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House of Representatives
28 May 1942

16^th Parliament · 1^st Session

JOINT COMMITTEE ON SURAL INDUSTRIES
QUESTION
- WOOL INDUSTRY
QUESTION
- AUSTRALIAN COMFORTS FUND
QUESTION
- AUSTRALIAN ARMY
QUESTION
- DEPARTMENT OF LABOUR AND NATIONAL SERVICE
QUESTION
- WHEAT INDUSTRY
QUESTION
- CANBERRA MILK SUPPLY
QUESTION
- WOMEN’S AUXILIARY AUSTRALIAN AIR FORCE
QUESTION
- DELIVERY OF BREAD
QUESTION
- BEER RATIONING
QUESTION
- MAN-POWER IN RURAL INDUSTRIES
QUESTION
- APPLES AND PEARS
QUESTION
- BROWN-OUT REGULATIONS
QUESTION
- DAIRYING INDUSTRY
QUESTION
- MR. BRIAN PENTON
QUESTION
- COAL-MINING INDUSTRY
QUESTION
- WERRIBEE BEEF
QUESTION
- HAIL INSURANCE
QUESTION
- AIR RAID PRECAUTIONS
QUESTION
- ACQUISITION OF PEAS
QUESTION
- CLOTHES RATIONING
QUESTION
- ADVISORY WAR COUNCIL
QUESTION
- SUPERPHOSPHATES
QUESTION
- MEMBERS OF PARLIAMENT
QUESTION
- TRANSPORT OF WORKERS
QUESTION
- CONTROL OF RURAL INDUSTRIES
QUESTION
- COMMONWEALTH CONTROL OF RAILWAYS
QUESTION
- DELIVERIES BY MARKET GARDENERS
QUESTION
- SYDNEY GRAVING DOCK
QUESTION
- UNIFORM INCOME TAXATION
NAVIGATION BILL 1942
LIGHTHOUSES BILL 1942
INCOME TAX (WAR-TIME ARRANGEMENTS) BILL 1942
- Second Reading
QUESTION
- [T59]](#subdebate-33-0)
STATES GRANTS (INCOME TAX REIMBURSEMENT) BILL 1942
- Second Reading
INCOME TAX ASSESSMENT BILL 1942
- Second Reading
INCOME TAX BILL 1942
GIFT DUTY ASSESSMENT BILL 1942
ESTATE DUTY ASSESSMENT BILL 1942
WIDOWS’ PENSIONS BILL 1942,
ADJOURNMENT
PAPERS
ANSWERS TO QUESTIONS
- Flax Production
- Liberty Loan

Mr. Speaker (Eon. W. M. Nairn took the chair at 2.30 p.m-, and read prayers.

page 1650

JOINT COMMITTEE ON SURAL INDUSTRIES

Mx. FRANCIS. - As Chairman, I present the fourth progress report of the Joint Committee on Rural Industries.

– Yesterday the Minister for the Army, in reply to a question that I asked, said that any member of the Australian Military Forces who wished to be transferred to the Royal Australian Air Force as an air-crew member would be granted permission to do so. Will the honorable gentleman issue instructions to this effect to the officers commanding in the different States?

Mr FORDE:
Minister for the Army · CAPRICORNIA, QUEENSLAND · ALP

– by leave. - I said yesterday that any member of the Australian Military Forces who had volunteered for enlistment as an air-crew member in the Royal Australian Air Force, and was awaiting a call-up, would be given permission to transfer, in the order of their enlistment. During the last 24 hours, I have discussed this matter with the Adjutant-General’s Office, and am now able to state that the position is as follows: -

Men now in the Army who have previously been accepted by the Royal Australian Air Force as volunteers for aircrews will be released from the Army when called for by the Air Force. Agreement has also been reached between the two services for men in the Army to volunteer for service with the Royal Australian Air Force as air-crew members, but they will remain in the Army until called for by the Air Force. Men already in the Army will not be released for the Air Force ground staff, but new men being called up for the Army will be given an opportunity to volunteer for the Air Force ground staff. Any man in the Army who has been accepted for Royal Australian Air’ Force crew personnel will be released from the Army when called for. by the Air Force. The Air Force will inform the Army of the names of the personnel required. Men now in the Australian Military Forces of the rank of lieuten ant and lower - i.e. lieutenants, warrant officers, non-commissioned officers and private soldiers - and not on the Royal Australian Air Force Reserve, may volunteer for air crew, and if accepted will be released when called for by the Air Force. It has been agreed between the two services that men in the Army who have volunteered for Air Force ground staff will not lie allowed to leave the Army. Numbers of men are still being called up ‘ for military service. These men are brought to General Details Depots. They are then given an opportunity to volunteer for the Royal Australian Air Force. An allotment is made apportioning the men between the Army and the Royal Australian Air Force according to the requirements of both services. This applies only to the ground staff.

Sir FREDERICK STEWART:
PARRAMATTA, NEW SOUTH WALES

– Can the Minister for the Army inform the House of the reasons for the nonobservance so far of his decision announced some time ago that members of the Militia may now enlist in the Australian Imperial Force? My question is prompted by personal knowledge of a unit in Sydney which offered almost en bloc to enlist in the Australian Imperial Force, but could get no satisfaction from its commanding officer.

Mr FORDE:

– I discussed this matter by telephone to-day with the AdjutantGeneral in Melbourne. He said that the preparation of instructions for distribution to the commanding officers throughout Australia required a great deal of work and the delay that had occurred in the despatch of those instructions was inevitable.

Mr Spender:

– Could not the instruc- tions be sent out by telegram?

Mr FORDE:

– I suggested that course, but the Adjutant-General said that it would lead to all kinds of misunderstandings, and that it had been decided to send out the instructions by post. He said that in the opinion of the CommanderinChief and himself there was no great urgency about the matter so long as the instructions were issued as expeditiously as possible. The AdjutantGeneral was directed to issue the instructions expeditiously, and he assures me that that direction is being obeyed.

page 1652

QUESTION

DEPARTMENT OF LABOUR AND NATIONAL SERVICE

Appointments

Mr WARD:
Minister for Labour and National Service · EAST SYDNEY, NEW SOUTH WALES · ALP

– On the 8th May, and again on the 19th May, the honorable member for Wentworth (Mr. Harrison) asked me questions, without notice, about the appointment of Mr. G. Sinclair to my department, and requested me to furnish a list, setting out the number of Labour members of Parliament, union organizers, and other Labour supporters attached to the Department of Labour at present.

Mr. Sinclair has been appointed as an investigation officer at a salary of £468 standard. He will deal with certain matters affecting dilution in the boilermaking trades, and will be attached to the Central Dilution (Boilermaking Trades) Committee, under the control of the chairman of that committee. The duties to be carried out by the occupant of this temporary position, as approved by the Public Service Board, are as follows : -

Investigate the progress of dilution in all States in relation to the need, from time to time, for “ added tradesmen “ in the boilermaking trades.
Maintain liaison, in regard to boilermaking dilution matters, with the trade organizations concerned.
Investigate complaints of a general character regarding boilermaking dilution matters.
Advise field officers, dilution, of general policy in regard to dilution and placement of “ added tradesmen “.
As opportunity allows, carry out such duties of a field officer, dilution, as may be required.

The duties of Mr. J. S. Garden, who was recently appointed to my personal staff, are ‘ to act as a liaison officer between the unions and myself, and to carry out such investigations as I may, from time to time, direct as the result of requests received from unions. Mr. Garden is paid a salary of £10 a week. I am pleased to advise that, as a result of his activities, many disputes have been satisfactorily settled, without an actual stoppage of work.

Four members of the Commonwealth Parliament are assisting me with my departmental work, and may be included in the honorable member’s classification of “ members and supporters “. They are Senator Aylett, and Messrs. James, Watkins, and . Morgan of this Parliament. These honorable gentlemen are assisting me with my work in relation to specific industries or areas.

Regarding the details requested by the honorable member as to Labour supporters attached to the Department of Labour, the position is that at the date on which the Labour . Government assumed office in October last, a considerable number of supporters of the United Australia .party and the Country party was attached to this department. Due to the excellence of the work performed by the department, I am informed that all are now staunch supporters of the Labour party. If the honorable member has information to the contrary, I shall be pleased if he will give it to ‘me confidentially. I assure him that the matter will receive my usual prompt attention.

page 1653

QUESTION

WHEAT INDUSTRY

Payments from Pools - Australian

Wheat Board - Licensed Receivers

Mr COLLINS:
HUME, NEW SOUTH WALES

– Can the Minister for Commerce say whether there is any truth in the statement made last week at a meeting of the executive of ‘the New South Wales Farmers and Settlers- Association that it is proposed to reconstruct the Australian Wheat Board?

Mr SCULLY:
ALP

– It is my intention to reconstruct the Australian Wheat Board, but so far I have no further information to convey to the honorable member or to the House.

Mr BREEN:
CALARE, NEW SOUTH WALES

– Is it the intention of the Minister for Commerce to allow licensed receivers direct representation on the reconstructed Australian Wheat Board? Will he see that the licensed receivers are not placed in the position of being able to draw up their own contracts with the Australian Wheat Board for future handling of the wheat crop?

Mr SCULLY:

– The subject-matter of the honorable member’s question will be taken into consideration when the reconstruction of the Australian Wheat Board takes place.

Mr LANGTRY:
RIVERINA, NEW SOUTH WALES

– In view of the desperate position of wheat-growers, can the Minister for Commerce inform the House when the next payment will be made on wheat pools Nos. 2, 4 and 5?

Mr SCULLY:

– Very little is outstanding in connexion with wheat pools Nos. 2 and 5, and a substantial payment will be made almost immediately in respect of No. 4 pool. International complications have delayed the winding-up of No. 2 pool upon which a considerable sum is outstanding. I expect that, at an early date, the balance of the moneys will be paid.

page 1653

QUESTION

CANBERRA MILK SUPPLY

Mr BARNARD:
BASS, TASMANIA

– Is the Minister for Health aware that there is an acute shortage of milk in Canberra, and that action which it is proposed to take against those who keep cows for their own domestic use is likely to aggravate this shortage? Will the Minister inquire into the position, with a view to taking such action as will prevent a reduction of the number of cows in the Territory?

Mr HOLLOWAY:
MELBOURNE, VICTORIA · FLP; ALP from 1936

– The opinion seems to be widely held in Canberra that there is some - legal restriction upon the importation of milk into the Australian Capital Territory from outside areas. That is not so. Those who want to bring in milk are free to do so provided they supply the Department of Health with the names and addresses of the persons from whom the milk is to be obtained, bo that the department may take precautions to safeguard the health of the people. -Mr. Calwell. - There is an ordinance which forbids the importation of milk into the Territory.

Mr HOLLOWAY:
MELBOURNE, VICTORIA · FLP; ALP from 1936

– No, there is not. No doubt, the milk shortage would be aggravated if the number of cows in the Territory were reduced, but I do not think that that comes within my province.

page 1653

QUESTION

WOMEN’S AUXILIARY AUSTRALIAN AIR FORCE

Mr CONELAN:

– Recently, I brought under the notice of the Treasurer the cases of several young women attached to his department who have been refused permission to volunteer for the Women’s Auxiliary Australian Air Force. Has he yet made arrangements for the release of these women so that they may perform war service?

Mr CHIFLEY:
Treasurer · MACQUARIE, NEW SOUTH WALES · ALP

– It is true that the honorable member made representations to me for the release of two female employees of the Taxation Department, and many similar requests have been received in respect of employees of the department in the States. There is a shortage of staff in the Taxation Branch, and almost 1,000,000 additional assessments have to be sent out this year. Therefore, it is impossible to release every employee who wishes to join one of the women’s auxiliary services. However, the matter is being examined, and when the present rush of work is over, as many employees as possible will be released.

page 1654

QUESTION

DELIVERY OF BREAD

Introduction os Zoning System.

Mr HUTCHINSON:
DEAKIN, VICTORIA

– Can the Minister for War Organization of Industry say what has been the result of the recent discussions between his department and the Victorian Government regarding the zoning of bread deliveries in Victoria? Will the Minister take into consideration the effect of zoning on country storekeepers, who are also butchers and bakers, seeing that conditions in the country are altogether different from those in the metropolitan area?

Mr DEDMAN:
Minister for War Organisation of Industry · CORIO, VICTORIA · ALP

– Negotiations are proceeding between the Victorian Government and my department regarding the zoning of bread deliveries in the metropolitan area.

Mr Hutchinson:

– -Have they broken down ?

Mr DEDMAN:

– No, they are still going on, and I do not propose to say anything more on the subject until they have concluded. It is not at present proposed to introduce zoning in country areas.

page 1654

QUESTION

BEER RATIONING

Mr JAMES:
HUNTER, NEW SOUTH WALES · ALP; LANG LAB from 1931; ALP from 1936

– I desire to ask the Minister for Supply what has been the effect of the rationing of beer this year by reducing supplies by 35 per cent, of the average January and February sales * Is it not a fact that when the hotels run out of beer, many persons, including soldiers, consume “ plonk “ and other cheap wines to the detriment of their health ? Does the Government propose to remove the restrictions on the sale of beer in industrial centres?

Mr BEASLEY:
Minister for Supply and Development · WEST SYDNEY, NEW SOUTH WALES · ALP

– The Minister for Trade and Customs controls the rationing of beer. I am aware that complaints of a shortage of supplies have been received from centres where large numbers of workers are employed.

Mr James:

– And also where large bodies of troops are stationed.

Mr BEASLEY:

– That is so. I shall bring the representations of the honorable member to the notice of the Minister with a view to seeing whether action can be taken to overcome the difficulty.

page 1654

QUESTION

MAN-POWER IN RURAL INDUSTRIES

Mr MARWICK:
SWAN, WESTERN AUSTRALIA · CP

– When does the Minister for Labour and National Service expect to be in a position to make to Parliament his promised statement concerning a register of seasonal workers, and the Government’s manpower proposals in relation to the rural industries to which I referred on the 20th May last?

Mr WARD:
ALP

– I hope to be able to make the statement early next week.

Mr BADMAN:
GREY, SOUTH AUSTRALIA

– Recently, I applied to the military authorities for the release of a man from the Army so that he might help his father with seeding operations, and I have received the following reply, signed by the commandant of the area:–

S.55026 Sapper Heinjus, P. J.

Receipt of your letter of the 19th May, 1 04.2, relative to the above-named soldier ia acknowledged.

General Head-quarters memorandum 43910 in relation to leave far seeding purposes states: “ Other ranks who have not completed three months’ training will not be granted leave.”

Tn view of the fact that the above soldier »~as not enlisted until the 10th March, 1942, leave for seeding purposes cannot at present be approved.

Will the Minister for the Army make a statement clarifying the position regarding the release of men from the Army for seasonal work in rural industries? Statements have been made that the Government proposed to release rural workers, and I should like to .know whether this applies to those already in camp, and to others who will be called into camp in the future.

Mr FORDE:
ALP

– I shall make inquiries immediately, and a statement will bp made on the subject to-morrow.

page 1654

QUESTION

APPLES AND PEARS

Mr RYAN:
FLINDERS, VICTORIA

– Some weeks ago, I asked the Minister for Commerce whether he could inform the House of the policy of the Government regarding next season’s apple and pear crop. Is the Minister yet. in a position to make a statement on the matter! If not, when does He expect to be able to do so?

Mr SCULLY:
ALP

– It is true that some weeks ago the honorable member asked me to announce the policy of the Government regarding next season’s apple and pear crop, but to date, the Government has not considered the matter. I shall bring the representations of the honorable member to the notice of Cabinet so that an early announcement of policy may be made.

page 1655

QUESTION

BROWN-OUT REGULATIONS

Mr WATKINS:
NEWCASTLE, NEW SOUTH WALES · FLP; ALP from 1936

– Does the Minister for Home Security consider that it is necessary to impose a total black-out in Canberra, in view of the fact that the military authorities have advised that a brown-out is sufficient in coastal cities and districts? I ask the question because many men and women are obliged to work until a late hour in Canberra, and the retention of the black-out is not in the interests of their safety when they are returning to their homes.

Mr LAZZARINI:
Minister Assisting the Treasurer · WERRIWA, NEW SOUTH WALES · ALP

– At the request of the service chiefs, the brown-out has been enforced in capital cities and in towns and districts situated within 100 miles of the coast. Authority to order measures for the purpose of damping down sky-glow has been vested in State Premiers. In the Australian Capital Territory, the Minister for the Interior exercises that authority.

Mr Spender:

– Is it not a black? out?

Mr LAZZARINI:

– I have described it as a brown-out. I shall bring the honorable member’s question to the notice of the Minister for the Interior with a view to ascertaining whether the brownout restrictions in Canberra can be relaxed.

Mr STACEY:
ADELAIDE, SOUTH AUSTRALIA

– Is the Minister for Home Security aware that, under the brown-out or black-out scheme in Canberra, which in my opinion is dangerous to anybody who has to move abroad on a dark night, a glaring light is permitted to burn at the General Post Office each night? It is visible for many miles. Will the honorable gentleman inquire into the matter? It is the height of stupidity to have a portion of the city rigidly blacked out and permit a brilliant light to shine in another section.

Mr LAZZARINI:

– I shall . inquire whether the Post Office is offending, and, if it is, I shall bring the matter to the notice of the Postmaster-General immediately with a view to having the blackout completed.

page 1655

QUESTION

DAIRYING INDUSTRY

Mr PATERSON:
GIPPSLAND, VICTORIA

– In to-day’s issue of the Sydney Morning Herald, the chairman of the Commonwealth Dairy Pro duce Equalization Committee, Mr. James Purcell, is reported to have said that the man-power problem in the dairying industry has not been satisfactorily solved, and that much remains to be done in order to enable farmers to produce up to their normal capacity. Has the Minister for Commerce any information on the subject, and will he consider Mr. Purcell’s suggestion that, if adequate supplies of dairy products are to be maintained, the industry must be declared “ protected “ ?

Mr SCULLY:
ALP

– Although I have not had an opportunity to read the statement by Mr. Purcell, I know that any utterance which he makes regarding the dairying industry will have a solid foundation, because he is a recognized authority on the subject. The Department of Commerce has constantly watched the labour position in the industry, and the man-power authorities have been most reasonable in meeting its demands. Recently, the industry was declared “ protected “, and I have no reason to believe that the man-power authorities will alter that decision.

Mr FRANCIS:
MORETON, QUEENSLAND

– I ask the Minister for Commerce whether it is a fact that Great Britain has asked Australia for 70,000 tons of butter and 30,000 tons of cheese next season in addition to unlimited quantities of dehydrated butter and millions of cases of condensed milk and dried milk? Is the Minister aware that it was announced at a meeting of the Dairy Produce Control Committee that the principal difficulty in the way of supplying those requirements was the shortage of man-power? If so, will the

Minister give an assurance to the House and to the dairying industry that all the man-power necessary to enable Great Britain’s requirements to be met will be made available?

Mr SCULLY:

– Many factors operate to prevent the complete carrying out of our export contracts. As the honorable member is aware the principal cause is the lack of shipping. The Central Food Council has been established with the express purpose of watching both production and export. The export of dairy produce to Great Britain is agitating the minds of that council and of the Department of Commerce. Under no circumstances will the needs of Great Britain be overlooked.

page 1656

QUESTION

MR. BRIAN PENTON

Proposed Lecture Tour of United States of America

Mr CALWELL:
MELBOURNE, VICTORIA

– Has the Prime Minister yet ascertained who authorized the censorship authorities to prohibit American press correspondents from cabling to America their stories concerning the debate in this chamber last week on the desirability or otherwise of permitting Mr. Brian Ponton to leave Australia for the purpose of engaging in a lecture tour of the United States of America? If so, has the right honorable gentleman taken action to ensure that the cabling of such stories to America shall be permitted? Tn view of all that has been said on this subject, does the Prime Minister still propose to allow Mr. Penton to leave this country?

Mr CURTIN:
ALP

– Several news items relating to this matter were despatched abroad. No censorship ban was placed upon the transmission of such messages. As to whether the Government will permit Mr. Penton to leave the country, the matter still stands where I left it last week. The Government is not imposing a prohibition upon a newspaper editor going to the United States of America or to any other allied country unless he be indispensable to the War effort of Australia. As the military authorities do not regard Mr. Penton as being indispensable to our war effort, I do not regard him as being indispensable to myself.

page 1656

QUESTION

COAL-MINING INDUSTRY

Release of COAL-MINERS

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– In view of the continuance of petty strikes in the coal-mining industry, and the popular belief that the promoters of the stoppages arc eager to obstruct the war effort, will the Prime Minister consider the advisability of meeting the challenge to-day, instead of waiting for dangerous reactions to occur if a landing by the enemy seriously’ embarrasses the nation ?

Mr CURTIN:
ALP

– Tie whole subject of fifth-column work and sabotage is under the direction of the Military Intelligence authorities, with whose activities I do not interfere, because they are much more competent than I to deal with such matters. I propose to have a discussion to-morrow with the representatives of the coal-miners and the coal-owners. I cannot add anything fresh to what I have already said about the importance of coal production. I know that irritating forces are at work. What their origin is I do not know. No one has been able to place their finger upon it. This is not the only country in which this is occurring. I can only say that I hope for the best and shall do my best to get it.

Mr BRENNAN:
BATMAN, VICTORIA

– Before the House rises will the Prime Minister carry out his promise to give to honorable members an opportunity to discuss the whole position of the coal-mining industry? Honorable members on this side desire the opportunity to present the case from the point of view of the miners, giving the proper background and history.

Mr CURTIN:

– Last week the honorable member for Barker asked me whether I would provide an opportunity to the House to discuss coal. I mentioned what was being done and intimated that certain conferences were in contemplation. I hope that the conference to-morrow will be successful. In any event, I shall always be ready to give to the House opportunities to discuss matters of urgent public importance, and coal production in all its aspects is important; but. we have, to deal with a number of other matters which also are important. I wish to have the legislative programme which the Government has submitted, to Parliament disposed of as quickly as possible.

When that has been done, I shall endeavour to provide time for the_ discussion of other subjects which have net yet been discussed by honorable members.

Mr Brennan:

– Before the House rises ?

Mr CURTIN:

– Yes. I said last week that I sincerely hoped to be able to terminate these sittings at tho end of next week, and I stand to that hope.

Mr JAMES:

– Is the Minister for the Army aware that, in trying to secure the release of certain men from the Army, honorable members of this House may go round and round in circles, and return to the point whence they started? I have requested the Minister for Labour and National Service to secure the release from the Army of many coal-miners on account of the grave shortage of miners in the coal industry. The Minister has sent the usual letter to me stating that the matter has been placed in the hands of the Minister for the Army. But, when I write to the Minister for the Army, he tells me that the matter is in the hands of the Minister for La’bour and National Service. I want a show-down on this matter. If the Minister for the Army is satisfied that coal-miners are in the Army, will he give instructions for their immediate release?

Mr FORDE:
ALP

– It is the function of the Minister for Labour and National Service to determine whether particular men are required for industry or whether they should be made available for the Army. After men are called up for the Army it rests with the Army authorities to say whether they shall be discharged for service in war industries. There has been complete consultation between the Department of Labour and National Service and the AdjutantGeneral’s Branch of the Army on this subject. When it is found that miners, fitters or other skilled workers are not being employed in their skilled occupation in the Army, and that they are needed . elsewhere, they are released to follow their former occupation if it should be an essential industry.

page 1657

QUESTION

WERRIBEE BEEF

Mr RANKIN:
BENDIGO, VICTORIA

– Is the Minister for Commerce able to inform the House of

Identity of Economist - Reserve Stocks - Coupons

Mr HARRISON:

– Recently I asked the Minister for War Organization of Industry whether he could reveal to the House the identity of the economist who gave an interview to the Sydney Daily Telegraph on the subject of clothes rationing. When can I expect an answer to that question?

Mr DEDMAN:
ALP

– I have made certain inquiries into the matter, but I have not yet received any information upon it which I can impart to the honorable member.

Mr HOLT:
FAWKNER, VICTORIA

– Has the Minister for War Organization of Industry, or his department, been able to evolve a scheme which will, as far as practicable, give equal opportunities to all sections of the community to secure their clothing needs between now and the time when the rationing scheme will commence? Has his attention been drawn to predictions that, when rationing commences, the stocks in the hands of merchants will be such that the clothing supplies contemplated under the scheme will not be available? Has he any comment to offer regarding those predictions?

Mr DEDMAN:

– -My department has been watching the situation closely, and it is satisfied, as I am satisfied, that the best thing to do in the circumstances is to allow the restrictions on clothing sales to continue in force as at present. We are gratified to know that stocks of clothing are being built up so that, when rationing, does come into operation, there will be an adequate pool from which to draw. The information, in the possession of my department is that stocks will be adequate.

Mr BADMAN:
GREY, SOUTH AUSTRALIA · UAP; CP from 1940

– Will the Minister for War Organization of Industry inform me whether the method applicable to petrol rationing, under which retailers are required to furnish coupons to wholesalers in order to obtain stocks of petrol for retail sale, will also be applied to clothes rationing?

Mr DEDMAN:

– The rationing system will be administered by the Minister for Trade and Customs, to whose notice I shall bring the honorable member’s questions. I shall give him a reply at a later date.

page 1658

QUESTION

ADVISORY WAR COUNCIL

Mr BRENNAN:

– I ask the Prime

Minister who determines the questions to be discussed bythe Advisory War Council ?

Mr CURTIN:
ALP

– The matters which are submitted to the council appear on an agenda-paper which is prepared by myself, but any member of the council is free to raise any other matter which he considers to be relevant to the work that the council has to do.

page 1658

QUESTION

SUPERPHOSPHATES

Transport Difficulties

Mr COLLINS:

– In view of the great difficulty being experienced by farmers in some Riverina districts in securing supplies of superphosphates, owing to congestion on the Victorian railways, will the Minister for Transport, in cooperation with the Victorian Minister for Railways, do what he can to expedite the delivery of superphosphates so that farmers may proceed with their sowings beforeit is too late to do so?

Mr GEORGE LAWSON:
Minister Assisting the Postmaster-General · BRISBANE, QUEENSLAND · ALP

– I shall be pleased to co-operate with the Victorian railways authorities in this matter.

page 1659

QUESTION

QUESTION

SYDNEY GRAVING DOCK

Mr PERKINS:

– I ask the Minister for Home Security whether he is aware that, although Sydney is subject to brown-out regulations, the locality ‘of the graving dock that is being constructed is a blaze of light every night? Does he realize that this light would make an effective target for the enemy!

Mr LAZZARINI:
ALP

– The graving dock is being constructed in conformity with an agreement made at a conference between my department and certain State authorities. It is considered that the risk of being without a graving dock is greater than the risk of lighting the area so that continuous operations may be maintained. It is on the principle of putting first things first that the area is being illuminated, for by that means work is possible at high pressure for 24 hours a day.

Mr Perkins:

– It is making the Sydney brown-out a farce.

Mr LAZZARINI:

– That cannot be avoided.

page 1660

QUESTION

UNIFORM INCOME TAXATION

Position of State Taxation Officers

Mr WILSON:
WIMMERA, VICTORIA

– In view of the apprehension that exists among many State public servants, that in the event of the Government’s uniform taxation proposals becoming operative their standards of salaries, wages and conditions of employment, including increments, will be adversely affected, as has happened in the past in Victoria when that State has found itself in need of additional revenue, I ask the Prima Minister whether he can give an assurance that a suitable tribunal or authority will be provided to protect these groups from undue exploitation in such circumstances?

Mr CURTIN:
ALP

– That involves the question of whether the Commonwealth Government should set up a tribunal to determine the conditions of State public servants. I shall consider the matter and give to the honorable member a reply at a later date.

page 1660

NAVIGATION BILL 1942

Bill received from the Senate, and (on motion by Mr. Scully) read a first time.

page 1660

LIGHTHOUSES BILL 1942

Bill received from the Senate and (on motion by Mr. Scully) read a first time.

page 1660

INCOME TAX (WAR-TIME ARRANGEMENTS) BILL 1942

Second Reading

Debate resumed from the 27th May (vide page 1618), on motion by Mr. Chifley -

That the bill be now read a second time.

Mr MENZIES:
Kooyong

.- The proposals now before the House are of far-reaching importance. In one aspect, they are of revolutionary importance. They affect the whole of the relations between the Commonwealth and the States in time of war, and perhaps also in time of peace. Consequently, I desire to do what other honorable members have done, namely, address myself to the. subject with due gravity. Aa a first-elam problem, it merits first-class consideration. A good deal has already been said by different honorable members concerning their general picture of what the Australian Constitution ought to be. We have had an extraordinarily interesting speech from the honorable member for Bourke (Mr. Blackburn), speaking against the bill, but as a man who believes - as’ I understand him - in full legislative powers for the Commonwealth Parliament. We have had speeches from this corner of the House, from some of my friends from South Australia in particular, delivered for the most part from the point of view of persons who are not favorable to full legislative powers for the Commonwealth. My own view in respect of the general matter may be stated very briefly.* I do not want to argue it, because it does not seem to be entirely material to the bill ; but if I had to sum it up, I should say that, in the first place, it seems to me that in Australia there are certain things which, constitutionally and from a government point of view, are very desirable. The first is that there shall be a new Constitution. I have arrived at that conclusion after years of experience in both State and Federal politics. I look forward to the time when, in Australia, we shall have a new Constitution, if possible on the South African model; because I believe, not in the abolition of State Parliaments - it would be absurd to think of all law-making and all administration being centred in this capital - but in a system of government in which there would still be State legislatures - as there are in South Africa - yet in which the Commonwealth Parliament would have general legislative authority. Paradoxically, I consider that we shall never achieve complete ease in the decentralization of functions in Australia until we have a high degree of centralization of power.

Mr Calwell:

– Paradoxically, the right honorable .gentleman is preaching Labour policy.

Mr MENZIES:

– I am preaching my own policy, and I did not obtain it from a platform that was provided for me. I have arrived at it by a slow progression over a considerable number of years. In the second place, I believe - and this does not involve a constitutional change - that as part and parcel of some such idea there should be a very considerably enlarged Commonwealth Parliament; because I consider that an enlarged Commonwealth Parliament would produce greater resources administratively, and in the long run would have greater authority in the electorate. In the third place, 1. believe! - and I come now to a point a little nearer to the matter under discussion - that there should be the fullest access by the Commonwealth Government and Parliament, which are charged with the conduct of the war, to the financial resources of all Australians, wherever they ma.y live. That is a very sound principle; and it is none the less sound because. m a general way, I take it to be the principle which the Treasurer (Mr, Chifley) had in mind when he approached this problem. It is a principle fr:m which I do not dissent. In the fourth place, I should be prepared to subscribe to the principle of uniform taxation for uniform purposes. I make (bat qualification, because it seems to me idle to talk about uniform taxation when taxation can never be separated from the purposes for which it is raised; and the purposes for which the taxation now proposed to be raised will be spent are not uniform but, in fact, vary as between State and State.

Mr Rosevear:

– Then there would never be uniform taxation.

Mr MENZIES:

– There would; because, if we had a central legislative authority in accordance with the first principle I have set out, we should be able to have uniform taxation, and taxes would be raised for purposes that were essentially uniform. Having stated those four points, let me say that not one of them solves the problem, but that each merely propounds a problem. I emphasize that, because I point out that the problem before this House is not by any means solved by the statement of any honorable member, “I believe in uniform taxation “. The problem is, how to achieve uniform- taxa tion. Consequently, the question before this House is wholly one of method, not of objective. That statement, I put it to honorable members, is very much reinforced when one recalls that the scheme before us, whilst professing to achieve uniform taxation, does not, in fact, achieve, anything of the sort. What it does, is to add a non-uniform State contribution to a non-uniform Commonwealth contribution, and to take the necessary steps in order to see that the sum total of those two elements in each State is the same. That is not uniform taxation: it is a combination of two entirely non-uniform elements. Let us take, for instance, the Victorian taxpayer, exemplified by my friend the honorable member for Melbourne . (Mr. Calwell) - if I may select him. He pays the same total tax as the New South Wales man with the same income; he receives the same measure of defence - because defence is nationally, not parochially, disposed ; he receives less of State and other social services, consequently, by a process of subtraction, he pays more than the corresponding New South Wales man for the degree of defence which both enjoy in common. I say at once to the Treasurer that it is extremely difficult to avoid such anomalies. I do not know that any scheme may be devised in Australia, short of complete unification, which will get rid of those anomalies. I mention them merely in order to point out that the use of the expression “uniform taxation “ as a justification for these measures is merely the use of a piece of rhetoric, which is not a substitute for accurate argument. The real, immediate question, is not to be solved by reference to either the general principles with which I began, or the particular criticism that I make of the phrase “uniform taxation”; because, from the point of view of practical government at a time like this - and that is what every government must be concerned with - the question is whether .the scheme is as good a practical attempt as possible to simplify taxation, and to equalize the contributions of citizens. After a great deal of thought on the matter I have reached the conclusion that the question cannot be answered “ Yes “, but that it should be answered “ No “, and there are two principal Teasons for nay coming to that conclusion. I believe that .this is not the best ‘practical way to achieve ‘the desired result, because I believe that the ,best practical means were those embodied in the Fadden budget of last year. The Leader of the Opposition. (Mr. Fadden), when Treasurer of the Commonwealth, proposed to the State Premiers that they should vacate the field of income tax in favour of the Commonwealth. He thereby recognized the authority of the State governments within their own domain, and asked them to enter voluntarily into an arrangement with the .Commonwealth by which they would go out of the income tax field, and the Commonwealth would come in to -the extent that the field was thus -vacated. The Premiers, with one exception, said that they would not agree. Subsequently, the right honorable gentleman, as Prime Minister, .approached the problem again, and asked himself what was .the best course to pursue in the absence of an .agreement with the States. He produced a carefully worked out budget providing for a system of post-war credits which recognized the inequalities of State taxation, and rectified them as far as possible by giving varying -rates of most-war credits to the taxpayers in the various States. Tn my opinion, the right ^honorable gentleman acted with .correctness and wisdom, and I see no occasion whatever for deserting a well-considered scheme of the kind which he put before Parliament last year. I do not propose to do so. I believe that his plan was the better one, and I maintain my right to say that I want that plan rather than the one which is now before “the Bouse. .1 mow come to my second reason for disapproving of the Government’s proposal, and I approach the matter with a good deal of diffidence, because this dwelling upon technical considerations is ian ill business. However, my second reason is that I .have the gravest doubt of the ‘constitutional validity of the Government’s plan. I do not make that statement lightly. On the whole, I regret that the Prime Minister has not thought fit to table the opinions obtained by the Commonwealth <mi this point. I at -once admit that it is the practice not to “table opinions received by the Crown, but, in a case like this, where there are no facts that are special to either side, where all the facts ‘are known, where all the sections of the Constitution are known, and where all the decisions of the -court are known, . and all that remains is to go through a .process of argument and to draw inferences, it might have been of assistance to honorable members to have before them a view different, from the one which I am about to express. I may shorten my remarks by saying that the conclusions I have arrived at are not dissimilar to those expressed by the honorable member for Bourke (Mr. Blackburn)., though in one or two places our lines of argument may vary. All views on this subject must, of course, be tentative, because, in the last resort, no one will know what the constitutional position is until the High Court has spoken. The line of High Court decisions on the Constitution has never been constant. T-n the course of my preparation on this matter, I had occasion to loot up a famous decision given by the High Court about twenty yeaTS ago upon what is known as the Engineers’ case. At that time, I was, as honorable members opposite will be pleased to know, appearing before the court as the representative of the engineers. In that decision, the High Court of Australia reversed practically the whole of its previous decisions on the relations between the Commonwealth and the States. Therefore, I speak as every lawyer must speak - tentatively and with diffidence - .but I make bold to take up the time of the House because, as honorable members know, I have myself had considerable experience of constitutional matters before the High Court

Now, what is the substance of the Government’s .scheme ? That is the first question which any lawyer must put to himself, and the .court must put to itself. Under the scheme, it is first proposed to have a uniform, single income tax in Australia. In the second place, the scheme provides for the distribution of a part of the proceeds of the tax by way of financial .assistance to the States ‘each State’s allowance being calculated by a Deference to its income tax revenue over two selected years. In the third place, tie scheme proposes a penalty so great- as to ‘be prohibitive upon the imposition of a State income tax, and it- compulsorily transfers aH State income- tax departments and records, to the Commonwealth..

Honorable members ‘will’ note that I. describe it as a penalty on the imposition of a State income tax, and a little reflection will’ show that that is so. If the Government of Victoria decided, notwithstanding this scheme, to impose a State income tax, it would forfeit over £6;000j000 which it would otherwise collect from the Commonwealth. In other words, it would be fined £6,000,000 for exercising- its taxation powers; Every time a notion- exists that it would be illegal to do: something -directly, the in.stinct of the draftsman - and I speak with great respect of the Commonwealth Parliamentary Draftsman, who laboured valiantly with me for some years - is to< ask himself how he car get round the difficulty: Can he do indirectly what perhaps he would not be allowed to- do directly ? This instinct is a healthy one, and I would be the last to condemn it. If you cannot go over a hill’,, it- is sometimes desirable to go round it, but you are always forced to come back to this consideration : The real test of the validity of amy law is. not the wording of the- law, but its: substance. That is a principle which has been, well established for many years. It was the principle upon which the High. Court of Australia disallowed the “new protection” 3’5 years ago, because the learned judges declared that it professed, on the face of it, to be an excise- law, whereas- it was in reality an- industrial law.

The last example of that interesting principle: may be of interest to honorablemembers. It arose from action taken by the province of Alberta, in Canada, of which we have heard, and of which the Minister for- War Organization of Industry (Mr. Dedman) certainly- has heard. The- province of Alberta, acting, as it conceived, under the powers given, to the provinces in the Canadian. Constitution which is embodied in the British North America Act, set out to impose a tax on banks. That tax was very heavy indeed. The province sought to upholdit by declaring that it was a tax “ in order- to the> raising- of’ a revenue for provincial1 purposes “. The Government of Alberta-, said in effect, “:We have a- perfect right to- impose a tax- to raise revenue- for’ provincial purposes. This! is-, a tax which will raise revenue, and the province willget it. Therefore, it is fo* provincial purposes.”’ The- Privy Council, agreeing- wit]]the. Supreme Court of Canada, came- to the conclusion unanimously that-; Enoughit a-p-pea-red to be a tax on- banks- for thepurpose of raising’ a- revenue, it was, intruth and in* fact, designed to prohibit the operation- of banking, because it was a prohibitive tax. Therefore1, the- law was invalid^ because the province had nopower to- ma’ke- a law that prohibited the carrying on of banking within its boundaries’. That case, decided1 as recently as 1939, is- a- very modern and excellent example of the: principle, to which I have referred. That is- the sub- stance of this scheme.. Whatever the: form, of words we may use, this scheme is designed, among other things, to prohibit,, in fact,, the exercise by the States of their existing power to impose an income tax. Is that valid? That,. I believe, to be- the short- question. I only wish that the short question would admit of an equally short- answer. In one sense, the answer may be, “ I do not know “, because nobody yet knows- it. But in the other sense, I must discharge what I believe to be my responsibility to the House, by endeavouring to- give some indication- of the answer to- that question, “ Is- it valid? “ All honorable members,, particularly those who- think that the. problems of the ‘Constitution are only for lawyers, should occasionally read the Constitution.

Mr Calwell:

– Lawyers get most out of it

Mr MENZIES:

– They do; that is a most unhappy truth. Yet the Constitution, as the frame of government in this country, the charter under which, this Parliament and the- State Parliaments exist,, merits a great deal of thought and study by all honorable members. I remind, the House, at this juncture, of some of the leading- provisions. If honorable members will read what are commonly called the “ covering clauses “ of the- Constitution, they will find that what was established was- a Commonwealth,. and that the Commonwealth was to consist not only of the Commonwealth in the sense in which we use the term to-day, but also of certain States. In other words, it was a federal system. I have already indicated that I should prefer to see, in due course, another system, but for better or worse, the present system is a federal system. We have a Federal Parliament and State Parliaments, Federal powers and State powers, and co-ordinate authorities, each issuing orders to the private citizens. Turning from that to the Constitution itself, we find that the Commonwealth Parliament is set up, and the legislative power is vested in it. Section 51 contains, for the most part, the powers of this Parliament. I propose to refer to three of them, and I direct attention to the language that is used -

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to -

Taxation; but so as not to discriminate between States or parts of States.

The naval and military defence of the Commonwealth and of the several States . . .

Matters incidental to the execution of any power vested by this Constitution in the Parliament

The taxation power is not limited in terms in placitum (ii), except that there shall be no discrimination between States and parts of States, but it is limited by the opening words of the section. The taxation power, in other words, is to be exercised “ subject to this Constitution “, and within the limits of a law for the peace, order and good government of the Commonwealth, not of the States. After that, the Constitution proceeds to do one or two things which have a great bearing on this problem. So far, all those powers in section 51 have been stated as powers given to the Commonwealth, not as powers taken from the States. As the lawyers say, they are “ concurrent powers concurrently exercised by the Commonwealth, and they have a paramount operation by virtue of section 109. Section 52 gives to this Parliament three exclusive powers. One of them is to make laws with respect to the Seat of Government; another refers to the transferred Public Service departments; and the third relates to “ other matters declared by this Constitution to be within the exclusive power of the Parliament “. Section 90 makes exclusive the power to impose customs and excise duties and to pay bounties. There we have a little group of exclusive powers, expressly so declared by the Constitution. Unless the Constitution so provides, all the other powers in this Constitution are not exclusive, but concurrent. I say that subject to one comment. In the Josephs case during the last war, three judges, including Mr. Justice Isaacs as he then was, came to the conclusion that the defence power was an exclusive power.

Mr CURTIN:
ALP

– Although it was not contained in the list of exclusive powers ?

Mr MENZIES:

– The judges said that it was, because the Defence Department was one of the transferred departments. For that reason, Their Honours declared that it was an exclusive power. With very great respect to those three learned judges, I find difficulty in accepting that view. I do not believe that the defence power is an exclusive power, and I consider that abundant support for that opinion is to be obtained from section 114 of the Constitution, which expressly provides that a State shall not, without the consent of the Commonwealth, raise any naval or military force. Why we should need to prohibit a State from raising a military force if the defence power were an exclusive power to the Commonwealth, I cannot understand. I shall one day be very interested to see whether the High Court follows the decision in the Josephs case on that point. That, however, is probably by the way. Then, section 96, which is one of those relied on by the Government, provides for the grant of financial assistance to the States. Let me say at once that, although the taxation power cannot be used in a discriminatory fashion, because section 51 says so, section 96 can be used discriminatingly. There is no prohibition of discrimination in section 96. The Privy Council made that abundantly clear, if it needed to be made clear, in the flour tax case, Moron’s case two years ago. Then, section 99 - I refer to this; I shall not go back to it again - provides that -

The Commonwealth shall not by any law or regulation of trade, commerce or revenue, give preference to one State or any part thereof over another State or any part thereof.

do not rely on that for the purposes of the view that I am now putting, because I do not know that by any law or regulation of trade, commerce or revenue, the Commonwealth Government has given preference to one State over another. My view on that can be summed up thus : 1 do not find in this scheme any discrimination in point of Commonwealth taxation. Therefore, there is no violation of the later words of section 51 ii. I think there is discrimination in the matter of grants or reimbursement, but section 96 does not prevent it. Therefore, I do not rest my opinion on discrimination, although I notice that some lawyers, whose opinions are entitled to weight, did rest their opinions on that. I have said that there are two sections in the Constitution which deal with the position of the States, section 106 and section 107. Section 106 provides - and I emphasize these words - that -

The Constitution of each State of the Commonwealth shall, subject to this Constitution, continue as at the establishment of the Commonwealth or as at the admission or establishment of the State as the case may be until altered in accordance with the Constitution of the State.

Section 107 says -

Every power of the Parliament of a Colony which has become or becomes a State shall, unless it is - by this Constitution exclusively vested in the Parliament of the Commonwealth

Nobody could suggest that the taxation power is exclusively vested in the Parliament of the Commonwealth - or withdrawn from the Parliament of the State, continue as at the establishment of the Commonwealth or as at the admission or establishment of the State as the case may he.

There we have the clearest possible statement. We are giving a series of powers to the Commonwealth, some exclusive and some concurrent. Where the power is exclusive the State cannot make a law. AVI) ere it is concurrent the State can make a law; there may be conflict, and, if there is, what can happen? That is answered by section 109, which pro- vides -

When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail and the former shall, to the extent of the inconsistency, be invalid.

I apologize for having taken up the time of honorable members, but what I have said gives, within a brief compass, a sketch of the relevant provisions of the Constitution, and that enables me to ask my first question: Is this proposed law, which prohibits the imposition of an income tax by a State, a law with respect to taxation within the meaning of the Commonwealth Constitution? Now, as to that, I have no hesitation whatever in saying that in my opinion it is not. And there is an abundance of authority to support that view. I have three reasons for saying that it is not, and I shall mention each of them quite briefly. In the first place, the proposed law in this case is, in my opinion, not made for the peace, order and good government of the Commonwealth with respect to taxation. It seeks to impose a tax partly for Commonwealth purposes and partly for State purposes.

Mr Curtin:

– Does the right honorable gentleman not regard the revenue raised under the provisions of section 96 as revenue raised for the Commonwealth?

Mr MENZIES:

-I do not, in point oi substance, because I believe that in that case the transaction is merely colourable. I would find it difficult to stand up before any tribunal and argue that those sums were raised, not for State purposes, but for the purposes of the Commonwealth, those purposes being that the Commonwealth should then hand the money over to the States. Any tribunal would say : “ You have raised this money for the States

Mr CURTIN:

– To discharge functions, for example, education, which it is not practicable at present for the Commonwealth to discharge.

Mr MENZIES:

– Exactly; in other words, to discharge State functions - moneys raised for the express . purpose of being paid to the States for the discharge of State functions. I am at a loss to understand how that is a Commonwealth taxation law at all. It is not a matter which merely rests upon my unaided view, (because I am happy to say that this problem was very closely considered by at least two learned judges. Although the matter was not strictly necessary for the decision of the case, in West v. the Commissioner of Taxation, on which the question was whether the States -could tax pensions paid under the Commonwealth Superannuation Act, the matter was looked at by His Honour Mr. .Justice Evatt and also by His Honour Mr. Justice Owen Dixon. J[ say with infinite respect that «ach of those learned judges was a man of very special and outstanding -knowledge of constitutional problems. His Honour Mr.. Justice Evatt -said this - .. . . nor can the power of the Commonwealth Parliament under section 51 (2) to .make laws with respect to taxation assist, because that power relates only to taxation by the Commonwealth for the purpose of its raising -a Commonwealth revenue. lie went on to quote with approval some words written by .Sir Robert Garran in The Case for U.n&on at the time of the secession trouble in Western Australia. He quoted this passage with respect to taxation - .It can hardly be questioned that these words refer only to Commonwealth taxation uniform throughout the Commonwealth for Commonwealth purposes and do not cover control of Stasias taxation. “ Do not cover control of State taxation”! That passage -from Sir Robert ©arras’s argument made a profound impression “upon Justice Evatt’s mind because, in a subsequent case, he came back to it and referred to it, as the learned and honorable member for Bourke will remember. Subsequently, in the same judgment, lie said -

Ne doubt the decision to reject the general rule of .mutual immunity of ‘instrumentalities which was a .rule which provided for mutual non-interference, the State with the (Commonwealth and the ‘Commonwealth with the State, a doctrine which was rejected in substance in the Engineers’ case - was a wise one .and it must be followed .by us. But .ii is quite erroneous to regard the engineers’ case as having established a new and valid -constitutional principle under which- let me emphasize these words - either by direct declaration as to the termination ‘of specified State legislation, or as to the Stated legislative power, or :by indirectly creating .conditions or qualities .under Commonwealth legislation which will achieve the same objectives,

What a perfect description of the matter which is before us .now - the Commonwealth Parliament is .enabled; by the exercise of its -own legislative power., to .rid it? elf of any .State legislative “ interference”’ or “impediment”.

That is the clearest possible expression of the argument with which I ventured to open this phase of my .submission. I need not add to it. That is my first reason : that this Is not a Commonwealth taxation law.

My second reason is - and honorable members will appreciate it from the sections of the Constitution which I have read - that this scheme as an endeavour to make the taxation .power exclusive, .although the Constitution has made it concurrent. I emphasize that it is not for us to alter the Constitution, whatever we may think of it. If it states that this power is concurrent and that that power is exclusive, it is not for ns to say, “ Well, we think you did it wrongly; we are going to convert a concurrent power into an exclusive one

Mr James:

– We are not doing this permanently.

Mr MENZIES:

– -‘This problem cannot be affected by the duration of the law. It can be affected only by the nature of the law. If this Parliament can validly prevent a State from imposing income tax, it can validly prevent a State from imposing any tax, and therefore it can make the whole taxation power an exclusive power. Whether this Parliament determines to do this for two years or two thousand years, that does not affect the problem at all.

My third reason is that this scheme, by depriving the States of an important concurrent fiscal power which the Constitution has reserved for them, violates the federal nature of the Commonwealth Constitution. We cannot overcome any of our troubles by wishful thinking. Time and again I have heard constitutional matters discussed in an atmosphere of irritation, as though to say, “ Well, we are the National Parliament and we ought to have the power “. Frequently I, too, have thought that we ought to ha;ve certain powers, but that does not answer any questions.. We must always come back to the question:. “Do we possess that power V - not “should we” but “ do we “.. If the Commonwealth Parliament cam deprive the State Parliaments of their power to raise revenue by direct tuxes,, and: the Constitution deprives- them of” the power- to raise it by indirect taxes, then the States- are left without financial resources. A government, with no financial resources is- a non-existent government.

Mr Spender:

– At what point does the Commonwealth’s taxing power cease If the Commonwealth taxes incomes to the extent of 60 or 70” per cent., it excludes the States to that extent.

Mr MENZIES:

– To whatever extent one parliament taxes the people, the field that is available for the other parliament i3 diminished’. That is a matter of arithmetic. &it these powers in relation to taxation are concurrent. The Commonwealth has power to tax my honorable friend, and” the State has power to tax him also.. If there should come a time when the Commonwealth so taxed! him, and every body else, that the- State could not impose a tax at all, it could, very well be said, that the imposition of. such a grotesque, tax by the Commonwealth, was,, in reality, a law to prohibit the State from imposing a tax. But the last thing in the world that we should, endeavour to do in these matters is to set up theoretical questions and’ endeavour to answer them. The Commonwealth has not said to the States, that it will take all the. money that every body has,, but it has said that the States shall not. impose. taxes on in? come. It is the validity of. that law which now comes into question. I have said that this violates, the federal principle of the Constitution.. I know that,, in some quarters,, it is considered old-fashioned to talk, about, the federal principle of the Constitution; but. I am. discussing the Constitution that we- have, not the. constitution that exists- in the clouds.. The Constitution that we have gives full recognition- to the continued existence of States, and it is as such a Constitution that we must consider it.. Mr. Justice Dixon, in the case in which Mr. Justice Evatt made certain observations which I have already mentioned, approved of a passage f from a judgment by Mr. Justice Isaacs referring- to - the natural’ and fundamental principle that, where, by the one constitution separate and exclusive governmental powers have been allotted to two distinct organisms, neither is intended in the absence of distinct provision to the. contrary to: destroy or weaken the capacity or functions expressly conferred on. the. other.

That is a recognition of the federal principle and the continued existence of States. ExtemssioTL of time. granted.. Mr-. Justice Evatt, m. the- same case, made the- following- statement on: this point: -

Something of what I mean1 is indicated? by Gavan Duffy J>.. iE his dissenting, judgment in the: engineers’ case, where he declares that “ the existence of the State as a polity is: as essential to the- Constitution as the existence of the. Commonwealth “.

Those statements by Mr. Justice Evatt and Mr. Justice Dixon are not passages from- the judgments of lawyers who take a conservative, or narrow, view of constitutional problems. On the contrary, they are passages from the judgments of men who have, clearly and notoriously taken a liberal view of constitutional problems, and who have subscribed, to the widest interpretation of.” Commonwealth powers. Nevertheless, each of them unhesitatingly said that we must never lose sight of the fact that the Constitution is a federal constitution- and that the continued existence of the States is. just as much an ingredient of. it as is the continued existence of the Commonwealth.. For the three reasons that. I have stated I am- unable at present to believe that this law can be upheld under the taxation powers, though, no. doubt,, I shall be required so to believe if the High Court decides against my view. I. have- a- shrewd suspicion that those who drafted these bills hold a similar view, because I have not failed to notice that they axe expressed, to endure for the duration, of the war and for twelve, months- thereafter,, and that certain expressions have been used every now and then, relating this matter to the- defence and security of Australia. In other words, I do- not really believe, that the Government is resting .this matter on the taxation power- I believe that it is- resting it on the war power. I say to the honorable member for Warringah (Mr. Spender), who interjects, that I also hare a shrewd idea that he probably agrees with my argument up to now, though he will disagree with the rest of it.

The question of whether what the Government is now proposing can be done under the defence power of the Commonwealth is, to my mind, immeasurably more difficult to answer than the firstquestion I asked. All I can say about it is that I am left in grave doubt as to whether it can be done. We talk a great deal in Australia about “the war powers “ of the Commonwealth and most of us have a light-hearted idea that, whatever may be the position in peace-time, in war-time we may do anything. I notice that the Minister for the Army (Mr. Forde) is smiling. He, like the rest of us, has no doubt been positively corrupted by the National Security Act, and he believes that whenever any problem arises in war-time all that needs to be done is to issue a few new regulations under the National Security Act.

Mr James:

– The right honorable gentleman was Prime Minister when the National Security Act was passed.

Mr MENZIES:

– I know it; and I know all about the National Security Act. Aa a Parliament and a community we have light-hearted ideas about what can be done under “ the war powers “. But what “the war powers” mean passes the wit of man to define. At any rate, it passes my wit to explain or to understand the defence power of the Commonwealth. Honorable members will recollect that this power resides in the simple words : “ The naval and military defence of the Commonwealth and of the several States “. During the last war, a series of cases which came before the High Court for consideration required an interpretation of these words. One case arose out of the prosecution of a bake in what is now my electorate for selling bread at too high a price. In the case, Farey v. Burvett, reported in C.L.R. 21 the High Court was asked to decide whether a regulation fixing the price of bread came within the defence power of the Commonwealth. An unhappy lawyer argued before the court that: “ The naval and military defence of the Com monwealth “ means naval and military defence just as the expression “ white and brown horses “ might be thought to mean “ white horses and brown horses “. But the High Court said, “No, it means the defence of Australia by whatever means, including naval and military defence “. The then Chief Justice, Sir Samuel Griffith, with incisiveness but by a process of reasoning which I have never been able to understand, said that “naval and military” were words not of limitation but of extension! Consequently, we were cast upon a wide and almost uncharted sea. By and by we reached the stage at which it was said and believed that so long as certain steps might be thought by the Executive to have some relation to the effective prosecution .of the war, they could be held to be within the defence power of the Commonwealth. The words of the Constitution were given an interpretation in war-time which they would never have been given in peace-time. Th, result is that he would be a wise man who, to-day, would set any definition to the words. But I should like to set up this limitation at least, that, however wide the defence power of the Commonwealth may be under the interpretation that has been given to it, it is still one of the powers contained in section 51 of the Constitution, and because it is one of those powers, it is controlled by the opening words of the section, which include “ subject to this Constitution “. What do those words mean? I should be surprised if any court could come to the conclusion that the words did not mean, at any rate. “ subject to all the other sections of this Constitution “. Consequently sections 106 and 107 of the Constitution would be included, and those are the sections which recognize and require the continued existence of the States-. If language means anything at all - and I am becoming somewhat sceptical on even that point - the words mean that there is a limitation upon the defence powers of the Commonwealth. The limitation is to be found in this, that not even by the use of the defence power of the Commonwealth can we alter the Constitution by destroying the States as polities, taking the word in the sense in which it was used by Mr. Justice Evatt.

Mr Lazzarini:

– We are not destroying the States.

Mr Rosevear:

– We are just putting a bomb under them.

Mr MENZIES:

– I accept the second interjection. That my view on this point is not without support in judicial quarters is shown by a decision given by the High Court in the course of this war in connexion with the Apple and Pear Board. I heard an honorable member say: “Why drag that in?” I shall not drag it in any farther. I can see that the Treasurer is unhappy over the matter and I am profoundly sympathetic with him, but I must point out that in the case Andrews v. Howell, Mr. Justice Starke said -

Almost every citizen is injuriously affected by the war, and the argument we have heard leads apparently to the conclusion that in time of war the Commonwealth has complete power to legislate in respect of the social and economic condition of Australia. But I cannot agree. After all, the Government of Australia is a dual system based upon a separation of powers . . .

Mr Spender:

– Mr. Justice Starke happened to be the one dissenting judge.

Mr MENZIES:

– But he was not alone on that last point, for he was supported by Mr. Justice Owen Dixon and Mr. Justice Evatt, as I have pointed out.

It may be said that the marshalling of the financial resources of the country falls within the defence power of the Commonwealth. In a general sense I suppose that it does, but can such a marshalling of the financial resources be effected upon the basis that Australia is a unitary State ? That is the real problem. May we, in dealing with this subject, forget that Australia is a federation when, in dealing with all other powers, except the exclusive powers, we are forced to remember it? I do not believe that we can forget it. I do not speak with positiveness, and I do not desire to be dogmatic on the point. No one knows what decision the High Court may reach on the question of the defence powers of the Commonwealth. But, for the reasons that I have mentioned, I am left in a state of very grave doubt as to the validity of this scheme. When a scheme of this magnitude and far-reaching influence is placed before the Parliament, and the Parliament has a choice between it and the clear scheme propounded by the

– And we shall never make taxation popular.

Mr Harrison:

– Anyhow, the present proposal is a step in the right direction.

Mr SCULLIN:

Mr SPOONER:
Robertson

.- It is important to recall that the scheme now before the House does not propose the abolition of State parliaments, or even the abolition of State income taxes. But for the war I should wish that it did. It is a scheme to set up the machinery to enable State income taxes to be suspended for the term of the war and one year thereafter, and to enable compensation to be granted to the States that agree temporarily not to levy in this field. This is rather an important proposal, as the Leader of the Opposition (Mr. Fadden) has said, but it has not justified the exaggerated remarks of the honorable member for Boothby (Dr. Price), who described those who support it as “centralizers, unificationists, socialists, and destroyers of the Constitution “. I am none of these things, although I hope to be a unificationist in the fullness of time, when, by a gradual transfer of the more important powers of the States, a point- may be reached during an era of peace when such a policy may properly ‘be urged. I say to the honorable member for Wakefield (Mr. Duncan-Hughes), who asked me last night to nail my colours to the mast, that, when I was a senior Minister in a New South Wales government a few years ago, I made statements in public urging the adoption of a uniform tax and a single taxing authority for Australia. Early in 1941. I wrote a special article for the Sydney Morning Herald urging a scheme similar to that which is now before the House. I say this in case it may be thought that there is some mystery about my attitude upon this subject. The honorable member for Barker (Mr. Archie Cameron) can find plenty of my frank utterances upon this issue without looking for mythical niggers under imaginary woodpiles. I believe in this scheme, because I consider that it is vital to the future of Australia. Whatever my belief has been’ in other years, it is increased tenfold by the needs of Australia to-day. So strong is my conviction, that it has encouraged in me the hope that more honorable members of this House will find it possible to rise above the levels of petty State provincialism.

I shall describe briefly the position that exists in Australia to-day during the darkest days of the greatest war, when the Empire fights with its back to the wall. First, the revenues that the Commonwealth Parliament can collect through income taxation are limited in both the lower and the higher grades of income, and in company income by the rates that apply in one State or another. Secondly, taxpayers are driven to distraction by the operations of 24 different taxes upon incomes, and the complications have increased considerably as the result of both State and Commonwealth enactments during the past twelve months. Thirdly, although the Commonwealth endeavours to fix maximum tax rates of 18s. in the £1 in the high income ranges, it is unable to avoid a position in which many taxpayers are being assessed at more than 20s. in the £1. Although the Commonwealth has tried since November last, it cannot secure the co-operation of the States to remove this anomaly. The laws of the Commonwealth and of the

States are changing each year. They are changing, not only as regards rates, hut also as regards principles of taxation. In 1941, the New South Wales Parliament reversed many of the principles of taxation that were adopted by all States between 1933 and 1936 as providing some measure of uniformity, although they were a, poor substitute for complete uniformity under a single taxing authority! Throughout the treasuries and taxation departments of seven Australian governments, officials are constantly seeking how they may reach some new post of taxation or discover an opening before it is found by another government In December last, the Commonwealth Parliament, by the enactment of a new war tax, revived all the horrors of the unemployment relief taxes that had been introduced by the States as depression measures, and continued for some years after the depression was over. Indeed, in some States, they still survive. They have been re-named and dressed in bright new frocks, hut they are the same old taxes. In Queensland, it is called “development tax”, and in Victoria, “unemployment relief tax”. In New South Wales, it has been merged with the general income tax, in the hope that its identity will thus be lost; but the taxpayer still pays it.

Mr Stacey:

– New South Wales did a lot to prevent the establishment of heavy industries in South Australia.

Mr SPOONER:

– The honorable member has a suspicious mind. As big brothers, we advise South Australians to mix among bigger States, and become more broad-minded. We desire to help them to grow up, but they must not be spiteful.

The nation requires an all-Australian .plan of finance and taxation, because it is vital to the war effort at this stage. I do not like high taxation any more than other people do, but I like even less a system which enables a section of the -people in various parts of Australia, under cover of State income tax immunities, to obtain protection from the contribution that they should make to the cost of the war. Still less do I like a system where certain income groups are taxed so heavily in parts of Australia that it is impossible to ask them to pay higher Commonwealth tax for the conduct of the war. Because they cannot be more heavily taxed for war purposes, the corresponding groups throughout Australia cannot be taxed.’ Unless we alter this position, we cannot wage war efficiently. We are playing hide-and-seek all over’ a huge continent.

It has been suggested that these difficulties can be overcome by a uniform national contribution. I can speak impartially upon this matter because taxation in New South Wales is approximately the average of all taxation in

Australia. The fluctuations are to he seen in other States. Last September I supported the proposal for a uniform national contribution as the next best thing when uniform taxation did not seem likely to eventuate. But when uniform taxation is possible, the national contribution scheme falls short of the most, desirable way of financing Australia for victory. The effect of a national contribution, while varying State taxes exist, would be that for the time being, all taxpayers would find an equal sum of money. After the war, some taxpayers would have a post-war credit, the amount of which would vary according to the accident of where they happened to earn their income during the war. The inherent weakness of the scheme is that the taxpayer) whether a company or an individual, who, during the war paid more State tax than others, would have the smallest post-war credit to assist his rehabilitation. Conversely, the taxpayer who pays substantially less in State taxes, would have the largest amount to collect. As a method of collecting cash for the purpose of financing the war, the postwar credits scheme has distinct merits and I would support it again if the proposal to introduce a uniform tax had not been made. But as a system of taxation, the national contribution scheme would perpetuate all the anomalies and inequalities of the present position. When uniform taxation is achieved, the way will be clear for the introduction of a sound system of national contributions under which every Australian taxpayer will make a proportionate contribution, according to his income group,” and there will be only one tax, and one tax gatherer.

I am not attempting to advise the Government as to the best method of raising finance for the war effort, but the subject °f post-war credits is bound to arise gain, and I lake this opportunity to offer my views upon it. When the uniform tax is established, the inequalities that I °ave described will be removed. It will ‘hen become possible for a post-war credits scheme to be imposed upon the present rates of taxation, and the post-war credit mat will result to each taxpayer accord”*g to his income group, will be the same w&ether he lives in Brisbane or in Perth. &“er the passage of these bills it will be possible for the Government, if it so decides, to introduce such a system and to take money by compulsory loans until after the war so as to reduce the surplus spending power in certain income groups that is now a menace to Australia. If the Government will do this, I shall support the proposal with enthusiasm, because there will be far less need for rationing, and the complicated rationalization .of industry that will throw Australian industry into confusion. Proposals dealing with a uniform income tax do not provide the opportunity to deal with post-war credits. The time will arise in the near future for the matter of post-war credits to be dealt with. Post-war credits are worthy of consideration by the Government, but not till the uniform tax legislation has been cleared out of the way. I take this opportunity to make my position clear. I shall vote for all these bills, and for every aspect of them”. I shall vote against all amendments in principle that may be moved upon them. If I vote for any amendment, it will be because some technical detail may arise in respect of which improvement may be desirable, but I do not know of any such detail at present. I shall reserve till the committee stage the reasons that actuate me in supporting certain details of the bills of which full explanations have yet to be offered. I say that particularly in regard to the method of granting rebates in respect of concessional reductions, of which there has been criticism. The second-reading stage hardly provides the opportunity to deal with that matter. I have no doubt, however, that the right honorable member for Yarra (Mr. Scullin) will be able to convince critics. I shall help him to show honorable members that there is a sound reason for the method adopted and thai there are equally sound reasons for any other variations of income tax principles and law proposed to be introduced under this new scheme.

I desire to make one final observation concerning the rates hill. It should be well known that I held the view that the economic and financial safety of Australia demands that there shall be larger contributions to the federal Treasury by certain middle and lower income groups. I do not care whether it is done by “taxation or post-war credits or by a combination of both. Until this be done, not only will the Treasury be short of some of the moneys that it needs, but also t.b ere will be danger to war production, to ;>rice levels and to Australian currency. I have said so on several occasions this year, f hope the position will soon be rectified. This will not be properly achieved either by appeals for voluntary saving or by com-> plicated economic controls. The uniform tax legislation, however, is not the place for such a reform. The object of the uniform tax scheme is to cement several conflicting taxation systems into one plain and comprehensive plan, and to provide a foundation for a sound and fair system of war finance. In the course of laying this new foundation, it is inevitable that there be advantages and disadvantages to some taxpayers by comparison with their present tax liabilities. The uniform tax committee did its best, to iron out as many anomalies as -possible. For whatever anomalies still remain the blame lies not with the uniform scheme, but with the screaming inconsistencies of the seven existing watertight systems of taxation. The uniform scheme is the best effort the committee could make in the mathematical re-organization of seven systems that had little in common. It was not tho committee’s function to import policy into the uniform scheme. Policy can only bo u matter for the Government. Tt was the committer’s job to create one uniform scheme out of several conflicting schemes, aud it tried to do so. The rates bill as it stands is not, therefore, the considered view of the committee as to what taxation should ho pair! by different income groups. It. is the committee’s view as to the fairest method of bringing into certain tables of rates the existing inequalities of seven income tax acts as well as the development tax, unemployment taxes and other taxes of the States, and the new war tax of tho Commonwealth. I thank the Government for having provided me with the opportunity to serve the country on the committee. I thank the right honorable member for Tarra for his friendship, assistance and great practical help and knowledge during our work. We both join in congratu- latina Professor Mills, the third member, who, unfortunately, cannot be hero.

Mr MORGAN:
Reid

.- I support this measure after having given mature consideration to the whole matter and having tried to appreciate what it really entails. I fully accept the assurance of the right honorable member for Yarra (Mr. Scullin) .that he and his fellow members on the committee, which made the report on which this legislation is based, approached their task with a sincere desire to try to help in the creation of an all-in war effort by equalizing the tax burden cast upon the people by the needs of war. This proposal is in the nature of an experiment. It will have limited duration. While it is in operation its efficacy will be tested, and in the light of experience, when the time of its expiration approaches, it will be for the governments of the States and the Commonwealth to consider whether they can agree to continue the system. In the event of failure of the governments to reach such an agreement, the people can be consulted, by referendum. At the same time, perhaps, the suggestion made by the right honorable member for Kooyong (Mr. Menzies) that the people should be asked after the war to approve of an overhaul of the Constitution, could he given effect. In war-time we shall have become accustomed to doing many things which we may find desirable to continue to do after the war, but which, for constitutional reasons, might not be practicable. The people, would then have au opportunity to express in a referendum their desires as to whether the Constitution should be -brought into line with thc conditions then prevailing. Meanwhile, I cannot see any prejudice to the States. They are fully protected by compensation. I cannot see why there should be any fear on the part of the States, because they will receive more than they would have received in the ordinary way through their own income taxes. - In any case, the legislation is to tie temporary and, if in practice it doesnot work out all right, there will be no danger to the States, because the measures will simply lapse. If the system does work all right, it can be perpetuated either by agreement between governments or by consent of the people through a referendum. Another good reason why this opportunity should be taken to place the uniform tax system on trial is that the people are slow to accept constitutional alterations, no matter how desirable they may be. Instances of the reluctance of the people to agree to alterations of the Constitution are to be found in the number of occasions on which they have rejected very worthy proposals which have been submitted to them by referendum. During the life of these measures the people will be able to decide whether it is in their interests that they should continue in the post-war period. I disagree with those who suggest that the question should be put to the people 1low by referendum. It would be ridiculous to do so while the country is at war. It is unpatriotic, and even treacherous, to suggest that, the Government should be hampered by lack of the finance required for the prosecution of the war until legal entanglements have been straightened out and a referendum has been conducted. The holding of a referendum would divide the nation as it was divided on the conscription issue during the war of 1914-18, and that to-day would be infinitely more dangerous than it was then, in view of the fact that the enemy is at our gates. If a ship were in distress we should not expect the crew to argue amongst themselves- -

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– We should expect all hands to man the pumps.

Mr MORGAN:

– And we should not expect them >to bring the captain down from the bridge in order to hear arguments about their rights. Those honorable members who suggest that the nation should be put to the expense and delay of conducting a referendum were eager to denounce the coal-miners for downing tools. They are not consistent. When they advocate the holding of a referendum they advocate that Ministers should down tools and waste time travelling through the country in order to appeal to the people for certain powers at a time when they should be fully engaged in conducting the nation’s war effort.

A great deal has been said about the constitutional aspect of this question, and I have no doubt that strong legal opinions could be obtained on both sides.

Counsel frequently disagree on questions of law. Even the right honorable member for Kooyong (Mr. Menzies) with all his legal knowledge and training, is doubtful about this proposal and will not express an opinion definitely one way or the other. learned judges often have difficulty in deciding contentious points of law. I’ recall a case in which a judge, as he was going on to the bench, remarked to his associate that he would give his decision in favour of a particular litigant. However, a minute or so later, he decided to give a decision in favour of the other party. The most certain thing about law is its uncertainty. Courts of law are swayed by the conditions that apply at a given time. We have seen in the past how certain decisions given by our courts have been reversed. The right honorable member for Kooyong mentioned the Engineers’ case in this regard.

Mr CLARK:
DARLING, NEW SOUTH WALES

– Law is only a matter of opinion.

Mr MORGAN:

– And common sense. As the celebrated Irish ‘ humorist, Dooley, said, “Trade follows the flag, and the Supreme Court follows the election returns”. In the United States of America, when there was an agitation by vested interests for an extension of the slave trade, the Supreme Court of the time, led by Chief Justice Tainey, decided in favour of those interests. Later, when the people of the United States of America expressed their wishes in no uncertain manner, another Supreme Court gave a totally different decision. The same thing happened in connexion with the Roosevelt administration’s New Deal. The nine old men of the Supreme Court of the United States of America held that the provisions of the New Deal were unconstitutional. Later, a reconstructed Supreme Court held that the New Deal was constitutional. Only yesterday, the Supreme Court of the United States gave a decision which totally reversed all previous decisions in regard to certain principles of the law of defamation. So far as legal opinions are concerned, one man’s opinion is as good as the next man’s. As the right honorable member for Tarra (Mr. Scullin) has<” pointed out, we are engaged in a life-and-death struggle, and the powers that the Government proposes to take under this measure are in accordance with section 51 of the Constitution. The preamble of the bill states -

With a view to the public safety and the defence of. the Commonwealth and of the several States and for the more effectual prosecution of the war in which His Majesty is >’ i imaged, it is necessary or convenient to provide for the matters hereinafter Bet out:

The interests of the nation must be paramount in the present situation. Ear from destroying the States, as has been suggested, the action contemplated by the Government, to mobilise the financial resources of the nation, is intended to preserve the States. Proposals for uniformity of taxation and uniformity of laws through the Commonwealth, which I support, should not be confused with proposals for the centralization of the administrative powers of the Commonwealth. 1 am not a supporter of the propaganda, which is current in certain quarters, in favour of the complete abolition of the States. However, I agree with the right honorable member for Kooyong that the Commonwealth Government, should have complete legislative powers and that certain powers should be delegated to the State Parliaments and to local governing bodies. Under this proposal the State governments could become administrative bodies and exercise a co-ordinating authority over local governing bodies, which frequently have conflicting by-laws. I know of a case in which building regulations made by one local governing body apply to houses on one side of the street and a set of totally different regulations formulated by another local governing body applies to the buildings on the opposite side of the street. Every year, local governing bodies meet in convention and pass resolutions, but nothing is done to implement their decisions. If the States were made supreme over these councils, they could co-ordinate and implement their decisions to the benefit of the people generally. I deprecate any tendency towards completely centralized administration. There are examples of that in the marketing boards, which have proved not to be for the benefit of the people. That was illustrated recently in a Gallup poll, in. which a cross-section of the people in the cities and the country were asked to say whether they favoured or were opposed to the marketing of farm products through boards. Opposition to such boards was expressed by 59 per cent, of those whose opinion was sought, whilst only 19 per cent, expressed themselves in favour, and 22 per cent, were undecided or did not return an answer. A Gallup poll is not needed to decide such a matter. The proof of the pudding is in the eating thereof. The huge losses incurred by the Apple and Pear Board and other like bodies are sufficient evidence of the need for reform. Whilst it may be desirable to have a central co-ordinating authority to serve as an advisory body, the actual administration should be carried out by the local organization, which is on the spot and knows the conditions. There would not then be the huge losses, lack of organization, and muddling, which have characterized the operations of some boards. The Capital Issues Board was recently reconstituted. As previously constituted, it was a bottleneck in connexion with the war effort. I know of war industries which applied to it for permission to increase their capital in. order to extend their operations, but were impeded in their efforts. Quite recently, a company required an overdraft of £30,000. Failing to secure credit facilities through the Commonwealth, it finally arranged for an overdraft through a bank, and applied for the necessary approval from the Capital Issues Board. Approval was not given, for reasons that wore utterly wrong. It was said that the concern was working for only eight hours a day, whereas it was working two ten-hour shifts. Criticism may also be levelled at the Board of Business Administration, in Melbourne, of which Mr. Norman Myer, until recently, was a member. I have had brought to my notice a ‘ certain invention which should be of great value in connexion with armoured equipment for our fighting services. The invention was accepted by the Army authorities, and approved by the Inventions Board. Ah order for its production was given by the Department of Supply and development. The Army Department needed supplies urgently, but the Board of Business Administration recommended the rejection of the invention, although it would have effected a considerable saving of cost. Mr. Norman Myer was, I assume, able to influence the board into making the decision to hold up that very important equipment; yet his company was at the same time exploiting the community to the amount of £250,000. Instead of centralizing the whole of the administration in Melbourne or Canberra, the Government should utilize the machinery that is available in the State departments and local governing bodies throughout the country, not only for the prosecution of the war but also, particularly, in the post-war period for the opening up and development of Australia. I agree with the honorable member for Barker (Mr. Archie Cameron) that if such machinery be not utilized, and if the whole of the administration be centralized in Canberra or Melbourne, chaos will ensue.

Sitting suspended from 6.15 to 8 p.m.

Mr MORGAN:

– Whilst I support this legislation as a necessary war measure, I realize that the administration of it must be watched carefully. Much depends on the person administering these powers, and I can visualize that at some future date they may get into the hands of individuals who may be thirsting for power. For instance, when legislation providing for the setting up of the Central Reserve Bank in the United States of America was introduced it was supported by such an outstanding democrat as William Jennings Bryan, who lived to rue the day that he voted for the measure, because eventually control of the bank got into the hands of a financial group which was able to sway the industrial life of the country. To a greatdegree that group was responsible for the serious depression which started in the United States of America in 1928, and spread throughout the world. If the administration of the powers contained in this measure were to get into the hands of such people an attempt might be made to dominate, and dictate to, the various States in regard to both their administration and development. So far as the present Government is concerned, I have the utmost confidence that the power will not be abused, and that the Treasurer will administer the legislation wisely and justly, with due consideration for the rights of the States. However, should there be a change of government, and should this power fall into the hands of individuals who were not prepared to use it in the way that is intended, the States would have an opportunity, when this legislation came up for review, to move for the provision of whatever safeguards were considered necessary to prevent abuse of power. I take a long view of this matter, because I believe that it will lead to financial reform. It seems that the law of gravity applies also to taxation laws. Under the dual taxation system - taxation by the States and the Commonwealth - taxes in this country have reached saturation point. In fact, in some instances, Commonwealth and State taxes combined have exceeded 20s. in the £1, and recently the Commonwealth found it necessary to fix a ceiling of 18s. No doubt, it was in view of that fact, and in view of the unevenness with which taxes have been imposed throughout the various States in the past, that this scheme for the transfer of the sole taxing authority to the Commonwealth has been introduced. We shall have uniform taxation, and I can visualize the time when there will be agitation for new financial methods in the administration of the States and of the Commonwealth, particularly in regard to the utilization of national credit through the medium of the Commonwealth Bank. The Leader of the Opposition (Mr. Fadden) pointed out that the greater part of the taxation revenue of the various States is required to meet interest charges on loans that have been raised in the past. That is due to excessive borrowing, and the persistent adherence to orthodox methods of finance. Instead of pursuing the loan policy which has prevailed hitherto, we should utilize the credit of the nation and so obviate interest expenditure in the future. Not long ago the Treasurer (Mr. Chifley) pointed out to me that if no further loans were raised, and we continued to make the same sinking fund provisions that we are making now, the national debt would be wiped off in 60 years. Theref ore, taking a long view of this matter, it seems that this measure might be a blessing in disguise, not only for the people of the

Commonwealth, but also for the various State governments in as much as it may lead -to financial reform, and to the abandonment of orthodox methods of finance.

The real object of this measure is the mobilization of our resources in view of the dire situation in which the nation finds itself at present. The urgency of the position is apparent to any one who surveys the latest war developments. I shall analyse briefly the war situation as it is presented to us in cables which have come to hand during the last 24 hours. First of all,1 there is the Burma retreat, of which Lieutenant-General Stilwell has said, ‘according to a newspaper report -

The United Nations got a hell of a beating. We got run out - it is humiliating as hell.

Speaking of the Burma campaign and of Lieutenant-General Stilwell, the report continues -

He has fought against the Japanese - and lost; and he knows why. It’s the old story. The so-called “ armchair “ strategists hare been shouting into the ears of the AllWillBeWell Brigade for six months. A few thousand ill-equipped men matched a well -equipped army. Little or no air support. “ Japanese air superiority hurt us most,” says Lieutenant General Stilwell. “ They sent 40 to 50 planes over daily. We had not even an anti-aircraft gun.”

That is the sad tale of the Burma campaign. Then we have the latest news from the Soviet front.

Mr SPEAKER:

– Order ! The honorable member is .getting rather wide of the measures now under discussion.

Mr MORGAN:

– The object of these measures is to mobilize our resources. Surely I am entitled to refer to the war position generally because overseas events .have a great effect upon this country. In Russia, the Soviet troops seem to be in a serious predicament. So much so, that the allies apparently are considering opening a .second front. In China, the Chinese forces have been practically encircled, and are in danger of being defeated. That being the position, it is evident that we must be .self-reliant in this country, and must mobilize all our resources. This bill will assist in the mobilization of not only the material resources of the community, but also the man-power. The Government has announced that within the next few months 31S,000 more men and women will be needed for the armed forces and for war industries. According to the report of the special committee which considered the proposals contained in the measures now before us, the transference of sole taxing authority to the Commonwealth will release 1,000 skilled men from the State taxation departments.

Mr Fadden:

– That remains to be proved.

Mr MORGAN:

– I am merely going upon the advice of the expert committee which dealt with this matter. There is ample evidence that the labour and skilled knowledge of the taxation officials who will be released under this scheme, is urgently required in war industries. The Joint Committee on War Expenditure of which I was a member, has been reliably informed that there is a shortage of skilled costing investigators in munitions industries and that production is being held up because of delays in the payment of contractors who- require money urgently to pay for materials and Habour. One departmental witness stated that a. number of officers employed by the taxation departments should be made available to assist in that work. I suggest that in the mobilization of our resources, for war purposes, the Government could well emulate the example set by the Government of the United States of America and the Government of the United Kingdom, both of which have set up special production organizations. In the United States of America, Mr. Donald Nelson, who has been appointed Chief of the War Production Board, .issued the following warning: -

We are up against smart enemies and we must be smarter and keener than they are. A constant stream of war material must flow to England, Russia, South America, India and Australia. We cannot afford to let up one minute.

War production in the United States of America is greater than most people had expected, but it is still not great enough. In Great Britain Mr. Oliver Lyttleton has been appointed Director of War Production, in an endeavour to speed up war industries and eliminate bottle-necks and inefficiency. In this country, according to an announcement by the Prime

Minister (Mr. Curtin), there is a Cabinet sub-committee whose task is to create a drive for greater production. But such a sub-committee can give only a lead in general principles; it will, be necessary co have men. to implement the committee’s decisions. On that sub-committee are several Ministers. Among them is the Minister for Munitions. (Mr. Makin), who is an extremely busy man, charged with the responsibility of administering two departments, and so far as I can ascertain, he is doing a very good job. Another member is the Minister for Labour and National Service (Mr. Ward) who is busily occupied in the mobilization of man-power and resources. Likewise the Minister for Supply and Development (Mr. Beasley) is preoccupied with his department, as is the Minister for War Organization of Industry (Mr. Dedman). The Prime Minister of course is engaged mostly on matters of higher strategy. Obviously, it is impossible for those busy men to attend to details of war production, and the men who will be released from the various taxation departments by this legislation could be made available to implement the decisions of that sub-committee. I have made an examination of various industries, and I am satisfied that machines and labour are still idle in many places. Evidence has been given before the Joint Committee on War Expenditure that in some States there is still idle factory capacity. Only yesterday it was stated in the press that certain factories were dismissing employees. The report reads -

Claiming that they have been unable to secure new defence contracts, three munitions factories have notified the Man-power Department that they have been forced to dismiss a number of fitters and turners from their staffs.

This was stated yesterday by the DirectorGeneral of Man-power (Mr. Bellemore). He said he had not yet been informed by the Munitions Department why the work was not available.

That indicates that there is something radically wrong with the organization of our war industries. The man-power released from taxation departments upon the inauguration of a uniform tax scheme could investigate matters such as that, on behalf of the department which is now co-ordinating various war factories with a view to ensuring that they have sufficient orders to keep them going; There is no doubt that there is: a great waste going on in war industries and that employees and machines are idle at various times throughout the day in certain establishments. On the other hand,, some industries have more material than they need for the time being. If a director of production were appointed, he should be able to promote a spirit of co-operation among manufacturers, so that if one had a surplus of men or machines or material he would help to tide some other manufacturer over a shortage. Ou some jobs there may be 20 or 30 sub-contractors making various parts of a piece of. equipment. If one sub-contractor lags behind, production is slowed up all round. A director of production would be able to co-ordinate their efforts, and keep them all in line. Better use should be made of available credit facilities for the financing of capital expenditure. Millions of pounds has been expended upon the construction and equipment of annexes attached to privatelyowned engineering shops. That represents capital expenditure, and should be provided out of Commonwealth Bank credits, whereas, in fact, most of it has come out of revenue. Although the normal life of the plant in these annexes is 20 or 25 years, it is proposed to write off the entire cost in five years. Thus, at the end of that time, the cost will cease to appear upon the Treasury’s books, and the plant, which will still be standing in the annexes, will be sold for a song to the owners of the workshops to which the annexes are attached. Two munitions firms in my electorate have between them overdrafts amounting to £350,000 from private banks. One of them has an overdraft of £150,000 which is guaranteed by the Commonwealth Bank. Thus, the Commonwealth Bank takes all the risk, whilst the private bank gets all the profit. Those two firms are paying £15,000 a year in interest to the private banks, sufficient to provide employment for 60 men. The Treasurer should consider these points because interest charges of this kind are, of course, ultimately borne by the Government in the cost of munitions.

I strongly support this measure which the Government has brought forward in exercise of the emergency powers which it enjoys under the Constitution. With the risk of invasion hanging over us we must take every precaution. We were told .the other day that the evacuation of Burma was a military miracle only second to the evacuation of Dunkirk. We are now in the third year of the war. and the allied nations are still having Dunkirks, but there can be no Dunkirk for us in Australia. We cannot run out as the British were fortunately able to do from Burma. We shall have to stand and take it, and give back as much as we can. Therefore, I ask the House to pass this legislation, so that the Government may be in a position to organize the entire resources of the nation. Otherwise, we shall cease to exist as a nation.

Mr RYAN:
Flinders

.- This is the most important measure that has come before the House since I have been a member of it. It is probably the most important that the House has been called upon to consider for a long time. Its importance lies, not so much in what the bill contains, as in its implications. For that reason, wc should give the matter the deepest consideration, in the course of which we should ask ourselves these three questions -

Is the end which this measure is designed to achieve really essential to the war effort?
Is the measure constitutional?
Will this measure achieve its end with equity to the States and to individuals?

As to the first question, every one agrees that, in the present situation, it is essential that we should have the strongest armed forces possible, and that our forces should be supported with arms and munitions to the degree that we are physically capable of providing them. Those two considerations transcend everything else. No financial difficulties should be allowed to stand in the way. There is general agreement that the Commonwealth Government should have power to take from the people all the money necessary for the prosecution of the war, and to take it in the manner considered most just. The bill purports to introduce a system of uniform taxation. No one in Australia, and certainly no one in Victoria, objects in principle to uniform taxation. In fact, most people are very much in favour of it, because they realize that the present system has produced grave anomalies, chiefly due to the overlapping functions of the Commonwealth and the States. Therefore, uniform taxation as a principle is not in dispute. What is in dispute is whether the bill introduces that principle in the most effective way. I maintain that it does not introduce uniform taxation. As a matter of fact, far from removing the existing anomalies and inequalities, it will tend to perpetuate them. What we are really seeking is, not so much uniform taxation, as a uniform contribution by every body towards the cost of the war,- and that is what the bill fails to achieve. The financing of the war effort involves the raising of the largest amount of money possible, and, from that point of view, the Government’s present proposal compares unfavorably with the plan put forward by the Fadden Government. It fails in its purpose, because it does not introduce thiprinciple of uniform contribution.

We have also to consider whether the Government’s proposal is constitutionally valid. I do not want to cross swords with lawyers, and, as a layman, I feel diffident in expressing an opinion. However, I have had some experience of the operation of constitutional law in other parts of the world, and I have studied the terms of our Constitution with some care. I was very much impressed with the arguments of the honorable member for Bourke (Mr. Blackburn), and the right honorable member for Kooyong (Mr. Menzies). Those arguments will take a great deal of upsetting. If the bill b«? passed in its present form, we shall run the risk of losing more than we gain. Sooner or later, the legislation will be challenged by one or more States, and, instead of having uniform taxation, we may finish up by having financial chaos.

The third point is whether the bill, in its present form, would make for equity among the States and among individuals. On this ground I find the gravest objections to it. The plan proposes that, in consideration of their vacating the income tax field, the States shall be reimbursed by Commonwealth grants assessed on the basis of their income tax collections over the last two years. Under this scheme, New South Wales will receive £15,356,000, or £5 13s. 9d. a head, and Victoria £6,519,000, or £8 18s. Id. a. head. There is a very large discrepancy there, amounting to discrimination by the Commonwealth in its treatment of the States. The effect of the scheme in Queensland would be similar to that in New South Wales. Queensland would receive £5 14s. lid. a head of the population as compared with £3 Ss. Id. a head in Victoria. On that ground alone objection could be raised to this proposal. The net result, so far as Victoria was concerned, would be that its taxpayers would be involved in an additional payment of £4,000,000 a year, or an average of about £10 10s. more for each taxpayer than he now pays. There would be no objection to that if the extra money were to go straight into the war effort. In fact, a certain percentage of the money, and probably a large percentage of it, would be passed on by way of compensation to the other States, and Victoria would not be spending that money as it wished in the prosecution of the war. That is one of the reasons why this bill is not popular in that State.

Then, again, the unfair incidence of the tax seems to run counter to the principle of uniformity of contributions. If we are to have au equitable scheme that would be acceptable to all of the people in the Commonwealth, it should be based on the principle of uniform contributions, rather than the collection of money which might be diverted to channels other than those directly connected with the war effort. The treatment of Victoria would have unfortunate results with regard to Victorian public servants and the social services provided in that State. Payments to public servants and for social services in Victoria are determined by the Government of that State. For many years it has supported institutions that provide social services, and Victoria has fallen behind the other States in that regard; but, at the present time, those services should be increased. I am not referring only to such services as child endowment, widows’ pensions and similar services that have been discussed in this Parliament recently, but I have in mind the whole range of social services, which includes that most important service of education, and auxiliary medical services such as hospitals. If those activities in

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QUESTION

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Victoria are to be frozen as the result of the bill, that State will have just cause for grievance. The wages of public servants in the employ of the Government of Victoria are not determined by arbitration tribunals, but are fixed at the discretion of the Parliament of that State. If the Government of Victoria suddenly found itself short of revenue, as might well happen under this scheme, the Victorian public servants would be among the first to suffer. I suggest that it might be desirable to widen the scope of the Arbitration ‘Court to cover those employees.

Whilst this measure would discriminate between the States, it would also operate unfairly as between individuals. The Treasurer (Mr. Chifley) has spoken of raising an additional £15,000,000, without imposing further burdens on the people. That is to be brought about by a uniform plan that would apply only to taxpayers who are now subject to federal income tax. The present immunities from that tax will remain, and the tax now being gathered by the States in respect of the lower incomes will be lost in future under this proposal. A person with an income of £3 a week makes no contribution at all by way of Commonwealth income tax, and on incomes up to £8 a week, only light levies are imposed, but under the State laws, persons in receipt of the lower incomes are taxed. In Western Australia for instance, a person without dependants and in receipt of £150 a year, pays tax to the amount of £7 10s. a year, and similar taxes are levied on the lower incomes in South Australia, Tasmania and Queensland. Under the present proposal, however, persons in receipt of such incomes will be exempt from taxation. What is required at present is not that we should exempt persons with incomes from taxation but that we should increase these taxes. That is bound to come sooner or later. This measure merely proposes a new system of taxation, and the rates of tax will be proposed in another bill to be presented later. Whenever it is brought forward, it is clear that the persons with incomes which are now free from federal tax will benefit to a greater degree than they should. Generally speaking, the situation throughout the Stares, and particularly in New South Wales and Victoria, and to a certain degree in South Australia, is that persons in the lower salary ranges have vastly increased incomes, which are therefore available for taxation at a period when extra revenue is required to carry on the war effort. When speaking recently on the Widows’ Pensions Bill, I referred to the fact that many persons under the age of twenty years, and receiving from £3 to £5 a week in wages, have no family responsibilities, and often live at the homes of their parents. They spend money lavishly on many things which are not necessary to life. Those in this class should definitely be taxed under the bill.

Some honorable members are in favour of the measure and some are against it; but it is interesting to notice that honorable members from New South Wales are, as a whole, in favour of the bill. I have asked myself the reason for that. I have a high regard for the patriotism and intelligence of honorable members from New South Wales, irrespective of the side of the House on which they sit, but I do not admit that either their patriotism or their intelligence is higher than that of honorable members from other States. Honorable members from Queensland hold at least mixed views regarding the bill. Why do honorable members from New South Wales consider this bill to he a desirable one? I think that there are two possible reasons for that outlook. The first is that under this bill a step is taken on the long road towards unification, and for some reason or other honorable members from that State seem to prefer unification to the present system of government in operation in the Commonwealth. On paper, the State with most to gain under the measure is New South Wales, and, irrespective of the desire of its representatives to be impartial, the thought must be at the back of their mind that they should support a proposal that, would bring more grist to the people in the State from which they come. I have tried to approach this matter with an unbiased mind, and I consider that from the point of view of Victoria, and some of the other States, the bill will operate un- fairly. Every thoughtful member of this community must look forward tn the consummation of a unified form of government. I hold very strong views upon the matter. My principal objection to the bill is that, either deliberately or otherwise, it sets out to achieve, by a back-door method, some measure of unification, and I for one shall not tolerate it. If unification be desirable, it should be accomplished by proper constitutional methods. I hope that unification will be effected after the war, but the present is not an appropriate time for us to make such a great constitutional change. In my opinion, the Commonwealth Constitution, which was framed 42 years ago, is now outmoded. Events move quickly, opinions change, and the whole organization of government becomes more complicated. Some system should be evolved whereby a highly centralized government will legislate for the whole continent, and State or, if necessary, provincial governments will deal with purely local matters. Unfortunately, the trend of democracy has been to concentrate power at the centre, and to form bureaucracies, which are extremely subversive of good government. I advocate a large measure of decentralization under which the central government will vest autonomous powers in provincial governments. But all the main services, including taxation, must remain a function of the central government. I look forward to the day when those constitutional changes will be effected.

Whilst I appreciate the reasons which have prompted the Government to introduce this legislation, I cannot support the bill, because, in my opinion, it is unconstitutional, discriminates .between the States, and acts unfairly on the individual. Consequently. I shall vote against it.

Mr LANGTRY:
Riverina

.- I support the bill. Having listened attentively to the convincing speech of the right honorable member for Yarra (Mr. Scullin), I am astonished that any honorable members should oppose the principle of a uniform income tax. To be candid, I do not believe in taxation or loans; but if the Government considers that it must impose taxation, the system should be uniform. The reform which the Government now proposes to effect is long overdue. The Leader of the Opposition (Mr. Fad den) and the right honorable member for Kooyong (Mr. Menzies) have repeatedly stressed the necessity for an “all-in” war effort, but some honorable members are prepared to put State interests before national welfare. In this period of unprecedented crisis, the interests of the States must take second place to the interests of the nation. Some honorable members of the Opposition, who have severely criticized the bill, expressed the opinion that it is unconstitutional. Legal men on this side of the chamber have not concurred in that view, and as they are just as capable as are honorable members opposite, I propose to place no reliance in the claim that the legislation will be declared invalid.

I listened with keen interest to the speech of the honorable member for Reid (Mr. Morgan), who declared that the finance required for the conduct of the war should be made available free of interest by the Commonwealth Bank. That the Government must have money in order to carry on the war effort is indisputable. The question is: How shall the money be raised? As I have already stated, I am opposed to taxation rind loans. I am of opinion that, if Australia is worth fighting for, the Commonwealth Bank should issue the necessary credits for the purpose of prosecuting the war.

Mr SPENDER:
Warringah

.- I rise to support the bill. As a New South Welshman, I realize that this legislation does not find favour with certain States, but the representatives of Now .South Wales will advance very substantial reasons for according their support to it. Some honorable members have declared that we who represent New South Wales are actuated solely by the fact that, under a uniform income tax, our State will be better off than it is under the existing system. Those who have criticized the measure have clearly been actuated by State motives, and have not directed their remarks to the problem that confronts the Commonwealth Treasurer (Mr. Chifley). As one who has had experience of being Commonwealth Trea surer in war-time, I appreciate the difficulties that beset him. Apart from those who have airily advocated the Fadden plan of post-war credits, no critic of the bill has dealt with those difficulties. We, as a democracy, are indeed fortunate that we can in war-time, when an invasion of the country is threatened, debate this proposal at such length in the peaceful atmosphere of Canberra. I view the legislation against its proper background. Personally, I am satisfied that the Government is not concerned with introducing some form of unification, but is resolutely facing its responsibilities for the conduct of the war. For the current financial year the estimated collection by the Commonwealth from the taxation of the incomes of individuals and companies, including ‘war-time (company) tax, super tax, and undistributed profits tax, amounts to £75,150,000, and the estimated expenditure for the same period is from £395,000,000 to £400,000,000. The Commonwealth Treasurer must, by various means, endeavour to bridge the gap between revenue and expenditure, and, to that problem, every honorable member who speaks upon this legislation should direct his attention.

No one who has had experience of wartime finance can fail to admit that the Commonwealth has a well-nigh hopeless task in its endeavour, in war-time, properly to tax individuals and companies, because of the operations of conflicting and varying systems of State taxation. Those who criticize this legislation should examine the facts. On more than one occasion since the outbreak of war, the figures have been made available to them, and they should study the statistics. The information discloses how different rates of tax are applicable to different ranges of income in the various States. The right honorable member for Kooyong (Mr. Menzies) failed to answer me when I asked him at what stage could it be said that the Commonwealth power to tax ceased. In certain ranges of income in certain States, people are called upon to pay income tax exceeding 20s. in the £1. The Commonwealth has already endeavoured to meet this type of case, but the States have made no attempt to assist.

Evidently, some honorable members wish this system to continue.

Critics of the bill have declared that the Commonwealth’s proposal will restrict the power of the States to impose taxation, but in this period of grave crisis, State taxation is inhibiting the Commonwealth. In time of war, the Commonwealth stands predominant and has prior claim on the national resources for the purpose of defending the country. The simple question that I ask is whether the war effort, including, as it does, Commonwealth finance, shall be conditioned by the States. Is the method of raising money by way of income taxation to be conditioned by the States? I have no hesitation in saying that it must not be, and shall not be.

During this debate, some honorable members have discussed at length the so-called sovereignty of the States. One would be justified in assuming that the sovereignty of a State is some concept that can be measured with some degree of ‘accuracy. To speak, however, of Tasmania, for example, as having equal sovereignty with the Commonwealth in war-time is to whistle against the wind. The honorable member for Bourke (Mr. Blackburn) referred to the sacred thing called “State sovereignty “. What does it mean?

Mr Blackburn:

– I did not use that phrase.

– My concern is with the constitutional aspect, and what is constitutionally possible is politically possible. The honorable gentleman’s argument, on his own admission, is disappearing. I am advancing reasons why this legislation will be found to be proper. I am not concerned about whether it is against the spirit of the Constitution as interpreted by Mr. A or Mr. B. What concerns me is whether what is being done is a proper thing to do. I am answerable only to thi3 Parliament and through it to the people of Australia, not the people of just one State.

Further criticism of this legislation has been based on the principle that every government should have the responsibility of raising its own revenues. That argument was advanced, not as a constitutional inhibition upon the Commonwealth, but as a principle that should be observed. That principle has not been observed in full for a very long time, for the States are dependent to a large degree on the will of the Commonwealth. Anybody familiar with the financial agreement knows the extent to which the Commonwealth can condition the policies of the States.

Mr Chifley:

– Moreover, the States’ loan programmes are dependent on Commonwealth advances.

Mr SPENDER:

– Quite so. Talk about the principle gets one nowhere. In Canada payments to Provinces of revenue raised by the Dominion Parliament have been for generations a feature of national finance. In the United States of America, the basis of whose constitution is similar to that of the Commonwealth Constitution, during the civil war, the Federal Government collected a direct tax which it subsequently distributed among the States. Here we have done the same thing in part for 40 years. Neither the argument that the proposals are inconsistent with section 51 of the Constitution, nor the argument that the principle that each State should have the right to raise the money it expends is sound.

I now come to the final ground, the defence powers of the Commonwealth. I was amazed to hear the right honorable member for Kooyong express the view that the power of defence is not exclusive to the Commonwealth. Of course, the right honorable gentleman can say that the reasoning of the majority of the High Court Bench in the Josephs case, which was settled during the last war, does not appeal to him - I suppose that more than one lawyer has had given against him a verdict with which he disagrees - but it is the decision, not his disagreement, which makes the law. If there were any doubt about the exclusive power of the Commonwealth in respect of defence - I do not admit that there ever was - it was removed completely during the last war. The right honorable member for Kooyong referred to the judgment of three justices of the High Court Bench, and he said in substance that they reasoned that, because departments of State, of which the Department of Defence was one, were transferred to the Commonwealth, the defence power was automatically and exclusively transferred to the Commonwealth. That statement hardly does the right honorable gentleman credit. The High Court consisted of five justices and, for the purpose of showing that they considered many sections of the Constitution, it is material that I should refer to the judgments delivered. The judgment of Mr. Justice Isaacs, Mr. Justice Powers and Mr. Justice Rich stated : -

By Section SI (VL.) the Parliament has power to make laws with respect to “ The naval awl military defence of the Commonwen Hh and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth “. Section 52 (11) makes exclusive the Commonwealth power of legislation with respect to “ Matters relating to any department of the public service the control of which is by this Constitution transferred to the Executive Government of the Commonwealth “. By Section 01* “ Naval and military defence “ is named aa one of the departments to be “ transferred “ : and it has been transferred. So far, then, the legislative power is exclusive. Then, by Section 70, the executive power is also made exclusive, because there are “ transferred “ from the Government of the Stale to the Government of the Commonwealth “al! powers and functions “ relating to the transferred departments.

Sections 106 and 107, to which the right honorable gentleman referred, were dealt with by Mr. Justice Isaacs, who read the judgment. His Honor said : -

Sections 10C and 107, dealing with State Constitutions and Parliaments, declare that, these are to be limited accordingly. Section 114 forbids the State, without Commonwealth consent, raising or maintaining any naval or military force; and section 1H) declares the obligation of the Commonwealth to protect every State against invasion and, on requirement, against domestic violence.

Section 119 is a very important section that was not referred to by the right honorable gentleman. The obligation to defend against invasion is on the Commonwealth. Mr. Justice Higgins delivered a judgment in which he expressed views which showed quite clearly that he was of the same opinion as Mr. JusticeIsaacs, Mr. Justice Powers and Mr. Justice Rich. Mr. Justice Gavan Duffy, although he had not decided the case upon the same grounds as his colleagues, was at pains to make clear that he did. not want to have it appear that he necessarily differed from his brother judges on this point. It is idle and futile for the right honorable member to say in this House that there is still doubt as to whether the power of defence in Australia is exclusively vested in this Parliament and through it in the Executive.

It is clear from the judgments of the High Court that the exclusive defence power of the Commonwealth is an overriding power in war-time. During the last war many attempts were made to challenge regulations made under the National Security Act, and acts which purported to be made in exercise of the defence powers of the Commonwealth. It is significant that in not one case was the challenge successful. I am glad thatthe men who have sat on the High Court Bench have not brought to the consideration of the Constitution the narrow views which this House has been asked to-day and yesterday to accept. They have shown a knowledge of what is needed in a central government to carry out the heavy obligations of war. The last occasion on which an attempt was made to challenge the powers of the Commonwealth in wartime was the case of Andrews v. Howell, decided during the war, to which the right honorable member for Kooyong referred. The High Court Bench in that case, as I read it, clearly construed the defence powers of the Commonwealth as transcending section 92, which applies - as was decided by the Privy Council - to both the States and the Commonwealth. The Commonwealth and the High Court held that the defence powers of the Commonwealth were quite sufficient to cover even the acquisition of apples and pears. It is significant to read very briefly from the judgment of the Acting Chief Justice, Mr. Justice Rich, who was one of the judges in the Josephs case. This is what he said: -

The first point was that the entire plan was foreign to the defence power - section 51 (vi). AfterFarey v. Burnett (1910), 21 CL.R. 433, 22 A.L.R. 201, and the decisions during the last war which followed that case, I should have thought the argument was a hopeless one. I shall do no more than quote from the judgment of Isaacs J. (as he then was), two passages describing the application of the power to the circumstances of the last war in language even more opposite to those of this war - “ a war, imperilling our very existence, involving not the internal development of progress, but the array of the whole community in mortal combat with the common enemy, is a fact of such transcendent and dominating character as to take precedence of every other fact of life. It is ultima ratio of the nation. The defence power, then, has gone beyond the stage of preparation, and passing into action, becomes the pivot of the Constitution, because it is the bulwark of the State. Its limits, then, are bounded only by the requirements of self-preservation “ - 21 C.L.R.at page 453, 22 A.L.E. 209. The other passage is as follows: - “But when we see before us an unexampled struggle, in which we are a people, as an indivisible people, are not spectatorsbut actors, when we, as a judicial tribunal, can see beyond controversy that co-ordinated effort in every department of our life may be needed to ensure success and maintain our freedom, the Court has then reached the limit ofits jurisdiction. If the measure questioned may conceivably in such circumstances, even incidentally, aid the effectuation of the power of defence, the court must hold its hand and leave the rest to the judgment and wisdom and discretion of the Parliament and the Executive it controls - for they alone have the information, the knowledge and the experience, and also, by the Constitution, the authority to judge of the situation and lead the nation to the desired end “.

And Mr. Justice Rich added these words -

I cannot see how in a totalitarian war Court could say that an organization to deal with a not unimportant primary industry is outside the scope of the power.

And Mr. Justice- Dixon expressed the following view: -

It is enough, however, to consider the object stated by the regulations as that upon which they were based. In the circumstances of the present war it would, I think, be strange if such a purpose were hold to fall outside the defence power. Indeed, the course of the war has made it clear enough that it is impossible to treat the internal condition of a combatant country as a thing which can have at best only an indirect bearing upon the prosecution of the war.

– The Government is feeling its way step by step.

Mr CALWELL:

– It would be far better for the Government to be courageous and say that it is doing this thing in the interests of the nation, because it is bad for the people to be obliged to fill in so many forms, to have a multiplicity of collecting agencies and to waste public money which could be saved by a simple method. I have my own view as to what the Government desires, and I have stated it clearly. I suggest that the High Court would be helped if the Government were to express its real intention. I hope that the States will challenge the legislation because, if the case goes against them, a precedent will be established and the future position will be bound by it. I was glad to note that three Premiers expressed their intention of going to the High Court. If they did not do so in time of war, and if, in time of peace, a Commonwealth Government proposed to perpetuate this legislation, that Government might have great difficulty in - proving its case then, in spite of all that has been said to-day by legal gentlemen in this House, for whose erudition I have a great respect. I believe that this case will be prejudiced before theHigh Court in favour of the Commonwealth by the existing situation. I think the High’ Court will give not a legal judgment, hut a political one. High Courts give political judgments and High Court judges are politically minded. Some come from political parties. The best course to the High Court Bench for an ambitious young lawyer is to associate himself with a political party, propel himself into the spotlight and ultimately because of service to the party,- or Parliament, and thus obtain promotion to the judiciary. Having no illusions about many matters affecting the judiciary, I believe that it is very probable, in the event of this legislation being, challenged and the fact being established that all the taxing machinery of the States has been dismantled and their officers transferred to the Commonwealth Public Service, that the High Court Bench will say that it would not be proper for the judges to disturb the existing order, particularly if it is contended that it is necessary for the winning of the war. As the honorable member for Reid (Mr. Morgan) has suggested by interjection, present ills and threatened dangers will colour the opinions of the judges more than will the law, as laid down in the Constitution and supported by legal precedents established by High Court judges since federation. I should like to learn the course which the Government proposes to pursue if the High Court rules against the validity of the legislation. One answer might be “ Wait and see” in true Asquithian style; but that might not be the wisest course. The Government ought to have ready an alternative scheme. It is not always wise to rush legislation through Parliament. There exists a tendency to push through legislation and regulations which are hastily prepared and which have not had the consideration that they deserve. The decision of the Ministry on clothes rationing is a . case in point. It might have been better if more consideration had been given to that subject before the’ famous broadcasts were made. It might have been better, too, if the introduction of this legislation had been delayed for a week so that the Government might have had more time to con-

Mr. Calwell

Mr. Oahoell. sider it thoroughly. It is not always wise to rely . on eminent King’s Counsel who advise governments. The identity of the eminent legal gentlemen who advised the Government on the constitutionality of these bills has not been disclosed, but I am credibly informed that Mr. Fullagar, K.C., and Professor Bailey, both of Melbourne, are the two distinguished lawyers upon whose opinions the Government is relying. Mr. Fullagar is certainly one of the best constitutional lawyers in Australia. I am also advised that the opinion of an eminent King’s Counsel of Sydney was obtained, and that his view supported that of the Government.

If that is to be the result, the Government ought to consider immediately the desirability of giving to the residents St the Australian Capital Territory representation in this House on the same basis as representation has already been given to the residents of the Northern Territory, the honorable member for which (Mr. Blain), whose presence we miss, has no vote in this chamber. If the residents of the Australian Capital Territory are required to pay income tax on the same scale as other citizens of Australia, they are entitled to representation in this House. That would not be the only reason entitling them to representation, but it would give them a greater claim. I hope that the Government will give them that recognition, because they deserve it. If other Commonwealth territories are equally affected and their population is large enough to warrant similar recognition, they, too, should have representation in this Parliament. From time to time, as a layman, I have watched the effects of State legislation upon the lives and fortunes of Australian citizens. Under the Commonwealth Constitution trade between the States is supposed to be free and untrammelled. In practice, it is not. Certainly, there are no tariff barriers between the States, and no guards to see that property upon which duty should be paid is not smuggled from one State to another. Nevertheless, there is not absolute freedom of trade throughout Australia. There are differential railway freights, which are designed to encourage trade between one part of Australia and another. There are impositions under motor car registration acts which prejudice the claims of citizens who enter one State from another State. It may be said with truth that the State Parliaments themselves have infringed the Constitution. Such issues have never been decided by the High Court, but they might be taken into consideration in any discussion of a reallotment of powers and a settlement of the trouble that exists at present between the Commonwealth and the States. If the Government desired that there should not be litigation over this legislation it might have made a little more friendly approach than it did to the States. There might have been recognition of the fact that all Australians want to win the war, and that the roles which men are cast to play in different spheres of life do not make one man’s claims any better than those of another, to be comsidered a good Australian. If the Commonwealth and State Governments, after t heir first differences, had endeavoured to find a modus vivendi, perhaps a lot of the acerbity which has been imported into this debate, and it has not been altogether one-sided, might have been absent from it, The Premier of Queensland has printed a pamphlet outlining his position in regard to this legislation. The main contentions that he makes ought to be placed on record. He says -

I have read with a good deal of interest the report of the committee which submitted to the Commonwealth Government these proposals for a uniform tax. Knowing the personnel of the committee,’ I may say that I could have written the report myself. I do not make that statement in an offensive manner, because I hold the gentlemen concerned in high esteem, but I know their opinions. When you know the views of a man, you are able to estimate the workings of his mind upon a proposal with which he is asked to deal. In my opinion, both figures of income and expenditure have been under-estimated and the variation between receipts and expenditure will be between £4,000,000 and £5,000,000.

The pamphlet proceeds -

The Commonwealth desires to peg the revenues of the States, but how can we peg their expenditure? Last year, as the result of Commonwealth legislation, Queensland had to find approximately £700,000. Sometimes Commonwealth expenditure increases State expenditure, but does not increase State revenue to the extent estimated by the Treasurer. Under this scheme the revenues of a State would remain static.

No provision is made for any share by the States in buoyancy of revenue or for any increase of expenditure due to increases of population, disaster or other cause. We had a cyclone in Queensland in 1918 in my electorate. It resulted in the loss of 36 lives and in the destruction of produce worth £1,000.000. Such a disaster might overtake any tropical country.

In such circumstances would we be expected to come as mendicants to the Commonwealth Government and ask for assistance, or should we have the right to do as we did then?

We sent a Minister into the area to take charge of allrelief operations and to help rehabilitate the stricken people. That method is much more effective than any other I can think of.

I am prepared to say that the Queensland Government can obtain as much from its expenditure and get as good value for the expenditure of a pound as any other govern ment in Australia, not excluding the Commonwealth Government. In support of my statement, I am willing to have an examination made over the last ten years.

I am tired of the cry we often hear against the States to the effect that they are extravagant and spend money too lavishly, and that the Commonwealth Government only are heaven-born financial geniuses, and in fact that all such geniuses sit on the benches of the Federal Parliament House.

Such statements are absurd and are not borne out by anything that has been said this afternoon.

I shall now examine the justification put forward for this scheme. I agree that the winning of the war and the saving of this country transcends every other interest at present. I have looked at these proposals in a detached way, having regard to the principle which I definitely advance that the onus of proof rests upon the Commonwealth that this scheme is necessary to save the country. I have shown that according to the Treasurer’s own figures the Commonwealth Government will get little more money under this scheme than if the States were allowed to manage their affairs in their own way.

No reply in arithmetical terms, which’ any honorable member could understand, has been made to the assertion of that gentleman. It is important, also, that the position in regard to the State of Victoria should be placed on record. In this connexion, I read the following : -

Apart altogether from the fact that the proposals deprive the States of their taxing powers, and therefore the right to administer their affairs in their own way, they discriminate against Victorian taxpayers in a most inequitable manner.

The proposals would have the effect of compelling taxpayers of Victoria, the lowest taxed State, to contribute towards the cost of services in other States. Expenditure in other States is not to he reduced, and thus a premium is to be placed on past extravagance.

That view was advanced by a body which made representations to the Treasurer, through me. The Treasurer, in his reply, attempted to answer its contention. He said -

It is true that taxpayers in Victoria will pay something more under the uniform scheme than they have been paying hitherto, but it is also true that they have received greater benefits from war expenditure than have the people of other States.

That contention is not admitted, because no one can tell what may be the effect of the letting of contracts, no matter in what State the contract may be signed. The materials for many of the contracts let in Victoria naturally are drawn from New SouthWales. Inthis connexion, I need refer only to iron and steel, and coal. In other instances, contracts let in Sydney were given to subcontractors, who obtained their supplies from Victoria. In the final analysis, supplies of boots for which contracts were let in New South Wales were probably obtained from Victorian factories. .’No analysis has been made of expenditure by any department that would prove conclusively the ultimate destination of money expended in the war effort. I have made numerous inquiries in this respect, but to no avail. However, I do not accept the contention that the people of Victoria have received greater benefits than have the people of other States. The Treasurer’s reply continued -

The need for money to conduct the war is mo urgent that the Commonwealth must have available to it all the surplus taxable capacity of its citizens. The fact that Victorian governments have not entered into the income tax field to the same , extent as has been done in other States provides a greater taxable capacity for war .purposes. I do not agree that the taxpayers of Victoria will have to make a special contribution to other States.

The honorable gentleman, therefore, contends against the opinion expressed by the Government of Victoria, that a premium is ‘ by this legislation being placed upon the past extravagance of other States. I make the following further quotation from the Victorian case: -

Victorian taxpayers will be involved in an additional annual payment of £4,000,000, or an average of approximately £10 10s. per taxpayer, over and above the amount they arc now contributing. ( Independent estimates made by the Victorian Treasury and the Commissioner of Taxes, Mr. Chenoweth, confirm this figure. ) Tasmania made - a similar estimate,
The additional contribution by Victorian taxpayers makes possible a reduction in the rates of taxation in other States.
The proposed basis of compensation to the States provides for unfair discrimination, in that while taxpayers throughout Australia will pay income tax at a uniform rate, the amount to be paid to the States for vacating the field of income tax is based on their present level of expenditure. In other words, the State with the most extravagant ideas and the highest expenditure will receive more generous treatment. New South Wales, with a population of 2,812,000, will receive from the Commonwealth Government by way of grant two and one-half times the amount that Victoria will receive with- a population of 1.054,000.

[60]

Mr Rosevear:

– How do social service benefits in New South Wales compare with those in Victoria at the present time?

Mr CALWELL:

– Such a comparison is, of course, all in favour of New South Wales. [Extension of time granted.] I do not disagree with anything that the honorable member for Dalley (Mr. Rosevear) or any other honorable member has said in criticism of successive Victorian governments for their failure to increase social services to the same degree as New South Wales and Queensland, but the trouble in Victoria is that there is an Upper House, elected on a restricted franchise, which has acted as a Westinghouse brake on the wheels of progress. If New South Wales had had to contend with such an Upper House in the past, I am sure that its progress in the social field would not have been so great. The statement continues -

Queensland, with a population of 1,041,000. will receive within 10 per cent, of the total Victorian allocation. The following table sets out the amounts that the States would receive if compensation were on a population basis, compared with the proposals under the bill : -

Thus, on a per capita basis, Victoria would receive as compensation a sum of £9,170,000, compared with the sum of £6,520,000 proposed by the Commonwealth, an increase of £2,650,000. The proposal to compensate the States on the basis of the average collections from income tax in the two financial years 1939-40 and 1940-41 thus provides for discrimination of the worst type. Where a State has provided very lavish social services, and expended money in every conceivable direction and far in excess of any other State, It will receive compensation according to its expenditure. Thus Victoria, which has not provided many of the social services which exist in other States, and has stood for prudent administration, will receive a much lesser amount. j he States which have provided these services will receive compensation .to enable them to retain these services and continue their high expenditure, whilst another State, which has not already provided these services, will he penalized and will not now he able to bring its services into line with those of other States, although its taxpayers will be called upon to bear the same rates of taxation.

Mr Morgan:

– Could not that State increase its expenditure on social services ?

Mr CALWELL:

– It will he limited in its expenditure by this scheme to the average of the previous two years. If it desired to increase its expenditure, it would have to go before the Commonwealth Grants Commission and make a case, and if the Commonwealth Grants Commission, which consists of gentlemen outside of Parliament, decided that the State could not be given any more money because of war requirements and the difficulty in raising finance, it would not be able to raise its social services.

Mr Rosevear:

– It might not have any intention of raising them.

Mr CALWELL:

– It is not a question of what it might have intended in the past ; it is a question of what it might want to do in the future. If it wants to bring social services up to the level of those existing in other States, it should not be precluded from pursuing it» very laudable desire.

I had intended to read other statements in connexion with this matter, but I think that the one which I have read summarizes the bulk of public opinion in Victoria. Victorians have always been good supporters of federation. In fact, the activities of quite a number of societies in Victoria played an important part in bringing federation about. The very idea of federation was first mentioned in the Victorian Parliament in the late fifties or sixties of last century by a gentleman who subsequently became Premier of Victoria, Sir Charles Gavan Duffy, the father of the late Chief Justice of the High Court of Australia. I refer to Sir Frank Gavan Duffy. It is true that Wentworth had his conception of what would be a great Australia, and that Parkes played a magnificent part in bringing federation to ultimate fruition although, unfortunately, he did not live to see his dreams realized. It is Parkes that we have to thank for a phrase which has lived since his death, and I am sure will continue to live for many years - “The crimson thread of kinship runs through us all “. Victorians have no reason to be ashamed of the part they have played in federation, and I am confident that if a referendum were taken, as has been suggested by the honorable member for Reid (Mr. Morgan) and the honorable member for Hunter (Mr. James), on the question of granting additional powers to the Commonwealth, at least SO per cent, of the people of New South Wales and Victoria would register an affirmative vote. And, after all, of the 7,000,000 people in this country, 5,000,000 live in those two States. Unfortunately, we have a limitation in the Constitution which requires that a majority of the people in a majority of the States must approve of any proposed constitutional change. The difficulties in the way of making changes are very great; still, great changes are being made by means of this legislation.

Mr ACTING DEPUTY SPEAKER:

– Order! I am afraid that the honorable member is rather wide of the subject now under discussion.

Mr CALWELL:

– There are four bills in this series, all dealing with the subject of uniform taxation, and I am afraid that in the course of this debate, other honorable members have wandered back through the corridors of time, and even projected themselves far into the future. If I imitate their example, and conjure up a few possibilities, surely I am as much in order as they were, or perhaps I should say no more out of order. It becomes a matter of the delimitation of State and Federal powers. To-night we are participating in an historic incident. We are considering legislation which, if passed, will fundamentally affect the future of Australia, because it will inevitably result in the destruction of the States as we know them. They might linger superfluous a little longer, but if they lose their right to impose income tax, they will become mendicants existing upon the bounty of the Commonwealth. They will, in effect, be on the dole, and for practical purposes they will cease to exist as States.

As regards the contents of the bills themselves, some of the provisions relating to rebates seem strange to me. For instance, a rebate is allowed in the case of an only child, or in the case of an elder child, or the eldest of several children, of £70 a year. For the next, and subsequent children, a rebate of £30 is allowed. I cannot understand how the draftsman should have made such a distinction between the various children. Again, a maximum of £20 is allowed in respect of funeral expenses. The cost of dying is even higher than the cost of living these days, and if funeral expenses come to £40, and the taxpayer receives £20 from a society in respect of the burial, he cannot claim the balance. No undertaker to-day will bury any one for £20. Therefore, an allowance of £20 in respect of a funeral is not reasonable. An amount should be allowed representing the difference between the aggregate paid and the amount recouped, provided such amount did not exceed £20 in respect of any funeral. Provision is also made for a taxpayer to receive a rebate in his assessment of 2s. for every £1 of interest derived from bonds, stocks, &c. We are becoming very tender in our treatment of persons who live wholly or partly upon the proceeds of rent, interest and dividends. Where is the pristine fervour of those ex-Socialists amongst us who were formerly so much opposed to the taking of interest in this way, and who thought that Karl Marx spoke with prophetic vision upon the doctrine of surplus value? I conclude by suggesting that clause 4 of the States Grants (Income Tax Reimbursement) Bill be omitted, and the following clause substituted therefor : -

In every financial year during which this act is in operation in respect of which the Treasurer is satisfied that a State has not imposed a tax upon incomes, there shall be payable by way of financial assistance to that State an amount equal to the aggregate amount that would have been received by that State by way of income tax in such financial year if the law of that State for the assessment of income taxation and the rates of tax thereon which was in force at the time of the passing of this act had continued and was in operation in the State in the financial year.

Mr ACTING DEPUTY SPEAKER:

– The honorable member’s time has expired.

Mr GUY:
Wilmot

.- I desire to add my brief quota to the debate on this very . important subject. As I realize that the Commonwealth is obliged to find approximately £1,000,000 a day for war purposes, I subscribe to the prin ciple that the full taxable capacity of Australia must be placed at the disposal of the Commonwealth. I agree that the Commonwealth must have full command of the resources of the country, and that it should not be hampered by State laws which interfere with the full exercise of its powers. As the Mills report says -

The presence in the field of six States imposing taxes on income at widely differing rates restricts the powers of the Commonwealth in raising revenue from income tax.

The varying rates and conflicting principles of taxation applied throughout the States create anomalies that operate to the detriment of Commonwealth revenue and to the confusion of taxpayers.

I agree entirely with those sentiments. War expenditure by the Commonwealth has greatly increased the taxable capacity of the States and as the result of such expenditure State revenue has also increased. Moreover, as a further result of Commonwealth expenditure, the States no longer have to provide unemployment relief, because all the unemployed have been absorbed. Surely, the Commonwealth is entitled to any benefit arising out of its own activities.

Doubts have been expressed by some honorable members regarding the constitutional validity of the Government’s proposals, but very few of us in this House are qualified to discuss that issue. We must leave it to the constitutional authorities inside and outside this chamber, but it is interesting to learn that eminent King’s Counsel are divided in their opinions. Some have advised that the proposed legislation is constitutional ; others say that it will be a violation of the Constitution. However, if the matter actually reaches the Privy Council, and the council declares the legislation to be unconstitutional, the result for Australia will be financial chaos until such time as a validating act can be passed. We must leave that aspect of the matter until this legislation is held to be unconstitutional. Whilst I generally support these measures, because I am in favour of the principle of uniform taxation, I have serious misgivings because of the fact that they do not provide for uniform taxation. They certainly provide for a uniform income tax, but, having regard to disbursements to be made to the States under one of the bills that we are now discussing, this plan is most inequitable in its effect on taxpayers in different States. After all, we are one people, and taxes should be levied equitably on all taxpayers, irrespective of the part of the Commonwealth in which they reside. There should be no preferential treatment as between citizens residing in different parts of the Commonwealth. To put the matter in another way, a taxpayer residing in a certain part of the Commonwealth should not be called upon to pay more taxes than a citizen on the same income residing in another part of this country. These bills do not prohibit the States from levying income tax, but they do more or less coerce the States out of that field. If they do not voluntarily enter into an agreement to suspend income taxation for the duration of the war, and until the last day of the financial year following the cessation of hostilities, they will be caught in another way, for the ‘Commonwealth makes it an offence for a taxpayer to pay his State tax prior to the payment of his Commonwealth tax. When the Commonwealth tax has been paid he will have no taxable margin left, and the State will be left without a field of income taxation. In addition, no compensation will be paid. The Commonwealth takes control of all records and documents, all taxation offices and officials, and prescribes a priority payment of tax ; therefore, I am justified in saying that there is a measure of coercion in the bill.

It is proposed to collect an amount of income tax from the people of Australia approximately equivalent to that collected under a combined Commonwealth and State tax, and it is also proposed to return to those Spates which agree to the scheme an average of the amount collected in the two base years 1939-40 and 1940-41, less costs of collection. On an income tax basis, the State that I represent will fare rather well; but, when taxation generally is taken into consideration, there is little or no equity in the proposal. I desire ‘uniformity, but uniformity with equality of sacrifice. In the past, some States have relied to a far greater degree than others on income tax’ for revenue purposes. For instance, the land tax collections in Victoria amount to 5s. 2d. a head of the population; in Queensland, Ss. ; in South Australia, 10s. 4d.; in Western Australia, 5s. 2d.; and in Tasmania, 7s. 4d.; whilst in New South Wales no land tax is collected, excepting an amount of about £2,000 in the western district. The taxpayers in all States except New South Wales will be obliged to pay the proposed Commonwealth tax and, in addition, the State land tax. Because New South Wales and Queensland collected more than twice as much income tax as other taxes those States will have an unfair advantage over other States, which collected only about half of their revenue taxes from income tax. Therefore, I should welcome some adjustment whereby compensation would be increased by an amount sufficient to enable State governments to reduce the land tax and other taxes to the same relative levels’ as in New South Wales, thereby achieving a measure of uniformity in total taxation. Whether postwar credits can he adopted to bring about this measure of justice to all taxpayers, I am not in a position to say; but I suggest that the Government should give consideration to the matter from that aspect, with a view to making this proposal more equitable.

I am inclined to think that the only way to secure uniformity with equity would be to have one taxing authority for Australia. If the Commonwealth took over all taxation, uniformity and equality of sacrifice could be achieved. Realizing that the Commonwealth must be supreme, I support the bill, but I urge the Government to endeavour to ‘devise a system which would be more equitable in its incidence than the present proposal. There is need for simplification of taxation and of taxation returns. Much duplication now occurs, because there is insufficient co-ordination between Commonwealth and State taxation departments. I believe that the present scheme opens a way to the provision of a more simple and effective taxing machine than has operated in the past. According to the report of the special committee which is the basis of the bills that we have before us to-day, there will be substantial economies in man-power, money and materials. . The report states that 3Q per cent, savings will be made in staffs and in that respect £250,000 will be saved annually. Notwithstanding the inequalities of which I have spoken, I support [the proposal because it will result’ in simplification of the taxation system, will produce a financial saving, and will protect persons on the lower incomes. The present exemption from Commonwealth income tax will be maintained, and many taxpayers in the lower income field will receive relief. A cursory glance at the .tables which have been distributed among honorable members shows that persons in receipt of the lower incomes ‘will benefit by a reduction of tax, but I realize that the rates are subject to revision at any time. Considerable discussion has ensued on the subject of State rights. In this period of unprecedented crisis, we are concerned not with State rights, but with our very existence. When we are dealing with such momentous issues, State boundaries should not be permitted to obtrude. After all, these rights are not being vested in a foreign government. In nearly every activity of the States, the Commonwealth exercises some controlling influence. This subject should be approached, not in a parochial, but in a national spirit. State rights must be- subordinate to national interests. I agree with the statement that has been made so frequently in this chamber that the rights of the people are supreme.

Mr ROSEVEAR:
Dalley

.- The bill which is now under consideration is one of a series of measures that will introduce the much-heralded uniform income tax, and I whole-heartedly support the legislation. Some honorable members profess to believe that this measure is a step towards unification. I wish that I could believe it. If it were true, I should welcome the bill with even greater enthusiasm than I do at this moment. The critics of the measure have declared that it is a step in the assumption by the Commonwealth of the whole of the functions of the States, and they have pointed out that from time to time the States have been prepared to concede certain powers to the Commonwealth. On a number of occasions, the people have not been generous when they have been asked to approve an alteration of the Constitution for the purpose of increasing the powers of this Parliament. With all its faults, the majority of the people still appear to favour the Constitution in its present form. If we require evidence of that we have only to recall ‘he fate of the most recent referendum in which the Commonwealth sought to obtain control of marketing and aviation in Australia. By an overwhelming majority the people defeated the proposal.

Some honorable members have stated that the Commonwealth’s gradual assumption of responsibility for social services is further evidence of its usurp.tion of the powers of the States. I remind them that although responsible government was granted in New South W ales in 1856, it was not until the advent of the Lang Government 61 years later that the thought of widows’ pensions entered the minds of State legislators. Two years later, New South Wales introduced a child endowment scheme, and that was the only State which had these social benefits. It is a compliment to the gentleman who was the Premier of New South Wales at that time, and who was .responsible for the introduction of that beneficial social legislation, that the last Commonwealth Government and the present Administration have followed somewhat tardily his example by making those social benefits Commonwealthwide. In so doing the Commonwealth has usurped the functions of only one State, because the other five States have not granted those social benefits to their people. A vast residue of power still resides in the State Governments, and, therefore, I discount the claim that this temporary legislation represents a substantial step towards unification. The Government has promised that the legislation will be limited to the period of the war and one year thereafter. It can be more truthfully said that these bills are the outward manifestation of the fact that the Treasurer (Mr. Chifley) desperately requires money for the conduct of the war, and I predict, with more certainty than the right honorable member for Kooyong (Mr. Menzies) spoke on the constitutionality of the measure, that the Treasurer next year will be much harder pressed than he is now to obtain adequate finance for the war effort. The Government cannot destroy private industry and wealth-production on the grounds of nonessentiality without affecting the income pool from which taxes are drawn. The more the Government diverts industries from pursuits of wealth production to war production, the more it will reduce the pool on which the Treasurer must draw. The present policy of diverting wealth-producing industries for the purpose of war production will substantially increase the difficulties of the Treasurer next year.

The principal justification of this legislation is the needs of war finance. The question that arises is whether the constitutional bar, to which the right honorable member for Kooyong referred, will overcome the intention of the Treasurer to pursue a more vigorous war effort, so far as governmental finance can achieve it. The matter will be decided by the High Court, and it is difficult to foretell - even the right honorable member for Kooyong refrained from being dogmatic on the subject - whether the war situation will influence Their Honours to give a judgment different from that which they may pronounce in peace-time. If the States vacate the field of income taxation, the Commonwealth will compensate them by paying to them the averageof the sum of their receipts from income tax during the last two financial years. If the States do not co-operate, they will not receive any compensation, and will be forced to depend upon their own resources. The Commonwealth Government is making sure that it will have first call on the national resources, because the first charge upon the pocket of the taxpayer will be for purposes of Commonwealth income tax. Despite that provision, some honorable members have declared that the scheme is not compulsory. I remind them that the high rate of the proposed Commonwealth income tax will make it impossible for the States to superimpose an income tax. The position reminds me of the words of the English comedian, Stanley Holloway, who, when speaking of Magna Charta, said -

It was through that there Magna Charta,

Which was signed by the barons of old.

That in England to-day you can do what you like

So long as you do what you’re told.

That element appears to be the basis of this legislation. The States can do as they like so long as they do what they are told. The right honorable member for Kooyong says that these bills will prohibit the States from exercising powers that are confirmed in the Commonwealth Constitution and, of course, government without the power to tax is not government at all. So this legal tangle willbe left for the legal fraternity to unravel. It seems that, ultimately, the High Court, without any political responsibilities, or any responsibilities for the conduit of the war, will decide whether the Commonwealth Treasurer will have the right to exploit to the utmost possibilities the field of income tax in Australia. I am prepared to concede that there are arguments for and against the proposition, although I am whole-heartedly in favour of the legislation. Some of the points in favourare that as the result of this legislation and without any great interference with the ranges of income or rates of tax the Commonwealth will have, I understand, for war purposes an extra £15,000,000 a year. Secondly, the work of the Commonwealth Taxation Department will be nearly halved, and thus man-power will be saved. Moreover, in these times when savings are necessary, at least £250,000 will be saved in the cost of tax assessments and collection. The work involved in companies in preparation of income tax returns will be halved. That will mean a further saving of man-power. The scheme will also ensureto the States revenue equal to the average revenue for the two financial years 1939-40 and 1940-41 when they enjoyed revenues inflated almost entirely by Commonwealth war expenditure. I think that that is the strongest argument that the Commonwealth has in exacting this uniform tax. It will particularly benefit New South Wales because, until last year, it had to finance child endowment and until this year widows’ pensions. That State will be in an extraordinarily sound position. Not only will it get from the Commonwealth taxation pool an amount equal to the average of its revenues in two inflated war years, but also, at the same time, it willbe relieved of the financial responsibility of child endowment and widows’ pensions. That there are some States which will benefit more than others I am prepared to admit. I join issue with the right honorable member for Yarra (Mr. Scullin), who said that particularly from honorable members representing New South Wales Constituencies there had emanated a spirit of parochialism, because they had criticized the distribution among the States of governmental expenditure on war. I was for twelve months a member of the Commonwealth Man-power and Resources Survey Committee and, during that time, I saw the munitions programme in operation throughout Australia. I saw not only the magnitude of the work in all States but also the nature of the work. As I shall proceed to point out, the nature of war expenditure is more important to the finances of the States and to the industries in the States now and after the war than the magnitude of the amount of money expended. Although tha would seem to be rather inverted logic, I hope to be able to prove it. The States will benefit hoth directly and indirectly from this legislation. I make bold to say that Victoria has had a lion’s share of the war expenditure, and that has been owing, not to the fact that it was more eminently able to do the work than, for instance, New South Wales, not because there was a greater development in that State in secondary industries than in New South Wales - I compare the two States because they are the most nearly similar in industrial respects - but because of the whole of the organization and influence of the war effort was centred in Melbourne. That was why the expansion was greater and earlier there than in any other State. I have said that it is not so much the volume as the nature of war work done that benefits a State. Both in volume and nature of work Victoria has had the lion’s share of the war expenditure, directly and indirectly. The great bulk of the development which has taken place as the result of war expenditure in Victoria will have a permanent post-war value. 1 emphasize that point. That is why I say that it depends not on the volume, but on the nature of the work. Another point I emphasize is this: It is important to look at the war expenditure in the

States from the point of view of the effect on State taxation income and we find that in Victoria the greatest war development has taken place in private enterprise; so, not only have wages and the volume of wages increased, bringing more workers into the field of taxation, but also those controlling private industries that have had the vast majority of war development in that State, have increased taxable incomes. In Victoria in the two years in question - I join issue with the Premier of Victoria on this point - there was enormous development of private industry. That is taxable industry. Furthermore, there was a vast expansion of employment, and unemployment was eliminated. That meant more taxable income among the workers and less responsibility for the maintenance of unemployed on the State. So I say that Victoria benefits from war expenditure to a greater degree than any other State and has less to complain of in this uniform taxing scheme than any other State. The Premier, Mr. Dunstan, ascribed the differences between the taxation in the various States as being due to the fact that Victoria had been prudently governed and, therefore, had low taxation, whilst in the other States there had been extravagance. New South Wales has far greater social services for the workers than has . Victoria, Its widows’ pensions, child endowment and child welfare payments are in excess of those of Victoria. We have those things ; yet the Victorian Premier says we have high taxation because we are extravagant, and that Victoria has low taxation because of prudent government, The fact that this Parliament has during the last two years passed acts conferring upon the whole of Australia child endowment and widows’ pensions is the best assurance that this Parliament does not endorse the view that they are evidence of governmental extravagance. I believe, therefore, that the argument of Mr. Dunstan that the low taxes in Victoria are due to prudent government and the high taxes in New South Wales are due to extravagant government is not generally accepted by this House. I have said that in varying ways the States will benefit as the result of Commonwealth war expenditure. Already in New South

Wales there has been a vast expansion of private business connected with the war effort. Consequently, in that State the field for State taxation has also been vastly expanded. Of course, as the Government’s war programme develops, it will be accompanied in that State by an expansion of State-owned, non-taxable factories. Whilst those industries will not contribute taxes directly to the Commonwealth, they will provide a new field for Commonwealth revenue in that the employees engaged in such industries will be taxed. Next to Victoria, New South Wales has benefited to the greatest degree through the development of industries resulting from Commonwealth expenditure. Commonwealth expenditure in Queensland has not been comparatively high ; but in that State most of that expenditure has been in respect of private enterprise, and the State Government’s taxable area in that State has been correspondingly increased. Western Australia is in the same position as Queensland, with the unfortunate difference that the development which has taken place in Western Australia has been so belated that the Government of that State will not derive through Commonwealth war expenditure very groat benefit under this proposal. That development did not take place t sufficiently early to materially benefit Western Australia’s finances. In Tasmania, Commonwealth expenditure has been relatively small. It has not been sufficient to affect the general financial equilibrium of the State.

Mr Holloway:

– Jut Commonwealth expenditure will create additional spending power in that State.

Mr ROSEVEAR:

– That is so. At the moment, I am discussing only the benefits through taxation which the State Governments have derived during the period of inflated expenditure on the part of the Commonwealth. South Australia, perhaps, fares the worst of the States so far as Commonwealth expenditure is concerned. I believe that that State has the greatest grouch against this proposal. It is true that, in South Australia, government factories have developed appreciably. However, I repeat that that State’s finances derive litle benefit, except in wages taxation, from such expenditure, whereas the other States have already benefited to a very great degree because in their case Commonwealth expenditure has been incurred in respect of private and taxable enterprise. However, South Australia has benefited insofar as this expenditure has increased the income of he workers, and has entirely eliminated unemployment in that State. That additional wage pool will be only lightly taxed by the Commonwealth. Thus, the States, generally, have benefited from the Commonwealth ; but it is not correct to place all of them in the same category so far as revenue from State- taxes is concerned except those States in which lower incomes have been taxed.

This legislation, of course, has some disadvantages. So much has already been said with respect to them by the State Premiers, and those who support the view taken by the Premiers, chat I do not propose to discuss them. It is true that other avenues of taxes will still remain open to the States. However, whilst the States enjoy sovereignty, they should also retain rights; because sovereignty, without rights, is practically useless, and one of the greatest rights the States possess is the right to levy taxes. It is generally admitted that that right is fundamental to good government. In the past, the States have had some bitter experiences in connexion with agreements made with- the Commonwealth Perhaps this proposal savours to them of the Financial ‘ Agreement and the Premiers plan to which the State were induced to become- parties some years ago. The States took some time to realize the implications of those agreements. For instance, whilst only one of the State governments originally opposed the Financial Agreement, I venture, to say that the consensus of opinion among the State Premiers to-day is opposed to working that agreement. The same observation applies to the Premiers plan. Whilst it was almost universally endorsed at the outset, the majority of its supporters came to condemn it very soon after it was implemented. The more progressive States- thus have come to learn by experience that when they surrender portion of their authority to the Commonwealth, as was the case, for instance, in respect of loans, they invariably become anchored to the more backward States. - For that reason, the Premiers plan and the Financial Agreement, which were practically universally endorsed when they were proposed, are to-day universally condemned. I hope that on this occasion that process will be reversed. To-day, the Premiers condemn this plan ; hut I sincerely trust that its benefits will soon be made manifest, and that it will he universally accepted on its results.

Some honorable members have contended that what has come to be known as the Fadden plan is to be preferred to this scheme, because that plan provided for post-war credits. I agree with the right honorable member for Yarra (Mr. Scullin) that the Fadden plan was really conceived as an afterthought, following the rejection by the States of a plan somewhat similar to this. The Fadden plan was offered as a palliative to the States. It provided for a uniform income tax, with the promise of post-war repayments of credits on an unequal basis. The, taxpayers in the States with the lower rates of State taxes were to receive greater post-war credits from the Commonwealth Government. A notable feature of the Fadden plan was that it did not fix a date for the redemption of those credits.

Mr ARcHIE CAMERON:

– And no dato can be fixed for the termination of the war.

Mr ROSEVEAR:

– No; but it is provided that -this plan will terminate twelve months after the end of the war. I do not say that the Menzies Government, which sponsored the Fadden plan, could have arbitrarily fixed a date for the redemption of the post-war credits provided under thai plan; hut it could have promised that those credits would be redeemed within, say, two, five or ten years after the war ended. The premises made under that plan were “Kathleen Mavourneen “ promises. The credits were to be repaid some day, provided the lenders lived long enough, and were very lucky. However, that plan was not acceptable to the House. I do not think that it would have been of .very great advantage to the States. Most certainly it would have given rue to nice legal points. The right honorable member for

[<»]

Kooyong said that we could not avoid the constitutional obstacle merely by endeavouring to go around it. It would be interesting to know whether the Fadden Government’s proposal was not aimed at circumventing the Constitution in the same way. After all, when is a constitutional offence committed ? That is an interesting point for lawyers. In this case, is it not committed at the time when the taxes arc collected, regardless of what promises are made? Here we have a uniform income tax scheme and a promise by the Commonwealth Government to pay back a certain amount to the States, whereas, in effect, the Fadden Government’s proposal was to collect the tax and pay a certain amount of it back to the taxpayers. Surely, if by inaugurating a uniform income tax scheme the Commonwealth is contravening the Constitution, then the offence against the Constitution is committed at the time that the tax is exacted, and not afterwards. Therefore it would be interesting to know from the right honorable member for Kooyong whether the Fadden Government’s proposal from a constitutional viewpoint was not on all fours with this one.

Mr FADDEN:

– My scheme would not have been brought into existence except by agreement with the States. That is a different thing altogether.

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES · LANG LAB; ALP from 1936; ALP (N-C) from 1940; ALP from 1941

– No doubt the much-eulogized Fadden plan was an afterthought of a scheme similar lo this, which the States rejected. If this scheme be illegal in any respect, then so also was the Fadden plan.

There is one other matter which has not been touched upon in the course of this debate, and that is tho question of post-war reconstruction, which, in its way, is-as important aa our war activities. Much has been said about winning this war, and winning tho peace afterwards, r.nd it is important that there should be some adjustment of the finances of the States and of the Commonwealth in order to make provision for the post-war period. If there be any inequalities or injustices in that period, it is certain that they will operate against the interests of the States. The uniform income tax scheme will he abandoned one year after the conclusion of the war, and the States will he left to their own resources, but we must bear in mind the possibility that, before one year after the war there will be thrown upon the States the job of extracting themselves from, or avoiding, an economic depression. It is obvious that when the war finishes the services of more than 500,000 munitions workers will become redundant. In addition to that, probably 350,000 men of our fighting forces will be discharged and will be locking for work. At present, in the course of our industrial re-organization for war production, day after day we are closing down industries which are classed as non-essential, but whether they are considered essential or not, at least they provide avenues of employment, and a pool of wealth into which all governments have dipped in order to raise revenue. If these industries were kept in existence, they would expand during the war, and at the conclusion of hostilities they would provide even wider avenues of employment than theyhave in the past. When one appreciates the fact that, by smashing private industries and converting them to war purposes, we are reducing or eliminating the wealth produced by those industries, one can visualize what the post-war situation will be, when huge numbers of soldiers and munitions workers arc thrown on to the labour market. Will the Commonwealth assume the responsibility of caring for those people until they are re-absorbed in industry? I was in this Parliament during the last depression find I know the paltry assistance that was granted for the relief of unemployment by this Parliament at a time when 200,000 men and women throughout the length and breadth of the Commonwealth were dependent upon relief work and the dole for their very existence. The most that the Commonwealth could offer them was £250,000, by way of a Christmas grant. That was the Commonwealth’s contribution to the alleviation of distress during the last depression. Have we any reason to believe that it will be any more generous in the future? I am not a fool enough to think that it will.

Mr HOLT:
FAWKNER, VICTORIA · UAP; LP from 1944

– The Commonwealth provided £400,000 for unemployment relief.

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES · LANG LAB; ALP from 1936; ALP (N-C) from 1940; ALP from 1941

– Even if the grant were £1,000,000 or even £2,000,000, could that be regarded as a substantial contri bution? Surely not. 1 am afraid that it will be less in the future because the Commonwealth will plead that all available money is required to meet commitments such as soldiers’ deferred pay, repatriation pension?, &c, and will throw the responsibility to look after the unemployed on the States. The worst effects of this legislation may not be feltby the States until after the war, because they will be prevented now from making any special budgetary provision to meet post-war exigencies. Some of the Commonwealth work now being carried out in the States as part of our war effort will have a definite post-war value, but other work such as that being carried out in South Australia will have no post-war value whatever, and will cease when the war terminates. Therefore the problem of post-war reconstruction in South Australia will he different from that in Victoria. It will be much more intense because, owing to enlistments and the call for workers in munitions industries, the primary industries of South Australia have already been denuded to such a degree that in January last, sufficient labour was not available to cut firewood for the furnaces in the fruit-preserving factories, or to pick the fruit. All the industrial development in that State has been in the Commonwealth factories which have no real post-war value. What can South Australia do, even though it may realize, that at the conclusion of the war, special action will have to be taken to rehabilitate members of the fighting forces, and men who are now employed in war undertakings which have no permanent value? What can be done to ensure the rehabilitation of the primary industries, upon which so much depends? Obviously, if the Commonwealth assumes sole control over taxation, and leaves no taxing capacity to the Status, no special provision can be made. These are the problems that the States have to face, and they are the only weaknesses that I can see in this scheme. It is a fact that the great majority of the people of Australia, regardless of the States in which they live, are imbued with one desire and that is to win the war. They are prepared to make all kinds of sacrifices, personal, physical, and monetary, in order to achieve victory.

Surely those individuals who guide the destinies of the various States have sufficient foresight to -re that the” people who are making these sacrifices have a right to demand security in a better world after tie war. Therefore “1 hope that regardless of how long the war lasts, the Commonwealth will, not by means of this legislation, but by means of a reasonable agreement with the States to meet special circumstances, take adequate steps to see that whilst the Treasurer has adequate financial power to prosecute the war to the best advantage of this nation, the States which make the biggest sacrifices new will not be sacrificed when the conflict terminates.

Silting suspended from 11.30 p.m. to 12.15 a.m. (Friday).

Friday, 29 May 191$.

Mr PROWSE:
Forrest

– I do not wish to record an affirmative vote on the motion for the second reading of this important measure without giving some reasons for doing so. If this were peace-time no one would need to ask me in what way I was about to vote. I would vote against the extension hi the powers of the Commonwealth Government, and against any further interference with, or infringement of, State rights. I have repeatedly said in this House that £1 in the pocket of a citizen in one part of Australia should be equal in value to £1 in the pocket of a citizen in any other part, but it is not >o, and the reason lies in the varying taxation demands’ made by the States upon their people brought about by Commonwealth .tariffs, navigation and other laws, favouring some States to the disadvantage of others. Now we are at war. When I last went before the electors in my division I told them that I regarded the winning of the war as paramount over everything else, and they endorsed that view. As a matter of fact, we have in Australia to-day only one industry, that of the war, together with essential subsidiary industries. We are completely and totally at war ; nothing else matters so much. I am a State righter, but no State right is more important than a free Australia. I stand for a free Australia, and all other con siderations, including State rights, must yield to that.

I like the Government’s proposals better than those put forward by the Leader of the Opposition (Mr. Fadden) when he was Treasurer. Ordinarily, we find ourselves with a certain amount of taxable income, and there - has been an arrangement between the States and the Commonwealth that between them they should take in the form of taxes just as much of that income as was reasonable. Now, in present circumstances, the States will do well if they remain financially static. They are not in the business of war to the extent that the Commonwealth is. Upon the shoulders of the Commonwealth Government and of this Parliament rests the responsibility of keeping the enemy out of Australia, and of enabling us to play our part as one of the allied nations in the fight for liberty. What I like about this measure is that it does not do any serious injury to the States. It pegs State revenue at its present level. It hands to the States for the duration of the war, and for a year afterwards, the average of their income tax returns for the last two years. They are assured of that, when, to . my mind, there exists a possibility that, if they were to depend upon their ordinary methods of revenue raising, they might be worse off. The total taxable income of the Commonwealth has increased as a result -of the expenditure by the Commonwealth of money on the prosecution of the war. This expenditure has placed most of the citizens of Australia in a much better financial position than they were in peace-time. Of course, this prosperity is evanescent. It will pass, and we shall have to pay for it in the long run because the industry of war returns no profits! It is all loss, but in the meantime, the expenditure of so much money leaves us without unemployment in the States, and places in the pockets of the people more money than they had in peace-time. The Commonwealth Government, being responsible for the defence of the country, has a Tight to all the extra revenue which may be raised by taxing the increased national income. It does nothing to strengthen my resolution to vote for this measure to hear honor: able members speak of it as a steppingstone to unification. I am opposed to unification. The Prime Minister (Mr. Curtin) knows that the people of “Western Australia are opposed to it, and to the extension of Commonwealth powers. I hare held a sort of Gallup pole of my constituents on this issue, and over 90 per cent, of them are in favour of the Government’s proposal for the duration of the war. Some of them have asked me to seek an assurance from the Government that, after the war is over, there shall be no tricky business - that advantage will not be taken of the situation to implement a political platform. I have faith in the Prime Minister in that regard. I believe that he will not take advantage of the situation, but will allow the people themselves to settle a question of that kind. I am not a unificationist; I am a State righter. I even went farther than that in the past, but I want unity when we are fighting the enemy. The States have a good deal of reason to be jealous and fearful. When they entered federation, it was said to be for the purpose of achieving unity in regard to three principal things, customs, postal services and defence. Since then, the Commonwealth has assumed the direction of a great deal more than that. It has impinged upon State rights. It has entered fields of taxation never dreamt of at first. However, any objection which we may have to this extension of Commonwealth power must be subordinated to the present need to defend the country. In that connexion, the Government’s proposal serves a proper purpose. State representatives, if they are honest with themselves, must recognize that this is not a time for the States to embark upon new enterprises. If they can receive the same revenue as before and maintain existing services, they will have very little to complain of. I like this scheme the better because it docs mean unification of income tax legislation. The people of some States may feel that they will now be called upon to pay more than they formerly did, and they are inclined to take credit for the fast that in the past they paid so little in taxes, saying that their low taxes were due to good government. I disagree with that, but even if it were true, I still say that those States which, at this time, have a high taxable capacity, should be

Mr. Prowse prepared to pay more. I honour the right honorable member for Yarra (Mr. Scullin) for the attitude he has taken up. He is a Victorian, and in his State taxes have been low, .but he recognizes that it is only just that Victoria should now pay more if it is able to do so. Victoria has derived more benefit from the expenditure of Commonwealth money on defence than has any other State. As a matter of fact, it is not only since the outbreak of war that Victoria has been in a favorable position compared with the other States. I lived in Victoria before the inception of federation. At that time, Victoria was a protectionist State, and in the shelter of its tariff, it established secondary industries. .”When the federal system was instituted, the customs barriers between States were broken down, and Victoria had the whole of the Commonwealth for a market. In Western Australia, at that time, certain factories had been established, and were developing satisfactorily. Victoria en- joyed protection against overseas competition, but we needed protection against Victoria just as much as it needed protection against more efficient competition from overseas. Thus, ever since, federation, Victoria has been in a favorable position as compared with the more distant States, and for that reason taxes in Victoria have remained low. Before the war, Western Australia bought on an average £10,000,000 worth of goods each year from the eastern States, mostly from Victoria, and sold to the eastern States only £1,000,000 worth of goods each year, leaving an adverse trade balance of £9,000,000. That money pro- vided employment in the manufacturing. States, to make profits for the manufacturers, and eventually to provide revenue for the governments of Victoria and New South Wales. The people of Western Australia have had to buy in a dear market, and its government is charged with the development of a State one-third of the area of the Commonwealth. It has heavy burdens to bear, and consequently has been forced to tax its citizens heavily, who do not benefit by it» trade-with the eastern States. Now, however, we are at war, and I recognize that taxation should be, as far as possible, unified for the purpose of carrying on essential services, and particularly those associated with the prosecution of the war. [ shall vote in favour of this measure, because I regard it as necessary for the purposes of the war effort. I am told that, by the unification of income taxation, man-power will be released. The passage of this bill ought to release manpower directly to a considerable degree and indirectly to probably an even greater degree. It will also effect a saving of money. Some people fail to understand that the Treasurer will get a greatly increased revenue, largely on account of this scheme, because of the increased taxable capacity of the people and of companies. With an expenditure for waT purposes of £1,000,000 a day, much of that money will find its way back into revenue in the form of taxes, and it must he returned to the coffers of the Commonwealth rather than to those of the States, since we are at deadly grips with the enemy.

Mr BREEN:
Calare

.I listened with great interest to the speech of the right honorable member for Kooyong (Mr. Menzies), who introduced for the benefit of lay minds many legal opinions. He quoted an opinion expressed by the present Attorney-General (Dr. Evatt) when a justice of the High Court. Mention of that opinion brought to my mind a booklet which that Minister gave to me about twelve months ago. It is entitled Constitutional Interpretation in Australia, and the author is H. V. Evatt. It satisfies my mind and dispels some of the doubts that were conjured up by the right honorable member for Kooyong. On page 2 of the booklet, the author states -

After the war, Sir Adrian Knox succeeded Sir Samuel Griffith as chief justice of the High Court of Australia, and three decisions of the court were regarded by many students as foreshadowing a permanent transfer to the Commonwealth, by judicial decision, of powers which the people, when duly consulted by constitutional referendum under section 128 of the Constitution, had refused to give. Lecturing to the University of London, Sir Robert Garran then said that the rigidity of a constitution “ can never be absolute “ and that “ a political constitution must be capable of development to meet the changing needs of the community “. He added, significantly, that “ apart from textual amendment, there are other ways in which a constitution may adapt itself to the changing conditions of the body politic. One is by the process of judicial decision “.

That supports the statement by the right honorable member for Yarra (Mr. Scullin), in reply to the speech by the right honorable member for Kooyong. The former conveyed to my mind that, despite the legal quibbles of the right honorable member for Kooyong, there is a touch of realism in our parliamentary life to-day. We are not appalled by the possibility that a decision of the Parliament might be upset by the judiciary or a High Court completely out of step with public opinion. Any doubt that I may have had owing to the remarks of the right honorable member for Kooyong was completely dispelled by the speech of the right honorable member for Yarra in the first instance, and again by reference to the booklet published by the AttorneyGeneral. Significantly enough, the quotation that I have made was marked twelve months ago by the author himself. He perhaps had some prophetic vision of such a measure as that now before the House. In the position in which Australia now finds itself, no court would upset any reasonable decision which the Parliament might make. Every instrumentality of government, legislative, judicial or executive, is directed to the defence of the country. Despite care to preserve the forms of the Parliament, we realize at present that we have to a certain degree surrendered, by virtue of the passage of the National Security Act, powers that the Parliament is very jealous of in times of peace. In reality, the Parliament meets merely to review the decisions of the Government, and to examine regulations that have been promulgated during the period when the Parliament was not in session. In no instance has any regulation so issued by the Government been upset by a vote of this House.

Mr Blackburn:

– That is not a correct statement.

Mr BREEN:

Mr JOLLY:
Lilley

.During this debate, some doubt has been cast upon the constitutionality of this legislation. In my approach to the problem, I assume that the Government has satisfied itself that it has the power to introduce a uniform income tax, and I therefore support the bill. Since the outbreak of war, I have been convinced that a unified financial policy is essential in the interests of our national economy. During the debate on the budget for the financial year 1939-40, I urged the establishment of a common purse for the Commonwealth and the States, with a central taxing authority to raise the necessary revenue. My only criticism of this legislation is that it does not go far enough; it should embrace tho whole field of taxation, and include estate duties, stamp duties, land tax, entertainments tax and a liquor tax, because it is important that these levies should be uniform throughoat the Commonwealth. If that were done, tho great disparity in the amount that Victoria will receive, compared with other States, would not occur. It is due to the fact that Victoria relies for its revenue to a much greater degree upon taxes other than income tax. Figures relating to the various taxes raised by the States have already been quoted. Our colossal war bill makes it imperative to have co-ordination in taxation between the Commonwealth and the States. Some honorable members have asked why it is necessary in this war to do something that we did not find necessary to do in the last war.. My reply is that the financial problem to-day is much more difficult than it was in 1914-1S. Whereas the total expenditure during the last war was £184,000,000, the estimated expenditure for the current financial year is £300,000,000, and that sum is being increased from day to day. Before the outbreak of war, the problem of taxation was not so serious, because the Commonwealth Government relied for its revenue almost entirely upon indirect taxation, leaving the field of direct taxation largely to the State governments. The huge war bill has compelled the Commonwealth Government to encroach to a much greater degree than ever before upon the field of direct taxation. In 1933-39, Commonwealth receipts from income tax totalled only £10,000,000; the estimated revenue from that source during the current financial year is £90,000,000.

The multiplicity of taxing authorities, with their varying rates and conditions, has created a serious problem. The Commonwealth Government is compelled to impose a uniform income tax, but under existing conditions it cannot do so without creating anomalies which, in many instances, would operate harshly against taxpayers. Some persons are called upon to pay more than their fair share, and in some instances the rate exceeds 20s. in the £1. To illustrate this anomaly, I shall refer to the experience of three taxpayers, whose returns I have examined. The first had for the year 1940-41 a taxable income of £7,589, and paid Commonwealth and States taxes totalling £7,820. The second, with a taxable income of £6,S74, paid taxes amounting to £7,040. The third, who had a taxable income of £6.774, paid Commonwealth and States taxes amounting to £6,724. The Commonwealth and State Parliaments never intended that the rate of tax would exceed 20s. in the £1. One good reason why the Commonwealth Government should, at this stage, control the imposition of income tax is that, owing to the huge increase of the national income, the State governments, without increasing their rates of tax, can secure much larger revenues than before.

Mr Holt:

– Perhaps the States would have reduced their taxes.

Mr JOLLY:

– They have not done so. In 193S-39, the States obtained from income tax £29,000,000. In 1940-41, that sum had increased to £35,000,000.

The honorable member for Dalley (Mr. Rosevear) referred to the financial agreement between the Commonwealth and the States, but I contend that the Loan Council demonstrates the wisdom of unified financial control. The Loan Council has acted not only as a check on the extravagant expenditure of loan money, but also has assured the equitable distribution of available funds. In addition, it has maintained a moderate rate of interest, which has resulted in a substantial saving to taxpayers. One shudders to think what our loan indebtedness would be to-day had the freeandeasy methods whereby State governments competed against the Commonwealth and against one another on the loan market and increased interest rates in order to secure subscriptions, been continued. The experience of the Loan Council is a strong argument in favour of the assumption by the Commonwealth of the power to introduce a uniform income tax.

– I understand that attention has now been given to the northern station.. The military advisers of the Commonwealth, which the honor able member supported, decided that no attempt should be made to defend the northern portions of Western Australia and Queensland.

Mr Archie Cameron:

– No such recommendation was ever made by the military authorities.

Mr CONELAN:

– In contrast to Victoria, Queensland is a very large State, with a comparatively small population. During the depression, the Government of that State embarked upon a public works programme in order to reduce unemployment. In that work it asked in vain for Commonwealth assistance.

It is proposed that the Commonwealth should be the sole taxing authority for the duration of the ‘war; and twelve’ months thereafter. Should the war end in the month of July, it will mean that if based on a financial year this, scheme will operate not for twelve months, but for one year and eleven months after the date on which the war ends. Immediately hostilities cease, thousands of soldiers, sailors, members of the Royal. Australian Air Force, and workers in war factories, will be thrown upon the. labour market Obviously, under this proposal, a State like Queensland will be unable to rehabilitate those people. It will be obliged, to approach the Commonwealth as a mendicant for assistance in thai direction. Despite the fact that we are now able to find hundreds of millions for financing the war, I have no doubt that immediately the conflict ends, the same old cry will be raised that no money can be found to rehabilitate our men and women now in the fighting services, and war workers. I can easily imagine how a non-Labour government of a State will fare in any request it might be obliged to make to a non-Labour government in this Parliament. The Commonwealth is also to have power to take over State taxation staffs as well as the accommodation and equipment of those staffs. It has been stated that with one taxing authority, considerable man-power will be released from the staffs now engaged in the State taxation offices. In view of the fact that some States now collect taxes on behalf of the Commonwealth, I fail to see how an appreciable saving of manpower can. be so effected. The complexity of the system of deductions associated with this uniform tax proposal will preclude any appreciable reduction of the existing staffs in taxation offices in the States. Another difficulty will arise from the fact that the retiring age of State public servants in Queensland is 66£ years, whereas for Commonwealth public servants the retiring age is 65 years. What is to happen under this proposal to State public servants on reaching the age of 65 ? Will they be thrown on the scrap-heap?

Mr SPENDER:

– ‘Those problems will iron themselves out.

Mr CONELAN:

– In Queensland, a State development tax is now in operation, and in 90 per cent, of cases this tax is collected at its source. What will happen to that money when the Commonwealth Government takes control? Are those taxpayers to be reimbursed?

Mr Jolly:

– It will all come into the income tax, then.

Mr CONELAN:

– That is not so. These people to whom I refer pay that tax at the source. It i3 all very well for members of Parliament to look at the matter in that way, because they pay their tax once a year, and are protected; but the ordinary worker pays this tax by weekly instalment at the source. Who will reimburse them?

Mr Jolly:

– It is only a matter of adjustment.

Mr CONELAN:

– That may be so; but the State has not been given a guarantee that such an adjustment will be made. The Commonwealth also proposes to take over arrears of States taxes, As is well known, many people are obliged to apply for an extension of time in which to pay their tax. I am thinking of the ordinary man who is obliged to battle along on a small wage. Probably, these late payments will total some hundreds of thousands of pounds; but the Commonwealth does not intend to allow the States to retain that money. All of these problems, and many others, must be rectified, because I have no doubt that this measure will be passed.

Much has been said in this debate about the necessity for making a total war effort, and the difficulties which confront the Commonwealth in financing that effort. I do not subscribe to that view. At no time since the outbreak of this war has the Government failed to obtain all the finance it requires to carry on the war effort. It has experienced shortages of material and equipment, but not of finance. The last loan was oversubscribed by £12,000,000. Therefore, it is not correct to say that the Commonwealth Government must have the sole right to levy income tax in order to obtain sufficient revenue to finance our war effort. Honorable members who have spoken against this measure are just as patriotic as those who have supported it. All of my relatives who are eligible to join the fighting services, or directly assist in the war effort, are now doing their share in those capacities. I, personally, offered my services to the Australian Imperial Force several months before the Labour party assumed office.

Some honorable members on this side have spoken about the platform of the Australian Labour party insofar as it urges ^Iterations of the Constitution. Section 128 of the Constitution provides that it cannot be altered without the consent of the people. Amendments must first be proposed by Parliament, but they cannot become law unless they are endorsed at a referendum by a majority of the electors, and also by a majority of voters in a majority of the States. Under the Labour party’s platform a Labour government is pledged to submit all proposed alterations of the Constitution to the people. The platform does not bind members of the party to support proposals which merely tinker with the Constitution behind the backs of the people. No one can say that Mr. Fallon, the president of the federal executive of the Australian Labour Party; Mr. Forgan Smith, the Premier of Queensland; Mr. Willcock. the Premier of Western Australia; Mr. McKell, the Premier of New South Wales; and Mr. Cosgrove, the Premier of Tasmania, do not understand -the Labour platform, or are not as loyal to it as any member of this Parliament. The whole wisdom of the Labour party is not to be found in this Parliament. These men, like myself, are pledged to work and vote for the realization of the federal platform. I pledged myself to do my utmost to carry out the principles embodied in that platform, and so did every one else, hut neither I nor any other Labour representative is pledged without consulting the people, to support a measure which will hamstring a State and prevent the government of that State from carrying out a policy which has done so much for the people. I say without fear of contradiction that the Parliament of Queensland is more democratic than this Parliament. The Queensland Parliament can alter its own Constitution as it thinks fit, and is not overridden by the High Court. It is a better instrument of social reform than this Parliament. In fact, this Parliament has not originated any reforms, hut ha3 followed in the steps of Queensland and other States which have blazed the trail with old-age pensions, child endowment, widows’ pensions and Unemployment insurance schemes. I should be glad to vote for a uniform taxation scheme if it were submitted to the people of Australia in a constitutional way.

Mr HOLT:
Fawkner

.The ostensible object of the measures which are now under discussion is to establish a scheme whereby, allegedly for the duration of the war, the Commonwealth will become the sole taxing authority in respect of incomes. As put to the House by the Government the proposal has certain obvious merits. The Government claims that the scheme will simplify our tangled taxation system and will result in a saving of man-power. It is claimed also that, as a result of this measure, additional revenue will be available to the Commonwealth for war purposes. There is even the claim running right through the speeches of many honorable members on both sides of the chamber, that this proposal has a direct constitutional appeal because it is the first big step along the road to complete unification to which they aspire. These may be very desirable objectives, and, personally, I have no quarrel with any of them; my quarrel is with the unfair means employed by the Government to achieve these objectives. It is no new thing for a government to camouflage an unfair and unpopular scheme with a popular’ catch phrase. High-sounding principles make a useful smoke screen for those who have not. the interest or energy to inquire too closely.

– Honorable members cannot have things both ways. The honorable member for New England (Mr. Abbott) says that Victoria took no action to improve the position, but neither did it do other things. It maintained what might be termed a frugal financial policy, but also it was a sound political and industrial policy which had the effect of bringing capital and labour to Victoria. Those people who claim that Victoria is the most favoured State because of its natural advantages are overlooking completely a host of most important factors. If there is one State in the Commonwealth which is endowed with great natural advantages it is Queensland. No other State can compare with Queensland from the point of view of richness of soil, resources, and other natural advantages, but I suggest with all confidence that the development of Queensland has been retarded for a generation owing to the stupid taxation policy which has been pursued by governments in that State. When the war broke out Queensland was so underdeveloped industrially that although the Commonwealth desired that war activities should be carried on in Queensland to the maximum capacity of its secondary industries, it was found that because of that short-sighted farcical policy, there was not sufficient potential industrial capacity to build up substantial war-time industries. Therefore it is no complete answer to this problem to say that some States have natural advantages, and therefore are in a more blessed position than others. Certain other factors have to be taken into consideration.

There is another matter which might conic closer borne to honorable members in this chamber. Once again I cite the case of Victoria, and in order to counter the charge of parochialism which is being levelled at me by certain snipers on my flank, I remind those honorable members that i am a native of New South Wales, and am living in Victoria in more or less permanent exile. Therefore perhaps I am in a more favorable position than my colleague the honorable member for Warringah to deal with this problem from an Australian point of view. As a people we have not dealt as generously with parliamentarians in Victoria, although theY have perhaps given ‘better service than have their colleagues over their northern border. Victorian parliamentarians receive only £500 a year, whereas in New South Wales they receive £875, and if this measure becomes law we shall be helping to ensure that they shall continue to receive that amount. This is no place in which to discuss what is a reasonable remuneration for parliamentarians, but I make the point that the Victorian legislators will be compelled for ever to gaze wistfully across the border at their more favorably situated opposite numbers if we peg State incomes at their present level. The third point for consideration is the clumsy, arbitrary and unfair basis of compensation which it is proposed that the States shall receive. The Government, without advancing any satisfactory reason, has taken as a basis the average return from income tax over the last two years. My objection to that is that there has been no analysis made of the real needs of the States, nor any proper comparison of the standards that obtain in the various States. It is pertinent to ask why that was not. done. We have, in the Common wealth Grants Commission, a .body admirably equipped to undertake the work. It has, in fact, been doing just that kind of work for years. If, after examination, it presented to this Parliament a recommendation based upon its view of what was just and equitable, we should have far leiobjection to the Government’s proposals than we have now. A cursory inspection of some of the available figures will serve to illustrate my point. On a per capita basis, Queensland will contribute to Commonwealth revenue, after the apportionment of revenue to the States is made, £10 6s. 8d. a head, and will receive as its compensation payment £5 14s. a head. New South Wales will contribute £14 7s. 3d., and will receive £5 15s., whilst Victoria will contribute £16 5s. 3d., and receive £3 10s. Id. I recognize that there are difficulties in the way of the per capita system of distribution, but it is obviously just. If the distribution were made on a per capita basis, Victoria would receive £2,900,000 more than under the proposed scheme, New South Wales would receive £3,500,000 less and Queensland £1,200,000 less.

The Prime Minister in his speech on this bill showed all his ability as a debater, but he left his sense of logic and fairness outside the chamber. I have rarely heard him utter a greater mass of inconsistencies than he did on this occasion. He made the extraordinary claim that the Government’s proposal was designed to mobilize the financial resources of the nation for war purposes. I say that that is so much nonsense. The Treasurer (Mr. Chifley) claimed that, under this scheme, he would receive an extra £12,000,000 or £15,000,000. He did not explain, however, that on the same rates of taxes he would receive very much the same amount if this scheme were not brought in at all. That is because the national income is increasing all the time. The Prime Minister, in one breath, says that it is hoped under the scheme to mobilize the nation’s resources for war, and in the next breath he says, in effect, that, under this scheme, 70 per cent, of the taxpayers will contribute less than before. Does he really mean that the scale of rates which he has placed before the House is not the scale which he means to apply? Arc those rates merely so much window dressing? The Government has endeavoured to sell the scheme to the States on the basis of the disclosed taxation rates. These amount to the sugar-coating on the unpleasant pill, so far as Victoria is concerned. Great publicity has been given to the matter of rates. The Government says, in effect, “ This is not such a bad scheme, after all. Look at these rates. You will not have to pay much more than you are paying now.” That was also the method of approach of the honorable member for Robertson (Mr. Spooner), who assisted in the fathering of this misbegotten infant. I present this dilemma to the Government. Either the rates which it has indicated are to apply - in which case 70 per cent, of taxpayers will obtain taxation relief at a time when the Treasurer is crying for all available finance for the war effort - or those rates are not to apply, in which case they are merely advertised, as a hoax upon the public and the opponents of this scheme.

There is, however, an even more serious objection. The Government still refuses, even under this scheme, which it advances as a major financial reform, to face the problem of reducing the excess purchasing power of the great mass of the people. It is, in fact, making the position worse in that regard, rather than better. In some of the States, the taxpayers on the lower incomes have been contributing more towards the revenue of their governments than they will under this new proposal. It is clear to any one with eyes to see that, in the capital cities, a great deal of unnecessary purchasing power is enjoyed by boys and girls earning from £3- to £4 a week. They have few responsibilities, and are creating a demand for unnecessary goods and services, while contributing to only a negligible degree to the cost of the war effort. It evades once again the responsibility of taxing this group in order to direct to the production of war needs human and material resources now devoted wastefully and unnecessarily to civilian requirements.

The fifth objection to the scheme is that there is a grave doubt as to its constitutional validity. The Government has proposed a revolutionary constitutional change, and is pressing forward in the teeth of bitter opposition from the State governments, and of divided opinion in the Commonwealth Parliament. It is acting, against the will of a great number of people throughout the Commonwealth. Tt cannot claim that it was given a man date to do this. If Parliament has given any definite expression of opinion on the subject, it was when the Fadden budget was before the House. All members of the then Government party supported that budget, and even the honorable member for Henty (Mr. Coles), who voted against it, expressed his approval of it as a scheme for post-war credits. At a time when we should be seeking to achieve unity, the Government is dividing the people on a major constitutional issue. There can be no doubt that the scheme represents in principle, and even in degree, a major advance towards unification. Indeed, that has been claimed quite openly by the supporters of the measure on both sides of the House. The policy of the Government is dictated partly by its financial embarrassment, which arises out of its rejection of the Fadden budget, and is also in line with the accepted policy of the party from which it draws its support. The scheme might be acceptable to the people if they thought it necessary for the winning of the war. They might have felt obliged to make a sacrifice of principle in order to achieve a necessary result, but the fact is that this scheme is not necessary for the financing of the war. Actually, the scheme proposed in the Fadden budget would have produced £10,000,000 more than it is expected to raise under this proposal, and it would have dealt more fairly as between the States. It was welcomed by the press and the public, and received very substantial support in this Parliament. It was rejected by the present Government, which now. because of the financial embarrassment arising out of that rejection, has been forced to put forward the present proposal.

I may sum up as follows: I am not opposed to the principle of uniform taxation, but this measure does not provide for uniform taxation, and neither does it give uniformity of benefits. It discriminates between States in respect of benefits, and the burden placed upon the taxpayers in the States. It evades the real financial problem of the war, that of reducing purchasing power, and diverting men and materials to essential war industries. It provides for the introduction of a scheme of doubtful constitu- tional validity. I do not propose to go farther into that point at this early hour. It has been dealt with by honorable members of all parties, and this much is clear : Whatever the High Court may decide, there must remain a degree of doubt which will create uncertainty, perplexity and hesitancy in the minds of the people and of the State governments. This is a scheme for the introduction of unification by stealth and by the back-door method. It will divide the people at a time when they should be united. It is fraught with so many objectionable features, and is so inferior to the Fadden scheme which it seeks to replace, that I have no hesitation in casting my vote against it and against every bill associated with it.

Mr WATKINS:
Newcastle

– After listening to the many speeches that have been delivered for and against the Government’s proposals, one could probably commence his speech by saying

I do not know if the cause be wrong, or if the cause be right.

I’ve had my day and I’ve sung my song, and fought a bitter fight.

In truth, at times I do not know what the men are driving at,

But I’ve been Labour all my life, and I’m too old to “rat”.

Many accusations have been levelled at honorable members on the. government side of the chamber because of the fact that honorable members of the Opposition think that this proposal represents the thin end of a wedge for the abolition of the State parliaments and the introduction of unification. Ever since I have taken an interest in politics I have believed that Australia should have one Parliament, one people, and one destiny. If the present Prime Minister (Mr. Curtin) has set out to do away with State boundaries, and to make taxation equitable in every State so far as is possible, honorable members should not be parochial, but should realize that the Commonwealth Government is responsible for the financing of the war effort. We should not speak with out tongue in our cheek, and with one eye on the interests of the nation and the other on the requirements of our own States ox electorates. Would we be in favour of establishing a navy, an army, and an air force under separate control in each of the States rather than having the fighting services united under one control ? This Parliament is asked to give to the Commonwealth Government power to tax the people according to their ability to pay. If, Mr. Speaker, you were the leader of an army in the field, would you co-ordinate your forces under one control, or would you have divided control ?

I have heard arguments in this debate against the legality of the measure before the House, and as to what might happen if an appeal were made to the High Court to determine whether this proposal was constitutional. I am not concerned about its legality or about the arguments submitted by members of the Opposition, but I have great faith in my own leaders, knowing that they have examined the legal position before presenting this measure to the Parliament. Even if these measures were referred to the High Court, I have no doubt that that tribunal would take a national view of them. I express the hope that this bill is the thin end of a wedge designed to bring about unification. The destiny of the people of this country is in the keeping of the National Parliament, and is not in the hands of the State authorities. Therefore this Parliament should be solely responsible for the collection of taxes that are required to ensure the safety and future welfare of the people. I shall conclude with the words uttered by “ Toby “ Barton over 40 years ago, when he expressed the hope that some day Australia would have one Parliament, one people, and one destiny. It is much more necessary to-day, when the war clouds hanging over this country are very dark, than it was 40 years ago, that that hope should be realized. I trust that members of the Opposition, and some members on the Government side of the chamber who have spoken against this proposal, will look beyond the State boundaries and adopt a national outlook.

Mr HARRISON:
Wentworth

– I begin with the premise that the taxation proposals contained in this measure are necessary for the successful prosecution of the war, and that the war is not being fought by the several States bat by Australia as a whole. Then I consider the position that confronts the Government in its desire to bring about a maximum war effort, and my mind goes back to the circumstances that obtained at the beginning of the war, when the Menzies Government had to face the problem of placing Australia on a war footing. The Fadden Government had also done valuable work in drawing up a war budget. Those governments were confronted with the serious problems inseparable from building up the necessary organizations for the provision of munitions and the establishment of the foundations essential to a maximum war effort. At that time, the war was being fought in Europe, and this country was not committed entirely to total regimentation, but the war is .now at Australia’s gates. Whereas previously we might conceivably have shown some apathy with regard to the war effort in Australia, the time for apathy has long since past, and it is imperative that the whole of the resources of this country should be marshalled for war purposes.

The Opposition is proud of the fact that when it was in office it budgeted for a record revenue. When the honorable member for Warringah (Mr. Spender) introduced his first budget, it aroused considerable comment. The credit of the country has been used to a marked degree in financing the war effort, and taxation has been increased tremendously. But as the war proceeds the need for increased revenue is paramount. That was explained by the figures made available by the Treasurer (Mr. Chifley), who said that for the first three years of the war the expenditure had amounted to about £515.000,000. Then he drew attention to the fact that it was quite possible that for the coming financial year the expenditure would reach the huge sum of £360,000,000. When the Opposition was in office, it recognized the necessity for longrange planning. The problem presented itself to the then Treasurer in a way that caused him to plan ahead in order eventually to take from the people of Australia sufficient money by means of taxes to provide largely for war needs. He approached the States and asked them to give approval to the introduction of a scheme of uniform taxation. Whether he eventually intended to superimpose upon that scheme post-war credits, or whether he put forward a plan for post-war credits, is entirely beside the point. The fact is that he approached the States in the first place, and suggested what he considered was the best scheme - one of uniform taxation. With one exception, the States refused to adopt the plan, and strangely enough most of the objection to-day to this legislation comes from the representatives of the particular State which originally approved of it. The Opposition, when in power, made extensive use of the credit of the country in financing the war effort, and because of the effect which that policy obviously had on prices and the general economy of the country, the State revenues became buoyant. We- found that the States were competing with the Commonwealth with regard to services and resources, and therefore I think it was wisely proposed by the then Treasurer that he should approach the States and point out why they should relinquish the field of income taxation, giving to the Commonwealth Government an opportunity to obtain the maximum amount of tax from the people, in order to increase the funds available for the war effort. Legislation has been placed on the Commonwealth statute-book to make it possible for the Government to prosecute profiteers, but I suggest that States as well as individuals are capable of profiteering. If they indulge in wasteful expenditure and maintain services that are not essential in time of war, they are merely profiteering at the expense of the Commonwealth. I instance the increased social services which have been provided in certain States. Quite recently, for instance, the widows’ pensions provided by the Government of New South Wales were increased. The problem is whether the Commonwealth or the States shall benefit from buoyant revenues. Should the increase of .revenue be used by the Commonwealth for war purposes, or by the States for parochial, political bargaining, and the maintenance of unessential services? There can be only one answer. If our desire to achieve a maximum war effort be genuine, we must extract every possible advantage from buoyant revenues.

I do not wish to discuss the constitutionality of this legislation because, frankly, I am not qualified to do so; but like the honorable member for Newcastle (Mr. Watkins) I consider that the Prime Minister (Mr. Curtin) and the Treasurer would not have given certain assurances to the House unless they had satisfied themselves that the measures were constitutional. I realize that lawyers differ upon these matters. Doctors: differ, and the patient dies. Lawyers differ, and their clients ultimately die. but first they go bankrupt. As has been made perfectly clear to the House, this measure does not prevent the. States from entering the field of income taxation. If that contention can be substantiated, it will dispose of the criticism that, the bill is ultra vires the Constitution.

Mr Menzies:

– I should like to hear the honorable member substantiate it.

Mr HARRISON:

– I shall not attempt to do so; but the excellent speech which the honorable member far Warringah (Mr. Spender) delivered convinced me that the legislation was constitutional. Even if any doubt existed about the constitutional limitations, what should we do? It is acknowledged that we must enter the field, of direct taxation to a greater degree than we have done in the past. We must utilize the full resources of the country. Honorable members who ere opposed to the bill have declared with one accord, that they believe in the- principle of uniform taxation and that the Commonwealth, must, in order to achieve a maximum war effort, enter all fields of taxation. If the only thing that prevents them from supporting this legislation is their doubt about the constitutional limitations, are they prepared to allow the States to go ahead with wasteful expenditure, or do they suggest that a referendum should be taken upon the subject? Surely they would not be so foolish as to advocate that a referendum should be held in this period of national crisis.

Mr Menzies:

– The honorable member prefers the bill to the Fadden budget ?

Mr HARRISON:

– Yes. I believe that the first attempt which the right honorable gentleman made to secure uniformity of taxation was the best. The subsequent proposal, involving post-war credits, was the- next best thing. But if

I had to choose between a scheme of uniform taxation and post-war credits, I should without hesitation select the former. Some opponents of the bill, when driven into a corner, have asserted that the Commonwealth (government should be the sole taxing authority. A few minutes ago, the honorable member for Fawkner (Mr. Holt) was challenged upon this point. He was opposing the bill to the best of his ability when he was asked whether he would support a scheme of uniform taxation. Thereupon, he stated that he preferred a uniform taxation scheme to a uniform income taxation scheme. That is the general attitude of honorable members who’ are opposing the bill. I subscribe whole-heartedly to that view ; but I believe that this legislation is the first step towards unification. Because of that I wish, to take that initial step. The opposition of honorable members from South Australia goes deeper than their mere objection to the principle of uniform taxation. They fear unification. During a referendum campaign, a slogan appeared in Sydney : “Are you a little Stater or an Australian ?” The honorable member for Melbourne (Mr. Calwell) reminded me to-day of that slogan. We are justified in asking certain honorable members whether they are South Australians, Victorians or Australians.

This legislation will remain in operation ostensibly for the duration of the war and for twelve months thereafter. I venture to suggest that once the people experience the benefits of uniform taxation, the acts will never be repealed. As I stated,, these bills are the first step towards complete unification. It is a matter, not of legal argument, but of plain common sense. The problem is whether the Commonwealth Government shall possess sovereign rights to enable it to conduct the war, or whether the States shall have the right to superimpose their sovereignty upon the Commonwealth. There should be no disagreement on that issue. The war has caused many drastic” changes in the economic budget of the individual, of business, and of governments. Parliament realizes that this is the natural sequence in the rapid change of events, and has to decide whether the present system of income taxation is better than a uniform scheme. All honorable members who have had business experience know that the present system is wasteful to the extreme, and is entirely inequitable as between State and State, and as between the Commonwealth and the States. Because of the political set-up of the various States, the taxation system has been used as a great medium for political bargaining. Under existing conditions, the States are free to enter any field of taxation, and they may very easily become a threat to the security of the Commonwealth. When I first entered this Parliament, legislation was introduced for the purpose of circumventing the activities of the then Premier of Now South Wales, Mr. J. T. Lang, in exploiting the field of taxation in that State. At that time our constitutional limitations were not stressed although the action of the Commonwealth Government of the day in endeavouring to restrict the activities of the State was open to challenge. As T have pointed out, the present system of taxation, as employed by the Commonwealth and the States, may well be used by a State, which has no sense of responsibility, in a manner that may imperil the security of the Commonwealth. On the other hand, a scheme of uniform taxation will succeed in centralizing finance. As the honorable member for Warringah Indicated, that would be most desirable, because it would permit the utilization of the full resources of the country for the conduct of the war. Unless a uniform system of taxation is introduced in the near future, the Commonwealth Government will not be able to regiment the whole of the national resources for the purpose of achieving a maximum war effort. The proposal of the Government, if adopted, will put a brake upon wasteful expenditure by the States. In a time of national danger, no State should have the right to indulge in wasteful expenditure upon unessential services, and in granting unnecessary social benefits.

Mr Archie Cameron:

– The honorable member should preach that text in Macquarie-street, Sydney.

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– The text could be preached with equal advantage to other

State parliaments. The regimentation of all the people of the Commonwealth u needed for the fighting forces and for essential production. The fighting forces should have the first call on the financial resources of the country.

The language of some of my honorable colleagues from Victoria and South Australia was more extravagantly picturesque than logical. They claimed that New South Wales would receive unfair advantages under uniform taxation. The Victorians drew attention to the fact that individuals in New South Wales would contribute less income tax than individuals in Victoria. My rejoinder is that, as a State, New South Wales contributes much more than does Victoria or any other State to She revenue of the Commonwealth. The discrepancy between individual contributions is so slight as to be of little moment. Moreover, the revenues of Victoria and South Australia are more buoyant than ever before, solely because of the money which the Commonwealth Government has expended in concentrating war industries in those two States. The money required to build the huge munitions factories operating in South Australia has been collected, not from the people of South Australia alone, but from the people of Australia as a whole, and the bulk of the Australian people live in New South Wales and the other eastern States, which are the richest States of all. When I visited South Australia to investigate its resources of man-power, I found that the- war industries there still required 20,000 males who were not registered in the State-

Mr ARCHIE Cameron:

– The honorable gentleman is suggesting that his colleagues from South Australia established war industries in that State solely for the benefit of that State.

Mr HARRISON:

– The honorable member cannot put those words into my mouth. The argument advanced is that the industries were established in South Australia for strategical reasons. The honorable member cannot have it both ways. If the eastern States are to become the front line in the defence of Australia and to resist invasion, and South Australia is to have the production of munitions, the eastern

States should have consideration in the raising of revenues. The honorable member for Boothby (Dr. Price), in his attack on those who cannot see eye to eye with him, used the language of the radio script - the language we used to hear from Mr. F. E. Baume and the ““Watchman”, and, I have no doubt, listeners in South Australia hear from the honorable gentleman himself. The honorable gentleman may hold his radio audiences spellbound, but his extravagances failed to impress honorable members. The honorable member has no right whatever to take the stand he adopted. There is no need for me to tell him that the State which he represents has been maintained .by the Commonwealth with revenues subscribed by the people in the eastern States. South Australia is now in the position of a spoon-fed boy who, seeing the spoon being taken from him, cries bitterly. This legislation has been attacked not so much because it provides a uniform income tax system ‘but because its critics fear that it is the first step towards unification. The States which those critics represent cannot be persuaded to adopt an Australian outlook favorable to unification. They think that, if they can effectively oppose this bill, they will be able to stave off for a little while longer the inevitable unification of Australia.

Mr Menzies:

– Does the honorable member recall the last referendum on an increase of Commonwealth powers in which New South Wales defeated the marketing proposals by 440,000 votes ?

Mr HARRISON:

– Possibly that did occur, but if the people of New South Wales were asked the simple question whether they favoured unification, they would say “ Yes “ by a handsome majority. The people of New South Wales want the whole thing, not half measures.

I agree that this legislation is not perfect, but, instead of opposing it, honorable members should make suggestions designed to improve it. It will be necessary to make some improvements. The comparative tables show small increases on the existing average of Commonwealth and State income taxes. Actually, however, there is a substantial difference owing to the disallowance of the deduc tion of State taxes paid. A man with an income from personal exertion of £800 a year is now taxed £179 10s. by the Commonwealth and the State. Under the proposed uniform tax his assessment will be £179 8s. If the State tax paid were deducted, his assessment would be £162. I think that some more equitable adjustment should be made in that case. In the case of incomes below £400 a year, the proposed rates of tax are in the main less than the present Commonwealth and State taxes combined. As has already been pointed out by other honorable members, earners of less than £400 a year are to be relieved of about £750,000 of tax, imposed upon their total incomes. If the need of the Government for revenue is so great as we all have reason to believe it is, the Government is not warranted in reducing the amount of taxes paid by people earning less than £400 a year. The Government will find it impossible to convince honorable members that, whereas it is necessary to increase the taxes paid by people in the higher groups of income, it is either necessary or equitable to reduce the taxes paid by people in the lower groups. A slight increase of the rates of income tax levied on lower ranges of income would return more to the Government than a big increase on the higher ranges. It will be generally conceded that claims of simplicity are not realized in the schedules of the Income Tax Bill. The schedules are so complicated that the Taxation Department will experience trouble in assessing various individual incomes. The Treasurer, I know, agrees that a taxpayer should know his liability. In the past the Taxation Department has endeavoured to make that knowledge possible by issuing a ready reckoner, reference to which enabled people in various income groups to know their liabilities. Under the schedule contained in the Income Tax Bill, however, a ready reckoner would have to be issued for each individual taxpayer. Unless people engage the services of taxation experts, they will always be at the disadvantage of not knowing whether or not their assessments are excessive. I call the attention of the Treasurer to the- chaos which resulted in New South Wales last year when the income tax “was assessed on the rateable incomes. Inquiries will reveal that income tax assessments in New South Wales are so far behind that many people will not receive them for a long time. I ask the Treasurer to consider carefully the suggestions I have just made. A number of other suggestions will be in ads when the bill is in the committee stage. As he is aware, a royal commission inquired into and reported upon the simplification of our taxation systems. That commission cost thousands of pounds, and, apparently, that money has been wasted. The Treasurer could very well have taken advantage of that report in preparing this proposal. In dealing with legislation of this kind which is entirely new, and, I hope, will remain permanently on the statute-book, we should start off with a system sufficiently simple to enable the average taxpayer to calculate his tax. I have indicated how I propose to vote on this measure. This proposal is inseparable from the requirements devolving upon us in the prosecution of our war effort. If we desire to develop to full nationhood, and to protect those things which, as a nation, we prize so much, we must accept the responsibilities of nationhood, and no longer permit the States to interfere with the natural and essential development of this country.

Mr MARTENS:
Herbert

– 1 do not propose to remain silent on* this measure. I have never opposed any proposal designed to increase the powers of the Commonwealth. Indeed, I have supported such proposals publicly, sometimes in opposition to a majority of my colleagues, simply because I believed that the Commonwealth should have the greatest possible powers. I walked twelve miles in order to cast my vote against the enabling bill, and I shall never regret that vote. No nation should tia itself inexorably to a written Constitution. The. dead hand of the past should not determine our future. We should not allow ourselves to be hamstrung in that way. A wrong impression has been created, particularly among many sections of the community, by the stand taken by the Government of Queensland in regard to this proposal. Erroneous inferences have also been drawn from the visit to

Canberra during the last few days of Mr. Fallon and Mr. Bryan, as representatives of the Queensland Labour party. It has been alleged that they came here to tell honorable members representing Queensland electorates how they must vote on this measure. They came here for an entirely different reason. I, personally, regret the fact that they were unable to achieve their objective, because I should prefer that no friction should be caused between honorable members on this side in dealing with this measure However, that is by the way. I simply take this opportunity to deny the allegation that any honorable member representing Queensland has been browbeaten. None has been asked to vote on this measure other than according to his convictions. Of course, there was a time when the executive of, not only the Queensland Labour party, but also all State branches of the party, dictated how Labour members should vote in Parliament. In those days Labour members were not even asked for their opinion. However, it is” impossible for executives of the State branches of the Labour party to adopt that attitude to-day, even should they desire to do so.

The honorable member for Fawkner (Mr. Holt) claimed that present-day conditions in Queensland have resulted from the extravagance of governments in that State. I point out to him that for a very long time Queensland was governed by governments very much akin to those which, as a general rule, have been in power in Victoria and invariably encouraged low wages and “sweating” in industry. Under such governments industries were not developed in Queensland. Victoria is a comparatively small State, with a very high productive capacity. However, it has a great area of poor land in proportion to its size, and it has not nearly so extensive a railway system as Queensland. Queensland’s railway system covers a mileage of 6,000 miles. The railway from Brisbane to Cairns is 1,040 miles, and that from Townsville to Mount Isa, 670 miles. Huge sums of money were expended on the construction of those railways. Thus it became necessary to levy comparatively heavy taxes. I also point out that Victoria and New South Wales had move orless established themselves as industrial States before Queensland was proclaimed a State. The earliest governments of Queensland were determined that the State should remain solely a primary producing State. They were not concerned with the development of secondary industries. I also remind the honorable member for Fawkner that many Victorians who have settled in Queensland have done so well that they are not anxious to return to Victoria. I admit that taxes generally are high in Queensland.; but, whilst the rates of tax imposed there on the wealthier classes are higher than those levied on corresponding incomes in Victoria, the rates imposed on incomes in the lower ranges are considerably less. Further, a higher exemption is provided in Queensland than in Victoria. Many people who have made their money in Queensland have invested it in Victoria because the “ sweating “ conditions prevailing in industry in the latter State provide greater profits. Since I became a member of this House, the number of electors on the roll for Herbert has increased from 57,000 to 68,500, although in that time the area of the electorate has been considerably reduced. That electorate contains no secondary industries, only primary production being carried on within its boundaries. Those facts clearly indicate that the State government is doing a good job.

I shall support the bill. I shall be prepared tosupport every measure designed to give greater power to the Commonwealth, as I shall support every referendum that may he taken for that purpose. I hope that a referendum will be taken, for instance, on unification. However, if such a referendum be taken, I hope that the question will be submitted clearly, and will embody the principles which Labour has always supported, namely, the establishment of a system of communal governments, possessing clearly defined powers which will enable them to do more effectively and intelligently much of the work now done from Canberra. The present lack of uniformity in our laws is tragic. In this respect, I mention the laws dealing with public health, industry, and transport. They should be uniform through out the Commonwealth. Under such a system no section of our people would have cause to worry because they lived in a so-called maltreated State. All would realize that they enjoyed equal benefits, subject directly to the national Parliament. I hope that the day is not far distant when such a system will be inaugurated in this country. I trust that this measure will be carried.

Mr ABBOTT:
New England

– I support the bill mainly because it is essential that the whole of the financial resources of the Commonwealth be fully mobilized, and, as far as possible, controlled and handled by the Government which is directly charged with waging the war. This afternoon we heard a brilliant speech by the right honorable member for Kooyong (Mr. Menzies) concerning the constitutionality of this measure. After listening to him, I felt worried because I thought that he had built up a watertight case to show that the bill was unconstitutional. Later, however, I listened with great interest to the speech of the honorable member for Warringah (Mr. Spender). In my opinion he shattered the opposing arguments advanced by previous speakers. I was then comforted by the feeling that when doctors differ, the patient, as a general rule, recovers. I feel sure that this legislation will be found to be constitutional”. No legalism or formalism should prevent us from mobilizing the resources of the nation to the fullest possible degree. It is not so much a matter of expenditure being controlled by the Commonwealth that makes this proposal for a single income tax authority essential. Ihope that in the months ahead a good deal more of the taxation of the States willbe brought under the control of the Commonwealth. The essential feature of this proposal is that it will prevent the States from competing with the Commonwealth for man-power. Since the outbreak of war, the States have not shown any appreciable readiness to curtail their expenditure, or demands on man-power. For many months they were quite prepared to continue with their peace-time programmes. For that reason, principally, I welcome the measure. The Treasurer (Mr. Chifley) pointed out that previous attempts along these lines were summarily rejected on the plea that they represented an invasion of State rights. [ have not the slightest doubt that that is so; but I maintain that the Commonwealth Government has a far greater right to demand that State rights, and the rights of the people generally, shall be subservient to our imperative need to defend this country. State rights must go by the board, in order that the supreme right to which I have referred may be sustained. The criticism levelled against the Government for its alleged failure to provide adequate compensation for the States under this scheme appears to be very shallow indeed. The proposed compensatory payments to the States are most generous. Since the outbreak of war, as the result of increased Commonwealth expenditure, State finances have steadily improved. In addition, the States have been relieved of many of the burdens which they were obliged to carry in peace-time. For instance, they have been ‘relieved of the burden of providing for the unemployed. I do not suppose that at any time in the history of this country, the revenues of State railways have been more buoyant than they are at present. Railway balancesheets up to June, 1941, reveal great prosperity. Those services are benefiting immensely from the carriage of equipment, troops and goods. In addition, unemployment relief represents an enormous saving by the States. Therefore I consider that the States have no grounds for complaint. In his secondreading speech the Treasurer said, with reference to the recent conference of Commonwealth and State Ministers that an undertaking was given to the States that the grants of financial assistance which this bill would provide, could be increased on a claim being made by a State that its financial circumstances were such as to warrant an increase, and that the Commonwealth Grants Commission would determine the extent to which the grant should be increased. That was not the formula that was recommended by the committee which was appointed by the Government to consider the uniform income taxation proposals. Paragraph IS of that committee’s report provide? that a State may submit a claim to the Commonwealth that its financial cir cumstances are such as to warrant an increase of the amount of compensation for any financial year subsequent to 1942-43, but it also provides that the Commonwealth may claim that the compensation to any State for any financial year should be reduced on the ground that the Commonwealth has relieved the State of the responsibility for an existing service provided by that State. I consider that the Commonwealth Government would have been well advised to have adopted the two-way method recommended by the committee rather than the one-way method contained in the bill. It has been claimed in the course of this debate that the rate of compensation to individual States is, in many cases, unfair and that it should be on a per capita basis. I remind honorable members who argued in that way, that some States have cost a great deal more to develop than others. For instance, Victoria has been a much cheaper State to develop than Queensland or New South Wales. In New South Wales practically the main railway system runs along a narrow ridge of the Great Dividing Range and, therefore, it has been very costly to construct. Similarly, in Queensland enormous lengths of line have been required to open up remote areas. Therefore it is unfair to suggest that the States should be compensated on a per capita basis. In addition, if that method were adopted, some States might enjoy a surplus of revenue, whereas in others there would be a deficit, with the result that claims would be made to the Commonwealth Grants Commission for additional compensation, and States which had a surplus would have no use for it, because if an attempt were made to employ it in developmental works requiring man-power, the war effort would be prejudiced. The various States governments have adopted different means of obtaining their revenue. While some States depend largely upon income tax, others raise revenue by means of other forms of taxation. In New South Wales, for instance, income tax amounts to £6 Os. 3d. per capita, and other taxes, £2 16s. 5d. per capita, making a total of £8 16s. Sd. In Victoria, income tax amounts to £3 9s. 7d., other taxes £3 2s. 8d., making a total of £6 12s. 3d., whereas the corresponding figures for Tasmania are £3 8s. Id., £3 17s. 6d.. and £7 5s. 7d. In view of the varying systems of taxation, I consider that the Commonwealth Government should take steps at the earliest possible opportunity, to examine the whole field of State taxation with a view to achieving unity. In addition to the per capita payments in the various States, all these different forms of taxation vary in themselves. For instance, in Victoria the entertainment tax amounts to 7s. 8d. ; South Australia, lis. 9d.; New South Wales, 4s.; and Queensland, Is. lOd. per capita. Land tax in Victoria amounts to 5s. 2d. ; South Australia, 10s. 4d. and Queensland, 8s. per capita. I maintain that all these avenues of taxation should be controlled by the Commonwealth Government and brought into line. Victoria at present does not derive so much revenue from income tax as does New South Wales, but under one control the difference would be evened up in the other forms of taxation from which Victoria and South Australia might obtain more revenue and New South Wales less. I maintain that the national income is the only reservoir from which we can draw taxes in the Commonwealth, and that the Commonwealth should control the whole of the revenue raising powers of the States. I do not think that the Commonwealth will ever have sufficient control over the expenditure of money to ensure the best use of man-power and materials in the war effort unless it has complete authority over the revenueraising powers of the States at least for the duration of the war. I suggest that the Commonwealth should go even further than those proposals, and provide that the compensatory grant to a State which has a surplus should be reduced by the amount of that surplus, and that States should not be allowed to increase their rates or to levy new direct or indirect taxes. In 1938-39, the total revenue of all States amounted to £124,893,000. By 1939-40, the total had increased to £130,543,000, and in 1940-41, the figure was £137,896,000. I believe that the Commonwealth must place a ceiling on State revenues, and I welcome this bill as a step towards the fixation of that ceiling.

There is one other point which I should like to make, and that is in regard to lower income groups. I fully realize that the committee was charged only with the task of bringing about a uniform system of income taxation in the Commonwealth, hut it is a pity that the position of the lower income groups has not ‘been tackled. According to the 1940-41 figures, the estimated national income of approximately £800,000,000 was distributed as follows : -

That means, in effect, that 70 per cent, of the actual income distribution pays 3.89 per cent, of the income taxation.

The demands upon the man-power and resources of the Commonwealth are increasing at an enormous rate, and it is estimated that an additional 318,000 men and women will be required very shortly for the armed forces and munitions establishments. In addition, the Allied Works Council has called for 30,000 workers. At present the primary industries are suffering from an acute shortage of man-power, and if production is to be kept up to the level required to meet home-consumption demands and overseas commitments, additional labour will have to be made available. Therefore, I believe that there is an urgent necessity to damp down the enormous amount of consumer purchasing power in the Commonwealth to-day. Possibly that purchasing power will be reduced to some degree by rationing, but it is doubtful whether that restriction alone will reduce the purchasing power sufficiently to prevent it acting detrimentally to the war effort. A large amount of voluntary saving is taking place in this country. Savings bank deposit figures show that during the last twelve months deposits have increased from £250,234,000 to £264,446,000, an increase of £14,212,000. The sales of war savings certificates between March, 1940, and March, 1942, amounted to £21,312,838, giving a yearly average of £10,656,419. That average, added to the increase of £14,212,000 in savings bank deposits, amounts to £24,868,419. That means that the voluntary savings of the community in those two directions amount to nearly £25,000,000 per annum. But those are voluntary savings and there must be many people within the income groups which are mainly responsible for those savings who are not saving. Another point in regard to Savings Bank deposits and war savings certificates is that the savings are not frozen ; they may be used at any time and can be released in such a way that they will be in violent competition with the war effort. In addition, they may cause a substantial rise of prices despite price-fixing legislation, and so lead to the creation of black markets. It is necessary for every one to make sacrifices and I contend that there should be a compulsory loan contribution throughout the whole range of income groups down to £150 per annum for a single man without dependants. Those loans would be repayable in the post-war period and would be of enormous benefit in the change over from a war-time economy to a peace-time one. In addition, they would give great assistance to new housing schemes which must be undertaken in this country when the war is over. It is necessary to remove slums, not only from metropolitan districts, but also from the rural districts. There are just as many slum dwellings in rural areas as there are in the cities. When these post-war credits were released, they would have an enormous effect in creating a demand for consumer goods not required at the present time. They would place money in the hands of the freest-spending part of the community, and would help to swing the country more quickly from a wartime economy to a peace-time economy. I intend to vote for these bills, although I may support amendments to some of the clauses. I shall vote for the bills because they will bring about a simpler form of income taxation, and will prevent competi tion between the Commonwealth and the States in the income tax field. I believe that the people, having once experienced the benefits of this simplified system, will not be prepared to go back to the bad old system of other days.

Mr HUTCHINSON:
Indi

– The measure now before the House is the culmination of a series of events which have taken place over a period of many years. We have to-day a situation which is reverse of what was contemplated during the early days of federation. Before federation, Australia was a collection of colonies, and the people in those days were jealous of their powers and prerogatives. There was in the feeling of the people for their colony a certain amount of nationalism, which was reflected in their approach to federation. Tinder the federal system the States were left with almost complete powers, whereas the Commonwealth was given only certain powers specifically prescribed. It was expected that th* States would retain full possession of the field of direct taxation, while the Commonwealth would raise all the revenue it needed by indirect taxation. It was not until 1910 that the Commonwealth first invaded the field of direct taxation. That was when the Land Tax Act was passed, and even then the purpose of that act was not so much to raise revenue as to break up large estates. It was not until the war of 1914-18 that the Commonwealth was forced seriously to invade the direct taxation field. From that time on the Commonwealth has tended to occupy an ever-increasing part of the field, and the States have tended more and more to shelve their responsibilities. During the financial depression, the Commonwealth still further extended its activities, when, owing to the conditions prevailing at the time, it was compelled to grant assistance to some of the primary industries. Even to-day it is notable that the States are failing in many respects to exercise those functions which come properly within their province. When the present war broke out, the Commonwealth was faced with the need for raising revenue on a scale never previously contemplated. A state of total war makes it necessary for the Government to control men and money. I cannot visualize the Commonwealth being prevented from obtaining the money it needs merely because the States have the right to impose certain taxes. The need for some new method of financing the war was recognized soon after the war broke out. The Fadden Government, before introducing its budget last year, made overtures to the States in an endeavour to achieve simplification of the taxation system, but the States refused to cooperate. The then Treasurer (Mr. Fadden) devised the scheme which was incorporated in the budget introduced last year. His government was defeated on that .budget, for reasons which we need not go into now, and one of the first acts of the present Government was to appoint a committee to inquire into means for simplifying income taxation, and for raising more revenue. Every parliamentary member of that committee had previously expressed his views on the subject in no uncertain way, and it was, therefore, only to be expected that the committee would evolve a scheme in conformity with the views which they had expressed. The present scheme is very similar to the plan outlined by the right honorable member for Yarra (Mr. Scullin) when speaking on the Income Tax Bill of 1940. One might say that the right honorable member for Yarra is the author of the present scheme. The honorable member for Robertson (Mr. Spooner), another member of the committee, has long been in favour of. a single taxing authority, and he could be relied upon to support the right honorable member for Yarra. I do not know whether Professor Mills had an open mind on the subject or not, but probably, when he found himself in the company of the other members of the committee, whose minds were already made up, he said, “ You fellows have your scheme all ready, so we may as well call it a day “.

Mr SPENDER:

– I think that he advocated a similar scheme in 1933.

Mr HUTCHINSON:

– If that is so, then they were unanimous. The committee was, in effect, a biased committee because its members were already committed to certain views. This is not a uniform taxation scheme in that it does not cover all forms of Commonwealth and State taxation, but it is essentially a uniform income tax scheme. If the scheme made for equity I should welcome it. I find no fault with the principle that, in time of war, the Commonwealth should be paramount in finance. I do not object to the simplification of our complex taxing system, but this scheme is merely the foundation stone, and we must consider the nature of the edifice which is destined to be erected on that foundation. When one does that, one immediately becomes antagonistic. It is evident that the scheme, far from producing unity, will result in discord and litigation.

The main objection to the scheme is that it lacks the essence of equity. The bill seems to me to have strange ethics. It extols extravagance and condemns frugality. The two States that will be heavily hit are Victoria and South Australia. Those States have been noted over a long period for safe and prudent government. In Victoria, we have had no John Langs or Theodores. Social services have cost less in Victoria than in other States because of the policy pursued by successive governments in Victoria, whether Labour, Country party or nonLabour Ministries. In the wake of capital has flowed man-power, and in the wake .of industry and man-power has followed a standard of living which, I think, is unparalleled in any part of the Commonwealth, and possibly in any. part of the world. Because Victoria has followed on those lines and has not indulged in extravagances such as the palatial bathing pavilions seen on the north-coast of New South Wales, it is now to -be penalized for its frugality.

New South Wales is to receive out of the £33,000,000 mentioned in the bill the sum of £15,356,000, or £5 10s. 7d. per capita or 46 per cent, of the total; Victoria is to receive £6,517,000, or £3 8s. Sd. per capita, or 19.5 per cent, of the total ; whereas Queensland will get £5,821,000, or £5 14s. 4d. per capita, or 17.4 per cent, of the total. Taking into consideration the net contributions which the people in the several States will make to the Commonwealth for the purpose of financing the war and carrying on various government services, one finds that Victoria will contribute £16 5s. 3d. and Queensland £10 6s. Sd. as compared with £14 7s. 3d. per capita which will be contributed by New South “Wales; but Victoria will get back only £3 Ss. 8d. per capita as compared with £5 10s. 7d. per capita in New South Wales. The position of the people of Victoria and New South Wales is much more comparable than that of the people of the other States, because those two States have attained similar standards. The incomes of the various classes in New South Wales compare closely with those of the various classes in Victoria, and it can be seen at once that under this bill Victorians will fare badly.

I do not favour per capita payments to the States because the stages and conditions of development in the various States are dissimilar, but one gets a wider view of the scheme if one looks at what would be the position if per capita payments were made. Victoria would then receive £2,900,000 more, New South Wales would lose £3,500,000, and Queensland would lose £2,100,000. Therefore, it appears that Victoria is getting a raw deal under the scheme. A similar remark could be made with regard to South Australia. The disparity is heightened when one considers the methods by which taxes are raised in the different States. New South Wales raises £6 0s. 3d. per capita by direct taxation and only £2 16s. 5d. per capita by indirect taxation, whereas Victoria gets £3 9s. 7d. per capita by means of direct taxation and £3 2s. 8d. per capita by indirect taxation. In New South Wales the field of indirect taxation is hardly touched, although in Victoria roughly half of the total sum raised is obtained by direct taxation. Therefore the capacity of the people on the lower incomes to maintain their standard of living must be less in Victoria than in New South Wales. Superimposed on the higher indirect taxation operating in Victoria comes the much higher indirect taxes levied by the Commonwealth. The burden of indirect taxation is higher in Victoria than in New South Wales, yet, under this formula, Victoria will pay much more into the Commonwealth pool than New South Wales, and will receive substantially less.

In New South Wales, practically no land tax is levied. The total land tax in that State amounts to only £2,411 annually. In Victoria, however, £492,000 if raised by means of the State land tax. There again we have a big discrepancy. In New South Wales the State would be able to raise some hundreds of thousands of pounds, if not £1,000,000 or more, by increasing indirect taxes to the same degree as in Victoria. That State, with its high indirect taxes, has not the same latitude in that regard. These facts are well known to the people of Australia. The adoption of the proposed inequitable system would tend to cause trouble which in these times we should all be anxious to avoid. In addition, in the last few days, Tasmania and Western Australia have apparently been able to extort from the Commonwealth additional sums of money which immediately affect the formula laid down in this bill. There is a feeling in the community that, if governments are of a certain political colour, more money is available in the pool for them than for the governments of other States.

One of the main virtues of the scheme, according to the right honorable member for Yarra, is that it will effect a saving of man-power. The committee which investigated the proposal estimated that it would release 1,000 men for war work, and result in a saving in the gathering of taxes of £275,000 a year. I doubt whether anything like that saving of man-power and money will be made. If such a saving be possible, some of the States must now be unduly extravagant. The Taxation Department of Victoria has gone closely into this matter and the Government of that State has been informed that there will be a saving in man-power in that State of only 43 male employees. Where is the rest of the saving to be made? If the saving in Victoria will be 43 persons, it should be about 60 or 80 in New South Wales. According to the figures presented to the Government of Victoria by the State Commissioner of Taxation, I doubt whether any great saving of manpower will be made as the result of thi3 scheme. Many, if not all, members of the Opposition are impelled to support the Fadden Government’s scheme, which contained no provision that would result in litigation or discord. The Fadden budget was received favorably throughout the Commonwealth.

Mr Frost:

– Where?

Mr HUTCHINSON:

– Throughout the Commonwealth.

Mr Frost:

– What became of the Fadden Government?

Mr HUTCHINSON:

– It was not thrown out of office because of faults in its budget. The honorable member for Henty (Mr. Coles) stated that he found no fault with the budget. I am convinced that the more the people examine the Fadden Government’s scheme, the more they will appreciate its good points. The scheme was so designed as to provide vary-, ing amounts of post-war credits in the different States for the purpose of removing inequalities. The principle was the adoption of a uniform national contribution, from which ‘was deducted Commonwealth taxation for the current year, and State taxation for the previous year, the balance being represented by post-war credits. That scheme had the advantage of creating what may .be described as “ deferred pay “ for thousands of people, and removed inequalities that exist in the present system. In addition, the scheme attempted, and went a long way towards achieving, the withdrawal from the masses of the community some of their excess purchasing power. The scheme was so designed as to produce equality as between State and State, and by effecting a reduction of the demand for consumer goods, would release man-power for the war effort. The Government has yet to attempt something along those lines. During the past few months people have indulged in an orgy of spending as a result of the failure of the Government adequately to withdraw excess purchasing power from the public. At the outbreak of war the national income was £700,000,000 per annum. Last year it rose to £800,000,000, and competent authorities have estimated that next year it will be approximately £1,100,000,000. That means that nearly £400,000,000 is passing from hand to hand, mainly among people in the lower and middle income groups. This has caused an orgy of spending, which has compelled the Government to introduce the rationing system. People are now comparing “ Fadden’s fair finance “ with “ Curtin’s coupon queues The Government will be obliged to restrict this enormous volume of purchasing power. I do not regard the proposed new rates of tax as representing anything more than a subject for honorable members to discuss. As the honorable member for Fawkner (Mr. Holt) stated, the rates are the sugar-coating of the pill. The time must come when the Government will be compelled, by force of circumstances, to tax the lower income groups in order to finance the war. When the Government does so, the real benefits of the Fadden Government’s scheme will become apparent to the general public. The following figures, which are based on Victorian incomes, illustrate my contention: -

The Fadden Government’s proposal abolished existing inequalities as between State and ‘State, and was much more acceptable to those States which had, in the past, conducted their finances prudently. But the outstanding advantage was that it provided for people ‘who to-day earn and spend easy money a nest-egg that would be of inestimable value to them in the difficult post-war era. Whilst I agree that a unified system of taxation is necessary and that the Commonwealth Parliament should exercise supreme power over finance an war-time, I cannot support the proposal of the Government, and I am driven, not unwillingly, to realize the advantages of the Fadden budget.

Mr FRANCIS:
Moreton

– I regard the proposal of the Government to introduce a uniform income tax system as the most revolutionary proposition that the Parliament has been asked to consider for at least two decades. Before I deal with the proposal, I shall refer briefly to the observations of the honorable member for Griffith (Mr. Conelan), who stated that Queensland has not experienced a financial impetus arising out of Commonwealth, war expenditure.

Mr Conelan:

– Until a few months ago.

Mr FRANCIS:

– Lest the honorable member is not aware of the explanation, I shall add to his knowledge of the subject by quoting from a statement by Mr. Leggat, a prominent member of the Australian Labour party and an advocate of the Engineers Union. The transcript of the evidence given before the Commonwealth Arbitration Court at the basicwage hearing in March last contains the following passage: -

I make the definite assertion that this State will face up to the post-war problems better than any other State because we have prevented, to a great extent, the introduction of temporary repetition production works in this State because we could see that after the war this repetition reproduction will go out of existence and the State that indulges in it at present will then be faced with a surplus employable population.

If Queensland has not experienced the impetus, the explanation lies in the fact that a deliberate effort was made to avoid it. Incidentally, Mr. Leggat is a member of the Board of Area Management, which deals with the production of munitions and the allocation of munitions annexes.

Tho proposal of the Government to introduce a uniform income tax system is similar in principle to the proposal which the present Leader of the Opposition (Mr. Fadden) when Treasurer submitted to a conference of Commonwealth and State Ministers. His plan was rejected ; only the Premier of South Australia, Mr. Playford, supported it. Later, Mr. Fadden, when Prime Minister and Treasurer, proposed an alternative scheme, involving post-war credits. A national contribution was to be assessed on every income in excess of £100 per annum earned by single men and women. From the national contribution was to be deducted Commonwealth income tax payable in the current year, and State income tax payable in the previous year. The balance was to be collected as a loan, and known as “ post-war credits “. Under that scheme practical uniformity would be achieved, and disparities between lower and higher taxed States would be avoided. The principle of post-war credits is infinitely preferable to the present proposal. The introduction of a compulsory savings plan would indicate to each individual the minimum amount of savings that the Government expected him to contribute to the war effort. Such a plan would be equitable if it were applied- in strict proportion to the capacity of every individual to contribute. Whilst it would achieve the main objectives of the Government’s plan, it would have the added advantage of establishing equality of sacrifice in war-time, and creating a nest-egg for taxpayers resident in States that have been frugal and careful with their finances.

The proposal of the Government aims not only at stabilizing the finances of the nation in a period of great emergency, but also at effecting far-reaching economies in taxation administration. The reform if adopted will save taxpayers considerable labour and expense in preparing their returns. The report of the special committee on taxation claims that the adoption of the Government’s proposal will result in a reduction of administrative expenses amounting to £250,000 annually, and will release 1,000 men for the fighting forces. As an example of the simplification of procedure and the resultant reduction of expense, I quote the following passage from the Bulletin: -

As things are, not only concerns hut individuals drawing income from two or more States have to waste time and money preparing unnecessary returns, writing unnecessary letters, stamping them unnecessarily and making out unnecessary cheques. In the case of companies with interstate connexions these superfluous operations not only amount to chronic business worries but make no inconsiderable addition to annual expenditure, especially as they an always accompanied by unnecessary arguments.

One case - one of a thousand - has been stated -

My company operates in every State. We prepare seven returns and pay fifteen different income taxes - three federal, twelve State. We find it necessary to lodge objections against at least half of the assessments, because of departmental interpretation of sections of the various acts. At present we have objections outstanding in respect of Queensland income tax for 1930, 1940 and 1941. It will take at least a further year to clear these up. Recently we were able to come to a satisfactory arrangement with the New South Wales Commissioner for the adjustment of assessments for 1938, 1939 and 1940. We were congratulating ourselves on having acquired a good knowledge of the New

South Wales statute when along came Mr. McKell’s new act. Our 1941 assessment for tax under this act has just been received. It has so many errors that, judging from past experience, it will take at least a year to straighten it out.

But comparatively small taxpayers are not pared.

Take the case of a man who draws £250 or £300 per annum from a job in New South Wales and £150 or bo from an investment in Victoria. Three sets of income tax papers are required from him - one by the New South Wales Taxation Department, one by the department in Victoria and one by the Commonwealth Central Office in Melbourne. That means three assessments, arrived at in the tedious official way by three lota of government employees, and three cheques. If the victim claims medical or hospital payments as a deduction from taxable income he is expected to send his receipts to the New South Wales department, get them back and post them to the Commonwealth Central Office, otherwise the claim will not be allowed. And if he thinks he has been overtaxed by one or more of the three collections of departmental bosses, as he often does, he has to engage in more correspondence or decide in bitterness that it isn’t worth the trouble.

Those are good examples of the problems and annoyances which beset people when they try to make out their income tax returns under present conditions. Whilst these proposals fall short of those contained in the Fadden budget, they will certainly relieve taxpayers of considerable inconvenience. The failure of the State governments to submit alternative proposals makes their opposition to these proposals all the more deplorable. I emphasize that this legislation is limited to the duration of the war and one year thereafter, and that it has been submitted for the sole purpose of ensuring that the Commonwealth shall have at its disposal the moneys essential for the successful prosecution of the war, which is now costing about £1,000,000 a day. The Commonwealth Government’s expenditure of £350,000,000 per annum on the war has greatly increased the revenue of the States, and it is rightly claimed that, since this extra revenue is owing to Commonwealth activities, the Commonwealth should have first call on it. The terrific task which war has imposed on this nation should be borne equitably by all sections of the community. The pooling of Commonwealth and State taxes and the imposition of a uniform rate of income tax will re move anomalies and equalize the burden. The imposition of a uniform income tax will mean increased payments by some taxpayers and reduced payments by others. The effect in Queensland will be that all taxpayers will enjoy reduced income tax payments. Under the uniform scheme the total collection of income tax in Queensland will be £16,504,000. Of that amount £5,982,000 will be paid to the State Government in compensation. The net contribution to the Commonwealth will therefore be £10,522,000 or £10 6s. 8d. a head. The net per capita contribution to the Commonwealth in all States will be as follows : -

The total income tax collections from each State and the compensation to each State are as follows: -

The following table sets out the proposed uniform income tax compared with present total taxes on income from personal exertion of a Queensland taxpayer with a dependent wife and one child: -

There will be similar reductions on ail other incomes. It will be seen that, of the three most populous States, Queensland taxpayers pay less per capita to the combined income tax revenue and receive more per capita in compensation than formerly. The rates proposed will return the same revenue on the same level of incomes existing in the last two years. It is clear, however, that incomes are rising appreciably because of the huge war expenditure, and it is estimated that the increased taxable capacity will return from £12,000,000 to £15,000,000 additional revenue. For defence reasons it is important that all this extra money should flow into the Treasury of the Commonwealth, ‘because the Commonwealth is responsible for the prosecution of the life-and-death struggle in which we are now engaged.

The States have raised the issue that these proposals are an infringement of State rights. Everything we are doing to defend ourselves infringes the former rights of some one or other. Many thousands of young men have been called from their studies or work, into the defence forces, and almost all have suffered considerable financial loss. Many industries are being closed down on the ground that man-power and material used by them are essential to the war effort, whereas the industries are not. Men are compelled to work in war industries, and cannot leave their employment without permission. All that is an infringement of the liberties of the individual. The war demands that all our resources be marshalled, and, but for the war, my vote on these measures might be different. The only thing that counts with me to-day, however, is the winning of the war, for, if we do not win it, all our rights and liberties will go for ever. As a principle, however, it is wrong for one government to collect money and another government to expend it- The government that expends the money should be the government that legislates for its collection. The Government’s proposals are far from ideal. I support the principle of uniform taxation, and this is a step in that direction. I shall support these proposals, although I do not ap prove some of the details. I much prefer the post-war credits of the Fadden budget, which provided for equality of sacrifice during the war and the provision of funds to assist the taxpayers in the difficult days of post-war reconstruction. I conclude with the hope that in the committee stages these proposals will be amended in such a way as to make them more equitable.

Mr McEWEN:
Indi

I listened with interest to the speech of the Prime Minister (Mr. Curtin), in reply to the clear, comprehensive criticisms of this proposal by the Leader of the Opposition (Mr. Fadden), because I thought that -we could expect from the head of the Government the best argument which could be used in defence of this legislation. In common with all who listened to the Prime Minister, I was disappointed. He made a very interesting speech, in respect of a great deal of which many could find themselves in agreement, but it was notable for the fact that it was not directed to the legislation now before honorable members. The right honorable gentleman regaled the House with a dissertation upon the virtues of a system of uniform taxation and of the regulation of legislation and administration in the federal system. The points he made are points with which few, if any, honorable members would disagree. Unfortunately, the Prime Minister, one of the ablest debaters in this Parliament, completely evaded the issues raised by the Leader of the Opposition. 1 find myself on no new ground in saying that I entirely agree that there should be a re-alinemcnt of the constitutional authorities of this country - the Commonwealth Government and the State governments. I have always held the view, and often expressed it here, that the States should be subordinate to the Commonwealth and that they should legislate and administer in respect of matters delegated to them by this Parliament. That, of course, would require that the States be empowered to levy taxes for the carrying out of the specifically delegated functions, or that this Parliament should make such subventions as were necessary to enable those functions to be carried out. It was on those lines that the Prime Minister poke, but that has nothing to do with this legislation. This legislation bears the label “ uniform tax,” but it bears the scantiest resemblance to a uniform tax. Holding the views which I have just expressed, if I were unable to secure those great reforms, I should support any substantial step towards establishing the greater authority of this Parliament, provided such a step did not involve the perpetration of gross inequities. It is from that aspect that I have examined this measure. First, this measure is but an insignificant step towards establishing the greater authority of this Parliament vis-a-vis the States; and it embodies intolerable inequities. It is proposed to compensate the States for the surrender of their right to levy income tax by giving them some subventions. Whilst those subventions are to be voted by this Parliament, no attempt whatever is to be made to regulate the expenditure of that money by the States. Thus, the States will have no responsibility for raising the revenues which they will expend. That is a cardinal objection to this proposal. Secondly, it is claimed that this measure will establish uniformity of taxation; but no attempt is made to ensure that such uniformity is accompanied by equal entitlement to benefits by the citizens of the Commonwealth as a whole That is inequitable. It is proposed to give to States, which have built up certain standards of public and social services, a subvention which will enable them to maintain those services at their existing levels. At the same time, the taxpayers in those States will enjoy a reduction of taxes. That in itself would not be cause for criticism, were it not for the fact that the subventions to be paid to other States will oblige those States to peg their public and social services at lower levels, and, at the same time, the taxpayers in those States will be obliged to pay higher rates of taxes. That is the case in respect of Victoria, for instance. That is an intolerable proposal. The amount of money that will be paid by way of compensation to Victoria will not enable that State to proride public and social services of as high a standard as those provided in other

States. For instance, a system of pensions for coal-miners operates in New South Wales.

Mr Chifley:

– For which the miners themselves help to pay.

Mr McEWEN:

– Yes ; but such payments are aided by a subvention from the State Government. That social service may be small, perhaps, but it is of considerable importance in New South Wales. Coal-mining does not exist in Victoria; and the pegged subvention which Victoria is to receive will not enable that State to introduce such a scheme. In Queensland, public hospital* are substantially aided from the State consolidated revenue, whereas in Victoria such institutions are substantially maintained by public contributions. Those States in which public hospitals are substantially maintained from State consolidated revenue will receive from the Commonwealth sufficient to enable them to continue their present system, and the taxpayers in those States will enjoy a reduction of taxes, whereas Victoria, for instance, will not be enabled, out of the compensation it is to receive, to establish a similar system, although, at the same time, the taxpayers of Victoria will be obliged to pay higher taxes. In Tasmania, public health services in country districts are substantially nationalized, being financed from State consolidated revenue. Such services will be financed from the subvention made by the Commonwealth to Tasmania. In Victoria, the public health services in country districts are not nationalized to any degree whatever; but it will not be possible for that State to implement legislation similar to Tasmania’s legislation in this respect, because it will not have the necessary funds to do so. At the same time, taxpayers in Victoria will be obliged to pay higher taxes. Many other instances of this kind could be cited. However, I do not propose to labour the point at this early hour of the morning. The injustices I have described constitute charges against the propriety of these proposals. If time permitted, I should like to advance further arguments against them. However, my leader has spoken substantially along the lines I should like to follow; and the honorable member for Fawkner (Mr. Holt) and the honorable member for Deakin (Mr. Hutchinson) have pointed out in very strong terms the inequities of this proposal. The Prime Minister, when replying to the Leader of the Opposition (Mr. Fadden), said that this measure was introduced for the purpose, in part, of mobilizing the man-power and financial resources of the Commonwealth. No one can offer criticism against that objective. Normally, it would be sufficient to compel every honorable member to support the measure; but we find that this proposal bristles with inequities. It will give to a vast number of taxpayers a reduction of tax, and to a considerable number complete remission of their taxes. Thus it is a travesty to describe the proposal as a step towards the greater mobilization of the man-power and financial resources of the country for the conduct of the war. Instead of making for a greater measure of order and equity, it will cause chaos. The proposal cannot justly be described as a proposal for uniform taxation. It is nothing more than a gullible version of Labour’s policy, and will bring about confusion and division in the ranks of our people at a time when complete unity is essential.

Mr BECK:
Denison

.This wearisome debate is drawing to a close. My remarks will be brief. In fact, I rise to speak simply because I do not wish to cast a silent vote on the measure. I agree entirely with honorable members who have approached this matter from a national point of view. We have heard weighty arguments for and against the legality of this proposal. However, I am not concerned about its constitutional aspect. We shall have no constitution at all if we waste as much time in trying to win the war as has been wasted in this debate. Any State which raises the constitutional aspect at a time like the present will do a grave disservice to the nation. Therefore, I hope that no State will do so. The Prime Minister (Mr. Curtin) proved conclusively that the Commonwealth’s case for uniform taxation is unanswerable. In this time of national crisis, the expenditure of the States should be curtailed as much as possible, in order that every available £1 shall be expended on our war effort, which is the only matter of real importance at the moment. This proposal will cause no hardship to any State. It should help to improve our war effort by releasing many employees now engaged by the States on work not directly connected with the war. How can any State claim to be assisting our war effort if it insists that its revenue be increased at a time like the present ? Only one government is entitled to increased revenue, in the existing circumstances, as the result of expenditure by the Commonwealth Government, and that is the Commonwealth Government itself. At the same time, no one can justly claim that this proposal will bring about real uniformity of taxes. It reeks with inequalities. South Australia and Victoria, for instance, will be placed at a serious disadvantage. However, sufficient has already been said on that aspect. The honorable member for Deakin (Mr. Hutchinson), and other honorable members, stated that the support of Tasmania for this proposal had more or less been bought by increasing the grant to that State. The Treasurer (Mr. Chifley) has fully explained the reasons for the extra allocations to that State. Any allegation that Tasmania’s support for the proposal has been bought is entirely without foundation. There was an essential fallacy about the Tasmanian figures as at first presented. The figures on which the original allocation was made were not a true reflection of the income of that State during the period on which the allocation was based. At the time when Tasmania began collecting its taxes by instalments, the wages tax was abolished, and, generally speaking, the business of taxgathering was thoroughly disorganized. Many assessments were sent out months later than usual. Therefore, the Tasmanian position is quite clear. The Government realized that the Tasmanian allocation would have to be increased to bring it to its proper proportion. It is quite erroneous to suggest that Tasmania’s support was bought by the Government.

I do not propose to speak at length on this measure, because I realize that the debate has dragged on long enough. Generally speaking, I support the measure with all its imperfections and inequalities.

I support it because I believe that it is a step in the right direction. It will rid the taxpayers of Australia of many of the difficulties which they now encounter in the maddening maze of taxation laws. It will also reduce the huge expenditure which some individuals and businesses have to incur in the preparation of income tax returns. This is the beginning of real uniform taxation and I hope that all taxation will be placed on the same basis as soon as practicable.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– in reply. - I assure honorable members that the Commonwealth obtained very reliable legal advice in regard to the constitutionality of this measure, and the other bills associated with it. This measure has been framed largely in accordance with advice tendered by eminent legal authorities who have expressed the opinion that it is entirely constitutional. I, personally, although only a layman, did not doubt the capacity of the Commonwealth to impose whatever taxes it desired to impose.

Certain suggestions have been made in regard to the special committee on taxation, but I am sure that no honorable member doubts the integrity and the ability of the right honorable member for Yarra (Mr. Scullin). Also, I am confident that honorable members on both sides of the chamber, regardless of differing opinions, appreciate the technical ability of the honorable member for Robertson (Mr. Spooner) to deal with the more complex phases of taxation. Professor Mills, of course, occupies an eminent position in the public life of this country, and I remind honorable members opposite that he was selected by a government which they supported as a member of the Royal Commission on the Monetary and Banking Systems. It seems, therefore, that honorable members opposite appreciate the ability of Pro.fessor Mills to deal with questions of a national character such as this.

I was amazed at the parochial outlook displayed by some honorable members in the course of this debate. I was surprised to hear the honorable member for Barker (Mr. Archie Cameron) vigorously working the handle of the parish pump, because, whatever differences of opinion there may be between the Government and the honorable member on political questions, I have always given him credit for taking a broad national outlook on important questions affecting the Commonwealth.

The fundamental reason for this legislation is that, as the Commonwealth has been responsible for the creation of the present great buoyancy in revenues and incomes, and the greatly increased taxable capacity of the people of Australia, the Commonwealth should reap the benefit, in order to prosecute the war. 1 need not add any figures to those which have already been given by the Leader of the Opposition (Mr. Fadden), showing conclusively that the States are receiving greatly increased revenue in the income tax field, apart altogether from other benefits derived from services supplied by the Commonwealth or performed by the States on behalf of the Commonwealth. This Government realized, as did the previous Government, that there was a greatly increased amount of money in circulation, and that without exerting any effort at all, individuals and organizations were making private gains as a result of increased Commonwealth expenditure. The States found themselves in the position of receiving easy money, and there was no evidence of an endeavour on their part to curb expenditure. In fact, the States have always been willing to hold out their hands for loan moneys, despite the ever-increasing expenditure required for the defence of this country. When I referred to mendicant States I intended merely to remind the House that when the States were informed of the possibility that, owing to Commonwealth needs, money could not be raised for State purposes, they were very glad to accept loan moneys advanced by the Commonwealth Government. My own impression is that the States are always very glad to obtain money, whether it be handed to them in the form of grants, or extracted from the people in the form of taxes. However, these matters, as well as the conservation of man-power and the saving of expenditure on the collection of taxes, although important, are incidental to the main object of this measure. In addition, a uniform tax scheme will reduce the complexities which confront the public in compiling income tax returns. On that ground alone, I am sure that the Australian public will welcome a measure such as this. Despite the criticism that has ; been voiced by various honorable members, the Government has gone on with this measure, not only because it believes it to be necessary in the interests of the war effort, but also because it believes that the overwhelming mass of the people of this country support a reform such as this.

Question put -

That the bill be now read a second time.

The House divided. (Mr. SPEAKER - Hon. W. M. Nairn.)

AYES: 41

NOES: 11

Majority . . 30 .

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

Bill - by leave - read a third time.

page 1747

STATES GRANTS (INCOME TAX REIMBURSEMENT) BILL 1942

Second Reading

Debate resumed from the 15th May (vide page 1291), on motion by Mr. Chifley -

That the bill be now read a second time.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Speaker - Hon. W. M. Nairn.)

AYES: 41

NOES: 11

Majority 30

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time and committed pro forma; progress reported.

Message reported recommending appropriation for the purposes of amendments to be moved by the Treasurer in this bill.

In committee (Consideration of GovernorGeneral’s message) :

Motion (by Mr. Chifley) proposed -

That it is expedient that an appropriation of revenue be made for the purposes of amendments to be moved by the Treasurer in a Bill for an Act to make provision for the grant of financial assistance to States, and for other purposes.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– I shall do so. When the special committee on taxation considered the revenues of the various States in the base years, it was found that Tasmania was at a disadvantage because its assessments had been issued late in one of those years. The matter was discussed when the Prime Minister (Mr. Curtin) and I met the Premiers in Melbourne, and it was agreed that consideration would have to be given to the position of Tasmania. After that, we received from the Government of Tasmania representations on this and other subjects. The question of the amount of compensation to be paid to Tasmania was referred to the Commonwealth Grants Commission, whose report on the subject has been tabled in the House. The commission recommended that the grant to Tasmania be £900,000, and this is the amount which it is proposed to pay, less £20,000, the estimated cost of collection. This confirms tho statement of the honorable member for Denison (Mr. Beck), when he asserted that it was erroneous to suggest that Tasmania’s support had been bought by the Government. In the case of Western Australia, the estimated cost of collection was put down at £54,000. However, the Government of Western Australia pointed out that it had never previously been debited with more than £30,000 for the cost of collecting income tax. Therefore, this matter has been adjusted, and the amount of compensation which it is proposed to pay to Western Australia has been increased by £24,000.

Mr HOLT:
Fawkner

.The action now being taken by the Treasurer (Mr. Chifley) confirms what was said in this chamber earlier about the clumsy and slovenly manner in which the basis of taxation was fixed in the first place. The Government has found it necessary to have an investigation made by the Commonwealth Grants Commission into the amounts to be paid to two of the States.

Mr Chifley:

– Only one.

Mr HOLT:

– That makes the matter even worse, from my point of view. In order to make available to the States only those sums which could be proved to have been reasonably necessary in the war years, why could not an investigation be conducted by the Commonwealth Grants Commission? A proper analysis should be made of the needs of the States and comparisons made of the standards operating in the various States.

Question resolved in the affirmative.

Resolution reported; report adopted. hi committee: Consideration resumed (vide page 1747).

Clauses 1 to 3 agreed to.

Clause 4 (Grants to States).

Mr DUNCAN-HUGHES:
Wakefield

, - I desire to know the general position with regard to grants to States. This clause provides that if the Treasurer is satisfied that a State has not imposed a tax upon incomes, the amount shown in the schedule against the name of the State shall be paid to it. Clause 5 makes provision for the payment of arrears, and clause 6 provides that, if a State Treasurer is of opinion that payments made under clause 4 are insufficient to meet the revenue requirements of a State, he may make application for a larger sum. Will the ordinary grants to States continue automatically on the same basis as in the past?

Mr Chifley:

– There will be no interference whatever with the provisions under which grants are now made to the States.

Clause agreed to.

Clause 5 agreed to.

Clause 6 (Additional grants to States).

Mr CONELAN:
Griffith

– Will an increase of the basic wage in any State be protected under these proposals ?

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– If the Treasurer of a State considers that circumstances have arisen in which the State requires additional compensation from the Commonwealth, he may make application direct to the Commonwealth Grants Commission. The consideration of his request by the commission is not dependent upon a referonce to the commission by the Commonwealth Treasurer. The commission will recommend to the Government whether the request should be granted in whole or in part or should be refused.

Mr Menzies:

– There is no provision for reducing the amount. Sub-clause 1 of clause 6 provides that if the Treasurer of any State is of the opinion that the payments are insufficient the matter can be referred to the commission, but can it be referred back to the commission if the Government considers the amount to be too large?

Mr CHIFLEY:

– The amount of the grant would be decided by the Parliament.

Mr MORGAN:
Reid

.- [f a State considers that the payment recommended by the commission is insufficient there is no provision for an appeal to the Treasurer against the recommendation. It seems to me that the words, “ not exceeding the amount recommended by the Commonwealth Grants Commission “ should be omitted from sub-clause 3. If the Treasurer is satisfied that the sum recommended by the commission is not sufficient, he should be able to make an increased amount available to the State, or the matter should be reviewed by a standing committee of this Parliament. The final decision should not rest with an outside body, such as the commission which is not answerable to the people.

Clause agreed to.

Clauses 7 and 8 agreed to.

New clause 6a.

Mr FADDEN:
Leader of the Opposition · Darling Downs

– I move -

That the following new clause be inserted: - “6a. - (1.) If the Treasurer is satisfied that in any financial year the Commonwealth has relieved a State to which payments may be made under section 4 of this act of the financial responsibility for any service or benefit previously provided by that State, he may, by writing, so inform the Commonwealth Grants Commission constituted under the Commonwealth Grants Commission Act 1933-1005. (2.) Upon receipt of any such information the Commonwealth Grants Commission shall inquire into and report to the Treasurer as to whether it is just that, in consequence of the State having been relieved of that responsibility, a lesser amount of financial assistance should be payable to that State than the amount payable in accordance with section 4 of this act, for which purpose the Commonwealth Grants Commission shall have all the powers it would have if the information were an application made by a State under the Commonwealth Grants Commission Act 1933-1935. (3.) 1Where the Treasurer, after considering the report, is satisfied that it is just that a lesser amount of financial assistance should be payable to that State than the amount payable in accordance with section 4 of this act, the amount so payable shall, notwithstanding anything contained in that section, be reduced by such amount (not exceeding the amount recommended by the Commonwealth Grants Commission) as the Treasurer thinks just.”.

My reason for submitting the proposed new clause is that the special committee on taxation recommended that, in order to preserve flexibility, the following formula should be adopted : -

A State may submit a claim to the Commonwealth that its financial circumstances are such as to warrant an increase in the amount of compensation for any financial year subsequent to 1942-43.
The Commonwealth may claim that the compensation to any State for any financial year should be reduced on the ground that the Commonwealth has relieved the State of responsibility for an existing service provided by that State.
Any such claim shall be referred by the Commonwealth to an independent authority for investigation and report, and the Commonwealth shall, after receiving the report, decide on any appropriate variation of the amount of compensation.

The Government adopted the first and third paragraphs of that recommendation, but did not adopt the second, which I now desire to have inserted in the bill. This proposed new clause is necessary in order to safeguard the principles of the measure. If a State finds that, through adverse climatic or other circumstances, the amount allotted to it is insufficient, it has the right to make representations to the Commonwealth as provided in the bill, and consequently the Commonwealth should have the right to review the circumstances of a State brought about by fortunate conditions to which the Commonwealth might have materially contributed. The Commonwealth might also relieve a State of considerable expenditure, as it did in the case of New South Wales, with regard to child endowment. In certain circumstances the Commonwealth should have power to review the grants to a State, just as the States are entitled to appeal to the Commonwealth, when they experience adverse circumstances. In order to provide all necessary safeguards, to preserve the maximum taxable capacity, and to obtain the maximum finance for the war effort, the proposed new clause should be accepted.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– The Government, which has already examined this suggestion, is unable to accept the proposed new clause because the States might place a wrong construction upon it and challenge the sincerity of the Commonwealth. The States might consider that the Commonwealth, in taking over some small service which they now perform, would use it as a weapon to reduce their compensation. Believing that the proposal would create unnecessary suspicion, the Government did not adopt this recommendation of the committee. The Government considers that if the Commonwealth assumes responsibility for a State service, this Parliament should decide the amount by which the compensation payable to the State should be reduced. The compensation payable to New South Wales has already been reduced as a result of the action of the Commonwealth in relieving the State of a portion of a social service that wa3 in operation when this legislation was drafted.

Sir Frederick Stewart:

– Even then,, the Government did not deduct the full cost of that service.

Mr CHIFLEY:

– The Commonwealth has done a fair thing. Similar action has been taken in respect of compensation payable to Victoria and South Australia. Honorable members should realize that the introduction of widows’ pensions has definitely relieved the States of some expenditure on certain forms of social services which are not specifically called widows’ pensions. However, the Government believes that it would be a mistake to incorporate in this legislation the clause suggested by the Leader of the Opposition (Mr. Fadden), because it would cast suspicion upon the sincerity of this Parliament.

Mr DUNCAN-HUGHES:
Wakefield

– In supporting the remarkes of the Leader of the Opposition (Mr. Fadden), I propose to read figures which have been extracted from the New South Wales budget relating to items of expenditure from the social services fund, which was previously met by the State, but which is now borne by the Commonwealth -

The total expenditure which was previously met by the State but which is now borne by the Commonwealth, was thus £2,080,741 in 1939-40 and £2,032,526 in 1940-41. Those figures indicate that the compensation payable to New South Wales should be reduced, not by £427,000, as the Government proposes, but by £1,623,000. If the Government rejects this suggestion, the payment to the State will be duplicated in an unjustifiable way.

Mr SPOONER:
Robertson

– It is true that the special committee on taxation evolved a formula which it considered to be the most suitable method by which the compensation payable to States may, in certain circumstances, be increased or decreased. After studying the report. the Government believed that this Parliament was the proper authority to examine any proposal to reduce compensation payable to States as the result of the Commonwealth assuming responsibility for a. service now given by the States. As I stated in my secondreading speech, I do not intend to adhere rigidly to the letter of the committee’s recommendation if the Government decides, as a matter of policy, to adopt a certain course, and I shall vote against the proposed new clause.

Mr Spender:

– How will Parliament determine the amount f

Mr SPOONER:

– Parliament, by amending this legislation, can reduce the amount of compensation. My own preference lay in the direction of the committee’s formula, but as the Treasurer (Mr. Chifley) has already declared, the Government has experienced difficulty in convincing the States that it has no ulterior motive in introducing this legislation. Suspicion has been cast upon the Government’s sincerity. If the bill had contained a provision to empower the Government at a later date to reduce the compensation payable to a State as the result of relieving it of a service, criticism of the legislation might have been intensified. In order to avoid that difficulty, the Government did not adopt the recommendation of the committee.

Mr Menzies:

– Incidentally, it is worth £1,500,000 to New South Wales.

Mr SPOONER:

– I do not agree with that statement. The special committee had in mind services for which the Commonwealth will assume responsibility in the future, and not services that it took over eighteen months ago. It recommended that, after 1st July next, the formula shall be applied for the purpose of reducing the amount of compensation payable to the States if the Commonwealth assumes control of a service that they now perform. The remarks of the honorable member for WakefieLd (Mr. Duncan-Hughes) are irrelevant to this discussion. After all, the scheme will operate for the duration of the war and twelve months thereafter, so that it is terminable. I make “ no bones “ about my position. The formula which was embodied in the committee’s report was my personal preference, but the Government, in order to avoid creating unnecessary suspicion and embarrassment, did not adopt it. I shall not split straws on the bill, but shall vote against the proposed new clause.

Mr HOLLOWAY:
Melbourne PortsMinister for Social Services · ALP

– I hope that the committee will not take the proposal of the Leader of the Opposition (Mr. Fadden) seriously, because a literal interpretation of it means that a State shall automatically cease to grant social benefits if the Commonwealth appears to duplicate them. When the Commonwealth introduces new social benefits, it does not necessarily assume responsibility for similar services performed by the States. In Victoria, a paltry sum is paid in respect of destitute children. When the Commonwealth Parliament passed the child endowment legislation, it did not expect the State to cease making those payments.

Mr Spender:

– The matter may be considered by the Commonwealth Grants Commission, but the Government is not bound to accept its recommendation.

Mr HOLLOWAY:

Sir FREDERICK STEWART:

– And he stated that, but for this legislation, it would be competent for the States to use their taxing powers to a greater degree than they used them during the two years which have been taken as a basis for the calculation of their compensation. Surely the purpose of the bill is to prevent the States from making calls upon the national fund other than for essential purposes. It is desirable that the States be assured of a static income so long as their reasonable and justifiable obligations remain static. We have no objection to that; and the proposed new clause does not attack that principle. However, it is not difficult to conceive that the States obligations in respect of services, other than social services-

Mr Chifley:

– What services has the honorable member in mind ?

Sir FREDERICK STEWART:

– The revenues of State railway services, in the immediate future, will be millions greater than they were during the two years taken as a basis for the calculation of compensation, and the revenues of the railways are drawn largely from Commonwealth sources. I repeat that, quite apart from social services - although I am not excluding them - it is not inconceivable that the requirements of the States will alter. Surely, the basic principle of this measure is to bring into the Commonwealth Treasury all revenue over and above the minimum requirements of the States. That is implicit in the proposed new clause moved by the Leader of the Opposition.

Mr JOLLY:
Lilley

. I am very surprised that the Government is not prepared to accept the amendment. Certain circumstances may arise in which it may become necessary to review the amounts which it is now proposed to pay to the States. For instance, the State governments still have power to levy taxes other than income tax. In doing so they may very well reduce the sources of revenue available to the Commonwealth Government. The State governments may desire to increase their rates of land tax, which is a deduction from Commonwealth tax under the Government’s present proposals. Stamp duty, as a charge against a business, is also a deduction from Commonwealth tax. Should the State governments increase stamp duty, they will thereby decrease the revenue available to the Commonwealth. The liquor tax also comes within this category. Tie Government would be well advised to have the power set out in the proposed new clause moved by the Leader of the Opposition (Mr. Fadden). After all, it will be used only for very good reasons.

The argument is unanswerable that ‘the State governments can still increase other taxes which, in the final analysis, will affect Commonwealth revenue.

Question put -

That the clause proposed to be inserted be so inserted. (Mr. Fadden’s amendment.)

The committee divided. (The Chairman - Mr. Prowse.)

AYES: 21

NOES: 31

Majority 11

AYES

NOES

Question so resolved in the negative.

The Schedule -

Mr FADDEN:
Leader of the Opposition · Darling Downs

– I move -

That the grant ‘‘New South Wales . . . £15,356,000” be reduced by £1,337,000.

– The .special committee on taxation did not set out to say how the States should expend their revenue. The honorable member may, if that is possible, move for the appointment of a royal commission to go into the matter, but he cannot have the investigation made under cover of this bill. Supposing that there were some merit in what has been suggested, and we went back for a year or two to the time when the Commonwealth took over certain services on behalf of the States. We might then find that the Commonwealth would be obliged to make large deductions from the payments of Victoria and South Australia because those States have been able to avoid unemployment relief payments due to the fact that the Commonwealth has expended large sums of money on defence undertakings. New South Wales has, for twelve months longer than other ‘States, been left with a heavy unemployment burden. If we are to be retrospective in regard to child endowment in New South Wales, then let us be consistent, and examine the expenditure of the other States. If we do that, some honorable members may be surprised at the result.

The honorable member for Parramatta declares that railway revenue in the States is soaring. That is true, but he may be surprised to learn that, for the seven months which ended on the 31st January, whilst New South Wales railway revenue increased by £1,100,000 as compared with the corresponding period of the previous year, railway expenditure increased by £1,700,000. When I inquired the reason, I learned that the work which the railway departments are doing for the defence services is, in many instances, uneconomic. They cannot make up proper trainloads; they must take the material when and where it offers. Moreover, the cost of labour and coal have increased considerably.

Mr MORGAN:
Reid

.I was surprised that the honorable member for Parramatta (Sir Frederick Stewart), who claims to be interested in social services, should have spoken as he did. Surely he must know something of the position in regard to schools and hospitals in New South Wales, that most hospital boards have deficits, that additional hospital accommodation is needed as a result of the war, and that the schools have been neglected for years by anti-Labour administrations. Only recently I heard the New South Wales Minister for Education say that he had to find several millions of pounds for new school buildings and for repairs to existing buildings. In my electorate, he laid the foundation of a new school. The old school had not had a coat of paint for 50 years, and there were holes in the floor through which the rats entered and ate the children’s lunches. Under the previous Government, plans and specifications for a newbuilding had been prepared, but there was no guarantee that the work would ever be done. Now the foundations have been laid, and building operations are going on. Another consideration is that the States have to find large sums of money for air raid precautions services. I was surprised to hear the honorable member for Parramatta advocate something which would have the effect of preventing necessary services being provided in New South Wales.

Mr JOLLY:
Lilley

.The Government ought to give serious consideration to this amendment. It may be no more than a coincidence, but it is certainly fortunate for New South Wales that the two years which ended on the 30th June, 1941, were selected as a base years for the fixing of compensation under this scheme, for in those two years taxation in New South Wales increased from £20,000,000 to £24,000,000, an increase of 20 per cent., whilst in every other State taxation remained practically stationary. In Victoria the figure remained at £12,000,000, in Queensland it increased from £8,600,000 to £9,100,000, in South Australia it remained at £4,000,000, in Western Australia it remained at £3,000,000, and in Tasmania there was a slight reduction. It does appear that New South Wales is getting more than a fair deal under this scheme.

Sir FREDERICK STEWART:
Parramatta

. I am sorry to hear what the honorable member for Reid (Mr. Morgan) has said about my disloyalty to New South Wales, but in this time of war the nation and the Commonwealth Treasury have first claim upon my loyalty. No explanation has been tendered as to why the £6,190,000 which was collected as a special unemployment tax in New South Wales in 1940-41 is to be continued. The £15,356,000 in this schedule includes an item which in 1940- 41 was called unemployment tax, and the sum of £5,809,000 was expended in affording relief to unemployed persons. How much of that tax will not be expended in New South Wales during this year and during the war period? The explanation given by the honorable member for Robertson (Mr. Spooner) that the Government of Victoria is to receive £256,000 more than it intended to collect for 1941-42 only aggravates the position. That money should have been left for war purposes. My remarks are not confined to New South Wales, because I have no doubt that they apply to some of the other States. The fact remains that New South Wales has budgeted for and has collected tax for 1941- 42 to the amount of £2,000,000 in excess of its requirements. That is the surplus which the Government of that State expects in the ensuing year.

Mr FADDEN:
Darling DownsLeader of the Opposition

– I admire the enthusiasm of the honorable member for Robertson (Mr. Spooner) in opposing the reduction of £1,337,000 that should justly bo taken into account in respect of child endowment advantage to New South “Wales. He went to some pains to explain that the adjustment was brought about by virtue of the fact that the New South Wales budgetary position for this financial year would have provided for extra taxation of £1,370,000. Has that cancelled the child endowment advantage? The financial years taken into consideration in order to arrive at the amount of compensation are 1939-40 and 1940-41; but an estimate that does not relate to that period does not come into the picture at all. In justifying the £1,370,000 adjustment, the honorable member consoles the committee by the fact that Victoria ‘would have received less had the 1941-42 figures been taken into account. We cannot give consideration to what a State may expect to receive for a year that is not one of the years in question. We cannot pretend to take 1939-40 and 1940-41 as the two average years for all of the States, and also take into consideration what might have been the position in 1941-42 on the basis of estimates. Many Treasurers are optimistic with regard to their estimates. Take the budgetary position in New South Wales and the actual realization of the cash position in that State. The honorable member for Robertson said that, if New South Wales were deprived of £1,370,000, it might be in deficit, but that argument could be applied to every State. New South Wales has improved its position from a deficit of £770,000 in April, 1941, to a surplus of £1,190,000 in April, 1942, an improvement of £1,960,000, and there are two more months in the financial year to be taken into account. So it may be said that the surplus for New South Wales will amount to £2,250,000. Why should that State have such a surplus, when the Commonwealth will budget for a deficit of £70,000,000? The Treasurer is at his wits’ end to know how to raise the money to carry on the war. The Commonwealth Government is confronted with a heavy task, but if it wishes to reduce the deficit of £70,000,000, and retain the taxable capacity . and confidence of the people, it should not allow New South Wales to have a surplus to which it is not entitled.

Mr SPOONER:
Robertson

– Paragraph 12 of the report of the Special Committee on Taxation states -

The committee, in selecting a basis f 01 compensation which would be equitable as between the Commonwealth and the States, paid particular attention to the relative needs for revenue of the Commonwealth and the States in war-time, and to the existing financial arrangements in the States.

In other words, the committee took earn to see that there would be no undue disturbance of the financial position in the States. What would be the advantage of giving compensation to any one State that would place that State in deficit, and cause it to go back to the Loan Council and ask it to make up the amount of the deficit? The committee was anxious to see that whatever compensation was given to New South Wales, Queensland, South Australia, or any other State, it would not make its financial position worse than before. The honorable gentleman said that I have confused the year 1941-42 with those that were used as a basis for compensation, but that has nothing to do with the case. We reviewed the position in 1941-42, and we applied to the finances of that year the compensation basis that would arise from the two earlier years. He said that this year New South Wales is showing a surplus. It will be the first surplus for some years. Up to the end of April it amounted to £1,190,000, and that is based on the receipt of £17,200,000 from income taxation.

Sir Frederick Stewart:

– New South Wales has been taxing much more heavily than necessary.

Mr SPOONER:

– That is another story. Next year must be commenced with a reduced revenue of £1,300,000, because of the basis of compensation. If the figures for New South Wales were available in all other respects, and we could imagine static conditions, the budgetary position of that State in 1942-43 would be square. It is true that the compensation is based on 1939-40 and 1940-41, but it is based on those two years with an eye to the application of that finance to the current year. That has been done in the case of all States.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

. The Government does not propose to accept the amendment. It has complete confidence in the recommendation of the special committee. It believes that the committee which dealt with these matters weighed them from all of the aspects from which they have been considered in this debate. Even those honorable members who support the Leader of the Opposition (Mr. Fadden) are very confused about the subject, and I can only conclude from the silence of the honorable member for Barker (Mr. Archie Cameron) that he is not clear about it. The matter has been closely examined, and the basis was framed on that investigation, subject to our knowledge of the position. The Government will adhere to the proposals that have been outlined.

Mr. Fadden. Will the Treasurer assure me that child endowment has not been taken into account as an adjustment?

Mr. CHIFLEY. I believe that the honorable member for Robertson has explained that.

Mr ARCHIE CAMERON:
Barker · ALP

. As this discussion proceeds, some honorable members on this side of the chamber become more convinced that these bills should not be passed. From the point of view of New South Wales, it is a great pity that the right honorable member for Yarra- . (Mr. Scullin) was a member of the special committee. I am astonished that the Government did not replace him with another New South Welshman, in which case that State would have obtained the whole of the money instead of a miserable 46 per cent of it.

Mr. Lazzarini. Cannot the honorable member forget State considerations?

Mr. ARCHIE CAMERON. In view of the preferential treatment that has been meted out to New South Wales, I find it most difficult to overlook them. Surely the principle which the Government has enunciated in clause 6 should have been used for this purpose. The Commonwealth Grants Commission, which is not a political body and is not identified with any State, should have been invited to indicate its views of what constitutes a fair thing. I do not accept the judgment of the special committee in this matter, and I am equally confident that the country will reject it. This series of bills constitute probably the worst legislation that has ever been placed before this chamber, and the position is aggravated by the fact that the Government did not invite the Leader of the Opposition (Mr. Fadden) to recommend a representative of the Opposition for appointment to the committee. Instead of consulting the Leader of the Opposition, the Government simply selected the honorable memberfor Robertson (Mr. Spooner). As the debate proceeds, we recognize that it had justification for making that appointment. For the pretence that this method will produce justice and provide for the requirements of all the States, I have only contempt.

Question put -

That the amount proposed to be reduced beso reduced (Mr. Fadden’s amendment).

The committee divided. (The Chairman - MR. Prowse.)

AYES: 23

NOES: 31

Majority . . . . 8

AYES

NOES

Question so resolved in the negative.

Mr CHIFLEY:
Macquarie Treasurer · ALP

. I move -

That the words and figures -

be left out with a view to insert in lieu thereof the following words and figures: -

This increase of the grant to Western Australia is due to a re-examination of the saving which will be effected in income tax administrative costs in that State. The State had represented that the estimated saving of £53,000 was excessive and asked for a re-examination of the matter. On re-examination, it has been found that it would be fair to assess the saving at £30,000, thereby increasing the grant to that State by £23,000.

The increase of the grant to Tasmania follows upon the recommendation of the Commonwealth Grants Commission after it had examined the claim submitted by the Government of that State. I laid the report of the commission on the table of the House yesterday. The commission recommended that the grant should be increased to £900,000, and the adoption of the recommendation means that, after the deduction of the saving of £12,000 in administrative costs, the grant to Tasmania will be £888,000.

Amendment agreed to.

Schedule, as amended, agreed to.

Title agreed to.

Bill reported with an amendment; report adopted.

Bill read a third time.

Sitting suspended from 7 to 9.50 a.m.

page 1761

INCOME TAX ASSESSMENT BILL 1942

Second Reading

Debate resumed from the 15th May (vide page 1294), on motion by Mr. Chifley -

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 7 agreed to.

Clause 8 - (1.) Section seventy-two of the Principal Act is amended -

by omitting from sub-section (1.) all the words after the words “annually assessed; “ and inserting in their stead the following words: - “ or
Federal land tax or land tax imposed under any law of a State or of a Territory being part of the Commonwealth (other than taxes which are deductible under section seventeen of the Estate Duty Assessment Act 1914-1940), to the extent to which those rates or taxes are charged or levied in respect of property held by the taxpayer for the purpose of producing assessable income, shall be allowable deductions.”; and

Section proposed to be amended - 72. (1.) Sums for which the taxpayer it personally liable and which are paid in Australia by him in the year of income for -

rates which are annually assessed;
Federal land tax or land true imposed under any law of a State or of a Territory being part of the Commonwealth; or
incometax imposed under any law of a State or of a Territory being part of the Commonwealth (other than taxes which are deductible under section seventeen of the Estate Duty Assessment Act 1914-1928) shall be allowable deductions.

Mr FADDEN:
Darling DownsLeader of the Opposition

– I move -

That the following words he left out: - “ to the extent to which those rates or taxes are charged or levied in respect of property held by the taxpayer for the purpose of producing assessable income “.

It is proposed to move later for the rejection of the provision made by clause 10, for the repeal of section 79 of the principal act. In order to prepare the ground, it is necessary to make alterations to clause 8 and other preliminary clauses which deal with concessional allowances, and the calculation of them by means of the rebate system. The whole object of instituting uniform taxation is to effect simplicity in methods of taxation and release for other purposes man-power at present engaged in duties relating to taxation. The simplest method of assessing tax must be adopted, because the bulk of the work of the Taxation Department is done in its assessing branch. It must be admitted that the method proposed by the bill is most complex. If it be adhered to, simplicity will not be achieved. A previous Government appointed a royal commission under the chairmanship of the late Mr. Justice Ferguson, to inquire into the subject of taxation with a view to effecting uniformity as between the Commonwealth and the States, with particular regard to the nature of the allowances that should be made, and the method of determining them, in order to approach as near as possible to a uniform system of income taxation. The commission considered the matter of allowable deductions, and discarded the idea of adopting a complex method, particularly that proposed by this measure, for the calculation of rebates. The argument is advanced that this method is more scientific than are others for arriving at an equitable allowance in respect of a wife and children, and other concessional allowances. The object sought to be achieved, first by the special committee which considered this matter, and now by the. Government, is well covered by the assessment of tax in accordance with the curve of the income; in other words, the higher the income the greater is the quantum of tax. For example, a man with a tax able income of £5,000 pays much more than five times the tax of a man with a taxable income of £1,000. Under the new scale, the tax of the latter will be £256, whereas that of the former will be £3,374 or sixteen times as great. A man with a taxable income of £200 will pay approximately £8, whilst a man with a taxable income of £400 will pay £57 - not twice as much, but in the ratio of 57 to S. Concessional allowances should be made on the existing basis. This is not an appropriate time for complex calculation. Simplicity is demanded. One of the basic reasons for this legislation is the release of man-power. That object will be defeated if a complex method of assessing taxable income be adopted. It would be just as logical to say that a man with a taxable income of £1,000, with allowable deductions in respect of wages, should have his tax rebated according to the principles of the proposed scientific method. Nobody will argue that that method tends towards simplicity; rather will it introduce complications. Few taxpayers will understand their assessments, and every assessment will have to be checked very carefully. The existing provisions of the Income Tax Assessment Act should be retained. I ask the Government to consider the matter further. I do not deny that its proposal has merits; but I repeat that this is not the time to introduce a complex method of calculating tax, the result of which must be to make it impossible for the taxpayer, to understand his assessment.

Mr JOLLY:
Lilley

.- I am somewhat at a loss to understand the reason for this new provision. The Treasurer may be able to state whether an improvement of the revenue position will be effected under it. I should like him to state also what the effect is likely to be on the taxpayer. The scheme is a complicated one, and few taxpayers will understand it. Honorable members have been furnished with explanatory notes ; but similar explanations will not be available to taxpayers generally. The language used should be such that every taxpayer may understand it.

Mr SCULLIN:
Yarra

.The honorable member for Lilley (Mr. Jolly) is quite right when he says that these matters are not easily understood. I have never seen an Income Tax Assessment Act which was easily understood; nor has the honorable member. In order to explain to the committee the reason for this provision, one has to consider other clauses of the bill. The first approach to it, as the honorable member for Robertson (Mr. Spooner) will agree, was made when it came before the special taxation committee. The proposition put to that committee, and subsequently to this House, was to initiate a scheme of uniform taxation. That involved reconcilement of the different laws of Australia in order to obtain a complete whole. The members of the committee did not want to withdraw any of the concessions at present enjoyed ‘ with respect to dependants. When the Commonwealth war tax was introduced, a different method was employed in relation to the concessional allowance on account of dependants, the deduction being at the flat rate of Is. a week for each dependent in respect of all taxpayers. That had to be blended with the existing concessions. The easiest, and the only practicable, means conceivable by which that might be done, would, be to. abolish the existing law, which provides for a deduction of £50 from the taxable income in respect of a wife and £50 for the first child under the age of sixteen years, and to calculate the concession according to the rate of tax payable by the taxpayer. In order that the allowances in respect of a wife and children might be the equivalent of what has so far been given, the committee fixed the amount for a spouse and a mother at £100, for the first child at £75, and for other children at £30. If honorable members will study the schedules of the amounts that are to be paid, they will find that by and large) - I believe almost entirely - these concessions remain as they were; if anything, they are, I think, a little to the advantage of taxpayers with dependants.

Mr Jolly:

– That is the net effect?

Mr SCULLIN:

Mr PERKINS:

– The Social Security Committee, of which I was a member, made a recommendation to the Government on this subject. I confess that I was greatly disappointed when I found that, apparently, no notice had been taken of that recommendation.

The CHAIRMAN (Mr. Prowse).The honorable member’s remarks would be more appropriate to clause 23.

Mr PERKINS:

– I appeal to the Minister to make provision for such cases. What is the use of a committee making a recommendation after an exhaustive examination if its recommendation is to be set aside?

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– The Government cannot accept the proposed amendment, chiefly because a readjustment to give effect to it would probably cost millions of pounds. The scale has been prepared on the principle of rebates.

Mr Fadden:

– Will the Government’s proposals increase the revenue by millions of pounds?

Mr CHIFLEY:

– No; but I am informed that a reversion to the system of deductions, instead of allowing for rebates, would have a serious effect upon the revenue- probably to the amount of £750,000.

Mr Fadden:

– The honorable gentleman said that it would probably cost millions of pounds.

Mr CHIFLEY:

– The loss of revenue may exceed £750,000. In this matter, I agree with the remark of the right honorable member for Yarra (Mr. Scullin). The Government’s proposals have been studied by a special committee, one member of which - I refer to the honorable member for Robertson (Mr. Spooner) - has a complete knowledge of the technical side of taxation as well as experience in the administration of taxation laws. A proposal which has been described as a simple mathematical proposal has been received from an association of taxpayers, but when it is examined it is found to be not so simple after all. Indeed, it is rather complex. However, the Government is prepared to examine any proposal seriously put forward. If any honorable member has a suggestion which he thinks will meet the situation; in a better -way than by a system of rebates, the Government is prepared to consider it; but I point out that the Government must, to a great degree, rely on the judgment of those persons - members of this House and others - who have had experience of the rebate system and have compared it with a system which allows for deductions. For the moment, the Government must rely on the opinions of these experienced men until a better method can be found.

Mr FADDEN:
Leader of the Opposition · Darling Downs

– The Treasurer (Mr. Chifley) has given the very reason why the committee should insist upon retaining the system at present in operation. He told us that such a change would probably mean a loss of millions of pounds of revenue. That can only mean that the rebate system will extract a similar additional amount from the taxpayers. The only view I can form from that statement ii that this rebate system is a concealed imposition on the taxpayer. I think the Treasurer has misunderstood what I had in mind. I did not suggest the quantum of concession. What I suggested was that the act should be allowed to stand at present with regard to allowances for a wife and children under sixteen years of age. These allowances should be a simple deduction from the taxable income, and the residue should be taxed according to the scale proposed. I submit that view in order to lessen complexity as much as possible. It is all very well to claim that a Toady reckoner would be prepared which taxpayers would readily understand. Our object is simplicity and it will not be achieved by this method. I know the taxation scales appertaining to the bill have been worked out carefully, and therefore I do not intend to be adamant on the matter. I am afraid that the implementation of this system will not be as simple as the Government expects. Time will prove whether my fear is well founded, and I shall be satisfied if the Government will give a guarantee that the matter will be reviewed when the budget is being prepared.

Mr. Chifley. I am prepared to give that assurance readily.

Mr. FADDEN. In view of the assurance given by the Treasurer I ask leave to withdraw my amendment.

Amendmentby leave withdrawn.

Mr JOLLY:
Lilley

.Under the scheme of taxation now being discussed, there will be no State income tax, but State income tax paid this taxation year will not be allowed as a deduction from federal income tax payable next taxation year. If that is a correct statement of the position, hardship will be inflicted on a number of taxpayers who pay heavy State income tax this year; they will receive no benefit next taxation year because they will not be allowed a deduction on account of State income tax paid this year. The Treasurer (Mr. Chifley) should consider that aspect of the legislation. I am sure that if the Treasure examines section 104 of the principal act, dealing with undistributed profits of private companies, he will adopt my view that the income tax paid this taxation year on the profits of a private company should be allowed as a deduction next taxation year before the amount of the undistributed profits is arrived at.

Mr. Chifley. I think the honorable member has raised a pertinent question and it will be examined. The matter has already been brought under my notice.

Clause agreed to.

Clauses 9 to 22 agreed to.

Clause 23 (Concessional rebates).

Mr JAMES:
Hunter

. I consider that an amendment should be inserted at the end of the clause on the lines that I propose to indicate. Take the ease of a taxpayer with an invalid son or daughter over the age of sixteen years who cannot qualify for the invalid pension. The child is not permanently incapacitated, and as he or she cannot work the taxpayer is in duty bound to maintain the child. I know of one case atWeston where a dependent son who is an invalid is now 54 years of age, and cannot obtain the invalid pension. The father is not allowed to claim the £50 reduction on his account, as he would be if the dependant were under the age of sixteen years. A person over sixteen years of age costs more to maintain than a child under sixteen years. I want provision made also for the allowance of £50 in respect of an adult daughter who lives in the taxpayer’s home and nurses the taxpayer’s invalid wife, or, where the mother has the income, an adult daughter who is nursing the invalid father. Under the New South Wales act, provision is made for an allowance of £60 in the case of an invalid child over sixteen years, who is not in receipt of income, and is maintained in the taxpayer’s home.

Mr. Chifley. What is the honorable member’s definition of a child ?

Mr. JAMES. I am the child of my father, and I am 50 years of age. Why split straws ? The Treasurer knows what I mean. I am referring to cases in which a father is responsible for the maintenance of an invalid child under or over sixteen years of age, and, as I said, the maintenance of a child over sixteen years is greater than that of one under sixteen years. The Government permits a deduction of £50 for the maintenance of a child of six months, but no allowance is conceded for an invalid child over sixteen years who has to be maintained by the taxpayer until he or she qualifies for the old-age pension. I have in mind the case of a miner in my electorate. His wife has been bedridden for fifteen years, and the daughter, who is now 35 years of age, has dedicated her life to nursing her mother. The miner is not allowed the deduction of £50 on account of the daughter. I consider that the deduction should be allowed in this case, because the daughter has given up a woman’s normal life to devote herself to her invalid mother.

Mr SCULLIN:

– What wages does that miner earn,

Mr JAMES:

– He would probably earn £300 a year. He has no children under the age of sixteen years; he gets a deduction on income tax on account of his invalid wife but no deduction is allowed for the daughter whom he has to maintain. He therefore becomes taxable on this meagre income. An amendment is being prepared to- effect my purpose.

Mr SCULLIN:

– The proposed amendment would not be in order, because it would increase taxation.

Mr JAMES:

– Surely the justice of the case should be considered. Apparently, Labour governments are just the same as other governments - they adopt the principle of the greatest good for the greatest number. It is a rotten policy. The proper principle that should be adopted is each for all and all for each. A minority in the community invariably suffers when a government adopts the vote-catching policy of the greatest good for the greatest number. The adoption of that policy places great hardships on small minorities and no attempt is made to eliminate them. The continuance of the existing state of affairs should not be tolerated. Opportunities rarely occur for the removal of such anomalies, and I plead with the Treasurer to take this opportunity.

Mr SPOONER:
Robertson

– The honorable member for Hunter (Mr. James) has referred to an anomaly which has slipped through the whole social services system. I am aware of cases similar to those which he mentioned. In fact, one was brought to my attention about a week ago. In general terms it is the case of an invalid who depends entirely upon a taxpayer. The invalid may be at any age between sixteen years and 60 years, but the taxpayer is not allowed any deduction in respect of him. This is not a matter for an income tax deduction. It is really a weakness in the social services system. The Commonwealth has not yet come into the general field of social services. Certainly it has control of invalid and oldage pensions, but most of the other social services are controlled by the States, and between the various systems this case has escaped attention. The honorable member should be fair to the Government; this has never been an allowable deduction for federal income tax purposes, although, during recent months, it has become a deduction for State income tax purposes in New South Wales. Taxpayers in that State now have the benefit of an allowance of £60 calculated according to their rates of taxation. Whilst this is a useful contribution towards the maintenance of invalid dependants, it is a very small one, and is far from adequate. I wish to make clear the position of the Government in this matter. The committee on uniform taxation, which advised it, considered the concessional deductions and allowances provided in all the income tax systems of Australia. No two systems have identical concessional deductions and family allowances. New South Wales makes an allowance for dental fees, which is not granted elsewhere, and in September last it allowed a deduction similar to that which the honorable member for Hunter urges. The Commonwealth committee on uniform taxation had to recommend some plan of concessional deductions, and it concluded that the only one which it could recommend was the existing federal plan. Had it adopted one deduction from New South Wales and one from South Australia, for inclusion in the Commonwealth system, it might have been obliged to go farther and take items from the Western Australian and Tasmanian systems until it had a huge list of deductions. It did the obvious thing when it recommended that the Government should use the existing Commonwealth plan, which does not provide for cases such as the honorable member for Hunter mentioned. The Government has stated clearly that .it has accepted the recommendations of the committee on uniform taxation for the time being in order to establish a basis for its legislation. The Treasurer promised a few minutes ago that any anomalies could be investigated within the next two or three months before the introduction of the budget. By adopting the committee’s report, the Government has excluded the particular case which is under discussion, but the Treasurer will probably investigate it in the next few months. I agree with the honorable member for Hunter that dependent invalids should be provided for in the social service system. However, the income tax law is not the proper place to provide for them. The honorable member should realize that nobody is losing anything under these proposals. The allowance ‘which he proposes has never been included in the Commonwealth income tax provisions, and it has only recently been adopted by New South Wales.

Mr BARNARD:
Bass

– The Joint Committee on Social Security investigated this problem more thoroughly than the honorable member for Hunter (Mr. James) has had an opportunity to do. It has considered representations from many persons and organizations, who have stressed the hardship that is imposed upon people who are caring for invalids in respect of whom no taxation allowance is made. After careful consideration of the subject, the committee made a recommendation in its first interim report, which was submitted to the Government some months ago. It made the following statement : -

It has been brought under notice in a number of cases that parents maintaining an invalid over the age of sixteen years for whom an invalid pension has been rejected on the grounds of adequate maintenance by the parents of the invalid, are not allowed any exemption from income tax for the maintenance of such invalid. On the present basis of calculation of adequate maintenance, namely, £78 per annum referred to in paragraph (3) above, this entails real hardship in a great number of cases. Even in the event of the basis for adequate maintenance calculation being raised to the £130 figure herein suggested, it is considered that the amount normally allowed for the maintenance of a dependant (£50) by the Commissioner of Taxation, should be allowed in all cases where the taxpayer is maintaining an invalid over the age of sixteen years who is not receiving an invalid pension.

Mr SCULLIN:

– The honorable gentleman remarked a few moments ago that he could not. say what the father’s income was in this case. It would be necessary, of course, to have information on that point.

Mr Perkins:

– Why should we stick at sixteen years of age for income tax deduction purposes ?

Mr SCULLIN:

– As soon as an invalid child reaches the age of sixteen years he becomes eligible, under certain conditions, to receive an invalid pension of 25s. a week. I have a great deal of sympathy with cases of the kind referred to by the honorable member, but this is not the appropriate occasion to deal with them.

Mr BECK:
Denison

.Paragraph xi of section 28 of the Income Tax Assessment Act of Tasmania provides that -

Every old-age and invalid pension granted by the Commonwealth and all pensions paid to, or in respect of, an officer of the State or Commonwealth service in respect of injury received by such taxpayer in the execution of his duty as such taxpayer shall be exempt from tax. I ask the Treasurer (Mr. Chifley) whether these exemptions will be preserved under this bill, and, if not, whether it is the intention of the Government to introduce amending legislation to cover such cases?

Mr RYAN:
Flinders

.I support the honorable member for Hunter (Mr. James), the honorable member for Bass (Mr. Barnard), and the honorable member for Eden-Monaro (Mr. Perkins), in the submission they have made to the Treasurer (Mr. Chifley) for special consideration for invalids. I consider that taxpayers who maintain invalid children over the age of sixteen years should be granted income tax deductions in respect of such cases. The Joint Committee on Social Security made a unanimous recommendation on this point. The cases it desired to have covered were, in my view, entitled to the consideration suggested. I am not convinced by the arguments of the honorable member for Robertson (Mr. Spooner) or the right honorable member for Yarra (Mr. Scullin) that the point raised cannot be covered in this bill. I do not profess to be a taxation purist, but I cannot see why there should be a differentiation in this matter between a child of sixteen years and a child over that age. However, I am not greatly concerned whether such cases are covered in this bill or some other measure, so long as the Treasurer will give me an assurance that they will be properly covered before very long.

Mr JOLLY:
Lilley

– I understand that an instruction” was issued recently by the Treasurer (Mr. Chifley) that air raid precautions expenditure, which was not capital expenditure, would be allowable as a deduction for income tax purposes. A recommendation was made by the Taxation Advisory Committee in relation to war damage insurance, to the effect that a person insured for £20,000 against war damage whose property was declared to have a depreciated value of £10,000, should be taxed for income tax purposes on the remaining £10,000,. in the event of his receiving that amount under the policy, with a qualification that he might obtain permission to replace his assets. Has the Government covered such cases in this bill, or docs it propose to take steps to cover them?

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– I have issued an instruction concerning air raid precautions expenditure. It is intended to give effect to the recommendations of the Taxation Advisory Committee in relation to war damage insurance, but with some modifications. The matter will be dealt with in the Income Tax Assessment Bill, which will be introduced during the budget session. The Taxation Advisory Committee consists of two outside appointees, an accountant and an economist, with Mr. Trebilco, of the Taxation Department, as chairman. Quite a number of amendments will be brought down during the budget period. It was considered advisable not to cumber this measure with other than those that are absolutely necessary at the present time. The honorable member for Bass (Mr. Barnard) has been kind enough to show to me a passage in respect of invalidity which appears in a report of the Joint Committee on Social Security. I have always found it very difficult, when representations have been made to me, to determine exactly what is regarded as invalidity by those who make tho representations. As the right honorable member for Yarra (Mr. Scullin) has said, under the amended regulations, with the increase of the amount in respect of the family unit from £1 10s. to £2 10s., an invalid pension may be obtained if the degree of invalidity be 85 per cent.

Mr James:

– There is no provision in respect of those whose degree of invalidity is only 50 per cent.

Mr CHIFLEY:

– That is a matter which I thought the Joint Committee on Social Security would investigate. I believe that the honorable member for Hunter (Mr. James), at whose suggestion tho alteration was made, was satisfied that the degree of invalidity had been made reasonably high. Then there is the case mentioned by the honorable member for Eden-Monaro (Mr. Perkins) . As the right honorable member for Yarra (Mr. Scullin) has said, a man with a wife and children would be entitled to an invalid pension in respect of a child if his income did not exceed £7 10s. a week. There is also the class in which are found those whose degree of invalidity is less than 85 per cent., and who are thereby debarred from a pension. I shall study the provisions of the New South Wales act in this respect. In such cases, I do not think that the rebate or deduction would be very much of a concession. In some instances, it would not amount to anything, because the individual concerned is not at present paying tax.

Mr Ryan:

– It would operate in favour of the lower incomes.

Mr CHIFLEY:

– It would operate proportionately. A person who is not taxable may be maintaining such an invalid. The present Government amended the Invalid and Old-age Pensions Act. reducing the degree of invalidity from “ permanently and totally incapacitated “, to 85 per cent, incapacitation. Below that figure there is a number of grades, in which are invalids whose degree of incapacity is 75 per cent., 50 per cent., and lower. I am not quite clear as to whether the Joint Committee on Social Security has mentioned the degree of invalidity to which consideration ought to be given. There is another case that has been mentioned previously; it came under my notice when I was a private member. A man may have a wife whose invalidity is sufficient merely to prevent her from performing ordinary domestic duties, in consequence of which he has to employ a housekeeper. It is argued that in such cases some concession ought to be allowed. I have always been troubled in deciding whether or not outside domestic help is necessary; in other words, what degree of invalidity would warrant some concession being made to the taxpayer who has to employ such assistance. The honorable member for Bass will agree that it is a difficult problem. In the discussions that I have had with the Taxation

Department, and in the representations that have been made to me, I have not been able to discover a satisfactory basis for the determination of the matter. The honorable member for Hunter has put up a great battle on behalf of these unfortunate people. I shall have an examination made of the matter, but am not at all hopeful of being able to determine exactly the degree of invalidity that should be adopted. Provision could not appropriately be made in the measure that we are now considering.

Mr CALWELL:
Melbourne

. It is good to hear that the matter of invalidity is to be further considered by the Joint Committee on Social Security, because, even though a concession has been made in respect of 85 per cent of invalidity, that does not cover all cases; there are still many persons who, unfortunately, are suffering very greatly, because they have to maintain children, who, whilst not 85 per cent incapacitated in a strict physical sense, for all practical purposes are totally and permanently incapacitated. I have in mind an unfortunate girl who is a dwarf. Some dwarfs are able to capitalize their disability, and thereby make a fortune, whilst others who suffer from an inferiority complex are prevented from securing employment and thus earning a livelihood. The unfortunate girl to whom I have referred can wash cups and saucers, and help about the house. On that account, the authorities say that the could go out to work and make a living, whereas in fact she can do nothing of the sort. Her father has to buy special boots for her. He is a soldier at the moment, and would be exempt from income tax because of his low income and the size of his family; yet he is heavily penalized, compared with others, in that he is not granted a pension in respect of that daughter, although she is over sixteen years of age. I hope that something will be done to cover such cases. On the general principle, I support the case of the honorable member for Hunter (Mr. James), that if concessions are made under State acts they ought to be made also under the Commonwealth act. We are seeking to achieve uniformity of taxation. Why can we not have uniformity of concessions?

Mr. Chifley. In some instances, no benefit would be derived.

Mr. CALWELL. I admit that; but in other instances, benefits would accrue. The honorable members for Eden Monaro (Mr. Perkins) and Bass (Mr. Barnard) have said that a recommendation in respect of this matter has been made by the Joint Committee on Social Security. If so, the Government ought even now to give effect to it. Far better would it be to have some provision in the Income Tax Assessment Act, than to continue in the hope that provision may be made later in an act relating to social security. The honorable member for Hunter has spoken with full knowledge of the conditions that exist in industrial districts. I, too, know how some people have to live. I have said frequently in this chamber that one out of every seven of my electors is an old-age or invalid pensioner. Sub-section 2 of the proposed new section 160 reads -

The amounts in respect of which a rebate of tax shall be allowed under the last preceding sub-section shall be -

in respect of each child . . . wholly maintained by the taxpayer -

inrespect of an only child or in respect of the elder or eldest of such children an amount of seventy-five pounds: and

in respect of a child who is not an only child or the elder or eldestof such children an amount of thirty pounds.

What is the reason for the differentiation? Is it that child endowment is not paid in respect of a first child, and the Government desires to make an additional concession in that regard? If so, what is the reason for the further provision that the rebate of tax to be allowed in respect of the first child shall not exceed £45, and inrespect of subsequent children shall not exceed £5?

Mr. Chifley. That is a maximum.

Mr. CALWELL. I have not been able to make an arithmetical calculation that will enable the figures £45 and £5 to coincide with any existing amounts, in the Child Endowment Act or anywhere else.

Mr BLACKBURN:
Bourke

– When the honorable member for Hunter (Mr. James) expressed a desire for an exemption in respect of an invalid child over sixteen years of age who is maintained by a taxpayer, the honorable member for Robertson (Mr. Spooner) said that, apparently, this provision had been omitted from the social security laws. It is a deliberate omission from those laws, because the matter has been discussed over and over again in this chamber. Originally, under the Invalid and Old-age Pensions Act an invalid child who was maintained by his relatives was denied a pension, but after some agitation that provision was altered in order to meet cases in which the invalid was maintained by a brother, sister, or other relative. Nevertheless a child who is incapacitated to the degree of 85 per cent and is maintained by a parent, cannot obtain an invalid pension. That position is the result of deliberate action taken in this Parliament as late as this year. It is true that administrative practice takes the family income into account, but that practice has no statutory basis. If a deduction be allowed in respect of a mother who is maintained by a taxpayer, I cannot see any reason why a similar deduction should not be allowed in respect of an invalid child of any age whom he maintains. Moreover, that deduction should be allowed irrespective of whether the taxpayer has a low income or a moderate income. The allowance should apply to every child who would be entitled to an invalid pension were it not that he is maintained by the taxpayer. Either the Invalid and Old-age Pensions Act should be amended, or provision to that effect should be made in this legislation. It seems unfair that a taxpayer parent should bear the burden of maintaining his invalid child and not have such expenses recognized as a fit subject for deduction. I do not think that it is fair that this deduction should not be allowed in respect of persons with incomes higher than those suggested by the right honorable member for Yarra. So far asmy memory serves me, there is no statutory basis for taking the family income into account; it is merely the administrative practice of the department.

Mr. Scullin. There is a regulation.

Mr. BLACKBURN. It does not bind any one. The Government can alter it without consulting Parliament. There should be statutory provision for this deduction, and it should notbe confined to persons with low incomes. A man receiving £600 a year should be entitled to a deduction in respect of an invalid child maintained by him.

Mr. Chifley. What does the honorable member regard as a proper definition of an invalid?

Mr. BLACKBURN. Any child who, but for the fact that he is maintained by his parents, would be entitled to an invalid pension. In respect of every such case a deduction should be allowable.

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

I do not think that the honorable member for Bourke (Mr. Blackburn) has expressed correctly the position as to the eligibility of the child over sixteen years of age for an invalid pension. For some months a child over sixteen years of age who is maintained by his parent has been eligible for an invalid pension, regardless of the income of the parent.

Mr. Blackburn. I think that the Minister is wrong.

Mr. HOLLOWAY. The income of the parent does not come into consideration unless the income of the family exceeds an amount equal to £2 10s. for each adult of the family. That is to say, if the family consisted of a father, mother, and adult invalid daughter, a sum of at least £7 10s. a week could come into the home before the claimant would be rendered ineligible for any pension. A resolution to that effect was carried in this Parliament late in 1941.

Mr BLACKBURN:
Bourke

. There is no misunderstanding between the Minister for Social Services and Health (Mr. Holloway) and myself, except that what he says is done by law is, I think, done by administrative practice and not under the authority of any statute. My point, which is untouched by his remarks, is that, by administrative practice, or statute, or both, certain persons who are otherwise qualified for invalid pensions are denied pensions because they are maintained by their parents.

Mr. Chifley. I have the honorable member’s point clearly in my mind.

Clause agreed to.

Clause 24 agreed to.

Clause 25 (Rebate in respect of loan

Mr CALWELL:
Melbourne

. I should like to know why it is proposed that a taxpayer shall be entitled to a rebate of 2s. for every £1 of interest which is included in his taxable income, and which is derived from bonds, debentures, stock, or other securities issued by the Government of the Commonwealth, or of a State, or by any municipal body. It seems to me that in this clause we are continuing the system of protection from State tax. I know of the difficulties which exist in regard to issuing loans free of both State and Federal taxes. The last loan which was floated on that basis was offered to the public towards the end of the war of 1914-18. Since then, all loans have been free of State tax, due, 1 believe, to the disparity between the rates of tax in the several States. I do not think that such a large concession should be made on account of money derived from investments, in this case investments in government loans. I should like to learn what departure from existing practice is being made in this clause.

Mr SCULLIN:
Yarra

.The provision contained in the clause is in the bill now because all Commonwealth loans have been issued free of State income tax. Under the income tax rates bill, which will be brought on today, Commonwealth and State income taxation is to be amalgamated in one uniform system. Then the Commonwealth will collect all income tax revenue, and if we did not give a rebate to honour the obligation entered into in the prospectus of our loans, that they would be free of State income tax, we should be guilty of repudiation. A calculation has been made that the rebate will be worth on an average 2s. in the f 1 of interest received on Commonwealth Government loans and that amount is to be a rebate to the taxpayer.

Mr Calwell:

– Will a rebate of 2s. in the £1 cover all the cases, or will some holders of bonds receive less than that sum ?

Mr SCULLIN:

– Nobody could calculate the exact figure. “When the Commonwealth loans were issued, their freedom from State income tax enabled the Commonwealth to borrow at a slightly lower rate of interest than would otherwise have been obtainable. We were anticipating a small reduction of the interest rate for the next Commonwealth loan, but as it will not be free of State income tax, we hope to get it at the usual rate of interest. There is another important principle involved. The Commonwealth could not permit a

State Parliament to tax the interest paid to holders of bonds issued by the Commonwealth. Therefore, all these loans were free of State income tax. We must keep faith with past borrowers and live up to the terms of the prospectus of the loans, otherwise we should be guilty of repudiation.

Clause agreed to.

Clauses 26 to 29 agreed to.

Clause 30 (Payment of tax to have priority over all other taxes).

Mr BLACKBURN:
Bourke

– This is an objectionable clause. It provides that the States shall not be able to take Id. of income tax until the Commonwealth has collected its income tax. Despite the sanction that the House has given to the main bill, introducing the uniform taxation system, I regard this clause as a bad and unfair provision and a part of a scheme which in my judgment violates the principles on which the Constitution is based without the people being consulted.

Clause agreed to.

Clause 31 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill - by leave - read a third time.

page 1775

INCOME TAX BILL 1942

In Committee of Ways and Means: Consideration resumed from the 15th May (vide page 1303), on motion of Mr. Chifley -

That a tax be imposed upon incomes . . . (vide page 1294).

Mr FADDEN:
Leader of the Opposition · Darling Downs

– I move -

That paragraph 1 be postponed.

This amendment, if carried, is to be regarded as “ a direction to the Government to reduce the rates of tax and to raise an amount equal to the consequential reduction in the estimated revenue by means of a national contribution to be levied by way of loan on the incomes of persons whose taxable incomes exceed £100 “.

My reason for submitting the motion is to take this unique opportunity to bring before the committee the necessity and desirability of combining with the uniform system of taxation a system of national contribution whereby post-war credits shall be created in the form of loans to be repaid to taxpayers after the war. It is not necessary for me now to go into details concerning the initiation of this reform of national contribution. I ask the Government to consider it on the lines embraced in the motion. It is not a new form of national contribution. It has been successfully used in Great Britain. A few days ago, I pointed out that the Chancellor of the Exchequer in Great Britain had referred to the success of that scheme, and I indicated that, out of the sum of £125,000,000 that had been contributed by those earning the lower ranges of income in the United Kingdom, £60,000,000 constituted post-war credits. The advantage of a post-war credits system must be obvious to every honorable member. Grave responsibilities must be faced during the war, but greater responsibilities will have to be shouldered after the war. Post-war reconstruction of our services, industries, economic policy and fabric generally will cause great concern to Australia and its people. Therefore, a post-war credits scheme would give the added advantage that, in addition to compulsory saving during the war period, whereby purchasing power would be diverted from civil to war requirements, a fund would be established by which post-war reconstruction could be financed. The employees of Australia will assuredly be confronted with a grave situation when the war ends. Employment will be hard to obtain, war industries will no longer continue, and there will be a tremendous diversion from war activities to civil activities. In addition, a system of national contribution would provide an opportunity for every citizen of Australia to become a practical or an expectant shareholder in Australia Unlimited. It would enable him to contribute towards the war effort by providing some of the finance necessary to wage the war successfully. At the present time, the rates of tax proposed are of such a nature that certain ranges of income are totally relieved of any contribution to the war effort by way of taxation. This is not the time to give such relief. This is the time when all the resources of Australia, physical, material and economic, should be marshalled to achieve the best possible result. Consequently, it is inconsistent with the system of uniform taxation to relieve from responsibility for contribution to the national effort ranges of income which are at present taxed by the States, and not lightly by certain States. I mentioned in my secondreading speech on the principal bill certain aspects of this matter which I shall not repeat. The facts stand out like a lighthouse on a dark night. Out of a total taxable income of £800,000,000 in Australia, the amount of £560,000,000 represents the incomes of those receiving £400 a year and under. I realize that that range includes low rates of income which should not be taxed, but the Government seeks to get out’ of that field only 3.892 per cent of the total revenue to be raisedby income tax. Under the scale, only £28,800,000 is to be obtained from the field of taxable income amounting to £560,000,000. I maintain that it is ridiculous to seek such a small contribution from that income field. Just as the total taxable income in Australia increased from £700,000,000 in the previous year to £800,000,000 last year. I am sure that the total taxable income capacity in the field represented by the sum of £560,000,000 has increased considerably over the same period. The decision of the Government against obtaining more income tax revenue from the lower ranges of income is not sound, particularly when the Government is scratching for money. It says that a uniform system of income taxation is necessary so that every available field may be exploited in order to provide the money required for the war. But it is inconsistent, because it proposes not to tax a group of incomes which ought to be taxed. That group is to be relieved of an amount of £750,000, which it pays under existing Commonwealth and State tax rates. . Taxes amounting to £20,700,000 are to be taken from the group of incomes between £401 and £1,000 a year. That will represent 14.275 per cent of the group’s capacity of £145,000,000. Taxes amounting to £7,000,000 will be taken from the group between £1,001 a year and £1,500 a year. Under the old rates, that group is taxed £6,500,000. The new tax will represent 25 per cent, of its capacity of £28,000,000. Incomes of £1,500 a year and more will be taxed an amount of £35,000,000, an increase of £1,000,000 over present rates. This will represent 52.239 per cent, of that group’s capacity of £67,000,000. What further evidence is required to prove conclusively that the Government is not only failing to distribute the burden of taxation equitably, but also is unfairly relieving small incomes of impositions. The low income group must be taxed. The Treasurer has said that he contemplates a deficit of £70,000,000 for this financial year, yet the proposed tax on the low income group represents less than 4 per cent, of its capacity. The Government has an excellent opportunity to derive revenue from that field, because the majority of earners of low wages and salaries are willing to contribute their mite to the war effort. They want to contribute to the security of Australia. An integral part of any uniform taxation scheme should be a system of post-war credits, which would give the low income earners an opportunity to contribute to the war effort and to set aside a nest egg for the days of post-war reconstruction. The merits of post-war credits scheme are undoubted ; they virtually speak for themselves. There is no novelty about the proposal. The Government of the United Kingdom has effectively implemented a post-war credits system in order to derive revenue from a group of incomes which in times of peace it would not dream of touching. It realizes that every person must contribute to the winning of the war. This depends upon the provision of adequate finance. Every citizen should have the opportunity to contribute adequately, effectively, and sensibly not only to the war effort but also to the rehabilitation of the nation after the war.

Dr PRICE:
BOOTHBY, SOUTH AUSTRALIA · UAP

because the Fadden Government had the courage to deal with a problem which this Government will not face - the taxation of that part of the national income which holds the bulk of the people’s spending power. The present Leader of the Opposition (Mr. Fadden) explained, in October, 1941, when he was Prime Minister and Treasurer, that incomes under £400 a year represented £560,000,000 of the national income, an increase of £70,000,000 over the amount that those people had been earning at the outbreak of war. It is difficult to obtain accurate figures at the present time, but obviously that section of the national income has increased immensely as the result of the munitions programme and the intense inflationary policy of this Government. The increase probably represents the greater part of the general increase from £900,000,000 to £1,100,000,000. In war-time it is essential to reduce the spending power of the consumers. Nevertheless, in spite of this vital necessity, the Government proposes to reduce the burden of taxation on 70 per cent, of the taxpayers, who are, in the main, paying their taxes cheerfully as a war-time obligation. The horrifying - I could almost say cowardly - thing that the Government is doing is that it is even reducing taxation on single persons without dependants. According to’ the figures that we have been given, such persons earning £150 a year will be required to pay nothing, although in South Australia they have been paying £5 8s. a year, in Western Australia £7 3s. a year, and in Tasmania £3 8s. a year. Proportionate reductions will be granted to those who are earning £200 a year. Instead of maintaining taxation the Government is muddling about with price control and rationing, and confusion is increasing. Unless rationing is really necessary, owing to a shortage of goods, properly graduated taxation with appropriate exemptions would be infinitely preferable to it. Great Britain, Canada and New Zealand have recognized this, and are taking the honest course in dealing with the problem. Unfortunately, I am unable to cite detailed figures of what Great Britain has termed its “ austerity budget “. It is a severe budget, but the people are complaining that, if anything, it is not severe enough. Even prior to its introduction single persons in Great Britain were paying £6 5s. a year on incomes of £150. Australians on that income were paying nothing. Single men in Great Britain earning £200 a year were paying £16 13s. 4d., and Australians on the same range were paying £7 9s. The Fadden plan in relation to companies was to take 20 per cent of their undistributed profits as a loan to be repaid after the war, except when such funds were required for wartime expansion. The idea was excellent in theory, and it would have been excellent in practice. The late, and possibly unlamented, Joint Committee on Profits was requested to urge the Government to adopt that plan. Somebody complained a few minutes ago that our parliamentary committees are not being consulted by the Government. That is one reason why the Joint Committee on Profits has gone into temporary suspension. One of its suggestions was that a portion of the undistributed profits of companies should be borrowed and put aside to provide either against a post-war slump or for the expansion that we hope will occur after the war. The companies are desperately afraid that there will be a period after the war when prices will fall more rapidly than the Prices Commissioner, Professor Copland, will be able to control them, and they want the Government to adopt the course of action which I recommend. Many funny things have happened in this chamber in the last few days. Honorable members from New South Wales on this side of the chamber have found that £1,300,000 has been tucked away for that State. Somebody has dug up £77,000 for Tasmania. We have also discovered honorable members who move in three dimensions, so to speak. They think one way, speak another, and vote a third. So many funny things have happened that I have investigated the rates of tax on company shareholders proposed by the Government. I speak now on behalf of people whom I have defended on many occasions the poor shareholders, whose only income is from their investments in company shares. I make it clear that I speak not for the large shareholders, but for the retired menand women whose life savings are invested in companies like the Adelaide Electric Supply Company Limited, which has from 16,000 to 17,000 shareholders, most of whom are small investors. The Government ought to have some regard for that thrifty section of the community; but, knowing what has happened in the past, I suspected that these people would be kicked again if it were possible to do so. On looking at the published figures, honorable members will see that the Government claims that taxation on property income in South Australia will be reduced. The existing tax on property income amounting to £400 a year is £36. This is to be reduced to £71. The tax on £500 is £120, and it is to be reduced to £106. On £600 itis £157, and it is to be reduced to £142. That does not give a true picture. If we take one special class of the people whose income is derived from property those who are small shareholders and who have no other income we see a totally different picture. In South Australia, the old tax on dividend incomes of £400 a year was £60, consisting of £33 6s. 8d. Federal tax, £7 17s. 2d. State tax, and £18 6s. war tax. In the new schedule the figure has been raised to £71 6s. On a dividend income of £500, the tax has been raised from £87 to £106, and on a dividend income of £600 it has been raised from £118 to £142. I do not believe that these figures have been put before honorable members previously. For the reasons I have given I urge that during the period that will elapse before the budget session, the Government should reconsider its policy in this regard. The British system of rebates and company taxation in relation to small shareholders has a great deal to recommend it, and I suggest that it be considered. If the Government is not prepared to give an exemption to small shareholders with an income up to the basic wage, say, up to £200, I at least ask that it allow them to retain an amount equivalent to that received by invalid and old-age pensioners. It has been said that the application of this policy would make too much work for the officers of the Taxation Department, but as it appears that many officers in the taxation departments of the States may

– Not as citizens of the Commonwealth?

Mr PATERSON:

– Individual citizens of certain States are entitled to a higher proportion of post-war credits in relation to the amount of tax collected from them than are the citizens of certain other States. That is because some States are more harshly treated in the first instance. Let us consider again the glaring disparity between the treatment of citizens of New South Wales and that of Victoria under the proposals of the Government. Under the Government’s plan the average citizen of Victoria will pay, including State taxes other than income tax, about £2 4s. 3d. a head more than will be paid by the average citizen of New South Wales. That is unjust, unless some effort be made by the Treasurer to adjust the difference by means of variations of the amounts credited to such citizens as postwar credits. What applies to Victoria in this connexion applies almost equally to South Australia and Tasmania, as compared with the citizens of Western Australia and Queensland. I urge the Treasurer to consider sympathetically the proposal which has been put forward, not merely because it has great virtues as a means of promoting savings, on a compulsory basis, but also because it could be used as a means of overcoming a real injustice which otherwise would be done to the citizens of Victoria, South Australia and Tasmania. The bills which either have passed through this chamber within the last few days, or are under consideration, would become acceptable to me if a post-war credits system were adopted as a part of their machinery, with such appropriate variations of the ratio of tax to compulsory loan as would substantially rectify the .undoubted inequalities in the incidence of this tax in the different States, when one takes into consideration that, on top of that tax, there is a certain measure of State taxation other than income tax still to be met. Apart from my plea, that this proposal should be adopted as a means of compensation, I support it on its own merits. I believe that the time will come when many people in Australia would thank God for a post-war credit, for they would then have something to their advantage when the transition stage between wartime activity and peace-time activity is reached. With all due deference to the honorable member for Bass (Mr. Barnard), with whose rather extravagant remarks I entirely disagree, I say that there are many people in Australia to-day, particularly single young persons of both sexes, who are making exceptionally good wages arising directly out of war-time activity. Many of them are making better wages than ever before, and whilst no doubt some of them are of a saving disposition and buy war savings certificates or bonds, others give no thought whatever to the morrow. For the latter class a system of compulsory loans or post-war credits would be an undoubted blessing in the years to come. When the war is over, and we are engaged in the difficult transition task of changing from war-time activity to peace-time activity many of these young people will be looking for other jobs, and I believe that they would bless the Treasurer who had the courage and foresight to introduce a scheme of this kind. I trust that the Treasurer will consider sympathetically the proposals of the Leader of the Opposition.

Mr BARNARD:
Bass

. I Iwas sorry that the Standing Orders interrupted my remarks a little earlier. I agree with the honorable member for Gippsland(Mr. Paterson) that large numbers of people in this country are earning considerably higher wages than they ever previously enjoyed, and also that some of them give no thought to the morrow. It would he well, however, to reflect on the situation in which many of them found themselves only a couple of years ago. From the bulletin issued by the Labour party on the 12 th August, 1940, on the subject of unemployment, I extract the following paragraph: -

The number exclusive of dependants in receipt of or working for sustenance or working part-time on relief works in the various States at the 30th June, 1039. was 111,440. Of this figure, it can he safely assumed that those persons who are receiving such assistance would cover approximately 250,000 men, women and children, which means that 250,000 people in Australia are living under intolerable conditions.

In New South Wales alone at the end of January, 1940. there were approximately 39.000 food recipients, who, with their dependants, number . 100,000 persons. It is estimated that the total number of food recipients and their dependants in New South Wales and relief workers and their dependants would work out at approximately 155.000 persons.

The Premier of New South Wales, in July, 1940, said - “ We have 2,500.000 men of working age in Australia not 10 per cent, of them are yet occupied in full-time war activity.”

We began this war with more than 100,000 unemployed in Australia. We still have more than 100,000 unemployed.

Many young people who to-day are receiving what the honorable member for Gippsland describes as high wages were in receipt of sustenance less than two years ago. The payments to them were sufficient only to keep body and soul together. Most of these workers, who for only a short period have been in full-time employment, have incurred debts which they are now trying to meet. They must, moreover, buy clothes in preparation for different seasonal conditions, and many of them have also to provide nourishing food for children who arc suffering from malnutrition. I disagree entirely with any proposal which would force these people, almost as soon as they get into full-time employment, to set aside a proportion of their earnings in order to provide post-war credits. Numbers of these workers cannot, afford to have any deduction made from their wages for that purpose. Honorable members opposite seem to think that ‘because these workers are now in full-time employment, and, perhaps, receiving good wages, they must be subject to a plan under which a certain sum would be compulsorily taken from their pay envelope each week, regardless of their commitments and responsibilities. The proportion of workers in receipt of big wages who are young, single and without financial responsibility is small. To my knowledge, many of them, are purchasing war certificates and bonds to the utmost of their capacity. That is all that should be expected of them. The bulk of the purchasers of such certificates are working men and women. Having drawn attention to the position in which many of these workers found themselves less than two years ago, I am content to leave thepublic to judge whether the plan of the Labour party for financing the war or that of the Opposition is the better.

Mr MARWICK:
SWAN, WESTERN AUSTRALIA · CP

. I wish to strike a. note of warning in connexion with company taxation. In doing so, I make it clear that I have no interest in any company, either private or public ; but, as a member of the Joint Committee on Profits, I had the opportunity to study company taxation in some detail, and to hear the views of many persons connected with companies of various kinds. Although a company has neither a body to be kicked nor a soul to be damned “, it does offer an excellent opportunity for many thousands of people in this country to invest their limited savings. The taxation of Australian companies is reaching a dangerous peak, and we must be careful not to destroy a valuable source of revenue. In my opinion, the Treasurer (Mr. Chifley) would be well advised to study carefully the two reports of the Joint Committee on Profits, and to heed some of the suggestions contained therein. Under this measure, it is proposed that company taxation shall be at the rate of 6s. in the £1. That will cause considerable hardship to thousands of small investors who, rather than use their savings in businesses of their own, prefer to invest it in efficiently and economically managed companies, believing that their capital is safer in such hands. During the last few years the various taxing authorities in Australia have regarded the earnings and dividends of companies as an easy and profitable field of taxation, and the result has been the infliction of considerable hardship on scores of thousands of small investors. I appeal to the Treasurer to study carefully the two reports submitted by the Joint Committee on Profits. In my opinion, taxation of companies is reaching a dangerous level in Australia and is destroying a lucrative field of taxation because it is checking the expansion of companies, particularly the younger and more vigorous companies that have developed in the last few years. Heavy company taxation is also affecting seriously the means of livelihood of scores of thousands of small investors. People who draw, say, £80 or £100 a year from a company have to pay a high rate of income tax on their dividends, although their personal exertion income is below the minimum for ordinary income tax. Because companies and their shareholders are spread over a vast area in Australia, they do not seem to be able to bring strong influence to bear on Parliament in their own interest.

Mr Mulcahy:

– Did not the Joint Committee on Profits find that many companies make huge profits?

Mr MARWICK:

– According to the bulletin of the Commonwealth Bank, there has not been a large increase in the profits of companies since the outbreak of the war. I am aware that some companies have made substantial profits, but they are not large in number. There are means by which the Government can take excess profits from these companies by way of taxation, and that is being done.

Mr CLARK:
Darling

.- 1 oppose the amendment moved by the Leader of the Opposition (Mr. Fadden). His objective is to reduce the spending power of the people in order to transfer labour and material from non-essential to essential industries as a contribution to the war effort. I consider that that objective can be better attained by the Government transferring man-power and material from non-essential to essential industries when and where they are required. The proposal for compulsory war-time savings proposed by the Fadden Ministry was unjust in its application. I have examined the schedules furnished by the present Leader of the Opposition (Mr. Fadden), who was the Treasurer when he submitted to Parliament the national contribution proposal of his Government, and I shall quote several examples of the unfair distribution of the burden on different incomes. On a personal exertion income of £150, the national loan contribution was £11.1; on an income of £200, £16.8; on an income of £1,000, £42.2; and only £6.8 on an income of £2,000. Therefore, the national loan contribution would have been very heavy on the low incomes and very light on high incomes.

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– You are ignoring the fact that’ the higher incomes are already heavily taxed.

Mr CLARK:

– My figures show that the national loan contribution would have been heavier in the case of property incomes. On a property income of £150, the increase would have been £11.1; on £200, £16.2; and on £250, £18.3. On an income of £1,000 the total amount paid in tax, including the national loan contribution, would have been £13.2 less than on the then existing scale, and on an income of £2,000 it would have been £119 less, and on an income of £3,000, £155 less. That proposal was unjust because it sought to place an increased burden on low incomes and reduced substantially the tax on high incomes. The then Treasurer stated in his budget speech delivered on the 25th September, 1941, that the national loan contribution would yield £32,000,000 for 1.941-42. The policy of the Labour Government of compelling by regulation the trading banks to deposit their surplus balances with the Commonwealth Bank has made available to the present Government a sum of £37,500,000. Therefore, the Labour Ministry’s policy has been more productive than the .Fadden Government’s national contribution scheme would have been. The present Government should go further by preventing the hoarding of money. Regulations should be formulated prohibiting hoarding, and providing that all surplus funds in the hands of the people must be paid to the trading banks. This money would then be transferred automatically under the present arrangements to the Commonwealth Bank, and money could then be made available to the Commonwealth Government. The statement was made during the budget debate last year that a similar policy had been adopted in Germany long before the present war, and by that means a great war machine was built up by a country which was regarded in many quarters as bankrupt. It is illegal in Germany to hoard money, and surplus money in the hands of the people must be paid into the banks. I believe that that is a better method to adopt than the compulsory taking of savings from the people. As I pointed out, the schedule of national loan contributions proposed by the present Leader of the Opposition (Mr. Fadden) when he was Treasurer provided for considerable increases of the tax paid by persons on low incomes. The contributions started with incomes of £150 a year, and when the income exceeded £2,000 per year the total amount of tax paid was reduced. It was most unjust to propose a large levy on low incomes and reduce the contribution to taxation revenue by those on high incomes. I consider that any proposal to tax low incomes is unjust. Persons earning low incomes experience much difficulty in ob taining the necessaries of life, and now the rising costs of commodities leave them with very little to contribute to the taxgatherer.

Sitting suspended from 12.45 to 2.15 p.m.

Mr HARRISON:
Wentworth

– Earlier this morning, in an atmosphere such as we are in at the moment, I stated clearly, amidst a roar of interjections, my views regarding uniform income taxation. I said that I preferred uniform taxation to a system of post-war credits, because I considered that it would have a much fairer incidence. I also made it clear to honorable members that I considered post-war credits’ to be the next best thing to uniform taxation. That was the reason why I supported the post-war credits- scheme which was introduced by the Leader of the Opposition (Mr. Fadden) when he was Treasurer, although I realized that it would have created disabilities as between State and State. On this occasion, I see no reason why a scheme of post-war credits should not be superimposed upon the uniform income taxation system. We are rapidly approaching the time when we cannot expect to obtain much more revenue from the higher ranges of incomes. As a matter of fact, even to-day, Commonwealth and State taxes assessed on some incomes amount to more than 20s. in the £1. That should not obtain, and it would not obtain if the States had agreed to pass certain legislation. The time is not far distant when this Government, notwithstanding what its supporters may say in opposition to post-war credits, will be forced to draw upon the lower ranges of incomes. There can be no escape from that. The law of diminishing returns will force it to do so, if it intends to engage in a total war effort, or even to maintain the present rate of expenditure. Honorable members supporting the Government will then have to decide whether they will take the money from the lower income earners by means of direct taxation or whether they will borrow it and create a form of deferred pay for them. I join issue with the honorable member for Bass (Mr. Barnard), who tried to convince us that the people who enjoy the lower incomes do not engage in wasteful expenditure. There is wasteful expenditure throughout the whole range of incomes.

Mr Calwell:

– Cite instances.

Mr HARRISON:

– I shall not endeavour to give instances, but I refer the honorable member to the great wartime increases that have occurred in the lower incomes. Those people were not on the bread-line prior to the war. They were not emaciated; they did not fail to enjoy the good things of life. One need only consider the ways in which they spent their money on amusements to realize that. They had no commitments then; and a person without commitments obviously can live on a smaller income than a person with commitments. However, when we refer to wasteful expenditure, we do not direct our remarks exclusively at the lower wage and salary earners. There is wasteful expenditure in the higher income groups, in spite of the heavy tax burden imposed upon them. Persons enjoying the higher ranges of income have not adjusted themselves to the new war-time impositions, and, naturally, they are still trying to liquidate the commitments that they have entered into. Therefore, in time of war wasteful expenditure must occur in all ranges of income within the taxable field. There should be,, and I believe that there will be, some interference with the lower ranges of income, and the Government will be forced to decide between direct taxation and post-war credits. This war is being fought for us by our forces in the field and by an industrial army. What is done in connexion with our soldiers? A certain amount of their pay is deferred. Any honorable member who fought in the war of 1914-18 will appreciate the benefit of deferred pay to a soldier when he is repatriated into civilian life. Why should that principle not apply to the industrial army? Why should the munitions workers and other war workers be permitted to take money from the general pool in ever-increasing quantities without being forced to save some of it ? These men will ultimately be re-transferred from war work into civil industries. I nm afraid that, if a Labour government is still in power when peace returns to us, we shall suffer a period of depression during which the workers who will be displaced from war industries will not be able to secure employment. I hope that this will not occur, but we must be prepared for it. What does the Govern ment propose to do by way of preparation ? Does it want to perpetuate the dole which has been a blot on the pages of Australian history? An alternative course is open to it. Instead of taking money from the lower income groups by means of taxation, it can borrow from them and establish a form of deferred pay for them. The same thing can be done iri connexion with industry. Many industries have been forced to curtail their activities and expenditure because of wartime conditions, and they would be happier if they knew that they had a nestegg in the form of post-war credits which they could use for development when peace returned. A post-war credit scheme would have a twofold effect. It would help industry and provide it with an incentive to expand,, and it would provide a means of absorbing displaced workers into peace-time employment. There could be no happier circumstance than the existence of industries with reserve funds that would enable them to expand and employ greater numbers of the men who must be transferred from the fighting services and war industries, and who also would have reserves to tide’ them over the period of change. The Government will be forced to face this problem in the near future. It would be wise to accept a direction from the Opposition now, because it will be forced by circumstances to do so ultimately. Supporters of the Government, who now oppose this proposal, will be forced to eat their words, because the Government must, in the near future, draw upon the lower ranges of income for its war needs. 1 cannot imagine it taking the money by means of direct taxation when it has the opportunity to borrow, and eventually return the money. I envisage a post-war credits scheme superimposed upon the system of uniform taxation which, will bear equally upon individuals and States. I commend to the Government the proposals of the Leader of the Opposition.

Mr HUTCHINSON:
Deakin

– The amendment submitted by the Leader of the Opposition (Mr. Fadden) is designed to superimpose upon the uniform taxation scheme a system of postwar credits similar to that which he proposed when he was Treasurer some months ago. A peculiar feature of the speeches of honorable members who support the Government is that they accuse us of endeavouring to tax lower incomes by means of a system of post-war credits. They charge us with a lack of humanity because we say that there must be an equitable ratio of taxation on the low, middle and high incomes. Government supporters are remarkably inconsistent on this subject of taxation. I recall the occasion when the Leader of the Opposition moved for the adjournment of the House four or five weeks ago in order to discuss certain remarks made by the Minister for Labour and National Service (Mr. Ward) in Sydney regarding the payment of interest on loans. The Minister had stated, and he amplified the statement fully in this chamber, that, whilst he agreed to the payment of interest on past loans and on the £35,000,000 Liberty Loan that was th«m in process of flotation, he did not believe in the raising of large sums of loan money and the paying of enormous sums of interest. Presumably the honorable gentleman spoke on behalf of the Government. A remarkable feature of that debate was the fact that nearly all private members on the Government side of the House agreed substantially with the Minister. They said that the money needed for the prosecution of the war should be raised by means of taxation. They did not like the idea of loans at all. It 5s a matter of simple arithmetic that, if the Government is to obtain the money required for the war by means of taxation, sooner or later, as the honorable member for Wentworth (Mr. Harrison) has said, it must levy upon the lower incomes. No honorable member on the Opposition side of the chamber relishes the placing of additional taxation on people in the lower income ranges. We should be happy if the war could be financed without adopting that method. ‘But the mathematics of the case prove that it cannot be done. In the year 193S-39, which was the 1939-40 year of assessment, the amount of income received by the people totalled £700,000,000. Only 17,000 people were in the £1,001 to £1,500 income range that year, and they received £21,000,000 of the total income. Only 18,000 people were in the income range of £1,501 and over and they received £54,000,000 of the total income. The people in those two groups numbered 35,000 out “of a total of 2,840,000 and they received only £75,000,000 out of a total of £700,000,000. In the year 1940-41, which was the 1941-42 year of. assessment, the amount of income received by the people totalled £800,000,000. Only 23,000 people were in the £1,001 to £1,500 income group and they received £28,000,000 of the total income. Only 23,000 people were in the income group of £1,500 and over, and they received £67,000,000 of the total income. The people in those two groups numbered 46,000 out of a total of 3,000,000, and they received £95,000,000 of a total of £800,000,000 and over 40 per cent, of that went in taxation. Those figures show how impossible it would be to obtain anything like the amount of money the Government requires without tapping the middle and lower incomes. In the year 1938-39, which was the 1939-40 assessment year, 2,580,000 people were in the income range under £400 and they received £500,000,000, and 225,000 people were in the income range £401 to £1,000 and they received £125,000,000. In the following year, when the national income increased by £100,000,000 to a total of £800,000,000, the people in the income range under £401 received £560,000,000, and the 245,000 people in the £401 to £1,000 range received £145,000,000. In the face of these figures I cannot understand how the Treasurer can expect to receive the revenue he requires from income tax without tapping this source. The following table is most interesting: -

Those figures show clearly that people on the middle and lower income ranges are improving their position substantially but are not paying increased taxes in anything like thesame ratio. It is also clear from that table that the revenue resources of the two higher income ranges are gradually diminishing. Very soon we shall have to give close attention to the law of diminishing returns. If the Treasurer desires to make substantially increased collections from income tax, obviously he will have to tap further the lower and middle ranges of income.

Figures supplied to me recently indicate clearly that the national income is increasing month by month in consequence of the large amount of credit which is being pumped into our financial system. Our national income next year will probably be between £1,000,000,000 and £1,100,000,000, and the greater part of the increase will go to people in the middle and lower income ranges. It is undeniable that the position of people in the lower income ranges has improved greatly since the outbreak of the war. Therefore, I agree with the honorable member for Wentworth (Mr. Harrison), that sooner or later the Government will be compelled to tap this source of revenue. If, when that time comes, the wage earners could be given a choice between a system of post-war credits, or if you like, deferred pay, such as that proposed by the Fadden Government, under which a proportion of their money would be placed in safe custody for them until after the war, and a system of straightout taxation such as has been introduced by this Government, I have not the slightest doubt that they would choose the post-war credits system.

One reason which the Government has given for introducing the series of bills which we have been considering this week is that the plan provided therein will not only simplify taxation methods but will also increase the revenue. I suggest to the Treasurer that a much greater sum would he obtained from the application of the post-war credits policy than is likely to be obtained from the policy which the Government is now applying. The honorable gentleman has said that he expects to receive between £12,000,000 and £15,000,000 in addi tional income tax through the introduction of this plan. The post-war credits plan proposed by the Fadden Government last year provided for an increase of £25,000,000 a year. Had that plan been presented this year, with an obviously increased national income, I believe that it would yield an increased amount of from £35,000,000 to £40,000,000 to revenue. The plan would also be of immense value to the wageearners, because it would ensure to them a supply of ready money after the war when, it is generally admitted, ready money will be difficult to provide.

I shall refer to one other aspect of the subject which is causing some concern to the Minister for War Organization of Industry (Mr. Dedman). [Extension of time granted.] It has been stated frequently in this chamber that one of the objects of war-time taxation should be to withdraw from the public excess money which might be used for the purchase of large quantities of non-essential consumer goods, the purpose being, not only to divert money to war purposes, but also to release manpower for war industries. These objects have not been achievedby the taxation policy of this Government. As the Minister for War Organization of Industry well knows, the purchasing of non-essential consumer goods has not decreased to anything like the degree that was desired. I prophesied last year when speaking on the Fadden budget that this would be our experience if some such policy as that then proposed were not adopted. I also said that in that event the wholesale rationing of goods would be inevitable. My prophecy has been fulfilled. The spending power of the people has been increased enormously and the money that has been earned has been spent freely. It is desirable, I suggest, that a considerable proportion of the money being earned to-day in war industries should be set aside to meet post-war needs. In actual fact, our living standards have not been greatly decreased, because the people have so much money to spend, but unless we are careful we shall suffer a serious reaction after the war. For these reasons, I urge the Government to reconsider its attitude to post-war credits. If it will introduce measures to provide for the accumulation, of substantial post-war credits by the mass of the people we may look forward to less difficulty than if people are not able when peace returns to obtain ready money to meet current needs.

Mr ARCHIE CAMERON:
Barker · ALP

– This is one of the most important proposals to be brought to our notice since the Government introduced its financial programme a week or two ago. This scheme of post-war credits is not new, and I do not propose to debate it at any length. I did not speak on the subject last October, when the Fadden budget was under consideration, although I voted in favour of that budget. Times have changed since then, but all that was said in support of post-war credits at that time has been amply justified by events. It has been proved beyond doubt that the easiest, quickest, and most satisfactory solution of some of our financial problems, at least, would be the adoption of a policy of post-war credits. The points put by the honorable member for Deakin (Mr. Hutchinson) are very good ones. The adoption of the system of post-war credits would result in savings being effected by many persons who will need financial resources at some time in the future ; and there would be a restriction of purchasing power in a market that is being depleted of goods, but not of money. If the volume of cash in circulation be maintained, the one result of the reduction of the volume of goods available must be rising prices. With money, but not goods, available, and rationing in force, what has become known throughout the world during this war as “ black markets “ will become operative. Unless a very firm grip be taken of the situation, the Government will experience quite a lot of difficulty in that connexion. The proposal of the Leader of the Opposition may not be agreed to by- the committee - it was rejected by a majority of honorable members last year - but that will not prove that it is not the best of the proposals that have so far been advanced. Therefore, the committee would be acting correctly if by the means proposed it were to provide an indication of a point in the distance towards which the Government might move, and give some idea of the country that has to be traversed.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– The Government declines to accept the amendment. An old story has been resurrected for our edification. We have been told of the wonderful potentialities of the budget produced by the present Leader of the Opposition (Mr. Fadden) on the 25th September last. The proposals then advanced by the right honorable gentleman aimed at the raising of approximately £7,000,000 by means of taxation and £25,000,000 under a scheme of post-war credits, £20,000,000 of which was to have been obtained from individuals. Since the present Government assumed office, it has imposed direct and indirect taxes estimated to produce an additional £60,000,000 a year, despite the fact that the country was told that it could not survive without post-war credits, and that inflation would make an immediate appearance on its door-step. The Government has faced up to the realities of the position, and has not adopted any fancy schemes, such as might be designed by professors of economics, at whom the Opposition was inclined to scoff last night. Under this measure, the Government hopes to raise what iT- considers it is entitled to receive, namely, an additional £15,000,000. That is no mean effort, and it compares more than favorably with the proposals contained in the Fadden budget of last year. The Prime Minister (Mr. Curtin) has drawn my attention to the fact that Commonwealth loans raised by this Government have been fully subscribed without recourse to private banking institutions. I have referred previously to the means adopted by the Tight honorable member for Kooyong (Mr. Menzies) as Prime Minister, and the Leader of the Opposition (Mr. Fadden) as Treasurer, in order to fill a loan.

Mr Fadden:

– Does the honorable gentleman say that the Government did not receive anything from the trading banks ?

Mr CHIFLEY:

– Nothing whatever.

Mr HARRISON:

– Surely the circumstances are different to-day!

Mr CHIFLEY:

– Everything is changed except some of the stories that the Opposition periodically trots out. Why this wonderful solicitude for the lower income groups!

Mr. Fadden. Has the Prime Minister appealed to such groups?

Mr. CHIFLEY. Of course he has; and they have responded.

Mr. Fadden. The honorable gentleman knows that they have not responded.

Mr CHIFLEY:
MACQUARIE, NEW SOUTH WALES · ALP

-thirds of the last loan raised consisted of contributions of less than £200. I have frequently hoard financial policy preached according to the views held by those for whom the honorable member for Deakin (Mr. Hutchinson) speaks. I listened to such a discourse in 1930-31. The financial policy which it was then said would be good for the workers drove many of them into misery and degradation. What then happened does not give me any confidence in the financial policies now being preached by honorable members opposite.

Mr. Hutchinson. Can the honorable gentleman disprove the figures I have given !

Mr. CHIFLEY. They were so voluminous that I do not feel disposed to dissect them. I view with grave suspicion this wonderful solicitude for the workers. The thought that the workers, after being starved for years, and being obliged to bang about the gates of factories seeking employment, are now making sufficient to enable them to purchase some of the necessaries and amenities of life, seems to cause honorable members opposite to have a feeling of almost hatred towards them. A tree is judged by its fruit. We have tasted some of the fruits of the financial policy espoused by honorable members opposite. The Government will not accept it. We believe that we have done very good work in financing the affairs of this country. We recognize the wisdom of much of what has been said concerning the grave danger of a decrease of the quantity of goods available and a concurrent increase of the purchasing power. That is elementary, and is generally realized. The Government is making definite and determined efforts to defray the cost of the war as it proceeds. The rates proposed in this measure are a part of the general scheme: of taxation. They may not he in accordance with the views of every member of the committee, but they are calculated to return £15,000,000 more than was previously obtained from the total Common wealth and State taxes. The proposal to institute post-war credits may be regarded as something in the nature of a King Charles head. I give to the Leader of the Opposition full credit for sincerity. I could not do otherwise, because all his actions are characterized by sincerity, honesty and political decency, and I should be ungrateful did I not pay tribute to those qualities in him. ‘ 1 merely differ from the policies expounded by honorable members opposite, and consider that the measures adopted by this Government have had very good results. The Government is unable to depart from the proposal it has placed before the committee.

Question put -

That paragraph 1 be postponed (Mr. Fadden’s amendment) .

The committee divided. (The Chairman - Mr. Prowse.)

AYES: 26

NOES: 0

N oes . . . . 32

Majority . . . . 6

Amendment negatived.

AYES

NOES

Mr ARCHIE CAMERON:
Barker · ALP

. The way in which these proposals were presented to the Parliament and the country would make it appear that taxpayers in certain States will get a reduction of Federal and State taxes should the bills become law. That is probably the worst feature of the whole campaign associated with this legislation. In. saying that, I do not in any sense accuse the Government of having directed such a campaign. The Government asked for a recommendation and, having received it, published it. There has not, however, been any clear-cut incisive indication by the Government to the taxpayers that the rates contained in the proposals are not the rates on which income tax will be levied for the ensuing financial year. Any person who has made a study of these proposals must be convinced that the rates which appear in the schedule will not remain. Throughout the country, there has been created for these proposals a measure of support which would not have arisen had the actual figures which will appear in the taxation measure to be introduced in August been presented to the Parliament. I have always believed that the mind of the Government, as sought to be expressed in its legislation, should be set out clearly to the country and the Parliament. Whilst on this occasion there may he some extenuating circumstances, it is incumbent on me to call the attention of taxpayers to the altered circumstances in which their assessments will arrive next year.

Mr JOLLY:
Lilley

. Are we to understand that these new rates will apply to next year’s income and not to income for the year ending the 30th June next?

Mr. Chifley. That is the position.

Original question resolved in the affirmative.

Resolution reported.

Standing Orders suspended ; resolution adopted.

Ordered -

That Mr. Chifley and Mr. Holloway do prepare and bring in a bill to carry out the foregoing resolution.

Bill presented by Mr. Chifley, and passed through all stages without amendment or debate.

page 1791

GIFT DUTY ASSESSMENT BILL 1942

Bill returned from the Senate without amendment.

page 1791

ESTATE DUTY ASSESSMENT BILL 1942

Bill returned from the Senate with an amendment.

In committee (Consideration of Senate’s amendment) :

Clause 8 -

Section 20 of the principal act is repealed and the following section inserted in its stead : - (2.) Where an administratorhas not made to the Commissioner a full and true dieclosure of all the material facts necessary for the making of an assessment, and there has been an avoidance of duty, the Commissioner may -

where he is of opinion that the avoidance of duty is due to fraud or evasion at any time; and”.

Senate’s amendment. Leave out “ at any time “, insert “ within twelve years from the date upon which the duty became due and payable under the assessment “.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

. I move -

That the amendment be agreed to.

The period of twelve years stated in the amendment is accepted by the Government in this instance, in respect of estate duty, but the Government does not wish that acceptance to be regarded as a general principle to be applied to other measures.

Mr. Archie Cameron. Does the amendment mean that it will not be permissible to go back beyond twelve years ?

Mr. CHIFLEY. Yes.

Question resolved in the affirmative.

Resolution reported; report adopted.

page 1791

WIDOWS’ PENSIONS BILL 1942,

In committee (Consideration of Senate’s requests) :

Clause 4-

In this act, unless the contrary intention appears - “ income “ means any personal earnings . . earned, derived or received by any widow for her own use or benefit . . but does not include any payment by, way of gift or allowance from any child of the widow.

Senate’s request No. 1. Leave out “child”, insert “ son or daughter.”

Senate’s request No. 2. After clause 34 insert the following new clause: - 34a. Whenever the maximum rate of pension per annum isincreased or reduced in pursuance of the last preceding section, the maximum rate of pension per annum payable to a pensioner, immediately prior to the increase or reduction, in pursuance of section twenty-one a of this Act,shall be increased or reduced by such amount, if any, as the Minister determines, not exceeding one half of the amount by which the maximum rate of pension per annum is increased or reduced in pursuanceof the lastpeceding section.”.

Mr HOLLOWAY:
Melbourne Ports Minister for Social Services and Minis ter for Health · ALP

. I move-

That the requested amendments be made.

The object of the first request is to make it clear that gifts or allowances made to claimants for pensions by their children, whether over or under sixteen years of age, will not be taken into account in determining the rate of pension. The word “ child “ did not make the position clear; the use of the words “son or daughter “ will bring this legislation into line with other legislation of a somewhat similar character.

The purpose of thesecond request is to provide that the rate of institutional pension shall be adjusted in accordance with the cost of living variation. Thereby this legislation is beingbrought into line with other similar legislation.

Question resolved in the affirmative.

Resolution reported ; report adopted.

Bill amended accordingly, and returned to the Senate.

page 1792

ADJOURNMENT

Allied Forces: Trial or CIVIL.

Offences - Department of Information - Australian Wines - Brochure Issued to Visiting Allied Forces - Uniform Income Taxation: Attitude or Mr. Forgan Smith and Mr. Fallon - Man-power: Flax Industry ; Potato Industry - Labour Displaced by Government Policy - Shops and Theatres : Business Hours Sheep Shearing - PostWar Reconstruction : Water Conservation and Irrigation; Land Settlement; Transport - Clothes Rationing - Australian Army Canteens Prices Control : Penalties - Boot Industry: Manufacture of Luxury Lines.

Mr CURTIN:
FREMANTLE, WESTERN AUSTRALIA · ALP; FLP from 1934; ALP from 1936

. I move -

That the House do now adjourn.

I take this opportunity to express the appreciation of the Government of the assistance given by honorable members in dealing with the business of the House this week, and for the diligence with which they have applied themselves to the legislation placed before them.

Mr BRENNAN:
Batman

.- The declaration by the Prime Minister that he had acquiesced in the trial of a person accused of murder in this country before a tribunal set up by a foreign country caused a severe shock to every thinking person who is interested in the maintenance and integrity of the British legal system. Both the fact itself and the manner of its accomplishment are equally reprehensible. This dangerous departure from British legal practice occurred when Parliament was sitting, and under its very nose, but without its being consulted. A felony is said to have been committed in Australia against one or more Australian citizens, and the person charged is to be tried before a court set up by a foreign country in this country. The principle of trial by jury is to be abrogated and abandoned in the matter of a capital charge, and a military court substituted. That is a radical and dangerous departure from correct procedure. The offence is alleged to have been committed in Australia. It has apparently nothing to do with military discipline, and if it has, then the military authorities can deal with that aspect of this case in their own way. Any person committing a felony in this country is required to answer to the laws of this country. The offence is against the people of Australia ; it is against the peace, order, and good government of this country. In a personal sense, it is against the life of a citizen of this country, and the relatives and friends of the person said to be put out of life are entitled to look for the vindication of our law. The attempt of the Government to cover the matter by regulations, in principle improper, will probably be found, in view of the regulations having been hastily contrived, insufficient to meet all aspects of the case. Making due allowance for the fact that the Government has no trained legal adviser responsible to this House by reason of the absence on duty elsewhere of the AttorneyGeneral (Dr. Evatt), I think that the action of the Government, in all the circumstances, is to be deeply deplored.

The analogy of the law passed by this Parliament in regard to visiting forces from different parts of the British Commonwealth of Nations is a very unconvincing one. I had the honour conferred upon me, by the present Prime Minister, when he was the Leader of the Opposition, of leading the debate on that subject for the Opposition, and I took leave to say that the legislation was open to objection from many points of view, and I was able to quote, in support of the view I was putting, high legal authority in Great Britain, where the change had been opposed by distinguished lawyers in the House of Lords. In any case, that was a matter of the application of a system of British practice, which is common to all members of the British Commonwealth of Nations. Britain is the source of law as far as Australia is concerned, and I pointed out at that time that it was open to objection that visiting soldiers from Great Britain should not have, for example, recourse to that important arm of defence, namely habeas corpus, and that we had always rightly boasted that the tribunals of this country remained open to every person suffering an injury through the British criminal law. I pointed out then that the measure was objectionable from that point of view. Now it is intended, and the precedent is laid down, to extend this very dangerous principle to foreign countries. If it is extended to one friendly foreign nation it will have to be extended to another friendly nation, also. There are people who take a narrow view of this matter, and suggest that if a request of that kind comes from a friendly ally, whose friendship is so much needed by us, and so welcome to us, we should immediately comply with it. I suggest that we should look farther. “We should have regard to the foundations of British liberty. One of the sound foundations upon which British liberty is built is the fact that persons, who are still living and who have suffered by an assassin’s hand the loss of one near and dear to them, should have the opportunity and satisfaction of calling in the aid of the law of this country to vindicate their rights as far as they can be vindicated in the case of death. I am very far from prejudging this case against any person charged. Some people are only too prone to accept as proof that which is alleged. I do not fall into that error. I merely confine myself to the intrinsic fact, namely, that murder is suspected, and is said to be charged, and a grave departure is proposed from the well established fundamental principle of British law that the person charged should be brought to trial under the law and procedure of this country.

Mr DUNCAN-HUGHES:
Wakefield

– I desire to bring a matter under the notice of the Minister for Transport (Mr. George Lawson), who represents the Minister for Information in this chamber. The following statement was published in a newspaper a few days ago: -

The Department of Information has recently issued a brochure “ Welcome to Australia “ for distribution among visiting United States troops. It carries a foreword by the Prime Minister (Mr. Curtin) and supplies information of varied nature.

I do not expect that the Prime Minister (Mr. Curtin) was responsible for the preparation of the brochure, but it bears his signature, and accordingly will carry some weight. The article continued -

One page is devoted to food and drink, and we quote that portion relating to drink - “ Australians drink considerable beer - watch your step with it - it is a whole lot heavier and more alcoholic than most United States beers . . . Australian distilled whisky is cheaper than imported and the best brands are good. Australian gin is also cheaper than imported and some is first grade. Australian wines also have to be watched. The cheapest grades have a kick like T.N.T. Medium price and better grades are very good wines, but all have a high alcoholic content.”

I suggest to the Prime Minister, who no doubt put his signature to the brochure without having read it through, that the statement I have quoted is a very unfortunate one to be made under the authority of the Department of Information. We are aware that there have been in this country recently a considerable number of excesses in the drinking of alcoholic liquors, and I think that every sensible person deplores those excesses. However, I think that some of our own people, more than the visitors from America, need a warning of the sort I have quoted. The discipline of the visiting troops, as far as I have been able to observe it, compares very favorably with that of our own troops. Unlike our people the Americans are accustomed to the drinking of wine. One hundred million gallons of American wine is consumed in America every year; when I obtained information a year or two ago regarding wine production, I was surprised to note the quantity of wine produced in America. I do not wish to discuss the relative merits of beer, spirits, wine, or their respective strengths, but it is within the knowledge of honorable members who are not teetotallers, that one would not advise a young man to start drinking gin and whisky instead of beer and. light wines. However, that is the effect of the advice given to our visitors by the Department of Information. It is well known, that Australian wines vary in quality and alcoholic strength. Every wine-making country produces poor wine and good wine. The quality of .the wine produced in Australia in recent years has shown marked improvement in almost every type produced. Honorable members are aware that during this war wine has had great difficulty in competing with other alcoholic liquors. It has been placed low on the export priorities ; it has lost the markets that were opened up in the Far East, and the people of Australia are not generally great wine drinkers. They drink more whisky and beer. All these factors have had a detrimental, effect on the producers of wine, who are not solely the wine-makers, but include growers of grapes. Returned soldiers settled along the river Murray are particularly affected. Their stake in the country is a great one, and the Government should take keen interest in them, partly because they are heavily indebted to either Commonwealth or State Governments. Nobody can deny that the paragraph I have quoted would tend to dissuade American soldiers from drinking wine. I do not know very much about their tastes, but. I have been told that Americans do not care very much for beer, and that most of those who drink liquor prefer whisky. Tt is most unfortunate that, at a time of almost unexampled difficulty for wine producers, a statement should be issued with the authority of a department of the Crown to the effect that Australian wines are extremely fierce and, in fact, should be guarded against. The warning is, in effect, “ You had better keep away from our wines “. I raise this matter in an endeavour to secure justice for our winemakers. Wines should be given preference over spirits and beer, partly on account of the kind of men employed in the industry and the great difficulties which the industry is experiencing because of the war, and partly on account of the enormous reserve stocks of wine. Any increase of local consumption would be of great, assistance to the wine producers.

Mr RIORDAN:
Kennedy

.- I take this opportunity to refute certain allegations that were made on Wednesday by the honorable member for Hunter (Mr. James) during the debate on the uniform taxation proposals. The honorable member said that the Premier of Queensland (Mr. Forgan Smith) had exerted pressure on certain members of this Parliament from that State in order to compel them to cast their votes in a particular way. That is utterly untrue. I, as a member from Queensland, say that I was not directed by Mr. Forgan Smith to vote- in any way, nor did he attempt to influence my vote by coercion or cajolery. It is true that the subject of uniform taxation was discussed by the Queensland central executive of the Australian Labour party, which placed its views before honorable members from, that State. However, it did not make any request or issue any direction to us. I formed my own views regarding uniform taxation when the present Leader of the Opposition brought down his budget last year, and I have been a member of the Labour party long enough to be thoroughly conversant with its policies. It is regrettable that a member of the Labour party in this Parliament should make false charges against a State Labour party, leader. If I remember correctly, the honorable member for Hunter spoke of Mr. Forgan Smith dictating to honorable members from Queensland. I do not know how the honorable : member formed that view. If a man demonstrates qualities of leadership he should not be branded as a dictator. Mr. Forgan Smith is capable of defending himself, but, because the charges made against him arose from statements which I made, I consider it my obligation to reply to them. Mr. Forgan Smith is a national figure. He has achieved fame and distinction unequalled by any other Labour leader. I admire his gifts of leadership, his ability, and his qualities as a plain man. I know what he has done for Queensland in the past, and I am grateful for what he is doing for that State to-day at this time of crisis. He has the respect, affection and confidence of the people of Queensland. He has been Premier of that State for ten years. It is ridiculous to suggest that a man of such standing in the community would go about covertly coercing people to do certain things. The honorable member for Hunter also launched an attack on Mr. Fallon, the president of the Australian Labour party in Queensland, and its central executive. He said that Mr. Fallon came to Canberra. That is true, but he did not come here for the purpose asserted by the honorable member, who claimed that he visited Canberra in defiance of a decision of the party that State executive officers should not interfere with Commonwealth Labour parliamentarians. Mr. Fallon did nothing like that. He did meet certain honorable members from Queensland, and subsequently he consulted with senior Ministers, but he came here for the purpose of ascertaining the views of Federal Labour parliamentarians on the subject of uniform taxation, and to see whether he could remove any points of conflict between them and the State .executive of the party. He did not come here to dictate to us, It is strange that the honorable member for Hunter did not mention another gentleman who accompanied Mr. Fallon on his visit to Canberra - the secretary of the State executive of the party. I have often seen Labour party executive officers from other States in this place. Some of them have held numerous interviews with honorable members. However. I shall not stress that point. I strongly resent the charges made against Mr. Forgan Smith and Mr. Fallon by the honorable member for Hunter. His remarks implied that they had, in some way, intimidated me and coerced m« into adopting a certain stand. Nobody can coerce me into doing anything. Mr. Fallon is one of our foremost industrial leaders ; he is the leader of one of the largest unions in Australia. I cannot understand why the honorable member for Hunter attacked him. I strongly resent the allegations made by the honorable gentleman.

Mr McDONALD:
Corangamite

– I draw the attention of the- Government to the perilous condition of the flax industry. It has been sponsored by the Commonwealth Government, and considerable sums of money have been expended on its development. Mills have been established in various districts in Victoria at a cost of about £10,000 each. The crop has been purchased from the fanners at a guaranteed price of between £6 and £7, but to-day, although hundreds of acres of flax have been spread out for retting’ purposes, there is no labour available to gather it. Flax is an essential commodity at this time, and it should be treated as such. Neither the Government nor the taxpayers can afford to see serious deterioration and, in some instances, complete waste of flax which has been grown under adverse conditions. The industry is, in its infancy in this country, hut, despite many difficulties, good crops were grown last year. In one district last Sunday, 100 volunteers, including bank managers, carpenters. grocers and farmers, assembled and worked for ten hours gathering up the flax that had ‘been spread in one paddock. I understand, from communications which I have received, that similar conditions prevail at another centre. This matter requires urgent attention, in the interests not only of producers, but also of the war effort, to which flax is essential.

Mr POLLARD:
Ballarat

.- For some time past, I have been receiving many letters from farmers in the Ballarat district and adjacent potato-growing areas complaining of their inability to obtain sufficient labour to lift the potato crop. In all cases in which farmers have required the release from the Army of former employees or their own sow, I have advised them to notify the soldiers concerned to apply to their commanding officers and to support the applications with statutory declarations as to the purposes for which the releases are required. I have found that commanding officers are extremely reluctant to release men. That is understandable, because they must endeavour to maintain the strength of their units. Often the officers are entirely ignorant - this is no reflection upon them - of the importance of the men’s applications. Another unfortunate fact is that a long period usually elapses between the making of an application for release and the giving of a decision by a commanding officer. More often than not, the decision is adverse. I have received so many letters on this subject that, during last week end, I made a tour of a large portion of the potatogrowing district in my electorate. I found the position to be acute. Potatoes must be dug as soon as possible after they mature, and they are most susceptible to seasonal conditions. This year, the weather has been exceedingly wet in the potato-growing districts adjacent to Ballarat. Owing to the scarcity of labour, many of the potatoes have not yet been dug. The longer they remain in the ground, the greater will be the danger that they will rot or become diseased. I realize that this is a difficult problem, but I urge the Government to take steps immediately to cope with the situation. Instructions should be issued to the commanding officers of military camps situated within reasonable distance of the potato-growing districts to release any men required for potato digging. A general instruction cannot be issued to all commanding officers for, obviously, commanding officers at or near battle stations could not release men, but in other places men who apply for temporary release for essential work in a primary industry, particularly for potatodigging, and support their applications with statutory declarations endorsed by the local constable of police, should be released for specified periods of, say, one or two months; if that be not done, valuable foodstuffs may be wasted. I suggest that applications should be supported by statutory declarations and endorsed by a local police constable in order to prevent abuses, and to avoid the lodging of applications on frivolous grounds. If this proposal be not practicable because of army considerations, I suggest to the Government that experts from State Departments of Agriculture should be coopted and attached to the Army in order to give advice on applications for temporary release for essential work in primary production. Such experts would be able to determine quickly whether an application were genuine and the grounds for it reasonable, and could recommend accordingly. I bring this matter to notice because I am certain that unless action be taken promptly, considerable losses of essential foodstuffs will occur. It may even happen that, notwithstanding the present high price of potatoes, some growers will lose a large proportion of their crops. I hope that the matter will be given immediate consideration.

Mr HOLLOWAY:
Melbourne PortsMinister for Social Services and Minister for Health · ALP

.- -Yesterday, the honorable member for Bourke (Mr. Blackburn) asked me a question concerning certain persons who have lost their employment as the result of government action. The matter was also mentioned in an article in the Sydney Daily Telegraph, from which it might be inferred that persons displaced from their employment as the result of government policy had to be out of work for six weeks before they could obtain compensation. I wish to correct that impression. Persons who lose their employment in these circumstances may obtain compensation after fourteen days. A married man is entitled to £2 a week, plus £1 5s. a week in respect of his wife and 5s. a week in respect of his first child. Single men, and persons between the ages of sixteen and twenty-one years living away from home, are entitled to payment of £1 5s. a week. Such persons who reside at home are entitled to 17s. 6d. a week. It is not provided that persons must be out of work for six weeks before payment can be made, although the department desires to confine payments, as far as practicable, to monthly periods, because of the difficulty of providing clerical assistance. Many departments are hard pressed to-day to get through the work that has to be done. The regulations provide that the possession of £50 by a single man and £100 by a married man would be a disqualification for this compensation. The idea is that if they have this money it will enable them to tide themselves over the period for which they are out of employment. I make it clear, however, that a person who is displaced from his employment can obtain compensation immediately if he is in need of it.

Mr HUTCHINSON:
Deakin

– A statement was made some time ago that the Minister for War Organization of Industry (Mr. Dedman) contemplated fixing certain hours during which retail stores and theatres in capital cities would be allowed to remain open. Has the Minister yet reached a decision on this subject, and, if so, will he announce it? I particularly desire to know whether there is any foundation for the statement that the Minister intends to direct the discontinuance of theatre sessions which begin at 5 p.m. If the matter has not already been determined, I ask the Minister, because of the importance of the matter, to consult with retail traders and picture theatre proprietors on the subject in order to ensure that injustice and unnecessary inconvenience shall not be caused. It might also be advisable for the Minister to inquire into the procedure followed in England in these matters.

I wish now to direct attention to National Security (Shearing of Sheep) Regulations issued under Statutory Rules 1942, No. 216, in the hope that the Minister dealing with the matter will clarify the position. Regulation 3 provides -

In these regulations, unless the contrary intention appears - “ flock sheep “ means all sheep except - [a) rams;

ewes from which rams are bred for sale or station use: and

the progeny of such ewes which have not been culled into the general flock.

Regulation 5 reads -

Nothing in these regulations shall apply in relation to any sheep where the total number of sheep owned by the owner of the sheep does not exceed 1.000.

Many thousands of farmers in New South Wales, Victoria and Tasmania run between 600 and 700 ewes on their property, and from these they may obtain 400 or 500 lambs annually. As a rule, the sheep are of breeds suitable for the production of fat lambs. The farmers are in doubt whether fat lambs, which are not shorn but are sold in the wool, are included in the definition of “flock sheep “. If so, it means that the farmers affected are debarred from shearing their “ flock sheep “ except within certain periods. It is highly desirable that this point be clarified immediately, and that a statement be made in the press and over the air concerning the position.

Mr LANGTRY:
Riverina

.- I congratulate the Prime Minister (Mr. Curtin) and the Government upon the statement published in this morning’s press to the effect that a body is to be constituted immediately to give consideration to post-war reconstruction. I am particularly glad to know that attention is to be given to water conservation. In my opinion, the settlement of Australia has been achieved by backtofront methods. Men have been sent out into virgin country before provision has been made for either transport or water facilities. One consequence has been that many of the men have not made a success of their holdings, and another has been that primary producers have frequently had to apply to the Government for bounties on production and for other assistance. Even as recently as the years following the last war, land settlement problems were approached in the wrong way, and many soldier land settlers found that the conditions were such as to make success impossible. Even some men with a lifelong experience of primary production were unable to make a success of their holdings. One reason for this was that the holdings were overcapitalized. Land was purchased at prices far beyond its productive value. After all, land is worth only what it will produce. Governments in every State of Australia appointed individuals to buy land and to supervise soldier land settlement schemes who were totally unqualified to do the work. I hope that the post-war planning authority which the Government is proposing to establish will avoid similar mistakes. If that authority proposes to do anything in connexion with land settlement, it should ensure that water conservation and transport facilities are available before soldiers are settled on the land. Hitherto, the procedure seems to have been to send the men out into undeveloped areas, and, after they have struggled for years on holdings far removed from centres of population and markets, to provide for them some transport facilities. If the men were lucky they might, years afterwards, be given a water supply. Many soldier settlers are even now living on properties which have an indifferent transport service and no ‘water supply at all which is the life blood of man, beast and vegetation. This leads me to suggest that the Government should take every possible care to ensure that only men with the requisite knowledge shall be appointed to the post-war planning authority. Recently, I read two fine articles on post-war planning by Dr. Bradfield and Mr. Ion Idriess. They deal with the great possibilities in the interior of Australia under proper schemes of water conservation. Men of their calibre should be chosen to do the kind of preliminary work that the Government has in mind. It is absolutely essential that experienced and competent men shall be placed in charge of projects which will be fraught with great consequences for good or ill to the nation. Any scheme devised should be such as will ensure that men settled on the land will be enabled to make provision for their declining years, A most serious position will result if the matter be neglected, because little scope will be offered to these men for employment in the large centres of population. The personnel of the committee should be the best obtainable. I compliment the Prime Minister upon having the foresight to plan ahead, and trust that the result will be something of which the Government will have every reason to be proud. If irrigation be planned there will be no occasion for the compulsory conservation of fodder, because feed for stock will be grown wherever it is needed.

I have much pleasure in supporting the remarks of the honorable member for Ballarat (Mr. Pollard). If proof can be furnished of men having been taken from positions that cannot be filled by others, the matter should receive the immediate consideration of the appropriate Minister.

Mr ARCHIE CAMERON:
Barker · ALP

– ‘Comments by the honorable member for Batman (Mr. Brennan) are always interesting, but I hope that the Government will not accede to the request he has made this afternoon. He appears to have a pronounced horror of anything in the nature of a court martial, and not to be over-enthusiastic in his attachment to any military subject. For his week-end reading, he might very well study the Manual of Military Law, which provides for a procedure quite different from that of our civil courts. I defy him or any of his colleagues to name a fairer trial than any soldier on service receives from a court martial - the only court in the British Empire of which I have knowledge in which the prosecuting counsel has to put, to the best of his ability, the case for the accused. The procedure in civil courts is entirely different, being point against point. The honorable gentleman has expressed deep abhorrence at the American forces having jurisdiction over their own men. In having agreed to that course, the Government acted wisely. The American forces are under American law. They are citizens of the United States of America, and probably have been conscripted for service outside their own country without their wishes being consulted by their Government. We have sent forces out of Australia during this war as we did previously. Even the honorable member will agree that such forces should be amenable to the laws of their own country. They continue to be citizens of this country even though they are serving overseas. Would the honorable gentleman ask that our forces in Egypt shall be subject to trial by Egyptian rather than Australian law for any offence committed in that country? Such a contention would be absolutely preposterous. Even in the Army, murder is a crime. In fact, the ten commandments are enforced practically in their entirety - even to the satisfaction of the honorable member, I believe he would find if he studied the list of crimes for which any member of the armed forces of this country may be tried. That applies also to the American forces. The only sensible course, in the circumstances in which we are placed, with a large number of foreign troops in this country for the first time in its history, is that any member of the American forces shall be tried by an American court in respect of any offence committed against the laws of this country. If we interfere with dispensations of justice by those tribunals, and determine to deal with American troops as we please, according to our law, we may find very shortly that there will not be many of us in certain parts of this country, for reasons that need not to be stated. If some of our men get into mischief, as I have known them to do at times, they may find themselves being tried in their own country according to a law which, although similar to, is not identical with our own. As one who has had some little experience, I affirm that the Government has acted wisely. I hope that it will stand its ground, and will not be led aside in this rather important matter by either the requests or blandishments of its supporters or opponents.

I shall now deal briefly with a point raised by the honorable member for Wakefield (Mr. Duncan-Hughes). It is a serious matter that a government department, the costs of which are defrayed by this Parliament, and the transgressions of which against common sense are notorious and numerous, should publish a pamphlet of the character of that which has been delivered to us lately. Why such a department should be allowed to exist is beyond my comprehension. Its very establishment gave rise to a first-class argument in this House. Had it never seen the light of day, the country would have been better pleased. The wine industry is in a particularly bad state. It does not follow that every man who comes into this country is from the wild west of America. I am afraid that some of the publicity put out by the Department of Information suggests that members of the American forces are little boys who are beyond the control of their mothers for the first time in their lives. Such statements will do no good to the American troops in Australia, and, I am confident, do not enhance the reputation of the Australian Government, as exemplified through that awful enormity, the Department of Information. Hardly a thing touched by that department does not bear the imprint of the cloven hoof of incompetence. As the Treasurer (Mr. Chifley) is anxious to save money, and the Minister for Labour and National Service (Mr. Ward) is anxious to conserve man-power, the Government could not do better than have a clean-up in the Department of Information, removing from it a few gentlemen who might look better in some other avocation than that of writing nonsense which merely excites the disgust of persons who otherwise might be inclined to enjoy the amenities offered by our country.

Mr CALWELL:
Melbourne

.- Yesterday, the honorable member for Grey (Mr. Badman) asked a question concerning the manner in which coupons for the purchase of clothes will be dealt with by retailers. He inquired as to whether the position that obtains in regard to the sale of petrol will operate in regard to supplies of clothing. The man who purchases petrol gives his tickets to the retailer, who in turn surrenders them to the wholesale supplier. By that means, the coupon system is worked from purchaser to the source. 1 understand that there is still some doubt as to -how the rationing system will operate in regard to the supply of clothing. I also understand that a meeting of the Master Traders Association in Melbourne this week appointed three gentlemen who represent three of the big emporiums to submit to the Rationing Committee a scheme to provide that the purchaser of clothing shall hand his coupons to the retail store, and that subsequently the retailer shall not be obliged to curtail bis purchases in any way. If adopted by the Rationing Committee, this scheme will have the effect that the big emporiums will be able eventually to force the small retailers out of business. I have already drawn attention to the devious ways in which the directorate of Myer Emporium Proprietary Limited has succeeded in entrenching that establishment in an almost impregnable position. I have stated that, at the end of its last trading year, the value of the goods held by this emporium was £1,000,000 greater than it had been previously. I new assert that the present value of its goods is approximately £2,000,000 greater than would ordinarily be the case. With its big stocks, it will advertise quite a number of large sales, and thus draw to itself the patronage of practically the whole of the purchasing public of Melbourne.

Mr Beck:

– The small shops are doomed.

Mr CALWELL:

– As the honorable member for Denison (Mr. Beck) remarks, the small shops are doomed ; because Myers, Treadways, and perhaps one or two other big establishments, will be able, by welladvertised sales, to secure practically all the coupons issued in Melbourne. When the system has been in operation for a few months, it will be found that the small traders will have been crushed out to the benefit of the wealthy few. There have been several discussions of the methods by which Myer Emporium Proprietary Limited obtained £250,000 more than it was entitled to take from its customers, and the shady practices which it proposes to adopt in regard, to the restoration of that amount to the public, in order that it may further strengthen its hold. I have now furnished fresh evidence of the slickness by which it hopes further to enrich itself. I trust that the Rationing Committee, and the Government, will not permit the proposal of the Master Traders Association, dominated as it is by three big emporiums, to be put into effect, and that the system adopted will be identical with that which operates in connexion with petrol rationing.

I hope that the Minister for the Army (Mr. Forde) will abolish wet canteens in our military establishments. There are several good reasons why he should do so, one of which is that there is a shortage of liquor. The existence of wet canteens in military camps is open to grave abuse. However theoretically perfect the system mav be, in practice, numbers of young men are encouraged to drink excessively, to their physical detriment. .Soldiers can be issued with a certain number of tickets for drinks, but, as the number of nondrinkers is large, it frequently happens that those who want to drink are able to get more than a reasonable supply of tickets, and consequently are able to obtain more liquor than is good for them. Such a state of affairs is injurious to the men and the nation. As there is a limited quantity of beer available, it would be better for it to be sold in hotels than in the camps. I have visited some military camps in Victoria, where I have found that, generally, the opinion of officers is that the wet canteen system should be abolished. I realize that other honorable members may hold other views, because this is a debatable subject; but from what I have seen and heard I am convinced that it would have been better had the wet canteen system never been established. The previous system under which liquor was available to soldiers in city hotels should be permitted to continue, subject to strict supervision. I do not blame city hotelkeepers generally for what happened in the past, because only a minority of them was responsible for the abuses which gave rise to the determination of the Government to ensure a stricter observance of the law. I hope that the Minister for the Army will give immediate consideration to this matter, as many young men of eighteen years of age are being subjected to unnecessary temptation.

Mr MARWICK:

– It may be a matter of control.

Mr CALWELL:

– I do not think that the wet canteen system can ever be properly controlled. The Canteens Board seems to be a powerful organization which can secure the services of carpenters and other tradesmen when it desires to establish wet canteens in camps where they do not already exist. I visited the camps at Mount Martha and Balcombe last Sunday, and learned that a wet canteen was to be established at the former camp. A hut which had been used by the men for drying their clothes had been taken for the purpose, and a counter was being fitted. Apparently, there was no difficulty in securing the services of tradesmen to do that work, although I understand that frequently difficulty is experienced in obtaining the services of tradesmen to perform other work around the camps. The Government would do well to look into the activities of the Canteens Board with a view to restricting its powers. I am not convinced that that body has been any more successful in its administration than have many other boards which have been established to do work which could be done better by departmental officers.

Mr DEDMAN:
Minister for War Organization of Industry · Corio · ALP

– The honorable member for Deakin (Mr. Hutchinson) referred to the restriction of trading hours in retail shops, and of the hours during which picture houses are to be permitted to remain open. The Government has considered these matters from a national security point of view, and whilst it is true that my department does consult with the owners of businesses, and with employees in industry, in relation to contemplated action which would affect them, such negotiations take place in regard only to certain aspects of the matter. The honorable member may rest assured that where the matter under consideration is one in which it is proper that the organization of retailers concerned should be consulted, it will be consulted.

Mr BECK:
Denison

.- The honorable member for Melbourne (Mr. Calwell), whose opinion on many matters I value, has raised the question of the rationing of goods. I hope that his suggestion that such rationing be placed on the same basis as petrol rationing will be given effect. To-day, Ministers consult with the large firms which supply goods to the public, and those firms give advice which suits their own purposes. I regret to have to say that I fear that the larger business concerns in Australia will squeeze most of the smaller firms in the country out of business before long. One large Melbourne emporium has extracted unlawfully from the public a sum of £250,000, and, although it has been instructed to return that money to the public, that very action will give to it an opportunity to cut prices and obtain business at the expense of small retailers. The treatment of that big concern is vastly different from that meted out to a wholesale firm in Tasmania with a capital of about £50,000, which was fined £600 because, after a period of ten years, during which it did not distribute any dividends, it made a profit of £1,000 in one year. I am not certain of the exact figures, but those which I have mentioned are approximately correct. I am sure that if the Treasurer (Mr. Chifley) were to look into this matter, some adjustment would be made. It is shocking that, at a time like this, a big establishment which robs the people can escape without a fine, whereas a small concern is penalized heavily. Cases of this kind justify many of the remarks made by honorable members opposite regarding “ big business “ in this country. I have already discussed the fine of the Tasmanian firm with the Prices Commissioner, and I am confident that, if an investigation be made, the Treasurer will realize that a grave injustice has been done.

Many manufacturers of footwear in Victoria and New South Wales are engaged almost entirely in the manufacture of boots for members of the Australian forces and our allies. These establishments are engaged almost 100 per cent, in assisting in the war effort, and are doing a wonderful job. Other firms, however, confine their operations to the manufacture of women’s fancy luxury lines, which are sold at from £3 5s. to £3 15s. a pair. Such establishments, if allowed to continue, will capture the whole market, whilst genuine manufacturers who normally make goods used by the masses of the people will he driven out of business. One concern which I have in mind is ostensibly a Canadian company which started in Australia since the outbreak of war. If it can produce luxury goods, it can produce goods required for the defence of the country; and it should he made to do so. I ask the Minister to consider this matter with a view to removing this inequity.

Mr CHIFLEY:
Treasurer · Macquarie · ALP

– I shall see that the remarks of the honorable member for Melbourne (Mr. Calwell) in relation to the rationing of clothing and other goods are brought to the notice of the Minister for Trade and Customs (Senator Keane).

The honorable member also referred to the abuses associated with the wet canteen system. I assure him that the supply of liquor to members of the forces and to civilians is under consideration by the Government.

I shall have inquiries made regarding the fine imposed on a Tasmanian firm which was referred to by the honorable member for Denison (Mr. Beck). Action in regard to the Myer Emporium Limited is a matter for the Minister for Trade and Customs, who is the Minister controlling prices. I am acquainted with some aspects of the Myer case, but I do not know how it is being adjusted. I shall, however, bring the matter before the Minister concerned.

As to the manufacture of certain luxury goods to which the honorable member also referred, the Minister for “War Organization of Industry (Mr. Dedman) has already spoken, and therefore cannot answer the honorable gentleman, but I have no doubt that he will look into the matter.

Question resolved in the affirmative.

page 1802

PAPERS

The following papers were presented : -

Lands Acquisition Act Land acquired -

For defence purposes -

Cavan, South Australia.

Mackay, Queensland.

National Security Act National Security (General) Regulations Orders -

Control of machine tools.

Taking possession of land. &c. (32).

Use ofland (25).

House adjourned at 4.28 p.m. (Friday).

page 1802

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Retired Coal-miners.

Tea Rationing : Internees.

Mr. Beasley. On the 20th May, 1942, the honorable member for Lilley (Mr. Jolly) asked the following question, without notice: -

Has the Minister representing the Minister for Trade and Customs yet received a reply to the question I asked on the 29th April last as to whether the tea ration granted to persons in internment camps is 2 oz. a week as compared with 1 oz. a weekfor private citizens generally?

The Minister for Trade and Customs has now supplied the following answers : -

The victualling of internees is a responsibility of the Minister for the Army, and tea required for this purpose is included in the Army requisitions for tea supplies. Such tea is not subjected to the system of consumer rationing by registration.

I am informed by my colleague, the Minister for the Army, that the question of the quantity of tea provided in the schedule of rations allowed to internees by international agreement is being examined.

Copper Supplies.

News Broadcasts.

Flax Production

Mr Guy:

y asked the Minister for Supply and Development, upon notice -

What was the total acreage sown tor (lax in Tasmania for the 1941-42 season?
What was the number of registered growers ?
What was the total yield of flax straw?
What was the total value of the crop to the growers?
How- many growers had their crops assessed as (a) 27 inches and upwards in length (standard), (6) 21 to 26 inches, and (o) 20 inches and under?
What was the average return per acre for crops in each of those three classes?

Mr Beasley:
ALP

– The answers to the honorable member’s questions are as follows : -

15,085 acres.
1,445.
10,185 tons.
£98.0G2 4s. 5 and 6. The information U not readily available, and can only lie obtained by a dissection of all growers’ accounts. Crops of most growers, too, sell within more than one category, and much detailed investigation is involved. The details, however, are being obtained, and will he furnished to the honorable member at a later date.

Wheat Stored at Fremantle.

Mr Marwick:

k asked the Minister for Commerce, upon notice -

Has he, from time to time, received reports of probable- serious losses from weevil infestation of stored wheat in Fremantle?
If so, did these reports, amongst others, concern the wheat of the season 1939-40 stored in the bulkhead known as C.O.R., Fremantle?
What amount of 1939-40 wheat was stored in this bulkhead?
For what period has this wheat been stored there?
’ In view of the fact that this wheat is now practically cleared out, will he state -
1. what percentage of the intake weight has already been out-turned f.a.q.;
1. what percentage of the intake weight has been sold to the produce trade on a dockage basis;
2. what percentage pf the intake weight has been abstracted in the screening process and afterwards destroyed; and (rf) what is the aggregate gain or loss .per cent.
What is the average 10SS per bushel expressed in fractions of a penny calculated on wheat at 4s. a bushel?
Was any treatment given to this wheat whilst in the bulkhead?
Does lie know of any reason why the out-turn of this, the first standard type bulkhead to be emptied, should not be indicative of the out-turn of other standard type bulkheads at Fremantle
Does the out-turn of this bulkhead appear to warrant the pessimistic statements frequently made about weevil damage at Fremantle?

Mr Scully:
ALP

– The answers to the honorable member’s questions are as follows : -

Reports covering the danger of weevil generally in Western Australia have been received.
1. This wheat was referred to, as well as other wheat stored. ‘i and 4. It is not in the public interest that this information should be given. 5. (a) 99.084 per cent.; (6) .283 per cent.; and (o) .144 per cent.; totalling 100.127 per cent, [d) The .127 per cent, represents the aggregate gain on the intake weight.
2. About .125d. a bushel.
3. The only treatment given was screening into trucks as out-turned.
4. It is not possible to express a view as to the out-turn of other bins at Fremantle.
5. It is not possible to draw a concrete conclusion from the results of this depot as to the out-turn of other bins at Fremantle.

Liberty Loan

Mr Calwell:

l asked the Treasurer, upon notice -

What was the cost of (a) advertising, (6) other publicity work, and (o) administrative work, in connexion with the raising of the last Liberty Loan?
What amount in brokerage and/or commission was paid in respect of such loan?
What brokerage was paid in respect of the contributions to that loan made by the Australian Mutual Provident Society, the Colonial Mutual Life Assurance Society ami the Temperance and General Life Assurance Society ?

Mr Chifley:
ALP

– Inquiries are being made and a reply will be furnished as soon as possible.

Western Australian Mails.

Mr George Lawson:
ALP

n. - On the 27th May, the honorable member for Forrest (Mr. Prowse) asked the following question, without notice: -

Is the Minister representing the PostmasterGeneral aware of the irregular delivery of mails to and from Western Australia? Will he endeavour to expedite their delivery?

The Postmaster-General has now submitted the following answer: -

It is regretted that owing to unavoidable circumstances some dislocation in the mail service to and from Western Australia ha* recently occurred. There is, however, the closest co-operation between the Post Office and the other departments concerned, and every effort is being made to provide the best postal service practicable.

Military Clothing.

Mr Beasley:
ALP

y. - On the 20th May, the honorable member for Wentworth (Mir. Harrison) asked me a question, without notice, concerning the accuracy of an article printed in Smith’s Weekly regarding orders for military underwear placed by my department, and whether my department had notified firms other than those stated to have shared in certain contracts, that it had been decided that no further orders would be given in respect of summer requirements of military underwear.

I desire to inform the honorable member that some of the statements in the article are incorrect, notably that which referred to orders valued at £200,000. This amount is overstated by approximately £110,000. As honorable members are no doubt aware, there is a contract board in the Department of Supply, which is the competent authority responsible for the provision of essential national clothing, food supplies and equipment to all branches of the forces. It receives the demands from the war departments, and makes those arrangements which it considers promise to be the most satisfactory to the armed forces and the Commonwealth. In February last the Contract Board was faced with the purchase of approximately 1,132,335 cotton garments consisting of drawers and athletic singlets, the value being £90,054. Whilst this obviously was a contract of magnitude its production involved only 25 per cent, of the available capacity. In normal times this would not have represented any difficulty, because it would have been a most convenient arrangement for any manufacturer to apply one-quarter of his production to defence and the balance to his civil trade. Unfortunately, at this particular period, the cotton yarn position became so acute that practically the total quantity available was needed for defence work. The question to be determined was whether to maintain industry on a 25 per cent, basis or to concentrate the orders among three of the larger factories which happened to be those possessed of machinery for all stages of production, from the raw cotton to the finished garment. The board recommended the former course.

The Contract Board’s policy is to regard the public tender system as the basis of all its purchases. However, under war conditions it is quite impossible to apply this rule inflexibly. Consequently the board has, in many cases, been forced to adopt a policy of fixed prices, which was followed in this particular instance. The prices which have in the past been tendered for these items showed wide variations and relatively small proportions of the Army’s needs have been available from the lowest tenders. This means that it has been necessary to place contracts at various rates in accordance with the prices tendered and the capacity of the firms to produce. The fixed prices, which were adopted for the order in question were based upon careful examination of the manufacturing costs of the most efficient manufacturers and a nominal margin of profit only was allowed. Having regard to the greatly increased scale of sizes, the fixed prices were appreciably lower than the weighted average of the rates paid under the tender system, despite increases of labour, material and other costs which had taken place in the meantime. There is no intention on the part of either the Contract Board or myself to attempt to crush the small manufacturer. On the contrary, the policy has always been to assist and encourage the smaller factories. I give the House an assurance that, in any plan for the concentration of industry, I shall use my utmost endeavours to ensure that a proper balance is kept between the large and small factories so as to avoid any possibility of monopolies obtaining a stranglehold on any of our industries. The contracts referred to cover requirements up to the 30th June, and consideration is now being given to the allocation of new contracts. The Army’s requirements have substantially increased and, in the interests of our military forces, it will be necessary to make a greater spread of orders than previously. In the new plans, arrangements will be made for at least limited allocations to be made to the smaller firms. At this stage it is not practicable to be definite, but I am hopeful that orders will be given to all of the’ knitting factories which have previously made these garments for the department. With regard to the latter part of the question, no such notification was given. Inquirers were advised that, as a matter of general policy, it was proposed to restrict future orders to spinner-knitters, and it was regretted that further allocations could not be made to other knitters.

Transport of Workers.

Mr George Lawson:
ALP

n. - Earlier during this sitting, the honorable member for Hunter asked the following question, without notice: -

Has the Minister for Transport given consideration to the question which I directed to him a fortnight ago regarding the inadequacy of the train services between the Maitland coal-fields and Newcastle for the transport of munitions workers and miners to and from their places of work? Can the Minister impart any information to me on this subject?

I have to inform the honorable member that the whole matter has been carefully inquired into with a view to meeting satisfactorily the requirements of the men concerned, and the adjustments in working hours which have been made since the 18th May, 1941, and provision has been made for the following alterations to take place as from Monday, the 18th May, 1942 : -

With regard to workmen from the Cessnock-West Maitland area, the following services meet their requirements : -

It is considered that this time-table will considerably improve the position so far as the men are concerned.

Cite as: Australia, House of Representatives, Debates, 28 May 1942, viewed 22 October 2017, <http://historichansard.net/hofreps/1942/19420528_reps_16_171/>.

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House of Representatives28 May 1942

JOINT COMMITTEE ON SURAL INDUSTRIES

QUESTION

WOOL INDUSTRY

Mr ABBOTT:NEW ENGLAND, NEW SOUTH WALES

Mr SCULLY:Minister for Commerce · GWYDIR, NEW SOUTH WALES · ALP

QUESTION

AUSTRALIAN COMFORTS FUND

Mr HARRISON:WENTWORTH, NEW SOUTH WALES

Mr CURTIN:Prime Minister · FREMANTLE, WESTERN AUSTRALIA · ALP

QUESTION

AUSTRALIAN ARMY

Mr CONELAN:GRIFFITH, QUEENSLAND

Mr FORDE:Minister for the Army · CAPRICORNIA, QUEENSLAND · ALP

Sir FREDERICK STEWART:PARRAMATTA, NEW SOUTH WALES

Mr FORDE:

Mr Spender:

Mr FORDE:

QUESTION

DEPARTMENT OF LABOUR AND NATIONAL SERVICE

Mr WARD:Minister for Labour and National Service · EAST SYDNEY, NEW SOUTH WALES · ALP

QUESTION

WHEAT INDUSTRY

Mr COLLINS:HUME, NEW SOUTH WALES

Mr SCULLY:ALP

Mr BREEN:CALARE, NEW SOUTH WALES

Mr SCULLY:

Mr LANGTRY:RIVERINA, NEW SOUTH WALES

Mr SCULLY:

QUESTION

CANBERRA MILK SUPPLY

Mr BARNARD:BASS, TASMANIA

Mr HOLLOWAY:MELBOURNE, VICTORIA · FLP; ALP from 1936

Mr HOLLOWAY:MELBOURNE, VICTORIA · FLP; ALP from 1936

QUESTION

WOMEN’S AUXILIARY AUSTRALIAN AIR FORCE

Mr CONELAN:

Mr CHIFLEY:Treasurer · MACQUARIE, NEW SOUTH WALES · ALP

QUESTION

DELIVERY OF BREAD

Mr HUTCHINSON:DEAKIN, VICTORIA

Mr DEDMAN:Minister for War Organisation of Industry · CORIO, VICTORIA · ALP

Mr Hutchinson:

Mr DEDMAN:

QUESTION

BEER RATIONING

Mr JAMES:HUNTER, NEW SOUTH WALES · ALP; LANG LAB from 1931; ALP from 1936

Mr BEASLEY:Minister for Supply and Development · WEST SYDNEY, NEW SOUTH WALES · ALP

Mr James:

Mr BEASLEY:

QUESTION

MAN-POWER IN RURAL INDUSTRIES

Mr MARWICK:SWAN, WESTERN AUSTRALIA · CP

Mr WARD:ALP

Mr BADMAN:GREY, SOUTH AUSTRALIA

Mr FORDE:ALP

QUESTION

APPLES AND PEARS

Mr RYAN:FLINDERS, VICTORIA

Mr SCULLY:ALP

QUESTION

BROWN-OUT REGULATIONS

Mr WATKINS:NEWCASTLE, NEW SOUTH WALES · FLP; ALP from 1936

Mr LAZZARINI:Minister Assisting the Treasurer · WERRIWA, NEW SOUTH WALES · ALP

Mr Spender:

Mr LAZZARINI:

Mr STACEY:ADELAIDE, SOUTH AUSTRALIA

Mr LAZZARINI:

QUESTION

DAIRYING INDUSTRY

Mr PATERSON:GIPPSLAND, VICTORIA

Mr SCULLY:ALP

Mr FRANCIS:MORETON, QUEENSLAND

Mr SCULLY:

QUESTION

MR. BRIAN PENTON

Mr CALWELL:MELBOURNE, VICTORIA

Mr CURTIN:ALP

QUESTION

COAL-MINING INDUSTRY

House of Representatives
28 May 1942

Mr ABBOTT:
NEW ENGLAND, NEW SOUTH WALES

Mr SCULLY:
Minister for Commerce · GWYDIR, NEW SOUTH WALES · ALP

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES

Mr CURTIN:
Prime Minister · FREMANTLE, WESTERN AUSTRALIA · ALP

Mr CONELAN:
GRIFFITH, QUEENSLAND

Mr FORDE:
Minister for the Army · CAPRICORNIA, QUEENSLAND · ALP

Sir FREDERICK STEWART:
PARRAMATTA, NEW SOUTH WALES

Mr WARD:
Minister for Labour and National Service · EAST SYDNEY, NEW SOUTH WALES · ALP

Mr COLLINS:
HUME, NEW SOUTH WALES

Mr SCULLY:
ALP

Mr BREEN:
CALARE, NEW SOUTH WALES

Mr LANGTRY:
RIVERINA, NEW SOUTH WALES

Mr BARNARD:
BASS, TASMANIA

Mr HOLLOWAY:
MELBOURNE, VICTORIA · FLP; ALP from 1936

Mr HOLLOWAY:
MELBOURNE, VICTORIA · FLP; ALP from 1936

Mr CHIFLEY:
Treasurer · MACQUARIE, NEW SOUTH WALES · ALP

Mr HUTCHINSON:
DEAKIN, VICTORIA

Mr DEDMAN:
Minister for War Organisation of Industry · CORIO, VICTORIA · ALP

Mr JAMES:
HUNTER, NEW SOUTH WALES · ALP; LANG LAB from 1931; ALP from 1936

Mr BEASLEY:
Minister for Supply and Development · WEST SYDNEY, NEW SOUTH WALES · ALP

Mr MARWICK:
SWAN, WESTERN AUSTRALIA · CP

Mr WARD:
ALP

Mr BADMAN:
GREY, SOUTH AUSTRALIA

Mr FORDE:
ALP

Mr RYAN:
FLINDERS, VICTORIA

Mr SCULLY:
ALP

Mr WATKINS:
NEWCASTLE, NEW SOUTH WALES · FLP; ALP from 1936

Mr LAZZARINI:
Minister Assisting the Treasurer · WERRIWA, NEW SOUTH WALES · ALP

Mr STACEY:
ADELAIDE, SOUTH AUSTRALIA

Mr PATERSON:
GIPPSLAND, VICTORIA

Mr SCULLY:
ALP

Mr FRANCIS:
MORETON, QUEENSLAND

Mr CALWELL:
MELBOURNE, VICTORIA

Mr CURTIN:
ALP

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

Mr CURTIN:
ALP

Mr BRENNAN:
BATMAN, VICTORIA

Mr FORDE:
ALP

Mr RANKIN:
BENDIGO, VICTORIA

Mr SCULLY:
ALP

Mr PERKINS:
EDEN-MONARO, NEW SOUTH WALES

Mr SCULLY:
ALP

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES

Mr LAZZARINI:
ALP

Mr GUY:
WILMOT, TASMANIA

Mr SCULLY:
ALP

Mr DEDMAN:
ALP

Mr HOLT:
FAWKNER, VICTORIA

Mr BADMAN:
GREY, SOUTH AUSTRALIA · UAP; CP from 1940

Mr CURTIN:
ALP

Mr GEORGE LAWSON:
Minister Assisting the Postmaster-General · BRISBANE, QUEENSLAND · ALP

Mr GEORGE LAWSON:
ALP

Mr CURTIN:
ALP

Mr GEORGE LAWSON:
ALP

Mr DEDMAN:
ALP

Mr LAZZARINI:
ALP

Mr WILSON:
WIMMERA, VICTORIA

Mr CURTIN:
ALP