15th Parliament · 2nd Session
Mr. Speaker (Hon. G. J. Bell) took the chair at 2.30 p.m., and read prayers.
– In view of the great public importance of securing an indisputably accurate expression of opinion from the coal-miners on the question of returning to work under the terms of the award of the Arbitration Court, and the confusion that has arisen because of the different methods adopted by various mass meetings of miners to obtain expressions of opinion, will the Government offer to place its electoral machinery and officers in the seven federal electorates concerned at the disposal of the miners, in order to enable a secret ballot, the result of which could not be questioned, to be held immediately?
– The right honorable gentleman’s suggestion will be considered.
– Has the attention of the Prime Minister been directed to a report of a meeting held yesterday at Wollongong, on the south coast of New South Wales, at which Mr. Orr, the secretary of the Miners Federation, is reported to have said that, although regulations governing free labour were promulgated three days ago, they had not been enforced because the Government was not game to enforce them? In view of the apparent interpretation of the Government’s tolerance as weakness, will the Prime Minister indicate any time limit for the enforcing of such regulations?
– It is not proposed to issue any further warning statements in the matter referred to by the honorable member. Mr. Orr is once more due for disappointment; and so, unhappily, are the men whom he is leading.
– In view of the possibility that the coal strike may continue into next week, I ask the Prime Minister whether it is intended to make any alteration of the sitting days of Parliament? Seeing that the Government has issued certain regulations to cover strike eventualities, is it intended that those regulations shall he discussed by Pailiament before they become operative I
– It is not proposed to make any alteration of the sitting days of Parliament for next week. The Government does not intend to bring the subject of the coal strike before honorable members again, but it will act as and when it deems action advisable, in accordance with the regulations which have been gazetted.
– Has the Prime Minister seen the results of voting at the aggregate meetings that have been held in various parts of Australia on the question as to whether the miners should continue on strike or return to work? Has he noticed that, in spite of the apparent division of opinion between the leaders of the miners in putting the case before those meetings, the rank and file of the miners decided by a majority to continue their present struggle for uniform conditions? Does not that decision belie the statement that the miners have been led by a few Communists ? “Will he now, at the eleventh hour, as the Leader of the Opposition, the mining unions and other unions associated with the industry, and [ myself have requested him to do, call a compulsory conference in order that this unfortunate struggle can be settled? Is he aware that in all probability if he does not call such a conference civil strife will be caused?
-I shall not call a conference; and I refuse to believe that there will be civil strife. On the contrary, [ believe that the great majority of these nien will return to work.
– Will the Prime Minister state whether or not it is the intention of the Government, through the agency of the censor, to stop completely the publication of the miners’ journal known as Common’ Caused If not, how can the right honorable gentleman reconcile the refusal of the censor to permit the publication in this week’s issue of the result of the miners’ aggregate meetings, and of any reference to the profits of the Broken Hill Proprietary Company Limited, with the statement that he made last September that he did not propose in any way to muzzle opposition to the Government?
– I shall ascertain the facts in connexion with the case mentioned by the honorable member and provide him with a reply.
– In view of the heavy wear and tear that is taking place on roads in the vicinity of military camps owing to the heavy traffic, and the burden that this places on the local governing bodies affected, will the Minister for the Army consider, or has he considered, making a special grant to such bodies to enable them to maintain such roads in better condition?
– The matter referred to by the honorable member, which affects a great many municipalities, is now receiving consideration by the Government. It is true that some roads in . the vicinity of military camps are showing signs of the exceptionally heavy traffic that they are called upon to bear, and the question of providing funds to assist .the municipalities concerned is now being discussed by the Treasurer and myself.
– Is the Minister representing the Minister for the Interior in a position to advise the House as to the attitude of the Government towards the proposal to create a settlement for refugees in the Kimberley district of north-west Australia? Is he aware that many people suspect something in the form of a “ racket “ on the part of persons who want to sell land in this area? Can he say whether there is any ground for such suspicion, and whether the land proposed to be utilized for the purpose is Crown land and, if not, to whom it belongs? ^
– As to the first portion of the honorable member’s question, it is against the policy of the Government to encourage any aggregation of aliens in refugee settlements. As to the second part, I shall see if the information can be obtained.
– Has the Minister for Commerce yet fixed a date for the holding of a conference with representatives of the apple and pear industry to determine the methods to be adopted for the next season’s crop.? Can he say what organizations will be represented at the conference, and particularly will he take steps to ensure that organizations of growers will be adequately represented ?
– I propose to ask representatives of the States to assemble in Canberra on the 24th June for the purpose mentioned by the honorable gentleman. The question of who will represent the States will depend on the action taken in the States themselves. The desire of the Commonwealth is that the delegation shall be as representative as possible of all of the interests concerned.
– Several months ago Che Launceston City Council and the Defence Department arranged to extend thesewer to the Elphin showground camp. Will the Minister for the Army lay on the table of the Library, or make available to me, the file relating to this matter?
– I shall he pleased to show the file to the honorable gentleman.
– In view of the factthat a subsidized shipping service, which had undertaken to transport about twenty persons from Melbourne to Darwin, returned their tickets to those passengers when the vessel reached Sydney and requested them to fend for themselves, will the Minister representing the Minister for the Interior take steps to ensure that, upon arrival of those passengers in Darwin, their hotel expenses in Sydney will be refunded to them at the office of Burns, Philp and Company?
– I cannot give any undertaking to do what the honorable gentleman has suggested, but I shall have the matter investigated.
– Will the Minister for Commerce lay on the table of the House the file containing the correspondence with the respective State governments which have sought assistance under the Wheat Industry Assistance Act,and also the files containing the schemes submitted by the several States, as well as a record of the proceedings at the recent meeting of the Australian Agricultural Council?
– Although records of the proceedings of the Australian Agricultural Council are kept, it has never been the custom , to make them public; nor can the correspondence to which the honorable member has referred be made public.
– Has the Minister for Commerce allocated a grant of . £500,000 for the assistance of marginal wheatfarmers in various : States, excluding Vic- toria, without first submitting the matter to Cabinet ? Does not the Minister think that the allocation of this very large sum should first have been sanctioned by Cabinet?
– If the honorable member will study the Wheat Industries Assistance Act, he will learn that under it this Parliament authorized the Minister for Commerce to make such a distribution. I made it.
– Will the Minister for Commerce intimate to. the House the nature of the calculations which led to the conclusion that Victoria had no marginal wheat lands that should be brought within the terms of the Commonwealth grant?
– Victoria was omitted from the scheme for the simple reason that the Victorian Government did not submit a case.
– I ask the Prime Minister whether it is in accordance with established Cabinet practice to allow any Minister, notwithstanding the provisions of anyact, to allocate so substantial a sum as £500,000 without first consulting Cabinet, and obtaining its sanction for such allocation?
– It is in accordance with established Cabinet practice for any Minister, upon whom any statutory duty is imposed, to perform that duty and, where discretionary power is given, to perform it according to his own discretion. In certain circumstances a Minister may desire to be reinforced by Cabinet decision, but that is by no means a matter of practice; it depends entirely on the circumstances of the case.
– In view of the fact that substantial injustice will be done to individual wheat-growers if due consideration be not given to the allocation of these funds, will the Prime Minister take steps to ensure that allocations of funds under the Wheat Industry Assistance Act will, in future, be placed before Cabinet for its approval?
– I assure the honorable member that I shall continue to conduct the business of the Cabinet to the best of my ability.
– Will the Minister for Air give to the House an outline of the main features pf the Empire air training scheme?
– I shall be very pleased to prepare a statement on the main features of the Empire air training scheme, and give it to theHouse to-morrow morning. A good deal of what must be contained in such a statement will be repetition of what has already been given ; but nevertheless, as there has been a good deal of misunderstanding concerning a number of the mainfeatures of the scheme, and as possibly some of them have not been sufficiently stressed, I believe that such a statement willbe inf ormative to honorable members.
– Will the -Treasurer state why the Commonwealth Bank Board refuses to disclose, in answer to a question asked in this House, the estimated loss to the country, due to the rise of gold prices and the fall of sterling, as the result of the sale by the board of the gold reserve for sterling?
– I have already given an answer toa question ofthis nature. In addition to its not being the practice to answer questions relating to policy, in order tofurnishthe details desired by the honorable member, numerous particulars would have to be obtained, and it is thought that the value of the information would not compensate for the cost involved in obtaining it.
– I ask the Treasurer whether the separate transactions involved in the sale of £10,300,000 worth of Australia’s gold reserves would, in his opinion, be difficult to tabulate? Is it not a fact that in spite of the continued increase of the price of gold and of the fall in sterling, the Commonwealth Bank Board persevered with its policy of selling Australia’s gold reserves, and that, as the result of those transactions, it has incurred a loss of £5,000,000? Isthat not the real reason why the Commonwealth Bank Board will not furnish the information for which I have asked?
– I have nothing to add to what I have already said on this subject.
Gristing of Wheat - Hides and Skins - Scoured Wool
– Will the Minister for Commerce state whether the Government, in order to conserve shipping space and to assist employment in Australia, is prepared to take steps for the gristing in this country of as much wheat as possible, and its shipment as flour ?
– Every endeavour has been made, whenever possible, to export wheat in the form of flour, in order to conserve shipping space, to maintain employment in Australian flour mills, and to provide a reserve of mill offal for the use of other export industries in Australia. That practice will be continued.
– What practical steps have been taken by the Department of Commerce to conserve shipping space forthe overseas export of hides and skins ? Have any arrangements been made, or are any contemplated , for the scouring of greasy wool in Australia, thus conserving the shipping space in respect of overseas wool exports?
– The honorable member may rest assured that the first portion of his question is receiving consideration and necessary attention. I ask him to give notice of the second portion of his question.
– Has the Minister for External Affairs seen the cabled reports published in the newspapers to-day of heavy intensification of defence preparations in Holland, apparently in expectation -of developments in that country? Has the honorable gentleman received any information concerning the position; if so, oau he inform the House of the nature of it?
– I have seen the cabled reports referred to by the honorable member, which, according to what construction is put upon them, represent another of the periodical scares or anticipations-
– Which in some instances, . unfortunately, have proved to be true.
– I am now referring to the Netherlands countries. The Government has no information which can properly be put before the House in that regard.
– Will the Minister for the Army state what was the outcome of the conference of the Australian Dental Association held in Melbourne last week for the purpose of evolving means to improve the dental fitness of members of the Australian Imperial Force? Is a dental corps of 200 dentists now being inaugurated to work a clinic on the Royal Agricultural Showground in Sydney for the treatment of the Australian Imperial Force? If so, is this clinic working in conjunction with the Australian Imperial Force? Is the honorable gentleman aware that the committee has need of necessary facilities to achieve its purpose?
– A conference of the Australian Dental Association was held in Melbourne last week, as the result of which the president of that body made several very valuable suggestions which are at present under consideration by the medical branch at Army Head-quarters. A report published in one of the Sydney newspapers has been brought to my notice in which it is suggested that 200 dentists should be formed into a clinic in order to do certain dental work in connexion with the troops. So far as my knowledge goes, that suggestion has been made merely by the president of the New South Wales Dental Board, and not by the Australian Dental Association.
– It has been reported in Tasmania that instructions have been given to destroy thousands of bushels of apples. Seeing that these apples have an economic value, will the Minister for Commerce have made immediately an investigation by the Council for Scientific and Industrial Research, to ascertain whether or not they are capable of being used for some purpose; failing which, will he give definite instructions that they be distributed free of cost among the poor of Australia?
– I know of no instruction that has been given, either in Tasmania or anywhere else, to destroy apples. I shall inquire into the matter, and acquaint the honorable member of the result.
– As rumours are in circulation that the practice of letting military contracts at Ingleburn camp on a percentage basis has been discontinued, will the Minister for the Army inform me when it ceased and why?
– That question should be directed to the Minister for the Interior and I shall bring it under his notice.
– In view of the very serious state of the wheat industry, which is involving the eviction of many thousands of farmers from their holdings, and may cause the eviction of many more, I ask the Prime Minister whether he will give consideration to the introduction of moratorium legislation, qualified or otherwise, to give protection to the wheat-growers pending the adoption of some adequate scheme of reconstruction ?
– The honorable gentleman’s suggestion will be considered.
– Is the Prime Minister able to inform me whether negotiations are proceeding between the Government of the United Kingdom and the Government of Russia, with the object of reaching an agreement on war aims? Is the right honorable gentleman able to make any statement to the House on the subject?
– I have no information which suggests the fitness of an affirmative answer to the question.
– Will the Treasurer inform me whether it is the intention of the Government to continue to apply section 3 of the Income Tax Act on bonds that are subject to tax at rates not higher than the 1930 levels ?
– Approximately £500,000,000 of the public debt is subject to. the limitation referred to by the honorable member. It would, of course, be simple to introduce legislation to remove that limitation so that such bonds could be taxed at rates higher than those in force in 1930. However, as the bonds were sold on a prospectus issued by the Commonwealth Government, one of the terms of which was that they should be subject to income tax at rates no higher than those of 1930, the introduction of such legislation would amount to repudiation of the terms of the bonds.
– I ask the Minister representing the Minister for the Interior whether he will lay upon the table of the Library copies of all Commonwealth and State reports that he has available in relation to the estimated tonnage and values of our iron ore deposits? I should also like any available reports to be tabled which deal with mining for iron ore below the surface in other countries.
– I shall bring the honorable member’s question under the notice of the Minister for the Interior.
– Is the Prime Minister yet able to inform honorable members when they are likely to have an opportunity to read and discuss the Townsend report on the shipbuilding industry ?
– That subject is still under the consideration of the Cabinet.
– Has the PostmasterGeneral made the inquiries which he promised to make into the circulation of the A.B.C. Weekly? I also ask the honorable gentleman whether he has the particulars for which I asked concerning the necessary licence for the importation of newsprint from nonsterling countries, and whether the issue of such a licence is in accordance with Government policy?
– I have not yet received the information asked for by the honorable member in relation to the A.B.C. Weekly. I shall have inquiries made into the subject of newsprint importations.
– I ask the Minister for the Army whether Mr. Christie, the president of the Fascist organization known as the Australian Democratic Front, is associated with the firm of T. W. Garratt, Christie and Buckley, solicitors of 14 Martin-place, Sydney? Is Mr. Christie a member of the communications section of the censorship staff in Sydney? Does the Minister consider it proper that a gentleman who belongs to an organization with foreign ideas-
– The honorable gentleman is now making an allegation, or, at any rate, an innuendo.
– I ask the Minister whether he thinks it proper that a person occupying the position that I have indicated should continue to act as a member of the censorship staff in Sydney?
– Whilst I must disclaim all knowledge of the alleged activities of the gentleman in question, it is true that a Mr. Christie, who was a member of the firm mentioned by the honorable member, was employed as a paid official on the censorship staff in Sydney. He made representations that, in order that he might be able to devote his time to private duties, he be relieved of his position and transferred to the honorary staff. That was done some months ago, and since that time Mr. Christie’s services have not been utilized.
Presentation to the GovernorGeneral.
– I have to report that, accompanied by honorable members, I waited to-day upon His Excellency the Governor-General at Government House and presented to him the Address-in-Reply to His Excellency’s Speech on the opening of the Second Session of the Fifteenth Parliament agreed to by the House on the 3rd instant, and His Excellency was pleased to make the following reply: -
I desire to thank you for the AddressinReply, which you have just presented to me.
It will afford me much pleasure to convey to His Most Gracious Majesty the King, the message of loyalty from the House of Representatives of the Commonwealth of Australia to which the Address gives expression.
Motion (by Mr. Nock) agreed to -
That he have leave to bring in a bill for an act to amend the Petroleum Oil Search Acts 1936.
Motion (by Mr. Spender) agreed to-
That he have leave to bring in a bill for an act relating to the imposition, assessment, and collection of a war-time tax upon companies.
Bill brought up, and read a first time.
– by leave - I move -
That the bill be now read a second time.
This bill is designed to obtain from companies a portion of the additional revenue which, it is proposed, should be contributed by them towards the war expenditure. Many proposals were exhaustively considered by the Government and finally it was determined to impose a tax upon the profits of companies in excess of a special percentage as a means of raising the additional amount required. This tax will be known as the war-time (company) tax. This measure may be regarded as an implementing of the resolve of the Government to obtain special taxes from high profits made during war-time.
I remind honorable members of my remarks in the Financial Statement made to the House on the 2nd May with regard to the war-time profits tax which operated during the 1914-18 war. This purported to tax the war-time profits of all traders, including companies, but it signally failed to achieve its intention. The former Commissioner of Taxation, reporting on the effect of this act in his seventh annual report covering the financial year ended 1920-21, said -
The tax is unequal and harsh in its incidence. These features of it are due to its peculiar construction, which, as shown by the figures quoted, permitted escape from the tax of the vast majority of large and oldestablished businesses which have made consistently substantial profits, both in amount and in percentage on capital employed whilst small and struggling businesses, particularly those which wore commenced shortly before or after the outbreak of the recent war were obliged to pay relatively heavy amounts in tax. Many young businesses however, find themselves in positions of technical difficulty, from which there was no relief for them under the law. Some of those businesses had clearly benefited by the war, though it was impossible to ascertain whether their prices had been reasonable or unreasonable. Others of the young businesses had clearly made profits, apart from -war conditions, and would probably have made greater profits if the war had not occurred.
In my financial statement, I referred to the factors which persuaded the Government not to follow the principles embodied in such legislation having regard to the many injustices and anomalies which resulted from it. I refer honorable members to this statement. Notwithstanding the high rates of the tax, it yielded over the whole period of its operation, after allowance of refunds, less than £8,000,000. It affected less than 2 per cent, of the businesses in the Commonwealth.
For the time being it is proposed to limit the tax to companies. This decision has been reached for several reasons. In the first place, it is impracticable to impose a tax upon all individuals. For example, in the case of a business or profession which depends upon the personal qualifications of the owner, there is no conventional relation between capital and earnings, for in such businesses little or no capital may be required. Personal service and brains cannot be capitalized in the same way as material assets. Therefore, as we cannot fairly tax all individuals, we propose to tax none. This decision is justified by the fact that a comparison of the total in-, come taxes payable respectively by a company and an individual shows that when the income is a substantial amount the individual, pays a much greater amount than the company. In fact, figures that have been taken out demonstrate that the total income taxes payable by an individual with a considerable income will exceed the amount payable by a company employing the same capital and earning the same return, even after this tax is added to the income taxes payable by the company.
Another important consideration is that a careful estimate shows that the amount likely to be realized by the taxing of individuals would be relatively small, and, as their inclusion in the measure would materially add to its complexities and increase the cost of administration, it is proposed, at least for a time, to exclude them. It may, of course, become necessary later to reconsider this decision.
In connexion with the exemption of individuals from the scope of the tax, it has been recognized that there are certain types of companies in respect of which there exist almost equal reasons for exemption. These represent the incorporation, for various reasons, of individuals whose income arises almost exclusively from their personal qualifications and ability to render certain types of services which are rewarded by fees, commissions or other similar charges. Capital is nominal or small and the income has little or no relation to the use of capital. It would not be appropriate to bring such companies within the scope of a measure which bases liability upon the productivity of capital. The parity of their position with that of individuals as already recounted is recognized by a special exemption in their favour.
An attempt has been made in the bill to avoid the defects of the previous act. No distinction is made between established and new businesses. The fact that a business has made large profits prior to the war will not exempt it from liability to pay tax on the profits’ it makes during the war. It is proposed to treat all in the same way, namely, to allow them a statutory percentage of 8 per cent, on the capital employed to earn the profits, and to impose the tax on a graduated and progressive rate on the profits in excess of the statutory percentage. If the profits exceed the statutory percentage, it is obvious that as an entity the company has a special capacity to bear additional tax without, impairing its present or future productive power. The first 1 per cent, of capital by which the taxable profit exceeds 8 per cent, will be taxed at the rate of 4 per cent., the second 1 per cent, will be taxed at the rate of 8 per cent., and the rate will increase in steps of 4 per cent, for each further 1 per cent, until the taxable profit reaches 22 per cent, of the capital employed. All profits in excess of 22 per cent, will be taxed at a flat rate of 60 per cent. The imposition of a graduated tax will neither discourage enterprise nor encourage extravagance in order to reduce profits to the .same extent as a tax at a high flat rate. Moreover, it materially simplifies the design of the act, as it reduces the necessity for some concessions which may be justified where a high flat rate of tax is payable. A number of calculations has been made in order to estimate the effect of this tas upon the profits of companies, and I am satisfied that it will not press harshly upon those companies which are earning only a reasonable return upon their capital. The tak will, of course, press more harshly, with an increasing degree of severity, on those companies whose earnings exceed a reasonable return. In wartime it is felt that this class of company is in a position and should be expected to contribute the larger proportion of the amount to be raised by a tax of this kind. It is clear, however, that a graduated rate of tax will press less harshly on companies earning up to 22 -per cent, on the capital employed than would a tax imposed at a high flat rate. The capital employed will be the amount paid up in money or other valuable consideration, together with all reserves and accumulated profits. A minimum capital of £12,500 will be allowed for all purposes of the act. The allowance of 8 per cent, on this minimum capital represents £1,000, so that no business with a taxable profit of less than £1,000 will be liable to this tax. There are detailed provisions associated with the computation of capital ‘which may be dealt with more effectively in committee.
The taxable profit will be the taxable income as assessed for federal income tax purposes, less the federal income tax payable thereon, but not including any tax paid in respect of the undistributed profits of the company. State income taxes paid will have been allowed as a deduction in computing the amount upon which federal income tax is payable.
The bill makes no specific provision for the allowance of losses incurred in prior years, nor it is necessary that it should. Such losses are allowed for income tax purposes and are therefore taken into account before arriving at the taxable profits for the purposes of the act.
Experience has shown that there are certain special cases for which it is difficult to make specific provision in an act of this kind. The act will, therefore, provide for the appointment of an independent board of referees to consider special cases which must arise in the administration of the act; for example, classes of businesses in which the statutory percentage may be too low, having regard to the nature of the risk of loss incidental thereto, and other cases where the capital of the business, as determined in accordance with the provisions of the act, may not represent the true capital employed in earning the profits. ‘ Such cases may not be numerous, but unless some provision is made to deal with them, hardship might result.
It is recognised that primary producers require special consideration, principally because of the variation of seasonal conditions. It would not be fair to tax them on the excess profits of a good year following several years of drought, and it is proposed to embody in the bill provisions somewhat similar to those of the Income Tax Assessment Act, and to average the taxable profit of primary producers over a period of five years for the purpose of ascertaining the percentage of taxable profit to capital. Where the average represents not more than 8 per cent, of the capital employed no tax will be payable. If the average exceeds S per cent, or such higher percentage as may be prescribed for that class of business, the rates of tax applicable to the taxable profit of the year will be the rates which would be applicable to the average taxable profit. The tax will be linked as closely as possible with federal income tax. Ordinarily’ companies will not be required to make any additional returns, as most of the information required can be obtained from those which have been lodged for income tax purposes. The possession of this information will facilitate administration by the department, enable it to collect the tax inexpensively and promptly, and avoid the delay in assessment which occurred under the previous act, with the result that when the tax became payable it frequently could not be paid because the money had been invested in buildings and plant or otherwise expended.
This bill represents legislation of an emergency character, and, arguments which in time of peace might be urged against its principles, cannot be regarded as valid at present. The desire of the Government in raising the necessary money is to have particular regard, to ability to pay, and it is considered that companies making high percentages of profits to capital employed are in a specially favourable position in this regard. It is not thought that the tax will have any serious effect upon dividends except those now being paid at a particularly high rate, and the recipients of these can be expected to accept a somewhat reduced, but still high, rate in these times when each must bear a share of the burden.
As regards shareholders generally, the large majority, who have invested their money in shares in companies regarded as suitable for safe investment, will not be affected by the tax, as these companies do not, in general, make profits in excess of 8 per cent. of the capital employed by them. It is suggested that any who might be disposed to plead that a person who has bought shares in a company at a premium would be unfairly affected by this tax should examine the position closely to see, first, whether the particular company is one likely to pay this tax and, secondly, whether the amount of tax it will have to pay will necessarily affect its dividends having regard to its total profits, both current and accumulated.
In whatever form a special tax is levied upon companies, it diminishes the pool available for dividends., and this tax no more than others. It is conceded, of course, that the scope of this tax is limited.
The distinguishing feature of this tax is that it seeks to obtain the revenue from these companies whose rate of profits to capital is high enough to justify a special contribution in war-time, and this is preferred to one which takes from one and all indiscriminately regardless of any factor other than the actual quantum of profits.
The position of holding companies is specially provided for in the bill. They may elect to have their subsidiaries treated as branches and thus be treated as one company for all purposes of the act. In the absence of any such election, which is irrevocable without the consent of the commissioner, the companies will be separately assessed. In the latter case, it is not proposed to duplicate liability by taxing, first, the profits earned by an operating company and then the dividend paid to the holding company out of those profits, and the bill therefore provides for the exclusion of the dividend from the assessment of the holding company.
Some companies liable for this tax may have to pay the holders of preference shares dividends at a rate in excess of the statutory percentage. In the absence of a special provision, the whole weight of the tax would fail upon the funds available for ordinary shareholders. Provision has, therefore, been made to enable such a company to deduct from the pre: ference dividends an appropriate portion of the tax.
These remarks represent a general survey of the intention and scope of the bill. Like other taxation measures, it contains provisions which may better be dealt with in the committee stage.
It is not inapposite to say that more and more the industrial life of the community is becoming subject to the control of companies and, for this and other considerations to which I have referred, that the companies affected by the proposed legislation should be expected to pay additional taxes in this time of emergency.
Debate (on motion by Mr.Forde) adjourned.
In Committee of Ways and Means:
– I move -
That in respect of the amount by which the taxable profit of a company which is not a primary producer exceeds the percentage standard -
The motion submitted for the consideration of honorable members sets out the rates of tax which it is proposed to impose upon companies, the taxable profits of which exceed the percentage standard. The percentage standard is an amount equal to a specified percentage of the capital employed. Ordinarily this percentage will be eight but in certain circumstances a special board will have power to increase this percentage.
I explained to honorable members in my financial statement of the 2nd May and in my second-reading speech on the War-time (Company) Tax Assessment Bill that the rate of tax would be graduated commencing at 4 per cent, on the first l.per cent, of capital employed by which the taxable profits exceed the percentage standard. On the second 1 per cent, on the capital employed by: which the taxable profits exceed the percentage standard the rate will be 8 per cent.; on the third 1 per cent, the rate will be 12 per cent, and so on. This is the effect of the rates set out in the motion as applicable to companies which are not primary producers.
If honorable members will examine the fourth column of the table contained in the motion they will observe that the tax increases by 4 per cent, for each 1 per cent, by which the taxable profits exceed the percentage standard until a maximum rate of 60 per cent, is reached. The maximum is reached when the excess of the taxable profit to capital employed is more than 14 per cent., so that where the percentage standard is an amount equal to S per cent, of the_capital employed the maximum rate will be reached when the taxable profit is more than 22 per cent, of the capital employed.
In order to express the rates in the simplest and shortest form for the purposes of the table where the excess of taxable profit over the percentage standard comprises more than 1 per cent, of the capital employed, the rates of tax upon all percentages except the last has been expressed in the form of an average rate. This is the rate which appears in the third column of the table.
For instance, where the excess is more than 2 per cent, of the capital employed the average rate for the first 6 per cent, is shown as 6 in the third column of the table. This represents the average of 4 per cent, which applies to the first 1 per cent, and 8 per cent, which applies to the second. And this procedure has been followed down through the succeeding grades. Any other method of expression would be exceedingly cumbersome and would involve considerable repetition.
In the case of a company which is a primary producer the tax will be imposed at a rate equal to the rate at which tax would be payable in respect of the average taxable profit of the accounting period and the four preceding accounting periods. This rate will be applied to the actual amount by which the profits of the accounting period exceed the percentage standard.
Bill brought up by Mr. Nock, and read a first time.
Debate resumed from the Sth May (vide page 616), on motion by Mr. Spender -
That the paper be printed.
– I understand that the Treasurer (Mr. Spender) in due course will answer the line of criticism pursued last night by the right honorable member for Yarra (Mr. Scullin).
– That is so.
– It is not my intention to presume to canvass any of the interesting and in many respects cogent arguments advanced by that right honorable gentleman, who is recognized as being one of the most competent financial authorities in the political life of Australia. If I had any comment to make about his speech, which I am sure greatly impressed honorable members, it would be that generally his criticism was not really constructive in regard to the war-time obligations which now confront this country. The right honorable gentleman did sound a warning about the possibilities of the occurrence of another chaotic condition overseas in the next year or two when we may be called upon to meet commitments which are not provided for in this financial statement. As the right honorable gentleman himself said, he has sounded this warning many times in this House, and before the last degression he was indefatigable in his efforts to awaken the then Government to the dangers that were confronting us in the drain upon our overseas financial resources. I understand from the statement made by the Treasurer that this Government fully recognizes the gravity of the situation which may develop and, whilst it is not able now to bring down proposals for dealing with such a contingency, that it has not lost sight of the risk it is running. Indeed it has given an undertaking that some attempt will be made - it will have to be a practical attempt - to avert any of the dangers foreseen by the right honorable member for Yarra.
Criticism of the proposed increases of taxes is interesting^ but not absolutely necessary or helpful to the Government. There is not the slightest doubt that many honorable members of this House could voice grievances in connexion with many aspects of the taxation measures, but I think it is generally accepted that it is necessary to put up with a great deal in these times of emergency and danger, even if individuals and interests are affected, and even if there are obvious anomalies which would be regarded as intolerable in more peaceful and happier times. I do not think that the criticism expressed by the right honorable member for Yarra is helpful to the Government and, although we must admit its cogency and practical character, we expected something more constructive from him. Generally, his speech was of a destructive character. He did make some reference to a matter of very great importance to the people of Australia; a subject which 13 attracting a considerable amount of attention amongst people not versed in the financial complexities and problems of this country, namely, the reliance that can be placed upon banking resources. I listened very intently to the right honorable gentleman and the impression I gathered was that he showed a tendency to indulge in a little flirtation with inflation; I could read” in his remarks an incitement to the people of Australia to support those “ national credit-ites “ who are virtually asking for the introduction of an inflationary system. I say that, not with any desire to criticize the right honorable gentleman, but merely to indicate the impression which I gathered from his remarks. The right honorable gentleman must be recognized as a leading financial authority and I am afraid that his statements may be regarded as encouragement to a movement which, if it gathers momentum and gets out of hand, would have serious political repercussions on the financial structure of Australia.
The Government’s objective, in a nutshell, is to raise £125,000,000 during the remainder of this financial year, and the whole of the next financial year. The amount which has still to be provided to meet war expenditure in Australia up till the end of June, 1941, is £70,000,000. The interest of this Parliament in the financial statement presented by the Treasurer begins and ends with that proposal: How are we to raise that £70,000,000 to meet visible commitments up to the end of June, 1941? Covering the same period, there will be overseas expenditure estimated at not less than £35,000,000, but methods by which this money is to be raised are left to the future. The Treasurer has said that we must bear in mind the problem of making provision from Australian sources as early as practicable for at least some portion of our overseas finances. If we are unable to arrange accommodation overseas, the whole of the £35,000,000, plus any unexpected additions, will have to be provided from Australian internal resources.
It seems to me that the two fundamental features of this statement, are: first, the methods by which we propose to raise the £70,000,000, which is the balance left over from the ‘ present provision up to the end of the financial year, 1940-41, and, secondly, what suggestions, or actual proposals, can he put forward by the Government for meeting the £35,000,000 to which we are already committed overseas, plus any additional amount which may be incurred. It is quite clear that the overseas commitments amounting to £35,000,000, constitute a very serious problem for the present Government, and for those who may be responsible for the financial security of Australia during the next fifteen or eighteen months. Yet despite the magnitude of this sum - it is more than half the total which we require for internal expenditure up to the end of next financial year - and the possibility that’ it may grow or even double itself during the next financial year, the Government has made no effort to get down to tin tacks immediately. Peculiarly enough it prefers to leave the matter to the future, and admit that it is bankrupt of ideas on the subject. It seems incredible that such a huge addition to our war-time commitments as is represented by this overseas liability, should not have been provided for by the Government at some earlier stage, or should not have been covered by some scheme submitted to Parliament. I admit that I am not in a position to offer any suggestions, but I repeat that this matter is so serious and important, and may have such repercussions in the financial position of this country in the next twelve months, that it is peculiar, to say the least of it, that more attention has not been paid to it by the Government.
The matter which most vitally interests the people of Australia at the present time is the method by which the £70,000,000 which has to be found before the end of June 1941, is to be raised. In the economic and political life of Australia, it is becoming commonplace to regard the borrowing capacity of this country as being inexhaustible. Allowing, for the moment, that that is so - it has yet to be demonstrated - then, of the £70,000,000 which has to be found £50,000,000 will be raised by means of loans. As -the right honorable member for Yarra said, there is no doubt that it will be raised; in fact, it will have to be raised. If there is any slackness in the willingness of the people to contribute that amount, other methods will have to be tried, and possibly a further revision of the taxation proposals now before this Paraliament will be necessary. When we consider that the total national income for the present year - I am quoting^ statements by certain economists whose opinions have been widely published lately - is not less than £800,000,000 from all sources, overseas and internal, it would appear that the raising of £50,000,000 by way of loans during the next fifteen months will be a small item in our war-time budget. I agree with the right honorable member for Yarra that it will be a mere flea bite, and the people will contribute it without any trouble.
That leaves us with only one immediate problem of direct personal concern to the taxpayers - the £20,000,000 to be raised immediately by taxation. Bills have been introduced to implement the Government’s proposals, and the people now know, not only the total sum asked of them, but also the methods by which it is proposed to be raised. Of that £20,000,000, only half will be obtained by direct taxes, which always is a method of Government finance that attracts the immediate interest of the taxpayers. Although indirect taxes pay ultimately fall more heavily than direct taxes on the general community, that form of impost does not usually interest the people very much. They take the view that indirect taxes are paid by almost every person in the community, and what is every body’s business is apparently regarded as being nobody’s business. The taxpayers, however, concentrate the full force of their attention and the fire of their criticism on proposals for increasing direct taxes.
The main problem of honorable members in discussing the Treasurer’s Financial Statement is to decide whether the Government’s proposals for raising £10,000,000 by direct taxation are fair, and whether all sections of the community are being called upon to make a just contribution to Australia’s war-time expenditure. Without the slightest doubt taxation in Australia is increasing by leaps and bounds. If we put on one side, for the moment, consideration of the war-time mentality that whatever has to be paid must be paid without question, and consider the actual form of the burden that has to be carried by the people, we may be able to determine how much more taxation the people will be able to pay.
In order to give a picture of the tax position of the Commonwealth to-day, I shall quote figures relating to taxation by the Commonwealth and the States in recent years. In the last financial year, the combined taxation by the Commonwealth and the States reached a total of £124,565,180. Of this sum the Commonwealth collected approximately £74,000,000, and the States £50,000,000. Since 1929 the total annual collection of taxes from both Commonwealth and State sources has increased by a little over £35,000,000. The Commonwealth increase of £17,700,000 was contributed to largely by the sales tax and the flour tax, neither of which figured in the list of taxes ten years ago. Those figures show that with the additional £20,000,000 about to be imposed by the Commonwealth, the direct and indirect taxation of the people of Australia will amount to approximately £145,000,000, representing roughly £20 per capita. During the last ten years the total of taxes per capita has increased from £13 193. lid. to £17 19s. 7d. Therefore, the Government is now asking the people to accept an increase of virtually £3 per capita. I think it will be generally admitted that that is a big load. Although I do not suggest that the people are unable to pay that amount, having regard to the national income from all sources, it is useless to deny that it is a staggering impost. As this may not be the last increase of taxation, since our war effort must be carried on with the Utmost vigour to ensure the safety of the nation, the people are entitled to ask the Government to explore every possible avenue in an endeavour to reduce taxation where possible, and also to economize in both wartime and general governmental expenditure.
The time is ripe for a review of the financial ramifications of the States. So far as we know, the States do not contemplate any increases of taxation; but. apart from that aspect, the people are entitled to inquire whether the limit has not been reached in both Commonwealth and State tax fields, and whether there should not be some lightening of the burden. Because of war- time requirements it may not be possible to reduce Commonwealth taxation, but the position is different in the States, which are not affected so much by war-time expenditure as is the Commonwealth. So far there does not seem to be any suggestion by the States that they will reduce their share of the tax burden which, unfortunately, the Commonwealth has been compelled to increase. As the Commonwealth Government cannot guarantee that the total per capita rate of £20 from Federal and State sources will not be increased substantially within the next few years, the States should examine their tax structures with a view to reducing their charges upon the people. Having built up their edifices of taxation, the States, apparently, will not reduce them, although they are excessive, because no one has asked directly for relief. The view of the States is that because the attention of the taxpayers is directed entirely to the Commonwealth proposals nobody is worrying much about State taxes, whereas the Commonwealth is being blamed for the increased burden; and since a war is in progress, the people regard these tax increases as inevitable. That is not the true picture of the position. The States have a responsibility, not only to the taxpayers, but also to the Commonwealth. The Commonwealth may yet have to consider whether, under its National Security powers, it can take action not merely to prevent the States from increasing taxes during the war, but also, if necessary, to compel them to reduce their imposts to meet the state of emergency.
Since the commencement of the war the Government of New South Wales has increased its taxes by almost 3’0s. per capita. That was due to a sudden recession of State revenues from various sources. That Government went ahead with its proposals as if a state of war did not exist. I consider that the Commonwealth could have invoked its National Security powers in order to influence the State Government to wield a less heavy hand in its dealings with the unfortunate taxpayers. That Government is now talking about reducing taxation, but so far nothing has been ‘ done. The Commonwealth Government should ask for more definite action. It is true that the unfortunate coal strike has caused a very big increase of the deficit in New South Wales, but that dis- pute will also affect the other States and the Commonwealth. The strike is a national calamity and its effects must bo borne by all governments. It offers no reason why the States should maintain their existing high taxes or even contemplate increases in any direction. If we accept the inevitability of direct taxation amounting to £10,000,000 - I exclude indirect taxation as not being of great public interest at the moment - we must decide whether or not the Government has done the. right thing in selecting income tax, land tax, and company tax as .the three main sources of additional revenue. In my opinion, the Government has acted fairly in its attempt to apportion the burden, but I agree with the right honorable member for Yarra that there are anomalies which may have to be adjusted. As the right honorable gentleman pointed out last night, a paltry increase of £14 in respect of one class of wealthy taxpayers is too little. I consider that the extra burden upon people in the middle range of incomes is unduly heavy, and that unfortunate repercussions are probable. The proportion of extra taxes to be borne by persons within the highest range of income is too low. We are told that the Government is circumscribed by the heavy taxation imposed in Queensland, and that it must take both the highest and the lowest State imposts into consideration. In my opinion, these difficulties ought to be brushed aside by the exercise of powers conferred on the Commonwealth Government under the National Security Act. I cannot see why the taxation schemes of the various States, which have no regard to the problems confronting the Commonwealth, should be allowed to influence the financial proposals of the Commonwealth. If the problem of dealing with high and low imposts in the various States cannot be dealt with more simply than this Financial Statement indicates, the Government should consider whether the powers con?ferred on it by the national security legislation should not be invoked, in order to. ensure a greater measure of justice to all classes of taxpayers who will be called upon to bear extra . burdens because of the war. I plead the cause of taxpayers on the middle range of income. The Government claims credit for having ex- eluded from these additional taxes SO per cent, of the people with low incomes. They will not be called upon to pay any direct taxation as a contribution towards the war because the Government considers it fit and proper that the burden generally should be thrown upon the middle range of income-earners. No logical reason has been given for that policy. In normal times it is pleasing to exempt from Commonwealth taxes persons in receipt of low incomes, although I point out that the taxing authorities of the States are not so considerate, but to-day the nation faces a grave emergency. During the last war, when the position was not so serious as it is now, persons in receipt of small incomes were not exempted from additional taxes. I ask honorable members if they can remember any protest by persons in receipt of small incomes against making a contribution towards . meeting the war-time commitments of the nation.
– “What taxes did the Commonwealth impose on persons with small incomes during the last war?
– It imposed heavier income taxes on them.
– What was the starting point?
– During the war the statutory exemption fell to £150 per annum, but working men who were staunch supporters of the Labour party and strong industrialists gladly paid the extra amount in order to assist the nation in its war efforts.
– They were not called upon to contribute so much by way of indirect taxes.
– Taxpayers generally do not worry much about indirect taxes.
– Then we must worry for them.
– That shows the value of camouflage.
– I consider that there is too little recognition of the patriotism of Australians with small incomes. If the Government were to ask them to make an additional direct contribution to its war effort they would do so gladly, and give to the Government credit for having adopted a wise policy.
It would be an easy matter for me to say that I have no objection to an increase of the land tax, because I have not to pay it. It is not sufficient to say that this is a form of taxation which should be exploited to the utmost, because any increase of the land tax is likely to have serious repercussions. I do not say that an increase of the tax is avoidable; but it is not a wise form of taxation at the present time when Ave reflect that three-quarters of that tax is paid in respect of town lands and only one-quarter of it by the owners of country lands. The effect of an increase of that tax on the building industry alone may be considerable; it may result in increased unemployment. Since the outbreak of war, building operations in New South Wales have slumped by 50 per cent., and there is danger of wholesale unemployment in that industry. I cannot imagine any more effective way of intensifying that recession than by imposing further additional taxes on town lands. Without wishing to be an alarmist, I predict that one effect of this additional tax will be a further slump in the building trade, and, therefore, I do not feel justified in giving three hearty cheers. As a means of accomplishing the end for which it was imposed, the land tax has proved to be an absolute failure. It is now practically a confiscatory tax. If we are forced to increase it, we must expect some serious economic repercussions, particularly a heavy decline of employment in the building trade. It will be admitted that the Government has very little choice, because the avenues availableto it for raising additional revenue are severely limited. Therefore, I suppose that we must wait, and see what happens.
If the effect of this tax, which we are told may be the forerunner of further taxes, is to bring about a deflationary movement, we shall have to put up with it. There is danger of a deflationary movement arising from the heavier taxation of companies, particularly the proposal to limit the rate of profit to 8 per cent, after which there is to be a steeply rising rate of tax until 60 per cent, of the profit made in excess of 8 per cent, is to be appropriated by the Commonwealth.
I heard the Treasurer’s statement in regard to shareholders who bought shares at a premium, but he did not deal with the real crux of the problem. Perhaps that was because he could not see any way out of the difficulty. But we cannot get away from the fact that all companies which pay dividends, being profit-earning companies, demand premiums for their shares. The great majority of the shareholders of such companies have bought their shares at a premium, and they will be severely hit by any arbitrary fixation of the rates of profit. Some shareholders who bought their shares at par will do well with an 8 per cent, dividend, but others, who paid as much as a premium of 100 per cent, for their shares, will be hit badly. The effect of this tax will he to frighten intending investors away from new companies which offer alluring prospectuses and promise substantial profits. There may be a deflationary effect in that sphere, but we shall have to take the risk.
We cannot expect any taxation to be satisfactory to every one. I have never heard of an ideal solution of the taxing problem, because there is no ideal solution of it. The Government is at its wits’ end to finance the war, and cannot expend too much time in considering the effect of ite actions on this or that section of the people, or on this or that individual. That there are anomalies is undoubted; some of them have been pointed ‘out by the right honorable member for Yarra and others. Various organizations of taxpayers have also expressed their views. These taxes will hurt the community, and especially certain interests, but we must give them a trial, and see what the result will be. I have sufficient confidence in the Government’s ability and instinct for justice to all sections- of the community, to expect that, if these anomalies prove to be really serious and to have a bad effect on the economic and general life of the community, it will lose no time in trying to effect some improvement.
– The honorable member’s time has expired.
– Last night I listened with great interest to the speech of the right honorable member for Yarra (Mr. Scullin). I compliment him on his speech, and disagree with the honorable member for New England (Mr. Thompson) that it was not constructive. On the contrary, it was a most useful contribution to the discussion, and should be welcomed ,by the Government. The right honorable gentleman pointed out certain anomalies which are likely to occur. His desire was to put the Government on the right track by pointing out the injurious effects of some of its proposals, with a view to remedying them at the start. I do not propose to deal with all of the matters referred to by the right honorable gentleman but I emphasize his remarks regarding the . effect of the heavier burden which will be placed on persons in the middle income range, and the failure of the Government to realize that the men who have most to lose should be called upon to make the biggest sacrifice. As the right honorable member for Yarra pointed out, a man with an income of £40,000 a year will have his tax increased by only 3 per cent., whereas a person in receipt of a salary at the lower end of the scale will have to pay 125 per cent. more. However logical the explanation of the Treasurer (Mr. Spender) may be, the unwholesome fact remains that those who have most to lose should the Allies not win the war are to be called upon to pay the lowest percentage increase of taxation. It is true that the Government has been able to leave untouched single men with an income up to £250, and married men with two dependants whose income is not more than £400. We all hope that the war will end before it is necessary for the Government to come further down the ladder.
Then we come to the middle class of income, which is represented by a fairly numerous body of taxpayers. No particular hardship will be caused to the man who actually pays the tax, but his domestic staff, consisting of gardeners, chauffeurs, utility men and the like, will suffer, because he will consider it necessary to effect economy, and will do so by dismissing those employees. The right honorable member for Yarra rightly stated last night that the whole House realizes that taxes have to be increased in order that the money which the Government needs may be raised. We are all sympathetically disposed to the Government, but we cannot be expected to accept blindly proposals that are formulated by one or two men in the Treasury, and rushed through this Parliament by a new Treasurer, causing anomalies which should be avoided. We must put our heads together, and see that the least harm is done to the community. I am satisfied, from my reading of the figures, that those who are to be hit by these proposals will be hit doubly hard, so hard, indeed, that they will immediately pass on the burden, causing innocent persons to become the victims. Unlike the honorable member for New England, I am not in favour of waiting until anomalies are disclosed, and then attempting to cure them; they should be prevented before they arise. I should like the Treasurer to withdraw these proposals, and make an attempt to propound something better. Let us see that as little suffering as possible is caused to the community.
.- I have listened with more than ordinary interest to the debate on the financial proposals of the Treasurer (Mr. Spender). Last night the right honorable member foi Yarra (Mr. Scullin) made a most excellent speech. His analysis of the Treasurer’s proposals was illuminating to honorable members, and I believe that the right honorable gentleman put his finger on the weak spots in them. I am in agreement with some of the remarks of the honorable member for New England (Mr. Thompson), but differ from him when he brushes aside the matter of indirect taxation. Nor do 1 agree with his suggestion that men on lower incomes should have to make a direct contribution to the finances of the Government, either at this particular time or at any other time. The honorable member has said that 80 per cent, of the population does not pay direct taxation. The reason is that their incomes are less than £250 a year. They are not, however, to be allowed to escape a fair measure of taxation under the proposals introduced by the Treasurer. Consisting as they do of persons who have small incomes and large families, they make a substantial contribution to the returns from taxation, and experience considerable anxiety in keeping their families well clothed and fed in order that in later years they may take their rightful place in the community. Greater consideration should be shown to that section of the people.
The Federal Government should be careful to avoid interfering with the taxation of the States. The right honorable member for Yarra very rightly said last night that the Commonwealth should go ahead with its proposals and leave the States to make any adjustments they considered necessary. The view expressed by the honorable member for New England might be all right in the case of New South Wales, but it is an entirely different proposition when applied to the smaller States of the Commonwealth. For a number of years, the matter of severity of taxation ha? caused very grave concern to the occupants of the treasury bench in Tasmania. Because of the attitude adopted by the Commonwealth Grants Commission, which year by year investigates the finances of Tasmania and some of the other States, Tasmania has suffered the loss of a considerable amount, because the severity of taxation in that State has not been up to the average of the mainland States. Some consideration was given to that particular aspect when the Treasurer was framing his proposals. I should bo loath to see any interferenceby the Commonwealth Government with the taxation of the different States. The taxing of higher incomes at a much, steeper rate by Queensland than by Victoria may cause some difficulty to theCommonwealth Government. On theother hand, however, the tax on middle incomes is higher in the southern States than in Queensland. It is a matter of the internal economy of the States, and they should not be interfered with.
At the moment, we should not be unduly concerned in regard to the effect on employment of the imposition of additional land tax or other direct taxation. Sacrifices have tobe made. Money has to be found to enable Australia to continue its wai effort as a partner in the British Commonwealth of Nations. For that reason, there should be a display of patriotism by those who are in a position to contribute to the revenues of the country. There isno fairer way by which money for governmental expenditure may be collected: from the people than by direct taxation. Only during the last few days cases have been cited in this House of lack of patriotism by somebig financial concerns, and of attempts by them to exploit the community. Two particular cases were those of the boot industry and the oil industry.
Those are two that have come to light; probably there are others. It is from these people that money should be extracted. If the sources of obtaining revenue are dried up in Tasmania, and there is little or no expenditure in that State on defence works, its people will have to seek employment on the mainland, and the resultant decline of population will cause greater problems to arise.
– Is the Government not spending much defence money in Tasmania ?
– Very little.
I wish now to refer to the sales tax and to indirect taxation generally. This aspect of the Treasurer’s statement requires considerable elucidation. I do not regard it as satisfactory in any way. The honorable gentleman went to considerable pains to indicate the field over which this tax would be levied. He said that whereas the sale of commodities in Australia for 1940-41 was estimated to amount to £750,000,000, sales tax would be levied on only £215,000,000 of that total. In referring to exemptions amounting to £98,000,000 the honorable gentleman said -
The goods making up this £98,000,000 have been exempted by successive governments for one of four main reasons, viz.: -
Toavoid taxing foodstuffs and goods which directly increase the cost of living such as tea, coffee and cocoa, pastry, scones, footwear,&c., £24,000,000.
To give assistance to industries which otherwise might have to receive: direct help, viz.,. agricultural machinery, mining machinery, building materials, equipment for the fishing industry, £48,000.000.
To avoid taxing articles used in medical, educational, charitable, philanthropic and religious activities, £12,000,000.
To obviate the necessity of taxing the containers used to market exempt goods; to place manufacturers consumable aids on the same footing as raw materials; and to avoid taxing small manufacturers; £14,000,000.
He added -
The alternatives facing the Government were therefore the re-imposition of sales tax on the goods which had been exempted for the reasons stated with a relatively small: increase in rate or to obtain the whole of the requirements by a somewhat sharp increase in rate.
The exemptions now in force are to continue, although the rate of tax is to be substantially increased with the object of yielding an additional £5,000,000 of revenue. The new rate of tax is to be 81/3 per cent., which is 21/3 per cent. higher than the existing rate; The burden of sales tax falls most heavily upon people with small incomes and large families. The more goods people have to purchase the more tax they have to pay. That is inescapable. It is useless to argue that only 81/3 per cent. will be passed on to the public. The percentage that the people will pay in sales tax will be considerably greater. The increase of sales tax will also fall heavily upon small business houses. I have no doubt at all that some amount in excess of 81/3 per cent. will, in many cases, be added to the retail cost of commodities. Although the existing exemptions are to remain in force, the fact remains that an additional amount of at least £5,000,000 will be collected in sales tax. Wearing apparel will still be subject to the tax and in this respect the poorer sections of the community will bo considerably embarrassed.
Customs and excise duties, another form of indirect taxation are expected to yield an additional £5,300,000. In fact, of the £20,000,000 additional revenue which the Treasurer contemplates raising by taxation, £10,300,000 is to come from indirect taxation and £9,700,000 from direct taxation. I have excluded estate duty from my calculation of the amount to be contributed by indirect taxation; but in actual fact it, while a direct tax, is also, in a sense, obviously an indirect tax.
The honorable member for New England referred to certain anomalies in our land tax legislation, and, in a general way, criticized this method of raising money. Personally I consider the land tax a fair impost. It certainly has been a great money spinner for successive governments since it was first imposed.
Speaking of direct taxation generally I should like to know how the Government proposes to collect the money. An examination of the records for the. last three years shows that a considerable amount of both income and land tax remains uncollected. The following are the amounts outstanding in respect of all assessments at the 30th June, in the last three years: -
As the Government has been unable to collect these taxes at the rates now in force, I anticipate added difficulty when the increased rates are imposed. I offer no complaint against the Treasury officials or the officers of the Taxation Department because these amounts are outstanding. In my experience taxation officers do not miss very much. Nevertheless, last year £3,331,985 of income tax remained uncollected. In these circumstances I suggest that the Government should give a good deal more consideration than it seems to have given to the adoption of the policy applied by the Victorian Government for some time of collecting income tax by instalments. People do not feel the burden of taxation so heavily if they are able to pay by instalments. In fact, under such a system, direct taxes come to be regarded much as indirect taxes are regarded. For example, when I buy my tobacco I rarely think of the amount of excise duty I am paying. Very few people, I imagine, stop to think that when they buy a small packet of cigarettes they are actually contributing -3d. to the Commonwealth revenue. The payment of direct taxes however, is quite a different matter. Under State legislation State income tax is payable within one month from the receipt of the assessment. Under federal legislation Commonwealth income lax is payable within sixty days of the date of the assessment. I know that an extension of time may be obtained in certain circumstances, but the fact remains that a large sum of money has to be found by the taxpayer for this purpose within a limited period. I therefore suggest that the Government would be wise to explore the practicability of adopting a system of payment of income tax and, for that matter, land tax, too, by instalments, for I am sure that thereby it would avoid the carrying over,, from time to time, of large amounts of unpaid taxes.
The British Commonwealth of Nations is at war, and as a member of that Commonwealth, Australia’s future is threatened. Consequently, it is imperative that we play our part in this conflict. For this purpose we must find more revenue, and I agree that taxation measures of this sort must be resorted to in a time of national emergency. The additional taxes, however, should be levied on an equitable basis. I am reminded of the anomaly referred to by the right honorable member for Yarra (Mr. Scullin), who pointed out that in certain circumstances a preferential shareholder will pay no income tax, either as a shareholder or as an individual. That is unfair. I hope that the Treasurer will make an effort to remove such anomalies. The burden of additional taxation on the poorer sections of the community can be eased by reducing indirect taxes as much as possible. At the same time the general basis of taxation should be more equitable.
.- Realizing the difficulties which confront the Government and the Treasurer (Mx. Spender) in devising ways and means for the raising of the additional revenue required for the prosecution of the war, I congratulate those responsible for the framing of the proposals submitted to the House last week. The new taxes have been very carefully calculated. Whilst they will enable the Government to find a substantial portion of the additional revenue which it requires, they will at the same time, cause very little dislocation of industry. Thb right honorable member for Yarra (Mr. Scullin) in his excellent speech last night, which I am sure was appreciated by all sections of the House, although all of us did not agree with his conclusions, raised certain objections to these proposals. The Government should be given full credit for- retaining the present statutory exemption in respect of income from personal exertion. A person with .a wife and one child, and earning up to £350 per annum, will still remain absolutely exempt from Commonwealth income tax. The Government is to be commended in exempting from income tax the £250 to £350 range of incomes in a time of war, particularly in view of the fact that the number of persons within this range is very large. The right honorable member for Yarra drew attention to what he represented to be the inequity of the rate of increase of tax on certain grades of income. I remind him that a very substantial percentage of incomes in the higher ranges is already being paid by way of State and Commonwealth taxes, and it is questionable whether any further considerable increase of tax could be levied on those incomes at the moment without causing acute dislocation of industry and possibly widespread unemployment. I have already pointed out that individuals whose incomes range from £250 to £350 per annum and who have only a wife and child to support, will remain completely exempt from Commonwealth tax under these proposals. A man with an income of £500 per annum with the same dependents will be called upon to pay only £20 or 4 per cent., of his income by way of State and Commonwealth income tax. In this connexion I am taking Queensland figures in respect of State tax, because in the majority of cases the Queensland rates are the highest of any of the States. Honorable members will agree that an individual in receipt of an income of £500 per annum from personal exertion is generally regarded as being reasonably placed, and not obliged to struggle for his sustenance. He may not be able to enjoy luxury, but he has a reasonable measure of comfort. When the right honorable member for Yarra drew attention to the disproportionate increase of the rate of tax in respect of higher incomes, he neglected to say that Commonwealth and State taxes on an income of £5,000 per annum already amounts to £1,939, or 40 per cent, of the income, which leaves a little over £3,000 to the taxpayer. I also direct attention to the fact that the combined State and Commonwealth taxes on an income of £4,000 amounts to £1,348. Thus on the additional £1,000 between the £4,000 and £5,000 marks the Commonwealth and State Governments levy £600 in tax, leaving only £400 of that £1,000 to the taxpayer. In view of these figures I suggest that taxation has reached such a point, that its extension much further, would make it a very doubtful proposition for a taxpayer to endeavour at all to increase his income and extend business enterprise. The right honorable member for Yarra also pointed out that the tax payable on an income of £40,000 represented a very small percentage of the total income. I should be surprised to learn that many people in this country enjoy so large an income. However, on this amount of income, if it be derived from property, the taxpayer is left with only £12,S40 after paying Commonwealth and State taxes.
– He has sufficient left.
– We cannot tax everything a man earns or we shall destroy every incentive in the individual to extend his business activities. On this point, of course, the policy of the Government and that of honorable members opposite differ fundamentally. I believe that individualism is the driving force of progress.
Another point with which I propose to deal is the increase of land tax by 50 per cent. Last night the Treasurer (Mr. Spender) pointed out that the exemption in respect of mutual and partly mutual insurance companies had been lifted because a disparity existed in favour of these companies in respect of the subletting of buildings. I hold no brief for insurance companies, or any other section of the business community, who have the capacity to pay what is in effect a capital levy. I intend, however, to take up the case of those industries, such as the primary exporting industries, which cannot pass on this levy. I refer particularly to the wool and wheat industries. The Commonwealth Wool Inquiry Committee appointed in 1932 dealt comprehensively with the incidence of land tax on wool-growers. It pointed out, as the honorable member for Bass (Mr. Barnard) has. already stated, that outstanding land tax unpaid amounted in 1932 to £714,000, and it is obvious that this tax has not been paid because of the inability of many taxpayers to pay what is, in effect, a capital levy. I have no objection to a tax of this kind, provided that it is levied on people who can afford to pay it. In the wool and wheat industries, however, values during recent years have not even remained stationary. They have declined. That fact must be considered when we are dealing with the ability of these primary export industries to pay a tax of this kind. In its report the Wool Inquiry Committee stated -
Western Australia exempts from laud tax all land- used solely for agricultural, horticultural, pastoral or grazing purposes if improvements have been effected to an amount equal to fi per acre or one-third of the unimproved value of the land, whichever amount is the lesser.
The Commonwealth might adopt that principle in respect of its land tax. In his summary of business statistics the Government Statistician of Hew South Wales shows that on the basis of wholesale values of products in 1911 representing 100 points, the value of nonrural products advanced to 175 points by 1939. The movements in values of rural products in that period were: Butter, 100 to 160; wool, 100 to 132; and wheat, a decline from 100 to 75. It will be clearly seen that while insurance companies and other city property interests, such as brewing companies, trustee companies, &c, have the ability to pass on these taxes, the land tax remains a dead weight on” the exporting primary industries., which cannot, in any circumstances, pass it on. I propose to quote some figures in order to show the_ effect on share values of the low prices of export primary products. The Stock Exchange Index for January, 1940, shows the comparative values of shares in various kinds of enterprises, shares of the value of £1 being shown in the table as 100. The table is as follows:-
This shows that the primary industries are in a very bad state compared with other industries, particularly the export primary industries, and there is need to watch how this extra taxation will affect them.
The right honorable member for Yarra said that the sales tax on flour should be abolished so that the consumers of bread might obtain the benefit of the low price of wheat. I point out, however, that the sales tax on flour is a graduated one, and disappears altogether when the natural price of flour rises to something over £12 a ton, at which price bread can be retailed for 6d. or 7d. a loaf. I ask honorable members how often did the consumers of bread obtain any benefit from the low price of wheat or flour? In country districts, in particular, the price of breads remains, as a rule, at 6d. or 6£d. a loaf,- irrespective of whether the price of flour is £5 or £15 a ton. Therefore, even if the flour tax were removed, the beneficiaries would not be the consumers, either in the city or the country, but the master bakers.
– The tax stabilizes the price of flour.
– That is so. Increased taxation, both State and Federal, will make it very difficult for many people, who have not been accustomed to make provision for the payment of their income tax, to meet the payments when the time comes. As the tax rises, one’s personal expenses do not decrease, with the result that, at the end of the year, the taxpayer on a low, middle or even high income will probably experience great difficulty in raising the amount of his assessment. Only this week I noticed an advertisement inserted in the press by the Monte de Piete Company stating that it was willing to lend taxpayers money with which to pay their income tax. Of course, borrowers would have to pay good interest.
– That is a new industry started by the refugees.
– No, the advertisement I saw was inserted by the Monte de Piete Company, which has been established for at least 30 years. I am not taking exception to the action of the company in embarking on that kind of business. I only mention it as evidence that taxpayers find difficulty in raising the money when the time comes to pay, and I say that the Government ought to introduce a system for the payment of taxes by instalments, and should give adequate publicity to the matter. Some taxpayers do try to make provision for the payment of their taxes, and regularly pay something into a savings bank account for that purpose. In many instances, however, before the end of the year, they are tempted to withdraw the money for some reason or other, and thus, when the time comes to pay, they find themselves financially embarrassed. I suggest, therefore, that the Commissioner of Taxation should be empowered to pay at least savings bank rates of interest on any instalments of tax paid into his department.
On the whole, the Government is to be commended for the very thoughtful financial scheme which it has brought forward. We all realize that big sacrifices will have to be made during this war. Some honorable members have complained that the rates of tax have not been increased sufficiently in respect of those on higher incomes. Whatever justification there may be for this complaint, we should remind ourselves that this field still remains as a reserve, to be drawn upon at a later stage. Undoubtedly it will be drawn upon as the war proceeds, and an increase of rates too suddenly at one time might so disorganise industry that great injury to the community would result. I am sure that those engaged in rural and primary industries appreciate the fact that all the exempt fields have been left untouched, that thu averaging system remains, and that many articles, which we thought might have been brought within the scope of the sales tax, are still exempt.
.- We have been presented with a statement by the Treasurer (Mr. Spender) setting forth the Government’s financial proposals, which involve the laying of very heavy burdens on the community. I regret that these burdens are much greater than would have been necessary if the Government had been less extravagant. We all are aware of the high fees and salaries that the Government is paying to the chairmen and members of the various boards and commissions which it has set up. Similar extravagances have been perpetrated in other fields of administration, and I have in mind one example in my constituency. Some time ago, the Government established a cavalry camp at Torquay. A site was duly selected, and £25,000 was expended in establishing the camp. Three months later, all the fixtures were torn down, and most of the money which had been expended was simply wasted.
– The same sort of thing has happened in other places.
– Not only was unnecessary expense incurred on the laying of pipes for a water supply and on other basic works, but the permanent fixtures of the camp were still being installed during the last week of occupation. That was a sheer waste of money. I am sure that other honorable members can recall similar examples of extravagance. 1 suggest that the Treasurer will go down to history, not as Mr. Spender, but as Mr. “Squander”.
The right honorable member for Yarra (Mr. Scullin) reminded honorable members that the financial proposals of the Government make no provision for necessary overseas expenditure, amounting to about £35,000,000. The Government has been warned time after time of the need to watch the position in regard to its London funds. We can accumulate funds in London, in order to meet our overseas expenditure, only by having an excess of exports over imports plus debt commitments, and the only part over which the Government has any control is the imports. The Government should have had in the financial statement some reference to the control of imports with a view to augmenting our London funds. The British Government has this matter in hand. Several days ago I read a statement in the Autocar, of the 8th March of this year, to the effect that it is the policy of the British Government to endeavour to retain in their pre-war position, so far as that i3 possible, those industries which have built up British trade. Great Britain, apart from financing its war effort, is safeguarding its trade position in the post-war period. It was also stated that in pursuance of that policy one British motor-car manufacturing company had, within the last twelve months, increased its trade in motor cars with Australia by many thousands of pounds. During the war the British motor-car industry is able to hold and even increase its trade with Australia; but the motorcar industry in this country is working only part time. Control of imports is a factor which the Government should have taken into consideration before submitting its financial proposals to this Parliament.
Passing from that subject to that of raising money, I am entitled to ask why the Government needs the money it proposes to raise. I understand that it requires it in order to make what is called its war effort, which, consists of enlisting (he men required for the fighting forces, and of providing the labour, material and resources required to produce munitions of war. The Government needs money in order to give it command over man-power and resources. Our real war effort is being obscured because too much consideration is being given to the financial aspect of our policy. Financial policyshould be governed by the existing economic conditions of the country. 1 shall endeavour to illustrate my point in this way : At the outbreak of war 85 per cent, of our man-power was engaged in producing peace-time goods and services, and the other 15 per cent, was unemployed. Lt may be said that at the same time 85 per cent, of our capital equipment and resources was employed in producing peace-time goods and services, and 15 per cent, was not so employed. Our problem was to get our man-power and resources to make a war effort. Obviously if 15 per cent, of our man-power was unemployed and a similar percentage of our capital equipment and resources also was unemployed, we could have transferred our unemployed man-power and resources to our war effort without placing any real burden upon the community. In other words peace-time production of goods and services would not have been interfered with, and the financial counterpart of such a policy should be that the money required to put that man-power and these resources into our war-time effort should be provided by the central bank without cost to the community. We have been informed hy expert economists that such a policy would not result in inflation. Of course, I realize that in practice it would be impossible to draft 100,000 men who were unemployed at the outbreak of war into the Navy, Army and Air Force. There are other ways in which to give effect to such a policy. Had this Government offered an adequate remuneration to the men willing to serve in the fighting forces the necessary recruits, some from the ranks of the unemployed and some from our primary and secondary industries, could have been drawn off, and the remainder of the unemployed could have taken their places. When the resources of the nation in the matter of man-power and raw material are not being fully utilized., the money to enable these resources to assist our war effort should bc provided by issuing central bank credit. I am criticizing the Government’s financial proposals from that point of view. The time has not yet been reached when the Government would be justified in resorting to the imposition of additional taxes. I realize that thu Government has to take cognizance of the fact that, the time will come when credit from that source will not be available. There is a limit in that respect, and when further c; edits cannot be obtained the Government will need to have ready its taxation proposals to enable it to obtain money to give it command over our man-power and raw material. When that stage is reached all the money needed should be obtained by taxes rather than by loans. There are quite a number of misunderstandings in regard to the effect of raising money by taxation and by loans. Whether the money be raised by imposing taxes or by floating loans it comes from the same source. That source is the surplus which the individual possesses over current requirements. If the money is available for investment in loans, it is also available to pay taxes. A number of persons believe that by obtaining money by loan we “ pass the buck “ to the next generation, but that is not the case. When money is raised by taxation the Government uses it in payment for goods and services forming part of its war effort. If an individual has £1,000 to spare the Government taxes him and obtains command over goods and services to that value. In peace-time the individual would have used the amount of tax paid for some other purpose; for instance, he could use it to construct a house which would be rented to a working man, probably at an exorbitant rent; but the community would have the use of the dwelling. But in war-time the Government takes the money by way of taxes or by way of loan, and it is not used in the construction of a house but in the manufacture of armaments. If the money is raised by loan the investor gets his return on his money, but the poorer people of the community are deprived of houses. In these circumstances the real burden of war rests upon the present generation of the poorer section of the community. The investor loses nothing, although his rate of interest may decrease. The poor people are deprived of butter in order to pay for bombs, and of houses in order to pay for armaments. In this connexion I wish to make a clarion call to the youth of this country. The wealth of the community is controlled by the elderly people who invest their money in war loans, and who in consequence of the interest increase their capital holdings. The money of the community becomes concentrated in the hands of the elderly men who sit back and demand that youths shall be conscripted to give their flesh and blood in defence of their country. Instead of raising loans, the Government should increase the taxes to such a degree that all money required could be raised by that means.
– That would be physically impossible.
– It would not, as I have clearly shown. If the honorable member for Gippsland (Mr. Paterson) studies the subject carefully he will see that taxes and loan money come from the same source. If money is available for investment in loans it is also available for the payment of taxes There is no getting over that.
– My word there is!
– I am afraid that I cannot convince the honorable member.
– Does the honorable member suggest that sufficient money could be raised by taxing the people?
– I do.
– With an extension of credit?
– I said that, at this stage of our economic activity, the correct method to raise money for war purposes is by means of central bank credit, but when a limit has been reached the Government should obtain finance by means of taxes and not by raising loans. I emphasize the point that if the money is available for investment in loans it could be collected in taxes.
– The honorable member is .advocating confiscation.
– Not at all. If we finance our war effort with loan moneys, not only is the present generation deprived of the man-power .and resources utilized in our war effort, but future generations also have to pay. If money required for war purposes is raised by taxes only the present generation pays by being deprived of goods and services; but if it is raised by loan the present generation is mulct to the same degree, and future generations are penalized because they will be taxed in order to repay principal and interest.
Although I realize that our war effort cannot always be financed by central bank credits, the taxation proposals” which have been submitted to this Parliament are inequitable. I am emphatically opposed to any increase of the sales tax. It is a bad tax. Under it the poorer people suffer to a far greater extent than the rich. It is one of the most regressive taxes that we could possibly have. In addition to that, it does not do one job that a tax should do. Taxes are imposed in order to take money from the pockets of the taxpayer, and so give to the Government command of goods and services; but it also has another purpose, and that is to reduce the expenditure of the individual taxpayer. The best method to reduce the expenditure of the individual taxpayer is simply to take money from him as income tax and let him spend the remainder of his money as he thinks best. Tn that way he gets the greatest satisfaction from the money that is left with him. The imposition of sales tax dictates, in effect, on what part of his expenditure a person shall save his money. The Government, if it taxes goods, should single out the commodities on which it thinks the community should not be spending money.
– That is what it has done.
– It has done so to a degree by exempting certain goods, but it has not carried the principle far enough. Here is an example of what I mean : Sales tax is payable on both sewing machines and wireless sets. Sewing machines are a household necessity, and the Government should not discourage their use in the ordinary wor/king-class home. It should, therefore, exempt sewing machines completely from sales tax. But it should by taxation discourage the expenditure of man-power and resources in the manufacture of wireless sets. That is different from putting sales tax on all goods except foodstuffs. My point is that the Government could achieve its purpose far better by increasing the income tax than by imposing a sales tax. Again, for instance - I think perhaps that this is a better example than the one that I gave - sales tax would be payable on corrugated iron roofing and also on the substitute, corrugated fibro-cement roofing.
– Building materials are exempt from sales tax.
– Even conceding that, the point that I make is that the Government wants steel and iron for its muni- tions works and it should discourage the use of corrugated iron in buildings. It should, therefore, tax corrugated iron and exempt corrugated fibro-cement. Taxation should operate to discourage the use of those things which the Government needs and encourage the use of the substitutes for which the Government has no use in its munitions programme.
As well as disagreeing with the sales tax, I believe that the Government’s income tax proposals are not progressive enough. The rate of tax does not increase rapidly enough as incomes grow. If one drew a graph of the rate of progression of the new income tax in comparison with the rate of progression of the old, it would be seen that the rate proposed by the Government is not nearly so steep as the ratewhich now obtains. The rate of progression should be far steeper, because those on higher incomes can afford to pay much more than they are being called uponto pay at present.
The exemptions granted are totally inadequate ; they begin too early in the scale of incomes. The allowances of £50 for a wife and £50 for each child are not nearly high enough. Those allowances have stood for a long time, and no consideration whatsoever has been given to the fact that since they were introduced the value of money has depreciated. The allowances to-day have not the same value as they had 10 or 15 years ago, and should be increased to correspond with the decline of the value of money. I, therefore, say that the Government’s proposals in this regard are totally inadequate.
The Government’s taxation proposals in regard to unearned income are not severe enough. I speak of the higher unearned incomes. It is true, as the Treasurer said, that the lower unearned incomes generally represent the savings effected by people to maintain them in their declining years. I agree that those incomes should be let off fairly lightly, but on unearned incomes in the higher ranges the rate of tax should be much higher than is now proposed. The individuals who have those high unearned incomes can well afford to meet the needs of the Government, and I should rather see the tax on them increased than the rate of sales tax advanced. Another consideration - and this affects our war effort - is that, if you tax unearned incomes, you in effect force the holders to seek work. To the extent that that is done, you force people into productive activity, and the value of their work acids to the income of the nation. The taxation of unearned income is an incentive to people to do a job of work which otherwise would not be done. As an illustration of that, I was discussing taxation with two farmers at the conference of the Country party at Geelong. One agreed with my views, but the other said. “That is no good to me. I have a farm which I have built up over ten’ or twelve years. I leased the property only the other day to another man and I intend to sit back for the rest of my life and live on the rent”. I told him that that attitude did not appeal to me, and that no individual should be idle and live on unearned income.
– Not even aged people ?
– I except them, but this man was in the prime of life, and expected to be able to sit back and live on the hard work of the man to whom he had rentedhis farm. I have no time for an individual of that sort. If you tax that man’s unearned income, in order to enjoy goods and services he has to earn income, and in order to do that he has to work and so add to the productivity of the community.
I summ arize my objections to the Government’s proposals in this way: First, 1 say that the Government should pay greater regard to the expenditure of moneys than it is doing. It should curtail the waste and extravagance which are rampant in Government services to-day. Secondly, it. should get whatever money it requires by an expansion of central bank credit. The time has not arrived for new taxation proposals. When that time does arrive the Government should raise the money needed in a way more equitable to the poorer sections of the community. It should resist any temptation to increase the sales tax, and should, instead, raise the extra money needed by increasing the income tax, particularly by accelerating the rate of progression and by demanding a larger proportion of unearned income.
.- If the honorable member for Corio (Mr. Dedman) ever becomes a member of a ministry I should say that his Prime Minister would certainly not appoint him to the Treasury portfolio. The honorable gentleman said that the Treasurer (Mr. Spender) would go down in history as “ Mr. Squander “, but if that honorable gentleman tried to apply the honorable member’s suggestions he would be decidedly unpopular. What honorable gentleman here would entertain for a moment a proposal that at one swoop the income tax should be increased fivefold ? The suggestion is too ridiculous for consideration.
– Does the honorable member not think that those who have high incomes should have to pay? The soldiers will be paying with their lives.
– We all subscribe to the view that those who have the money should be taxed more heavilythan those whose incomes are small.
– From where does the honorable member get his fivefold?
– The honorable member for Corio wants to cut out the sales tax. If we eliminate business undertakings, such as the Post Office, we have to raise in taxes this year about £100,000,000. A good deal willcome from customs and excise, but direct taxes will bring in about £30,000,000. If the sales tax were eliminated, we should need, in order to raise the required volume, to increase the income tax fivefold. I am sure that the proposals submitted by the honorable member would not even receive support from his own side.
In this debate, members have agreed that the taxation proposals of the Government are, in the main, fair and equitable. True, there are certain anomalies. The honorable member for Richmond (Mr. Anthony) has already referred to one item which has been considerably criticized, namely, the rate of tax on incomes in the range from £1,500 to £4,000. The honorable member has given facts which I shall not repeat, beyond saying that that range of incomes has to bear a large proportion of the State taxes. Reference bus been made to the high taxation in Queensland. It would be well for this House to know the rate of tax per capita in each of the States in the financial year 1938-39. I take these figures from the Commonwealth Y ear-Book: New South Wales, £78s. 3d.; Victoria, £68s. 3d.; Queensland, £811s. 9d. ; South Australia, £71s. 3d.; Western Australia, £7 16s. 3d.; and Tasmania, £7 10s. 2d. That,I submit, is the only fair comparison that can be made.
Mr.Curtin. - Does that include all taxation ?
– The figures are for direct taxation. I do not know the position in other States, but the Queensland figure includes income tax and the State development tax, which was previously known as the State relief tax.
– Would it include dividend duties ?
– Yes, everything that might be regarded as direct taxation.
– I think those figures include all taxation.
– Do they include motor registration fees?
– Motor registration fees are not included in these figures.
– What about local government taxation?
– That also is not included.
– The comparison relates only to taxes collected by the Taxation Departments
– There is not a very great difference in the per capita taxation of the various States. Queensland lias the highest taxation, but, notwithstanding that fact, its people have to make their contribution to the grants made by the Commonwealth each year to Western Australia, South Australia and Tasmania. L am not ‘objecting to that; I recognize that it is necessary and just.
– Is not the high taxation in Queensland due, in some measure, to low transport charges?
– There are, of course, reasons for Queensland’s high taxation, but I cannot go into them now. The figures which I have quoted are in respect of direct taxation paid by the people of the various ‘States.
I listened with interest to tlie speech of the right honorable member for Yarra (Mr. Scullin), and I was particularly interested in his suggestion that some adjustment should be made of the income tax paid by shareholders in companies. Although there may be something to be
Raid in favour of that, I point out that if effect were given to such a scheme it would be necessary to recast our present system of taxation, and in the end we would probably not be very much better off than we are under existing conditions. 1. congratulate the Government on the War-time Profits Tax Bill. As the Treasurer pointed out in his second-reading speech on that measure, the war-time profits tax previously in operation did not have the desired effect. The honorable gentleman revealed that under the earlier legislation it was possible for companies making up to 80 per cent, profit to escape the tax, whereas other concerns, making perhaps only 10 per cent, profit, were liable to pay it. That anomaly was due to the very unsatisfactory basis of the tax, which was levied and assessed on a pre-war standard of profits and capital. A very good purpose would te served if a special committee of this Mouse were constituted to report upon anomalies in existing taxation. After all, it is the duty and responsibility of this Parliament, before imposing taxes on the people, to satisfy itself that the incidence of the taxes is as equitable as possible. I draw attention to the effect that these new measures will have upon our national economy. We must not overlook the fact that in addition to the total of £79,000,000 to .be raised by the Government for war purposes, the taxpayers will be called upon to meet the regular taxation levies necessary to carry on the ordinary activities of government. Adding the two together we find that the revenue to be raised by taxation next year will amount to £121,000,000. It is interesting to recall that, during the peak year of the last war, the total revenue derived from taxation was £43,000,000, so that next year’s estimated taxation is nearly 300 per cent, greater than that for the heaviest year of the last war. Since the last war the population of Australia, has increased by only 40 per cent. I point out also that during the peak year of the last war, the total cost of defence was £83,000,000, of which £21,000,000 was derived from revenue, and £62,000,000 from loan. According to the statement now before the House, the war expenditure in 1941 will amount to £79,000,000, of which £50,000,000 will be obtained from loan, and £29,000,000 from revenue. In addition, of course, £35,000,000 will have to be raised during the next two years to meet overseas commitments. If we assume that £20,000,000 of that sum will he expended in the year 1940-41, we arrive at a total defence bill for the year of £99,000,000, as compared with £S3,000,000 during the peak year of the last war.
I believe that the deduction allowed to the taxpayer for children should be higher than it is. A man on, say, £400. £500 or £600 a. year does not actually receive very much relief in his taxation assessment from an allowance of only £50 for each child. Every consideration should be given to the family man, who, after all, is very important to the welfare of Australia, and I urge the Government to consider an increase of the deduction allowed in respect of children.
With regard to the Government’s taxation proposals as a whole, it seems that, owing to circumstances that are largely unavoidable, Parliament is being asked to sign a blank cheque. We have not the budget or Estimates before us but Parliament should be given some assurance that the vast sums of money to be raised by this legislation will be wisely spent. Because of the rush manner in which defence work has to be carried out, defence expenditure, although, colossal, is not subject to the same strict budgetary control as is exercised over ordinary departmental expenditure. In addition to the routine check by the Auditor-General’s Department, which, in the main, merely satisfies itself that some responsible officer has approved of certain payments, and that the vouchers are correct, thorough investigations of defence expenditure should be made by somebody appointed specially to prevent waste.
– There is an internal audit section of the Defence Department.
– I would prefer to see a check carried out by the AuditorGeneral’s Department rather than from within the Defence Department itself. I emphasize that matter because I think it is very important. I have had brought under my notice instances of extravagant expenditure, and I urge that every care be taken to eliminate such waste. I am not venturing to criticize the AuditorGeneral, because I know that he is carrying out his work as efficiently as is possible in the circumstances, but I suggest that the control exercised in connexion with defence expenditure should be something more than the ordinary audit check.
I agree with the honorable member for Corio that there is need for some review of the expenditure of all departments in order to avoid waste. For instance, a saving could be effected by restricting the use of paper. An appeal lias been made to the people of Australia to conserve paper - newspapers have already been asked to take action - and in my opinion a huge saving could be effected by the Government in this direction.
– That is being done now.
– An instance of waste in the use of paper may be found in the printing of the financial statement now under discussion by this House. When the statement was presented by the Treasurer, a printed copy was circulated to all honorable members, and on the following day proofs of the speech were issued to us by the Hansard department. Surely no honorable member wants two copies of such documents.
– Would the honorable member cut out Hansard t
– I would not go so far as that, but I suggest that Hansard could be curtailed with advantage. The Prime Minister and the Leader of the Opposition, or the members speaking for their parties on particular measures, might be reported fully, but the reporting of the speeches made by other honorable members’ should be limited to, say, a quarter of an hour. Honorable members would then know that after the expiration of that time their remarks were not being recorded in Hansard. Such action would not only effect a saving of paper, but also would improve the standard of debates in this chamber.
I hope that- in spending the vast sums to be raised under these measures the Government will ensure that great care is taken to avoid waste. It is all very well for us to approve of these proposals, but the increased imposts have to be paid by the taxpayers, and they are justly entitled to demand that the money be wisely expended. Whilst I concur in the suggestion that provision be made for’ the payment of income tax by instalments, E think that the scheme propounded by the honorable member for Richmond, for the payment of interest to those who pay their taxes in advance, would be extremely difficult to operate. A large staff would be required and the result would probably not be very economical to the Government. I suggest to the Treasurer, particularly, that conferences be held with the various State governments, with a view to’ spreading income tax assessments over the year. The taxpayers in Queensland receive almost simultaneously their Federal inCome lax assessments, State income tax assessments, State relief tax assessments, State land tax assessments and Federal land tax assessments.
– It is the same in Victoria.
– The Commonwealth and State governments, I think, might very well consider the advisability of endeavouring to spread the assessments over the year instead of issuing them within the period of one or two months.
– Payment by instalments would be the better method.
– Under the present system serious difficulties may arise and, in some instances, disturbance of industry may result owing to the necessity for meeting high tax assessments of Commonwealth and State governments at a bout the same time. I urge the Government to’ consult with the State governments as to whether it is possible to spread the issue of various income tax and land tax assessments throughout the year. This course would be appreciated by the taxpayers, and I feel sure that it would benefit industry and commerce generally.
.- I am able to verify the statements of the honorable member for Corio (Mr. Dedman) in relation to wasteful expenditure on defence works, particularly in connexion with military camps. Some time ago the Defence Department incurred considerable expenditure in the construction of acamp at Dapto, in my electorate, and many men were in camp there. For some reason, as yet unexplained, after training had been in progress for a considerable period, the authorities decided to abandon the site and establish a camp somewhere else. The huts were torn down and carried away. Carpenters and other tradesmen have told me that it would have been just as economical for the authorities to set fire to the buildings and burn them on the spot for all the use they would be after they had been moved to a new camp site. Despite anything that the Minister for the Army (Mr . Street) may say to the contrary, I affirm that there has been a great deal of waste in connexion with some military camps. I do not accuse the honorable gentleman of deliberately givingwrong information to this House when he has been questioned on this subject, but I suggest that some of the officers of his department” gave to him misleading replies when they denied absolutely that there had been continual and wanton waste of foodstuffs in the military camp at Ingleburn. I am sure that if the Minister would visit that district and meet some of the local councillors and other responsible citizens, he would be convinced of the truth of the complaints. I have been reliably informed that one man had a room full of bread from the camp, and was using it to feed his pigs; that meat was buried at the camp, and that wholesale scandalous waste was in evidence on every hand. The people who have given me this information are responsible citizens, and are not likely to make accusations which they could not prove. I am satisfied that if a proper inquiry were conducted into the matter, their charges would be substantiated.
– I had an inquiry.
– I know that. In order to indicate what can take place 1 remind the Minister of what happened during the last war. Then, as now, allegations of wasteful defence expenditure were made, and many inquiries were held. One such inquiry had reference to charges against an officer named, I think, Price, and it elicited that he had kept an entire fictitious battalion on the pay-roll, and succeeded in drawing from the Commonwealth Treasury a total of about £70,000. I do not say that things are so bad to-day, but I challenge some of the official reports dealing with these charges of wasteful expenditure in the Defence Department, because those reports are furnished by officers who themselves are very often guilty of the offences about which the complaints have been made. For that reason independent inquiries should be conducted. There should be a closer scrutiny of all army contracts. During the war years of 1914-18 we gained much experience of the waste of public money in connexion with military contracts, and came to understand the rottenness of some tenderers for those contracts.
– The honorable member must realize-
– Of course, the honorable member for Bendigo will rise in defence of the Army, because he is an army man. These things, of which the honorable member for Corio and I have complained, have actually happened, and any inquiries that may be authorized should be held independently of army officers and defence employees. If the truth is ever to be obtained in these inquiries the investigations must be carried out by persons who are not guilty of either committing the offences or condoning them.
I support the statement of the honorable member for Corio that the war should be paid for out of taxation, because if that policy were adopted, we should never have a war. Those people who now make profits out of war would not be able to do so if the honorable member’s suggestion were adopted, for then the greatest incentive to the making of wars - profiteering - would not exist. Before the introduction of the private banking system, wars were financed by taxation. There was no national debt in Great Britain before 1694, when the Bank of England was established. For centuries prior to that time Britain had fought wars and paid for them out of current tax revenue. Consequently, wars became unpopular because of the financial drain which they imposed upon the resources of the various countries involved in them. One of England’s kings was publicly beheaded mainly because of wasteful expenditure and because he was standing in line with vested interests. Experience over the years has proved that if the people who are now able to make profits from wars were prevented from doing so, wars would cease.
The honorable member for New England (Mr. Thompson) has ranged himself alongside those other honorable gentlemen who are opposed to any kind of monetary reform, either because of the influence wielded by vested interests or because they are, by nature, timid and fearful of change. The honorable member thinks that he has only to shout “ inflation “ and all demands for monetary reform must be silenced. He alleged that the right honorable member for Yarra (Mr. Scullin), when Prime Minister of this country, had flirted with inflation. Ee could not have listened attentively to the right honorable gentleman, the burden of whose speech was a warning to the Government to take steps to prevent private banking institutions from inflating the currency, thus robbing the taxpayers. So long as the private banks are allowed to control the finances of this country there will be uncontrolled inflation. The only way to allay the people’s fears about inflation is to allow the Commonwealth Bank alone to guide the financial destiny of the nation, so that whatever profits come to it may be given to the nation.. We have very definite evidence of the inflationary tendencies of the private banks. We need only to re<!all some of the proposals of the “ tragic
Treasurer”, the most tragic Treasurer
– I hope the honorable member is not referring to me.
– No ; but the honorable gentleman will probably go down in history as the “ tragic, tragic Treasurer” if he continues along the course which he is following to-day. He may even eclipse the record of the right honorable member for Cowper (Sir Earle Page) who once was described as “ the tragic Treasurer “ by the honorable member for Henty (Sir Henry Gullett). I remind the honorable member for New England that when the former leader of his party was Commonwealth Treasurer he inserted in the Commonwealth Bank Act a section which allowed the private banks to finance the primary producers by what was termed “ the right to draw notes from the Commonwealth Bank “. It was thought that cash would be asked for to a greater amount than the banks actually had in their tills at any time, but particularly when the primary producers wanted funds to market their commodities. In order to meet that situation it was provided that if the banks found themselves short of ready money they should have the right to go to the Commonwealth Bank and draw notes at an interest rate of 4 per cent, to a total of £20,000,000. The fact is that the associated banks did not draw even one note from the. Commonwealth Bank. They made credit entries in their books for which the farmers *»ad to pay, and charged interest on those entries until they had pyramided a credit of £60,000,000 on the bare right to draw notes from the Commonwealth Bank. Because they did not exercise that right at any time the private banks did not have to pay one penny in interest to the Commonwealth Bank. It follows, from what I have said, that if the wheatfarmers are in a precarious financial position to-day with a debt structure of about £160,000,000 on their land, that amount is part and parcel of the load placed on their shoulders by the present system of finance, which the Treasurer contemplates continuing. The truth and the logic of the statements of the right honorable member for Yarra cannot successfully be contested. He has stated that while this Government allows the associated banks to make use of the credits created by the Commonwealth Bank in the country’s war effort, every £1 of credit which they use will possibly be multiplied by them threefold and used as a means to create further inflation in the same way as the right to draw notes on the Comwealth Bank was used.
Honorable members will be able to find in Hansard the remarks of the right honorable member for Cowper in his budget speech of 1925. He then admitted that the associated banks lent at interest 17s. for every £1 that they held in current accounts and charged their depositers 10s. each annually for keeping their accounts. The contract which they entered into with the depositors was that they would pay the sums entered in their books at any time that the depositors so wished; but there is evidence to prove that the average trader depositing money with a bank draws only 3s. of every £1 of his total deposit at any time. The banks knew this, and lent out at interest the remaining 17s. The practice is being continued to-day.With total deposits of £120,000,000, the banks surely have sufficient funds for profit-making without being given in addition the right to use the credits needed for Australia’s war effort; in order that they may continue this process of inflation. The Treasurer will, no doubt, reply to my remarks later. I do not know whether he will discuss inflation, because he may say that the right honorable member for Yarra did not raise that issue. The honorable gentleman believes that he knows so much about inflation thathe can safely challenge any honorable member who speaks on that subject. I ask him to show clearly where the border line lies between financial safety and the beginning of inflation.
– Can the honorable member tell me?
– I can not, and the Treasurer can not tell me because he cannot explain a subject about which he knows almost nothing. No one can say where inflation begins. The only way to check inflation is to allow the Commonwealth Bank to do the whole job. Unless that institution be given full charge, inflation cannot be checked, because no one can tell what the associated banks are likely to do. The statements of the right honorable member for Yarra. cannot be controverted, Two-thirds of the debt which the primary producers of this country owe to the associated banks is fictitious and fraudulent, because the banks did nothing for the primary producers except liquefy some of their assets by allowing them to draw cheques. They used the primary producers’ own credit, which they liquefied, because they were the only people who had the machinery to do it. Not only did they take something from the primary producers and give them nothing in return, but they also used the wealth of the producers to build up debts against their own assets. Members of the Country party, including the honorable member forNew England, have stood for these things.
– I should like to know what it is that I am supposed to have stood for?
– The honorable gentleman’s former leader, with his con- sent and support, allowed the associated banks to build up a debt of £60,000,000 against primary producers to whom they gave nothing. They “ pyramided “ a debt of £60,000,000 upon the bare right to draw notes from the Commonwealth Bank.
I probably should not have risen had not the honorable member for New England attributed to the right honorable member for Yarra statements which he did not make.
-i did not attribute anything to him.
– The honorable gentleman said that the right honorable member for Yarra was flirting with inflation - that his speech would be welcomed by the “ cranks “ outside.
– I did not say that.
– If the honorable gentleman did not say it, that was what he meant. If the Government wants the maximum war effort of which the people of this country arc capable, it must do more than it is now doing on the home front. Various members of the Ministry, as well as their supporters, tickle the ears of electors at week-ends with statements about the need to build houses for the people. They say that the slums must go, war or no war. By such means they obtain a great deal of publicity, but 1 ask them when they intend to stop talking and do something in the matter. I want some evidence of their sincerity. Homes for the workers can be built, and work provided for many artisans, without any cost to the Treasury. I challenge the Treasurer to prove that that cannot be done. He could introduce legislation to empower the Commonwealth Bank to expend, say, £2,000,000 in the construction of homes. A start could be made with the construction of 10,000, or even 30,000 homes, which could be provided for workers free of interest and other charges, excepting the bare cost of administration, which could be added to the capital cost. When 20,000 or 30,000 homes had been constructed, the cost being repayable in, say, fifteen years, the workers would pay their contributions to the Commonwealth Bank, and the money thus obtained would enable other homes to be built.In that way, a long-range policy of home-building could be embarked upon. All that is necessary is that a start shall be made. The instrument by which this could be done already exists: I refer to the Commonwealth Bank. Bricks and mortar, timber and other materials are a liability unless they are put to good use; but when they are used in the construction of homes they become assets, not only tothe owners of the homes, but also to the community as a -hole. The amount necessary to make a start may be £500,000 or perhaps £2,000,000. I emphasize that all that is required is sufficient to make a start. Throughout Australia homes should be built reasonably close together without overcrowding, so that water, light, sanitary and other services could be provided at reasonable cost. On the South Coast of New South Wales there are many places where a programme of home construction could be carried out. Similar opportunities exist in some of the outer suburbs of Sydney and elsewhere in that State, and, no doubt, in other States also. The construction of these homes would provide work for bricklayers and other artisans, and also for timber workers and others in the mills and forests and elsewhere. Not one penny of additional taxes would need to be raised, nor would the country’s war effort be impaired by such a project. Immediately the work was commenced the Government would be creating assets. The construction of homes for the workers is one of the most urgent needs of Australia to-day. Action along these lines would enable men and women to live in reasonable comfort, and rear children under decent conditions instead of being forced to live in tents and huts not fit for dogs. Anything that is done to destroy the home life of the people does untold injury to our civilization. War or no war, this is something which must be attended to. Any man in this Parliament who will not give serious consideration to this matter, or any Government that says that it cannot be done, is doing more injury to our civilization than is done by even war itself.
Debate (on motion by Mr. Fadden) adjourned.
Honorable members will be interested to know that I have received the following telegra m : -
Members of First Federal Members Association at anniversary celebration to-day extend greetings and best wishes to all members present Federal Parliament.
Hume Cook, President,
G. Higgs, Secretary.
Sitting suspended from 6.14 to 8 p.m..
– I take great pleasure in supporting the Treasurer (Mr. Spender) in the taxation proposals he has brought before this honorable House. I am sure that every honorable member recognizes that the duty of the Treasurer on this occasion has not been a pleasant one, and further, that the money which has to be raised to meet the war expenditure of this nation is indispensable to our needs and has to be taken from the pockets of the people, as a contribution to the protection of Australia, not only as a nation but also as part and parcel of the British Empire. The duty placed, not only on the Treasurer, but also on the Government, has been far from pleasant.
No member of any Parliament derives pleasure from having to increase taxes, especially in the circumstances with which this Government is faced, and to the amount that it is compelled to take. Nol merely as a supporter of Great Britain, but also as a nation itself, Australia has to make the maximum effort. The present situation is sufficiently serious to cause the people to concentrate on the huge task which lies ahead. It must be admitted that, in a period of eight months, immensely important advances have been made by the enemy - we have to face it with frankness and candour. It also must be admitted with courage. The job of the Allies has barely commenced, and it is going to impose a strain on the population of every part of the Empire as well as of France. For this purpose, there must be sacrifices of various kinds. There will have to be personal service by soldiers and civilians, including the provision of finance for the upkeep of the fighting forces. The pockets of the people have to be searched by the Government, and private resources must be utilized. Undoubtedly this will prove painful, but equally it is inevitable. The estimate is that, in addition to the present funds, the Government will require £70,000,000 to carry on the war and the defence programme to the middle of next year. It is proposed to acquire £50,000,000, or just over 70 per cent, of the total amount, by borrowing, and the balance of £20,000,000 ‘by means of further taxation. The fact is, that the Commonwealth taxing machine is only one of seven taxing machines in Australia, all of which have formed the habit of making large collections irrespective of war conditions. There ought to be the hope and belief that there is a willingness on the part of the people to shoulder the burden, knowing that it is part of the price of victory, and there should be sympathy with the Treasurer in his unpleasant duty of making new imposts. There has clearly been an attempt to spread the charges. The sales tax will be felt by every body, In fact, all of the new taxes will -affect the community as a whole, either directly or indirectly, and it is of no use to pretend that they will not be detrimental to the industrial and commercial activities of the Commonwealth. There are to be, quite properly in war: time, special collections from profits made by companies in excess of 8 per cent. In this way, the Government aims at tapping the means of those who, on the one hand, can best afford to pay, and on the ‘ other hand have most to defend in the struggle to preserve Australia from the clutches of Hitler. In this connexion, the enlargement of the land tax, which for the most part reaches only well-to-do individuals or companies, should be accepted with equanimity, particularly as it is only a return to previous rates. The rank and file will be brought into the field of contribution through customs and excise duties, and that small section of the community which may be included among the rich will be caught by means of increased duties on the estates of deceased persons. The small class which consists of direct payers of income tax will have to find the not-inconsiderable additional sum of £3,000,000. Thus, whilst new charges are to be shared by tho masses, it must be admitted that, in framing its financial policy, the Government has by no means permitted to escape those who are considered to be in superior circumstances. Roughly, the new taxation is one-half direct and one-half indirect. In time of war, if not ordinarily, it ought to be recognized that the duty of the nation is the duty of all of its citizens; that, as a matter of justice, none should escape, since every person in the Commonwealth will benefit beyond the possibility of appraisement through the overthrow of Hitlerism, for which this outpouring of so many scores of millions of pounds is both requisite and inevitable. Thanks to the British Government, and more particularly to the Royal Navy for having kept the sea routes open, the export industries of this country are in a relatively strong position and are the principal buttresses to the internal as well as the external economy of the Commonwealth. Information just to hand discloses that from March of last year to March of this year the deposits in the nine trading banks increased by £30,800,000, and the advances receded by £8,SOO,000. The margin advanced during the year from £36,200,000 to £74,800,000” This is not money which belongs to the banks; they are merely the custodians of the funds of their customers. The position suggests that the country is in a sufficiently healthy financial condition to accept the new taxation without shrinking, and also to subscribe to the war’ loans that will need to be launched between now and June of next year. There is evidence of the fact that the Government does not raid the people in order to keep the proceeds in the Treasury, but returns the money to the nation through expenditure on defence and war services. From the aspect of cold economics, these disbursements are unproductive, but from a practical consideration of realities emerges the conviction that they are productive of ultimate immunity from conquest. Hence all classes are required to understand that the Government is taxing them for their own good, for the support of public safety, for the honour of Australia, and for the stupendously important purpose of -financing the cause of the Allies in a war that has to be fought to a finish, if life is to be worth living, and in a struggle which has to be prosecuted to a successful achievement. Heavy as the cost may be in money - more, we sincerely hope, than in human life - it fades into insignificance compared with the value of victory. It was with due regard to these factors that the Government framed its financial policy and the taxation proposals that arc now presented to this honorable House for its acceptance. The Government gave full consideration to the recognized principles of taxation enunciated by Adam Smith. In a report presented by the Royal Commission on Taxation in 1920, seven commissioners representing widely different sections of the community emphasized their full adherence to the four principles of taxation which the Government has taken into consideration. Thee four principles are -
The Government, I submit, has paid full and ample regard to these long-established principles in the principles it has brought before this House by virtue of its taxation proposals. Having to find £20,000,000 by means of direct or indirect taxation, it has canvassed and surveyed the whole of the possibilities of obtaining that revenue, and has come to the definite conclusion, by the most scientific means at its disposal, to find one-half from indirect taxation and onehalf from direct taxation. I have always held the opinion that, in the final analysis, the great bulk of taxation is found by the worker and the producer. Those are two terminal points which cannot pass on the imposts. “When I heard an honorable member of this House state this afternoon that the Government had paid no regard to a certain field of taxation on the lower ranges of income* I immediately aroused myself to the fact that the bulk of the £10,000,000 of indirect taxation will bc found by that class of consumer or resident of Australia which is not attacked by a direct form of taxation. The Government had that in mind in formulating its proposals.
– It deliberately wanted to tax the lower class.
– It did not deliberately want to do that. No government deliberately wants to attack anybody. But in the circumstances in which this Government finds itself to-day, it has to tax the people in order to find the wherewithal to save the very classes and institutions with which we are associated to-day. We are faced with the indespensible necessity of protecting all that we hold dear; all that we define as freedom in our community. I repeat that the Government, being faced with that position, has endeavoured to spread the burden of that indespensible necessity as equitably as possible among all sections of the Australian people. I believe that discerning and fair-minded people will recognize that the Government, having regard to all of the circumstances, has done a very good job indeed.
– Is it not a fact that foodstuffs are completely free from sales tax?
– Yes ; all basic materials and foodstuffs are exempt from sales tax.
Mr.Curtin. - With the exception of bread.
– I remind honorable members opposite that when the sales tax was first introduced as a taxing measure in this House, not in a time of war, the foodstuffs of the consumers of Australia, with very few exceptions, were subject to it.
– That is not right.
– The commodities which make up the cost of living were in the main subject to sales tax.
– Basic foodstuffs were exempt from the start.
– As a general principle, a large number of the items comprising the cost-of-living regime was subject to sales tax when it was first introduced.
– There was no tax on bread. .
– I shall refer to the tax on bread, through the medium of the flour tax, in the course of my remarks.
– Which Government first imposed the sales tax?
– The Scullin-Theodore Government. I do not wish to go into the merits or the demerits of the system. My point is that this Government was mindful of the necessity to exclude from the range of the tax all items that affect in a considerable way the cost of living of the worker and the family man of Australia. The basic clothing and wearing apparel of the workers, for example, is not subject to sales tax.
Mr.Curtin. - The honorable gentleman cannot expect to get away with that statement.
– Do honorable members opposite deny that sales tax was imposed by the Scullin-Theodore Government on building materials, and will they further deny that the cost of housing is a considerable factor in the cost of living ?
– Were agricultural implements excluded from the sales tax by the Scullin Government?
– They were not; but they are now excluded from it.
I wish to touch upon several matters that were dealt with last night by the right honorable member for Yarra (Mr. Scullin). I have read the report of the speech of the right honorable member, though I did not have the pleasure of hearing him. I always give close attention to any utterance that falls from the right honorable gentleman’s lips in this House. I feel, personally, that his remarks are always worthy of the greatest possible respect. His speech last night was constructive and decidedly helpful in relation to certain aspects of the Government’s taxation proposals, and I am sure that the Government will study his survey with close attention. He has had many years of experience in the matters upon which he touched, and his remarks were arresting.
With regard to the allowance of the rebate in the assessment of shareholders, it must be agreed that there are arguments for its withdrawal as well as for itsretention.
The arguments in favour of its withdrawal were put by the right honorable member for Yarra, and do not require any elaboration. The Commonwealth scheme of taxation has always provided for rebate to be allowed to shareholders in respect of dividends paid out of profits which have been taxed in the hands of the company. It must be remembered that dividend income differs from other property income such as rents and interest by reason of the fact that the dividends have previously borne tax as profit in the hands of the company. Even the allowance of the rebate does not always fully relieve the taxpayer from his liability to tax, as the inclusion of the dividend in his income increases the rate of tax payable on his other income. The withdrawal of the rebate would be particularly hard in the case of holding company in that the dividend would be taxed once in the hands of the operating company as profits and again in the hands
The plain fact is that royal commission after royal commission which has inquired into our taxation system, has recommended the continuance of the rebate system. The last Royal Commission on Taxation, after having taken advantage of all available information on the subject and having made an exhaustive inquiry, came to the conclusion that the company was virtually the agent of the shareholder and was the source from which we get the tax. The company pays a basic standard rate which, in fact, is an instalment of taxation on behalf of the shareholder. The shareholder is taxed on his dividend income and also on other income, but he receives a rebate in respect of what the company has paid, for it is realized and appreciated that the company is his agent. If, in addition to the tax imposed on the company, a tax is also imposed upon the shareholder on the profits that filter through to him, and he is given no rebate, it must be obvious that the same profit is taxed twice - once in the hands of the company, and again in the hands of the shareholder. It is on that account that successive royal commissions have recommended adherence to the rebate system. Formerly the method adopted was to tax the company on the undistributed profits and to tax the shareholder on the distributed profits, but it was considered that that method was cumbersome, and that thepresent method was a decided improvement. I am quite prepared to concede that there are arguments for and against the rebating system, but it would certainly inflict a serious hardship on shareholders at the present time to abolish the rebate without taking into account the conditions under which it is made. Certain taxpayers would be obliged to pay an extremely high and inequitable rate. The right honorable member for Yarra cited the case last night of a preference shareholder in a company who received £1,400 in
A man with an income of £1,400 from preference share dividends who has also £1,000 of other taxable income from rent would pay £385 in tax. He would pay on the £1,000 at the £2,400 rate, and he would also pay on the £1,400, at the £2,400 rate; but in existing circumstances he would receive a rebate of the tax paid by the company as his agent on his preference share income. That would bring his total tax down to £245. If however his income were £1,000 from rent only, and dividend income were not taken into account, he would pay only £87 10s. It must therefore be apparent that it would be quite inequitable to refuse to grant him the rebate now allowable.
– I suggest that that does not follow the Adam Smith principle to which the Minister has referred.
-I admit that there are anomalies, but we should not try to get rid of an anomaly by means of an inequity. Although a man may obtain a rebate of the 2s. in the £1 already paid by the company and assessed against him, he still has to pay income tax at a higher rate because his income is of a composite character.
For the assistance of honorable members I give the following examples to show the effect of the inclusion of dividends with the taxable income from other sources and the effect of the withdrawal of the rebate on dividends: -
The above calculations are based on the rates proposed to be applied for the next financial year, i.e., 1940-1941.
It is to be noted that the inclusion of £1,400 dividends in the taxable income has the effect of increasing the tax payable on £1,000 rent by £72 18s. 4d. from £87 10s. to £160 8s. 4d.
The above calculations are based on the rates of tax proposed to be applied for the next financial year, i.e., 1940-1941.
The above calculations are based on the rates of tax proposed to be applied for the next financial year, i.e., 1940-1941.
The above calculations are based on the rates of tax proposed to be applied for the next financial year, i.e. 1940-1941.
The above calculations arc based on the rates of tax proposed to be applied for the next financial year, i.e., 1940-1941.
The right honorable member for Yarra also complained that a taxpayer receiving income from the profits of a company might receive a rebate of 2s. in the £1 whereas the company may have paid at the old rate of1s.11/8d. in the £1. It is quite true that that may happen, but it is impracticable to follow the apportion-‘ ment of the income to its farthest point. Admittedly there is an anomaly here also, but would it be just to. remove an advantage that a taxpayer with a small income may get, simply because a taxpayer with a big income may obtain some greater advantage? I could prove by numerous examples that men with composite incomes pay at a much higher rate” than persons with incomes from only one source, and I think it will be generally agreed that very few taxpayers who enjoy an income of £1,400 a year from dividends have no income from any other source’. Such taxpayers in practically every instance have composite incomes and because of that fact they have to pay at a higher rate than would otherwise apply. I cannot deny the contention of the right honorable member for Yarra that a taxpayer with dividend income may obtain a rebate of 2s. in the £1 in some instances although the company may have paid only1s.11/8d. in the £1, but I remind the House that the Taxation Commission after fully considering this whole matter came to the conclusion that the difficulty in apportioning the income to the year in which the profit was made was so great that the present method was’ the best that could be adopted.
The adoption of a standard rate of rebate,’ irrespective of the rate at which the company was taxed on the profits from which the dividends were paid, was one of the basic recommendations of the Royal Commission on Taxation presided over by Sir David Ferguson, and was designed to simplify rebate calculations in the interests both of taxpayers and of the Taxation Department. Previously rebates were calculated on the basis of the actual rates of tax paid by the company, and as dividends were often paid out of the accumulated profits of several years, and as the company rate has varied in different years, it followed that various portions of each dividend were subject to a different rate of rebate. In recommending a standard rate of rebate the royal commission considered that the rebate shouldbe the rate payable in the year of assessment. In support of that view, regard was had to the fact that where a shareholder whose individual rate is less than the standard rate is to be allowed rebate at his own rate, the rate adopted is that payable in the year in which he is assessed on his dividends, since that is the rate at which his income is being assessed. To rebate dividends at the rate applicable to the current year in one; instance - where the rebate is allowable at individual rate- and at the rate applicable to the previous year in another instancewhere the rebate is allowable at company rate - would be confusing and without justification. The point taken by the right honorable gentleman was a good one, but, as I have indicated, that’ problem was thoroughly investigated by the royal commission.
– If a company paid 1s. 11/8d. would a shareholder receive a rebate of 2s.?
– The company has paid 1s.11/8d., but its shareholders would get the rate applicable to the company in the year of assessment, and this year it happens to be 2s. However, the reverse could easily bo the case, and has happened for years. In previous years when the rate of company taxation was progressively decreased, the rate applicable was the last rate, namely, the minimum rate. Consequently this provision cuts both ways. It is anomalous, I admit; but as I have already said, the point was fully investigated by the royal commission.
– That anomaly was corrected in legislation recently passed by the New South Wales Parliament.
– This matter was in quired into by the royal commission whose main recommendation was that the rebate should be given at the rate applying to the year of assessment.
The right honorable member for Yarra also touched upon the exemption of 25 per cent. of distributable income in arriving at the amount of taxable income upon which the further tax of1s. is payable. He stated that a company, by taking advantage of that provision, could build up reserves and issue bonus shares. If that happened, the company would not escape taxation, because the issue of bonus shares out of accumulated profits is a distribution and, therefore, subject to tax.
– The right honorable member had in mind not so much the distribution of shares as the building up of reserves.
– A company would not escape tax by that means if it eventually distributed bonus shares. The reason for this 25 per cent. exemption was to bring public companies into line, as far as possible, with private companies. The private company is allowed a reserve of 331/3 per cent. If it does not distribute 662/3 per cent. of its profits that percentage of profits is nevertheless deemed to be distributed, and tax is accordingly levied on that basis. A company is allowed reserves amounting to 331/3 per cent. of its profits. Underthe Government’s present proposal it is intended to reduce that margin to 25 per cent., and also to allow a margin of 25 per cent. in respect of public companies. The reason for this alteration is obvious. Unless it is an old-established and prosperous concern, which has created substantial reserves, a company cannot possibly distribute 100 per cent. of its profits. But there is a difference between the profits of the company and its taxable income. Under the act many companies which can show a loss have, at the same time, a taxable income. Certain debits are disallowed for taxation purposes. The Commonwealth act, for instance, does not allow depreciation on buildings, fencing, &c., but a prudent company will provide depreciation in respect of such items. There is also a disallowance for excessive writing off of bad debts and depreciation of stocks, and other items. Consequently, it ‘is’ deemed advisable to allow a margin of 25 per cent. in respect of reserves in order to enable a company to remain stable by discouraging it from - straining its resources in order to distribute profits. [Leave to continue given.]
Not only the right honorable member for Yarra, but also other honorable members, took the Government to task because of a disparity in the increases in respect of different rates of tax. The right honorable gentleman quoted figures to show that whereas the rate in respect of an income of £350 was increased by 50 per cent., other increases were as follows : £400, 66 per cent.; £500, 25 per cent.; £4,000, 2.7 per cent. ; £5,000, 1.7 per cent. ; and £10,000, 3.7 percent. In arriving at those percentages the right honorable gentleman dealt only with property tax, but, I submit, that it is not a fair basis of comparison. For instance, in the new grades which have been introduced property and personal exertion rates have been brought together more closely in approaching the £4,000 and higher income groups. Previously, these rates were out of all proportion. In order to secure greater conformity with the practice adopted by the States, the Government had to give consideration to not only its own taxing requirements, but also the incidence of taxes levied by the States. Take, for example, an income of £3,000. In respect of personal exertion the previous rate was 21.05d., and in respect of property, 44.69d. These rates have been increased to 35d. and 45. 5d. respectively. However, these figures scarcely provide a fair basis for comparison. I repeat that the Government was obliged to give full consideration to the degree to which the States have entered the fields of taxation available to the Commonwealth. We must appreciate that during the last seven or ten years every State Government has progressively increased taxation, particularly in respect of incomes over the £1,000 mark, so that to-day little or no margin is left to the Commonwealth in this field. The point I emphasize is illustrated by the following comparisons of proposed 1940-41 income tax on a net income of £4,000 with taxes on other incomes : -
PROPERTY INCOME TAX WHERE LOWEST STATE TAX DEDUCTED.
£4,000 is approximately eleven times greater than £350. Tax on £350 is £4, tax on £4.000 is £70”.. £702 tax is 175 times greater than £4. £4,000 is ten times greater than £400. Tax on £400 is £7, tax on £4,000 is £702. £702 tax is 100 times greater than £7. £4,000 is eight times greater than £500. Tax on £500 is £11, tax on £4,000 is £702. £702 tax is63 times greater than £11.
PROPERTY INCOME TAX WHERE HIGHEST STATE TAX DEDUCTED.
£4,000 is approximately eleven times greater than £350. Tax on £350 is £3. tax on £4.000 is £702. £702 tax is 234 times greater than £3. £4,000 is ten times greater than £400. Tax on £400 is £5, tax on £4,000 is £702. £702 tax is 140 times greater than £5. £4.000 iseight times greater than £500. Tax on £500 is £10. tax on £4.000 is £702. £702 tax is 70 times greater than £10.
– But is not the important point how much each taxpayer has left after paying tax?
– That is a good argument, because the test of the equity of taxation is the amount left to the taxpayer after he has paid tax. The effect of the new proposals from this point of view is demonstrated in the following table : -
– A man with a net income of £4,000 should be able to live on his residue of 62 per cent.
– But the honorable member should not forget that that class of taxpayer provides employment by investing his capital in industrial activities. He should remember that we would benefitgreatly if we had many more taxpayers in this income class. Employment is created mainly by people who have taxable incomes.
-Who is the man on the. £40.000 mark?
– He is mythical.
Mr.Curtin. - I agree.
– Yet the right honorable gentleman for Yarra quoted figure dealing withhis case. The point I emphasize is that whilst the Government allows a residue of 92.86 per cent. onan income of £350, and 88.8 per cent. on an income of £500, the percentage of residue to net income in the case of the £4,000 man is 62 per cent., 56.72 per cent. in respect of the £5,000 man and 41.81 per cent. in respect of the £10,000 man. If honorable members want a test of ability to pay and of equity, in these taxation proposals, ample evidence is to be found in the residual amounts whichI have cited.
– Equity is only amatter of opinion.
– The honorable member expressed his opinion this afternoon and I am now giving mine. It is not only a matter of percentage of increases. The House has also to consider the quantum of taxation or its monetary effect, and from whatever angle we view the increases it will be found that the Government’s proposals are reasonable. The following table shows the effect of the Government’s proposed increases on incomes from personal exertion and from property : -
The point that I wish to emphasize is that it is not a matter of the percentage by which the Government has increased the tax on higher income, but the amount extracted as compared with that collected previously. I repeat that State governments have not only successively increased taxes, hut they have also increased taxes on the higher grades of income, such as £1,000 a year and over. The Commonwealth Government, in its original taxation proposals, took the highest possible amount, as I have shown, from the higher grades of income. Previously, on a net income of £350, the Commonwealth Government collected only 30s. less than is now proposed and the variation is clearly shown in the table which I have’ cited. Viewed from every aspect, the Government’s proposals, unpleasant as they are, are absolutely essential for the proper protection of the community, and for the continuance of its war effort. The Government has given full and complete consideration to the ability of the taxpayer to pay. Every section of the community has been asked to carry what is considered its fair burden of sacrifice in order to accomplish this gigantic and unprecedented war effort. I shall cite one or two facts in regard to State finances: [Further leave to continue given.] The Government has kept in mind the financial position of the States which have a very limited field of taxation. Direct taxation is their largest field, but that field could not be tapped to a degree that would be detrimental to the welfare and activities of the States.
The Government is faced not only with financing its war efforts, but also with keeping a properly balanced Commonwealth economy. The States, too, have to maintain their activities in order to provide work and alleviate unemployment. Having these facts in mind, the Government’ had to consider the fields it would tap without detriment to the States and I. consider that it has done its work well.
In the last five financial years State taxation has risen from £34,400,000 to £50,500,000, an increase of 47 per cent., Queensland showing the greatest proportional increase. The expenditure of public moneys by the States in administrative services during this period has shown increasing extravagance although no additional service to the public is rendered commensurate with the’ increased cost. For example, in New South Wales there were 25,000 fewer pupils in the schools in 1939 than in 1931.. In this period the cost of education rose from approximately £4,500,000 to £5,500,000. This is an extra increase of £40 for each unit decrease of school enrolments. In the last financial year the loan money required by the States to carry their budgetary deficiencies amounted to £4,250,000. Further overdrafts were asked from the Loan Council in respect of deliberately planned shortages in the current year, even though some of the State budgets were made after the beginning of the war. The treasurers of theStates, with the exception of Tasmania, designed to spend many millions more than in the previous year, which was during peace-time, and which was a peak year. The expenditure of the States on ordinary services from consolidated funds during the nine months of the present financial year to 31st March, 1940, is approximately £101,000,000. Nine-monthly comparisons since the year 1937 are approximately as follows : -
In the last-mentioned period the public should have been enjoying £13,000,000 worth more of police protection, health, education, transport, etc., than they were getting three years previously. Yet there are fewer children to teach, there is more undetected crime, and there has been no apparent improvement of public health. Although personal expenses of private. citizens must be curtailed so that the Commonwealth Government may be supplied with war funds, the State governments are practising extravagance and setting the worst example possible to the population. Between 1st July, 1939, and 31st March, 1940, including seven months of war, the States increased their consolidated fund expenditures by approximately £1,000,000 monthly and over-spent their incomes by almost as much. Such a situation being disturbing and highly discreditable, even in normal circumstances, the Commonwealth Government, in close co-operation with the State, should constantly endeavour to formulate and carry out an effective financial policy; but the major problem with which we are faced to-day is our responsibility and reliability in connexion with our war effort. That should be of paramount importance, not only to the Commonwealth, but also to the States. In our Australian economy there is no room for undue expenditure or governmental extravagance in any shape or form. There must be closer co-operation in the control of expenditure from the public purse. The figures I have cited show definitely the necessity to take the matter in hand and to arrest any drift that would have a detrimental effect, not only upon the Commonwealth, but also upon the States. The Government is faced with the task of having to find a huge amount for war purposes that could notbe forseen twelve months ago. At present we cannot, see the end, and wedo not know to what further degree weshall have to impose taxes or to depend upon the resources of theCommunity in order tocarry our war effort to a successful conclusion.
– I am rather astonished at theliberties which the Assistant Treasurer (Mr. Fadden) took in criticizing the budgetary position and administrative methods of the States of the mainland, Tasmania being excluded. He has said that in recent years therehasbeen a rising tide of expenditure in States which havehad increased revenues, and that that is a development which has hampered, to some degree, the activity of the Commonwealth in dealing with its war effort. I can safely leave a rejoinder to that contention to the Treasurers of the States. But every charge made against the States is a charge which also can be made against the Commonwealth. The Commonwealth has had a rising tide of revenue, and of expenditure, quite apart from the contributions that have, been made from the Commonwealth revenue fund for purposes of national defence. As a matter of fact, last year we had a record tax yield in the Commonwealth and also in the States, but this Government has been prodigal in its expenditure, although it has not provided very much from revenue for defence requirements.
I do not propose to deal with specific forms of taxation at this stage, as they can be debated more effectively when the bills imposing the taxes are before the House. I propose to deal with the general principles embodied in the Financial Statement submitted by the Treasure (Mr. Spender), because they are of major importance. That statement represents the keystone of the Government’s financial policy in the matter of war costs and how they shall be financed. This is the last opportunity which this Parliament will have for some time to exercise control over the Government’s war expenditure or the methods to be employed to give effect to its war policy, for the statement is a statement dealing not only with the remainder of the extra war expenditure for this year as against that which was put forward in the Budget, but also with the total of the present programme of the Government to the end of the financial year 1940-41. Having regard to the omissions from this statement, it can be said that it does- represent substantially a statement which, if the Parliament accepts it, more or less commits Parliamentto pass all derivative legislation. I agree with that.The statement, however, is a stark revelation ofthe mistaken policy which has animated budgets which have been submitted to this Parliament during the last four years. It will be recalled that although on each occasion the Parliament realized the necessity for increased provision for defence, the Government did not believe in any policy except one of reducing direct taxation and increasing indirect taxation. The result has been twofold. To-day we are faced with a staggering increase of costs incidental to defence. A good part of those costs are costs related to supply, equipment and organization, to acceleration of our effort, which, if it had been started much earlier, would bo much more soundly developed by now than is the case, and this country would not only have incurred less expenditure in respect of defence organization, but also I believe, would have had a much sounder type of organization. We are obliged to compete with other countries to secure aeroplanes and petrol supplies - to compete to secure manufactures of all types and commodities - under conditions in which rising prices, despite prices control, are more or less inevitable. Therefore the costs not only of the fighting services but also of the very core of defence organization and the like, equipment and so forth, munitions and so on, inevitably will cost us more this year than would have been the case if provision had been made for the establishment of these supplies during the last three or four years. Let me point out to the Government that in 1938-39, notwithstanding the fact that the world was in convulsion and the then Prime Minister was talking about the shadows into which the world was entering, only £8,800,000 was spent out of revenue on defence. In the previous year it was approximately £6,000,000 and incidentally at that time the income tax was yielding approximately £10,000,000 -£8,500,000 in one year, £9,300,000 in another, and £11,800,000 in the latest financial year. At the same time indirect taxation was jumping. It went from £51,000,000 in 1936-37 to £56,400,000 in 1937-38, and £58,700,000 in 1938-39. I say to the country now that the contraction of our London funds, which is a tremendous problem for the Government, is related entirely to the encouragement which it gave for the easy entry of imports into Australia. It did that, not because it was unconcerned about the development of Australian secondary industries - I shall not make that charge against theGovernment - but solely because it was attracted by the easy method of getting money to the Treasury without imposing direct burdens on the taxpayers. Thus, we are faced with this stupendous task, in worsened economic conditions, of not only conducting the fighting services in their various activities, but also the vast provisioning of them for which the foundation should have been laid three or four years ago, if we regard the speeches that were made then by Ministers as representing their clear comprehension of the position. 1 remind the Government of the election speeches delivered by honorable gentlemen opposite when they were seeking a mandate from the country three years ago. The country was endangered. The world was on the verge. All sorts of charges were made against myself and my colleagues because of our supposed unwillingness to defend the country. The Government got its majority, but did it impose burdens on the people? No, because it was anxious to relieve the £4,000 or the £40,000 a year men who have been spoken about so much to-night and who are always a precious asset to the Government. Now the Government enters a vast mathematical wilderness to explain why those men are already paying too much.
-i thought the honorable member said that the £40,000 a year men do not exist.
– I am not too sure that they do. I remind the country that we are faced with a bill which calls upon us to find £125,000,000 for defences - that is what it amounts to - for the balance of this financial year and for the whole of next year.
– For the whole of this year and the whole of next year.
– All right . That £125,000.000 is exclusive of all expenditure that this countrymust incur overseas. It also shuts out of account any expansion of the present programme within Australia, and it leaves untouched all of the marketing problems which were referred to yesterday- at least in respect of wheat. In effect, the Government says that the normal budget provisionwill enable this money to be found so far aa the purposes of Australia are concerned with the exception of £70,000,000. That £70,000,000 has to be met. To bridge the gap between the amount which will be derived from the budget and the programme of £125,000,000 for this year and next year, the Government contemplates that its programme will enable it to get that money. But I say that before we can set about getting that money we have to have some indication as to how the £35,000,000 of overseas expenditure is to bc met; for this country is a debtor country and it is imperative that it should at least pay its way overseas in respect of its normal commitments, and make provision also for that expenditure of £35,000,000 in connexion with the wai effort. . As 1 read it, that means £27,000,000 -of annual expenditure for normal commitments overseas which we cannot escape, and here is a bill which the Treasurer says is now £35,000,000 that will have to be met next year. That means that about £02,000,000 will have to be found overseas. The Treasurer’s predecessor borrowed £6,000,000 on the London market. No provision has been made, or forecast for, this overseas liability other than that the British Government has agreed to meet expenditure up to the end of this year, so I understand.
– That is so.
– And to charge that at a rate of interest at which the money is raised from the British public. Whether there is provision for a sinking fund I do not know, but inevitably that means that the loan programme in Australia is being accompanied also by a loan programme outside Australia, and that has to be continued after the end of this year or else public flotations must be raised. It would be absurd to expect, the British public to finance Australian borrowing on the London market at, least so far as we can envisage the situation in the United Kingdom at the present. The only way in which that could be met is to ensure, as far as possible, that the Government will see to it that a far greater effort is made to market primary products than apparently the Government has been capable of making so far. I point out that in respect of wheat and wool and other primary products that can be exported the difficulty is to find buyers, especially buyers for wheat, and in any event as the statement of the Minister for Commerce (Mr. Archie Cameron) indicated, it is not merely a case of buyers, it is also a case of ships. And if it is a case of ships for wheat, it must also be a case of ships for wool. Let me put this : Every ship that comes here, no matter whether the ships are many or few, will bring imports to a greater monetary value than will be the value of our exports.
– How does the honorable gentleman work that out?
– Because of the class of cargoes that will come to Australia as against the class and volume of the cargoes that will go out. Wool and wheat will take more space and be of less value than, the various types of imports.
– But the ships that will come here are not loaded so fully a.3 they are when they go away.
– If the honorable gentleman’s argument is correct, that must have been the position in the last 25 years.
– No. The honorable gentleman imagines that things go on at present in the same way as they did when there was no war. That is not true. A vast number of tramp ships, hundreds and hundreds, came here in ballast in peace-time, but I cannot imagine that occurring during a state of war. The honorable gentleman knows that the problem, as the Minister for Commerce said, is to get ships, and I venture to say that two things will happen. If you can correct your London adverse balance heca use of an excess of exports over imports, it will be due to the fact that, having regard to shipping, imports have fallen, and if that be the case the Government’s custom.? expectations will not he realized.
– On the honorable gentleman’s argument imports must always exceed exports.
– That is not far from being correct, having regard to the statement made by a Minister the other day that, the normal ships that come here bring valuable cargoes. T. suggest petrol and large numbers of aeroplanes.
Mr.Archie Cameron. - I have not made any statement about incoming goods.
– That is the honorable member’s own statement.
– Yes.I say that ships will bring cargoes the value of which will be at least as great as the cargoes that they take away.
– Many of the vessels will come in ballast.
– In any case one of the best things that the Government could do to deal with the situation overseas is to revise its outlook on the gold industry, and endeavour to see that the excise which it collects, about £1,000,000; it may be more- will be used to employ more labour in the gold-mining industry, on the principle that an increase of production of gold would produce probably less money in the Treasury here at Canberra, but more money in the place where the Government really needs it. Money at New York which could be secured as the result of an increased gold production in Australia would on balance, having regard to the dollar position, essential imports and the exchange position in total, represent a rearrangement of policy which would give the nation, as a nation, far greater advantages than the mere collection of the excise itself to the Treasury. I know of no commodity so immediately saleable or capable of giving us overseas credit so efficiently or completely, and I know of no other industry inAustralia which, if its production were increased, would be as assured of a market.
– The gold excise went through on the voices.
– Yes. I am not opposing what the Governmenthas done. I am suggesting that, in view of the fact that the Government has an increased interest bill of £27,000,000 and another overseas obligation of £35,000,000 in respect of war expenditure, and because, furthermore, the Government has acknowledged that there has been a decline of Australia’s . London balance by more than £30,000,000 during the last two years, itis imperative that the Government should take some steps, although belatedly, to arrest the momentum to which it was a party, which is not working out to the advantage of Australia, and may very well imperil the nationaleconomyof this country. The former Treasurer, Mr. Casey, used to jibe when honorable members on this side of the House said that the trade balance was swinging against Australia. The present Treasurer has not had sufficient experience of this matter to know that it was the borrowing programme which took place before the last depression that created a terrible situation for the Commonwealth Government and for the people of Australia ; and it was the “ bust or boom “ course which this Government pursued prior to the war that now makes the problem of war finance far more acute for the Australian people than it need be. I offer no opinion as to what has been done, except to say that, having regard to the fact that part of the price is entirely due to the war, the excise on gold represents the application of a sound principle - a principle which is so sound that the Government has not thought fit to apply it to any other commodity.
– For very good reasons.
-Reasons whereby the Assistant Treasurer (Mr. Fadden). can justify putting a tax. on one income at a vastly different rate from that imposed on another income. The Assistant Treasurer said that ourexports arein good condition.
– Well, are they not?
– I do not think that they are. I cannot see how the Government’ proposes to get rid of the goods available for export. What about the restriction on shipping space?
– The shipping problem applies only to wheat, barley and apples. Apart from thesecommodities everything is all right,and prices are good.
– We acknowledge that prices, are good, but the trouble isthat insufficient shipping space is available owing to the action of the right honorable gentleman’s predecessors in disposingof the Australian Commonwealth Line of Steamers.
– The Australian Commonwealth Line of Steamers could not have taken away a week’s supply of our primary products.
– The fleet would have been built up by us. It would have been an easy matter to have added more ships to the line.
The loan programme for Australia contemplated by the Government involves £50,000,000, and in addition to that the States will have to go on the loan market for at least £15,000,000. Then there is the financial provision for those two pools; there is the wheat overdraft - I do not know whether or not the Apple and Pear Board has an overdraft at present, but I should not be surprised if it had.
– That board has a small overdraft at present.
– I cannot give the ‘exact figures, but the amount is not very great.
– Which means that the growers did not get very much.
– The Lord sent bad weather.
– When we consider a Commonwealth borrowing programme during this financial year and the whole of the next aimed at providing £50,000,000 for war purposes we have to take into account the fact that the States will also go on the loan market. Last year they raised £13,900,000 for works and £4,600,000 on deficit accounts, making a total of £18,000,000.
– What about the sinking fund?
– I know about that. I am quoting the amount that the States actually obtained on the loan market, which was, of course, much less than they sought. In the previous year the figure was approximately £17,000,000. Undoubtedly they will ask for something this year. I do not know how much the Loan Council will decide that they should receive; but obviously, if we put the figure at £15,000,000, we shall be allowing for a reduction of loan expenditure by the States on works or for deficit purposes. The Commonwealth Government wants £50,000,000 in loan money, so that the total to be taken from the loan market during the next fifteen months by the Commonwealth and the States will be £65,000,000. The Treasurer said, quite properly, that it would be necessary for central bank assistance to be forthcoming, as it could not be expected that thepublic would provide all of the money required. That statement is well founded, because the banks have already provided £1 2,000,000 for a Government which does not believe in what it calls inflation, or in anything except real money, and there is the advance of £21,000,000 which the Commonwealth Bank has made to the wheat board. That represents an issue of credit, at this juncture, of approximately £33,000,000.
– That is a different matter altogether.
– That money is advanced against an asset.
– What is the asset?
– I am not objecting to it being done; I am merely pointing out that it is being done. Evidently the Treasurer indicates that it is all right to issue this money against wheat. The honorable member for Swan (Mr. Gregory) yesterday asked that the advance be actually increased by another 6d., presumably from the Commonwealth Bank. For the Commonwealth Bank to make this stupendous advance against wheat in 1940, under war conditions, is apparently regarded as quite proper, but when the Commonwealth Bank was asked in 1929-30 to do the same thing, such action was described as destructive of every principle of sound finance.
– On that occasion the wheat-growers asked for an advance of 3s. on something that was worth1s. 2d. This Government has advanced to the wheat-growers 2s 10½d. on something that is quoted on the world’s markets at4s.
– But the Minister has admitted that the commodity cannot be placed on the world’s markets.
– But the value is there.
– Similarly the value of gold which is 1,000 feet down in the earth is there, but the money can only be obtained if the gold is brought to the surface. Unless the Government is able to organize means whereby Australian wheat can be placed on the world’s markets where its value will be realized, or unless more money is provided for silos and the improvement of storage accommodation, it is probable that at least part of this asset, against which the Commonwealth Bank has made advances, will not merely deteriorate, but a teo disappear. I stress the importance of that matter as one of the things that undoubtedly arise in our consideration of the war finance programme of the Government.
From the aspect of the banking system, there has been an extraordinary development in its handling of the monetary problems of Australia. The Board of Directors of the Commonwealth Bank has either read the report of the Royal Commission on Banking, or it has been influenced by the present Treasurer who, it will be recalled, was not an endorsed United Australia party candidate at the last federal elections, and for that reason, f.ould naturally be expected to bring to the discussion of financial principles at least some departure from the orthodox methods of his predecessors. It is rather remarkable that the Commonwealth Bank will not only advance money against wheat that is not sold, and which the Minister for Commerce says cannot be sold until ships are found to convey it to the world’s markets, but it will also give a £12,000,000 advance to the Commonwealth Government for the purpose of war expenditure, which is an asset only in the sense that an insurance premium a gai nst fire is a n asset. I repeat that T have no objection to what is being done ; I am merely drawing attention to it. In addition, the Commonwealth Bank made firm subscriptions to the two recent internal loans floated on the Australian market. This is a splendid record of the utilization of national credit by a Nationalist Government in defiance of everything that it said on election platforms. As to the degree to which this can be carried on, that is a matter depending at present on variable factors. I think that the Government is quite right to mix loan programmes with programmes of taxation. There are limits to any one kind of treatment of the financial needs of a nation in time of war ; there are definite limits to taxation ; there are limits to loan possibilities, and there are limits to the issue of central bank credits. The Treasurer says - I am prepared to accept his general hypothesis - that he has struck a balance between the three important sources which arn available to the Government for conducting the war. I would need much more precise information than has been made available to me to find fault with the dissection as between taxation and the total of loan account, but the honorable gentleman does not indicate to us - I do not expect it - what proportion of the £50,000,000 is to be obtained from the public. Probably ‘ the Treasurer will obtain as much from the public as : he can, and then will find out what is to be done as he goes along. He proposes to take £20,000,000 from the people by way of taxation, and I submit that he has divided that amount by means of a stab in the dark. He says that he will take half from direct taxation, and the other half from indirect taxation, but where will that get us? In dealing with direct taxation, the Treasurer has said that we have to take into account all taxes that the States have imposed - that we cannot increase Commonwealth taxation on the higher ranges of income because the incidence of State taxation falls very heavily on those categories. Therefore, he says, we are driven to a greater exploitation of the middle range - as if, in recent years, the States have not been savagely imposing taxation on the middle ranges of income, and indeed on the lowest ranges of income. There is hardly a working man in any of the States who. once he gets a slight margin above the basic wage, is not subject to direct taxation at the source. Because of that, I say to the Treasurer that we are not here to-day to correct all the anomalies of the peace-time systems of direct taxation; it is not our business to reconcile State and Federal taxes and credits, and provide, as it were, a new basis for direct taxation in Australia; we are concerned about contrasting what the position was in time of peace with the obligation now facing this House to find money for the war. We should bring ourselves to set out what increased burden every man in Australia will have to bear as the result of the fact that we are now at war. We are not concerned about rebates or about whether or not some men may have to pay twice. Those matters are relatively unimportant, I venture to say. If in this year of w ar a man has an income of £2,400, then, regardless of how he gets his income or what charges have been made upon it, that £2,400 should be subject to the rate of tax that this Parliament prescribes.
– That is very nearly what we have done.
Mr.CURTIN.-That is not so. The taxpayer in Queensland will pay less to this Government for the purposes of war than will the taxpayer on the same income in Victoria. The reason for that is that taxpayers in Queensland pay a higher rate of tax to the State Government than do taxpayers having the’ same income in the State of Victoria.
– That is one of the disadvantages of having a Labour Government.
– No. If there were no war, this problem could be left as one of the anomalies existing between the States. Rut weare no longer dealing with taxpayers merely as citizens of the States; we are dealing with them as citizens of the Commonwealth, and this Parliament, with its specific responsibility for the conduct of the war, must ensure that the burden placed upon them shall bear relation, not to their obligations to the States, but, to their obligations to each other.
-Regard must be paid to the amounts which they have to pay to the State governments.
– I do not accept that unreservedly.
– Why not?
– Not to the degree to which the honorable gentleman has done. He has revised the whole curve of progression in connexion with the incidence of income tax in order to take into account the amount of tax levied in the Stateimposing the highest rate. He says he has done that in order to keep withinbounds what otherwise would be excessive taxation of the higher incomes. The Assistant Treasurer has said that when, a man in Queensland with an income of £40,000’ a year has paid his Commonwealth and State taxes he has left only about 34 per cent, of his total income. But that leaves such a taxpayer, after he has satisfied the demands of the tax collector, with a net income of over £13,000, so the Assistant Treasurer’s statement seems to be a little ridiculous. [Leave to continue given.]
– How many Australians have an income of £40,000 a year?
– I do not think there are many. Therefore I fail to understand why the Government should be speciallyconcerned to see that such men are not treated harshly. By its solicitude for taxpayers in this category the Government is not only seriously impairing Australia’s income tax schedules, but is also leaving this Parliament open to criticism, which is already very vocal, that we are not laying down . an equitable schedule of taxation as between the various categories of citizens. It is because of that criticism that we should more or less ignore what happens to a man if he has had assured to him a net income of £4,000, £5,000 or £6,000.
– Does the ‘ honorable member suggest that the Government should take everything in excess of such an amount?
-I would not object to that for the purposes of the war. When all is said and done, what are the relative stakes which different citizens of this country have at issue while we are at war ? Among the things which the workers have involved are liberty and the hope of a better social and industrial life which are menaced by nazi-ism. That, I believe, is clear. But what of the well-to-do? What is their stake as against Hitler, and what is at issue for them in the winning or losing of the war? They will not be involved in a struggle afterwards for a better life. Certainly they have at stake, equally with the workers, personal liberty and the free institutions of democracy, but apart from those their stake is vastly different from that- of the workers. Whereas the workers will have to struggle to establish a decent- social order when the war is won, the well-to-do will have nothing to fight for. They will merely continue in the sheltered life to which they are at present accustomed. But the workers, having Won one fight, will still have to face another. Having defeated the external enemy, they will have to overcome the internal impediments to social decency and a better standard of living. The welltodo will continue to enjoy their already high standards. Therefore it appears to me to be inevitable that on the backs of the well-to-do should be laid not merely the normal incidence of taxation, but the major burden in connexion with the financing of the war.
– Why stop at £5,000? Why not come down to incomes of £1,000 or £2,000?
– Because I am a rational being. In all systems involving the requisitioning by the State of the goods, services and resources of its citizens, there are, I hope, common-sense levels which an intelligent appreciation of the problem would naturally suggest. 1 1 does not seem to be right for the State to despoil the great majority of its citizens of .the whole of their substance. It certainly would not be right to deprive any citizen of the whole of his substance ; but in time of war, we ought to say that any margin over and above what would provide for a reasonable standard of living, plus a reasonable standard of comfort for those who can have that, and plus also an opportunity to continue the cultural opportunities to which their families have been accustomed, should not be encroached upon unless it became necessary to do so. Having said this, I venture the opinion that social standards, family life and the culture of this nation would not suffer if we left everybody having an income in excess of £5,000 a year, a net income of £5,000. It we did that, I believe that a great deal of stupid, extravagant and misdirected investment might be diverted to far more useful national purposes. Therefore, my answer to the Treasurer is that there is a vast difference between’ taking everything that- every citizen has), and taking everything over and above what the Parliament would regard as a.” common-sense limit.
– I agree with the honorable gentleman that there is such a vast difference.
– We ought to do that.
I propose to leave the discussion of the personal exertion rates until we are dealing with the bill itself. I now direct attention to the subject of indirect taxation. When the war commenced, the Prime Minister (Mr. Menzies) called together the Premiers of the States, and pointed out what, the Commonwealth was, doing in connexion with prices control, which is vastly different from price fixation. There lias been no attempt on the part of this Government to fix prices! What it has done is to establish a system of prices control.
– It fixes prices in respect of certain goods.
–And it moves the rates about. There is no static fixation.
– It would not be possible to have static fixation.
– I know that. I am using the proper term in order that I may not be misunderstood. The Government has instituted a system of prices control and the Prime Minister/ in giving to the State governments the ‘ outline of the Commonwealth’s determination, said that there were certain factors which would cause price increases. In the very forefront of those factors, the right honorable gentleman specified increases of sales tax, and customs and- excise duties. He went on to say that the second factor would be increases of overseas prices of imported commodities and increases of the cost of exchange, as well as a number of other considerations. But it is extraordinary that the Government, which seeks to control prices and has established a system’ for that purpose, should itself embark upon an easy method of obtaining money for the Treasury, which method, on the authority of the head of the Government, becomes in itself a factor in making price rises inescapable. It has been said that indirect taxation does not fall heavily upon the workers. Tho Assistant Treasurer declared that the workers havetheir basic foods exempt from indirect taxation. That is true; but it is no concession to the workers. The rich man also has his basic foods exempted from sales tax. The basic wage earner, equally with the Commonwealth Treasurer or a man with an income of £40,000 a year, is free from sales tax on boots and other exempted commodities.
– That was not the point made by the Assistant Treasurer.
– The Assistant Treasurer stated that basic foods are exempt from sales tax and that the greater part of the cost of living of the poor man is outside the scope of sales tax.
– That is so.
– The Treasurer will find in any examination of the incidence of indirect taxation that it is impossible to segregate social classes, because the effect of price increases ultimately is reflected in the general commodity price level. It is impossible to select certain sections of the community and say that predominantly their household regimen consists of a given restricted class of goods. As a matter of fact, the workers use electric light, which the Government says is not subject to sales tax; but the workers use electric light globes and pay for them through house rents. They pay all charges incidental to the properties which they occupy, eitheras owners or as tenants. The Government has said that clothing is subjectto sales tax, but that the worker buysonly cheap classes of clothing and therefore the tax is not sp heavy on, him as on those who buy more expensiveclothing. Never was there a more fallacious argument.
– Thehonorable gentleman is not answering the Assistant Treasurer’s statement. He said that the increase of sales tax had not increased the cost of the regimen of the. working man.
-It will fall on the cost of living. It is notpossible to hold back the incidence, of an increase of the sales tax or any customs duty so that it sticks at a particular class of persons.It falls inevitably, like rain, over the whole countryside. The only possible way in which an economist or statistician can measure the weight of indirect taxation is by averaging it per capita over the whole community. In all the calculations in respect of the severity of indirect taxation in any country, the measurement is always per capita. It could not be otherwise. We are so dependent one upon the other that it is impracticable to say that particular goods are bought only by one class of persons. It is notorious that sales tax is paid ultimately by the final consumer of the article purchased.
– I agree with that.
– Having regard to the heterogeneous tastes of the Australian public, the intermixture of social classes, and the different types of houses and modes of life, he would be a veryoptimistic man who could find a terminal point for the incidence of indirect taxation.
– Is the honorable gentleman opposed to granting exemptions from sales taxation?
– No. I am in favour of exemptions as being preferable to a widening of the field and a reduction of the rate. I quite agree with the principle of the method that the Government has employed in its treatment of the sales tax, but whatI consider to be rather unfortunate is that the Governmenthas increased the sales tax to 81/3 per. cent. That advance could have been avoided by increasing income tax, land tax or some other direct tax.
– The Government has increased those taxes as well.
– Yes, but should it not have increased them more steeply? I am confident that if- the war should last, the Treasurer will come before Parliament nextyear and say thathehasto increase income tax again ; then he will be justifying the very arguments that to-night he is resisting. He will justify them then on the ground of necessity, whereas to-day he denies them on the ground of their inherent unsoundness.In time of war no section of the community ought to escape thedirect responsibility to contribute towardsthe national effort. No contribution in the shape of money toll upon the people can equal the sacrifice of those who actually serve in the fighting forces or do the work of the nation in field, factory and workshop. The war will be won, not with money, but by men and the equipment provided for them. Only by physical things such as guns, munitions, man-power, primary production, secondary production - men or the fruits of man’s labour - can this nation maintain its integrity. The money-changers cannot contribute anything other than convenience us by providing the medium whereby we can effect inter-changes between ourselves and other countries. Too long has the world worshipped at the temple of mammon. We ought not to fight this war in such a way as to enrich further the already rich when it is over.
.- The Assistant Treasurer (Mr. Fadden) urged that there should be greater co-operation between the States and the Commonwealth. Having heard the Leader of the Opposition (Mr. Curtin) to-night, I go further, and say that there is undoubtedly a great need for more co-operation between all parties in this chamber. Had we, in fact, a national government, the people would quickly understand the real issues of the war, whereas to-day large numbers of people appear not to care one rap about it. On every hand we see idleness, carelessness, men on strike and indifference to the issues at stake. I am convinced that if honorable members on the other side took a share in the administration of the country the outlook of many people would change. I do not agree with all that the Leader of the Opposition said. His speech was, for the most part, designed for political gain rather than to assist to resolve the great issues before the nation. I suppose that it is all part of the political game, but at a time like this every member of every party should be doing his utmost to defeat nazi-ism. Should Germany win the war, we shall lose our freedom. If honorable members opposite would take a strong stand, and show a determination to carry on the war to a successful issue, I believe that many people would make a united effort and convince the world that Australia would do itsshare. This is not the time for strikes, for pacifist appeals or for Communist propaganda, anu honorable members opposite could do much to help the State in its war effort.
The Leader of the Opposition said a good deal about taxing people with large incomes. In this connexion we cannot overlook the heavy taxes in some of the States. That taxation will become heavier, because loans free from Statetaxes and, in some degree, from federal taxes as well, have been issued. The States must increase taxes in order to compensate themselves for loss of revenue on tax-free loans. I agree with the Leader of the Opposition that, in the final analysis, the wealthy section of the community has more to lose from a German victory than have others, and I will gladly assist him in his efforts to make them pay at a still higher rate. I also agree with his remarks as to the inadequacy of our war effort prior to about eight months ago. The previous governments of Australia ought to have done more. As I have previously pointed out, I consider they were more desirous of placating the public than of making the nation secure against attack. No one, however, can justly complain of the efforts pf the Commonwealth Government during the last six months; but if all parties would combine in a determined effort, much more could be done.
As to the bill itself, I am somewhat doubtful of whether the holder ofpreference shares should be granted any rebate of taxes. That, however, is a matter which can be discussed in committee.
I hope that the Treasurer will make it clear that landholders, particularly many pastoralists in Western Australia who are practically bankrupt in consequence of there having been practically no rain for seven years, will not be called upon to pay land tax when they have not made any profit. There must also be a revision of the taxation on gold-mining companies.
Enormous sums of money will be needed for the prosecution of the war. Unfortunately, wo cannot say how long the war will last, but we know that we are facing a well-prepared enemy and that our liberties are in danger. The question arises as to how the money for the conduct of the war can be raised. Should it be raised by means of taxes, or loans, or by using the credit of the nation? I congratulate ‘the present Treasurer on what he has done in connexion with interest, rates. He deserves great credit for what he has achieved, lt is good that we can obtain loans at fi or 3$ per cent. If I could have my way, 1 should make contributions to war loans compulsory upon every person according to his income. If money were not forthcoming voluntarily, action should, be taken to get it by other means. A good deal of false propaganda is being circulated about the financing of the last war. It is said, for instance, that Sir Denison Miller had stated that the Commonwealth Bank had provided £350,000,000 for the carrying on of the war, and could have found as much more money if it had been necessary. That is a barefaced lie, because Sir Denison Miller did not make any such statement. The Commonwealth Bank did not contribute fid. At the end of 1919 the total Commonwealth securities held by that institution amounted to £7,200,000. I do not wish to belittle the Commonwealth Bank. I know that it did great work during the war; but statements such as I have mentioned are deliberately false, and I wonder that people give to them credence. There seems to be a fairly prevalent idea - and apparently it is held by the right honorable member for Yarra (Mr. Scullin) - that the Commonwealth Bank can provide the Government with unlimited credit, free of interest.
– The right honorable member for Yarra did not say that.
– The right honorable gentleman said that the rate of interest did not matter much, because it merely meant taking money from one pocket and placing it in another. That is ridiculous, because the Commonwealth Bank is bound to meet all legitimate demands made upon it for money. If the Bank issues credit for £10,000,000, it creates a debt for that amount against itself. It is compelled by law to pay all demands in legal tender. The note issue is restricted. That, of course, could be altered by an act of Parliament; but we already have sufficient paper money, and the experience of Germany and other countries after the last war should be a sufficient warning of the danger of inflation by an over issue of paper money. The nation cannot be financed in that way. I was amazed recently to receive a letter stating that Hitler could obtain all the money that he needed free of interest, and that the same thing could be done in Australia. That is not so. The following extract from an address delivered in November, 193b, by Doctor Schacht, the great German banker and economist, may be of interest to honorable members : -
In such an economy a great increase in the money in circulation leads necessarily to price and wage increases and thus to a strained state of affairs which in the end causes an economic depression. But NationalSocialism introduced in Germany a stateregulated economy which made it possible to prevent price mid wage increases. This did away with one of the main objections to a financing of production through credit. Awd ho credit was used to produce a greater volume of goods, and the only problem which remained was the determination of just how far thi, money creation could go. For money creation by the State always contains the seed of excess which leads to inflation. The fact that the newly-created money would be covered by newly-created goods was not the only point: the type of goods also had to be considered. Simply expressed, the problem was aB follows: The credit money, made available for the armament program, produced a demand for consumption goods, insofar as it was paid out in the form of wages and salaries. However, the armament manufacturers deliver military goods which are indeed produced but not consumed. This leads to two conclusions: first, care must be taken that in addition to armament production,, a volume of consumption goods is produced which is sufficient for tin’ needs of the population, including all those working for rearmament, and second, the les? is consumed, the more workers can be allotted to armaments; this, however, leads to greater consumption and thus to increased labor requirements on the part of the consumption goods industries. Thus standard of living ami extent of rearmament stand in inverse relation to each other. The less I consume, the more 1 save, and the more I save, the more I can spend on armaments. This means that armaments in the final analysis can be financed not through money creation but only through savings.
This quotation shows the method adopted by Germany to enable it to carry out its great armament policy. By ite absolute control of wages, prices, labour and thebanking system it was able to raise large sums on short term advances from the Reichsbank. As the demands came upon the bank to honour those credits, long-term loans had to be issued to repay the bank and enable it to function. As Dr. Schacht states, “In the final analysis it can be financed, not by money creation, but only through savings “ ; in other words, by loans from the public; and this policy is clearly demonstrated in the report of the League of Nations.
I was amused at the dismal failure of the honorable member for Corio (Mr. Dedman) to expound the principles of social credit and show how the war could be financed by bank credits free of interest. I listened with interest to his recital of his meeting with two farmers at a Geelong conference. One of these men, who had done fairly well out of his farming operations, informed the honorable member that he had leased his land and intended to retire. According to’ the honorable member, the correct thing to do with that sort of man was to confiscate the whole of his property. That is a nice sort of teaching to instill into the minds of the young people of Australia. It is not even good socialism, although I dare say that it is ideal communism.
I wish now to quote from the report issued by the League of Nations on Public Finance from 1928 to 1935. It said with respect to Germany that, although Hitler was able to obtain from the Reichsbank short-term loans free of interest, so soon as demands were made on the bank, he had to issue loans publicly to effect repayment. The report stated that in 1934 a 4 per cent, loan of 300,000,000 reichsmarks was offered at 95 per cent.; that in 1935 a 41/2 per cent, loan of 500,000,000 reichsmarks was issued at 98 per cent.; and that for the two years which ended in 1936 consolidation loans totalling about 3,400,000,000 reichsmarks had been issued at 41/2 per cent. The report reads -
The41/2 per cent., 1935, loan was issued in January, 1935, for a sum of 500,000,000 reichsmarks, and was taken up entirely by the “ Deutsche Girozentrale “ and placed by it among the various savings banks. The issue price was 98 per cent, for the State, while the acquisition price for the savings banks was 981/4 per cent. The repayment of the loan is to be effected within 27 years, from March, 1936. In virtue of a special order of February, 1935, by the Minister’ of National Economy, regarding the liquidity of savings and clearing banks, these institutes are authorized to invest up to 50 per cent, of their liquid balances (20 per cent, of the clearing and 10 per cent, of the savings depositsin the abovementioned 41/2 per cent., 1935, Reich loan.
The report pointed out later that the yield of loans issued at 41/2 per cent, and taken up by the savings banks and clearing banks was used for consolidation purposes, and then went on to state -
Another 41/2 per cent, loan for 700,000,000 reichsmarks was issued for the same purpose. The subscription was. open from the 29th June to the 14th July, 1936. This consolidation of short-dated indebtedness, by its conversion into long-term debt, had reached in June, 1936, about 3,400,000,000 reichsmarks, 1,500,000,000 of which was raised by public subscription; thebalance was taken upby credit institutions as follows: 1,1 25,000,000 by the savings banks; 600.000.000 to 700.000,000 by the insurance companies; and 75,000,000 by the co-operative societies.
The League of Nations made it perfectly clear that what the Reichsbank did was similar to what has been done in Australia. I believe that the Commonwealth has issued short-term loans amounting to approximately £88,000,000. That is in the nature of inflation. I do not say that anything unsafe has been done. On the contrary, I say that while we are at war we may have to take every risk in order to see that funds are provided in order to enable the Government to carry on. The Leader of the Opposition and the right honorable member for Yarra, who have been expounding the policy of the issue of credits by the Commonwealth Bank, should state unequivocally whether they agree with the social credit propaganda. It is known that certain concessions can be granted, not only by the Commonwealth Bank, but also by the trading banks, in order to assist the nation in time of need. These honorable gentlemen should tell the people to what length they are prepared to go in the direction of banking reform. The sooner they do so, the better itwill be both for themselves and for us. The Leader of the Opposition to-night levelled against the Commonwealth Bank a charge in respect of its attitude to the Labour Administration of 1929-31. From his remarks, one would imagine that the Commonwealth Bank had done everything possible to oppress that Government. At the end of September, 1929, the amount which the Commonwealth Bank had invested in government and municipal securities totalled £1,015,000
– In September, 1929, the Bruce-Page Government was still in power.
– In March, 1930, when the Labour Administration was in power, the amount was £1,019,000 and
At the end of September, 1931, it was £31,440,000. It will thus be seen that during that short intervening period the Commonwealth Bank had provided government and municipal authorities with no less than £30,000,000. From this one would -assume the Government did not try very hard to redeem its promise to the farmers. That, I consider, is a very fair answer to the statement of the right honorable member for Yarra. I hope that the people of this country will not be misled into the belief that the Commonwealth Bank can make everybody happy and prosperous simply by issuing credits. Mussolini once told his people, that he did not see how it was possible for them to make something out of nothing. Those two great countries, Germany and Italy, which have been hard pressed financially during the last ten or twelve years, but particularly during the last six years, although able to obtain from -their banking institutions a certain degree of assistance in the early stages, ultimately had to issue loans publicly in order to enable them to place those institutions in a sound financial position. The Avar must be financed by taxation and loans and we may rely on the fullest co-operation of the Commonwealth Bank in the latter course.
– 1 am conscious of the fact that the taxation proposals of the Government will give it authority to raise a very large sum from, the taxpayers of this country. I also realize that from time to time, from the revenue so derived, there will be allocations to the States for various purposes. I hope that the degree of. partiality shown .to some of the States under the Wheat Industry Assistance Act will .not be repeated in respect of any allocation that may be made from funds raised by these taxation proposals. Yesterday, the Minister for .Commerce (Mr. Archie Cameron), when asked to make available a summary of the plans submitted to him by the various State governments for dealing with marginal wheat lands and other problems of the wheat industry generally refused to do so. To-day the honorable gentleman also declined to table a copy of the report of the proceedings of the Australian Agricultural Council which discussed the subject.
– Such reports are confidential;
– Not at all, as the honorable member for Richmond will realize when he has had a longer parliamentary experience. On previous occasions when these reports hae been asked for by honorable members they have been tabled.
– What has this to do with the financial statement?
– A great deal 1 I am asking that the Treasurer shall not follow the unfortunate example set by .his colleague, the Minister for Commerce. Some extraordinary revelations have been made concerning the allocation of the money provided to help in solving the marginal wheat lands problem. We find, first, that no allocation has been made for Victoria ; and, secondly, that the Minister has alleged that the Government of Victoria has submitted no plan for dealing with this subject. The Minister’s statement in that regard was incorrect, as I shall show by referring to his remarks in the House yesterday.
– I again ask what this has to do with the financial statement?
– I am endeavouring to guide the Treasurer away from the path of destruction which the Minister for Commerce seems determined to take.
The ACTING DEPUTY SPEAKER (Mr. Rosevear). - The honorable member’s desire to guide the Treasurer may be laudable; but I can discover in the financial statement nothing dealing with the subject which he is discussing. 1 ask him to confine his remarks to the subject before the Chair.
– I shall take another opportunity to deal with the matter.
Debate (on motion by Mr. Archie Cameron ) adjourned.
Motion (by Mr. Spender) proposed -
That the House do now adjourn.
.- Continuing my remarks, which were interrupted a few moments ago, I point out that an unprecedented position has arisen in connexion with the allocation of Commonwealth funds for dealing with the marginal wheat lands problem. The attitude of the Minister for Commerce (Mr. Archie Cameron) on this subject in relation to Victoria is contradictory. The honorable gentleman said that the Government of Victoria had submitted no plans for dealing with the subject. I suggest that in making that statement he showed his resentment against Victoria and also his desire to victimize that State. In support of my contention I direct attention to paragraph 7 of the statement which the Minister made on this subject in the House yesterday. It reads - . . After the conference in Canberra in November, 1038, the Minister for Commerce asked each State Minister of Agriculture to supply information under six headings regarding marginal areas and State Government measures in connexion therewith. The information sought was as follows:-
The Minister then said -
In his reply to this letter on the 9th December, 1938, the Minister ‘ for Agriculture of Victoria advised that the information sought would bc furnished as early as practicable. On the 2nd March. 1939, a further letter was addressed by the secretary, Department of Commerce, to the Director of Agriculture, Melbourne, informing him that replies had been received from all States except Victoria on this subject. The information was furnished by the Director of Agriculture on the 12th April, 1939.
The comment might be made here that nom> of the States at this stage submitted actual plans in connexion with marginal area relief.
– -That refers to more than a year ago.
– Nevertheless it was information which the Minister himself had asked to ‘be furnished to him, and it. included an answer to the question “Generally has your State a formulated plan for dealing with marginal farmers ? “ In spite of having obtained that information, the Minister yesterday informed the press, and also honorable members of this House, that no plan had been submitted.
– The information that was then furnished is sixteen months old, it is completely out of date, and it has nothing whatever to do with the subject under discussion.
– The honorable gentleman asked for certain information and he admitted that it had been furnished. He went on to say that the Government of South Australia had taken immediate steps to appoint a committee to deal with the subject. He then proceeded to discuss matters which are utterly irrelevant to the subject under consideration.
– Why then does the honorable member make another irrelevant speech?
– I am endeavouring to show that the honorable gentleman dealt, not with the specific subject under consideration, but with irrelevant matters. Honorable members should note the next statement of the Minister, which raises a most important point. He said that the two matters of marginal area relief and assistance to distressed farmers were referred to the Federal Cabinet which, on the 1st March, 1940, approved of the grant of £500,000 for the purpose of assisting the States in relation to marginal areas. Do the words “ the States “ imply all of the States concerned? Did Cabinet decide that all of the States were to share, or only New SouthWales, South Australia and Western Australia whilst Victoria was to be excluded?
– Cabinet had to find the money and I, as the Minister for Commerce, had to decide what should bo done with it.
– How does the Minister’s statement square with the following report, which appeared in the Daily Telegraph, Sydney, of the 2nd March, 1940:-
The Federal Cabinet has voted £500,000 to New South Wales, Victoria, South Australia and Western Australia towards the cost of transferring wheat-growers from marginal lands.
– That report is inaccurate.
– It continues-
This, it was announced to-night by Mr. Menzies, would be negotiated between the Minister for Commerce and the State Ministers for Agriculture.
Since Cabinet came to that decision, under which Victoria was to share in this distribution, the present Minister for Commerce has come upon the scene, and has excluded Victoria, to the benefit of the State of which he is a representative. This matter should be fully investigated. The Minister went further than that. To-day, replying to a question by the honorable member for Martin (Mr. McCall), who asked whether Cabinet had approved of the allocation or had considered it, he said that Cabinet had not approved of his allocation, and that he had made the allocation acting under statutory authority. Such action on the part of a Minister is unprecedented. The established Cabinet practice is for any Minister, despite any statutory authority which he possesses, to seek final approval of Cabinet for the expenditure, or allocation, of so large a sum of money. I point out t hat the Cabinet includesthe Minister for External Affairs (Mr. McEwen) and the Minister for the Army (Mr. Street), gentlemen who represent substantial numbers of wheat-growers in Victoria, whilst several other honorable members opposite, including the honorable member for Wannon (Mr. Scholfield) and the honorable member for Bendigo (Mr. Rankin), also represent electorates in which there are large numbers of wheat-growers. And last, but not least, the Prime Minister (Mr. Menzies) represents a section of the people of Victoria whose welfare depends upon the well-being of the wheat-growers of that State. The practice in the past has been for the Minister directly concerned to submit matters of this kind for the approval of Cabinet, in order that other Ministers can ensure that money devoted for this purpose is distributed equitably. In these circumstances, I am astounded to learn that the dictatorial Minister for Commerce has arbitrarily allocated this money, and has excluded Victoria from any share of it. We have been informed, of course, that this money has been allocated purely for the purpose of dealing with marginal areas, and that, in the opinion of the Minister, the plan submitted by the Victorian Government was unsuitable. However, he did not, in common fairness, submit his allocation to Cabinet, and, consequently, denied to other Ministers to whom I have referred the opportunity to express an opinion, or to ensure that the money would be equitably distributed. What are the facts of the case? I have been obliged to obtain them independently of the Minister, who has refused to make the files available to me. The facts are that the Victorian Minister for Agriculture submitted Victoria’s plan only two days after the final plan of New South Wales was submitted. On this point I do not ask the House to take my word. Let us see what the Minister himself has said -
The Minister for Agriculture in Western Australia furnished details of his State’s plan in a letter dated the 31st March, 1940. On the 26th March, 1940, further communications were addressed to the Ministers for Agriculture in New South Wales and Victoria requesting them to expedite particulars of their proposals.
Like Victoria, all of the other States were late with their plans.
The Minister for Agriculture in New South. Wales replied by letter on the 11th April. 1940,and the information furnished was supplemented by detailed discussions with three officers of the New South Wales service who visited Canberra for this purpose on the 15th April, 1940. …
In the case of Victoria, the Premier of that State addressed a letter to the Prime Minister on the 17th April, in which he set out details ,o£ the expenditure incurred by tho Government of Victoria in conuexion with the rehabilitation of closer settlers.
The Minister said that the Government pf Victoria had not set out its scheme in detail.
– I was asking for details of what Victoria proposed to do.
– The Minister said that no proposal was submitted by Victoria regarding tlie marginal areas problem .pf that State, but, according to his own words, the Victorian Premier’s letter included the following: -
Portion of the money to be allocated to Victoria would therefore be used for the establishment of those settlers (Marginal area settlers) on larger areas, but it is desired that a considerable portion of the amount for tills State should be paid under Section 7(C), and applied in the provision of relief to distressed wheat-growers.
Victoria did not submit, as part of its plan, that any definite amount should be devoted to the relief of distressed wheat-growers, although it was entitled to do so under the Wheat Industry Assistance Act. The Minister will not deny that.
– I do.
– I shall quote the provisions of the act on the point-
– The honorable member may do so, but discretion is vested in me.
– But the possession of discretionary powers by the Minister does not disentitle Victoria to ask for a portion of this money to be used for a particular purpose. In an endeavour to justify his allocation of this money to be used specifically for the purpose of dealing with marginal areas, the Minister quoted the decision of the Australian Agricultural Council. That body decided that the money should be used specifically in dealing with marginal areas, but what statutory right does it possess in this matter? It is not mentioned at all in the Wheat Industry Assistance Act. Its decision, therefore, should play no part in the allocation of this money. This matter, should be reconsidered. It should be submitted to Cabinet, so that the opinions of Ministers from Victoria, and honorable members who represent large numbers of wheat-growers in their respective electorates, might be given due consideration. No single Minister representing an electorate in which a considerable number of wheat-growers reside should have the sole right to decide how the money should be allocated. Such an arrogant action is unprecedented in the history of parliamentary government in this country. When .the Victorian Minister for Agriculture found that the Minister was adamant in his decision that all of this money should be used for the purpose of dealing .’with marginal areas, Victoria submitted a plan dealing specifically with that problem. The Victorian plan-covered 765,000 acres of marginal lands on which 546 farmers were settled, and the proposal involved increasing the area of their blocks from 2,000 to 2,800 acres at an estimated cost of £135,000 for one year. . [leave to continue given.] For reasons’ best known to the Minister he said that that was not a plan.’ If that is not a plan, I would like to know what is. On the 12th April, 1939, a detailed statement of what Victoria had already done in the matter of marginal areas was, at the Minister’s request, submitted to him.
– That has nothing whatever to do with this subject.
– It .has, because Victoria has done more in the matter of marginal areas than any other wheatgrowing State.
– The area involved in Victoria is much smaller.
– The Minister cannot deny that Victoria made a greater effort than any other State.
– And made a greater mess of what it ..did than any other State.
– Between 1933 and 1937 Victoria re-settled 1,230 settlers at its own cost and without any Commonwealth assistance whatever. What has New South Wales achieved, and what has it yet to do? The New South Wales plan covered an area of 3,000,000 acres, and from 2,600 to 3,000 settlers, one half of whom are to be evacuated. But, as in the case of Victoria, no plan had been submitted. The New South “Wales scheme provided for an expenditure of £1,300,000 spread over four years and the amount required this year was £228,000. But Victoria having dealt with the problem at its own expense, tho Minister, because he is prejudiced, refuses to allocate to Victoria any portion of the sum which is provided by the flour tax, of which Victoria contributes £390,000. I cannot see how the Minister’s action can be justified from whatever angle it may be viewed. He has taken a most extraordinary step. According to a paragraph which appeared in the Melbourne Argus, the Minister said, “In my opinion the Victorian plan has not been formulated to solve the problem of marginal areas “.
– That is a true statement.
– It must be substantiated by the Minister who said that, the Victorian scheme, which involves 765,000 acres, 546 settlers, an expenditure of £135,000, and an increase of the areas from 2,000 acres to 2,800 acres, is not a plan. In what degree does it differ from the New South Wales plan? He further says that it had been hastily prepared. Who is to be the judge of whether that is the case ? It was a plan similar to that submitted by the Government of New South Wales. It is not the responsibility of the Minister to say whether a plan was or was not hastily prepared. He further said that, in an endeavour to justify Victoria’s claim for an allocation, that State had asked that a considerable portion of the amount should be applied in the provision of relief to distressed wheat-growers; but Victoria had a perfect right to submit alternative proposals. Although the Minister may have the statutory power to allocate the money, surely a State government has the right to submit .alternative proposals to assist wheat-farmers who have suffered considerable loss, inconvenience and distress. The Minister has no right to say that the Victorian Government wished to use the money for other purposes, or that the plan, in comparison with the detailed schemes submitted by the other States, was unsatisfactory. In view of all the circumstances, I ask the Minister to reconsider the situation with his colleagues, who have not even been consulted on the subject. Do they think that this allocation has been determined on a fair basis? We know that the Minister is prejudiced against Victoria and that by depriving that State of its share, South Australia, which he represents, derives additional benefits. I trust that the allocation will be submitted to Cabinet and that a more equitable allocation will be made.
.- I support the remarks of the honorable member for Ballarat (Mr. Pollard), who has dealt with this important subject at length. The honorable member, who has had Cabinet experience, assures us that the action of the Minister for Commerce (Mr. Archie Cameron) in this respect is unprecedented, and that the general practice when such a large sum of money has to be allocated is for a decision to be reached, not by a single Minister, but- by the full Cabinet. I regret that this highhanded and dangerous precedent has been established :by the Minister, and I am amazed to find that other Victorian members of the Cabinet and of this Parliament have not expressed their disapproval of his dictatorial decision. If the Minister’s action in this respect be allowed to pass unchallenged we can expect similar drastic action in the future, particularly from this Minister, knowing him as we do. He has not given any valid reasons for the decision reached, and some of his statements are contradictory. In one instance he said that the Victorian Government had not submitted a plan, and later that the plan forwarded by the Victorian Government was unsatisfactory. This is contradicted by the Victorian Premier. Such statements are similar to the charge which he levelled against me that when speaking yesterday on the serious position of the wheat-growers, I did not bring forward constructive argument. I dealt with general principles, and showed how the problem should be tackled. Surely the Minister did not expect me, in the short time at my disposal, to propound a complete plan to cover the whole industry.
– The honorable member’s electors would expect him to do so.
– I have submitted plans in the past, but I now consider that the responsibility rests upon the Government. This is a vital matter to Victorian wheat-growers, who rightly feel that they have been treated . unjustly. I am concerned more– particularly with the fact that the Wheat Industry Assistance Act provides that the allocation for any State may be so directed as to assist settlers suffering from seasonal disabilities. Surely the Victorian wheat-growers have experienced seasonal disabilities during recent years. Wheat-growers’ organizations in Victoria have asked from time to time that a portion of any allotment made to that State should be used to assist necessitous growers. The honorable member for Ballarat stated that certain proposals made to the Minister by the Victorian Government were not acceptable to him. In the interests of fair play the Minister should reconsider his decision, before handing over such a large sum to the other wheat-growing States. As a scheme was submitted by the Victorian Government and as Victorian taxpayers contribute one-third of the fund, I trust that the whole subject will be reconsidered and that Victoria will receive the assistance to which it is entitled.
– Honorable members opposite endeavour deliberately to create the impression that those representing industrial electorates have little or no sympathy with the people living in country areas.
– Hear, hear!
– The honorable member for Richmond (Mr. Anthony) knows that that is not so. Although one-third or more of the amount provided by the flour tax is raised in Victoria, the Minister for Commerce (Mr. Archie Cameron), in his usual dictatorial manner, and without conferring with his colleagues, has decided that that State shall not share in the allocation. There is something for the Minister to answer in the charges levelled by the honorable members for Ballarat and Wimmera. It appears that because there is some difference of opinion between the Minister for Commerce and the Victorian Government-
– Nothing of the sort.
– Because there; is a difference of opinion between the Minister for Commerce and the Victorian Government that government is not to receive any aid and the wheat-farmers in Victoria are to suffer. That is an entirely wrong principle. The act does confer certain discretionary powers upon the Minister, but we are entitled to expect from those Commonwealth Ministers who represent Victorian constituencies a statement of their views on what the Minister for Commerce has done. For my part, J consider that it has been clearly established in this Parliament during the present session that many, possibly the majority, of the farmers in Wimmera and other districts in Victoria are in a distressed condition. It has also been made clear by the Minister that no further grant is to be made to those farmers, notwithstanding their distress. ‘That a Government which is dominated by a Country party - although entirely different from the Country party in Victoria - should callously allow the farmers to suffer is to be regretted. I am disappointed that the honorable members for Bendigo (Mr. Rankin); Wannon (Mr. Scholfield), Corangamite (Mr. Street) and other honorable members who have wheat-farmers in their electorates, are content to let this decision go without one word of protest. I am convinced that they really have no consideration for the distressed farmers. One would expect that they would want to know why the Minister has exercised a dictatorial power to cut Victoria completely out of the allocation. There is ample justification for assistance to be given to the farmers in Victoria ; their exclusion is not an effective answer to the criticism that has been voiced. We should try to look at problems from an Australian point of view, but Victorian interests should not be neglected. The Minister for Commerce- comes from South Australia and, when Victoria is deprived of its share of the £500,000, South Australia and the other States must get more. That is the net result of it; the farmers in those other States will get a far greater allocation as the result of the Minister’s act than they would otherwise have done. It is entirely unfair. I represent a workers’ electorate, which pays a considerable amount of flour tax. On behalf of my own constituency I say that Victoria has not had a fair deal. The Minister may attempt to justify his decision, but on the facts that have been presented by the honorable member for Wimmera he has given vent to an entirely unwarranted prejudice against Victoria. I trust that the Minister will review his decision and give Victoria the consideration to which it is entitled.
– I have listened to all that has been said on this question. There is no doubt that honorable members are working themselves up to a fury over what is really a very small matter indeed. The facts are that this Parliament, during its present life, passed the Flour Tax Act and the Wheat Industry Assistance Act. In section 7 of the Wheat Industry Assistance Act Parliament made the Minister for Commerce responsible for the allocation of this money between the States. Honorable members say that I did not give any money to the State of Victoria. No money was given to the State of Queensland or to the State of Tasmania.
Opposition Members. - Those States do not grow wheat.
– They do. Queensland does grow wheat. Tasmania does grow wheat. If this money were to have been allocated for the relief of necessitous farmers each of those two States would have been claimants.
– Did Queensland present a request or a plan?
– Queensland did not present a plan for marginal areas. The document which was supposed to be the Victorian plan was not a plan at all. The Victorian ministry took the number 546. How it arrived at that number heaven knows!
– It was arrived at after a survey by the Victorian Lands Department.
– It was. not. The Victorian ministry divided, that number by two, multiplied the result by £500 and substracted £1,500 to arrive at the round figure of £35,000 and said, “ Here you are ; here’s our plan “. I lay this down very clearly and I want the States to understand it, that when this Parliament votes money for State purposes and I am the Minister responsible for allocating that money I shall demand justification from the States for the claims that they lodge. They have to show cause. Victoria did not show cause ; it has no marginal areas problem.
– Rubbish !
– I know what I am talking about. I live five miles from the Victorian border. I am in the marginal area. My electorate runs from the Mallee to the sea. Victoria’s western border is my eastern border. When the honorable members for Ballarat (Mr. Pollard) and Maribyrnong (Mr. Drakeford) talk about discrimination in these matters, I say that they either do not know what they are talking about or are using this only as a political issue. With respect to’ the allocation of this money, let us look at the facts. The’ Government of Western Australia submitted a four-year plan, and asked this year for £115,000. in my judgment, that plan was the best, and I gave Western Australia all the money it asked for.
– The Minister -was looking after Gregory and Prowse.
– No : South Australia, too, submitted a very good and comprehensive plan.
– Was that the Cameron plan?
Order ! The honorable member for Ballarat must not continue to interject. If he does not wish to hear the Minister, other honorable members do. .
– The honorable member for Ballarat has referred to the request from the State of South Australia in respect of marginal areas. A’ very large proportion of those marginal areas is not in my electorate and in the electorate of the honorable member for Wakefield (Mr. McHugh) and I should like to hear that honorable gentleman say that I have done wrong in the allocation of this money.
– I do not live in Victoria. The honorable member for Ballarat is handling his case very well.
– In New South Wales the marginal areas problem extends from the Murray River to the Queensland border. Victoria has never had a marginal areas problem of the magnitude of that in Western Australia, New South Wales and South Australia. In Victoria, there is trouble in what is called the “sunset” country in the electorate of the honorable member for Wimmera (Mr. Wilson).
– Victoria has some distressed farmers.
– So has every other State. It may interest the honorable member for Wimmera to know that as a result of frost to-day there are more distressed farmers in my electorate than there are in the whole of Victoria. I have lived alongside the Victorian border and have watched the settlement of the adjacent country, and I say definitely that I have never known a Mallee area settled under conditions, so expensive as those that were permitted by the Government of Victoria. The Cowahgi area was settled after the Development and Migration Commission had, following exhaustive inquiries, reported against it. It would be interesting to hear the views of the honorable member for Ballarat on that subject, because he was for some time Minister of Agriculture in a Victorian Labour Government, and he should be in a position to tell the House how much Victoria has lost through the settlement under expensive conditions of land that had been condemned by a properly constituted authority. When it comes to the allocation of money, if the responsibility is mine, I shall insist upon having justification for the proposed expenditure, and if a State cannot provide the necessary justification, it will not get the ; money. That is all there is to be said: about the matter.
– Surely the Minister does not wish to penalize individuals?
– Itis not a matter of penalizing individuals. Victoria is not being treated differently from any other State. None of the money that has been allocated to New South Wales, Western Australia and South Australia can be used for the relief of distressed farmers. That is absolutely definite.
– Did the Minister impose that’ condition?
– It was laid down by the Agricultural Council.
– That is so. The honorable member for Ballarat has told us that the Agricultural Council is not a statutory body. I agree with the honorable gentleman. The Agricultural Council is an advisory body. So also is the Premiers Conference. There is no statutory authority for the holding of Premiers Conferences, yet most vital decisions are reached at those gatherings and are the subject of subsequent legislation by this Parliament. Nobody suggests that such conferences should not be held. As a matter of fact, conferences of representatives of Commonwealth and States are held from time to time to deal with a wide variety of subjects - to explore situations and to advise the Commonwealth and State governments of the best method to overcome constitutional limitations. The Agricultural Council is one of the best and most useful bodies in Australia to-day, and its recommendations are respected by Commonwealth and State governments. At its meeting in Hobart in February last, it decided unanimously that this money should be used for marginal areas only, because that was regarded as the most vital problem of the day.
– Did the Minister say that its decision was unanimous?
– Yes. And I may add that the council knew what it was doing. The Commonwealth and State ministers who attended that gathering, knew that Australia had a record wheat crop, ‘and that if there was any problem of distressed farmers it was of such small magnitude that it could be dealt with effectively bythe State governments concerned. I do not challenge the right, of the Victorian Government to put some request before me as it did last week, but I remind the House that a law passed by this Parliament, vests in the Minister for Commerce discretion in the allocation of the money. T. exercised that discretion. Honorable members of the Opposition should realize that this Government’schief preoccupation is the conduct of the war, and that therefore the time of Cabinet should not be taken up in a discussion of details relating to such matters as this. If I am notfit to divide up £500,000 between four States, omitting, if I think just, one of the States, I am not fit to sit on the treasury bench. The honorable member for Ballarat has asked for an inquiry. I should not mind the fullest investigation but there is no need for it. I acted after mature deliberation, and careful consideration of all the schemes that have been submitted by the States. I know that the Victorian Government has said that its plan is for one year only.
– So it had a plan!
– I regarded it as a rather poor apology for a plan. The other States came to Canberra with plans carefully worked out for a four-year period; they could tell what they proposed to do with the different people, what their transfer to other areas would cost, what they proposed to expend on fencing, clearing, and acquiring additional land, and other details. No. such complete scheme was submitted by Victoria. The House, I think, must realize that if it appropriates £500,000 for a specific purpose and vests in’ the Minister for Commerce discretion in the allocation of that money, it must not complain after the division has- been made. I feel quite sure that, after mature deliberation, the honorable member for Ballarat will recognize, that I have done a very fair job in, theyallocation of this money. The Victorian Government has had since November, 1938, to furnish particulars of any marginal areas problem which it might have had. So far, it has done nothing.
– Will the Minister give reconsideration to the matter if the Victorian Government puts up a plan?
– Most definitely I shall not. The matter has been decided. The money has been divided. The States have been notified, and the Treasury has been told to pay the amounts allocated. So far as I am: concerned, that is where the matter ends.
– Is the money available?
– It will be available when it is wanted. Before I joined the Ministry, the Government had set aside £500,000 for this purpose.
– Irrespective of the flour tax?
– The money is coming in every day from, the flour tax. The fact, is that, the proceeds of the flour tax have been hypothecated to the amount of £500,000 for this purpose. Some of the States are not ready to expend all of that money at once. The honorable member for Wakefield lives in a marginal area and he knows the conditions there. He also knows, from his experience in the Parliament of South Australia in which both he and I served, that when the money is wanted it will be available. He cannot quote an instance of a Commonwealth government not standing up to its pledge toprovide money.
Question resolved in the affirmative.
The following paper was presented : -
Medical Research Endowment Act - Report by National Health and Medical Research Council on work done under the Act during 1939.
House adjourned at 11 p.m.
The following answers to questions were circulated : -
y asked the AttorneyGeneral, upon notice -
– The answers to the honorable member’s questions are as follows : - 1.The present estimated cost of the Patent Office building is £117,000. Accommodation is also being provided in the building for the Supreme Court of the Australian Capital Territory.
y asked the Minister for Commerce, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : -
y asked the Minister representing the Minister for the Interior, upon notice -
– The Minister for the Interior has supplied the following answers : -
s. - On the 23rd April, the honorable member for Bass (Mr. Barnard) asked the following questions, upon notice: -
I then promised the honorable member that the information would be obtained. I am now able to supply the following answers : - 1. (a) 186 cases are listed for hearing by the Full Court. This number includes 175 applications for a review of the basic wage and these applications will be determined in one hearing. (b) 59 part-heard and pending industrial disputes are listed for bearing by single judges of the Court. This number includes applications for variation of current awards grouped to indicate the number of separate hearings necessary for their determination.
Names of Organisations concerned in Applications before the Court.
Actors Equity of Australia.
Amalgamated Clothing and Allied Trades Union of Australia.
Amalgamated Engineering Union.
Amalgamated Society of Carpenters and Joiners of Australia.
Association of Railway Professional Officers of Australia.
Australasian Coal and Shale’ Employees Federation.
Australian Institute of Marine and Power Engineers.
Australasian Meat Industry Employees Union.
Australasian Society of Engineers.
Australian Boot Trade Employees -Federation.
Australian Builders Labourers Federation.
Australian Federated Union of Locomotive Enginemen.
Australian Class Workers Union.
Australian Insurance Staffs Federation.
Australian Journalists Association.
Australian Railways Union.
Australian Theatrical and Amusement Employees Association.
Australian Rope and Cordage Workers Union.
Australian Textile Workers Union.
Australian Timber Workers Union.
Australian Saddlery, &c. Workers Employees Federation. . “
Australian Tramway and Motor Omnibus Employees Association.
Australian. Workers Union.
Australian Bank Officials Association.
Blacksmiths Society of Australia.
Boilermakers Society of Australia.
Electrical Trades Union of Australia.
Federated Agricultural Implement Machinery and Ironworkers Association of Australia.
Federated Artificial Fertilizer and Chemical Workers Union of Australia.
Federated Clerks Union of Australia.
Federated Coopers of Australia.
Federated Confectioners Association of Australia. -
Federated Engine Drivers and Firemen’s Association of Australasia.
Federated Felt Hatting Employees Union of Australasia.
Federated Furnishing Trade Society of Australasia.
Federated Gas Employees Industrial Union. Federated Ironworkers Association of Australia.
Federated Liquor and Allied Trades Employees Union of Australasia.
Federated Marine Stewards and Pantrymen’s Association of Australasia.
Federated ‘Mining Mechanics Association of Australasia.
Federated Miller and Mill Employees Association of Australasia.
Federated Moulders (Metals) Union of. Australia.
Federated Municipal and . Shire Councils Employees Union of Australia.
Federated Rubber and Allied Workers Union of Australia.
Federated Ship Painters and Dockers Union of Australia.
Federated Shipwrights and Ship Constructors Association of Australia.
Federated Storemen and Packers Union of Australia.
Federated Stovemakers and Porcelain Enamellers Association of Australia.
Federation of Salaried Officers of Railways Commissioners.
Food Preservers Union of Australia.
Health Inspectors Association of Australia.
Manufacturing Grocers Employees Federation of Australia..
Marine Cooks, Bakers ‘and Butchers Association of Australasia.
Merchant Service Guild of Australasia.
Municipal Officers Association of Australia.
Musicians Union of Australia.
National Union of Railwaymen of Australia.
North Australian Workers Union.
Operative Stonemasons Society of Australia.
Permanent and Casual Wharf Labourers Union of Australia.
Plumbers and Gasfitters Employees Union’ ofAustralia.
Printing’ Industry Employees Union of Australia.
Professional Radio Employees Institute of Australasia.
Seamens Union of Australasia.
Sheet Metal Working Industrial Union of Australia.
TransportWorkers Union of Australia, . ‘
Trustee Companies Officers Association.. .
Vehicle Builders Employees Federation of’ Australia.
Waterside Workers Federation of Australia,
Wool and Basil Workers Federation of Australia.
n asked the Minister in charge of Scientific and Industrial Research, upon notice -
– The answers to the .honorable member’s questions are as follows : - 1. (a) Kimberley districts of Western Aus; tralia. - No further information, has been received by the Council .for Scientific and Industrial .Research in relation to this area since that published in the council’s journal in 1931 (volume IV., page 240.) (6) Queensland. - In February last the Queensland Department of Agriculture and Stock informed the Council for Scientific and Industrial Research that the present position in regard to the buffalo fly pest’ was rather alarming, in that the pest bad reached Normanton Common. Subsequently, the Queensland department arranged for one’ of its officers . to spend six months in northern Queensland’ oh buffalo fly work. Prior to proceeding on his investigations the officer discussed the position with the council’s entomological officers at Canberra, (o) Northern parts of New South Wales. - There is no evidence to show that’ the buffalo fly has reached northern New South Wales.
s asked ‘ the ‘ Treasurer, upon notice -
– The answers to the honorable . member’s questions - . are as :.11.w . -
Cite as: Australia, House of Representatives, Debates, 9 May 1940, viewed 22 October 2017, <http://historichansard.net/hofreps/1940/19400509_reps_15_163/>.