, the deduction will be allowed. This exemption is not specifically denied in regard to agricultural societies. It is denied in regard to all associations unless it can be shown that the subscription to the association is a part of the business costs of the taxpayer. The general argument that a subscription should hp an allowable deduction merely bfcause it assists a man in his business would allow those donations to be to win the goodwill of the public. It is only right to restrict the deductions to those subscriptions which are made to associations forming part of tbe taxpayer’s business.
Clause agreed to.
Postponed clause 14 -
After section 28 of the principal act the following sections are inserted: - “28b. - . (1.) Notwithstanding anything contained in this act, where any person in Australia (referred to in this section as the insured ‘ ) enters into a contract of insurance or guarantee against loss, damage or risk of any kind whatever (not being a contract of life insurance) -
with an absentee (referred to in this section as ‘the insurer’) who is not carrying on in Ausstralia an insurance business either in a principal office or by means of a branch; or
with a person in Australia acting on behalf of the insurer, any premium paid or payable under that contract shall be deemed to be assessable income derived from sources in Australia by the insurer. (2.) The insurer shall be deemed, in respect of the premiums, to have derived in any year a taxable income equal to ten per centum of the total amount of premiums paid or payable during that year to the insurer or to the person in Australia acting on behalf of the insurer.”
– I move -
That after sub-section 2, proposed new section 28b, the following proviso be inserted : - “ : Provided that, where the actual profit or loss derived ‘or made by the insurer in respect of those premiums is established to the satisfaction of the Commissioner, the taxable income of the insureror the amount of the loss so made by him shall, subject to the other provisions of this act, be calculated by reference to receipts and expenditure which were taken into account in calculating that profit or loss.”.
Yesterday I indicated that an amendment to this effect would, be moved. It deals with the taxation of insurance companies such as Lloyd’s, and provides that, although the Commissioner may assess the income of a company not resident in Australia at 10 per cent. for taxation purposes, the company may produce its books to prove that its actual profits are less, or that it has been working at a loss. If it can prove that, the assessment will be amended accordingly. If it cannot, the tax will be assessed on an assumed profit of 10 per cent.
Amendment agreed to.
.- The Royal Commission on the Motion Picture Industry devoted a considerable amount of its time to inquiring whether it was possible to impose taxation on those companies which hire out American films for exhibition in Australia. The companies which produce films in America do not send them here for sale. They are distributed through companies formed in Australia, which hire them out to the exhibitors. The New South Wales Government made an attempt, when Mr. Lang was Premier, to tax the income earned by films so hired, but, if I remember rightly, the court declared the legislation to be ultra vires. The film commission made exhaustive inquiries of the Solicitor-General, Sir Robert Garran, the Federal Commissioner of Taxation and other authorities, and was assured that it was impossible to frame taxation legislation which would be effective in taxing the earnings of foreign films exhibited in Australia. I should like the Prime Minister to inform honorable members whether the legislation we are now considering is likely to be challenged in the near future.
– The only way we can settle the question raised by the honorable member for Swan (Mr. Gregory), is to pass this legislation.
– I have no objection to the imposition of this tax.
– We intend to make the attempt any way. The proposed new section preceding 28b to which my amendment immediately applies is as follows : - 28a. - (1.) Notwithstanding anything contained in this act, where any person residing outside Australia, or any foreign company, derives income under any contract or agreement with any person in relation to the carrying on in Australia by that person of a business of distributing, exhibiting or exploiting motion picture films or of leasing such films to other persons, or of licensing other persons to exhibit or display such films, or in relation to the acquisition of any advertising matter for use in connexion with such films, and, in the opinion of the Commissioner, that business -
is carried on by a company, a majority of the shares in which are held by or on behalf of
– In the case of the New South Wales act the legislation was held by the court to be ultra vires.
– That, I think, was because the act was faulty.
– I want to know whether this clause is merely a gesture, or whether the Treasurer really thinks that he can collect the tax.
– I can assure the honorable member that we are in earnest about it. The Taxation Department is quite confident that it can collect this tax, and I wish it all the success possible.
– Will the Prime Minister say whether this clause is not a breach of the gentlemen’s agreement entered into just before the elections by the party now in power?
– That question is not worthy of an answer in the course of an important debate.
Clause, as amended, agreed to.
Postponed clause 22 (False declarations).
.- It gives me pleasure to find this clause in the bin, because the last Government also proposed to enact it. Honorable members may remember the proceedings that were taken in the High Court against the Abrahams brothers, and the criticism that was levelled against the Government of the day, because a prosecution was not launched for perjury on account of allegedly false declarations. The relevant declarations in the case were made, not by the Abrahams brothers, but by an attorney under power - who, in fact, was prosecuted. The Commonwealth law did not provide that a false declaration should be punishable as wilful and corrupt perjury. I am glad that this provision, in order to change the law in this respect, is to be enacted. A great, deal was said in respect to the case of the Abrahams brothers. It may be of interest to. those honorable members who then said that it would be an easy matter to obtain convictions against them for perjury, that either seven or nine convictions: were obtained by the Commonwealth for breaches of Commonwealth law. All the papers in the case were sent to the State authorities in Victoria. The Victorian law includes a provision making a false declaration as to income tax punishable as perjury. Those papers recorded the results of the investigations that had been made by skilled and earnest officers of the Commonwealth. But although governments of various political complexions have been in power in Victoria in the intervening period, no proceedings have been taken by the Government of that State. Only recently the Commonwealth Attorney-General (Mr. Brennan), who was one of the most vigorous Opposition speakers on the occasion of the debate that took place at the time, said, in reply to. a question, that this Government had made no inquiries with respect to the whereabouts of the Abrahams brothers, and that it was no longer interested in them.
Clause agreed to.
Postponed clause 23 -
Section eighty-eight of the principal act is amended by adding at the end thereof the following paragraph: - “;(h) notwithstanding anything contained in this section, and without in any way limiting, altering or transferring the liability of the public officer of a company, every notice, process or proceeding which under this act or the regulations thereunder may be given to, served upon or taken against the company or its public officer may, if the Commissioner thinks fit, be given to, served upon or taken against any director, secretary or other officer oi the company or any attorney or agent of the company.”.
– I move -
That the following words be added: - “ and that director, secretary, officer, attorney or agent shall have the same liability in respect of that notice, process, or proceeding, as the company or public officer would have had if it had been given to, served upon, or taken against the company or public officer “.
I move this amendment to meet the point that was raised by the Leader of the-
Opposition (Mr. Latham) last night - that the existing provision in the bill does not make the substitute defendant liable to the penalties that are provided in the case of the person who is liable in the first instance. This is a necessary power to deal with cases similar to that which the honorable gentleman has just been discussing.
.- I think that the Prime Minister misunderstood what I said last night, probably because I did not make my meaning sufficiently clear. I objected to what, in very clear language, it is now proposed shall be done. The amendment provides that, if there has been any default by a company or by the public officer of a company who, as the registered person, is made responsible for the performance of its obligations under the Income Tax Act, any director, secretary, officer, attorney or agent of the company, may, if the Commissioner thinks fit, be served with the proceedings, and shall be liable in the same manner as he would be if he were the defaulter. Let us take the case of the Australian Mutual Provident Society, or any other large company that has agents all over the Commonwealth. It is unlikely, of course, that there would be any difficulty in serving such a company, or its public officer, with the proceedings. But surely it is unreasonable that any agent of a company whom the Commonwealth authorities are able to discover should be liable for the default of its public officer! I am unaware that any difficulty has arisen in the enforcement of the obligations of a company. Section 38 of the act sets out the manner in which these matters shall be handled. That section provides that every company that carries on business in Australia shall, at all times, be represented by a person residing in Australia, duly appointed by the company or by its duly authorized agent or attorney. Paragraph c of that section reads -
If the company fails or neglects to duly appoint a public officer when and as often as such appointment becomes necessary, it shall bc guilty of an offence.
The penalty is £50 for every day during which the failure or neglect continues. Accordingly, there is full provision for the appointment of a public officer; and service upon him is sufficient to enable proceedings to be taken against the company. The section further provides that the public officer shall be answerable for the doing of all such things as are required to be done by the company under this act or the regulations by a taxpayer, and in case of default shall be liable to the same penalties. Paragraph g reads -
In any proceedings under this act taken against the public officer of the company, the proceedings shall be deemed to have been taken against the company, and the company shall be liable for any penalty imposed upon the public officer.
It is now proposed that the Commissioner may, if he thinks fit - not if there is any difficulty in finding the public officer - by serving with the proceedings any director of a company, its secretary, or any other officer, or any agent, make that individual liable in the same way that the public officer is liable.
– For default in the payment of the tax ?
– For anything for which the company is liable under this act.I suggest that, as the law is so complete in the direction of compelling a company to appoint a public officer, there can be no justification for making every director and every servant of the company liable for what the company is bound to do.
– Would the person who is prosecuted be able to indemnify himself against the company?
– There is no provision to that effect. There are provisions of a general kind which provide that, where he pays income tax on behalf of his principal, he can recover the amount from the principal. Those provisions, however, would have no application in respect of penalties for breaches of the act. If this provision were limited to cases in which a company had failed, after notice, to appoint a public officer, or to do something of the kind, there might bc some justification for it.
– Does it mean that the man is personally liable?
– He is liable for the penalties, and also, in the first instance, for the income tax; but he has the right to recover the income tax from the company. This provision will operate whenever the Commissioner may think fit to proceed against one of these individuals instead of against the public officer of the company. The provision in the bill is as follows: -
Notwithstanding anything contained iu this section, and without in any way limiting, altering or transferring the liability of the public officer of a company, every notice, proi«is or proceeding which under this act or the regulations thereunder may be given to. served upon, or taken against the company or its public officer may, if the Commissioner thinks fit, :be given to, served upon, or taken against any director, secretary, or other officer of the company or any attorney or agent of the company.
The amendment that is now proposed is that the director, secretary, officer, attorney, or agent shall have the same liability as the company or the public officer would have had if proceedings had been taken against the company or the public officer. I suggest that it is going too far to give to any officer of the Commonwealth the right to say that “A, the public officer, is liable, and B, the company is liable; but I think fit to proceed against C,- a director, D, the secretary, E, an officer, or F, an agent of the company ; and any one of those whom I select shall have the same liability as the company or the public officer.” Nothing has been said to show that it is necessary to have legislation of this extraordinary character.
– The latter part of the argument of the Leader of the Opposition, would have a great deal of force if we were to assume that we had a Commissioner who would exercise this power in an arbitrary, an unjust, and a stupid manner. We have to leave a great deal to the discretion of the Commissioner; and if in the exercise of his discretion he were to act so foolishly as to pass over the real offender and serve notice upon a director who had not offended, the only remedy would be to appoint a new commissioner. This proposal is put forward, not because there is a difficulty in finding the right person, but with the object of getting at the right person.
– Is it thought that a man of straw might be put up?
– I quote from the well prepared notes of the department, to justify the giving of this power. They read - lt was noticed in the Abrahams ‘brothers’ case that the public officer of the private companies formed by these persons was the secretary to the main company formed by these people. That public officer is a man of straw, and no good result would have followed his prosecution. What is needed is a power to select une of the real owners, or the principal executive officer of the company. . . .
– Or a director.
– If, in the opinion of the Commissioner, he is the real offender, why not ?
– Why should a man be made liable for an offence with which he was not connected?
– We must have power to get at the real offender and not merely at the man of straw.
– Then provide for the real offender.
– That is what we are doing; if the honorable gentleman can suggest a better way I shall be glad of his assistance. This provision has been closely scrutinized by the Taxation Commissioner and the Attorney-General’? Department.
– Is not the Treasurer trying to find a substitute for the real offender?
– No ; we are trying to get at the real offender and not the substitute.
– Does not the director of such a company as this clause contemplates deserve to be held liable ?
– The director of such a company must take his share of responsibility; if he finds himself in an awkward position, he will have only himself to blame.
– And any officer of the company too?
– Yes, if the Commissioner thinks fit.
– It is an outrage. One man does wrong, and, if the Commissioner thinks fit, he can fine any officer of the company.
– The Leader of the Opposition is stretching the meaning of the clause. Such special pleading might be effective elsewhere, but it will not deceive this committee. Parliament has given to the Commissioner of Taxation power? greater than . are conferred by legislation on any other public servant. Members have deplored the necessity for giving such power to any one person, but I am not aware that it has ever been misused or abused.
– Many taxpayers think it has.
– Their judgment is not always unbiased. When the principals skulk in the background and put up a man of straw to take the brunt of the prosecution, the Commissioner must have power to charge any officer or director of the company. He is not likely to select an innocent man ; he will choose the one whom he believes to be the real culprit.
.- Every offender is already provided for. A company, a public officer, or any other officer or servant of the company who is guilty of a breach of the law, or any person who aids or abets the commission of an offence may be prosecuted. The only effect of the new provision is to enable the Commissioner to select somebody who otherwise would not bear any liability, and obtain against him penalties that would not be obtainable against him apart from this provision The provision is absolutely unjust.
– The onus would lie on the Commissioner to prove the guilt of the person charged.
– As against either the company or the public officer, and if he proves that either is guilty, a penalty can be imposed on any other officer or director whom he selects.
.- I feel somewhat embarrassed. Two former Attorney-Generals of the Commonwealth, a former Attorney-General for New South Wales, and the honorable member for Corangamite (Mr. Crouch), who also is a lawyer, disagree as to the meaning of the provision now before the committee. When lawyers differ, how is a layman to decide? Apparently, I have no alternative but to vote with the Government, and let it bear the responsibility.
. The Leader of the Opposition has stated that if the company is found guilty the Commissioner may exact penalties against an innocent man, who may have had no association with the offence. If that interpretation can be sustained, the Government is taking a serious responsibility. The Prime Minister said that the Abrahams brothers put forward a man of straw. That practice is not new ; unscrupulous companies that are sailing close to the wind resort to that expedient for obvious reasons. To enable the Commissioner to catch the man who, he thinks, is really liable, whether technically or not, this amendment is proposed ; but, apparently, it goes very much further than is intended. How are we to safeguard the innocent? We may assume that the Commissioner will exercise his tremendous power justly, and with the utmost care, but it seems to me that a great wrong may be done, for which there will be no remedy. The provision might be improved by compelling the Commissioner to establish a connexion between the offence and the person charged.
.- The Leader of the Opposition (Mr. Latham) has pointed out that the Commissioner may, in the unwarrantable exercise of his discretion and in the absence of any evidence connecting an officer or director with an offence, saddle him with liability. Will the Prime Minister say whether that is intended or is possible?
– It is for the court to decide whether an officer whom the Commissioner believes to be guilty is or is not guilty.
– But does not the clause mean that if the company is guilty an officer of it may be punishable although he is innocent? ,
– The clause only gives the Commissioner power to take proceedings against an officer or director. His guilt or innocence will be determined at his trial. I shall read the proviso to the honorable member, because the impression has been caused that the Commissioner can pronounce any person guilty.
– Yes, if some one else has been guilty.
– The proviso reads-
Notwithstanding anything contained in this section, and without in any way limiting, altering or transferring the liability of the public officer of a company, every notice, process or proceeding which under this act or the regulation thereunder may be given to. served upon or taken against the company or its public officer may, if the Commissioner thinks fit, be given to, served upon or taken against any director, secretary, or other officer of the company or any attorney or agent of the company.
– I am satisfied.
– That imposes the liability of the company on the person whom the Commissioner chooses to serve notice upon. Will the Prime Minister read the amendment ?
Mr.SCULLIN.- I am glad that the honorable member for Fawkner is satisfied. He was misled by the Leader of the Opposition (Mr. Latham) into believing that the Commissioner has power to find a person guilty. This is the addition proposed by the amendment -
And that a director, secretary, officer, attorney, or agent shall have thesame liability in respect of that notice, process or proceeding as the company or public officer would have had if it had been given to, served upon, or taken against the company or its public officer.
There is no liability on the part of a person upon whom notice is served beyond the liability to proceedings being taken against him. The honorable member for Fawkner clearly understands that.
– That is so.
– That is in respect of the proceedings.
– What the Prime Ministeris now saying is entirely different from what he said previously. He said that the object of this provision was to place the liability upon one who was not a man of straw.
Mr.SCULLIN.- The object is to take proceedings against the actual offender.
– The proceedings having been taken officially, the charge has then to be proved against the person concerned.
– The point is that the “public officer” under the law is liable. That officer, in a fraudulent company, is usually a dummy. We can proceed against the dummy, and gaol him, but we cannot deal with the real offender in the “background.
– The charge must be proved against the person selected by the Commissioner.
– That is not so.
Mr.SCULLIN.- It is so, and that is the whole purpose of this provision.
Question - That the words proposed to be added (Mr. Scullin’s amendment) be so added - put. The committee divided. (The Chairman - Mr. McGrath.) Ayes . . 40
Question so resolvedin the affirmative.
Amendment agreed to.
Clause, as amended, agreed to.
Postponed clause 24 (Application of act ) .
– I move -
That aftersub-clause 2 the following new sub-clauses be inserted - “ (2a.) The second proviso inserted by paragraph (c) of section eight of this act in subsection (1a.) of section twenty of the Principal Act shall apply to assessments for the financial year beginning on the first day of July One thousand nine hundred and twentyfive and all subsequent years. (2b.) The amendment effected by paragraph (n) of section eleven of this act shall be deemed to have commenced on the date of the commencement of the Income Tax Assessment Act 1928.”.
The purpose of this amendment is to do an act of justice to co-operative societies. Previously provision was made that cooperative societies should have certain exemptions from income taxation, but it was found that the wording of the section did not fulfil the intention of Parliament. A co-operative society in South Australia carrying on the business of selling to some of its shareholders and buying from others of its shareholders does not, according to the wording of the section, share in the exemption, although it was the clear intention of Parliament that it should do so. The clause as it stands amends the section to apply to a co-operative society of that description. But the amendment that I am now moving will give this section’ a retrospective effect. This involves a refund of £2,500. This Government, as was the previous Government, is prepared, where it is found that the intention of the act is clear, to patch up the flaw in its provisions and to make them retrospective even to the extent of depleting Commonwealth revenue. It is a poor law that will not operate both ways. In this case justice is being done to at least one co-operative company.
– Will the whole of that £2,500 be refunded to one co-operative society ?
– I think so.
.- I commend the action of the Government in regard to this retrospective concession. The previous Government approved of exemptions in the case of co-operative societies. At the same time I protest against the retrospective application of the first part of clause 24. I consider that to bc uncalled for and unnecessary.
.- I should like to ask the Prime Minister why new sub-clause 2b should be retrospective only to the commencement of the Income Tax Assessment Act 192S. Is that on account of the original provision having been introduced then?
– That is the date ofthe operation of the provision.
– I admit the justice of making these particular concessions retrospective; but I think that a distinction should be drawn between such legislation as this and any legislation which attempts to impose a retrospective liability. For that reason these new subclauses are to be distinguished from other sub-clauses appearing in the original clause. I am opposed to some of those provisions, for reasons that I have already given.
.- I have been informed by a genuine trading co-operative society in South Australia that it has been unable to take advantage of the exemptions provided in the act, because seven-twenty-fifths of its business is done with non-members. Will this amendment meet such a case?
– This amendment does not deal with that aspect of the question.
Amendment agreed to.
Clause, as amended, agreed to.
– I move -
That the following new clause be inserted: - “ 12a. Section twenty-five a of the principal act is repealed and the following section inserted in its stead: - 25a. Where, in respect of property of any person from the use or ownership of which assessable income may be derived, any expenditure is incurred by that person in connexion with the acquisition or use of that property and a deduction in respect of that expenditure has been allowed or is allowable under any other provision of this act, and the whole or any part of the proceeds of the sale of that property is assessable as income of that person, no deduction shall be allowed from the proceeds so assessable in respect of the expenditure so allowed or allowable. “
The object of this amendment is to prevent double deductions being made, principally by land-dealers. It has been brought under the notice of the department since the introduction of this bill, that certain land-dealers are, in particular cases, able to make deductions in respect of wire and wire- netting used in the construction of fences, and that they are also able to make another deduction in respect of the same transaction. This amendment will prevent that being done.
Proposed new clause agreed to.
Amendments (by Mr. Scullin) agreed to-
That the following new clauses be inserted: - “ 22a. Section eighty-three of the principal act is repealed and the following section inserted in its stead: -
– (1.) In any taxation prosecution the averment of the prosecutor or plaintiff contained in the information, complaint, declaration or claim shall be prima facie evidence of the matter or matters averred. (2.) This section shall apply to any matter so averred although -
evidence in support or rebuttal of the matter averred or of any other matter is given by witnesses ; or
the matter averred is a mixed question of law and fact, but in that case the averment shall be prima facie evidence of the fact only. (3.) Any evidence given by witnesses in support or rebuttal of a matter bo averred shall be considered on its merits and the credibility and probative value of such evidence shall be neither increased nor diminished by reason of this section. (4.) The foregoing provisions of this section shall not apply to -
an averment of the intent of the defendant; or
proceedings for an indictable offence or an offence directly punishable by imprisonment. (5.) This section shall not lessen or affect any onus of proof otherwise falling on the defendant.’ “ “ 22b. Section eighty-five of the principal act is amended by omitting from paragraph (c) the word ‘justice’ and inserting in its stead the word ‘ distress ‘.”
Title agreed to.
Bill reportedwith amendments and report - by leave - adopted.
Bill - by leave - read a third time.
In Committee of Supply: Consideration resumed from 2Sth July (vide page 4807; -
Balance of proposed vote, £16,560, agreed to.
Proposed votes - Department of Trade and Customs, £9,715; Department of Health, £10,000; and Territories of the Commonwealth, £92,805, agreed to.
That there be granted to His Majesty to the service of the year 1930-31 for the purposes of additions, new works, buildings, &c, a sum not exceeding £130,570.
Standing Orders suspended and resolution adopted.
Resolution of Ways and Means covering Resolution of Supply reported and adopted.
That Mr. Scullin and Mr. Fenton do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Scullin, and passed through all its stages without amendment or debate.
Proposed vote, £77,620, postponed.
Proposed vote, £314,500.
.- The increased expenditure under this item is £36,000. Although £22,000 of this increase is accounted for by the fact that the activities of the Development and Migration Commission have been taken over by the Prime Minister’s Department, there still remains an increase of between. £2,000 and £3,000 concerning which I should be glad to have an explanation from the Prime Minister.
– The expenditure for 1929-30 was £58,426; the estimate for 1930-31 is £82,040. The extra expenditure incurred by taking over the activities of the Development and Migration Commission is £22,764, so that the net increase is about £850. Provision has been made for the activities of the Development and Migration Commission to be taken over by the Prime Minister’s Department as from the 30th June, 1930. Salaries for the development branch of the Prime Minister’s Department amount to £25,300. As a matter of fact, the administrative costs of my department have been reduced, apart from automatic increases to officers, cost of living allowances, and the extra expenditure incurred as a result of taking over the work of the Development and” Migration Commission.
– Does this item include immigration ?
– No, merely administration; migration will be dealt with later.
.- Under the heading of “ Publications Branch “, provision is made for the payment of four male assistants, and one female assistant. Will the Prime Minister state what is the nature of the work performed by the Publications Branch?
– I observe that under this heading there is an estimated increase in expenditure of nearly £2,000. Has the Publications Branch anything to do with the monthly circulars sent to members of Parliament, and is it a medium for the distribution of propaganda?
– One of the duties of the Publications Branch is to< keep honorable members advised concerning the work of the departments. The branch is responsible for the typewritten notices sent regularly to honorable members, containing information regarding departmental activities.
– How many such notices are issued?
– Sufficient for a copy to be sent to each member, and to make copies available to the press.
.- Those circulars contain material which is very useful indeed, and, generally speaking, I take no’ exception to them. Here and there, however, one finds matter of a distinctly propagandist character, and I suggest that this should be carefully guarded against. The publication of this matter is paid for with public money, and while it is quite proper that the public, and members of Parliament who are responsible to the public, should be fully informed of Government activities, and what is going on in the various departments of the Administration a distinction should be drawn between genuine information and material intended to be propagandist or persuasive. I refer particularly to material making comparisons with the administration of a previous government. Such comparisons may be made apparently in the way of providing information, and yet may, in fact, be of a propagandist ‘ character. There have been, from time to time, small slips of this kind. I do not suggest that, on the whole, the material has been propagandist; it has not; but it is evident that the matter has sometimes been prepared in the interests of the Government of the day. The publications also contain occasional statements as to the policy of the Government, and its views upon particular matters. The Government has abundant opportunities, in this House and elsewhere, of stating its views on matters of policy, and publications paid for with the money of the people ought not to be used for this purpose. I hope that this condition will be stringently observed in the future.
– I agree with the Leader of the Opposition that there should be no shadow of political propaganda in the publications issued from the Prime Minister’s Department, and the instructions given to the publishing officer are to that effect. The information made public is gathered from the various departments, is edited, and sent out. It may be that propagandist material gets in occasionally, but it is not the intention of the Government that it should. I shall make a note of the point raised by the honorable member.
.- I understood the Prime Minister to say that the actual cost of running his department had been reduced, as compared with the previous twelve months, but that the grand total of expenditure was swollen by the expenses connected with taking over the activities of the Development and Migration Commission. Under the heading of “ Administrative Costs “ the expenditure for last year is shown at £26,008; for this year it is £46,965. There is a footnote to the effect that this sum includes £16,181 for the development branch, previously provided under Division No. 16a - Development and Migration Commission. This still leaves a margin of about £4,000 over the actual expenditure for last year. It may be that this extra expenditure is balanced by savings elsewhere, but an increase of £4,000 on salaries, allowances, &c, for administrative officers seems fairly substantial. Under the heading of “ Congencies “, there is also an increase from £18,574 last year to £26,850 for 1930-31. In this case, also, there is a footnote, which points out that the estimate for this year includes £5,583 in respect of the development branch of the department. This leaves an actual increase of about £2,500. In respect of some of the items the increases are substantial. For instance, for office requisites, exclusive of writing paper and envelopes, the expenditure has been increased from £229 to £550.
– The honorable member must realize that in respect of all these items provision has to be made for the extra expenses entailed by taking over the activities of the Development and Migration Commission.
– But increases are shown on practically all the items, such as travelling expenses, postage and telegrams, printing and distribution of Commonwealth statutes to State Governments and others, &c. The increase in respect of the last item is over £1,000.
– The extra travelling expenses are also accounted for by the activities of the development branch.
.- When I was Treasurer we found that expenditure was curtailed by keeping the contingencies votes and estimate as near as possible to what it stood at the previous year. The fact that the minimum amount of money is available has a useful effect in keeping down expenses. I urge that, even though that course has not been followed this time, the Government should not cease to press for the curtailment of contingency expenses. About three years ago there was instituted a system .of control by economy committees and departmental committees that tended to cut down departmental expenditure very materially. That, of course, has been reflected in the total sum expended, which in the last seven or eight years has not increased appreciably, notwithstanding the fact that many new activities have been undertaken. Here is a field in contingencies votes in which, without doing injury to the conditions or the salaries of public servants, a very substantial saving can be effected. During the year ft will probably be found that the total amount for contingencies in the various departments will run into several hundreds of thousands of pounds. This year it is proposed to spend on office requisites, exclusive of writing paper and envelopes, £500, compared with an expenditure last year of £229. A saving may be possible in that direction. Similarly, the cost of writing paper and envelopes, including the cost of printing and embossing thereon, may be reduced from the £500 provided. The expenditure on that item last year was £399. Other printing is expected to cost £1,300, although last year the expenditure was only £223. These items should be subject to a continuous scrutiny by the departmental heads, under a definite direction from the Government that it expects expenditure to be reduced to a minimum during the year. If that be done, considerable savings will be effected throughout the departments.
.- I rise to draw attention to the special Canberra allowance, which, in the Prime Minister’s Department, amounts to something like £5,000. In addition to that allowance, various sums are provided for the purpose of paying other cost of living allowances. For some time I have felt very strongly that an endeavour should be made to improve the conditions of the public servants who were transferred to Canberra. It is well known that the cost of housing in Canberra is extraordinarily high. The Government will have to face this issue sooner or later. It is necessary to write off a portion of the cost of the Canberra houses, so as to relieve public servants of the burden of high rents, and thereby obviate the payment of this special allowance annually. People who come to Canberra from other States find fault with the expense to which they are put during their stay here. At the hotels they are charged anything up to 25s. a day, and in the business houses they find that their purchases cost them more than they would have to pay in other places. The result is that many people are giving the Federal Capital a wide berth. I am concerned not so much about the hotels as about the public servants who are compelled to live here. Many of them have been keenly discontented, but are now becoming more settled and satisfied. If the Government were to effect an improvement of their conditions in connexion with the cost of their homes, it would’ go a long way towards making them contented, and at the same time save the country a great deal of expense. It is too much to expect Australia to continue the payment of this allowance for all time. The Government should meet the position by writing off a certain percentage of the cost of the houses.
.- I draw attention to the allowances that are paid to officers who perform duties of a higher class than that in which they are ordinarily employed. In these days we should do all that we can to economize. During the year 1929-30 only £40 was spent upon this item, but this year the Government expects to spend £400. The report of the Public Service Board for 1929 deals with the matter of higher duties allowances as follows: -
Arbitration determinations provide for the granting of such allowances where officers are required temporarily to perform the duties of higher positions during the absence of the permanent occupants on sick leave or for other reasons.
The payment of these allowances is open to abuse, it being well known that the value of services temporarily rendered in higher positions does not in many cases justify the payment of additional remuneration, where the temporary occupant is merely carrying on, awaiting the return of the regular officer, who will take up any problems left over by his locum tenens The fact that officers who have time and again drawn higher duties allowances have failed to secure promotion, upon the position in which they have relieved becoming vacant, is a clear indication as to the departmental view of their efficiency for the particular work. Much of the expenditure on higher duties allowances is unjustified. The practice has gradually been extended until the financial effect is serious.
I ask the Prime Minister to investigate the working of his department, so as to ascertain whether additional payments are made to officers who temporarily perform the duties of others who are in a higher grade, while the latter are on leave. In this way, the Government can be committed to a considerable expenditure. There is room for improvement, and every avenue should be explored with a view to effecting economy.
An amount of £5,000 is provided for the travelling expenses of Commonwealth Ministers. It is admitted that those gentlemen are obliged to travel to a greater extent than private members. I contend, however, that travelling by motor car should be reduced to a mini mum. All members have passes on therailways, and no Minister should be allowed to travel by motor car when he can use the railways. Inquiries should be made to ascertain whether there are cases of Ministers having travelled by motor car between Melbourne and Canberra. The amount spent by the last Government on this item was £500 less than the sum which is now provided. 1 do not suggest that there have been grave abuses; but I submit that travelling by motor car should be reduced to a minimum.
– Is it the pleasure of the committee that the department be taken as a whole?
Honorable Members. - Hear, hear!
, - I should like to be informed of the justification for the provision of an amount of £500 for a liaison officer in the London office of the Development branch of the department, in view of the almost complete nullity to which this Government has brought the work of the Development and Migration Commission. What is the nature of the liaison that this officer maintains between Loudon and Australia ?
.- The only matter that I desire to raise is that of migration to Australia. The other evening the honorable member for Oxley (Mr. Bayley) endeavoured to confound me, and to give the impression that the influx into Australia of Southern Europeans under this Government had been as great as it was under the last Administration. When I dilated upon the abnormal influx that occurred during the regime of that Government, my statements were challenged. I stated that a greater number of Europeans were brought to Australia during that period than during any other period up to the 1921 census. It is useless for honorable members to squirm when facts are placed before them. The Leader of the Opposition questioned whether I was giving the facts; and the honorable member for Oxley said that I was speaking out of the fullness of my ignorance.
– As many came here during the first six months of 1930 as during the first six months of 1929.
– That may be so; but it does not affect my argument in regard to what happened during the regime of the Bruce-Page Government. The honorable member may try to confuse the issue, but I propose to state the facts from official documents. Up to the 1921 census there were in Australia 2,817 Greeks, 4,003 Italians, 609 Jugo-Slavs, and 1,078 other Europeans. The “ other Europeans “ do not include Danish, Dutch, Finnish, French, German, Norwegian, Russian, Spanish, Swedish, Swiss, and Turkish. It will thus be seen that the total of Southern Europeans was S,507. The figures that I shall now give will show that what I previously stated in regard to the Bruce-Page Administration was correct, and that, until the public outcry was so great that it was compelled to take action, thai Administration did not take any steps to prevent the influx of Southern Europeans, who to a certain extent have been responsible for the position in which we find ourselves to-day. The following figures give the excess of arrivals over departures: -
In 1921 the Maltese in Australia were so few that they were not separately classified in the census, but were grouped with “ other Europeans “. Honorable members will note that the influx declined in 1928 when the influence of the public began to be felt. It is all very well for honorable members opposite to say that these people were not brought to Australia by the Bruce-Page Government. It may be true that their passages were not paid by the Government, but they certainly were induced to come to Australia by organizations that supported the Nationalist and Country parties. Although I spoke at first without my book, the figures I have quoted support every statement I then made. The large influx of Southern Europeans, who ure still in Australia, and affecting the labour market, stands to the permanent discredit of the last. Government.
.- The honorable member for Adelaide has now produced a new set of figures.
– Order! I have only now discovered that there is no item in the Prime Minister’s estimates dealing with migration. If the honorable member for Oxley desires to speak on migration he must defer his remarks until the estimates of the Department of Migration and Transport are reached.
– That is most unfair. The reply of the honorable member will be widely separated from the statement of the honorable member for Adelaide.
The TEMPORARY CHAIRMAN.I am sorry that I did not discover earlier that the remarks of the honorable member for Adelaide were out of order at this stage. The honorable member for Oxley may speak on migration only by leave of the committee. [Leave granted.’]
– Replying to the honorable member for Adelaide by interjection I said that the percentage of foreigners entering Australia is greater under the present regime than under the Bruce-Page Government. I supported that statement by statistics. The honorable member has now quoted figures relating to migration since 1921. I agree that the influx of Southern European.* increased considerably after that year, and the reason is obvious. In 1921 the American Immigration Act was altered to provide that the migration of different nationals should be restricted to 3 per cent, of the number of such national? resident in the United States of
America at the time of the 1910 census. In other words, for every 100 Albanians in the United States of America in 1910, three additional Albanians would be admitted each year. Discovering that still too many Southern Europeans and Slavs were arriving, the quota was altered in 1924 to 2 per cent, on the basis of the census of 1890, when ‘the majority of the people in America were either of British descent or belonged to the Teutonic or Nordic races. These people were regarded as desirable citizens, and America was anxious to continue their preponderance in its population. From 1921 Southern Europeans have had the gates of America almost closed to them, and not being content to remain in their own countries, they looked for other migration fields, and many of them chose Australia. The effect of the quota system in the United States of America will be understood from the fact that whereas in 1921 no fewer than 222,496 Italians entered the United States of America, in 1926, when the 1921 act and the amending act of 1924 were fully operative, the number of Italians admitted was only 9,374. The first big flow of migrants to America was about the year 1851, shortly after the potato famine in Ireland. The Irish people crossed the Atlantic in shiploads, and before long two and a half million Irish were resident in America.
– Does the honorable member consider that these facts have any bearing on Australian migration?
– Decidedly. The second big influxion was from Germany in 1871. Disgusted with the FrancoPrussian war and the religious persecutions, many Germans turned to America, the new land of- freedom, and invaded that country at a very rapid rate At one time more Germans were living in Chicago than in any city of the world, with the exception of Berlin. To-day there are more Jews resident in New York than in the whole of Palestine. Later other tides of people flowed from Europe to America. When that tide was dammed at Ellis Island and elsewhere, Southern Europeans trans ferred their attention to Australia, and we were powerless to prevent them from coming here unless they were of an undesirable type to whom we could apply the dictation test, and deny them admission. The Bruce-Page Government realized that Australia was not obtaining a desirable class of migrant, so it applied the quota system with respect to Jugoslavs, Albanians and Greeks under an agreement entered into between the Australian Government and the Governments of those nationals. The quota was limited to 100 a month. We could not enter into a similar agreement with Italy, so a gentleman’s agreement .was arrived at under which the Government of that country promised to select with care the type of person to come to Australia. The Bruce-Page Government did more than any other Commonwealth Government to maintain the purity of our race. My interjection when the honorable member for Adelaide (Mr. Yates) was speaking was that the purity of our race was better maintained under the Bruce-Page Government than under this Government. I quoted figures showing that the percentage of foreign migrants as against British migrants had greatly increased during six months that this Government had been in office. The actual figures appear in Hansard, and honorable members, if they so desire, may peruse them. I admit, as the honorable member, for Adelaide stated, that the influx of Southern Europeans into this country increased greatly during the years from 1922 to 1928 ; but, as I have explained, that was because of the passage by the United States of America Congress of an immigration act which restricted the number of foreigners who could enter that country. Migrants were consequently forced to look for fresh fields, and Australia appealed to them more than any other country. I stress the fact that the Bruce-Page Government did maintain in Australia the standard of 98 per cent, of British stock.
.-Since honorable members opposite have claimed that the expenditure for this financial year is capable of being reduced to the extent of £4,000,000, I expected them, and particularly the honorable member for Oxley (Mr. Bayley), to make some practical suggestions for exercising economy in the Prime Minister’s Department. Instead of that, they have indulged in a discussion on alien migration.
– We shall make plenty of suggestions before the Estimates are passed.
– Instead of dealing in generalities, as did honorable members opposite, I propose to make a specific suggestion. I regret that the ex-Treasurer (Mr. Theodore) is not present, because I have already put my suggestion before him. I refer to the contingency votes under the Prime Minister’s Department. In this time of financial stress, we should do all in our power to effect economies. I, therefore, invite the attention of the Treasurer (Mr. Scullin) to page 29 of the Estimates. Under the heading of Contingencies appear a number of items, such as office requisites, exclusive of writing paper and envelopes; writing paper and envelopes, including cost of printing and embossing thereon; account, record, and other books, including cost of material, binding and printing ; and other printing. Those items represent a comparatively, small expenditure, ranging from £50 to £250. I suggest that they should be grouped as one item. That would have the effect of making substantial savings, not only in the clerical work, but also in checking, printing, auditing, and the various processes that operate in respect of contingencies. Each of those items involves separate ledger accounts, not only in the Prime Minister’s Department or the department concerned, but also in the Treasury. A similar position exists in respect of several items, under the heading of contingencies, appearing on page 38 of the Estimates. They cover writing-paper and envelopes, account, record, and other books; other printing, printing of bulletins; and printing of journals. Those items range from £80 to £1,000, and I can see no reason why they should be separated. If they were combined as one item there would be a considerable saving of expenditure. It is this sort of thing that is contributing towards the ever increasing cost of the Public Service. Economies effected in this direction would enable some of the officers who are now engaged on this work to be occupied elsewhere, and this to some extent would reduce the cost of the Public Service. I trust that the Treasurer will give consideration to my suggestion as its adoption will substantially reduce the cost of preparing and printing the Estimates and also reduce the amount of labour and forms now necessary. If it cannot be adopted this financial year, it certainly should be adopted when the Estimates for the next . financial year are being prepared.
.- There are two or three items appearing under certain divisions of the Prime Minister’s Department, concerning which more information should be given to the committee. I shall refer first to the Audit Department. This department, above all others, should maintain its activities in a period of depression in order to insure that no money is wastefully expended. I observe in respect of the central staff that nothing is shown in the expenditure column for last year; that the proposed vote for this year is only a little more than half the amount voted for last year ; and that the number of officers has been reduced from sixteen to nine. I should like an explanation of this. It appears also that the cost of office requisites for the Audit Department this year will be more than double what it was last year.
I come now to the proposed expenditure under division 11, “ Office of Public Service Board “. An amount of £2,575 is being provided for the holding of examinations, “ including advertising “, although only £1,858 was spent last year. The advertising mentioned must mean advertising incurred in connexion with the examinations, because the next line of the Estimates reads, “ Other advertising, £300.” Does the Public Service Board intend to hold examinations ad libitum, and to make numerous new appointments to the Public Service?
– The Government intends to see that examinations are held for all positions that become vacant. The previous Government filled many positions by selection.
– I am informed that that is not the real explanation. It it interesting to note that, whereas the expenditure last year in payments under the Public Service Act and Regulations to officers on retirement and to dependants of deceased officials, amounted to £2,525, only £250 is being provided for that purpose this year. This reduction, however, is not due to administrative care, but is more or less accidental. An amount of £8,000 is being provided also for the payment of municipal and other taxesin connexion with the High Commissioner’s office, and £12,500 is being provided for the upkeep of Australia House, London. Last year less money was spent in respect of both these items than the smaller sum that was then actually voted. J should like to know, therefore, why an increase is being allowed for this year. I wish to know, also, whether the expense being incurred in connexion with the inquiry of the honorable member forReid (Mr. Coleman) into the affairs of Australia House is to be met out of the vote for the Public Accounts Committee, or the vote for the Prime Minister’s Department, so that we may he able to discuss that surprising item of expenditure when the appropriate time arrives.
The items that I have mentioned are not large, but they justify my asking for an explanation.
House adjourned at 10.35p.m.
Cite as: Australia, House of Representatives, Debates, 30 July 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300730_reps_12_126/>.