15th Parliament · 1st Session
Mr. Speaker (Hon. G. J. Bell) took the chair at 3 p.m., and read prayers.
– In view of the complexity and increasing seriousness of the international situation, will the Minister for Defence state whether or not it is possible to expedite the enlistment of the proposed special force of20,000 men and get them into camp at an earlier date than the 1st November!
– by leave- As the Prime Minister has already announced the Government has decided to form a special force, consisting of an infantry division, for service either at home or overseas according to circumstances. This force is to be enlisted for the duration of the war and twelve months thereafter, or until lawfully discharged. Arrangements have been made for troops to be enrolled and medically examined immediately at any training centre in Australia. Itis obvious that, in respect of those who pass this medical examination,a further medical test will be necessary, as it is anticipated that each State will supply far more than its allotted quota., and consequently a special selection will have to he made. Therefore, this first enrolment and medical examination will not include attestation, which will come at a later date. Preference for enlistment inthis force will be given to the members of the Militia who are within the age groups and who comply with the very severe medical standard that will he required. It is not anticipated that, in the whole of the force, more than 20 per cent. will be without previous training. The names of the officers to be appointed are now under consideration. It will be realized that a very careful selection indeed will have to be made.
New camps will have to be erected to house this force. I think honorable members will realize that it is desirable that the force should he concentrated to as great a degree as possible. One infantry brigade group will be in camp somewhere in the Newcastle area, one in the Sydney area, and one near Seymour, in Victoria.
I stress the point that Australia’s first duty is to defend itself. Insofar as our land forces are concerned, that defence must be undertaken with the Militiaarmy that we now possess. Consequently, the first task of the Government is to give to this Militia army a greater degreeof training than it has already had. This is being done by bringing it into camp in two quotas of about 40,000 each for, in the first place, one month’s continuous training for each quota.I here point out that the training of this quota of 40,000 men will fully tax the existing camp resources in Australia - a fact which, I believe, is not realized bysome honorable members. Thereafter, undoubtedly, further training will be given to the Militia. The Government has made tentative plans for such training, the nature and extent of which will naturally be affected by the circumstances existing at the time. The Government ofthe United Kingdom, with which the Commonwealth Government; is in daily touch has itself recognized that at the present juncture the best contribution that Australia can make is to defend itself.
Opposition M embers. - Hear, hear!
– I point out that Great Britain itself is not asking for volunteers at the moment, but is operating with a eon trolled intake.I remind the House of what is often forgotten, namely, that the circumstances with which we are confronted to-day are different from those with which we had to deal in 1914. In those days, Australia had no defence problems such as we know exist to-day. Then, the safety of Australia was not for a moment considered to he in any danger. Consequently it could and did concentrate the whole of its military effort upon enlisting and starting to train the Australian Imperial Force. In fact, by December, 1914 - that is, after nearly five months of war - about 40,000 men had been sent from Australia overseas with some little training. To enable this to be done. Militia training was strictly subordinated to the training of the Australian Imperial Force. To-day, it is essential that the raising of this special force shall not set back the training of our Militia : consequently the whole of our resources cannot be devoted to its training, as was done 25 years ago. Therefore, members of the Militia who are accepted for this special force will in all probability continue for the time being their training with their existing units, and enlistments for the special force outside the Militia will probably be attached for the time being to existingunits. It is, however, expected that we shall have the special force in camp by the 1st November, that is, within three months of the outbreak of the war. That, of course, does not mean that they will not have received any training until the 1st November; it should mean that, by the end of November, at least 100,000 men will have received one month’s continuous training. Judged by any standard of comparison, this reflects very great credit on those who are responsible for the organization necessary for this training.
– I have received from the West Croydon, South Australia, branch of the Returned Sailors and Soldiers Imperial League of Australia, a telegram which reads -
Can you assist in stopping evictions of unemployed diggers from war-service homes?
Will the Minister inquire into the position in relation to these men, and prevent the continuance of any proceedings for eviction which may have been put in train ?
-I shall place before the Assistant Minister for WarService Homes the matter raised by the honorable member and shall see that his representations are given every consideration.
Mr. JOHN LAWSON laid on the table reports and recommendations of the Tariff Board on the following subjects : -
Brake and transmission linings.
Coil springs for motor vehicle chassis.
Dental units and dental polishing lathes.
Electric fans of the type ordinarily used in offices and the household.
Electric motors of less than1 horse-power.
Jute yarns; hemp and flax yarns.
Printed advertising matter from the United Kingdom.
Process engravers’ plates.
Radio and electrical testing instruments and appliances.
Screwing tools; tap wrenches, screwplates of the fixed type, and stocks.
Sewing threads, linen flux, hemp or jute.
Ordered to be printed.
– Pursuant to a promise made by me on Friday last during the course of questions, withoutnotice, I present the following statement, embodying particulars relating to war-time boards and committees : -
– On the adjournment of the House on the 14th September, the honorable member for Dalley referred to representations which he and other honorable members had previously made concerning the interpretation which was being placed on section84(9)c of the Commonwealth Public Service Act relating to the permanent appointment of returned soldiers to the fourth - nonclerical - division of the Commonwealth Service. I desire to inform the House that the question of appointment to the permanent staff of returned soldiers who complete two years’ temporary service is constantly under consideration. Where returned soldiers who are entitled to preference under section 84(9) of the act are engaged in a class of employment for which permanent positions are necessary, it is the prartice to make appointments as vacancies occur, or to create extra positions up to the number considered desirable. Where, however, employees are engaged in work for which it is deemed undesirable to have positions on the permanent staff, or where there is no room for additions to the permanent staff, appointments are not made. Since the amendment of section 84 of the Commonwealth Public Service Act in1936, restoring eligibility to employees whose employment had been broken, over 1,000 appointments of these returned soldiers have been made. I am informed by the Public Service Board that the bulk of the temporary employees in the service are in the Postmaster-General’s Department, mainly in the engineering branches, where both construction and maintenance work is carried out. Line work is of a fluctuating character, and for that reason a proportion of employees on construction work must be kept on a temporary basis, to meet the variations in work. Additions to the permanent staff must be regulated to work needs.
Preference for temporary work is given to returned soldiers, but it is not practicable to provide permanent positions for all who may secure two years’ temporary work.For example, due to marked expansion of services over recent years, about 2,000 temporary linemen have been engage; but there are indica tions that the rate of recent expansion will not be maintained, and, if that proves to be the case, reductions of staff would be inevitable. Therefore, some limit to the number of permanent appointments must be imposed. At present about 500 linemen have had two years’ temporary service, and action is in train on instructions given some weeks ago to appoint 220 of these to the permanent staff. Beyond that it is not desirable to go. The existing provisions of the Commonwealth Public Service Act as to the appointment of returned soldiers are considered to he very reasonable. The policy of preference to returned soldiers in the Commonwealth service is fully and sympathetically observed, and returned soldiers on becoming eligible are in all cases appointed permanently if permanent positions are available, or can, with proper regard to the requirements of the Service, be created. Figures as to appointments show that in the three years from the 1st July, 1936, to the 30th June, 1939, 1,480 returned soldiers were appointed to the permanent staff. As I indicated earlier in this statement, over 1,000 of these appointments were made under section 84(9) c, namely, to the fourth - non-clerical - division of the Service. In conclusion, I may mention that the total number of permanent appointments of returned soldiers which have been made under the Commonwealth Public Service Act is now 7,102.
– by leave - In less than three weeks of war, the situation, both in Europe and in the Far East, has undergone some rapid and important changes. It is not yet possible to assess the effect and full military implication of these. Much essential information is still lacking, and more than one interpretation can be placed on the true significance of certain more recent events which, on the face of them, profoundly affect international relations as they stood at the outbreak of war.
The central fact, in review of what has happened since the beginning of the month has been the early German success in the invasion of Poland. On the prepared lines of resistance to the German attacks from the northern, western and southern frontiers, the Poles have been driven from one position after another by the sheer weight of the German military machine. The Germans have used with the greatest effect their tactics of the lightning thrust, their mechanized strength and, above all, an overwhelming superiority in the air.
Mainly as the result of this last factor, the Polish forces, after the first few en- gagements, have been unable to form new concentrations or even to maintain cohesion. In fact, the bombing of depots, bases and lines of communication prevented the complete mobilization of the Polish army from being effected. In spite of continued resistance at certain points, notably Warsaw and positions further to the east, the German invasion has now penetrated far into the interior of Poland, and in particular is menacing Poland’s only effective communication with the outside world, the frontier with Rumania.
It appears that the Polish Government, which, early in the war, had moved from Warsaw to another city, is now dispersing. Some members are said already to have taken refuge. The information at present in the possession of the Government indicates that Polish military resistance has been broken and can make little contribution to the allied military effort.
Last week the Soviet Government mobilized very large forces along the western frontier of Russia. The purpose of this became evident when, on the 17th September, Russian troops crossed the Soviet-Polish frontier at points along its whole length, and proceeded to occupy Polish territory in the face of resistance. According to the official explanation given out in Moscow, this act did not mean that Russia. had abandoned its neutrality in the war. It signified only the determination of the Soviet Government to protect from the consequences of the military collapse of the Polish State, the White Russian and Ukrainian populations which had previously belonged to Russia.
A final opinion, either on the Russian motive or on the limits of the action undertaken, is not yet possible; but, even as it stands, the Soviet action is hard to justify by the arguments put forward in Moscow. It has been suggested in some unofficial quarters that Soviet occupation of the eastern territories of Poland may be the price to which Germany agreed for the German-Soviet Pact of nonaggression. It has also been suggested that the Soviet action may be the measure of Russian fears of what might follow from the precipitate German eastward advance.
However this may be, there is nothing as yet to show whether or not this move portends any wider Soviet intervention in the war. On the other hand, and although the news initially presents disquieting features, there are some factors about the Russian act which should not be overlooked.
It isimpossible to feel that Germany and Russia, between whom a deep-seated enmity and mutual suspicion has existed for many years can at a moment’s notice compose their hereditary differences and satisfy their own people. A common frontier may well accentuate differences of outlook and policy, and it seems probable that, until the Russian intentions are clarified, Germany will be forced to maintain substantial forces in theeast which would otherwise be available for operations on the western front. It is noteworthy too that an announcement has been made in Russia that the integrity of Rumania against any aggression will be preserved by Russia. Further, Russia today has already mobilized over 4,000,000 men, and its supply and communication system will be fully taxed to rneet the requirements of such a force.
I turn now to the Far East. Immediately before the Russian invasion of Poland it was announced that the Soviet Union and Japan had agreed on a truce to the hostilities which had been proceeding for a. considerable lime on the borders of Manchuria and Outer Mongolia. It was agreed that hostilities would cease at midnight on the 16th September, and that a commission would be set up at the earliest moment possible to establish the precise frontier of the disputed area.
Once again it is too early to assess the exact significance of this event. There has been sporadic fighting on the Manchurian border over a period of years, and truces have been arranged before.
All that can be said on present indications is that the agreement between the Soviet and Japanese Governments appears to be only a local one, and that it does not necessarily point the way to that general Soviet-Japanese pact of non-aggression which, it has in some quarters been suggested, would follow the pact between Russia and Germany.
Official statements in Tokyo have declared that the Japanese Government has no thought of a non-aggression pact with Russia, and have also denied that Germany has had anything to do with the Japanese-Soviet truce. It is claimed that, in concluding the truce, Japan was actuated only by its desire to bring about peaceful conditions in the Far East, and that the arrangement will assist towards a settlement of the China affair, as well as towards Anglo-Japanese understanding.
It is to be observed also that, in a broadcast from Moscow yesterday, it was stated that relations between the Soviet and Japan were far from being satisfactorily settled, and that Russia would continue to support Chinese resistance to Japan. Honorable members will have in mind the declaration made by the Japanese Government,, on the outbreak of war, that Japan has no intention of intervening in the war, and is resolved to pursue an independent policy. In the questions between the British and Japanese Governments which were outstanding on the outbreak of war we hope that the way will remain open to an agreed and friendly settlement.
The British Government in several declarations has expressed the resolve to prosecute the war in Europe until the end is achieved, and it is in the light of this determination, which is shared by all. the allied governments, that I refer finally to the military operations in Europe outside the eastern theatre of war. No one will expect at this stage the announcement of sudden of decisive developments in the military operations which have been begun on Germany’s western frontier.
Along a 90-mile front between the Rhine and the Moselle, the French armies in the last two weeks have begun a series of forward movements designed to establish contact with the German forces between the frontier and the outlying fortifications of the wide and deep German defensive system known as the Siegfried Line. At various points these operations have penetrated some miles in the German territory, and there is every reason to be satisfied with the success they have so far had.
It is to be emphasized, however, thai early and spectacular results are not to be expected. The operations are designed to maintain a steady pressure on the German western defences while Germany is also engaged militarily in the east, and they are going according to plan. In undertakings of such magnitude, there is no quick or easy way to success, and the very concentration of effort is itself a matter not to be reckoned in a period of a few weeks.
On the sea we are now witnessing the first stages of a rigorous naval blockade of Germany planned on a scale commensurate with the vast naval resources of Great Britain, and the plans prepared for ensuring British sea-borne supplies are now also coming steadily into force. There have been some losses from German submarine activity, amounting in the first two weeks of the war to about twenty vessels; but, with the gradual operation of the convoy system and application of modern anti-submarine defence, there is no prospect that submarine attack will be the menace which it was in the war of 1.914-18.
Nevertheless, I do not need to tell honorable members that the international position is one of the greatest gravity. So extraordinary have been the shifts and changes of the last few weeks that no Australian government with any sense of responsibility could pledge itself very much in advance as to what part it might be desirable or possible for us to play in this war. As I have already publicly stated, we aim at making the best use of our resources in the most effective place and in the most effective way. Uninformed speculation on this matter is not only useless, but actually dangerous. Our preparations are being made just as fast as our resources permit, and are being related to the facts of the international position, which are quite, different from those of 1914, and to .the strategic problems which these facts present.
– Will the Minister for Trade and Customs state if it is a fact that the price of sugar has been increased by wholesalers or retailers? If so, does the Government, regard such action as profiteering, and if so, what steps does it propose to take?
– .1 have received a number of reports which indicate that the retail price of sugar has been increased in certain parts “of the Commonwealth, and I have referred the matter to the Commonwealth Prices Commissioner for the fullest investigation.
– Lj it the intention of the Government as reported in the press to establish permanently in Melbourne the office of the Civil Aviation Department? Will the Department of Supply and the new Department of Information also be established there permanently? If so. is this action to be regarded as an indication that the Government favours for the time being, a reversal of its decision to regard Canberra as the Seat of Government of the Commonwealth?
– I do not know on what grounds the Deputy Leader of the Opposition uses the expression “ permanently “. He will. I am sure, realize that during this crisis it would not be practicable to remove the Department of Defence from its present location to some other place or to remove other departments related to it. Accordingly, the Department of Supply is being maintained for the present in Melbourne. During a. time of war the Department of Civil Aviation is brought into close association with the Department of Defence, and, consequently. J can see no prospect, during the present crisis, of any one of tin- three departments being removed from the centre where they are now situated.
Sale to British Sugar Control Board Ministerial Statement
– by leave - I desire to inform honorable members that arrangements have just been concluded for the sale by the Queensland Government to the British Sugar Control Board of the balance of Australia’s surplus production of raw sugar ex the 1939 crop. The quantity of raw sugar involved is approximately 290,000 tons, aird the price will be 7s. Gd. per cwl. sterling (£7 1.0s. a ton) c.i.f. United Kingdom ports, basis 96 degrees polarization, plus the existing British Tariff Preference of £3 15s. on dominions sugar. Any excess of freight rates above 3£>s. fid. a ton or of insurance above pre-war normal rates will be paid by the British Sugar Control Board. These arrangements are subject to an understanding between buyers and sellers that tlie price is intended to represent the basis of 7s. 6d. per cwt., according to values at the time the negotiations took place, and that in the event of currency or other developments rendering 7s. 6d. inadequate to give sellers, viz., the sugar producers, their present return therefrom, sellers will be entitled to re-open the question of price with a view to revision. It has also been agreed that if better terms are granted to other Empire sugar producers, those terms will be extended to Australian sugar producers. With regard to freights, as long as chartering remains free, the British Sugar Control Board will do everything possible to support the sellers’ chartering agents in their endeavours to secure tonnage to meet the approximate monthly requirements under the present contract and, in the event of all tonnage being requisitioned by the British Government, the British Sugar Control Board will continue to assist in the same manner. The price and conditions which I have mentioned will result in a net return on Australian raw sugar f.o.b. mill of approximately £10 a ton, which is slightly higher than that from recent sales to the United Kingdom, and compares favorably with the low average return of £8 4s. 3d. a ton on the previous season’s exports. The arrangement involves an increase by 37,000 tons of the exports from the 1939 crop that had previously been anticipated. Prior to this sale, 120,000 tons of raw sugar had already been exported to Britain and 72,500 tons to Canada. The total exports for the season will thus be 482,500 tons, which will substantially exceed the 1938 season’s record exports of 441,786 tons. The export value of the 1939 shipments will be approximately £5,000,000.
– In the announcement made by the Prime Minister over the air and in the press concerning a special defence force, certain maximum ages for respective ranks were mentioned, e.g., captains, 35, majors, 40, and lieutenantcolonels, 45. As no reference was made to this factor by the Minister for Defence to-day, I now ask whetherit is the intention to adhere to those ages, as by so doing, it would exclude a majority of ex- Australian Imperial Force officers, including those now training the Militia. Is it proposed to adhere to those ages, or leave it to the discretion of the officer in charge of the force?
– The ages announced will be adhered to.
– I have received many applications from young men. in country districts who desire to join the new volunteer force. Will they be afforded the same opportunities as those who are close to recruiting depots in the cities, and will country boys be afforded proportionate opportunities to become members of that force?
– One of the reasons why the applicants are not being enlisted immediately is to meet the very situation which the honorable member has brought under notice.
– Will men in the territories of the Commonwealth be given the same facilities to enlist, as will be given to men in Australia?
– I ask the Minister for Defence if he can reconcile his statement-
Mr.SPEAKER. - Order ! Ministers should not be asked to reconcile statements they have made with anything. To do so is to introduce debate which is not in order when asking a question.
– Then I shall deal with it, on the adjournment or I shall move the adjournment of the House if I cannot get at it in any other way.
– Will the pay of members of the enlisted force be more or less equivalent to what was paid to members of the Australian Imperial Force? . In the event of those enlisted being called upon to serve overseas, will their pay be in English or Australian currency ?
– In answer to the first part of the honorable gentleman’s question, the rates of pay, as announced by the Prime Minister, will be substantially those of the Australian Imperial Force. With regard to the second part, I shall deal with that should the occasion ever arise.
– Before proposing to send Australian troops overseas, seeing that Australia may not be required to send men overseas immediately, will the Prime Minister consider the advisability of taking a referendum of the people to decide whether or not they want to send troops overseas?
– I shall give the suggestion consideration.
– Will the Prime Minister state whether the military measures detailed by him on Friday afternoon of last week and broadcast on Friday night are now considered sufficient in view of the rapidly deteriorating situation disclosed by the right honorable gentleman a few minutes ago?
– I intimated whenI announced the steps which were being taken that in one or two respects I was not announcing something final. I indicated that the Militia Forces would be brought up in two drafts of approximately 40,000 each for a month’s training. As pointed out by the Minister for Defence, the question of further training is a matter which the Government has under consideration, and in relation to which it has made a tentative decision, which will be announced shortly. We have never contemplated that that would be the final result in relation to the Militia. In regard to the force that is being raised I have nothing to add. The attitude of the Government towards raising future forces will depend upon a consideration of the international position as it emerges from time’ to time, and upon, a further close consultation with the British Government, a consultation which has continued regularly day by day since the outbreak of war. .
– In view of the fact that the broadcasting of news during the war period is now under his control, can the Minister for Information state what arrangement or re-arrangement has been made for this facility during the war period ?
– I am sorry that at present I cannot give full particulars of the new arrangements which were decided upon at a conference convened by me and presided over by me in Melbourne yesterday. The conference was representative of the Australian Broadcasting Commission, the B class broadcasting stations, the Intelligence Branch of the Defence Department, and the leading newspapers of Australia. The atmosphere was friendly and new arrangements covering the war period were readied. I shall make a complete statement on the subject either tomorrowor the following day. I shall only add that I believe the arrangement arrived at will be satisfactory to the people of Australia. It has not been made for a specified term, and is subject to variation as circumstances may demand. It will show, too, no lack of the spirit, of cooperation and generosity on the part of the Australian pres3.
– What newspapers were represented ?
– The Australian Associated Press and the Australian Newspaper Conference were both very strongly represented. There was a very wide cover of the metropolitan daily press of the Commonwealth.
– The announcer of the British Broadcasting Corporation stated for all the world to hear early on Saturday morning that all Australian newspapers, with the exception of the
Labour newspaper, the Daily Mews; were urging full military preparation. As that is patently a deliberate misrepresentation of the attitude of the Daily News-
– Order ! The honorable member must ask his question.
– I ask the Minister for Information if he will make representations to the British Broadcasting Corporation to cease broadcasting to the world misleading information of that character ?
– I shall be pleased to bring the representations, made by the honorable member to the notice of the Australian Broadcasting Commission.
– Why is the tax on gold production to be fixed on the price of gold instead of on the profits derived from its production in accordance with the general principle of taxation?
– There were special circumstances connected with the recent rise of the price of gold. The general practice was departed’ from because it was felt that that rise was produced by the very kind of circumstances that rendered extra taxation in this country necessary.
– Arising out of the proposal to make a special levy on gold, which it is estimated will produce £1,500,000, I ask the Treasurer whether of that amount about £1,000,000 will come from Western Australia, and about £300,000 from the other States?
– That matter will be dealt with in connexion with the first item to be considered under Ways and Means.
– Will the tax on gold be levied on gold won by prospectors, sluicing companies and gold-mining companies whose operations- are unprofitable?
– I ask honorable members to defer questions relating to the gold tax until that matter is before the’ Chair, as it will bc in a few minute?.
– In view of the fact that the States are vitally interested in the prices of primary products to be sold to Great Britain, will the Minister for Commerce confer with the State Ministers of Agriculture before making a final decision in regard to the matter?
-The subject-matter upon which the question is based is already being dealt with by boards representative of the interests affected, as indicated by the Prime Minister in his statement on Friday last as to the personnel of these boards.
– Is the Prime Minister yet in a position to announce the details of the purchase of the Australian wool clip by the British Government ? Has he been informed that members of the Wool and Basil Workers Federation would be put off as from last week-end? Can he make a statement within 24 hours so that continuity of employment will be ensured to workers, and firms will not have difficulties in staffing their works should men be laid off and then have to be secured again later?
– I am not in a position to announce the conclusion of these negotiations. They are going on very actively. I have been taking an active part in these discussions each day throughout the week-end. No time is being lost because it is regarded as a matter of great urgency that we should reach finality as soon as possible; but I cannot undertake to have the final result within 24 hours.
– Before the Government completes any scheme for sending overseas what are classified as surplus primary products, will the Prime Minister make inquiries to ascertain the number of people in this country who, for financial reasons, are unable to provide themselves with a sufficiency of food., with a view to conferring with the State authorities in order to make such arrangements, financial or otherwise, as may be necessary to ensure that every man, woman and child in Australia will be provided with a decent standard of living before foodstuffs are sent overseas?
– The export of primary products from Australia will in no way impair supplies of those commodities which are available inside Australia.
– Is it a fact that the arrangement made with the British Government for thesale of Australian sugar is estimated to produce an enhanced price for Australian sugar of approximately £1,000,000 in comparison with the prices ruling last year? If so, will theGovernment regard that as a war-time profit and treat it in a manner similar to that in which it proposes to treat gold, namely, by making a lump sum levy on the profits so distributed?
– On the facts I am afraid I have nothing to add to the statement made a few moments ago by my colleague, the Minister for Trade and Customs. On the question of policy the suggestion made by the honorable gentleman will be taken into consideration.
– Can the Minister for Trade and Customs indicate who negotiated the agreement in respect of the disposal of sugar to Great Britain?
– I shall forward detailed information to the honorable member.
Restriction on Borrowing.
– In view of the impending dismissal of 3,500 employees of the Brisbane City Council owing to the shortage of loan money, will the Prime Minister, in view of his slogan, “ Business as usual”, take steps to assist that body through the Commonwealth Bank to raise the balance of its loan requirements for the remainder of its financial year?
– The total borrowing programme for all semi-governmental bodies in Australia was limited and approved by the recent meeting of the Loan Council. I regard it as highly improbable that there will bo any revision of that list in an upward direction,.
– Will the Commonwealth advisory committee on price fixation - a body upon which there are no representatives of consumers or trade unions - have power to override the decisions or recommendations of the State committees upon which the Minister for
Trade and Customs hopes to place such representatives? If not, in the event of a disagreement between the State and Federal advisory committees, who will have power to make the final decision?
– In reply to the first part of the honorable member’s question, there is no Commonwealth advisory committee on price control. A Commonwealth Prices Commissioner, who has the advantage of the advice of two consultants who are experts in trading practice, has been appointed. The interests of the consumers are fully protected by the fact that the Commonwealth Prices Commissioner is pre-eminently the representative of the consumers, and he is the only person who has the power to fix prices. His ruling will override that of any State authority. The State advisory committees will advise the deputy commissioners in their respective States, and these will make recommendations to the Commonwealth Prices Commissioner, but the final decision as to the price of any commodity will rest entirely with the last mentioned.
– In view of the enormous advance of prices by the big emporiums throughout Australia, sometimes 100 per cent.-
– Order! The honorable member is giving information, not asking a question.
– I haveto give the information in order to ask the question. Does the Minister for Trade and Customs intend to take action against big emporiums which are charging for old stock prices which are 100 per cent. in advance of whatthey were before the war broke out?
– If the honorable member provides me with details of such instances, I shall take prompt and effective action.
– Does the Minister for Trade and Customs believe that it is necessary for the Commonwealth Prices Commissioner to have an advisory panel? If so, why is it that the advisory panel has been selected entirely from one section of the community? Why should not the Commissioner be advised before making his decisions, by bodies including representatives of the consumers and the trade union movement?
– I have already indicated that the Commonwealth Prices Commissioner has been charged by the Commonwealth Government with the responsibility of fixing fair and reasonable prices to the consumers. If he is to do that work properly and not in a clumsy and inexpert way, it is necessary for him to have assistance and to be able to consult with practical men who have specialized knowledge of trading practice and methods. I point out that, after all, the employee is also the consumer, and unless the Commonwealth Price Fixing Commissioner has full access to expert advice he cannot do full justice either to the consumer or to the employee, because he would create a condition of affairs which would very quickly result in a large increase of unemployment.
– I ask the Minister representing the Minister for Commerce whether the Government proposes to enter into negotiations with the British Government for the sale of fresh apples and pears to that Government, and also whether the Minister can give an assurance that consideration will be paid to the allocation of adequate refrigerated storage space for the shipping of apples and pears? No indication has yet been given that apples and pears will be included among the commodities for the disposal of which negotiations are taking place with the British Government.
– I shall place the representations of the honorable member before the Minister for Commerce.
– Inasmuch as Australiahas been pledged by the Government to prosecute the war to an unlimited extent and expense, will the Prime Minister, in the light of the present position and the changing conditions, take an early opportunity to state the objectives for which he proposes Australia shouldcontinue to fight?
– I do not know that I clearly understand what the honorable gentleman has in mind. Does he mean that I should take an early opportunity to state our general war aims?
– That is a proposition not unattractive to me, and I shall give it favorable consideration.
– In connexion with the Government’s scheme to acquire and market the wheat crop, I ask the Prime Minister whether press reports that an. initial advance of1s. a bushel is to be made is correct? Will the right honorable gentleman make a full statement in connexion with the acquisition and marketing of the wheat crop?
– So far as I know any statement which has been made concerning the amount of the initial advance is quite unofficial. I expect to be in a position to make an official statement concerning the whole of the matter to which the honorable member refers within a day or two or, certainly, within this week.
– In connexion with the extension of the period of camp training for the Militia from sixteen days to one month, I ask the Minister for Defence whether the terms of enlistment provide for such an extension, and whether attendance at camps for the extended period is compulsory?
– In a time of war a member of the Militia is liable for continuous service.
– Is it a fact that certain militia units have been instructed that as from the 1st November they will undergo training in each alternate month? If that be so, how long is it proposed to continue on that basis?
– No such instructions have been issued. The position is that half of the Militia Force will go into training for a month, after which the other half will undergo a similar period of training. Subsequently, there will be further training periods which have not yet been decided upon.
– I have received a letter from the West Maitland branch of the Returned Sailors and Soldiers Imperial League of Australia, stating that it has been advised that it is the intention of the Government of New South Wales to return to Consolidated Revenue all moneys held in trust in connexion with soldiers’ memorials. Has the attention of the Prime Minister been drawn to reports in the Sydney press of the 13th September attributing to the Premier of New South Wales the statement that the position regarding surplus patriotic funds raised during the last war was being examined with a view to bringing down legislation on the matter ? Will the right honorable gentleman say whether the Federal or State Governments have jurisdiction over these funds, and what is the intention of his Government in this respect? There is a fear in the minds of some returned soldiers’ leagues that such money will be confiscated and paid into Consolidated Revenue.
– I take it that what the honorable gentleman is referring to is the question of funds which were raised in relation to the last war and which still exist wholly or partly. If that is so, I shall make an inquiry into the matter at once in order to ascertain the position.
– As honorable members have not access to proofs of statements made by Ministers, and seeing that press reports of such statements are necessarily very often condensed, could you make arrangements, Mr. Speaker, for the distribution of an adequate number of such proofs to honorable members either in the House or in the respective party rooms ?
– I shall look into the matter.
Appointments and Promotions
– In view of press reports that the present sittings are likely to end this week, I ask the Prime Minister whether the Government intends to allow further discussion on Order of the Day No. 4 standing in my name on the notice-paper, referring to the appointment of a select committee to inquire into appointments and promotions in the Postmaster-General’s Department.
– As I indicated earlier, I propose to move to-morrow that private business should not be brought on this week, having regard to the state of public business, the only exception in this respect being in the case of three bills standing in the name of the Leader of the Opposition (Mr. Curtin). I had already made a promise to the Leader of the Opposition that an opportunity would l»e given to the House to deal with those bills, and I, of course, desire to redeem that promise. It would, therefore, appear that the matter standing in the name of the honorable member for Maribyrnong would not come on this week, but the Government has no desire to prevent the matter from being decided as soon as possible.
Government’s MILITIA Proposals.
– Can the Prime Minister reconcile his statement to the Deputy Leader of the Opposition on Friday that the text of his broadcast speech on the Government’s militia proposals would further engage the attention of Cabinet after the adjournment of the House that day, when at. 4 o’clock that afternoon, linotype operators in the employ of afternoon newspapers were busy setting up his pronouncement?
– That is a matter which I am busy trying to find out myself; when I find out, I shall have a talk with the honorable gentleman about it.
– Is the Minister for Trade and Customs yet in a position to make the definite pronouncement relative to assistance of the cotton industry which the honorable gentleman promised on Friday?
– I promised to make a statement this week; I assure the honorable gentleman that that promise will be redeemed.
– Has the Prime Minister considered the advisability of approaching the State governments with a view to obtaining cooperation so that Australian finance could be determined on a national basis, as was the case during the depression when the Premiers plan was formulated ?
– That was a matter upon which I had some discussion with the Premiers when they last met. I arn still in touch with them about it.
– Will the Minister for Civil Aviation consider an extension beyond the 7th October of the time in which applications for appointment to the Civil Air Reserve must be lodged, because it will take at least a week for application forms to be sent to some parts of Western Australia?
– That date was calculated to enable these forms to be sent to every part of Australia and to give a reasonable time for them to be returned. The forms have been sent by air mail to the officers in control of aerodromes in various part of Australia. I shall inquire into the matter raised by the honorable member.
– Is the Prime Minister able to .make a statement as to the intentions of the Government in regard to the Commonwealth Bank Bill? If it is not intended to proceed with that bill during this sessional period, can the Prime Minister indicate whether the Government intends to bring forward any alternative proposal to cover the same position ?
– I shall make a statement in relation to that bill, on the lines suggested by the honorable member, inside the next two days.
– I ask the Minister for Information whether one of the important matters discussed at his conference with representatives of the press and broadcasting authorities was payment, by the Australian Broadcasting Commission for the right to re-broadcast news from Daventry ?
– I shall deal with that subject in my statement tomorrow, but at this stage, I can say that the Australian Broadcasting Commission does not pay for British broadcast news.
Consideration resumed from the 15th September (vide page 6’70) on motion by Mr. Spender -
– 1 move -
Chat the words “ and gold- coin and wrought gold paragraph 1. be omitted with a view to insert in lieu thereof the words “from any place not being a territory under the authority of the Commonwealth of Australia nml gold coin, and gold and gold alloys which on view have apparently been worked or manufactured for trade purposes, and the waste products arising from the working and manufacturing of gold and gold alloys for trade purposes (in these resolutions referred to as “wrought gold”) “.
The purpose of the amendment is to make clear that there is to be no exemption in respect of gold imported from New Guinea or any territory of Australia, and also to emphasize the desirability of defining wrought gold in such terms as to permit of no evasion of the intentions of the bill.
– I take it that the amendment really amounts to the substantive proposals put forward by the Assistant Treasurer (Mr. Spender).
– That is so.
– This whole proposal is one to tax price. It is not a profits tax. It will work rather anomalously from the point of view of the great multiplicity of companies and interests associated with the production of gold in Australia, in that, despite this tax, some companies will be able to show that they can carry on very profitably, whilst a number of other companies and mine operators will be able to show no profit at all because of this tax. The principle implicit in the tax is one which has been evolved because it is said that the price of gold now compared with what it was a while back is entirely due to the state of war, and therefore it is a fair thing that the costs of war should be met out of the advantages which war confers. Prima facie, there is much to be said for that, but does this Government stand for that principle? The answer is “ yes “, in respect to gold. But is it so in respect of sugar, base metals and the salary lists? I find that already a state of war has warranted the appointment of certain persons to the Commonwealth Public Service and that these persons are now being paid salaries higher than those which they received before they were recruited to the Commonwealth Public Service. It can be argued, of course, that these people will have, to pay higher income tax on their higher salaries, but all interests associated with the goldmining industry will, as individuals, have to pay higher rates of income tax and will be in the same category. The principle here is that prior to the war, the price of gold in Australia was a certain amount, so that every increase arises from the state of war, and the resolution proposes to take 75 per cent, of that increase. I could accept that principle provided it was applied not to one industry or one product, but to the whole field of production. To single out gold and exclude base metals and other primary products and manufactured products appears to me to be applying a perfectly just principle in one case and refusing to apply it over the whole field of economic life. I am quite certain that the Government has no intention whatever of applying the tax to sugar, base metals, potatoes, onions, boots, shoes, or any of the other commodities the prices of which, in the very nature of things, are bound to increase for causes which will either be war causes, or will have arisen, indirectly out of the war, from some causes which can be said to be unavoidable. The price which gold brings in Australia represents no exploitation of any persons in Australia. The increased price of gold is not profiteering. Nobody in Australia has been treated unfairly or has been subjected to any hardship as the result of the increased price of gold. The Government has no reason to use gold as a raw material or for any other purpose. The note issue now is in effect secured by sterling. If people like to buy gold then they can buy it, but individual transactions in respect of gold in Australia are in an entirely different category to the purchase of necessaries of life or of essentials for the carrying on of industry. It has to be acknowledged, therefore, that the principle is to be applied only in the case of gold. This is not a commodity tax; it is described as a gold tax. One of the advantages which Australia ought to enjoy, having regard to our raw materials, &c., will be defeated by this programme. It would be to the advantage of the Government immediately, and in the years ahead, if the production of gold in Australia were substantially increased. As a matter of fact, our national solvency has depended a good deal during recent years on the fact that gold production has increased.From 1903, the production of gold declined annually until 1929-30. We produced over 3,750,000 fine ounces of gold in 1903, whereas production in 1930 was only 440,000 fine ounces, and the gold mining industry was in a very serious state. Then Parliament granted a bonus on gold production, and in that very year, and entirely because of the increased confidence in the future of the industry, production began to increase. It must be remembered that even1s. an ounce, let alone a £1, sometimes represents the difference between a show being worked and not worked, and the granting of the bonus had the effect of bringing into production many shows which would otherwise have remained unworked. In the first year of the bonus production increased to 509,000 ounces, and during each succeeding year it has increased by approximately 100,000 fine ounces. In 1935-36, we produced over 1,000,000 fine ounces; in 1936-37, 1,250,000 ounces; in 1937-38 nearly 1,500,000 ounces, and in 1938-39 over 1,500,000 ounces. Last year, the value of Australia’s gold production in sterling was £11,600,000, and in Australian currency £14,500,000. What would have been Australia’s financial position but for this increased gold production? Only by the export of gold has our overseas trade account been balanced. Last year we were down in respect of merchandise in that imports exceeded exports by nearly £2,000,000, and it was only the export of specie and bullion to the value of £12,300,000 which gave us a net excess of exports of a little over £9,000,000. The London balance was drawn on heavily even then, because that excess was not enough to discharge our overseas liabilities.
– It was only a little more than a third.
– That is so. For the present year the excess of exports over imports for merchandise was only £540,000, but there was an excess of £11,300,000, including specie and bullion. For the last two years, the value of gold exports, amounting to £23,600,000, was all that prevented our Australian economy from being seriously impaired. But for two things, the granting of the bonus on gold production and the departure of Great Britain from the gold standard, gold production in Australia would not have increased above the 1929 level. At £4 5s. an ounce the Australian gold-mining industry could not pay. Production was shrinking year by year, but since the abandonment of the gold standard by so many countries, the industry has been rejuvenated. While it is true that threequarters of the gold produced in Australia is mined in Western Australia, which derives a special advantage from that fact, Australia as a whole has derived an important advantage also. I have here the official figures showing the average
London price for gold per fine ounce, and the Australian export parity price for recent calendar years. In 1938, the London price was £7 2s. 7d., while in 1935 it was £7 2s. Id. For the first six months of 1939 it was £7 8s. 6d., London price, which, converted into Australia currency, gave an export parity price of £9 3s. 4d. It must be acknowledged that this price of £9 3s. 4d. was not in any way due to the outbreak of war, but was due to the departure of so many national currencies from the gold standard. The Australian1 export parity price of gold in 1934 was £S 9s. id. over the whole year. Now, according to the motion moved by the Assistant Treasurer (Mr. Spender), any price above £9 is to be regarded as entirely attributable to the war; yet, for the whole of 1938, the average export parity price was £8 16s., and in 1937 it was £8 13s. 9d. It must be realized that at whatever figure the Government fixed the tax - even if it were fixed at £10 10s. an ounce - the result would be that certain shows which otherwise could be operated profitably would have to go out of production.
– They are the marginal shows.
– Yes, and they are very important to Australia. There are several of them at Tennant Creek, and others in Western Australia. The men and women associated with the goldmining industry ought to have a better return for a. day’s labour than the men and women carrying on their avocations in the centres of population where they are able to enjoy all the comforts and amenities of life. In Western Australia 700 gold prospectors are being supported by the State Government. These men secure 2, 3 or 4 ounces a month. If they win, say, 2 ounces a month, at the present price for gold they would get £21, of which amount the Government now proposes to take £3 by way of tax, so that their earnings would be about £18 a month. But in that State there are 300 other prospectors who are not supported by the Government - men who go out “ specking “ for gold. These men, I venture to say, may be regarded as the cream of Australian manhood. Instead of hanging about the cities waiting for somebody else to find them jobs, they go out searching for gold and, in doing so, put up with a great deal of hardship. It is estimated that in the various States about 2,000 men are earning a living in this way, and the Government proposes to apply to their earnings a tax which, on the face of it, I regard as just, but to be just it should be applied to all other situations that have arisen as the result of the emergence of a state of war. Unless this course is taken, the gold tax now proposed becomes a special tax and an anomaly, because it will be applied to only one commodity. From the point of view of companies, the tax will, I believe, operate unjustly, because some companies can show high profits with gold at £9 a fine ounce owing to the relative richness of the ore body worked and the comparative economy in treating the ore, whereas other companies working low-grade ore bodies will require a much greater tonnage output and will incur consequent higher expenditure to show the same rate of profit. It would not be right, as I see it, to operate the tax in the way proposed. [Leave to continue given.] Some companies can show a better relative position than other companies with gold at £9 an ounce. This applies particularly to two large low-grade propositions in Western Australia - one at Wiluna, and the’ other, which the Government of Western Australia has recently assisted by the construction of a railway line from Cue to Big Bell. These companies have to treat an enormous quantity of ore in order to show a profit on their operations. I venture to think that, but for the enterprise of such companies, a great number of Australians now employed in the gold-mining industry would have been forced to maintain themselves in some other avocation, and the nation would have been deprived of the £20,000,000 worth of gold that has been exported within the last two years, which has been an important factor in the rectification of our’ trade balance. If the price of gold rises to £11 lis., it is obvious that there will be a greater increase of gold production, and the Government will receive much higher revenue and greater advantage from this tax. In the first place, it will be in possession of the requisite funds for the purchase overseas of its requirements, and for which other exports might not be sufficient. Furthermore, we know that many countries have declared their neutrality in the present conflict. Obviously for any commodities which they may sell to us they would prefer payment, not in manufactured goods, but in gold. In all probability they would not want to import manufactured goods, and as we shall be fighting perhaps for our very existence as a part of the British Commonwealth of Nations, we shall have to conserve all of our raw materials for Empire needs. Thus gold will be in demand. So I suggest that, although this tax on gold may prima facie appear to be fair, it may prove to be a blow at the gold-mining industry and injurious to the Commonwealth, in that it may not encourage an increased production of gold by the opening up of shows that would pay if the price rose to £11 lis., or if it remained at to-day’s price, £10 10s. Since the outbreak of war the price has risen very sharply. In August the price was £9 8s. 7d. an ounce.
– No; it was £9 5s.
– There is a discrepancy between the figure which was given to me and that mentioned by the Assistant Treasurer, although presumably they both came from the same source. I obtained my information from the Commonwealth Statistician. I understand that the Assistant Treasurer obtained his from the Commonwealth B’ank. My figures relate to the average prices for each month, whereas the figures supplied to the Assistant Treasurer were the prices ruling from day to day, and I suggest that mine present a more realistic statement of the facts. As I have said, the price given to me by the Commonwealth Statistician was £9 8s. 7d. Australian export parity for August. The Assistant Treasurer has argued that 8s. 7d. of that price was due to the outbreak of war. Well, what about the prices for base metals? Every honorable member knows that they have risen, and as a result of the increased demand, further advances are likely. In August last, the price of copper was £70 ls. 3d. for electrolytic wire bars delivered Melbourne in lots of over five tons. On the 15th August, 1938, the price was £65. Because of the re-armament boom, there has been a strong demand for all base metals, and as the result the price of copper has gone up.
– The present price is not abnormally high.
– I am not saying that it is. I am simply showing that prices for base metals have risen because of the imminence of war or the outbreak of war. I accept the principle embodied in this proposal if the intention is to take the
Avar as the datum point and apply it over the whole field of production,-
– That could not be done with some commodities.
– That was because some were not even profitable at the outbreak of war. An- investigation of the gold-mining industry would disclose that, although some mines were operating profitably, the management was not able to build up reserves ; others were just able to pay their way.
The great difference between the Australian gold-mining industry and the goldmining industry in South Africa and Rhodesia is this: For a long period of years the industry in South Africa has been able to exploit cheap coloured labour under the protection of a government that came into power as the result of the waging of a brutal and unjust, war. The Johannesburg mining magnates, after driving out their own elected government, owed much to the government which was then set up for having given to them the kind, of mining conditions that made great profits possible. I do not suggest that in other countries mining companies do not use black labour, but the conditions which Kruger imposed on the mining magnates of Johannesburg were regarded as intolerable. Therefore, they were instrumental in creating conditions which led to the Boer War in order to take away from the Boers the power of government and control over the mining industry. That is the real economic gravamen of the South. African War. There ought to be, as between the gold-mining companies in South Africa and the Government of that country an acknowledgment that their -present favorable position is due to the fact that they have a special place in the whole economic and governmental system of South Africa. The second point is, that they are able to have thousands of kaffirs in compounds, with the result that, despite the great duty, their mining costs, on the basis of each ton of ore treated, are a mere fraction of the costs in Australia.
– Generally, their ore bodies are richer.
– That is so. Altogether, their circumstances are more favorable. Another factor which operates in the interests of the South African mining industry, and must therefore be taken into account, is that the Union has remained on the gold standard. Once a country goes off the gold standard, as Australia did, prices rise. When we talk about the increased price of gold as a yield, let us not forget that exchange has added 25 per cent. to the costs of the mining industry in Australia, as well as giving to that industry an extra 25 per cent. in Australian currency; it cuts both ways.
– In respect of what?
– All Australian costs have advanced by 25 per cent.
– Not internal costs.
– They have. If the honorable gentleman will look at the reports he will discover that all of our importers have to pay sterling in London, the exchange rate in Australian currency being 25 per cent. Our internal cost has been raised.
– By 25 per cent.?
– I venture to say that the greater part of the original advantage has now been overtaken. Raising of the exchange rate was an immense immediate gain to exporters. One of the purposes of going off the gold standard was to standardize prices and prevent them from falling. That was immediately reflected in the economic life of the nation by the raising of internal prices, not only of raw materials, but also of all other commodities. Wages did not move as quickly; had they done so, costs would have mounted more rapidly than they did. In every arbitration court, the employers are talking about rising costs. That is not due to the scarcity of materials.
Western Australia will regard this tax somewhat critically. It will say “ We have the wheat industry, which is unprofitable, and the wool industry, which is doubtfully profitable. We have a great body of iron ore, which you would not allow us to sell anywhere. You would not even give to us a quota of the Australian market for iron ore. What have we left? We have comparatively no secondary industries; they cannot compete with secondary industries in the other States. Here is the one industry which has kept the State going; it has veritably been our spinal column during the last five or six years, and now the Government subjects it to a special levy. This sort of thing is not done to the sugar industry in Queensland, or to the important secondary industries in Melbourne and Sydney. You simply say that, because we happen to obtain a higher price for gold, it is immoral for us to make profits out of war conditions “. I agree that it is ; but if there is to be a tax on prices, let it apply to all. The fairest way is to tax all profits. I know that the argument of the Government is that that would mean delay in the collection of the revenue.
– And difficulty in determining what are the profits, because they may be hidden.
– I agree with that. Under the War-time Profits Tax Act, almost insurmountable difficulty was experienced in determining what were excess profits. The Government is determined to make certain that the goldmining industry shall not make these profits, but does not propose to impose similar precautionary taxation on other industries. The workers of Kalgoorlie have an award which prescribes that, for every major part of 10s. by which the price of gold exceeds £9 a fine ounce, they are to receive an extra 4d. a shift. Thus the Government proposes to deprive them of1s. a day.
– It is perfectly certain that the wage will be re-adjusted.
– Of course. Although the Government is taxing the companies, the real effect of the tax will be to deprive the miners of Western Australia of1s. a day; because, if a company were to get to-day’s ruling rate of £10 10s. a fine ounce, the wage would rise by three times 4d. for each shift. I know that the Government must raise money; but I contend that it would act much more fairly if it taxed profits. I expect from it a consistent policy, not one that is productive of anomalies. In time of war, sacrifices should be general; there ought not to be exceptional taxation of some and taxation of far less severity on others.
.- When the announcement was made of this withdrawal of a substantial proportion of the profits being derived by the gold-mining industry, the proposal was accepted as a rather bright idea of the Treasurer. At first sight it seemed fair that any profit arising directly, or even indirectly, from war conditions, should be subject to a large measure of taxation for the purpose of meeting the expenses necessarily incidental to the prosecution of the war. But when the proposal is examined from the point of view of the gold-mining industry, it becomes clear that such an arbitrary method of imposing a levy equivalent to about 15 per cent, of the gross profits of production, will operate unfairly. Therefore, it is proper that the Treasury should reconsider the matter with a view to reverting to the practice of taxing profits that has always obtained in the past. Taxation of net profits places the burden on those shoulders that can best bear it. That is the only fair and logical form of taxation, and. I cannot see any reason why the Government should have departed from it as a general principle in order to place a special impost on gold production. After all, gold-mining is a hazardous industry, in which there are more speculative losses than occur in ordinary forms of industry; consequently there is good reason for saying that those who derive some success from it should be exempt from severe taxation. The profits of gold-mining companies vary to a greater degree than do those of normal industries. When we talk of gold-mining companies, we are disposed to think only of those large concerns which will earn enormous profits by reason of the increased price of gold ; but for every one of those successful companies there are many other smaller, struggling, unsuccessful companies, the majority of which go to the wall and are not heard of again.
There is also a large number which struggle on, hoping for success. This sudden accretion of value would have given to them that little extra income which would have made their operations profitable, but without it they will still be liable to all the hazards incidental to gold production. I shall cite the instance of a fairly good company which is characteristic of goldmining companies generally. It incurred liabilities aggregating about £15,000 for bona fide developmental work. Only recently has it passed the developmental stage and reached the stage of production. Last month, for the first time, it came into full production, and its output was about 400 ounces of gold. On the basis of £10 10s. a fine ounce, its profits this month would be £900, but on the basis of £9 5s., as is proposed, they would be reduced to £500, so that at one stroke the company’s first real profits are to be almost halved. That is a very substantial amount to take from any concern ; i t does not bear a fair proportion to the taxes levied on other industries. Not all of the price in excess of £9 an ounce is increased profit. War has enhanced the value of gold, but it will also increase the costs of cyanide, fuse, fuel, machinery and supplies - which constitute a very large proportion of the outgoing of gold-mining companies, especially those that are operating lowgrade propositions. The management of this company states that its outgoings last month to win the gold that it produced amounted to £3,300, and it estimates that, as the result of the war, its working costs will be increased by at least 10 per cent., representing an additional outlay of £330, which will absorb the greater portion of its profits if the Government takes the percentage proposed. I admit that a considerable portion of the large profits made by some gold-mining companies should be taken by the Government for the purpose of prosecuting the war, but I contend that it is grossly unfair to select gold-mining companies for a special form of treatment which has never been applied to other companies. During and subsequent to the last war, the War-time Profits Tax Act operated. I support that principle of taxation. The proposal that we are now considering represents a roughandready blue-pencil method similar to that used some time ago in connexion with the fixing of tariff duties. We then roundly condemned it. It is unscientific and illogical. It is merely a bright idea of the Treasury, and will not work out fairly. For that reason, the Government should not hesitate to apply the same principle of taxation as is applied to all other industries.
Let us compare the gold-mining industry with other industries that will derive an advantage from this war, as they did during the last war. The iron and steel industry of Australia is likely to make immense profits out of the upheaval. I should like the Government to be equally active, if it intends to be active at all, in seeing that the profits of that industry, in common with those of all other industries which are enhanced on account of war conditions, contribute a fair share to the revenues of this country. I see no good reason why gold-mining, which is one of the most precarious occupations, should be selected for special taxation, and an exemption granted to other big industries, many of which will doubtless make large profits out of this war, as they did in the years 1914-1918. I contend that the same principles should be applied to gold-mining as to other industries. The Western Australian people have a special reason for dissatisfaction with this proposal, and I think that .the fact that a more general protest has not been heard from them is a tribute to their patriotism. Western Australia produces over 70 per cent, of the gold won in Australia, and to that extent will be penalized by comparison with the other States. The Assistant Treasurer estimates that the proposed gold levy will yield tax to the amount of £1,500,000. of which Western Australia will contribute over £1,000,000, the other States nearly £300,000 and New Guinea about £200,000. On the one hand, there is a proposal to pay to Western Australia a Commonwealth grant of about £600,000, and on the other hand it is proposed to impose upon that State a charge which will more than outweigh the advantage that it will receive from the whole of the Commonwealth grant.
I realize that a measure of this kind should not be considered merely from the point of view of a particular State, but it is singularly unfortunate that war conditions should impose a heavy penalty upon Western Australia. It has been deprived, on account of international conditions, of the right to utilize its resources of iron ore, and now it is to be called upon to meet a special tax because the greater part of the gold recovered in the Commonwealth happens to be obtained in that State. The effect of the tax on Western Australia contrasts sharply with the announcement in the newspapers concerning the deal that the Government has been able to complete with the British Government for the sale of Queensland sugar. Whilst there will be a £1,000,000 price enhancement to the Queensland sugar industry, the Western Australian gold-mining industry will lose £1,000,000! These matters should be given due consideration, and I hope that the Government will reconsider the present proposal. I agree that the goldmining industry should bear a substantial share of the burden of taxation, but I consider that under this proposal it is to be penalized by a quick and somewhat haphazard method of taxation.
, - The proposal brought forward by the Assistant Treasurer (Mr. Spender) contains a rather novel feature. It was submitted on Friday afternoon when some members, in strict accordance with the custom of this place, had departed for apparently happier surroundings than they are able to find in Canberra. The motion is set down to-day as the first item of Government business, and I suggest to the Assistant Treasurer that many members of this committee have not had an opportunity to study the matter in all its implications. Therefore, I think that the Government would be unwise, to press the measure unduly this afternoon. In my opinion, it would receive a more sympathetic hearing to-morrow afternoon, after honorable members have had an opportunity to sleep on it, than it is likely to receive to-day. Naturally one expects an industry such as gold-mining to be looked upon, as it has been regarded in the past, as a fair mark for a few clippings on the part of His Majesty’s Government when it is in straitened financial circumstances, as it is on this occasion. The alacrity and speed with which the Assistant Treasurer has alighted upon this industry shows that he must be fairly well acquainted with the financial methods of some of the great men of the past, from King Henry VIII., back to the time of Nero, who had effective ways of balancing the budget.
The speeches by the Leader of the Opposition (Mr. Curtin) and the honorable member for Perth (Mr. Nairn) contained some pertinent observations. I regret that my two Country party colleagues, the honorable member for Swan (Mr. Gregory) and the honorable member for Forrest (Mr. Prowse), both being in hospital, are unable to take part in this debate, because I have no doubt that they would have some forceful observations to make on this measure. I understand that the Assistant Treasurer made no comments on this measure in submitting it to the House, but, later, it will be necessary for him to do so.
– I shall be willing to do that.
– If the principle is to be established that, on account of the increase of the price of gold being attributable to the war, three-fourths of that increase is to go to the Government, I should like the Minister to tell the committee whether the Government intends to apply that principle all round. If it does, I think that members of all parties would like to give the matter consideration in their party rooms; I doubt whether any of them have done so up to the present time. The rather interesting question also’ arises as to whether, in the event of this motion being agreed to, the Government will exempt the gold-mining industry from any levy under its income tax proposals.
– It is now exempt from Commonwealth income tax, and the Government does not intend to impose double taxation on the industry.
– The Minister’s reply clears up that matter. Other commodities are likely to he affected, but not to the same degree as gold.
– The prices of the other commodities will be controlled.
– That is a pertinent point. I suggested to the Assistant Treasurer on Friday afternoon that, perhaps, rather than impose a tax of 75 per cent. on the amount by which the price of gold exceeded a certain figure, it would be better to effect a straight-out purchase of the gold. Then, obviously, the price would be fixed by the Government and maintained at that level.
– That would not get over the difficulty raised by the Leader of the Opposition.
– No. Some of the arguments used in regard to increasing costs and marginal shows will hold just as well whether a 75 per cent. tax be imposed, or the gold be purchased by the Commonwealth Government. Some time ago the suggestion came from persons interested in the wheat industry that, in certain circumstances, they would be prepared to give up three-fourths of the increase of the price of wheat beyond a certain figure; but that was not on all fours with the present proposal because it was a voluntary offer, but I have strong suspicion that if the voluntary offer had been called for there might have been one or two slackers in that industry. I do not know of any other proposal of this kind having been placed before the Commonwealth Parliament. I have no desire at this stage to hold up the consideration of this motion, but I plead with the Treasurer to adjourn the discussion until to-morrow.
– I should like to meet the wishes of the honorable member if I could, but it is urgently necessary to pass this measure, so that the tax may be collected by the Commonwealth Bank.
– The war also is an urgent matter, and there are many things which I should like to see the Commonwealth Government doing, but which it is not doing. This measure is not of such great urgency that the vote could not be deferred until tomorrow. In any case, the measure can not be received by the Senate until tomorrow, as that chamber does not meet until 3 p.m. I suggest that the Senate will have certain matters to deal with before this measure comes before it, and therefore the greatest progress would be made by proceeding with a little less speed than usual.
– I register my protest against the proposed tax on gold, because, whilst it may seem a harmless impost, it will penalize some of my constituents. I refer particularly to the gold miners at Tennant Creek, whose charges at the Government battery are met in weights and not in cash. Loud praise of this proposal appeared in the press this morning. I am wondering why Mr. T. G. Murray should be praising this form of taxation. I think that his efforts could be better directed to returning to the Northern Territory, where Commonwealth money helped to finance him in some of his mines, and paying his debts to people in the territory. I have asked what has become of the company at Golden Dyke subsidized by the Commonwealth, and I have had no information from the Government or from the Minister for the Interior (Senator Foll) - the Minister in alio loco.
– Order! The honorable member must confine his remarks to the question before the Chair.
– It is difficult for me to place my views before the Minister for the Interior, since he does not occupy a seat in this chamber. Whilst some of the mining shows at Tennant Creek are “jewel shops”, yielding from 3 to 5 ounces to the ton, there are marginal shows occupying an area of about 30 miles square, which have great possibilities if costs are reduced, but return only from 8 to 16 dwt. to the ton. It is well known that in Western Australia prospectors earn a good living on8 dwt. shows; but, as the Leader of the Opposition has pointed out, bigger shows such as Big Bell and Wiluna are carrying on at a bare profit with a yield of 4 dwt. because of the large tonnage of ore they are handling, and, if this tax be imposed, it will certainly penalize them heavily. Tennant Creek is an isolated area that necessarily had to he developed by means of government batteries. A charge of 12s. 6d. a ton is made for crushing, and gold-miners will now be further penalized. According to the returns of a man who had his ore from an 18 dwt. show treated, the charges imposed by the Government were equivalent to approximately 6 dwt., 2 dwt. being for treating the sands. He was justified in considering the charge exorbitant. The additional impost of 22s. 6d. a fine ounce now proposed will penalize gold producers still further and retard development.
– What does the honorable member mean by 2 dwt. for sands?
– A price of £10 an ounce represents 10s. a dwt. There is a charge of 12s. 6d. a ton for crushing and a charge equivalent to the value of 2 dwt. for treating the sand. Further, a skilfully devised sliding scale based on the richness of the ore deprives gold producers of 4 dwt., which together with the 2 dwt. for sands treatment makes a total deduction of 6 dwt. a ton in respect of a show producing18 dwt. ore.
Mr.Scullin. - Does the honorable member suggest that the Government takes that?
– It does, as treatment charges. I have given the charges imposed at the government batteries, and this will be a further impost. If the Government persists in imposing this tax, against which I strongly protest, I ask that the Minister for the Interior (Senator Foll) shall take it into consideration in fixing the battery charges made for treating ore at government batteries, so that dwts. shall not be. deducted as treatment charges.
.-I am indeed surprised that the Government should impose this tax on the goldmining industry, particularly as it is totally different from any other tax previously imposed. I defy the Assistant Treasurer (Mr. Spender) to mention one instance in which the price of a commodity has been the basis upon which a tax has been founded. It has been shown quite clearly by previous speakers that the tax is unwise and unwarranted, and that the procedure adopted is most unusual. The Government has apparently looked around in the most casual way in an endeavour to ascertain additional sources from which revenue can be obtained, and because it thinks that large profits are being made by those engaged in gold-mining, it now proposes to commandeer 75 per cent. of the amount by which the price of fine gold exceeds £9 an ounce. The tax, which is unfair and ill considered, is to be imposed, not only on the gold produced in Australia, but also on that obtained in Papua and New Guinea. If the Assistant Treasurer (Mr. Spender), who apparently knows nothing concerning gold production in those territories, will refer to the New Guinea Year Book for 1937-38, the latest available, he will find that the production of gold in New Guinea in that period totalled 410,058 ounces, the value of which, at £5 an ounce, was £2,028,980. Although the Bulolo mine, which is the largest gold mine in New Guinea, showed a profit of £600,000 last year, the Government will be unable to tax that company because New Guinea gold is worth only £5 an ounce.
– Why is New Guinea gold worth only £5 an ounce?
– It contains a large percentage of silver and other minerals.
– It is not fine gold.
– No. Apart from two large mines the quantity of gold obtained in New Guinea is relatively low. During the same period the Mesima gold-mine in Papua produced about 35,386 ounces which was sold for about £75,000 or approximately £21s. an ounce. The price of gold obtained from most of the mines in Papua and New Guinea would have to be about five times greater than its present price before the Government would be able to gain any revenue from this impost. The big Bulolo gold-mine is conducted largely with foreign capital. Had the Government given attention to the conditions under which gold is produced in Papuaand New Guinea this ill-considered scheme would not have been submitted.
– The mineral will be assayed and the tax paid on the fine gold content.
– The tax will be paid on the fine gold.
– The interests of the Assistant Treasurer, who knows as much about gold-mining as a dog knows about his grandfather, are confined to Sydney, and any government submitting such a proposal must be entirely out of sympathy with those engaged in gold-mining. Apparently the Assistant Treasurer is not aware that during the last two quarters the gold production of Australia has decreased by 64,000 ounces as compared with last year, and if this continues the value of gold produced during the remainder of the year will be reduced by £1,280,000. The gold bounty provided by the Scullin Government assisted the gold-mining industry by increasing development. Skilled men were brought from the United States of America, Great Britain and other countries, and a new gold-mining technique was introduced to such a degree that whereas the Golden Mile 10-dwt. ore was unprofitable, under improved methods 3½-dwt. ore could in some instances be treated at a profit. At the Wiluna gold-mine £1,500,000 was expended on plant, and the services of the best goldmining experts available were secured before gold had risen to a very high price. A considerable portion of the Wiluna mine yields less than3½ dwt. of gold a ton of ore treated, and that company and other mining companies may be forced to close down if this impost becomes effective. Commercial undertakings in Sydney or in other centres cannot carry on if they do not show a profit, and it is unlikely that gold-mining companies will be able to do so.Gold-mining is carried out largely in the more remote parts of the Commonwealth, and cannot continue at such places as Tennant Creek, Kalgoorlie, and Wiluna indefinitely if this heavy tax be imposed. At Wiluna, which is 700 miles from Perth, 900 men are employed and a town with a population of between 5,000 and 6,000 persons has been established. It is unreasonable to provide that the Government will take 75 per cent. of the amount by which the price of fine gold exceeds £9 an ounce. Immense profits were not made in goldmining during the previous war, because the gold was commandeered by the Commonwealth Government at £4 4s.11d. a fine ounce. The Government is now having a tilt at a big industry in which those representing city constituencies are not concerned. As gold production is steadily decreasing, I should like to know why this additional burden is being placed upon the industry. The Government would be justified in imposing a tax on the profits derived by those engaged in gold mining, but the tax should not be based on the price of gold. Although we are told that a determined effort is being made to prevent profiteering, we do not hear of any revolutionary proposals to seize income such as is being done in this instance. Prior to the introduction of a gold bounty, only two of the twelve gold-mines in operation in Western Australia were showing a profit, and that was only £2,000 a year each; all the others were on the point of closing down. The chairman of the Chamber of Mines in Western Australia at that time forecast that the industry would eventually become moribund. In order to encourage gold mining in Western Australia, 700 unemployed were sent out by the Government, some of whom were unskilled. Prospectors, who were paid 20s. a week, were provided with tools, and in consequence the increase of production was considerable. The quantity of gold actually obtained was relatively small, but important discoveries were made. Many of the older prospectors, but for this encouragement, would have had to apply for the old-age pension. These men do not want the pension so long as they can exist and be given a chance of making a discovery, but if their earnings are reduced they may be forced into the ranks of the old-age pensioners. The effect of this impost will be especially felt in Western Australia, the Government of which has remained solvent only because of the dole handed out each year by way of a grant in aid by the Commonwealth Government. If this proposal be enacted, the Commonwealth will put a pound into one pocket of the States and take 30s. out of another.
The Western Australian gold-mining industry will have to contribute in one year approximately £1,000,000 of the total of £1,500,000 which the tax is estimated to yield. It cannot be said that the gold-mining companies in that State are making exorbitant profits. At present they have an arrangement with their employees under which extra wages are paid in respect of all gold won which brings more than £9 an ounce. To-day, with the price of gold at £10 10s. an ounce, the additional payment to the employees under that arrangement amounts to 6s. a week. It may be asked why these employees should receive extra wages. I do not propose to argue that aspect of the matter, except to say that I should like to see every possible filip given to the gold-mining industry, which in past years has suffered badly. I have already mentioned that before the rise of the price of gold took place, only two mines on the Golden Mile were making profits. When the industry was experiencing bad times, the Arbitration Court, realizing that no industry can pay outmore than it produces, fixed the wages of miners at rates which the industry could afford to pay. Some workers engaged in the industry at one time received as low as11s. 2d. a day. Gold-miners accepted wages £3 a week less than were paid to those engaged in the metalliferous mines of Broken Hill because they knew very well that unless they agreed to do so, many of the gold-mines would be forced out of production. In view of that, now that the price of gold has been increased and rates of pay have been raised proportionately, is it fair to question the wages paid in the industry ? It must be remembered that the gold-mining industry is carried on mainly in remote parts of the Commonwealth, where people have few of the amenities of life. [Leave to continue given.] When the mining industry was in the doldrums, miners were receiving as little as11s. 2d. a day at places where milk cost la. a tin and fresh vegetables were almost unprocurable. The sacrifices which they made in earlier years should not be forgotten to-day. Every encouragement should be given to the search for new fields. The successful development of the industry in Australia will depend on the working of great bodies of low grade ore. The Big Bell mine is able to treat successfully ores showing 3-dwt. ore, whereas previously 10 or 12 dwt. was regarded as the minimum. It is necessary to try out the treatment of these low grade ores in order to attract capital from London. The Government should take adequate steps to prevent the existence in this country of promoters who float companies to work “ dud “ shows whose operations have done nothing but harm to the industry. The only way in which prospectors can be encouraged in the search for gold outback is by the payment of a. subsidy. Very few old fossickers average an income equal to the £1 a week that is paid to the 700 subsidized prospectors sent out by the Western Australian Government: but they are eontent so long as they are able to keep themselves in food and have even a remote prospect of finding gold. We all know the lure of gold. Everything should be done to encourage the gold-seekers. Under this proposal, of every £1 by which the price of gold exceeds £9, they will be required to pay 15s. The result can only be to discourage those who otherwise would put their money into gold-mining ventures. This proposed tax deals a severe blow to Western Australia, which depends mainly on the support of two industries, first, the gold-mining industry and, .secondly, and to a much smaller degree, the wool industry. Wheatfarming is not profitable at the moment. Western Australia, derives no benefit from the protectionist policy of ,the Commonwealth. We do not complain, of that, nor do we complain of the fight that Western Australia has had to put up against the organized industries of the eastern States and the fact that for every £1 worth, of our goods accepted by the eastern States, we take exchange manufactured goods to the value of £6. We recognize that when Western Australia has a larger population its secondary industries will develop. I have always advocated a protectionist policy in this country; but I believe that the Government would do well to reconsider its decision to impose a tax which will deal such , a shattering blow to the largest industry in Western Australia, and instead of the proposal now before us, will levy a tax on profits only.
.- I support this proposal to impose a tax of 75 per cent, of the amount by which the price of gold exceeds £9 a fine ounce. Solely as a result of the war, the price lias risen to £10 10s. an ounce. This special increase is a windfall. A few years ago gold was worth only £4 8s. 9d. a fine ounce; the sudden increase has been brought about by war or international unrest. I rise mainly to draw attention to some observations made by the honorable member for Perth (Mr. Nairn), whose statements regarding the sugar industry of Queensland cannot be allowed to go unchallenged. The honorable member ha-s said that, as the result of the agreement concluded with the British Government for the purchase of the. surplus of Australian sugar, a profit of £1,000,000 will accrue to the Australian sugar producers, and he endeavoured to draw a parallel between that profit and the unearned increment of the gold-mining industry. He claims that £750,000 of the £1,000,000 of alleged profit on the overseas sale of sugar should be paid to the Commonwealth Government as a special war tax as in the Case of gold. The fact seems to have been conveniently forgotten by the honorable member for Perth that, during the last, war, the sugar industry made a larger contribution to national security than did any other industry in Australia. Whilst, the overseas price of sugar went as high as ls. 6d. per lb., the Australian price was limited to 6d. per lb. In 1915-17, the average price for sugar in Australia was £18 a ton, and in 1917-19. £2.1. a ton. Thus, for the whole period of the war, the average price of sugar in Australia was £19 10s. a ton. In the early years of the war, the overseas price of sugar was £16 10s. a ton, and towards the end of the war it rose to as high as £137 10s. a ton. There was a shortage of sugar in Australia during the war and two .consignments purchased overseas were priced at £44 a ton and £59 10s. a ton respectively. This sugar bad to be sold in Australia at the restricted local price of 6d. per lb., with the result that a loss of £4,000,000 was incurred. Had the Australian industry been able during the last war to take advantage of the. overseas price for sugar, it would have made a profit of £16,000,000. The loss of that money because of the fixed price of sugar was one of its contributions towards national security. The average price of Australian sugar last year was only £15 6s. a ton. The agreement with the British Government concerns only”290,000 tons out of a total production of 840.000 tons, and will show an advantage to Australian producers of only £500,000, instead of the £1,000,000 mentioned by the honorable member for Perth. The agreement will result in an increase of the Australian price from £15 6s. to £16 a ton for this year’s crop. In the years 19.1.5-19, the average price received for raw sugar was £19 5s. a ton, Thus it will be seen that even with the enhanced price growers will receive £3 5s. a ton less than the average price obtained during the last war. In addition, wages are now very much higher than those paid at that time. These figures show that there is no parallel between the sugar industry and the gold-mining industry. It is clear that the honorable member for Perth has no knowledge of the history of the sacrifices made by the sugar industry during the last .war. He conveniently forgets that the sugar industry pays all taxes, whereas the goldmining industry pays no taxation at all.
.- I must admit that when I first heard this measure explained by the Assistant Treasurer (Mr. Spender) it appeared to me just and equitable that a tax should be placed on the increased price of gold ; but a little’ examination leads me to the conviction that insufficient discrimination has been shown by the Government in imposing this tax, inasmuch as it. penalizes rich and poor alike, and disregards entirely whether a man or a company is producing 1 oz. or 100 oz. of gold. Whilst I agree that the Government should prevent an increase of the price of a commodity which would involve profiteering, I point out that an increase of the price of gold does not penalize any section of the community in any way. It creates no hardship, because no section of the community purchases gold as a consumable commodity or as a necessity. I qualify that statement to the extent that an increase of the price of gold ultimately depreciates the currency and causes higher prices generally, and in that way the general community is penalized. However, this method of taxing gold will not combat that evil.
– An increase of the price of gold does not affect the currency.
– Of course it does. After hearing the able way in which the
Assistant Treasurer (Mr. Spender) introduced this measure, I know that he is not so simple as to believe that an increase of the price of gold is not invariably followed by a depreciation of the currency and a consequential increase of the price of commodities generally. This tax, I repeat, cannot be justified on the ground that it will prevent profiteering as we understand the term. As gold is not a consumable commodity, except, perhaps, in its limited use in dentistry, no parallel can be drawn between it and any other commodity in daily demand in the community. This tax is a class tax. It affects only one industry. The richest gold-mine in Victoria which is owned by the Wattle Gully Gold Mining Company is situated in my electorate. I know something, therefore, of the ramifications of the industry, and I realize the hardship which this tax will place upon si meers, co-operative mining parties, prospectors and cyaniders. The prospectors eke out an existence by specking. Most of them make no more than 10s. a week, whilst some engage in prospecting in order to supplement the old-age pension. For two years during the last drought when water was unobtainable, sluicers at Castlemaine, Fryerstown and Chiltern were unable to follow their calling. Now when they have a prospect of recouping their losses, this tax will deny them any benefit from the increased price of gold. The position of the cyaniders is somewhat similar. Furthermore, many gold-mines have not yet reached the production stage, whilst some are practically on the point of closing down. These concerns, no doubt, had hopes of continuing their developmental work, but this tax will prevent them from recouping losses or expanding despite the increase of price; and the community generally will be denied the benefits that would result from increased activity and more employment. Finally, let us consider the position ‘ of well-established companies such as the Wattle Gully Goldmining Company, which is the richest concern of its kind in Victoria. Such companies are making substantial profits, but if the Government desired to attack those profits, it could do so effectively through the ordinary channels of taxation. However, one can never tell when even the most prosperous companies may strike unpayable ground, with the result that for a considerable period dividends will vanish, and numerous calls will he made upon shareholders. This tax, I repeat, is unfair. It cannot be justified on the pretext that it will prevent profiteering, when in fact the community is not penalized by any increase of the price of gold.
– The bill is designed to take a portion of an unearned income.
– Yes, but in its incidence this tax penalizes many sections of the community regardless of income. I urge the Government to reconsider this proposal. When the Leader of the Opposition (Mr. Curtin) was speaking, the Assistant Treasurer interjected that it was not always easy to ascertain profits. Under the National Security Act the Government possesses absolute power to make regulations for ascertaining the profits of gold-mining companies. Whilst I do not believe that the income of any section of the community should be enlarged as a direct consequence of war, I oppose this proposal because it will harm more than anybody else the small producers in the industry.
.- I protest against the method of taxation proposed in this motion. It is not only unfair, but also represents a complete departure from the accepted principles of taxation. It will affect adversely many old-age pensioners and prospectors who are now eking out an existence on alluvial goldfields such as those in the Ballarat and Bendigo districts. It is unfair to tax people by a method which pays no regard to income. Every possibility exists that new goldfields will be discovered in the Northern Territory and Western Australia, and such a development is not altogether unlikely even in Victoria. Lasseter’s Reef has not yet been located, but perhaps that or some other big body of ore may be discovered. Such a field would prove a wonderful boon to our economy. When I visited the Northern Territory last year, I found that prospectors at Tennant’s Creek and Pine Creek were struggling to make a living. Although odd shows were doing fairly well, most of the prospectors in those areas were in difficulties. This tax will penalize those people. Furthermore, if the industry were allowed to take full advantage of the rise of price very large bodies of low grade ore now lying idle throughout the Commonwealth could be worked profitably, and the exploitation of such deposits would prove of great advantage to us in this time of war. This tax is wrong in principle. Instead of taxing an industry in this way the Government should direct its attention to the profits of such companies as the Broken Hill Proprietary Company Limited which recently made an issue of bonus shares amounting to millions of pounds. That concern will sell steel to Great Britain at enhanced prices, but apparently its profits are not to be taxed except in- the ordinary way. Furthermore, during the present war primary producers will be enabled to sell their products at enhanced prices, but the Government has no intention of levying three-quarters of those increases of prices. So great would be the objection to such a method were it applied to rural’ products that no government would dare to move in that direction. I realize that we must be prepared to make many greater sacrifices during th’e war; nevertheless, a tax of this kind is absolutely unjustified. I hope, therefore, that the Government will see its way clear to adopt another method. The profits of wealthy gold -mining companies can bo got at by the ordinary methods of taxation. I urge the Government to reconsider this proposal.
.- I support the bill. I have listened with interest to the Leader of the Opposition (Mr. Curtin) and the honorable members for Kalgoorlie (Mr. Green), Perth (Mr. Nairn); Ballarat (Mr. Pollard) and Bendigo (Mr. Rankin). The first three honorable gentlemen represent electorates in a gold-producing State, whilst the two last mentioned represent, mining districts. . No doubt they are quite sincere in the views which they have put forward. I realize also that in years gone by, when the price of gold was £4 an ounce and under, many mines were forced to close. Since that time, however, the price of gold has more than doubled, with the result that many mines have been re-opened and operated at a good profit. I support the Government’s proposal, because I believe that any mine which cannot operate profitably on a price of from £9 to £9 10s. an ounce will probably go out of operation in any event. Many years ago it was claimed in South Australia that copper could not be mined profitably with the price at from £50 to £60 a ton, and when wages were practically only half of what they are to-day. However, the prices of copper and lead have not risen in anything like the same proportion as that of gold. If it did I have no doubt that the Government would take steps immediately to prevent profiteering in those metals. The price of gold may rise to £12 an ounce, and the Government has a perfect right to take 75 per cent, of the amount by which the price exceeds £9. Another reason for my support of this tax is the ease with which it will be collected; a tax on profits would be extremely difficult to collect and, possibly, nothing at all would come from it.
The honorable member for Kalgoorlie, who has been to New Guinea, declared that all that the miners in the mandated territory received for their gold was £5 an ounce; I, too, have been to New Guinea, and I contradict the honorable gentleman. The price of fine gold does not vary. I concede that in its mined state the gold won in New Guinea has a lot of silver mixed with it, but the average return is about £7 an ounce, not £5, as the honorable member would have the committee believe.
In answer to a question to-day, I was told that any rise of the price of sugar would be treated as profiteering. The sugar industry has been intruded into this discussion, and the honorable member foi1 .Perth (Mr. Nairn) compared it with the rnining industry. There can be no comparison. The price of sugar is fixed, and we have the assurance of the Ministry that a rise of the price, by even a farthing per lb., will be treated as profiteering. If gold-mining cannot be carried on profitably at £9 an ounce, the industry will crash badly when this war is over. I support the bill and hope that the Government will go on with it.
– I enter an emphatic protest against this proposal, which has been proved to have been hastily conceived by the fact that, although we had it placed before us only last Friday, the Assistant Treasurer (Mr. Spender) has already asked us to amend the motion.
– The amendment is a very minor one.
– It may be, but the mere fact that in such a short space of time since the submission of the motion we are asked to amend it by the omission of certain words and the insertion of other words is an indication that the whole proposal was hastily conceived. I agree with those honorable gentlemen who have declared that this discussion should be postponed in order that the committee might have further opportunity to examine it. My condemnation of this proposal is on behalf, not of the big raining companies, but of those unfortunate individuals who are compelled by circumstances to go inland on Cape York peninsula and other isolated places in search, of elusive gold. I refer to the prospectors. It is evident that this measure was drafted either by “goldminers “ in Martin-place or by public servants who have never been on a gold- field or down a gold-mine. The Queensland Government realizes the importance of gold-mining. In 1938, Queensland was the third largest producer of gold in Australia. It produced 151,432 ounces of gold worth £1,355,000. Assistance to mining cost the Queensland Government £45,319 in 1938. The Lyons Government showed sympathy with the goldmining industry, and, in association with the State governments, it entered upon a three-year programme under which certain sums of money were voted by this Parliament for the purpose of” assisting the industry. Now, just when the industry is getting on its feet, this Government proposes to take extra money from it. The prospectors are entitled to all that they can get from gold as it may take them three months to win an ounce. If we are to have increased taxes let them be imposed on incomes and profits; let them not be discriminatory class taxes. If the committee allows the Government to . proceed with this measure, who is to know but that, if the prices of primary products increase in. the future, the Government will not take similar action and grab the producers’ returns ? During the last war a government of the same political kidney as this Government, commandeered, the sugar grown in Australia and after selling it at £137 10s. a ton gave to the growers £30 6s. 8d. a ton. There has been criticism of the sugar industry, but if some of the critics would take the time and trouble to inquire into the industry the information they would obtain would prevent them from repeating the misstatements they have made to-day. The goldmining industry is different from the sugar industry in every way. Goldmining has brought a measure of prosperity to some of the States, particularly Western Australia. It has also had a good effect in northern Queensland. For instance, Charters Towers, which 30 or 40 years ago was at the pinnacle of its fame as a gold-producing area, is beir.g revived as the result of the assistant-!, rendered to prospectors by the Queensland Government. Old mines are being reopened and employment is increasing, wholly because of that assistance and the rise of the price of gold. If the price continues to rise the example of the prospectors, who go into the back country where they risk death and do not see other white men for months on end, will be followed by others. That cannot be, however, if this tax be imposed. The very introduction of this measure shows that this Government is not concerned for the development of this country, because the Government must be aware that the tax will retard the expansion of the gold-mining industry. ‘ direct the attention of Ministers to the fact that if this tax be levied there will be a. reduction instead of an increase of the number of gold prospectors in Australia.. Prospecting is a class of skilled labour which is rapidly going out of existence.
If a Labour government were in office and introduced legislation similar to this, there would be a squeal from Cape York to Perth that Labour was making a capital levy and indulging in robbery. If this Government is sincere in its professed desire to prevent profiteering in metal transactions, why does i’t not inquire into the circumstances of the lead industry? Lead is produced in three States, but the principal sources of supply are at Broken Hill and Mount Isa. The latter is operated by capital subscribed in Great Britain and the United States of America, and is of such strength as to be able to control the world price. Because the prospector is not in a position to control the price of gold he is, in. modern parlance, to “ get it in the back of the neck “. If the price of gold falls by £2 or £3 an ounce, will the Government make up the deficiency? Certainly not ! The Government will take, but it will not give.
At Miclere, one of the oldest goldfields in Queensland, from 150 to 200 prospectors are engaged. Single men receive £1 a week and married men £2 a week from the State. Because of the prevalence of dust, these men are always exposed to the risk of contracting phthisis; they are battling against great odds. Yet this Government proposes to take from them the reward for their labour. The Queensland Government is always being pointed to as the one which taxes most heavily the highest incomes. If the prospectors were to receive all that is their due from the gold that they win, probably the State would bt relieved of the necessity for assisting them further and possibly the taxes could be reduced. Therefore this gold tax will penalize the Queensland Government. Although only little more than two weeks has elapsed since the outbreak of war, already we see an attempt to exploit a small industry. A tax such as this is absolutely wrong in principle, and if this legislation be passed the primary producers of Australia had better be on their guard, because the Government will not hesitate to tax other primary products in the same way, even though the prices of those products have been unprofitable during the last two decades. The potentialities of such taxation are unlimited. It is a form of tax which has never been applied in the past, and in my opinion it is one of the most vicious impositions that could be inflicted upon a helpless and suffering section of the community. The men engaged in this industry are scattered far and wide throughout the Commonwealth and so there can be no immediate protest from them. They may not hear of this for twelve ov eighteen months, or until they receive payment for their gold. 1 assure the Government, however, that there will bc a protest from every part of northern Queensland.
.- The Government is faced with the problem of raising sufficient revenue to enable Australia to discharge its responsibilities in connexion with the war, and we must take into consideration just what fields of taxation may be exploited without imposing too great a hardship on any section of the community. Should the Government decide to forgo the revenue which it proposes to raise by the tax on gold, it would have to find £1,500,000 from some other source. In my opinion, the gold tax is a much fairer imposition than would be a further increase of the sales tax by 1 per cent. The increase of the sales tax from 5 per cent, to 6 per cent., already decided upon, will only raise the same amount as the proposed gold tax. Had the gold-mining companies been operating at a loss when the price was £9 7s. 6d. an ounce, and had the increase to £10 10s. an ounce meant all the difference between working at a profit and working at a loss, there would be no justification for the action that the Government is taking. The price of gold has appreciated very rapidly during the last few years and 1 think it is generally recognized that £9 7s. 6d. an ounce is a highly remunerative price, as share quotations on the stock exchanges conclusively show. I submit that there is no analogy between the conditions in the sugar industry and those in the gold-mining industry. The price at which sugar is to be sold to the British Government, namely, £10 a ton, is still not profitable to the producer, who in fact, is selling sugar overseas at from £2 to £4 a ton less than the cost of production in Australia. The Australian sugar producers have had to sell their surplus production on the world markets in competition with sugar from Cuba, Java, Fiji, and other countries where costs of production are rauch less, mainly owing to cheap labour. In dealing with this subject, honorable members should bear in mind the difficulty with which the Government is confronted in raising money.
It will be agreed that nobody, whether business man, primary producer, warehouseman, or any other member of the community, should be allowed to make undue profits out of conditions due entirely to the fact that the world is at war. This legislation will impose no hardship upon the prospector because he will receive for his product the price which would have ruled had the world not burst into flames as it has done. The Government proposes merely to tax the excess profits which have been brought, about as a direct result of the misery which the world is now enduring. I repeat that should the Government decide to forgo this tax, it would have to find the revenue through some other avenue - possibly, the rate of sales tax or the rate of income tax would have to be raised. An examination of all aspects of this proposal will show that it is eminently fair and with certain reservations, I propose to support it. One reservation is that I think that a simpler and more effective method could be adopted. The Commonwealth Government could purchase the gold at a fixed price in the same way as it intends to purchase surplus wheat and other primary products for export to Great. Britain.
– The Government does that.
– If that is so, I fail to see the necessity for the much more indirect method proposed in this legislation. The Government could commandeer all gold, as it does other commodities, and pay £9 7s. 6d. an ounce, or whatever other price it fixed as the datum point. I think that would overcome all difficulties.
– Is not the honorable member against Government control in wa.r time?.
– We have to exert some form of control over every industry in war time, whether we like it or not.
. -This proposal lends itself to certain simple conclusions. First, we have to recognize that we are passing through very troublous times. The Commonwealth Government is faced with the necessity for finding additional revenue, and, in it’s wisdom, it considers that the most equitable method is a tax on the increased price, of gold, because that increase, having resulted from circumstances to which nobody in Australia has contributed, may be described as a windfall. Secondly, nobody can possibly be harmed by having something taken away from them which they otherwise would not have received. As the honorable member for Kennedy (Mr. Riordan) stated, this is a new form of taxation. It is new because goldmining companies in Australia to-day are exempt from the federal income tax. Who will say, therefore, that .that industry should not be brought into the field of taxation when it stands to benefit immensely by virtue of world conditions which can be directly attributed to war and to international unrest? Honorable members of the Labour party have always strongly advocated the taxing of unearned increment. I ask them is not a price of £10 10s. an ounce for gold - a price which nobody in Australia would have dreamed of a month ago - a perfect example of unearned increment? I am associated with the gold-mining industry; I have financed prospectors and gougers; [ am interested in the recovery of gold from dumps in North Queensland, and I am also a director of the biggest goldmining company in Queensland, Mount Morgan. And I say that it is just to tax the increased price of gold which, as I have said, has been brought about by circumstances which, although fortunate for some people, are decidedly unfortunate for a great majority. I hope that as a result of this survey of conditions the Government will take steps to ensure that unearned increment from other sources also is taxed, because, by so taxing what may be described as fortuitous prices, it will be able to relieve the hardworking taxpayer and the real wealthproducer of this community. It has been suggested that the sugar industry will . benefit by the price of £10 a ton, which is to be paid for that product in the United Kingdom, but I submit that there is no parallel between the increase of the price of gold and the increase of the price of sugar. The sugar industry is a taxable industry and, whether the sugar be sold in Australia., in the United Kingdom, or, for that matter, in China or Japan, the profit finds its way to the Commonwealth exchequer through the Taxation Department. That is not so with gold.
As I have said, gold-mining is exempt from taxation, and consequently, will any reasonable person, who appreciates the difficulties confronting the economy of Australia, say that that industry should not make its contribution to the security of the country out of money which may be described as a windfall? I hope that the Government will apply similar taxation to other metals such as lead, and that it will fully investigate the desirability of taxing excess profits made by people controlling annexes for the manufacture of armaments and munitions under conditions which, in some instances, are far too favorable. I stressed that matter when speaking on the Supply and Development Bill, and I repeat now that every possible avenue of taxation should be surveyed, so that unearned increment will contribute its just proportion to the revenue required by Australia for its own defence and the successful prosecution of the war.
Silting suspended from 6.15 to 8 p.m.
.- I have not been very much impressed by arguments so far adduced in opposition to the proposal of the Government to impose this tax on gold. In this chamber we all profess to be opposed to the making of excess profits out of the war. We are 100 per cent, against prices being raised owing to the exigencies of the war, but when we are brought face to face with an actual example, reasons can always be found why those producing or selling a particular commodity should not be dealt with in the way in which we would deal with those who are ordinarily described as profiteers. It has been suggested that a better way to deal with gold companies, which will receive an enhanced price for their product, would be to tax.their profits. I believe that a tax on profits is, in general, to be preferred to a tax of this kind, but the fact must be remembered that, in order to encourage the gold-mining industry, we have refrained up to the present from taxing the incomes of the gold-producing companies. I suggest that more dislocation and more uncertainty would be caused by now imposing a tax on income than will be caused by the imposition of this tax on the price of gold. If we compare this proposal with what has been done in South Africa, we find that the Australian return of £9 7s. 6d. on present values is just about the amount which the South African gold-producers will receive under the provisions which have been enacted in that country. South Africa, I understand, is on a sterling basis, and there the price of gold paid to the producers is £7 10s. an ounce. If we add 25 per cent. exchange we get £9 7s. 6d., which is the value of the gold in Australian currency, and that is the amount that will he left to the producers after the deduction of the tax from the present price of £10 10s. an ounce. One might wonder why the figure of £9 was chosen as the maximum, tax-free price. Was it chosen because it is a good round figure, or was it because it is regarded as a fair and, indeed, a highly profitable price? I ask that question because, in respect to other commodities, the Government has adopted the rule that the price prevailing on the 31st August last, that is, the day before war broke out, should be regarded as the standard price. If that principle were applied to gold the maximum tax-free price would be about £9 16s. Probably the Government had in mind the fact that the price of gold had been steadily appreciating for some weeks before war broke out for the reason that war appeared to be imminent.
– This is an apology for the Government.
– No, I am giving my opinion honestly, as I have no doubt the honorable member did when he spoke. I point out, however, that if this principle be adopted in regard to gold, it will be difficult for the Government to refrain from adopting it in regard to other metals the prices of which may, and indeed almost certainly will, increase as the result of the war. To-day a comparison has been made between the sugar industry and the gold-mining industry. I take it that a good deal of latitude was allowed to honorable members who referred to sugar during this discussion on gold because the two terms are often regarded as synonomous. As a Victorian, I may state that sugar is now selling in Australia at a price somewhat lower than that of ten years ago, whereas gold is returning two and a half times as much, expressed in our currency, as it did ten years ago. No one can, with any sincerity, use the argument that the sugar industry is obtaining something which the gold industry is not.
– Sugar is produced at Maffra in Victoria.
– Yes, but the sugar producers of Maffra are not affected by the export trade. I have listened carefully to the whole of this debate. At the commencement I had a fairly open mind as to whether this was the best method of dealing with the position, but I think that the arguments advanced against the Government’s proposal have done more to induce me to support it than to oppose it.
.- I support the Government’s proposal. It is an anti-profiteering measure, and while honorable members may be able to put up a case for the poor prospector, the provision is not aimed at him. Those who win gold are obtaining an unexpected windfall due to the sudden rise of price, and the Government is justified in taking 75 per cent. of the increase. I agree, however, that the principle should be applied generally. It should be applied particularly to copper, zinc and lead, the prices of which will rise because of the war. These metals are of much greater importance to the enemy than is gold; Germany imported them in huge quantities just before the last war, and it was again doing so before the outbreak of this war. Some time ago, I asked the Prime Minister (Mr. Menzies) whether undertakings could be obtained from neutral consignees of these metals that they would not be re-sold to enemy countries. The provision which we are now discussing is designed to prevent profiteering in a precious metal. I should like the Minister to consider the fact that it will apply to different persons in different ways. A vendor of a mine may receive payment in cash and in gold won. If regulations are to be drawn up, I ask the Minister to make provision that payment in respect of gold won shall be at the net price - that is, after the tax has been deducted - and not at the gross price of £10 10s. an ounce.
.- This provision will adversely affect those prospectors who have gone great distances in’to the interior of Australia to such places as Tennant Creek in search of gold. I am informed that the cost of living there, apart from any provision for shelter, is about fi a day. Those men are working shows that return only a few penny-weights to a ton. This is definitely a commodity tax, because gold is now a commodity, nothing more or less, since it is no longer related to the currency, and the Government proposes to take 75 per cent, of any price increase over a fixed amount. The tax will fall most heavily upon those who are least able to bear it. Many prospectors earn no more than 10s. or £1 a week, and if the Government taxes the little they receive, the State governments will have to make increased sustenance payments to them. I realize that the Federal Treasury must have more revenue, but in this instance it is being obtained largely at the expense of the States, which will either have to increase taxes, or apply to the Commonwealth for larger grants. This is a completely new principle of taxation - the taking into the Treasury of the price of a commodity over and above a certain amount. The Opposition contends that it would be preferable to tax the profit _ of the industry, rather than appropriate any portion of the higher market price due to war conditions. If that principle were adopted, the burden would fall on those persons or companies best able to bear it. The majority of prospectors, and they are the men who actually find the gold, will be forced, under this measure, to contribute to the Commonwealth Treasury even when their particular enterprises may not be showing a profit. As the result, prospectors will be discouraged and the industry retarded. As the Leader of the Opposition (Mr. Curtin) stated this afternoon, the industry has been steadily expanding in recent years, owing to the higher price for gold. In 1930-31 gold produced in Australia was valued in Australian currency at £2,500,000. In recent years the value has increased to £A. 14,000,000. If the Government wishes to be consistent in this new principle of taxation, it should apply it to other forms of production. There is no reason why it should not take into the Treasury the difference between the price of wheat and the cost of production, which to-day is 4s. a bushel. By this proposal the Government is breaking new and dangerous ground.
Although .gold is produced in all of the States, the bulk of the tax will fall on the industry in Western Australia,, which has suffered more disabilities from federation than has any other State. The £10,000,000 worth of gold won in Western Australia last year practically saved that State from insolvency. Low prices for wheat and drought conditions for very many years had seriously affected the finances of the State Government. We therefore urge the Commonwealth so to arrange its taxation methods as to spread the burden equitably over all of the States. We agree that the Commonwealth requires additional revenue to meet the extraordinary demands that will be made on it during this period of stress. But we contend that there are better methods of obtaining the money. As I said in my speech on the budget, the Government could impose a tax on unimproved land values in excess of £5,000, if it had the courage to do that. But so far from seeking further revenue in that quarter, the tendency has been to reduce the taxes imposed upon the wealthy land-owners, nearly twothirds of whom are to be found in thecapital cities of the Commonwealth.. These remissions have benefited landholders to the amount of £9,000,000.
– in reply - I make no apology either for the basis upon which this measure is founded, or for themeasure itself. Taking into account the gold price which prevailed immediately prior to the outbreak of war, and 1’he price which is now operatingafter two weeks of hostilities, the Government needs no further justification for the introduction of this tax. In August, the average price of gold was £9 -8s. 7d. a fine ounce. The price to-day is £10 lis. Obviously, the increase has been due only to the depreciation of sterling in terms of dollars, and that resulted solely from the outbreak of war. In those circumstances the Government, faced with the obligation to find huge additional sums of money in order to prosecute the war,, had almost no option. The present enhanced price of gold is unquestionably the clearest case of unearned increment that could be presented, and the Government is fully justified in appropriating a substantial portion of the increment. As the honorable member for Richmond (Mr. Anthony) pointed out, had a state of peace continued therewould not have been this increase of the price of gold. Since the increase is due solely to war conditions, the Government is fully warranted in deciding that 75 per cent. of the increase should go into its coffers in order to help to finance war needs. This measure does not introduce a. new principle of taxation. When in 1933 the South African currency was depreciated to the level of sterling, the Union Government levied a tax upon gold based on a similar principle. In both Rhodesia and South Africa, local currency has depreciated since the outbreak of war, and both governments now propose to take substantially the whole of the price obtained for gold above a certain level. Sterling may depreciate in terms of dollars even more than it, has done in the last two weeks. If that should happen, the Commonwealth Government, in my opinion, would be fully justified in taking the 75 per cent. which it now proposes to divert to the Treasury. I cannot understand why the Opposition regards as unfair the taking, for war needs, from any section of the community, of a proportion of an accretion of value that is solely due to the outbreak of war. Some honorable members have urged that certain enterprises that are winning gold from low-grade ore will suffer from the imposition of this tax. I do not agree. If the price of gold increased to £11 or £12 an ounce,the payment of the proposed tax would not make their operations unprofitable, because they would retain 25 per cent. of the price above £9 an ounce. The position of the industry will, however, in no way change for the worse as the result of this tax. As all persons concerned with the buying of gold are aware, there was a definite chance immediately before the war broke out that sterling would depreciate in terms of the dollar, and when the war began the price of gold “ sky-rocketed “ in terms of Australian currency. This measure says, in effect, that the increased value in terms of Australian currency, being merely a fortuitous result of the war, shall be substantially appropriated for the purposes of the war.
The Leader of the Country party (Mr. Archie Cameron) and the honorable member for Richmond (Mr. Anthony) have asked why the Government, will not buy gold at a fixed price. My answer is that we have taken what appears to be the safest action. So far as I know, there are only three suggested powers under which the Government could take the increased value. One is given by section 51, placitum 31, of the Constitution, which states -
The Parliament shall, subject to this Constitution, have power to make laws forthe peace, order and good government of the Common wealth with respect to -
The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliamenthas power to make laws.
If the Government bought gold at £9 a fine ounce and sold it at £10 10s., it might well be accused of not acquiring the commodity on just, terms. The question of whether it was acquiring it for any purpose for which the Commonwealth could make laws mightalso be raised. This is in substance a taxation measure, and there can be no doubt, whatever in respect of the taxing power of the Commonwealth. The only other way in which the money might be appropriated is by the exercise of the Commonwealth’s war powers.
– Under the War Precautions Act, sugar was acquired at a price much lower than that which could have been obtained for it by the growers in the open market.
– That is quite true, but in considering proposals for the collection of revenue, the obvious duty of the Government is to take a course that cannot he challenged. Had the money been obtained under its war powers, the Government might have been challenged on the ground that the revenue was not being used for the purposes of war, and that it was, in fact, imposing a tax.
A minor issue was raised by the honorable member for Kalgoorlie (Mr. Green), who drew attention to the fact that this measure will apply to gold imported from territories such as Papua and New Guinea. He said that I, in my ignorance of the subject, had not realized that £4 was the price for Papuan gold. I point out to the honorable gentleman that under this proposal, gold will be taxed on the basis of the fine ounce, which is a standard measure no matter where the gold is won. For the reasons I have stated there can he no substantial objection to the acceptance of the measure.
– What about the power to make regulations?
– I should doubt whether any regulation touching the matter to which the honorable member referred could be made under the measure, but publicity could be given to the point raised by him so that those who deal in mines will know that this tax must be taken into consideration in any sale of a mine.
Amendment agreed to.
Motions, as amended, agreed to.
Standing Orders suspended; resolutions adopted.
That Mr. Spender and Mr. Holt do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Spender and read a first time.
Motion (by Mr. Spender) proposed -
That the bill be now read a second time.
– I suggest to the Assistant Treasurer that the Government should keep in mind the principle which is not only implicit but also explicit in this legislation, namely, that the unearned increment arising as the result of war is a field which does not legitimately belong to anybody except the nation, and that the Government, constituting as it does the executive of the nation, must apply that principle in all cases. The Government has invaded a very extensive field, and it is expected that there will be no anomalous application of this perfectly proper principle. I said earlier that it is a principle which I can respect, provided it is given universal application. But if it is to be applied only in one or two instances, then most certainly it is one which is not only new to this and similar governments but also will, I venture to say, be extensively practised in years to come by other governments.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Motion (by Mr. Spender). - byleave - agreed to -
That he have leave to bring in a bill for an act relating to the imposition and collection of a tax upon gold.
Bill brought up, and read a first time.
– by leave - I move -
That the bill be now read a second time.
As honorable members are aware, from a perusal of the motion that I submitted on. Friday last, the Government proposes to impose a tax upon gold delivered to the Commonwealth Bank of Australia, or to an agent of that bank, on and after the 15th September, 1939. That tax will not apply to gold imported into Australia, or to gold coin or wrought gold, unless and until the Treasurer (Mr. Menzies) otherwise directs by notice published in the Commonwealth Gazette. It will be imposed on gold delivered to the Commonwealth Bank in Australia or in a territory under the authority of the Commonwealth of Australia, and will therefore be payable on gold delivered in Papua and New Guinea, as well as on gold produced in those territories and delivered to the Commonwealth Bank in Australia.
The rate of tax to be imposed will be three-fourths of the amount by which the amount payable by the Commonwealth Bank of Australia in respect of gold delivered to it exceeds £9 for each ounce of fine gold contained in the gold so delivered.
From June, 1924, income derived from gold-mining operations has been exempt from Commonwealth income tax in respect of both income in the hands of companies and dividends in the hands of shareholders. This exemption was granted on account of the serious position of the gold-mining industry at the time. For some years, income from gold-mining has also been exempt from most forms of State taxation, except in Western Australia and Tasmania.
For several years, the gold-mining industry has enjoyed the benefit of high prices for gold. In 1930, the price of gold was £4 8s. 9d. a fine ounce. The price rose sharply from £5 17s. 6d. in 1931 to £7 5s. 8d. in 1932, and by August, 1939, it had reached £9 8s. 7d. a fine ounce. The average price for the year ended the 30th June, 1939, was £9 ls. 2d. In consequence of the depreciation of the dollar-sterling exchange, the present price is £10 Ils., which is almost 30s. in excess of the average price ruling in the 1938-39 period.
The Government considers that, as the present price of gold is due to war conditions, the gold-mining industry is in a. position to contribute to the revenue without jeopardizing its financial stability. The amount of 25 per- cent, in excess of £9 a fine ounce will enable gold-mining companies to meet any increase of mining costs which, may occur as the result of the war.
The Government’s proposal has the merit of simplicity. All gold must be delivered to the Commonwealth Bank or its agent, and when the actual quantity of fine gold has been determined, the bank will deduct from the amount payable in respect of the gold delivered, and pay to the Commonwealth, the amount of tax imposed. The amount of tax collected will, of course, depend upon the price of gold. The present production of gold in Australia and the territories under the authority of the Commonwealth is approximately 1,800,000 fine ounces per annum. If the present price of £10 -lis. a fine ounce be maintained, the revenue derivable from the tax for the remainder of this year will be about £1,500,000.
– I know that it is intended to take this bill through its remaining stages at once. I have no objection to that, having regard to wharf, I said previously ; but I rather think that the Government will be courting the possibility of the bill having to be amended in a little while if honorable members be not given full opportunity to consider its details in committee ; in order to do that we should have to defer the committee stage until to-morrow. I do not ask that that be done, but I do ask the Assistant Treasurer (Mr. Spender) to explain why the figure £9 Australian has been chosen as the starting point, when the whole principle of the bill is that the unearned increment arising from the war represents the justification for the imposition of this tax on gold delivered to the Commonwealth Bank. Figures that have been supplied to me. suggest that the average of the Australian export parity in respect of fine gold for the six months ended the 30th June, 1939, was £9 3s. 4d. The Assistant Treasurer says that the price for June was £9 ls. 2d.
– The average price for one year up to June, 1939, was £9 ls. 2d.
– For the year ended the 31st December, 1939, the Australian export parity was £8 16s., and I have not the least doubt that if the twelve-monthly period ended June last be taken the average price will be found to be £9 ls. 2d. But if the six months ended June last be taken, the figure will be found to be £9 3s. 4d. There was no unearned increment for this industry in June last, and obviously the figure which resulted from what I shall describe as the ordinary disturbance due to the departure from the gold standard and the developments that have flowed therefrom, was above the starting point which the Assistant Treasurer has selected as the point at which unearned increment arising from the war began.
– From September, 1938, when the crisis began, the price of gold suddenly increased from well below £9. We have taken £9 as the base price.
– In August of this year the average price was £9 8s. 7d. I warn the Assistant Treasurer that that movement of price in respect of the export parity for gold is reflected in a number of other commodities, and that when he comes to the application of his principle to those other commodities he will find it extremely difficult to separate the cost factor from the figure he will select as representing the datum point for the measurement of unearned income. I am quite a “ whole hogger “ for the taxation of unearned income, but I find it rather difficult to believe that the figure operating for the six months prior to the 30th June can be regarded as indicative of unearned increment due to war. It was certainly due to the competition for gold and to the attacks that were made on sterling, but these factors were characteristic of the whole of the evolution that had taken place since the onset of the depression. The matter must be considered in the light of rising costs. The Assistant Treasurer has allowed only the 25 per cent, that is not to be taxed to be equated to the spiral of rising costs from which the gold -mining, industry will not be immune. One of the essential raw materials of the mining industry is explosives.
– That aspect will not be lost sight of by the Government.
– If necessary, will the Minister bring down an amendment of the tax?
– That will depend on the circumstances.
– I take it that the Government intends to watch the operation of this tax, and to see that no injustice is done. Will that undertaking apply to the army of small prospectors, of whom there are about 700 in Western Australia ? They go out individually fossicking and specking under the stimulus of a system of government aid. My information is that in a mouth they sometimes earn the money resulting from the sale of 2 or 3 ounces of fine gold. At present prices, they would receive a little over £30 for 3 ounces; but hitherto the amount has been about £24, £26 nr £27. Out of that money they have to meet all of their costs and they operate in parts of Australia where the costs are high. Transport difficulties are very great, and the amenities of life are noticeably absent. Workers of this kind are worthy of encouragement. They do not hang around a city waiting for a government inspector to provide jobs for them. They have contributed more to the discovery of valuable ore bodies than have all of the geologists of Australia put together.
– ‘Our prospectors are the best in the world.
– Yes. Scientists say that, geologically, Kalgoorlie should not exist, and a similar remark has been made regarding Coolgardie. Reports presented by experts prior to 1900 declared that it was very doubtful whether gold would be found in payable quantities in those localities. The income of a gold prospector would not exceed £250 or £800 a year, out of which he has to defray all his working costs as well as provide for his upkeep. By doing this work, prospectors have relieved the Treasury of considerable subventions, because they have not called upon the Government for the dole or for relief work.
Another point to be considered is that the development of several important lowgrade mines would be materially retarded by the imposition of this tax. One of the things that the Government should keep in mind in respect of even the richer mines that are now earning the highest dividends in Australia is that there should be no inducement to the managements of these properties to practice selective mining, and to teaT out the richest ore bodies to the neglect of the poorer parts of the mines. If “the eyes be picked out of the mines “ the permanent and total value of the properties will be substantially reduced. The Government should not forget the important reports submitted some years ago by Mr. Kingsley, the expert who came from South Africa at the request of the Government of Western Australia to report on the mines at Kalgoorlie and elsewhere. His representations emphasized the need for the sound and rational development of this important national asset. I know that the Government must have money. I also appreciate the simplicity of the proposed tax, for money will come in on the very day the tax is imposed, whereas a tax on profits would not be nearly so rapidly realized. I can understand enthusiasm for the taxing of the unearned increment; but the exploitation of our mineral wealth should not be permitted to the detriment of those who will come after us, for, God knows, they will have enough debts to carry.
Question resolved in the affirmative.
Bill read a second time.
– I have not said anything hitherto on the proposal of the Government for the imposition of a tax on gold, and, in fact, I am naturally attracted to any plan designed to tax receipts that have the character of war profits. War profiteering is notan enterprise that commends itself to the Labour party.
– Or anybody else.
– The honorable member may later be able to establish by his deeds what he now champions with words, but I take leave to be a little hesitant in accepting his assurance. I have been mainly impressed by the newborn’ enthusiasm of the Assistant Treasurer (Mr. Spender) inhis adherence to the principle of the taxation of the unearned increment. I should like to know, for purely historical reasons, when he became devoted to the principle, and why in the past, in regard to other phases of taxation, when the Labour party was urging acceptance of this principle of taxation, neither he nor his political ancestors ever supported it. In respect of gold, the Minister says “ This is the clearest case that ever was of taxation proposed upon the unearned increment. When war was declared, immediately the price of gold, which was already high, bounded up by a couple of pounds an ounce “. Can the Minister give me an assurance that that principle will be applied all along the line, that prices will be noted as at the 3rdSeptember, 1939 of, unhappy memory, and that, when prices jump suddenly to the figures to which we became accustomed during the last war, he will be ready to leap in and take 75 per cent. of the increase for the Commonwealth in every case? When we are dealing with profiteering, one of the great menaces that threaten people at a time when men are dying in the trenches, or, under the new regime, being bombed to death in their homes, there should not be a watchful army of Shylocks ready to take advantage of the sufferings of others, and to enrich themselves in the hope and well-founded belief that, whatever happens in the present war, they will be survivors and will have made money out of it. I listened to the eloquent speeches made by the Leader of the Opposition (Mr. Curtin), the honorable member for Kalgoorlie (Mr. Green) and others, and certainly they proved to demonstration that the interests of the genuine goldseeker are being watched by their representatives in this chamber. I trust that the country may in an indirect way reap some benefit from this proposal, because the Assistant Treasurer, in his enthusiasm, is now definitely converted to the principle of the taxation of the unearned increment, and will see that the profiteer is scotched and that rich men do not become richer while poor men and women are sacrificing their lives during the progress of this war.
– I remind the honorable member for Batman (Mr. Brennan) that the Assistant Treasurer (Mr. Spender) has been in office for only a few months, but is at least trying to give effect to principles enunciated by him. In 1929, the honorable member for Batman became Attorney-General in a Labour Government which had the same opportunities as obtain to-day to tax the unearned increment. Did he make any move then, in time of peace, to do as was done in South Africa?
– Does the honorable member suggest that the action taken there in connexion with the exchange position is comparable with the present proposal?
– It is true that the South African Government acquired a considerable portion of the exchange at that time for reasons which I approved. I support the taxation of war profits beyond a reasonable amount, and have said in this chamber that the Government ‘should assume absolute control of the manufacture of war equipment in order to prevent undue profits from being made by any individual, corporation or company from defence preparations. If the honorable member for Batman (Mr. Brennan) believes that the Government should adopt the principle enunciated by the Labour party, he should commend’ the Government for introducing the bill. We all should be pleased that some effort is being made to tax unearned increment, and that to some degree at least revenue will be obtained from that source. Although I have been a director of goldmining companies, I regard the tax as fair. The minerals in the earth belong to the people, and excessive profits made on their sale should be taxed. When gold is removed from the earth, the value of the land depreciates. In agricultural pursuits, which usually follow mining, the properties of which the soil has been robbed are replenished. I agree entirely with what has been said by the honorable member for Kalgoorlie (Mr. Green) concerning the Bulolo Gold-mining Company, because I believe that all mining companies, regardless of those who control them, should contribute to the revenue through this tax. When gold-mining was first commenced in New Guinea, the gold obtained in that territory was realizing only £211s. an ounce, but to-day it is averaging between £5 and £6 an ounce. As a considerable amount of unearned increment is involved in this instance, the Government is entitled to collect a portion in the manner proposed. I commend the Government for the action it has taken, and I trust that the bill will have a speedy passage.
Bill agreed to and reported without amendment: report adopted.
Bill - by leave - read a third time.
In Committee of Ways and Means:
– I move -
Division A. - Rate of Tax in Respect of Taxable Income Derived from Personal Exertion. (For the purposes of this Division: T = taxable income in pounds.)
If the taxable income does not exceed £6,900, the rate of tax for every pound of taxable income shall be -
If the taxable income exceeds £6,900, the rate of tax for every pound of taxable income up to and including £6,900 shall
and the rate of tax for every pound of taxable income in excess of £6,900 shall be 87.09525 pence.
DivisionB. - Rate of Tax in Respect of Taxable Income Derived from Property. (For the purposes of this Division: T = taxable income in pounds.)
If the taxable income does not exceed £500, the rate of tax for every pound of taxable income shall be -
If the taxable income exceeds £500 but does not exceed £1,500, the rate of tax for every pound of taxable income shall be -
If the taxable income exceeds £1,500 but does not exceed £3,700, the rate of tax for everypound of taxable income shall be -
If the taxable income exceeds £3,700, the rate of tax for every pound of taxable income up to and including £3,700 shall be -
and the rate of tax for every pound of taxable income in excess of £3,700 shall be 102.465 pence.
DivisionC. - Rates of Tax in Respect of Taxable Income Derived Partly from Personal Exertion and Partly from Property.
Division D. - Rates of Tax by reference to an Average Income.
Division E. - Rate of Tax by reference to a Notional Income.
Division F. - Tax payable where amount would otherwise be less than Ten shillings.
Notwithstanding anything contained in the last five preceding Divisions, where the amount of income tax which a person would, apart from this Division, be liable to pay is less than Ten shillings, the income tax payable by that person shall be Ten shillings.
DivisionG. - Rates of Tax Payable by a Trustee.
For every pound of the taxable income in respect of which a trustee is liable, pursuant to either section ninety-eight or section ninetynine of the Income Tax Assessment Act 1936- 1938, to be assessed and to pay tax the rate of tax shall be the rate which would bo payable under Division A, B, C, D or E as the ease requires, if one individual were liable to be assessed and to pay tax on that taxable income.
DivisionH. - Rates of Tax Payable by a Company.
For every pound of interest in respect of which a companyis liable, pursuant to subsection (1.) of section one hundred and twentyfive of the Income Tax Assessment Act 1936- 1938 to pay income tax the rate of tax shall be 24 pence.
This resolution is the usual motion which precedes the bill brought in annually for the imposition and collec tion of income tax. Honorable members were informed in the budget speech of proposals for increasing the rates of income tax as compared with those prevailing for last year. The Treasurer (Mr. Menzies) explained in the course of his budget speech that it was quite inevitable that the budget, having been prepared in a time of peace and delivered in a time of war, must be subject to revision. The state of war existing to-day has already occasioned a revision of the budgetary proposals, and, as I informed honorable members before the House adjourned on Friday last, the Government proposes to raise part of the additional revenue required for purposes of defence by increasing the rate of income tax payable by companies from 19.8d. in the £1 mentioned in the budget to 24d. in the £1. The rate of 24d. represents an increase of 10.2d. on the rate prevailing for last year. No departure is being made, however, from the budgetary proposal to increase by 10 per cent. the rate of tax in the case of individuals. It is estimated that the additional annual yield to the revenue from the 10 per cent. increase of the rate in the case of individuals and 10.2d. in the £1 in the case of companies will be £3,287,000, and it is expected that £2,860,000 of this amount will be collected in the current financial year. The balance of the estimated yield is attributable to late collections after the 30th June next.
Although there is in this motion no departure from the form of the motion submitted annually to this House since 1931, the formulas appearing in it call for some explanation. Although the formulas in Divisions A and B merely give effect to the Government’s proposals to increase the rates of tax payable by individuals by 10 per cent., the result in the expression of that increase gives the formulas a rather formidable appearance. The Government has in mind the question of simplifying these formulas, but owing to the outstanding importance of events over the past few weeks, it has not been found possible to give consideration to the matter. The Government will, however, explore the possibilities in this connexion with the object of expressing the formulas in a simpler form in the rates billfor next year.
With regard to Divisions A and B of the motion, the normal rates of tax on income from personal exertion and income from property for the financial year 1931-32 were the rate3 shown in the bracketed portions of the formulas appearing in Divisions A and B. Those 193.1.-32 rates have been subjected to decreases and increases according to the varying demands of revenue, until to-day, as will be seen from the formulas, the rate proposed for 1939-40 is approximately 3 per cent, less than the 1931-32 rate on personal exertion income, and approximately 14 per cent, higher than the 1931-32 normal income tax rate on income from property.
In Division A of the resolution, the rate of tax on income from personal exertion is prescribed. This rate of tax increases with the increase of taxable income until a taxable income of £6.900 is reached. A flat rate of 87.09525d. is charged on each £1 of taxable income from personal exertion in excess of £6,900. In other words, tax is levied at a graduated rate up to £6,900 and at a fiat rate only on the income tin excess of £6,900. lit may lead to a clearer understanding of the formulas if I explain that the rate of tax on £1 of taxable income from personal exertion is approximately 2.9d. From this point the rate increases in a steady progression until tax upon a taxable income of £6,9Q0 is payable at the rate of 44.636d. in the £1.
The rates of tax applicable to income from property are provided in Division B. Each of the formulas in this division conforms to the same principle of progressive rates as in Division A, personal exertion, but the gradient of progression is steeper than in respect of personal exertion income. The commencing rate of tax is 3.4d. where the taxable income is £1, and this rate is increased until the rate of tax on £3,700 taxable income from property is 53.85d. in the £1. The steeper rate of graduation in the property income rate of tax as compared with the personal exertion rate may be illustrated by a comparison of the rate on £3,700 taxable income from personal exertion, which is 25.28d., with the rate of 53.85d. on £3,700 property income. A flat rate of 102.465d. is payable on each £1 of taxable income from property in excess of £3,700.
Division C provides the rates to be applied in the cases where taxpayers derive taxable income from personal exertion and from property. In these cases of composite income from personal exertion and from property, the rate of tax on the separate amounts of each class of taxable income is ascertained as. if the total income were derived wholly from personal exertion and wholly from property, respectively. The effect of the application of Division C is that the taxpayer pays tax on his taxable income from personal exertion and property at the rate attributable to his total taxable income. In other words, to illustrate the case by example, if the total composite income were £5,000, made up of £3,000 personal exertion income and £2,000 property income, the rate applied to both the £3,000 and the £2,000 is the rate applicable to £5,000.
Division D is operative when the averaging provisions of the assessment act are applied in the assessments of taxpayers. The provisions of the assessment act for the averaging of income to determine the rate of tax payable are limited to the assessments of primary producers and do not apply to taxpayers generally. It appears to be hardly necessary to explain to honorable members the working of the averaging system. The rate of tax on the taxpayer’s taxable income is ascertained by averaging his taxable income over the year of income and the preceding four years. The rate that is attributable to the amount of the taxpayer’s average income over the five-year period is the rate of tax prescribed by Division D to be paid by a taxpayer on his taxable income of the year of income.
In Division E an equitable basis is provided for the calculation of the tax payable by a taxpayer who receives a premium upon the grant or assignment of a lease. These lease premiums have the income character of commuted rent and for this reason the premiums are included in the taxable field by special provisions of the assessment act. The full amount of the premium is, however, taxed as income of the year in which it is received, and it will be readily appreciated by honorable members that the graduated rate of tax would cause a taxpayer to pay a greater amount of tax than he would be called upon to pay if he received the amount of the lease premium in the form of rent spread over the years of the lease term. This inequity is removed as far as possible by the assessment act, which provides for the premium to be taxed at the rate that would be payable on a notional income ascertained by dividing the lease premium by one-half of the number of years in the lease term. Any taxable income which may be derived by the taxpayer in addition to the lease premiums is aggregated with the lease notional income to determine the rate of tax payable on his total taxable income.
Division F provides for a minimum tax of 10s., which has been the minimum tax fixed for many years.
Division G prescribes the rate of tax payable by trustees in those cases where under the provisions of the assessment act the trustee is assessed on the whole or portion of the income of a trust estate. A provision of this nature is necessary to meet the case where the trustee of a trust estate is a company, otherwise the rate of tax applied to the taxable income derived by the trust estate would be the flat company rate instead of the graduated rate payable by an individual. For example, if the taxable income derived by the trust estate be, say, £3,000 from property, the rate of tax payable thereon is 44.68d. as against the rate of 24d. payable by companies.
Division H provides for the rate of tax to be paid by companies. As has been already stated, the proposed company rate is increased by 10.2d. in the £1 on the rate applied last year.
The third paragraph of the motion empowers the Commissioner to apply the rates of tax as set out in the resolution in those cases where it becomes necessary to make assessments for 1940-41 and 1941-42 before the rates bill for the financial year 1940-41 is passed by Parliament.
– I do not propose to resist this proposal. The budget debate found me acquiescent in the proposed increase of taxation which the Government then contemplated, As we all recall, the budget made provision for approximately £5,900,000 of new taxation. Last Friday the Assistant Treasurer (Mr. Spender) intimated that it was proposed to take, in addition to the tax on gold of £1,500,000, another £1,000,000 in taxation as the result of the change in the rate of company tax. I take it that the motion before us harmonizes the two proposals, the budget proposal in respect of income and company taxation and the announcement of last Friday.
– That is so. The only alteration in the motion is in respect of the company rate.
– The company rate now goes to 2s., whereas it was intended to increase it to1s. 7.8d . The Government intended to take 6d. and it has now decided to take1s.
– To be exact, 10.2d.
– And instead of £1,360,000 it is now proposed to take £2,360,000 from companies.
– The total figure is £2,860,000 including personal exertion.
– The Government has no proposal to vary the proposal in respect of personal exertion; it is a 10 per cent. rate superimposed on the step taken in imposing last year’s tax.
– I do not know whether the Assistant Treasurer (Mr. Spender) intends to put this bill through to-night. There are certain matters which I should like an opportunity to look into before the bill is passed. Although the honorable gentleman’s speech was very interesting to listen to, I should like an opportunity to peruse these formidable formulas.
– I shall be content if the bill is taken to the second-reading stage.
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Mr. Spender and Mr. Fairbairn do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Spender, and read a first time.
Motion (by Mr. Spender) proposed -
That the bill be now read a second time.
Debate (on motion by Mr. Archie
Message recommending appropriation reported.
In committee (Consideration of GovernorGeneral’s message) :
Motion (by Mr. Spender) agreed to -
That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to grant and apply out of Consolidated Revenue Fund a sum for defence purposes.
Standing Orders suspended; resolution adopted.
That Mr. Spender and Mr. Perkins do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Spender, and read a first time.
– I move -
That the bill be now read a second time.
This bill is for the purpose of appropriating for defence expenditure of a capital nature an amount of £627,309, which represents the excess receipts of the Consolidated Revenue Fund during 1938-39. By the Defence Equipment Act of 1934, a Defence Equipment Trust Account was established into which various amounts have since been paid, with the approval of Parliament, with the object of relieving the revenues of later years. The purposes for which amounts standing to the credit of this account may be used are : -
An amount of £1,425,915 remained in the trust account at the 30th June last from the excess receipts of 1937-38. This was set aside by Parliament for expenditure on defence equipment, and with the amount of £627,309, which it is now proposed to appropriate for a similar purpose, a total of £2,053,224 is available for capital expenditure in 1939-40 from the trust account. Details of the items on which this amount is to be expended will be found on page 315 of the Estimates. The policy of treating the excess receipts in this way has been approved by Parliament in a number of instances in the past. I commend the measure to the House.
– I do not know whether I would be in order in discussing at this stage the methods employed by the Government in the disposal of these sums of money, that is to say, the conditions under which the work for which this money will be expended will be carried out by the various contractors and others engaged in supplying defence equipment.
– There is nothing about those matters in this bill.
– The Minister stated that details of the items on which the money is to be expended will be found on page 315 of the Estimates. It is possible that those details may cover the particular equipment in which I am interested.
– It appears that the matter raised by the honorable member should be discussed on the budget and not on this bill.
.- I notice that it is proposed to take the whole of the surplus of £627,309 from last year and transfer it to the trust fund. No suggestion has been made that any amount should be set aside to reduce the accumulated deficit of £15,000,000. The last transfer of excess receipts for that purpose was made in June, 1937.
– The exigencies of recent events have made it impossible to utilize any portion of the excess receipts in reduction of the accumulated deficit.
– An announcement was made, in the budget of course, that it was intended that the surplus of last year should be appropriated for the Defence Equipment Fund which is used for the purpose of providing the defence organization with its capital equipment. In past years from the time of the present High Commissioner as Prime Minister it has been the practice of the Government to set aside some portion of the surplus revenue, in fact the greater part of it, for the purpose of adding to this equipment fund so that in future years the revenue would not be drawn on too heavily for defence purposes. That was a sound practice so far as it went ; but I thought that it would come to an end when the Government, the year before last, used portion of its very large surplus to reduce the accumulated deficit of the Commonwealth. The accumulated deficit, which, speaking from memory, is about £15,000,000, has stood stationary for many years, and the surpluses of succeeding years have not been used to offset the deficits of the depression years, with the result that we are paying, I should say, charges on that accumulated deficiency. In the past it has, of course, been possible to reduce taxation by this procedure.
– If the Government’s financial circumstances bad enabled it to utilize some portion of this money to reduce the accumulated deficiency it would have done so.
– I realize, of course, that if the Government did not provide this money for defence this year it would have to increase taxation. The excess of last year’s revenue while not in the revenue account is available to the Government to be used as though it were.
– The Assistant Treasurer (Mr. Spender) has referred us to page 315 of the Estimates for details of the items on which this money is to be expended. Apparently we may take our pick of the various works set outon that page costing £19,250,000.
– I refer the honorable member to the second column of figures on that page.
– I realize that the money is to be spent for defence purposes, and therefore at this stage I should not trouble the honorable gentleman to put his hand into the bran dip and say which items are concerned.
Question resolved in theaffirmative.
Bill read a second time and passed through its remaining stages without amendment or debate.
Debate resumed from the 15th September (vide page 668), on motion by Mr. Spender -
That the bill be now read a second time.
– If this were an ordinary year, one would be tempted to do the ordinary thing, namely, to traverse the reports which the Commonwealth Grants Commission has made dealing with the claims of the three claimant States under section 96 of the Constitution. But this is not an ordinary year. We are faced with grievous problems, the character of which we cannot even now envisage. I am disposed, therefore, to regard it as almost futile to attempt to consider the value of the report of the Grants Commission, which the Government has accepted and on which it has based this bill. The grant to South Australia is £45,000 less than that for the previous year, whilst the grant recommended for Western Australia is £25,000 more than that State received last year. The recommendation in respect of Western Australia was really £117,000 greater than the normal grant, but a deduction of £44,000 has been made in order to adjust an advance which was made on the recommended grant in 1936-37. Tasmania once again appears to have succeeded in establishing a claim for a larger amount and in the current year is to receive £20,000 more than the sum voted to that State for the previous financial year. On balance, the amount which the Commonwealth has to find is less than was the case in the year just closed. The commission apparently took into account a recommendation which I made in happier days that its report should envisage a three-year period. I felt then, and if times were otherwise should still feel, that in view of the great experience which the commission has had, and also the regularity with which the cases have been completed, that it was quite practicable to provide for triennial, rather than annual, payments. I confess, however, that the probable economic disturbancethis year, coupled with the tremendous derangement of the tax resources which will be available to the State governments, as well as the depletion of their borrowing resources, will no doubt create such a degree of disorder in their budgets that an examination annually, while the present state of affairs continues, appears to be the only feasible course. The Parliament has, for the last seven years, regularly accepted the recommendations of the Grants Commission and, as that was the practice of the Parliament in years gone by, I feel that it would be a waste of time. on my part to expect any other result upon this occasion.
Debate (on motion by Mr. Archie Cameron) adjourned.
Debate resumed from the 15th September (vide page 665), on motion by Mr. Spender -
That the bill be now read a second time.
– On the budget debate, I said that I agreed that the increase of the rate of sales tax from 5 per cent, to 6 per cent, was inevitable, and that the Government had done the sensible thing in retaining the present schedule of goods subject to tax rather than extending the range by bringing in goods hitherto exempt. As the Government must have revenue, and as we are faced with unpredictable increases even of the expenditure now contemplated, I can see nothing for the committee but to accept the tax programme of the Government. This afternoon, I attempted unsuccessfully to persuade the Government to review one of its proposed taxes, and I feel I had a much stronger case then than I should have were I to attempt to resist the increase of the sales tax. However, one final thought occurs to me in this connexion. During previous discussions on this tax, honorable members supporting the Government have rather carpingly suggested that a Labour government was responsible for the initiation of a tax of this kind, and have advanced that suggestion in such a way as to imply that if the Labour government had not brought down this tax, this kind of tax would not be known to Australia. All I have to say to that is that the present Government and its predecessors, under the late Mr. Lyons, retained the sales tax. No matter who was the Treasurer, whether it was the late Mr. Lyons or the present Minister for Supply and Development (Mr. Casey) or the Prime Minister (Mr. Menzies) - all of them were in those governments - the purpose of the tax as they used it was to raise approximately £9,000,000 a year, and the rate, no matter how it varied, whether, it went up or down, produced approximately £9,000,000 in each financial year. This year it is expected that the yield will be increased to about £11,000,000. I sincerely hope that that estimate will be proved correct, because it will reveal that the economic activities of the community will not be too seriously disturbed. That estimate, however, was given before the present situation became so menacing. I accept the measure.
.- I do not intend to speak on the genera] principle of the sales tax. Many of us have raised protests generally in years gone by, and suggestions have been made for the substitution of a tax on turnover - I myself have suggested it in Parliament - in order to prevent the harassing of business people arising from the complexities of ten different Sales Tax Assessment Acts. Certain exemptions, however, have made the tax rather more workable. in recent years. My purpose on this occasion is to point out that under this measure it is proposed that the sales value of imported goods be first converted into Australian currency before tax is assessed. That is a very radical departure from previous customs practice. As honorable members are aware, the sales tax is collected at the Customs House. This morning, Mr. Speaker, I asked if it were possible to- distribute reports of second-reading speeches of Ministers in proof form to honorable members in order to enable them to study the reasons behind various proposals brought forward by the Government. So far, honorable members are not given an opportunity to study the matter until the explanations of Ministers are distributed in Hansard in bound form, and we have been obliged to rely on condensed reports of Ministers’ statements in the press. If I remember rightly, the Assistant Treasurer (Mr. Spender) said that this bill was to rectify an anomaly in that retail traders who accepted delivery of goods at the Customs House would pay a higher rate than wholesale traders, who paid sales tax only when the goods were sold.
– The reason I gave was that, in 1931, when the exchange was only upon the basis of 10 per cent., for sales tax purposes 20 per cent, was added to the value for duty plus the duty and that rather placed the retailer at an advantage compared with the wholesaler.
– I propose to show that the depreciation of Australian currency does not justify this proposal and that this measure is out of step with customs practice. Honorable members are aware that customs duty is paid on the sterling rate. For example, on goods from the United Kingdom worth £100, if the tariff were 50 per cent, after the general addition of 10 per cent, ad valorem, the duty paid would be £55. It matters nothing that our currency is depreciated 25 per cent., the duty is still paid on a sterling basis. I recall that a former Treasurer suggested that we should convert all the United Kingdom invoices to Australian currency and then assess the duty on that basis, but the Opposition at that time, of which I was a member, was horrified at that proposal, seeing that it would have raised all rates of duty by 25 per cent, and upset the relationship of all items throughout the tariff. Although that Government had full power to collect customs duties in that way, that power was not exercised. I do not think any government would seek to implement such a proposal in respect of customs duties, but the present Government is now proposing it in respect of sales tax. I submit that the House is not fully aware of the purport of the proposal. The Assistant Treasurer says that this amount would yield an. additional £120,000. I do not know how that estimate has been arrived at, and I think it could be questioned, but as it is such a trifling amount, I suggest that the Government would be very unwise to tamper with a practice which has existed in customs law for so long. This proposal does not rectify any anomaly. It seems to have been rather ill-conceived. Undoubtedly it has come from the Treasury, and not from the Customs Department. No doubt the Assistant Treasurer is seeking to obtain additional money and I am not questioning any tax at the present time to raise greater -revenue for war purposes - but I suggest that it would be unwise to introduce into our customs law a precedent such as this. In order to illustrate my point that this proposal will not rectify the anomaly which the Assistant Treasurer suggests it will rectify, I shall take the following example. On goods worth £100 sterling, 10 per cent, is added, bringing the value to £110. The duty at 50 per cent, would then be £55 on the original value of £100 sterling. Primage duty at 10 per cent, would be £11, bringing the total value to £166. Assessing wholesaler’s profit, including overhead, at, say, 33-J per cent., the total valuation would be £221 6s. Sd., on which sales tax at the rate of 6 per cent, would be £13 5s. 7d. Under this proposal, without going into all the details, £25 exchange would be added to the retailer’s invoice value, bringing the original valuation in Australian currency to £125. To this, as usual, 10 per cent, is added, bringing the value to £137 10s. Then has to be added the customs duty and the primage duty. In addition the Customs Department adds 20 per cent, to find out the supposed wholesale value on which to base the sales tax. The proposal of the Government is that, instead of the amount remaining at £100, for sales tax purposes it should be converted ‘to Australian currency.
– That is fair.
– No. If the honorable member figures it out he will find that the retailer pays considerably more. He pays more tax and earns less profit.
– Is it not a time of war?
– Exactly. The honorable gentleman must have been outside when I said earlier that I have no objection to the amount of tax raised, but I do object to a principle being imported into the sales tax which is a radical departure from general customs procedure and which will be practised in the Customs Department, because once this is started at the Customs House it will not be long before the governments may want customs authorities to convert everything from sterling into Australian currency for the purpose of calculating duty. I suggest that in these two parallel cases, whereas the retailer will now pay £14 18s. . lOd. the wholesaler will pay £13 5s. 7d. and make a profit of 33 per cent, as against the profit of scarcely 10 per cent, made by the retailer. The Government has not given adequate consideration to this matter. It sees in this proposal a method of picking up a little more money, but it has not realized the far-reaching consequences. It would be wiser to put this proposal aside than upset the whole of the customs practice. I should support any other measure to raise a similar amount of revenue, but from long experience in the Customs Department, I say that it is wrong to convert to Australian currency instead of letting the invoices remain in sterling, as has always been the case.
.- The honorable member for Balaclava has provoked in my mind a thought on which I should like an explanation. For my part, I should not be perturbed to think that the Government was, by this proposal, to raise additional revenue from items which are ordinarily subject to revenue customs duties, but I should object to protective action, masquerading under the name of sales tax, being taken by an alteration of the sales tax procedure.
– There is nothing like that at all.
– It is accidental.
– In point of fact it places the wholesaler and retailer on what we say is a comparable basis.
– The Assistant Treasurer said that it does, but I say that it does not.
– I insist that it does. I shall give examples.
– I think that that is dependent, to a considerable degree, on the items which are exempt from sales tax. Consider, for instance, certain requirements in primary production, such as cream separators, which are exempt from sales tax.
– They would not be affected.
– That is so, but some items necessary to maintain at low level the costs of production in this country, raw materials for instance, which come in duty free are not exempt from sales tax. This proposal would introduce an element of protection which would be quite contrary to the previous customs fiscal practice.
– The proposal will cover all items on which sales tax is paid.
– But it does not follow automatically that those things which are on the duty-free list are identical with the goods which are exempt from sales tax. If I were assured by the Assistant Treasurer that all goods on the duty-free list were included in the list of exempted goods under sales tax, I should be quite content with this proposal, but unless it be made quite clear that the effect of this proposal will not be to introduce some protective effects which at present do not prevail I shall not be content.
– I take it that the Assistant Treasurer (Mr. Spender) will be able to tell us that the general exemptions from sales tax apply to this bill.
– ‘Yes, the same field is covered.
– And again, that this proposal has no relation to customs.
– None whatever except incidentally.
– It deals only with sales tax. I suggest that a brief explanation from the Assistant Treasurer would satisfy the House. The Assistant Treasurer said that this proposal was to place the wholesaler and retailer on the same basis. I take it that where the retailer imports this provision will apply.
– in reply - The purpose of this proposal is to place an importing retailer on the same basis as an importing wholesaler. In 1930, as I pointed out in my second-reading speech, the rate of exchange was 6 per cent. There was added 20 per cent, to the total sum made up of the value for duty plus the duty, for the purpose of determining the price upon which sales tax should be calculated. That 20 per cent, did not allow for the exchange factor. It can be fairly said that then the retailer who imported and the wholesaler who imported were on a substantially equal footing. Since then, however, the rate of exchange has increased to 25 per cent, with the result that the wholesaler when he sells to the retailer has to take into account the added exchange, whereas the retailer who imports has his sales tax based upon a sterling calculation, in respect of the calculation of the amount on which duty is paid in respect of goods imported into Australia. Consequently, the position is that the tax is based on a figure which has no relation to Australian currency. The object of this legislation is to bring the retailer who imports and the wholesaler who imports once again into line. The sales tax branch of the Taxation Department has had brought before it the disparity between the way in which goods in the two groups are treated. There have been distinct anomalies. As regards the comparison of retailers5 costs with wholesalers’ prices, the following figures have been taken from actual cases as an illustration of the present sales tax disparity between retailers and wholesalers : -
– Is the honorable gentleman quoting landed cost prices against selling prices?
– I am’ citing two comparable prices in respect of which sales tax is imposed. In respect of the same goods the wholesale trader pays a higher tax than the retailer.
– But the Minister is omitting the fact that the wholesaler has added his profit.
– I am omitting nothing relevant at all. As I said earlier, the exchange at the outset of this legislation was 6 per cent, and 20 per cent, was added for the purpose of fixing value for duty, and, despite the fact that the rate of exchange is now 25 per cent., that addition has not been altered, but the wholesale importer has had his costs increased in proportion to the increased rate of exchange and has to pay aa,les tax on that increased amount.
– But he does not pay his sales tax at the Customs House.
– That is so. It does not matter, however, where he pays the tax. The important thing is the calculation upon which the tax is based.
– Where one pays on selling price the other pays on cost price.
– In the present circumstances when the final basis is arrived at the wholesaler is placed at a disadvantage. We all know the growth of importing by large retail houses. Under the sales tax law at present these retail houses are placed at a competitive advantage compared with the wholesalers, and it is substantially for that reason that this amending bill has been brought down. It is true that the revenue will be slightly increased, but the main purpose is the removal of the anomaly.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 (Sale value of imported goods).
– I make this protest to try to get clarity from the Assistant Treasurer (Mr. Spender), who has said that this proposal brings the wholesaler and the retailer into line. I submit with due respect that it does not. Tho retailer pays the sales tax at the Customs House.
– On what?
– On sterling plus 20 par cent., which is intended to bring the articles up to wholesale value.
– I have already explained that in 1930 the rate of exchange was only 6 per cent.
– I wish the Minister would not sidetrack me. The retailer pays on that basis, whereas the wholesaler does not pay at the Customs House at all. He sells these goods loaded with his profits and he pays the tax on that basis. It is because of the representation of the wholesalers that the Government is doing this. There has been a clamour to hit the importing retailer because the wholesaler is now going to the wall. The general practice now in operation is that most firms import their own goods for which they paycash at the Customs House. It is cheaper to do that than to buy goods from a wholesaler who stores them and may put a big loading on to their price. To say that this puts the wholesaler and retailer in line is not correct, because the importing retailer pays at the Customs House on sterling at £100 plus 20 per cent. loading, whereas now the proposal is to convert sterling to Australian and make him pay on that. On the other hand the wholesaler gets his goods without paying sales tax, puts them into store, and subsequently sells them to some one elseat the invoiced price plus all overhead. Actually he passes the tax on to some one else and does not pay it himself. To introduce this procedure into sales tax is not worth while. I suggest advisedly, as one who was Minister for Customs for so long, that it will open up a dangerous precedent, and shortly pressure will be brought to bear for all sterling invoices to be converted to Australian as can be done under our present statute. Whilst I ardently believe in protection and in the revenue duties, I repeat that this course would open up a precedent at the Customs House because it is there that sales tax is paid. Therefore, I exhort the Minister and the Government to reconsider his proposal.
– The honorable member for Balaclava expressed the same opinion about six or eight years ago.
– That is true. On that occasion the proposal was put up by Mr. Theodore when he was Treasurer. I opposed it strongly and it was dropped. Mr. Theodore sought to apply the system to customs duties and now it is to be applied to sales tax when paid at the customs. It is not worth while and it would establish a precedent which would break down the system which has long been practised with regard to customs. I suggest that the Government should raise the £120,000 by some other method.
.- I have listened to this discussion with a great deal of interest, and in my opinion the problem is something like the old conundrum about the son of the man in the photograph. Both the former Minister for Trade and Customs (Mr. White) and the Assistant Treasurer (Mr. Spen der) are equally sincere in the views they have put forward, despite the fact that those views are in direct conflict.I should like to study this proposal more thoroughly in order to find out what its effect will be, particularly in view of the application of the principle with respect to an increase of customs duties, and I suggest that the Government should adjourn the discussion until a later stage. Honorable members would then have an opportunity to examine the legislation closely, and so arrive at a conclusion with regard to its effect.
Mr.Spender. - There is nothing mysterious about it.
– There is a strong difference of opinion between two honorable members of this House who have very high reputations. The honorable member for Balaclava was Minister for Trade and Customs for more than six years and is presumed to know something about matters such as this. At the same time one must give deference to the views expressed by the Assistant Treasurer (Mr. Spender). There is rather an important principle involved. This bill has been brought down quickly, and honorable members have not had sufficient time to study and digest it.
.- The point of difference between the arguments advanced by the Assistant Treasurer (Mr. Spender) and the honorable member for Balaclava (Mr. White) is the fact that the wholesaler pays the sales tax in addition to his invoice landed cost, plus all other charges. He pays sales tax on his profit on that particular transaction. I ask the Assistant Treasurer if he has taken that fact into consideration because that is a different method of arriving at the sales tax. The wholesaler pays his sales tax on all landed charges plus his profit on that particular transaction. Let us assume for argument’s sake that an item is landed at the wharfs and that the charge to both the wholesaler and retailer, after paying the invoice cost, exchange, customs duty, &c., is £4. The wholesaler sells that item to a retailer for £4 10s. and therefore sales tax has to he paid on that amount whereas the retailer who is in a position to do his own importing pays sales tax on only £4.
– The main point is that the wholesaler has to include in his price the increase due to the increase of the rate of exchange.
– I quite appreciate that point. I think we all agree that both the retailer and the wholesaler should be put on exactly the same basis as far as the payment of sales tax is concerned.
– What about exchange?
– Exchange, too.
– Well, that is all this bill contains.
– I happen to know something about this matter. We all know that in the final analysis the retailer pays the sales tax or passes it on to the consumer.
– Is not that a reason why the -retailer should have to pay the same sales tax on the same article regardless of whether it is imported direct or bought from the wholesaler? Is not that the purpose of the amendment?
– I point out To the Leader of the Opposition that the proposal does not do that.
– The amendment will.
– It does not equalize it at all. If a man imports his own goods, and, as I pointed out, an item costs him £4, then he will pay sales tax on £4. Assuming that the sales tax were 10s., he would be importing the article for £4 10s-, whereas if he were to buy the article from, a wholesaler, lie would have to pay considerably more for it. I do not think ‘that the Minister has taken into consideration the fact that the wholesaler has to pay his share of the tax on his profit, in addition to the cost of the goods.
.- In 1930, when the sales tax legislation was introduced, the exchange rate was 6 per cent. At that time, in order to put the retailer and the importing wholesaler on a competitive basis, the retailer who had his sales tax collected at the customs paid on the basis of the value of the import expressed in sterling plus duty, plus 20 per cent, of the total. In the meantime, the wholesaler has had to bear the increase of the rate of exchange and pay sales tax based on a figure which includes that factor. He imports goods, and when he sells to the retailer, he has to take into consideration an element which was non-existent in 1930, namely, the increase of the exchange rate from 6 per cent, to 25 per cent.. In the case of the retailer, that element has, up to now, been totally disregarded, and the basis of assessment is the same as in 1930. This bill is concerned with that new element, and with that only.
.- If the committee agrees hurriedly to this provision, it will realize later that it has made a mistake. What the Minister has omitted to mention is that every one, wholesaler and retailer alike, may pay at the Customs House now, and that is the way to obtain equality between them. However, there are those who prefer not to give the Government the cash immediately, but to put the goods into bond, hold them there, and perhaps make a good profit on them. It is true they paytax on the profit also. This bill was brought down last week, but no examples accompanied it to show how the new provision would work out. I challenge the Assistant Treasurer (Mr. Spender) to cite an example showing that it will place the two classes of traders on the same footing. If the wholesaler does not care to quote his certificate, as it is called, he can do the same as the retailer; that is, pay the sales tax and reap any advantage that operates now. A wholesaler with a £100-worth of goods will, after adding all the extras in the way of exchange, 5 per cent, primage, 50 per cent, duty and 33^ per cent, profit, bring the figure up to £234- 12s. 3d. A retailer, alter making all additions and the same profit, will bring the same £100- worth of goods up to £273. The Government cannot substantiate its claim that this provision will make for equity in business.
.- The honorable member for Balaclava (Mr. White) professes to be concerned with equity. I should like to know, whether, in a case where no sale is effected at all, it is proper to impose and collect sales tax. I had a personal experience of this when the honorable member for Balaclava was Minister for Trade and Customs. I was made to pay sales tax on something that was never sold to any one or bought by any one, namely, a small consignment of pearl shell sent from
Thursday Island to China to be polished and returned to Australia.
– That was a Treasury matter. It had nothing to do with the customs.
– In one case 6 per cent, sales tax .is imposed on the value of the goods in sterling, plus 20 per cent., while in the other it is imposed on sterling converted into Australian currency, plus 20 per cent. For example, suppose the value of a consignment of goods imported from Great Britain to be £100 after the addition of the statutory 10 per cent. A further 20 per cent, would be added in the case of a sale to a retailer in order to bring the amount up to what it would be if the wholesaler had put his profit on. Before this amendment was brought in, the retailer would have to pay on £120. As now proposed he will pay on £100 sterling, plus 20 per cent, profit, plus the added amount represented by the conversion of sterling into Australian currency, this being the basis upon which the wholesaler has been paying sales tax. The two are thus to be brought on to a common basis.
.- The Government is quite justified in taking this action. At present, there is an anomaly in that the importer is getting the advantage of the difference between the present exchange rate, and the rate operating in 1930. There are, however, worse anomalies than that. For instance, a person buying sugar in the city pay? sales tax oh the city wholesale price, but a country trader buying from one of the big country wholesale firms pays tax, not only on the city price, but on the rail freight also. However, I agree that the anomaly which this provision seeks to correct should be removed.
Clause agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill - by leave - read a third time.
Consideration resumed form the 3rd May, 1939 (vide page 44), on motion by Mr. John Lawson (vide page 40),
And from the 14th September (vide page 594), on further motion by Mr. Lawson -
That the schedule to the Customs Tariff 1933-1939 … be further amended * . . (vide* page 573).
– When the previous Government decided early last year to remove the import restrictions imposed in May, 1936, as part of the trade diversion policy, a decision was also taken to increase the general tariff rates in order to safeguard capital investments incurred in the local manufacture of certain commodities as a direct result of the trade diversion restrictions.
These general tariff increases were made in May of last year, but it was emphasized at the time that the Tariff Board would be asked to inquire publicly into and report upon the higher duties. Up to May of the present year the board had not completed its review of the higher duties, and they were reintroduced in Customs Tariff Proposals (No. 7) now before the committee. Since May the Government has received and dealt with practically the whole of the board’s reports upon the subjects covered by Customs Tariff Proposals (No. 7) and on the 14th September I introduced Customs Tariff Proposals (No. 9), which contained amendments based upon the findings of the Tariff Board.
These amendments will, in one or two cases, eliminate the higher duties imposed in May, 1938. In others, they will reduce them, while in yet another category they will leave them practically untouched.
At a later stage and before the committee commences the item-by-item debate I shall move a formal motion to enable the Customs Tariff Proposals (No. 9) to be dealt with in conjunction with the No. 7 proposals.
Consideration resumed from the 15th September (vide page 663), on motion by Mr. Menzies-
That the first item in the Estimates under Division 1 - The Senate - namely, “Salaries and allowances, £8,040 “, be agreed to.
– I regret that the Assistant Treasurer (Mr. Spender) is not at the moment in the chamber, because I wish to offer some comments upon a statement which he made on “Friday last concerning what he termed the high level of taxation in Queensland. J”, remind, honorable members that the Government of Queensland believes in taxing the people according to their capacity to pay. Therefore, the mau on the basic wage is entirely exempt from any form of State taxes, not excepting even the State development tax, whilst a married man with a wife and two children must be in receipt of an income of £4)00 a. year before he is liable to pay State taxes. That the people of Queensland are thoroughly satisfied with a Labour government is evidenced in the fact that, with the exception of one term, for the last 27 years Labour has ruled that State. In this budget, the Government proposes to raise by indirect taxes, approximately £62,000,000, and by direct, taxes only £17,000,000. In other words, approximately four-fifths of the total requirements for this year will come from indirect taxes in one form or another, chiefly customs and excise duties. No one objects to adequate protection being given, to Australian industries in order to ensure employment for our workmen, hut exception is taken to such imposts as the sales tax which falls most heavily upon the poorer sections of the community, including even invalid and old-age pensioners and widows and families of returned soldiers. Another iniquitous indirect levy is the flour tax, imposed ostensibly for the assistance of wheat-growers. We contend that if wheat-farmers require assistance, the money should be taken from Consolidated Revenue. The flour tax presses most heavily upon the poorer people, particularly those with large families.’ because they are the largest consumers of bread. If the Government desires to assist the wheat-growers, it should do so out of Consolidated Revenue. On numerous occasions during the last five years it has had surpluses, but these have been disbursed among the wealthy landowners in the form of remissions of taxes. In the period mentioned, the following remissions have been made in’ respect of twelve companies registered in Sydney: -
Similar treatment has been accorded to large companies in Victoria, South Australia, Western Australia, Queensland and Tasmania. The relief from land tax thus given in the last five years aggregates approximately £7,500,000. If the Government desires to raise additional revenue, it may do so by land tax which would affect only the wealthy section of the community. At the present time all land of . an unimproved value of less than £5,000 is exempt from tax. That exemption is far too high. Over a period of seven years, the land tax was decreased by approximately 50 per cent., but last year there was an increase of 11 per cent. This year, in what the Prime Minister (Mr. Menzies) has described as an historical budget, .provision has not been made for a further increase.
I am pleased that the Government has decided to raise the company tax. During the last few years, the profits of the Broken Hill Proprietary Company Limited have gone up by leaps and bounds. In 1931, that company made a profit of £83,257 and paid no dividend. In 1932, it increased its profit to £103,720 and again paid no dividend. In 1933, its profit was increased to £313,617 and it paid a dividend of 10 per cent. In 1934, it further increased its profit to £427,588 and again the dividend was 10 per cent. Tn 1935, the profit amounted to £670,442 and the dividend remained at 10 per cent. In 1936, with a profit of £850,361, it increased its dividend to 12-J per cent. In 1937, with a profit of £1,183,171, it again paid a dividend of 12£ per cent. In 1938, it further increased its profit to £1,340,461, and the dividend remained at 12£ per cent. In 1939, its profit amounted to £1,431,531 and its dividend was still 12£ per cent. In 1937, this company issued £1,730,405 worth of new shares at a premium of 50 per cent. Again this year, a new share premium reserve of £4,459,790 is to be capitalized on a distribution in the ratio of £64 bonus shares to £100 of subscribed capital. This represents a further watering of its stock. One can visualize what its dividend of 12½ per cent. means. This company should definitely have to pay a much higher company tax. I have a list of fifteen companies which, in the last twelve months, made profits aggregating over £15,000,000. They are-
Here is a field for the Assistant Treasurer (Mr. Spender) to explore during the coming year, either for budgetary or war purposes. These companies, in common with many others in Australia, made very large profits in the last twelve months, and should contribute towards the administration of the affairs of this country, not only in time of peace but also in time of war. They have the most to lose during the present crisis, and should accordingly pay something in the nature of an insurance for the safety of this country as well as their own business concerns. To-day I asked the Prime Minister (Mr. Menzies) a question in relation to his policy “ Business as usual “ during the period of the war. The budget makes provision for a large expenditure on public works. I sincerely hope that the Government will proceed with that works programme during the coming year, and will not ask the State governments to curtail their works expenditure. Curtailment of works programmes by the Commonwealth and the States would throwthousands of men on the labour market. That is happening in Brisbane at the present time. The Brisbane City Council is hard pressed to obtain loan money, and consequently has had to dismissa large number of men. who were employed on loan works. Every person who is out of employment is a definite drag on the community, and: I hope that the various governments and local-governing bodies will be enabled to keep all of their employees in work in this critical period.
The Commonwealth Government has promised to take definite steps to cheek profiteering. Only to-day the Premier of New South Wales admitted that hundreds of cases of profiteering had already occurred in that State. ‘ Therefore, I hope that the Government will vigorously prosecute profiteers, and see that the public is protected. During the last war, the prices of household commodities increased by leaps and bounds. In the first year of the war, the price of bread increased by 50 per cent., the price of flour by 86 per cent., and the price of butter by 62 per cent., whilst the prices of many other commodities doubled. By August, 1915, the price index number of some foods had increased in twelve months from 1,000 to 2,210. I trust that a similar rise will not occur during the first, year of the present war. The index figure of 1,000 at. the beginning of the war had risen by the end of the war to the extent shown in the following table: -
That was an average increase to 1,801, showing that the prices nearly doubled, whilst the wages of males in that period only increased from £2 15s. 3d. to £3 14s.11d., an increase of 19s. 8d., and the wages of females from £1 7s. 2d. to £1 17s.1d., an increase of 9s.11d. Wages, therefore, increased by approximately one-third, although the cost of living nearly doubled. During the last war, the working-class people were definitely on a lower standard of living through the increase of the prices of commodities and the slow rate at which wages advanced.
Although the government of the day undertook to prevent profiteering, many cases recommended for prosecution were deliberately overlooked by the then Acting Minister for Trade and Customs, who was also in charge of price-fixing. He admitted that he had refused to sanction prosecutions that had been recommended because of profiteering. I hope that the present Government will not condescend to do what was done during the last war by a tory administration which refused to take action to prevent profiteering. On that occasion, our wool, wheat, sugar, meat and butter were sold to the British Government, which disposed of its surplus to other countries and made huge profits out of its resale. Any profit made as a result of the Government’s action in acquiring foodstuffs on this occasion should be used for the benefit of the people. The Government proposes to tax profits made from the sale of gold as the result of an increase of price brought about by the war, and that principle should be applied to other commodities. The mistakes of the last war should not be repeated.
The Commonwealth Bank assisted this country materially during the last war, and I hope that, at least during the present crisis, the people’s bank will be permitted to handle all of the financial transactions of the nation. It should be allowed to utilize to the utmost the credit, resources of the country. Effect should be given immediately to paragraph 504 of the report of the Royal Commission on the Monetary and Banking Systems. The right honorable member for Yarra (Mr. Seullin) gave a most illuminating address, in which he showed how the Labour party, if in power, would have acted to overcome the present financial difficulties. Professor Copland, who is now one of the leading advisers of the Government, has stated that the Commonwealth has the filial voice in monetary policy. The Sydney Morning tfe raid of the 29th August, 1938, stated-
It is inevitable in a federation that tlie Federal Government must be responsible ultimately for monetary policy, as it is for defence.
In discussing the subject of the expansion of credit, the Melbourne Argus published the following statement in a subleader on the 3rd April last: -
Defence and development expenditure on a large scale will mean a much increased volume of transactions, consequently credit must be expanded to facilitate this increase.
The Commonwealth Bank Board, as a central banking authority, can effect this expansion quickly and safely. There is not the slightest danger in this course.
That is sound advice which the present Government should follow.
Now that Australia is at war, I again bring under the notice of the Government certain important facts which 1 ventilated when 1 first entered this Parliament. “When the House adjourned on the 1st September, 193S, it was generally understood that a state of war would be declared in consequence of the attitude of Germany towards Czechoslovakia, and although the Government has had twelve months in which to prepare for a crisis such as we now have to face, the Queensland coast, which is one of the most vulnerable parts of Australia and on which there are many excellent ports, is entirely unprotected. I understand that the Government proposes to establish a special defence force, and that one division is to be stationed in Victoria, another in New South Wales, and a third 100 miles from Sydney; but I should like to know what the Government proposes to do in Queensland and in other States, where many young men wish to be trained for military service. Are the services of these men to be rejected or will they be sent to Newcastle? They should be trained if possible in the State in which they reside, and as Queensland is possibly the State which would be attacked by an aggressor, the Government should establish one division as far north as is possible. The cost and difficulties associated with transporting troops from Newcastle to Northern Queensland would be considerable. The people of Queensland are definitely opposed to the defence policy of the Government, and not only Labour members and Government supporters representing that State in thic= chamber, but also the tory press and returned soldiers and other organizations arc protesting against the inadequacy of the Government’s defence proposals in respect of Queensland. The people of that State have to pay their share of taxes, and are consequently entitled to some measure of protection. Queensland manufacturers have also been disregarded in the contracts for war equipment. It would be in the interests of the Commonwealth if annexes such as are being constructed in other States were erected in Queensland also.
I understand that Senator Allan MacDonald and the Minister for Trade and Customs (Mr. John Lawson) who reported on the TransportWorkers Act have made certain recommendations to the Government, which have not yet been acted upon. That act was introduced as a temporary measure to inflict punishment on certain individuals, and as those men have already been punished too severely the act should be repealed. Some of them, who have been treated as outcasts, are hard-working citizens, and the act should now be repealed in order to bring about more harmonious conditions on the waterfront.
During the last few months numerous instances have been brought under my notice of young men, some of them not able to walk without the assistance of crutches, who cannot receive the invalid pension because they are said to be not permanently and totally incapacitated. If the Government were to provide these young men with a course of vocational training it would be of advantage, not only to the persons concerned, but also to the community generally. Some of them who were crippled early in life have to be supported by their aged parents who are living on a pension. Some who cannot walk without the aid of two crutches have been told that they are not totally incapacitated. I know of one young man whose legs are withered and who also has a disabled arm, yet he does not receive a pension. I do not think that any Minister really believes that any person so disabled should not receive a pension, and also some form of vocational training.
I understand that the Government has again cast aside national insurance, although the Prime Minister, when Attorney-General, resigned from the Cabinet because the Government would not proceed with the scheme. There are many unemployed in Australia, and I am afraid that the number will be greater during the remainder of the year. What will happen to our social services during the crisis through which we are now passing? Are these people not to receive any consideration because we are at war? Money has to be found to enable the conflict to be brought to a successful conclusion, but finance should also be made available to provide employment and also to establish an equitable national insurance scheme.
I notice from the budget that money is to be appropriated for additional postal facilities, and I trust that sufficient will be made available to construct a new post office at South Brisbane. The Government is satisfied to rent for postal purposes a shop in a one-way traffic street in one of the worst parts of the locality. The late Prime Minister, Mr. Lyons, was unable to find the post office, and his own officers did not know where it was. In his search for it, he went miles out of his way, even as far as Woolloongabba. Only 100 yards away from the present unsatisfactory and shabby post office building is a piece of vacant land owned by the Commonwealth which would make an ideal site for a new post office. I trust that the Government will take early steps to erect a modern post office building in this district. It is regrettable that when the Postmaster-General’s Department is making such huge profits out of its operations every year, the post office at South Brisbane should continue to be housed in such an unsuitable and shabby building. I invite members of the Cabinet to take advantage of their next visit to Brisbane to inspect the South Brisbane post office in order to see at first-hand what a blot it is on the landscape and how poorly it meets the needs of the residents there.
” Daily News “ : Attitude Towards Military Preparations-Land Tax.
Motion (by Mr. Spender) proposed -
That the House do now adjourn.
.- I direct the attention of the Government to a broadcast from the British Broadcasting Corporation early last Saturday morning in which an announcer stated for all the world to hear that all the Australian newspapers with the exception of the Labour journal, the Daily News, were urging full military preparations. The Daily News characterizes that statement as a plain unadulterated lie. It says that, with the Australian Labour party, it has repeatedly declared that it stands four-square for the effective defence of Australia as a member of the British Commonwealth of Nations and for the fullest military, naval and aerial preparations. Months before the war broke out, the Daily News criticized the Government for its bungling of defence. It demanded that the bungling should cease, and that Australian defence should be placed on the most efficient and effective basis possible. The reason for this emphatic attitude on the part of the Daily News was that the Australian Labour party, of which it is the official mouthpiece, had time and again drawn attention to the shortcomings of the Government in preparing for any emergency in which the British Commonwealth of Nations might be involved. I understand that such Australian news as is given by the British Broadcasting Corporation is sent from this country through certain channels. On behalf of the Daily News I ask the Government to take immediate action to prevent the repetition of ill-founded statements of this kind if it is honest in its declaration that it wishes to keep a united front in this country during the war. I should have thought that, as this broadcast was made last Saturday, some attempt would have already been made by the Government to bring to the notice of the British Broadcasting Corporation the falsity of the statements made. When I questioned the Minister for Information (Sir Henry Gullett) regarding the matter this morning, he did not seem to know anything about it. Who was responsible for sending lying information of this kind to the British Broadcasting Corporation and for traducing a journal which has played its humble part during this crisis? I feel sure that had such a lying statement been made regarding one of the newspapers which supports the Government there would have been a blare of contradiction not only in Australia but also in Great Britain. Apparently, however, because the Daily News has had the temerity to criticize the Government, insults of this description may, in the guise of patriotism, be hurled against it with impunity. Cowardly action of this kind is likely to cause trouble and heart-burnings in Australia, and these statements may, in turn, lead to other consequences. I ask the Government to take steps to see that this sort of thing is stopped once and for all.
.- During the difficult period now confronting the nation, when the Government is considering various increases of taxation in order to obtain the necessary finance to carry on its war-time operations, it is appropriate that attention should be drawn to attempted evasions of land tax. Provision is made in the land tax legislation for the exemption from the payment of land tax of real estate held by mutual assurance societies. I take it that the original intention was to exempt from the payment of land tax the business premises of these societies; but I find upon making inquiries that these societies are claiming exemption in respect of not only their business premises, but also the whole of their real estate. Some of them have considerable holdings of real estate and Iunderstand that the evasion of tax in respect of the whole of their assets of this kind would involve the loss of a considerable amount of revenue. I would not be so perturbed if the policy-holders in these societies were getting the benefit of the savings made by the societies in this way, but I am not at all sure that they are. When criticism is levelled against the operations of mutual assurance societies in this Parliament it is always argued that at least the policy-holders get the benefit of any profits earned. It may be asked how anybody but policyholders could benefit from the operations of mutual assurance societies. The Government should make inquiries in order to see whether the policy-holders are being protected. I may be told that they have ample opportunities at meetings held from time to time, and also through the election of their directors, to determine the policies of their respective societies; but the people to whom I refer have become so skilful in their evasion of certain provisions of the law, that it is almost impossible for the policy-holders to effect any change. Furthermore, the majority of policy-holders are so apathetic that they do not avail themselves of opportunities to bring about any alteration. In addition, honorable members of this Parliament have so often given out assurances that everything is all right with respect to the control of the funds of these companies that the policy-holders have become apathetic, believing that they have no need to exercise vigilance in the affairs of their respective societies. I understand that it is the practice of these companies to insist that the whole of their employees shall be policy-holders, so that when a meeting is called to confirm a decision of the directors, all the company employees, in the presence of their bosses, will vote as they are directed. Furthermore, the notices of such meetings are generally sent out to policy-holders at least a month ahead, and by the time a meeting is held the majority of the policy-holders have forgotten all about it and consequently fail to attend. Then again many policy-holders cannot conveniently attend meetings because they reside in distant areas. I have searched records in order to ascertain whether any foundation exists for the complaint I am putting before the House. I shall content myself at the moment with one illustration of the method by which these companies, particularly those dealing in real estate, utilize their funds to benefit certain people. This case gives rise to suspicion as to whether the interests of policy-holders are really protected in such transactions. A property, which, as a search of the title deeds showed, was sold on the 29th June, 1934, for £15,000, was purchased by one mutual assurance society on the 24th February, 1938, for £26,000. The property is situated in Darlinghurst, Sydney, and anybody who is familiar with that area will know that property values did not increase to that extent in that period. Furthermore, I am informed that in that period no structural alterations were made which might have enhanced the value of the property. The increase of £11,000, however, has been represented by the company concerned as the increased value of the property during that period. This transaction is similar to a number of others into which the Government should institute an inquiry. The facts which I have given have ‘been ascertained from the title deeds, and, therefore, cannot be disputed. Evidence equally reliable can be produced in connexion with other transactions of this kind. In the interests of thousands of policyholders in mutual assurance societies, the Government should institute an immediate inquiry into the manipulation of funds in this way. The facts which have been placed before me at least give rise to the suspicion that the interests of policy-holders are not being adequately protected. It would appear that some people gain a material advantage as the result of transactions of this kind, because it cannot be said that those in control of these companies are inexperienced business men. Therefore, we cannot dismiss these transactions as being due to inefficiency on the part of those in control of these companies, but must attribute them to much more serious causes. I again impress upon the Government the necessity for investigating these matters immediately.
– in reply - I shall bring the matter raised by the honorable member for Werriwa (Mr. Lazzarini) under the notice of the Minister for Information (Sir Henry Gullett).I am unacquainted with the details which the honorable member for East Sydney (Mr. Ward) has presented in respect of the matter he has just raised. I assure him that his representations will receive my urgent attention.
Question resolved in the affirmative.
The following papers were presented : -
Commonwealth Public Service Act - Appointment of J. J. Moyle, Department of the Treasury. Defence Act - Defence (National Security) Regulations amended - Statutory Rules 1939. No. 86.
National Security Act - Regulations - Statutory Rules 1939, Nos. 87, 88, 89, 90, 91.
Naval Defence Act - Regulations amended - Statutory Rules 1939, No. 85.
Seat of Government Acceptance Act and Seat of Government (Administration) Act-
Ordinances of 1939-
No. 6 - Trespass on Commonwealth Lands.
No. 7 - Police Offences.
No. 8 - Seat of Government (Administration ) .
No.9 - Co-operative Trading Societies Regulations amended, &c. -
Building and Services Ordinance.
National Capital Development Ordinance.
House adjourned at 11.17 p.m.
The following answers to questions were circulated: -
y asked the Minister representing the Minister for the Interior, upon notice -
Will he supply a statement of the qualifications and credentials of all officers of the engineering sections of the department, including temporary employees, and show their salaries?
– The Minister for the Interior has supplied the following answer : -
It is not considered that the time and expense involved in the preparation of this return is justified in the present circumstances.
h asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follows : -
h asked the Prime Minister, upon notice -
– As no request has been received from the United Kingdom Government for the despatch of munitions workers from Australia for service in England, the question has not arisen.
Taxation of Bonus Shares.
s - On the 15th September, the honorable member for Watson (Mr.
Jennings) asked the following question, without notice: -
Can the Treasurer say whether bonus shares issued by major companies in Australia are subject to income tax?
The answer to the honorable member’s question is as follows: -
Under the provisions of the Income Tax Assessment Act 1936-1938, bonus shares are treated in exactly the same manner as cash dividends.
In the case of a resident of Australia, bonus shares received by a shareholder in a company (whether the company is a resident or a nonresident) are taxable except in the following circumstances: -
1 ) When the bonus shares are paid wholly and exclusively out of -
the amount remaining after deducting from income derived from sources out of Australia (not being income which is or has been assessable income of the company) any losses or outgoings incurred in gaining or producing that income which would have been allowable deductions if that income had been assessable income;
profits arising from the sale or compulsory resumption for public purposes of assets not acquired for the purpose of resale at a profit;
profits arising from the re-valuation of assets not acquired for the purpose of re-sale at a profit;
profits arising from the issue of shares at a premium;
profits derived from the workingof a gold-mining property in Australia or New Guinea;
income which the company has received as dividends from a company which derived income from the working by it of a gold-mining property in Australia or New Guinea and which are paid wholly and exclusively out of the income so derived;
Bonus shares received froma company that does not carry on business in or derive income from sources in Australia.
In the case of an absentee, bonus shares are taxable to the extent to which they are paid out of profits derived by the company from sources in Australia. The exemptions as per (1) (a) to (f) and (2) apply in the case of an absentee as well as a resident,
s. - On the 14th September, the honorable member for Parkes (Sir Charles Marr) asked the following questions, upon notice: -
The Minister for the Interior has now supplied the following information: -
Section 58(2) of the ordinance provides as follows: - “ A holder of a residential hotel licence shall not refuse to supply meals, or the accommodation required to be supplied under the conditions of his licence, or any service thereby required when demanded under the conditions of and at any time specified in this Ordinance, or at any reasonable time, provided that a reasonable sum is tendered in payment therefor. Penalty : Ten pounds “.
Assistance to Wheat-growers.
– On the 8th September the honorable member for Grey (Mr. Badman) asked the following questions, upon notice : -
The Minister for Commerce has now supplied the following answers : -
Central Wool Committee.
s. - On the 15th September, the Deputy Leader of the Opposition (Mr. Forde) asked a question, without notice, regarding, inter alia, the representation of small wool-growers on the Central Wool Committee.
I desire to inform the honorable member that a statement embodying the personnel of the Central Wool Committee is to be laid on the table of the House today. Messrs. J. P. Abbott and D. T. Boyd, members of the committee, are wellknown wool men who have held representative positions on the Woolgrowers Council, the Australian Wool Board and State Graziers Associations. Mr. B. A. F. Cole, who is also a member of the committee, was a member of the provisional executive which formed the Australian Woolgrowers Federation, a body representing small growers, and previously he represented small growers, on the Commonwealth Wool Inquiry Committee in 1932.
Commodity Control Boards.
s. - On the 15 th September, the honorable member for Wimmera (Mr. Wilson) asked & question, without, notice, regarding the appointment of growers’ representatives to the Australian Wheat Board and the Central Wool Committee.
I desire to inform the honorable member that a statement relating; inter alia, to the wheat and wool control organizations will be tabled in the House today. Growers are represented on the Australian Wheat Board by Mr. E. Field, the chairman of the Australian Wheatgrowers Federation, and by Mr. D. L. Clarke, of South Australia. These gentlemen have been selected because of their association with the growing side of the industry and represent the growers generally, both large and small. With regard to the Wool Committee, Messrs. J. P. Abbott and D. T. Boyd are wellknown wool men who have held representative positions on the Woolgrowers Council, the Australian Wool Board, and State Graziers Associations. Mr. B. A. N. Cole was a -member of the provisional executive which formed the Australian Woolgrowers Federation, a body representing small growers, and, previously he represented small growers on the Commonwealth Wool Inquiry Committee in 1932.
s. - On the 14th September, the honorable member for Moreton (Mr. Francis) asked, without’ notice, whether Australia’s flax fibre is likely to be controlled by the Government during the present war as was the case during the last war. lu answer to the honorable member’s inquiry I desire to state that the question of the utilization of flax is bound up with that of the possibility of the production and utilization of substitutes for the fibres. This is the subject of a special investigation by the Department of Supply and Development and the Council for Scientific and Industrial Research in conjunction with outside interests concerned.
Shipments of Pig Iron.
s. - On the 15th September, the honorable- member for Werriwa (Mr. Lazzarini) asked a question, without notice,’ regarding some pig iron which had been loaded for shipment overseas and had been subsequently taken off the ship.
In reply to an earlier question I had informed the honorable member of the receipt of a letter from the manager of the Holland-Australia Line in Sydney stating that the pig iron was intended for consignment to a firm of Dutch smelters The manager of the Holland-Australia Line indicated that he had, on the 9th September, been instructed by cablegram from the directors of his company to’ stop loading and that as a result the pig iron had not been shipped.
s. - On the 14th September, the honorable member for Balaclava (Mr. White) asked a question, without notice, regarding the conditions of pay, &c., which would apply to temporary Commonwealth employees who are member! of the militia forces and who are called out for duty during the war. -‘I desire to inform the honorable member that it has been decided that temporary Commonwealth employees whose employment is not casual are to be treated on the same basis as permanent employees as far as their conditions of service permit.
Cite as: Australia, House of Representatives, Debates, 19 September 1939, viewed 22 October 2017, <http://historichansard.net/hofreps/1939/19390919_reps_15_161/>.