16th Parliament · 1st Session
Mr. Speaker (Hon. W.M. Nairn) took the chair at 3 p.m., and read prayers.
– Will the Minister representing the Minister for Trade and Customs take steps to remove the confusion that has resulted from the conflict of opinion between the chairman of the Rationing Commission in Melbourne that holders of ration tickets are permitted to purchase presents for friends without contravening the law and the opinion of the Deputy Commissioner for Rationing in New South Wales that such action would be a definite contravention of the law?
– I have read press reports in relation to this matter, and shall ask the Minister for Trade and Customs to clarify the position without delay.
– Is the Minister for Commerce aware that, owing to drought conditions on the south coast of New South Wales, great difficulty is being experienced in securing fodder for stock, because the shortage of railway trucks makes it impossible to transport it to Nowra from Albury, where ample supplies are available? Will the honorable gentleman endeavour to have the position rectified ?
– I have been informed that a most serious position has developed on the south coast of New South Wales owing to the prolonged dry season. Plentiful supplies of fodder are available, and would readily be sent to that area but for the shortage of the necessary transport facilities. I shall discuss the matter with the Minister for Transport, in order to see whether special arrangements may be made for the scarcity to be relieved.
– In view of the approach of the fat lamb season, and the limited transport available for the re moval of stock to slaughtering centres, can the Minister for Commerce state what facilities are available for country slaughtering operations ?
– The Government intends to do all that it can to encourage slaughtering operations in the country. Provision has been made for the opening of establishments in country centres to which, in some instances, lambs may be taken for treatment direct from the holdings on which they have been raised, thus avoiding considerable transport and the wastage that has been apparent in connexion with the overseas export of lambs. In New South Wales, there are most up-to-date killing works at Daroobalgie in the Forbes district, Aberdeen, Orange, Bourke and Nimitabel; and in Victoria at Bendigo, Ballarat and Portland. I have discussed with the Minister for Agriculture of Victoria, the possibility of opening the Donald works. I hope that the lamb producers of the respective States will take full advantage of the facilities afforded. They may have their lambs processed at a set rate, under agreement with the Commonwealth Government, and the lambs will be purchased according to quality, thus ensuring that producers will receive full value for them.
– Is the Minister for
Supply and Development aware that the new arrangement for the rationalization of the distribution of petrol and oil is having a very adverse affect upon rural communities, and has resulted in transferring to the individual the transportarrangements and expense in connexion with distribution that were formerly an obligation of the oil companies, without effecting a saving of man-power and transport? Does the honorable gentleman propose to take action to rectify the position?
– There has been constant agitation in numerous quarters for the pooling of petrol supplies, in order to avoid overlapping by the different companies and, consequently, over-use of petrol in transport, undue wear on rubber tyres, and the employment of excess man-power.
– The producers are now doing that work.
– I have stated the argument that was advanced in favour of the centralization of petrol supplies. A similar demand was made by the Army authorities. It was argued that pooling arrangements would best suit the conditions of the country in a time of war. These arrangements took some time to develop, because of the various oil interests affected. After a good deal of discussion and many conferences, both the large and the small companies agreed to a pool. The control of the pool is in the hands of the companies themselves, each company having a representative upon the committee. Determination of the localities in which supplies shall be made available also is a matter for the pool. There have been numerous complaints. In the circumstances, these could naturally be expected. All that have come before me I have forwarded to the Pool Committee, with the request that it. shall examine the effect that centralization has been having upon the interests to which the honorable member has referred. In some instances, adjustments have been made. If honorable members will supply particulars of unfair operation of the arrangement, I shall take whatever steps may be open to me to rectify the position.
– Has the attention of the Prime Minister been directed to the press statement this morning by Mr. Jamieson, of the Western Miners Federation, to the effect that the miners employed by fifteen western mines propose to strike unless their supplies of tobacco are increased? As this matter is of considerable importance, will the right honorable gentleman advise what action he proposes to take in respect of it?
– I have not seen the press statement referred to. For some little time, however, there have been indications that unless supplies of tobacco - and in some instances tea - are increased, industrial unrest is likely to occur. I was also somewhat surprised yesterday to be informed that one coal-mine was not working because arrangements had not been made to vary the starting time in accordance with the daylight saving provisions. I have only this to say: The Government is most anxious that there shall be fair dealing as between all sections of the community, and will do its best to bring this about. It will make the best arrangements it can to ensure that supplies of various commodities are made available as regularly and as equitably as organization can achieve, but that does not mean that interruptions of essential war industries will be tolerated for any reason whatsoever.
– I ask the Minister representing the Minister for Trade and Customs whether he will approach the appropriate authority - which I understand is the Import Procurement Branch - to secure the release of motor chassis needed by firms engaged in sanitary services, particularly in Quensland. Owing to the large influx of troops in some areas, the demands on these services have been heavily increased. I understand that large numbers of these vehicles have been brought into Australia under the leaselend agreement, and I ask the Minister to take steps to see that some of them shall be made available for the carrying on of these essential services.
– The importation of chassis comes under the control of the Import Procurement Branch, but the Army has issued a general impressment order in regard to motor chassis. It will be necessary to decide the issue as between the Import Procurement Branch and the Army authorities. I agree that heavy demands arc being made upon sanitary services in Queensland, and I shall take this matter up with the appropriate authorities with a view to getting something done.
– Having regard to the possibility of naval operations interfering with the supply of petrol from the only quarter where we can now expect to get it, is the Minister for Supply and Development satisfied that everything is being done to conserve - and, indeed, to augment - our stocks of petrol?
– At a time like this, it is too much to ask that we should be satisfied with any situation, but I should like honorable members to know that the position in regard to petrol supplies is, at the moment, very satisfactory. However, it might alter at any time, and the Government is constantly on the watch. It is not too much to say that, for the time being, the position in regard to petrol is better than it has ever been in the history of Australia. However, apart from getting supplies to Australia, there is the problem of distribution within Australia, and in this connexion, the manufacture and distribution of petrol containers in various parts of the continent is receiving attention. In this regard, also, the Government has reason to be pleased with the position.
– Having regard to the fact that in the United States of America, which is far better off in regard to supplies of petrol and rubber than we are, a maximum speed of 35 miles an hour has been fixed with a view to conserving both those commodities, will the Minister for Supply and Development consider the advisability of having a similar regulation introduced in Australia?
– During the last three months we have circularized all government and semi-government departments, and the American military command in Australia has done the same in connexion with their establishments, calling attention to methods for conserving rubber and petrol. We have now taken the matter a step further in consultation with the State Premiers, who have been asked to fix reduced speed limits for motor vehicles.
– A great many motor trucks are attached to various military camps throughout Australia, and it is, apparently, not intended to send them to operational stations. In the meantime, they are using a prodigious quantity of petrol. I ask the Minister for Supply and Development whether there is any reason why gas-producer units should not be fitted to these vehicles with a view to saving petrol?
– It is not easy for me, as Minister for Supply and Development, to lay down conditions to the Army authorities. This matter has been discussed with representatives of the Army, who do not seem keen to install gas producers on army vehicles. However, I understand that the honorable member’s question refers to motor vehicles which are being used for ordinary haulage purposes in areas far removed from operational theatres, and in that connexion I think his point is well taken. The honorable member has raised an interesting point, and I shall discuss it with the Minister for the Army with a view to ascertaining whether the suggestion can be adopted.
– I lay on the table the following paper : -
Taxation Proposals - Report of the Committee of Senators and Members appointed to consider the Income Tax Assessment Bill (No. 2) 1942. and the War-time (Company) Tax Assessment Bill 1942.
The committee did not reach agreement regarding the proposed amendment contained in clause 13 of the Income Tax Assessment Bill, but agreement was reached in regard to all the other proposed amendments. The Government intends to accept the recommendations of the committee.
– Seeing that the application of Mr. J. A. Mendes, of the Mayfair Hotel, Darlinghurst, for exemption from military service has now been dealt with by the court, will the Minister lay on the table of the House the complete file dealing with this case?
– I shall call for the file in accordance with the honorable member’s request. I understand that the central magistrate, who considered the case, gave Mr. Mendes six weeks in which to put his affairs in order before entering the Army.
– I give notice that, at the next sitting, I shall move -
That leave be given to bring in a bill for an act to remove doubts as to the validity of certain Commonwealth legislation, to obviate delays occurring in its passage, and to effect certain related purposes, by adopting certain sections of the Statute of Westminster, 1931, as from the commencement of the war between His Majesty the King and Germany.
I have prepared a memorandum on this subject, and it will be distributed to honorable members before the matter comes up for consideration.
Sixth Division: Punishment of Offenders
– Can the Minister for the Army say whether it is a fact that 57 members of the famous Sixth Division, who fought in Libya, Greece and Crete, and who were, as a result, more or less nervous wrecks, were later charged with mutiny, and sentenced to two years’ imprisonment in Long Bay gaol? Is it a fact that the officer, who is alleged to have been primarily responsible for the trouble, was later returned to Australia with his papers marked “ Services no longer required “ ? Will the Minister table the papers dealing with this matter?
– I shall have an immediate inquiry made into the matter.
– Following the meeting of the Agricultural Council yesterday, is the Minister for Commerce now in a position, to announce the prices of superphosphate that will be charged to distributing merchants, and to farmers respectively?
– This all-important matter will be discussed at the meeting of the Agricultural Council this afternoon. To-morrow, I hope to be able to supply to the honorable member an answer to his question.
– As the diamond drilling operations carried out at Whim Well, Pilbara, have been completed, will the Minister for Supply and Development inform me when he expects to have a report upon the test? How soon will that report be made available to the House ?
– I shall ask the Controller of Minerals Production to expedite the preparation of tine report, because the Government is greatly concerned about the production of copper in Australia at the present time.
– Did the Prime Minister read in the Courier-Mail on the 23rd September, a statement that factors caused by the war are bringing more than 4,000 people a year from country districts to Brisbane, and that about onehalf of those persons are leaving rural industries? Will the right honorable gentleman inform the House whether the Government contemplates taking measures to arrest this drift of the rural population? If so, what is the nature of the Government’s proposals ?
– Whilst the drift was characteristic of certain parts of Australia prior to the outbreak of hostilities, no doubt the war has emphasized the trend. I am aware that the drift is occurring in Queensland, but certain factors other than the war were partly responsible for it. The general relationship of rural industries to the problem of population will be studied by the Rural Reconstruction Committee. At the moment, the Government is concerned with the matter only insofar as it will increase the efficiency of the national effort for war purposes. The. Government has done its best to establish industries outside the cities, always having regard to the quickest way in which to get the required products or materials. For example, the Government is most anxious to transfer men to certain sections of the mining industry. To seek to enforce an arbitrary policy that people shall “ stay put “ in a particular area for any purpose is to create great difficulties. The Government has been obliged to improvise, according to needs, and I am satisfied that all Ministers can do for some time to come is- to effect such day-to-day adjustments as will meet the overriding requirements of conducting the war.
– Is the Minister for Commerce in a position to supply to the House any further information regarding the possibility of establishing mutton dehydration plants in western Queensland ?
– At the meeting of the Agricultural Council this week, I discussed the matter with the Minister for Agriculture in Queensland, Mr. Bulcock, and I desire to correct a wrong impression that has been created in Queensland that the Commonwealth Government does not propose to construct mutton dehydration plants in that State. The position is that the Government is most anxious to establish mutton dehydration plants, especially in the sheep country of western Queensland, and will do anything possible to expedite the work. I have instructed departmental officers to study various problems associated with the matter.
– Honorable members continue to receive many telegrams and letters urging an increase of the price of dairy products. As dairyfarmers desire enlightenment on this matter, I ask the Minister for Commerce to inform me whether the Government has yet reached a decision, and if so will he make a statement to the House on the position, in order to remove the necessity for further meetings in Queensland? In view of the delay in reaching a decision, will the honorable gentleman consider the advisability of making the prices retrospective from the 1st September or, if the decision is not made immediately, at least from the 1st October?
– The details have been completed, and the proposal awaits submission to Cabinet for approval. When the matter is being discussed, the suggestion of the honorable member will be taken into consideration.
– In view of the urgent needs of primary producers and the foodproducing industries, is the Minister for Labour and National Service prepared to order an exhaustive search among the staffs of “ protected “ industries with a view to transferring superfluous labour, wherever practicable, either temporarily or permanently, for seasonal work in food-producing industries and associated primary industries, so that essential commodities shall not be lost to the nation in this period of emergency?
– At the present time, the Government is making an exhaustive inquiry over the whole field of industry fo> the purpose of ascertaining the best use to which the limited man-power and woman-power of Australia may be put. In that examination, the primary industries are not being overlooked. The Government will do everything possible to provide the requisite man-power- at tha earliest possible moment.
– Will the Minister for Commerce make a statement regarding the position of partners who are engaged in the production of wheat? Will each partner be permitted to deliver 3,000 bushels and receive the guaranteed price, or will that price relate to the holding only?
– That will depend upon the nature of the partnership.
– I refer to a registered partnership.
– If it were an ordinary partnership on the normal farm, the partners would he treated on the same basis as any other unit of production. The Commonwealth Government will summon, next Monday, a conference of all wheat-growing organizations from all parts of Australia to determine matters such as that which the honorable member has mentioned.
– Has the Minister for War Organization of Industry read statements in the press about great discontent among students of the Melbourne University, particularly those from working-class families, regarding the action of the university in insisting upon the payment of six years’ fees for the medical course, which has been reduced to five years? If so, what steps does the Minister propose to take for the purpose of allaying this feeling ?
– I have seen the statement to which the honorable member has referred, but universities have always been under the control of the State governments and, unless the Commonwealth Government considers that it ought to control education, I think that the State governments should rectify any anomalies that exist as the result of the shortening of the medical course to five years.
– Before the approach of the shearing season next year, will the Minister for Labour and National Service convene a conference of representatives from each shearing zone in Australia for the purpose of effecting necessary adjustments, so that in future shearing operations may be carried out with a minimum of loss and inconvenience?
– I shall be prepared to call for a report from the DirectorGeneral of Man Power on how the existing scheme operates, and then, after having discussed it with him, call whatever conference of all interests may be necessary, so that any difficulties which may have arisen may be obviated.
– Is the Minister for War Organization of Industry able to indicate when he will be in a position to make a statement about the activities of his department?
– I hope to be able to make that statement to-morrow.
Call-up of Mr. Stanley Cox.
– In view of the conflicting statements which appeared in the press at the week-end concerning the call-up for the Civil Constructional Corps of Mr. Stanley Cox, who saw active service in the Middle East and Greece, and was discharged as medically unfit, will the Minister for Labour and National Service tell the House why a returned soldier of this war should have been subjected to this embarrassment and humiliation ?
– I am unaware of any conflicting statements in the press. I made to the press a statement which was accurate in every detail. In regard to the other section of the honorable member’s question, I shall be pleased to have inquiries made, and to obtain full information in regard to the case which he has brought under notice.
– Is the Minister for War Organization of Industry yet able to inform the House of the names of the representatives of the Central Wool Committee, the Australian Wool-growers Council and the federal Council of the Graziers Association who, he said, were consulted by Professor Clunies Ross and Mr. D. A. Gill, during their investigation of the pastoral industry?
– The honorable gentleman asked me a question in relation to this matter on the 9th September.
– It is the 29th September now.
– Yes. I supplied an answer to the honorable member’s question immediately afterwards. I did say then that representatives of those bodies had been consulted, but I think it would have been more accurate if I had said that members of those bodies had been consulted. They were not selected. Insofar as the Central Wool Committee was concerned, they were members who volunteered the information at the instance of the then chairman, Sir Owen Dixon.
– In an official or unofficial capacity?
– In his official capacity, as chairman of the Central Wool Committee.
– What about the other bodies ?
– I believe that I have already given the honorable member all the information for which he asked.
– If that is not the case, I ask the honorable member to put any further questions in relation to the matter on the notice-paper.
Bill presented by Mr. Curtis, and read a first time.
– by leave - I move -
That the bill be now read a second time.
The object of the bill is stated clearly and accurately in the long title. More precisely, the object of the measure is to continue in operation the provisions of the National Security (Employment of Women) Regulations, which would otherwise have ceased to operate from the 23rd September, 1942. The bill enacts that the provisions in the schedule, which are substantially the same as the provisions of the National Security (Employment of Women) Regulations, shall continue to have the force of law as from the 23rd September, 1942, and provides for the continued existence of the Women’s Employment Board established under those regulations. It also maintains in force all the decisions of the Women’s Employment Board made up to the 23rd September, 1942, and provides that current applications to the board are to be considered and decided by the board under the provisions in the schedule. As honorable members are aware, temporary provision has been made by the National Security (Women’s Employment) Regulations made on the 24th September, 1942, for the validation of decisions made by the board until this bill becomes law.
In the statement which I made to the House on Thursday last, when announcing the Government’s decision to introduce the present bill, I made it clear that the Government’s decision was not based on any desire to secure a political advantage by means of the powers conferred on it under the National Security Act to establish a special industrial tribunal during the present war. The Government’s case for the maintenance of the Women’s Employment Board with the powers and functions previously exercised by it is simply that, unless this be done, Australia’s war effort will be gravely impeded. In particular, the effective organization of the labour resources of this country and the diversion on a large scale of women to employment in war production and essential industries will be rendered practically impossible.
I have already explained to the House that the Government’s plans for the defence of Australia and the conduct of the war in the Pacific have involved the making of decisions to build up the numerical strength of our fighting forces to a certain figure, and to carry out a complementary programme of production and of construction of works which will cause a very heavy strain on the limited labour resources available from a nation with a population of only 7,000,000 people. Effect can be given to these decisions only by the employment of women in industry on a scale which has previously not even been contemplated.
The Government has been considering in the last few days the revision of manpower requirements and the possibilities of meeting those requirements, the general nature of which has already been indicated. The review of the man-power requirements of essential war production in the next six months shows that if we are to meet our war commitments, 64,000 women must be brought into employment in munitions factories and in factories engaged in essential industries. In addition, the service needs, involving the expansion of existing women’s auxiliary units, must be met. If we cannot find the numbers of women required and bring them into employment where they are needed, fewer men can be released to the fighting services, and our armies will go short of essential war equipment. Any obstacle placed in the way of absorbing women in these numbers into employment would be a direct blow at Australia’s war effort and would endanger the defence of this country. Unless the Women’s Employment Board continues to function and to exercise the powers conferred on it by the provisions of this bill, the requirement of 64,000 women for war industries cannot be met. As I understand the arguments of honorable members of the Opposition, they contend that it, is either wrong or unnecessary to bring women into war industry, or that provision should not be made for fixing rates of pay and working conditions for women employed in industry. The Opposition’s case is, I believe, that it is wrong to set up a. special tribunal to deal with the wages and conditions of women workers, and I propose to discuss the measure on that basis. The replacement of men by women involves fixing appropriate rates of pay for the women who are to do men’s work. It also involves the fixing of conditions and hours of work. The nature of the special problems involved, and the difficulty and complexity of the task which confronts any industrial tribunal in the solution of those problems, are well known. Machinery is available for the settlement of wages and conditions of work, and the Commonwealth Arbitration Court has had its powers and functions greatly extended by the Industrial Peace Regulations. These have widened the scope of the court’s activities, and greater use of conciliation committees has made the procedure much more flexible. However, it has not yet been possible for the court to overcome delays in the determination of matters which have been submitted to it from time to time. I have here details of all the cases that have been listed in the Arbitration Court in the period from the 1st December, 1941, to the 15th September, 1942, and I shall make them available for the scrutiny of any honorable gentleman who may wish to see them. During this period of nine and a half months, 659 applications were decided, i.e., an average of 69 a month. The highest number of applications dealt with in any month was 93 in December, 1941, and the lowest was 50 in May, 1942. Some of the claims were involved, and the hearings extended over months, for example the case of the Federated Gas Employees Union and the Australian Gas Light Company, regarding wages and working conditions. The hearings extended over 42 different days, from the 2.1st April, 1941, to the 10th August, 1942, as follows:-
Melbourne - 21st, 23rd and 30th April.
Sydney - 5th, 6th, 9th and 14th May.
Melbourne - 23rd and 27th May, 1st, 4th and 22nd July.
Sydney - 24th and 25th July, 8th August.
Melbourne - 11th and 22nd August, 29th October, 20th and 21st November, 1st, 2nd, 4th, 10th and 15th December.
Sydney - 16th and 17th December.
Melbourne - 24th December.
Melbourne - 27th March, 29th April.
Sydney - 14th May.
Melbourne - 11th June.
Sydney- 3rd, 8th, 9th, 10th, 13th-16th and 20th July, 10th August.
In many cases, there has been considerable delay in obtaining decisions from the court. During the nine and a half months ended the 15th September, 1942, decisions were given in 45 cases which had been pending before the court for over twelve months.
The following, six examples show the length of the delays that occur: -
There have been delays in the delivery of judgments after the hearings have been completed. During the nine and a half months ended the 15th September, 1942, the following delays elapsed between the closing of the cases and the delivery of the judgments therein: -
During the period to which these figures refer, a cardinal feature of the Government’s policy was insistence that the unions should accept judicial assessments of their war-time rights.
– Is there anything about Judge Foster in all that?
– The honorable member for Fawkner may make his interrogations in due course. It must be clear from these facts that there has been delay. I offer no criticism of the cause of the delay, because I am not able to say who has been responsible for it.
– Many inferences may be drawn from it.
– I simply state the fact and, in doing so, I remind the honorable gentleman that the Government was faced with the urgent problem of telling women what their rates of pay and conditions of work would be before it drew them into avocations in which they had never before engaged, and in which they were required temporarily to replace men. The men would have continued in these callings except for the fact that they were needed for the fighting services or for other essential war work. The men faced with this temporary intrusion of women were as much interested in the rates of pay and conditions of work as were the women themselves. If delays such as had marked the hearing of evidence and the making of awards by the Arbitration Court after evidence had been taken had been allowed to occur in connexion with the fixing of rates of pay and the conditions of work of the women required to replace the men called up for war service or transferred to other more essential occupations, the women would have been at work perhaps a month before they would have known what their pay would be. The Arbitration Court was already seriously congested when the need arose for the prompt determination of those questions. One judge of the court is performing very responsible duties on the coal tribunal, and another is doing similar work on the stevedoring commission. The appointment of extra judges to the Arbitration Court would not have solved the problem for several reasons. In the Arbitration Court, cases are taken in rotation, or according to their importance. A union which goes on strike can set the machinery of the court in motion much more promptly than can a union which prefers to keep its members at work. It is undoubtedly a fact that throughout its history the court has moved more promptly in respect of industries which have been the subject of an actual or a threatened stoppage of work. It was for this reason, among others, that the Government established the Women’s Employment Board. The board was designed to do quickly the special work that had to be done. There was an overwhelming necessity for quick action, and the board has carried out the duty placed upon it. It has already heard 85 cases, in respect of which 50 decisions have been made. The other 35 cases are awaiting awards. Fifty cases are still listed for hearing. A total of 7,685 women was affected by the decisions of the board. Almost half of them were employees of Commonwealth or State governments, or employees of State instrumentalities. The details are -
The claims heard, but in respect of which decisions have not been given, affect 2,603 women, of whom 2,022 are employees of the Commonwealth or State governments. The details are -
It will be seen, therefore, that 5,602 of the women involved in those cases are being paid out of war appropriations. In other words, the women are, in fact, as well as technically, government employees, or employees of public instrumentalities, the funds for which are provided by the Government. Some honorable gentleman appear to be under the impression that private enterprise has been greatly affected by the work of the Women’s Employment Board. That is not the case. The Commonwealth and State Governments are by far the largest employers of the women affected or likely to be affected by decisions of the board. At least 10,288 women were covered by claims made to the board. Of these, 55 per cent., or 5,602 women, were employees of the Commonwealth or State Governments. The largest claim affected 2,500 women employed by the Department of Munitions in ammunition and explosives factories. The board granted these women 65 per cent. of men’s wages while they were on two weeks’ probation, and thereafter 90 per cent. of men’s wages, £4 14s. a week, plus male war loading. The next largest claim affected 2,000 women in the metal trades. Nineteen separate applications were dealt with together, and the women were granted 60 per cent. of men’s wages, £3 3s. a week, while on a month’s probation, and thereafter 90 per cent. of men’s wages, £4 14s. a week, plus male war loading. In thirteen cases women were granted 100 per cent. of male rates. These cases included bar attendants - in my view, a woman serves a glass of beer just as efficiently as a man, and should not be exploited in the serving of it - and car drivers. Here again, if a woman can drive a car as efficiently as a man she is entitled to the same pay as a man would get.
– That principle should also apply to munitions work.
– It is being applied. Where women are as efficient as men the male rates of pay apply. But who is to assess the efficiency? The difference between honorable gentlemen opposite and honorable gentlemen on this side of the chamber is that we say that women who are as efficient as men are entitled to the economic status of men.
– Hear, hear ! I will go as far as the Prime Minister in that direction.
-But who is to make the assessment? The Government appointed the Women’s Employment Board for the purpose. In addition to the two claims I have already mentioned, saleswomen in men’s stores serving men’s goods, and tram and bus conductors were granted 100 per cent. of male rates. Nine of the cases included in that group of four were the result of agreement between the parties ; in the other four cases the board was precluded by the regulations from reducing the full male rate that was already being paid to women. In other cases various percentages were fixed ranging from 60 per cent. to 100 per cent. In the case of asbestos fabrication the board decided that the industry was unfit for women. All the claims submitted to the board were dealt with expeditiously, as the following statement shows : -
Total cases dealt with - 49.
Under one month - 13 claims.
One month and under two months - 13 claims.
Two months and under three months - 22 claims (including 10 metal trades claims heard together).
Three months and under four months - 1 claim.
Under one month - 40 claims.
One month and under two months - 9 claims.
The average number of days between conclusion of hearing and date of decision - 1 1 days.
On seven claims the board gave its decision as soon as the case concluded.
When the board commenced its hearings, the cases took much longer to decide than have more recent cases. Ninetyfive days elapsed between the time the first claim was filed and the decision was given, whereas only nine days elapsed between the filing of the claim and the giving of the decision in the last case. The average time occupied in hearing each case was one and one-third days. The details of the respective cases were as follows : -
Thirteen cases were heard in one day.
Eleven cases were heard in two days.
Five cases were heard in three days.
One case was heard in six days.
Nineteen cases were heard together in thirteen days.
That is an illustration of expedition. It is sufficient to indicate not only that there was urgent need for the establishment of such a board but also that it is possible for such a board to make decisions more speedily than they can be made by the Arbitration Court.
– Because of the factsbecause of the time occupied by the Arbitration Court compared with that occupied by the Women’s Employment Board.
– A police magistrate deals with ten times as many cases as are dealt with by the High Court. Why not, then, abolish the High Court, and compel all litigants to have their cases heard by police magistrates?
– The honorable gentleman is putting my case. He says, in effect, that it would be ridiculous to clutter up the whole of the administration of justice by insisting that every case shall go to the High Court.
– Oh, no!
– The argument of the right honorable gentleman is. that there ought to be an allocation of the dispensation of justice. That is precisely the view that I am putting. The Government says that, instead of every industrial matter having to go to the Arbitration Court, a separate instrumentality would in this instance be conducive to quicker and better results.
– Rough justice!
– If I interpret the honorable gentleman aright, his argument is that, in its awards, the Women’s Employment Board has dispensed rough justice. Rough justice for whom? Only for those who do not wish women to be treated decently in the realm of industry. What has the Women’s Employment Board done? I have pointed out that it has fixed assessments ranging from 66 per cent, to 100 per cent, of the male rate. The latter rate has been fixed in thirteen cases, nine of which were by agreement between the parties. In the other cases, various percentages were fixed as the result of an inquiry to determine the efficiency of the women relative to the efficiency of the average male. That the Women’s Employment Board has made its decisions more speedily than they could have been made by the Arbitration Court, is one of the reasons for the proportions of female employment to which we have attained, on the basis of a reasonable payment for it. In fact, this has been possible only because the procedure of the board has been completely informal, and because it has been free to specialize on the single task of adjusting the conditions governing the employment of women. Experience has shown that the task has been such as to strain to the full the resources of the board. As I have already announced, the Government decided last week, oil the recommendation of the departmental committee on man-power, to establish tribunals subsidiary to the Women’s Employment Board in order that applications may be heard simultaneously in all the States. The departmental committee stated, and the Government agrees, that a single tribunal would not be capable of dealing with the greatly expanded volume of applications that will arise out of the transfer of women to industry, in the numbers I have already indicated, as expeditiously as the situation demands.
There has been some confusion as to the nature of the board’s functions. In all the States, restrictions have been imposed in respect of the employment of women. These have been designed partly to protect the position of men, and partly to protect the health and welfare of women employees. Under the pressure of war conditions and the need to place women in industry, it is necessary to relax certain of these restrictions. This could not be done by setting aside the standard for women’s labour already built up. What is necessary is a careful examination of each individual case, and a decision in the light of all the circumstances. Accordingly, the function of the Women’s Employment Board is to examine each individual case in order to decide the degree to which any of the existing restrictions shall be set aside and to determine the conditions under which women shall be employed in each particular industry. The board is not an “ equal pay “ board ; but it is equally not a “ cheap labour “ board. Its task has been - and under the provisions of this bill it will continue to be - to measure the relative efficiency and productivity of female labour, and to determine what shall be the appropriate rates of pay and conditions of employment for women workers whose services are required in order to release men for the fighting services and essential industries. The Government, accordingly, regards the board as an essential part of the administrative organization for total war in Australia. I hope that by this time honorable members are sufficiently aware of the extent of the reorganisation of Australia’s industrial life that is imperative if this country is to be defended successfully. I prefer to believe that most of the criticism that has been directed against the Women’s Employment Board and the regulations under which it has operated, has arisen from the failure to appreciate the magnitude of the industrial task that is ahead of this country. An essential part of the performance of this task is the replacement of men by women in war production and essential industries. Therefore, the case for the determination of women’s wages during the war by a special tribunal rests on the ground that in this matter, as in many other matters, we are faced with a special war problem. This is not the ordinary industrial routine of peace. On the contrary, we are dealing with a special problem that has arisen as the result of circumstances brought about by the war. These women will be doing work that is normally done by men> and for which rates of pay have already been fixed by the Arbitration Court. The special problem is to determine what rate of pay shall be applicable to women and what changes of the conditions of labour are necessitated by the employment of women. If this problem is to be handled at all, it must be handled expeditiously. The general level of wages is not in question ; that is determined by the Arbitration Court. What is required is an adjustment of women’s wages on the basis of the capacity of women to undertake work that is normally done by men. In all these avocations, the Arbitration Court has fixed the minimum rate of pay, and its determinations have been made on the presumption that men will do the work.
The Government has asked that women shall be employed temporarily, in the hope that the war will not last for ever. It says that determination by a tribunal that is accustomed, or at least specially qualified, to make the assessment of the efficiency of a woman - or of two women, as the case may be - relative to the rate fixed by the court for the male worker in the industry concerned, is the most appropriate means of resolving the problem. Its contention is that, if the capacity of women be equal to that of men, they should be paid as much as men; and if it be less, they should be paid proportionately less. It will be the function of a special tribunal to examine each case and make a quick decision. There has also to be considered the degree to which the working conditions should be modified in respect of women. These matters can best be determined by a special tribunal. The volume of work is so great, and the need for urgent action so pressing, that a special tribunal is required. Moreover, the Commonwealth Government is the principal employer of women who are brought into industry, and i3 therefore entitled to special representation on any tribunal that deals with the problem.
Finally, there is the assurance that has reasonably to be given to men who are displaced, that their wage standards will not be lowered. The determination of women’s wages by a special tribunal will be a guarantee of this, because the tribunal will be solely concerned with estimating the relative capacity of men and women in work that is normally done by men but is being performed by women during the war. The Women’s Employment Board does not fix rates of pay; these are fixed by the Arbitration Court, and that function is not being taken from it. Nor is it being deprived of the function of fixing basic wages and basic hours. The Women’s Employment Board merely takes into account the fact that women are being used as a substitute for men in industries previously carried on by males; and without any examination as to whether the male rate is fair or unfair, it says that .the efficiency of women as a replacement force is of a given percentage - 20 per cent., 30 per cent., 60 per cent., 80 per cent., or 100 per cent, of that of men. The other question which had to be decided was whether the prohibition in State legislation of the employment of women shall be set aside under the National Security Act. We have to ensure that the men who are displaced do not have their economic standards eaten into by the incursion of women as a permanent economic feature. We must also keep faith with the women of this country, and ensure that if they are capable of doing as much war work as men, they shall be paid as if they were men. I believe that the Government’s method of approaching this problem will safeguard the rights of both men and women, and that is the Government’s purpose in introducing this measure.
Debate (on motion by Mr. Fadden) adjourned.
Debate resumed from the 16th September (vide page 346) on motion by Mr. Chifley -
That the bill be now read a second time.
.- The purpose of this bill is to give effect to the recommendations of the Commonwealth Grants Commission for the making of grants to the three applicant States for the current financial year, namely, £800,000 to Western Australia, £800,000 to South Australia, and £575,000 to Tasmania. Prior to the establishment of the Commonwealth Grants Commission, the applications of the claimant States for financial aid to compensate them for their disabilities were always referred to a parliamentary committee for investigation and report. This method was not entirely satisfactory and, in 1933, the Lyons Government appointed the Commonwealth Grants Commission, an action which met with’ general approval. Shortly after its appointment, the commission agreed upon a formula for the purpose of arriving at what was thought to be a just and equitable, method of assessing the. disabilities of the various claimant States, and this formula alao met with approval. The commission is composed of men of integrity and repute who have no political axe to grind. Their only desire is to see that justice is done as between the Commonwealth and the States. They are, to all intents and purposes, acting in a judicial capacity. In the circumstances* one cannot but give general support to. their recommendations. To do otherwise would be tantamount to disputing the umpire’s decision. For my part, I believe that it was a wise provision to remove the fixing of these grants beyond political control.
While I give general support to this measure, I hope that I shall be able to offer some constructive criticism, and that it will be accepted in that sense. I submit that the case of Tasmania is somewhat different from the cases of the other States, largely due to the fact that Tasmania does not derive as much benefit from government war expenditure.
– Neither does Western Australia.
– That is probably true, but I shall leave the honorable member to speak for his own State. This, differentiation in war expenditure has resulted in a great loss of population in Tasmania, particularly of skilled workers, who have been enticed to other States where more attractive industrial conditions prevail, lt has been contended that Tasmanian resources are not being fully utilized for war production. The geographical isolation of Tasmania is a tremendous drawback. A stretch of water played a most important part in saving England militarily, but the stretch of water between Tasmania and the mainland has been a serious economic drawback to that State. Compensation to Tasmania for the adverse effects of federal policy has not been on the scale to which Tasmania is entitled. The Commonwealth Grants Commission, on page 9 of its report, states -
The disappearance of State income taxation for the duration of the war and for one year thereafter must lead to some modification in the method of ascertaining relative severity of taxation, which is arrived at by relating taxable capacity to State collections of taxation.
We do not, however, think that the circumstances have yet arisen which render our method invalid or impracticable far dealing with grants based on the financial year 1940-41, and we have therefore decided substantially tomaintain for this year our existing basis of assessment. … It appears that, as the war proceeds, the commission may have to rely rather more on broad judgment and somewhat less on statistical analysis.
It appears that the commission should have given more consideration to the fact that Tasmania will receive not more than £880,000 in 1942-43 from the Commonwealth under the uniform taxation plan. That amount is £220,000 less than the income tax collected in Tasmania in the previous year. This is because, in arriving at the amount repayable to the States under the uniform taxation plan, the average collections for the years 1939-40 and 1940-41 were taken as a basis, whereas the taxation revenue from Tasmania in 1941-42 was £220,000 higher than the average for the two previous years. In another part of its report, the commission states -
The drain of labour from Tasmania, which is a continuation of what was happening for years prior to the war, can seriously affect the State’s economic and financial position.
I agree that it does very seriously affect the financial and economic position of Tasmania. The effect in Tasmania is shown by an examination of the “ Economic Indicators “, which appear on page 26 of the report. The base, being the average from 1936-37 to 1938- 39, is 100 in each case. The value of potato production fell from 117 in 1939- 40 to 75 in 1940-41; apple production from 87 to 70; and wool production from 125 to 117. The volume of butter and cheese production declined by over 7 per cent. and the net value of agricultural production fell by 29 per cent. Pastoral production remained almost stationary, whilst mining and secondary production increased.
In the period 1938-39 to 1940-41, agricultural production in Tasmania declined from £130s. 5d. a head to £7 5s. 9d. A similar serious decrease is noticeable in the dairying industry, where, over the same period, the decline was from £2 16s. to £1 19s. 6d. a head. In 1938-39 the value of all rural production in Tasmania was £23 14s.11d. a head, but two years later it was only £18 18s. 7d. a head. I direct the attention of the House to the fact that these serious decreases have occurred at a time when Australia urgently requires increased food production for its fighting forces and civil population.
– And our allies.
– The position is most serious.
– I agree. I ask the Treasurer to give further consideration to the proposal to grant to Tasmania only £575,000, because the State Treasurer now faces a deficit of nearly £400,000. If the Commonwealth Government insists upon the figure of £575,000, the State Government will find it impossible to grant cost of living adjustments to the State Public Service. In fact, the State Government cannot review or adjust its expenditure in order to meet this position without inflicting distinct hardship upon the State. Whilst other States are now enjoying unbounded prosperity, Tasmania is forced to submit to rigid economy, such as no other State experiences.
– Except Western Australia.
– I agree with the honorable member, who doubtless will explain the hardships of Western Australia during this debate. I supported the Government’s proposal for introducing a uniform income tax because I believed that the reform was most necessary. I was assisted in forming my judgment by the promise of the Treasurer that any adverse effect on Tasmania financially would be adequately met when the State submitted its case to the Commonwealth Grants Commission. In my opinion, the case of Tasmania has not received due consideration. Alone among the States, Tasmania is forced to practise austerity to a much greater degree than any other State. Tasmania does not object to austerity, but I contend that the degree to which it is applied should be uniform throughout the Commonwealth. In view of the promise of the Treasurer, many Tasmanians now regard themselves as the victims of a confidence trick. The taxable capacity of Tasmania in 1940-41 was only 70.9 per cent. of the average for all States, and I contend that a just claim has been made for an increase of the grant on account of the relative severity of its taxation for that year.
These are days of mystery telegrams. Recently, a telegram which was supposed to have been sent by the Prime Minister, was read at a public meeting at Paddington. The right honorable gentleman subsequently repudiated the telegram.
– Did he repudiate it?
– I read in the press that he had done so. On the 4th August, the Prime Minister despatched to the Premier of Tasmania a telegram stating that the grant to the State for the current financial year would be £800,000. As Tasmanians know to their sorrow, the grant will be only £575,000.
Mr.Chifley. - The statement of the honorable member is not true. The Prime Minister did not despatch any such telegram.
– All Iknow is that the telegram which reached the Premier of Tasmania announced that the grant to the State for the current financial year would be £800,000. The telegram was despatched on the 4th August, whereas the report of the Commonwealth Grants Commission is dated the 17th August, thirteen days later. The Treasurer of Tasmania, Mr. DwyerGray, suggests that during those thirteen days the Commonwealth Grants Commission was asked to, and did in fact, reconsider its report, and alter its recommendation. I do not make the assertion. Whether it is correct, the Treasurer will no doubt tell honorable members when he replies to this debate. Mr. Dwyer-Gray says that Tasmania is being victimized and prejudiced financially and economically by differential Commonwealth war expenditure. I trust that the Treasurer will clarify this matter to the satisfaction of the House.
– Does the honorable member contend that the grant to Tasmania should be £800,000?
– Simply because a clerk in the office made a mistake in despatching the telegram.
– How it happened, I do not know. My point is that the telegram was sent thirteen days before the commission dated its report. I agree with the view expressed by the Commonwealth Grants Commission that -
A State seeking financial aid should make reasonable effort to preserve financial stability.
Tasmania has endeavoured to do that. For example, the expenditure by Tasmania on social services is much below the average for all States. Education in Tasmania costs £1 14s. 2d. a head, but the Commonwealth average is £1 16s. 6d. Health services in Tasmania cost £1 4s.1d. a head, but the Commonwealth average is £1 7s. 2d. This disparity is to be found in nearly every other service. Tasmania has been obliged to adopt a lower standard of living than any other State.
– By necessity?
– Yes, because the State has not the wherewithal to finance the cost of better social services. I agree with the view that claimant States must ensure that their financial embarrassment is not due to their own extravagances. If the States do not practise reasonable austerity, they must pay for their own mistakes. In the past, all States have wasted money on unproductive works. The financial burden of the States has increased considerably over a period of years, because of the continuance of a policy of spending loan money on unproductive works, as is shown in the reports of the Commonwealth Grants Commission.
In conclusion, I consider that the disproportionate allotment of war work among the States has created great difficulty for Tasmania and has caused it to lose thousands of good citizens. In addition, this disproportion has prejudicially affected Tasmania’s finances and economic stability. Insufficient consideration has been given to the plight of the State.
.- These disabilities grants, as the payments are properly called, though they are improperly applied, are not on a fair basis. In fact, the distribution ofthe money never has been on a fair basis. Western Australia suffers from great disabilities, partly because it is so far removed from the centre of government and industrial activity. This disadvantage is accentuated in war- time, when the bulk of war expenditure occurs in the great centralized portions of the Commonwealth. Western Australia has to pay its full share of taxation to meet war expenditure, but the return to the State is so small comparatively that its citizens suffer greater disabilities than do citizens of the larger States in which the money is expended. Western Australia is more affected by lack of transport than any other State,, because its distances are so great and shipping and railway transport have been tremendously curtailed. Moreover, whilst the fiscal policy of the Commonwealth Government has been for the benefit of the eastern States, it has been a continuous disadvantage to Western Australia. The people of Western Australia sell in the open markets of the world and buy, virtually, in the dearest. The disadvantages and disabilities that the State suffers because it is a unit of the federation are not fully compensated for by the annual grants made to it by the Commonwealth Parliament.
.- The fact that legislation of this sort has to be passed every year shows that the Commonwealth Grants Commission is no mere temporary tribunal, but is likely to continue long into the future. The commission was originally, set up to provide a scientific basis for determining the needs, and making recommendations thereon, of those States which have suffered adversely from federation.
– It is unconstitutional.
– Of course, there are provisions of the Constitution by virtue of which the Parliament dealt with this matter in a certain way up to a certain time, but, eventually, the Parliament arrived at this method of determining how it shall give effect to the provisions of the Constitution.
– It had no authority to do so.
– It, may be, as the honorable member suggests, that the action taken was ultra vires the Constitution, but that issue could have been tested had some State or individual been disposed to contest the issue in the High Court, or by appeal to the Privy Council, if the High Court’s judgment had been unacceptable. The point is that the matter has not been tested, and we have to work on a formula which has been devised by Parliament itself as to the best method of assessing the needs of the weaker States. I am impelled to make some remarks upon this measure, because I do not think it speaks much for the statesmanship of this Parliament that, year after year, we just hand certain sums of money to States that need it, because of the disadvantages that they have suffered through federation.
– The practice has been extended to all States, under uniform income taxation.
– I think that this Parliament, at no distant date, ought to examine the whole subject of State boundaries - their alteration, the creation of more States, and the acceptance by this Parliament of a lot of the liabilities that are burdensome upon the States. The federal units - in other words the States. - have the obligation to accept certain liabilities for money that has been borrowed over the years here and abroad, but the Commonwealth might very well be asked to accept some of those liabilities and at the same time ask the States to surrender certain control of certain matters, particularly the railways, because the railway systems, which have so far been regarded as the means .by which, the lands of the Commonwealth can be opened up and developed, are, in a greater sense, the responsibility of the Commonwealth because of their relationship to the defence of this country. Not one railway has been built in Australia with a view to its, strategic possibilities. Every railway has been built only for land settlement and development. Now and in the future railways will have to be laid down with a view to their defence value, and, that being so, all the railways will have to be in the hinterland of the Commonwealth and, therefore, run at a considerable loss. That loss should be borne, not by the Spates concerned, but by the Commonwealth. As the honorable member for Darling (Mr. Clark) has reminded me, the three claimant States mentioned in the bill are not now the only States that are receiving grants from the Commonwealth. It. might be argued that all the
States which receive grants from the Commonwealth under uniform taxation legislation are receiving only what they themselves would have collected had that legislation not been passed.
– Only a portion.
Mr.CALWELL. - I am not certain that in some cases the amounts they are receiving are not more than they ought to receive, and that in other cases the amounts are less than those to which they are entitled. It may be thought desirable by the Government to bring these grants under the one heading; entertainments tax, uniform income tax, and disability grants might be considered by one body, and appropriate recommendations made to the Commonwealth Parliament. It has, unfortunately, been the custom of some people to sneer at the weaker States. The stigma which people in one or two States have attempted to cast on the claimant States by calling them mendicants has been destructive of national unity and grossly unfair. Victoria owes a great deal to Western Australia. When the banks collapsed in the’nineties, the fortuitous discovery of gold in Western Australia kept the older people and invalids of Victoria from starvation. In those days there were no invalid or old-age pensions. I have been told by those who were there that it was a common sight to see outside the post offices at Kalgoorlie and Coolgardie long queues of people waiting to send remittances to Victoria in particular, and in lesser degree to New South Wales. Similarly, Victoria owes a great deal to Tasmania, because the expeditions of Batman andFawkner which set out to settle Victoria came from Launceston.
– Victoria is a child of Tasmania.
Mr.CALWELL.- I agree, but Victoria’s development has been at a greater pace than that of any other State. It has 27 people to the square mile, and the tragedy is that all Australia has not at least that density of population. If it had, we would not be worrying so much about men and women to fill our armies and our factories and to do the work that has to done. I am afraid that the policy of the last two governments and this Government in concentrating the manufacture of munitions, particularly in Victoria and New South Wales, has not helped Western Australia and Tasmania. South Australia is in a different position, because in the last two governments South Australia had two Ministers who saw to it that a great deal of money was expended in South Australia to build there a replica of the munitions establishments at Maribyrnong, Victoria, and now those works are in production. The difficulty of South Australia is to obtain sufficient men and women to carry out the work which the Commonwealth has asked the people of Adelaide, particularly, and of South Australia, generally, to undertake. The population of South Australia is altogether too small to cope with the great quantity of work that has to be done. People are still migrating from Tasmania to the mainland, unfortunately. When I was in Hobart in August of last year, undertakings were given by the Premier of that State that a certain quantity of labour would be available for munition factories there and the fact that those works . are not yet in production is a grave reflection upon somebody. It is not good to have twogreat sprawling masses of population in Sydney and Melbourne. It would be far better if our industries were spread out, and safely established behind the mountain ranges of the eastern States and in the relatively sparsely populated States of Tasmania and Western Australia. Of Australia’s total population of 7,000,000 persons, 5,000,000 live in New South Wales and Victoria. That is no credit to the statesmanship of the Commonwealth Parliament. This state of affairs should never have been allowed to develop or, having developed, to continue. I hope that, even though we are at war, we shall devise some means of increasing the populations of the other States, particularly Western Australia and Tasmania.
– And of decentralizing the population, at the same time.
Mr.CALWELL. - Yes. One of the best means of decentralizing the population would be for the Commonwealth to take control of the railway systems, so that the problem of tariff protection could be associated with rebates upon manufactured articles .being transported back to the metropolitan areas from country districts. So long as we have the Commonwealth administering the customs laws and the States running the railways as business undertakings, weshall find that the big city manufacturing concerns established near the seaboard will obtain great benefits while the country districts will suffer. Australia is spending probably £500,000 upon the protection of the big steel industries at Port Kembla and Newcastle, merely because the Broken Hill Proprietary Company Limited wanted to have the advantage of sea transport, owing to its cheapness in peace-time. That, too, is a state of affairs which should not have been allowed to develop or continue. It is possible to develop great steel works at Lithgow, in other parts of New South Wales, and in South Australia. The development o. Whyalla is a step in the right direction, and if the war should help to make South Australia a great manufacturing State it will not have been an unmixed evil. There are inequalities as between the States, as there were at the time of federation, but they aTe more marked than they were then. The more populous States have become more powerful, whilst the others have not developed as they should have done. The ‘ Commonwealth Grants Commission was set up in 1933 by the Lyons Government, and ever since the financial year 1937j38 it has voted approximately £2,000,000 annually to .be distributed between South Australia. Western Australia and Tasmania. I hope that, instead of continuing to allocate such large sums, and saying, so to speak.
That solves the problem for another vear “, we shall find some cure foi- *thi** evil, and make these weaker States so selfsufficient that they will have no cause rr feel that federation has not been of equal benefit to all sections of the Commonwealth. When the American peopdeclared their independence in 1776, there were thirteen States with a population of 3,000,000. To-day, there are 48 American States with a population of 140.000,000 people. The greater number of States has helped
American development, and it would be a good thing if our own State boundaries, which were never intended to be permanent, were revised so that the Riverina, northern Queensland, the New England district of New South Wales, and the Western District and the Gippsland District of Victoria, to cite but a few examples, could be established as separate States. These districts have been prevented from developing ever since the States of which they form a part were originally established. At every opportunity I shall continue to support an increase of Commonwealth powers in conjunction with an increase of the num’ber of States, but with reduced powers, so that we may make what migh t be termed the “ outposts “ of our Commonwealth into great areas that will have no cause to harbour grudges against other States or the Commonwealth as a whole.
– And have a real federation, like the United States of America.
– Yes. We should follow more closely upon the lines of the American federation. Originally, in our federal Constitution, we made a compromise between the British system of government and the American system ; but, since then, we have not made such alterations as we should have made. One of the greatest tragedies for Australia was the separation of Victoria from New South Wales, and that should never have occurred. When the two separate sovereign States were created, most of the evils from which we are now suffering had their genesis. It would have been far better if we had remained a unified Commonwealth, and. alternatively to adopting the American system, had developed along the lines of the Canadian system or the South African union. However, we must deal with the .position as we find it. It is not satisfactory, and the passage of legislation such as this does not help us to solve the problem. It simply mitigates existing evils and postpones a solution of the problem for another year.
.- One cannot read the figures in the ninth report of the Commonwealth Grants Commission without being alarmed at the falling off of production that has occurred in the lesser States, particularly Tasmania and Western Australia, as the result of a drift of population to other States where war industries are clamouring for man-power. A table contained in the report gives the following interesting comparisons of net values of rural production per capita in Western Australia : -
Comparative figures for the mining industry are £19 17s. 5d. and £21 17s. I have no doubt that next year the figures for the mining industry also will show a serious decline. The commission should make a different approach to this subject. Western Australia includes onethird of the whole area of the continent, but it has only one-seventeenth of the population. Obviously, that handful of people cannot be expected to continue indefinitely to struggle with such a huge area. Substantial help will have to be granted to them. The huge haulage problems and the big construction works that will be necessary to develop Western Australia are beyond the capacity of the present population. The isolation of many Western Australians makes it almost impossible for them to get their products to a satisfactory market. We should not wait for the post-war reconstruction period before we face this problem. I consider that a proportion of the grant should be devoted to developmental projects. The State Government should not be limited to using the money to balance its budget. Many outback towns in Western Australia are falling into ruin, and there is a decided exodus of population to the capital city. Enlistments, which also have greatly depleted the populations of local centres, have been half as large again, proportionately, in Western Australia as in the other States. It will be vital to our continued existence as a nation to induce people to return from the capita! cities to agricultural districts after the war. We all cannot live on the seaboard. Yet we know that the amenities of life are much greater in the cities than in the country. A. big effort will have to be made to increase the attractions of country life.
– Has the honorable gentleman read Goldsmith’s Deserted Village?
– I am too much concerned about numerous deserted villages in Western Australia to think much about Goldsmith’s Deserted Village. 1 urge the Government to consider my suggestions. Provision should be made without further delay for special grants to be made to Western Australia in order to assist the State Government to deal with the problem of rural settlement. This aspect of the subject should be investigated by the Commonwealth Grants Commission at an early date.
– in reply - I wish to answer briefly a suggestion made by the honorable member for Wilmot (Mr. Guy) that the Prime Minister (Mr. Curtin), or some other member of the Government, had exerted pressure ‘on the Commonwealth Grants Commission in order to induce it to alter its original recommendation. The idea is too fantastic to require much comment.
– It would seem that advance information was obtained of the intended recommendations of the commission.
– The explanation is simple. Over a number of years it has been the practice of the commission to inform the Prime Minister confidentially, and before the report is made available, of its recommendations for grants to claimant States. This course is taken in order to permit the Prime Minister confidentially to advise the Premiers of the claimant States of the recommendations of the commission so that undue delay does not occur in preparing the State budgets. That procedure was followed this year. It was not an innovation by this Government. When the Prime Minister received the confidential information from the Commonwealth Grants
Commission this year he followed the procedure of his predecessors, and on the 4th August sent coded confidential telegrams to the Premiers of South Australia, Western Australia and Tasmania, informing them of the amounts of the proposed grants in each case. Unfortunately the wrong figures were sent to Tasmania. The telegrams were forwarded simultaneously and in almost identical language, but the amount of £800,000 used in the telegrams to South Australia and Western Australia was repeated in the telegram to Tasmania, whereas the figure should have been £575,000. The DirectorGeneral of Posts and Telegraphs has caused an inquiry to be made into the error in the transmission of the telegram to the Premier of Tasmania. The text of his report is as follows: -
The mutilation was due to carelessness on the part of the transmitting telegraphist at Canberra who Sailed to notice the slight variation in the text of the telegram addressed to the Tasmanian Premier as compared with the messages to Adelaide and Perth. In order to expedite their disposal, the texts of the three telegrams were prepared simultaneously with the result that the Hobart message was received with the same text as those of the other States.
Suitable corrective action has been taken in respect of the officer at fault and regret is expressed for the unfortunate happening.
In order to avoid a recurrence of similar failures in the future, instructions have been issued to the telegraph personnel at Canberra that, in all cases where messages appear to be alike, simultaneous transmission must not be undertaken unless every word in the messages concerned has first been checked and all copies found to agree.
– It is unfortunate that the incorrect amount was sent to Tasmania, for the State Treasurer framed his budget upon it.
– I agree with the honorable gentleman, but I assure him that there was no communication between the Commonwealth Grants Commission and the Prime Minister, except the normal information sent by the commission confidentially intimating the amount of the proposed grant in respect of each State. It would be most improper for a member of the Government to attempt to influence the Commonwealth Grants Commission in such a matter. Neither the Prime Minister nor I would-be a party to such a procedure. I believe that if any move of that nature were made the commission would strongly and properly resent it. I cannot believe that any government would attempt to influence a body like the Commonwealth Grants Commission in the discharge of its important duties. The honorable member for Wilmot (Mr. Guy) has referred to the smallness of the grant to Tasmania. Under section 6 of the States Grants (Income Tax Reimbursement) Act, any State may approach the Commonwealth Grants Commission for consideration of a claim for greater compensation because of the condition of its finances. It would he very difficult for the commission thus early in the year to determine what the deficit or surplus of a State is likely to be. This is proven by the fact that last year New South Wales budgeted for a surplus of £20,000 but ended the year with a surplus of £1,100,000; Victoria budgeted for a surplus of £11,000 and had a surplus of £792,000; Queensland budgeted for a surplus of £12,000 and had a surplus of £64,000 ; South Australia budgeted for a surplus of £10,000 and had a surplus of £1,087,000
– Those surpluses were the result of war expenditure.
– The States were aware bef ore they prepared their budgets that there would be a large war expenditure. Western Australia budgeted for a deficit of £198,000 and had a surplus of £2,000. Tasmania budgeted for a deficit of £156,000 and had a surplus of £2,000. In 1936-37 and 1937-38, Western Australia received advances of £44,000 and £136,000, respectively, for the purpose of tiding it over difficulties arising from drought. The circumstances that then caused that State to approach the Commonwealth Grants Commission had an effect on the budgetary position that was not capable of prior estimation; consequently it rereceived the advances I have mentioned against future grants. I say frankly that, so far as one is able to judge, the financial position of Tasmania is such that it will be less able to meet its commitments this year than will any of the other claimantStates. It will be recalled that the Government of Tasmania claimed that hecause of certain changes its income tax collections for one of the .base years used in the determination of the compensation to be payable in connexion with uniform taxation were very much lower than they would normally have been. The matter was referred to theCommonwealth Grants Commission, which found that assessments had been issued late and that the returns from income tax for that year had consequently been lower than the normal collection. It recommended an increase of the compensation by £77,000; and that increase was made. This has no relation to the position of Tasmania or any other State during the present year. Any State which, as time goes on, finds that circumstances arising out of the war or otherwise have prevented it from achieving the financial stability it anticipated, may apply to the Commonwealth Grants Commission for consideration of its position. I have no doubt that that body will deal fairly with any application that may come before it. It is claimed that Tasmania derives no benefit from war expenditure by the Commonwealth. It is perfectly true that, so far, Tasmania has not received from this source benefits equal to those that have been obtained by the other States. In some degree that is true also of Western Australia. The honorable member for Forrest (Mr. Prowse) referred to the decline of the wheat-growing and gold-mining industries in that State. The circumstances in relation to gold-mining are well known; what has happened was absolutely unavoidable. If, in consequence, the State should find itself in financial difficulties, I have no doubt that it will approach the Commonwealth Grants Commission for reconsideration of its position. It is not quite correct to say that Tasmania has not received any benefit from Commonwealth war expenditure. That its factory production has risen considerably cannot be disputed. Since 1934-35, it has increased from £3,100,000 to £6,900,000. The increase since the year prior to the war has been substantial - £1,500,000. According to the index numbers, there has been substantial improvement of the average production for the three years 1938-39 to 1940-41. Taking the average production of the three previous years asthe base figure of 100, mining production has increased from 99 to 142, secon dary production from 103 to 133, and savings bank deposits from 108 to 115 in 1940-41, despite the loss of population referred to by the honorable member for Wilmot. These increases prove that there has been some improvement of the economic position of Tasmania. I am not attempting to dispute the honorable member’s statement that certain factors have not been so beneficial to Tasmania as to other States. I wish it to be clearly understood, however, that if at any time a State considers that there are factors which warrant its receiving an increase of the allocation or compensation made under uniform taxation, the act specifically gives to it the right to approach the Commonwealth Grants Commission for reconsideration of its position. The commission is recognized as a fairminded, semi-judicial body. The mere fact that, because of certain of its recommendations, some States have received less than they considered they ought to have been given, does not mean that, in the final analysis, they will not obtain justice from the commission. I repeat the important point: It is very difficult for the commission early in the financial year, particularly in view of what happened to budget estimates last year, to determine exactly what the financial position of a State may be later in the year. I believe that it will adjust equitably whatever disabilities may afflict any of the States.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Message recommending appropriation reported.
In committee (Consideration of Governor-General’s message) :
Motion (by Mr. Chifley) agreed to -
That it is expedient that an appropriation of moneys be made for the purpose of a bill for an act to authorize the raising and expending of a certain sum of money.
Standing Orders suspended; resolution adopted.
That Mr. Chifley and Mr. Lazzarini do prepare and bring in a hill to carry out the foregoing resolution.
Bill presented by Mr. Chifley, and read a first time.
[5.13J. - I move -
That the bill be now read u second time.
The purpose of this bill is to obtain a loan appropriation of £200,000,000 to finance war expenditure from loan fund in 1942-43, and to authorize the raising of an equivalent amount of loan moneys to finance that expenditure. The subject of our war expenditure for the present year has been dealt with very fully in the budget and the subsequent debates, and I do not now propose to traverse the matter again at any length. This is the largest loan bill so far submitted to Parliament, and it reflects the tremendous increase of Commonwealth expenditure brought about by the war. “War expenditure from loan fund for 1942-43 is estimated at £300,000,000. The balance of loan appropriation available at the 30th June, 1942, was £86,000,000, and that amount, plus the provision in the present bill and revenue appropriation, should carry us on to May next. Before that date, a further loan appropriation will be sought from Parliament.
– The Opposition recognizes that the Treasurer (Mr. Chifley) must bring down such a measure as this as part and parcel of his method of finance, and because it is necessary to raise, by way of loan, the money needed for carrying on the war. The bill provides for a record borrowing programme so far as this Parliament is concerned - a double century. I hope that the Treasurer will be successful in convincing the people of Australia that it is their duty to subscribe generously and adequately to the loan.
.– The Leader of the Opposition (Mr. Fadden) has described this bill as a necessity. I do not believe that it is.
– I said that it was a necessity, having regard to the Government’s method of finance.
– And also, l may say, having regard to th-3 Opposition’s method of finance. I object to both governments’ methods.
– The honorable member must face things as they are.
– The borrowing of money on this scale, with its attendant obligation to pay interest, will land Australia in an impossible position before many years have passed. If we have to borrow at the rate of £300,000,000 a year for another five years, we shall have a total loan indebtedness of more than £3,000,000,000, and an interest obligation approaching £100.000,000 a year.
– What is the alternative ?
– If this system of finance is likely to lead the country to disaster, and I think it must, it is no tribute to the statesmanship of the honorable member for Darling Downs that he should say, “I have no alternative; what is yours?”
– I did not say that. It is the honorable member who is challenging the method, not I.
– The only suggestion I heard from the Leader of the Opposition when these matters were under discussion was that, instead of raising the money voluntarily, a system of compulsory loans should be resorted to.
– Not to this amount.
– I am glad to hear that admission from the Leader of the Opposition. Apparently, he does not believe that he could raise anything like £200.000,000 by compulsory loans. It may be that he could not raise more than £50.000,000.
– The amount estimated by the right honorable gentleman from compulsory loans was £25,000,000.
– Perhaps that is nearer to the truth. The Leader of the Opposition had no suggestion to make for bridging the gap between revenue and expenditure other than the raising of compulsory loans, which could not provide more than a fraction of the amount required. Apparently, the financing of the deficit is to be left to chance. Like Micawber, we are hoping for something to turn up. This is not so much an indictment of the Government, as of our general outlook on the subject of war finance.
– But it is the Government’s method.
– The Government is simply following the methods of its predecessors in office, and if there be anything wrong with those methods, the Opposition must accept the blame equally with the Government. The Leader of the Opposition cannot have it both ways. He cannot preen himself upon his own financial methods, and then condemn the Government for applying those very methods. We appear to be just floundering along, and we shall end up with repudiation. There is not the slightest doubt of that. We shall not only have to repudiate interest payments, but we shall also have to write off the capital indebtedness.
– That statement, coming from a government supporter, should greatly assist the new loan.
– The Leader of the Opposition probably hopes that the loan will fail.
– That statement is unfair. I hope that the loan will succeed.
– The Leader of the Opposition hopes that the loan will fail so that he may rehabilitate his fallen fortunes. But, he will need more than that, to rehabilitate him in public esteem.
– I wish the Treasurer good luck in raising the loan. Evidently the honorable member for Melbourne (Mr. Calwell) does not.
– Last year, the budget introduced by the right honorable gentleman, when he was Prime Minister, was condemned by a majority of honorable members of this chamber, and rightly so. I desire to see the credit of the nation used in a greater measure than the Government proposes to use it. I do not like the idea of passing legislation to float loans totalling £200,000,000, as if it did not matter whether the interest rate was 3 per cent, or any other figure. In my opinion, the proposed rate of interest is too high, and the burden that will be placed upon taxpayers will be too great for them to bear. If the Government will not raise the money by taxation, the Treasurer should endeavour to obtain it by way of interest-free loans. There are many well-to-do people in the Commonwealth who could lend their money without interest. Nothing is so nauseating as to hear speakers at loan rallies urging the people to invest their money in war loans, because they represent a good investment. The speakers say that government bonds are as good as anything in the industrial field or elsewhere. Many speakers, particularly those from the non-Labour side of politics take this materialistic and mercenary view of thi matter.
– Is not the honorable member damning the loan with faint praise?
– Parliament is not helping the morale of the people when some are asked to fight for 6s. a day, whilst others are asked to invest their money at a good rate of interest. I object to people being told that their contributions to war loans represent a sacrifice on their part; the sacrifices of a soldier who offers his life, and those of the investor who puts his money into government, bonds, the safest form of security, are not comparable. The whole system is fundamentally wrong. Instead of raising money in this unsound manner, the Government should resort to controlled inflation. Contrary to the statements of honorable members opposite, inflation can be controlled. The use of the national credit represents a form of deferred taxation. Of course, the Opposition, being tied to the banking institutions, is not anxious to see a system of credit expansion adopted. I know that honorable members opposite do not desire the banks to be nationalized. If the Government introduced a bill to nationalize the banking institutions, our opponents might have something of which to complain. To date, they have had no reason to protest against an attempt to introduce any form of socialization. Although they have put up one or two sham fights upon compulsory unionism, no real challenge has yet been made by the Government to the edifice of capitalism. I am firmly convinced that the Allies cannot win’ the war while they adhere to the capitalistic system. If production is regulated by the profit motive, we cannot have an all-in war effort, and without an all-in effort, we shall fail.
We cannot have total war while those who control the means of production, distribution and exchange dictate the quantities of goods and necessaries that they are prepared to produce. The Leader of the Opposition, who is a great defender of the present order of society, will find before the expiration of many years that the public will be ahead of him and his party, and. will insist upon the scrapping of the system which allows the present domination of the many by the few. An integral part of the capitalist system is borrowing at interest. We cannot justify borrowing at interest for war purposes. There may be some justification for borrowing at interest if the money is spent upon reproductive works that will enable the money to be repaid. But we should not borrow at interest for war purposes, and leave the burden of debt to posterity. The Commonwealth owes £167,000,000 in respect of the last war.
– How does the honorable member explain the policy of the Soviet Government of borrowing at interest.
– The honorable member is at liberty to explain it.
– The explanation should come from the honorable member for Melbourne.
– The honorable member for Fawkner is probably more closely in touch with the Russian situation than I am. I inform him that I have no intention of explaining Germany’s financial system.
– Germany has managed pretty well under the capitalist system.
– The honorable member cannot have it both ways. He has stated that Germany has managed pretty well with its method of finance presumably because it has won many military victories.
-Germany and Russia pay interest on war loans.
– There is a difference between the Russian system and our capitalist system.
– Does the honorable member suggest that we should adopt Germany’s system?
– The Minister knows that I do not suggest it. I remind the honorable member for Fawkner, who talks about the success of the German finan cial system to-day, that people of his way of thinking told this country that after six months of war, Germany would be bankrupt and could not continue the struggle because its method of finance differed from the British system. Now, we are struggling along with an antiquated system which may have seemed satisfactory in other days. Our expenditure is reaching astronomical figures. The austerity campaign which was f orced upon 500,000 working people and their dependants during the depression from 1932 onwards, was a direct outcome of the system of finance that was adopted during the last war. When the right honorable member for North Sydney (Mr. Hughes) was Prime Minister, he floated loans, free of Federal and State income tax and bearing interest at rates as high as 6 per cent. At that time, people did not realize how outrageous such rates were. In subsequent years some Premiers of the States paid even higher rates of interestupon borrowed money. To-day, even 3 per cent. seems excessive.
The Leader of the Opposition advocated a system of compulsory loans upon which he was prepared to pay the workers 2 per cent. In those circumstances, I fail to see why a high rate of interest, if any interest is to be paid at all, should be paid upon present loans. I noted in the Treasurer’s speech the very small amount received from persons by way of gifts or interest-free loans, compared with the huge amounts that have been invested at interest. In all this expensive propaganda issued from the Government Printing Office and circulated amongst those who from platforms urge people to invest in loans, nothing is said about the desirability of gifts, or interest-free loans. No emphasis is placed upon those matters in the speeches made by leading representatives of the Government and the Opposition. It almost seems as if those methods of assisting our war finance are frowned upon. I do not agree with the system of borrowing at interest, and I shall not be held by future generations as being one who glibly supported legislation for the raising of huge sums of money at interest and thereby placed an almost intolerable burden, on their shoulders. The principle is wrong. Whatever system may be devised to replace it cannot be worse in its ultimate effects than that part of it which forms the basis of the legislation introduced by the Treasurer and commended so enthusiastically by the Leader of the Opposition.
.- It is quite evident that the honorable member for Melbourne (Mr. Calwell) entirely misunderstands the bill. If he had read clause 3, he might have found it unnecessary to speak. The clause reads -
The Treasurer may, from time to time, borrow, under the provisions of the Commonwealth Inscribed Stock Act 1911-1940, or under the provisions of any act authorizing the issue of treasury-hills, moneys not exceeding in the whole the amount of £200,000,000.
The honorable member has jumped to the conclusion that this bill authorizes the Treasurer (Mr. Chifley) to go on the market and raise £200,000,000 from the public at such rates of interest as may be determined from time to time.
– Interest has to be paid on treasury-bills.
– The honorable memher cannot shift his ground. Notwithstanding the fact that he is a former Treasury official, the honorable member needs to have the provisions of the bill explained. I shall not for the moment state my attitude except to say that I shall support the bill, as, of course, one must support any bill which the Government introduces for the purpose of war finance. Clause 3 authorizes the Treasurer, if he chooses, to raise the whole of the £200,000,000 by means of treasury-bills issued through the ‘bank and not one penny from the public.
– Interest has to be paid on treasury-bills.
– The honorable member is trying to shift his ground. He condemned the system of , borrowing on the open market at interest and advocated the use of central bank credit. This procedure is not so difficult when all is said and done. If the Government desires to borrow from the public, it may issue Commonwealth inscribed stock or Commonwealth bonds in return for investors’ money corresponding to the face value of the inscribed stock or bonds. The Government undertakes to pay to the investing public the rate of interest agreed upon and to observe the conditions of the loan prospectus. If the Government borrows from the Commonwealth Bank - the central bank - it issues treasury-bills, which are discounted by the bank. The bank pays to the Government the face value of the treasury-bills. Whether the money be obtained from the pu’blic or the bank, it is nevertheless borrowing, and it constitutes a liability on the Commonwealth, which I ask the honorable member for Melbourne not to forget. This bill gives to the Treasurer power to raise this £200,000,000 by either method or by both methods. The Government has announced that it will place upon the market a loan of £100,000,000, of which £23,000,000 will he for conversion of an existing loan and £77,000,000 new money. When the Government has raised that £77,000,000 of new money, as we all hope it will - we shall all get * behind it to ensure that it shall - it will still have to raise £223,000,000 before the end of next June in order to finance the deficit of £300,000,000 by which it is estimated that expenditure will exceed income. It may well be that the excess of expenditure over income will he £320,000,000 or £330,000,000, and, in that event, there will be so much extra to raise before the end of the financial year. This .bill authorizes the Treasurer to supplement, by means of treasury-hills,. the £77,000,000 of new money which is shortly to be borrowed on the open market. The bill deserves and cannot get other than the support of the Opposition. But I express now the fear that I expressed during the budget debate, namely, that the Government may be compelled before the 30th June next to raise through treasury-bills a larger amount of money than is wisely proportionate to the amount of its needs during the current year. Money raised on the open market will draw to the Treasury some of the money, the huge expenditure of which is embarrassing the Government and the country, but money raised from the central bank will mean the placing in circulation of money which has never been in circulation before, and that will swell the already huge expenditure fund. I shall not repeat the story 1 told in my speech during the budget debate. I merely rose to correct the honorable member for Melbourne (Mr. Calwell) and to state that, if there were any objection to this bill, it would be on the score that in giving to the Treasurer authority to raise £200,000,000 it empowers him to raise from the bank a larger sum than is wisely proportionate to the amount of the Government’s needs during the current year. If this bill authorized the Treasurer to raise £150,000,000 on the open market and £50,000,000 through the central bank, there would be less objection to it from my point of view, although that would still represent an inordinate use of the nation’s inner resources. This bill empowers the Treasurer to raise the whole £200,000,000 through the central bank - I know that he does not intend to do so - and is open to criticism on that score, but not on the score alleged by the honorable member for Melbourne.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Debate resumed from the 11th September (vide page 279), on motion by Mr. Chifley -
That the bill be now read a second time.
.- This bill, which can be described as a concessional measure, is made necessary, first, by the requirements of the war, and, secondly, by the imposition of uniform income tax. It is needed to overcome certain anomalies, particularly, overlapping anomalies as between the various States and the various previous methods of taxation. The bill has been considered by an allparty committee of honorable members, whose recommendations the Government has expressed its readiness to adopt. The most important matter is the relief provided for the mining industry. Partial exemption from taxation should be granted in respect of wasting assets, because the inevitable loss from investments in mines which have to be worked to a maximum capacity to produce minerals essential to the war effort must be classified as a capital loss. The working of such mines is very important to the nation’s war effort. The effect of the proposed amendment will be to reduce the maximum rate of tax from 216d. in £1 to 172.Sd., with the right of appeal to the Board of Referees for greater relief. Twenty per cent, of the present net income from mining will be exempt from tax, and that portion of the profits will be free from dividend tax in the hands of shareholders. This provision is deficient in that the dividend must be paid wholly and exclusively out of the exempt mining income, and therefore the benefit of section 44 (3) of the act will be limited to one-fifth of the dividend of the mine. If exempt profits are overestimated by £1, the whole of the dividend will automatically become taxable, because the dividend will not have been paid “ wholly and exclusively “ out of exempt income. This applies to companies which want to pay as dividends the whole of their incomes which they consider to be exempt. Under section 44 (3) a dividend of £20,000 paid out of a profit of £36,000 will be exempt only in respect of the first £4,000. In my view, the exemption should he extended to cover the whole of the profits. Companies had no notice of the Government’s intention, and could not have declared, before the 30th June, 1942, a dividend wholly and exclusively out of the percentage of its profits, which the Government’ now proposes to exempt. There is no provision in the bill for exemption from tax in the hands of shareholders of dividends paid between the 1st July, 1942, and such date as would be reasonable, after the notification of these proposals, for com,panies to arrange to declare their dividends as being “ wholly and exclusively “ out of the exempt mining income. The next important provision of this bill relates to depreciation. The standard rates allowed -up to the present time do not provide for exceptional losses arising from the installation of new plant and buildings for war purposes, or from the high-speed use of equipment in compliance with the demands of government departments. Unfortunately, the allowance to taxpayers will not. be available to them during the war, when the money will be needed to meet the cost of new plant. Obviously, there should be some adjustment with regard to depreciation. Depreciation that was considered reasonable in normal times, when probably only one shift was worked, must necessarily be regarded as totally inadequate to-day when plant is being worked 24 hours a day. The amendment proposed in the bill will meet the position in some degree, but there are other deficiencies that should have been taken into account. The bill provides that adjustments will be made in the year in which compensation is receivable, instead of at the time when compensation is actually received. That is a very important point. Compensation on account of war damage or other causes over which the owners have no control may be receivable, to-day, but it will not be received, under the war damage insurance scheme, until after the war. That aspect should be cleared up.. The provision is not so liberal as it should be in the light of existing circumstances. No adjustment is proposed if assets are acquired by competent authorities for the purposes of the present, war. Technically, a profit will be shown, although the asset will have been removed from the taxpayer just as though the acquisition had been compulsory. Why should not depreciation be allowed on buildings as a nominal matter, even if the rate be low, and no adjustments made on sale if a sale is effected. Various bodies have recommended that allowances be made for the payment of State taxes for all years prior to the income year 1940-41. The act provides an allowance in respect of the payment of State taxes. But there may be circumstances in which delays in effecting adjustments, or in dealing with objections, or in making investigations over many years have bren brought into account, and it is reasonable to submit that State taxes paid in respect of years prior to .1040-11 should be allowable as concessions. Another important provision relates to expenditure on enemy raids precautions. Such expenditure is now treated, as an allowable deduction in certain circumstances, and the right of appeal to the Board of Referees is granted. The Government should deal wit/h this matter thoroughly and allow deductions in respect of expenditure incurred on enemy raids precautions during 1940-41. Unfortunately, this provision does not extend to the cost of restoring premises after the war to their original condition. ‘Certain enemy raids precautions have involved the alteration of buildings, and the allowance of deductions to the amount of the cost of such alterations is, in the circumstances, not sufficient.
The bill also contains a provision relating to payments by doctors and other professional men to funds providing benefits for fellow members of their professions engaged on overseas service. These payments should be allowable deductions, whether they be made pursuant to a written agreement or not. The bill provides that, where an agreement has been entered into in writing, an allowance shall be made. However, the fact of payment should be proof of an agreement. Recipients - should be assessed at personal exertion rates. I am aware of cases in which agreements have not been committed to writing; adjustments should be effected in respect of these transactions.
– There should be no difficulty about obtaining a signed agreement.
– There may be delay owing to the absence overseas of one party to the agreement. I bring this matter to the notice of the Treasurer because it could be rectified without difficulty. ‘Concessional deductions in respect of gifts by companies to charitable institutions are allowable for the year ended the 30th June, 1942, and an amendment is foreshadowed to provide for such deductions in the future. This course is justified, for many companies have made commitments in respect of future gifts. It is a matter for regret, however, that the Government is not providing for such deductions in relation to the tax upon undistributed income. As gifts are encouraged, in respect of the 6s. part of the tax, I can see no reason why they should he discouraged in respect of the 2s. tax on undistributed income.
– That matter is covered by the provisions in relation to deductions from taxable income.
– I do not think that it is sufficiently covered. At any rate there is some ambiguity which should be eliminated. The bill also leaves untouched a number of major problems, the chief of which relate to proprietary companies. That aspect of our taxation law should be looked into without delay. No effort has been made to meet the position of taxpayers, who, in respect of the income year 1940-41, were required to pay taxes amounting to more than 20s. in the £1. I am aware that under the uniform income tax provisions such a position will not arise in the future; but some injustice has already been done mainly through the lack of co-operation by certain States, and it would be desirable, in my view, for the Commonwealth Government to make such adjustments as may be necessary. The Treasurer expressed the hope some time ago that amicable arrangements would be made between the Commonwealth and State taxing authorities for a ceiling at 18s. in the £1, but that hope was not realized. The result has been that some companies and individuals, have had to pay more than 20s. in the £1 in Commonwealth and State taxation. It would be a gracious act on the part of the Commonwealth Government to make adjustments in those cases.
– Is the right honorable gentleman suggesting that the Commonwealth Treasurer should make the adjustment out of ‘Commonwealth funds?
– I am aware that the injustice has been caused in consequence of the unwillingness of certain State governments to co-operate with the Commonwealth to remove the injustices.
– TheCommonwealth Government has done its best to secure agreement. Adjustments could be made equitably only out of State moneys.
– I realize that, but it seems to me that the adjustment could be made part and parcel of the uniform income tax scheme.
– But the adjustment should be made out of State moneys.
– I would say so.I hope that the Government will take an early opportunity to deal constructively with the position of private companies, many of which are so placed that they cannot protect their assets against a fall in values which is expected to occur after the war. Many such companies will be unable to take their part in post-war reconstruction plans unless the present unfair incidence of taxation in respect of them is removed. I am glad that some of the anomalies in our taxing legislation are being removed! by this measure, but I urge the Government to turn its attention to the other matters to which I referred. I wish the bill a speedy passage.
.- Obviously, this is a measure which may be considered more effectively at the committee stage, and I shall defer certain of my remarks until that stage is reached. I wish, however, to make some observations on matters to which the Leader of the Opposition (Mr. Fadden) has referred, and which the Treasurer (Mr. Chifley) mentioned in his second-reading speech. In particular, I call attention to the anomalies which havearisen from alimony payments. These have come about principally because of the new scales of tax that have become effective in the last two or three years. In my view, the solution of the problem is not to be found in amendments of our taxing legislation.
The Government has not been sufficiently generous in the exemptions provided for members of the fighting services. Soldiers serving outside Australia enjoy certain tax exemptions under the existing law. In fact, their position is much more advantageous than that of the servicemen located in Commonwealth territories. It is easy to understand how the existing anomalies arose. At the time the concession to servicemen was first granted there appeared to be little likelihood of our men risking their lives in action in Commonwealth territory. That is no longer the case. To-day men in the Navy, Army or Air Force within Australia are, in my view, entitled to the same concessions as those serving in the forces beyond our shores. Tinder the provisions of this bill some concessions have been granted, but they are insufficient. Unfortunately, if this bill passed in its present form the anomaly between the servicemen serving beyond Australia and the servicemen serving within the country will have added to it an anomaly as between groups of men serving within Australia itself. I believe that the Government recognizes these anomalies. I am not prepared at the moment to express a specific view as to what should be done to meet the case; but I hope to deal with the subject in committee.
The Leader of the Opposition referred to the position of private companies. I remind the Government that a heavensent opportunity has been provided for it to simplify the whole income tax machinery of the Commonwealth. This was not possible until the passage recently of our uniform income tax legislation. Formerly seven systems of income taxation were operating within Australia, and it was almost impossible to make a change in one system without adding to the complications in another system. In meeting one problem another problem was almost invariably caused. Not only were there seven systems of income taxation, but there were several different taxes operating within each system. I believe that, altogether, we had in force more than twenty different systems of income taxation. Honorable members will recognize the impossibility, under such conditions, of establishing a simple, effective, and economical system of taxation. I realized it in 1935-36 when, on behalf of the State of New South Wales, I endeavoured to discover a system of taxation that could apply uniformly throughout the six States and the Commonwealth. I found that it was impossible to proceed farther than a certain point. I also found that no sooner ‘had the decision been made in regard to certain changes of one system of taxation than amendments by another government would nullify the effect of what had been done. One system of taxation now operates over the whole of Australia, and I do not believe that the people will consent to a reversion to the practice that it superseded. The Commonwealth Government now has the opportunity to clinch the matter, .by making the system so economical, thorough and complete, that the people will realize what sheer madness it would be to revert to the situation that existed at the beginning of this year. I shall not endeavour to recite the complications, but shall merely ask honorable members to believe - many of them already do - that the income tax laws simply reek with the most extraordinarily difficult and complicated methods of collecting tax. Like Topsy, they “ growed “, and they have continued to grow ever since, the Commonwealth entered the field of taxation in 1915. Both the Commonwealth and the States added one trouble to another, until the present extraordinarily complicated system was evolved. We now seem to cherish it, to regard it as something that belongs to us: we begot it and must not allow it to go, but must hang on to it with hooks of steel. We would do n wonderful job for the nation, if, during the next few months, we studied the situation calmly and quietly and evolved a system of taxation that was simple and effective. It would effect an improvement of the machinery of war .finance. The Treasurer would know where he stood, and the taxpayers and the nation would have a better understanding of the position. The problem is not capable of immediate solution, but must be considered quietly and carefully over a period. For the first time in the history of the Commonwealth, the opportunity now exists for the Government to deal constructively with the whole of the income tax system.
I wish to add a word to what the Leader of the Opposition (Mr, Fadden) has said in regard to those taxpayers who, in respect of the year 1940-41, paid more than 20s. in the £1; some of them considerably more. The fault lay, not with the Commonwealth Government, but with the States, some of which failed, whilst others refused, to co-operate with the Commonwealth in legislating for a ceiling rate of 18s., and making refunds to taxpayers. But whether the fault be laid at the door of the Commonwealth or the States, it certainly cannot be ascribed to the taxpayers affected. I do not believe that any government in control of this Parliament and nation desires- or did desire when the legislation was introduced - that through the sheer anomalies associated with the incidence of taxation, certain taxpayers should pay more than 20s. in the £1 on that year’s income. I grant that the operation of the uniform income tax law will obviate the difficulty in the future, and that it will not apply in respect of the financial year 1941-42. But it continues to operate in respect of the year 1940-41. Many of those who paid such a heavy impost have .honestly and well contributed to the war funds of the Commonwealth. The Government should continue to negotiate with the States for an amendment of their laws providing for the deduction of the difference from the funds payable to them under the uniform tax law. If that cannot be done, in these days when we are dealing with hundreds of millions of pounds it would not be too much to ask the nation to make repayment to the taxpayers concerned from Commonwealth funds. In the aggregate, the amount would not be very large. I ask the Government not to drop the matter; because injustice and harshness have .been applied to persons who did not deserve to be so treated. I urge the Government to endeavour during the remainder of the financial year to discover mean3 whereby the matter may be adjusted
The honorable member for Parkes (Sir Charles Marr) has reminded me of instances in which companies trading outside Australia lost permanently the value of deductions on account of State income tax in 1940-41. I should prefer to give the Treasurer the details privately, because the matter is complicated and I have not the particulars with me. I do not suggest that this bill ought to be so amended as to deal with the matter; yet it is related to those cases in which more than 20s. in the £1 was paid in 1940-41.
. -I regret that the Government has not reviewed the policy under which company tax is assessed, the individual income taxpayer being refused the right to treat as a rebate the amount of tax paid by the company of which he is a shareholder. The effect is to cut right across the traditional policy of taxation according to capacity to pay. Perhaps I anticipate the Treasurer (Mr. Chifley) when I acknowledge that a government of which
I was a supporter first introduced this principle when it taxed companies at the rate of 2s. in the £1.
– Was not the honorable gentleman a member of that Government?
– I accept the charge if the memory of the right honorable gentleman is more accurate than is mine. I am quite sure that had we known or considered that the rate of tax would rise to 6s. in the £1, apart from excess profits tax, there would have been a very different state of mind in regard to it. The policy is now working an injustice, in that rich and poor alike are taxed at the one rate. The significance of the operation of the policy was not brought home to me clearly until the proposal to limit profits to 4 per cent, was ventilated and given some notoriety in the country. In common with other honorable members, I received a large number of letters from persons who would have been affected had that policy been pursued. That the largest proportion of these communications was from, first, women, and secondly, persons of very moderate means, was most noticeable. I, perhaps, realize clearly for the first time just how serious would be the effect of this policy on such shareholders. One must assume that the effect is to lay an unduly heavy burden on persons with moderate capital invested in companies. I do not think that this policy should be continued for long. It was introduced as a means of raising revenue for war purposes and, with the same idea in view, the present Government has increased the rate. Nowhere else in the Empire is this system practised. Elsewhere, if taxation is levied on companies, a rebate is allowed to the shareholders. I suggest to the Treasurer that the matter might be reviewed in. the light of our experience since the outbreak of war. As things stand, it works an injustice, and the longer it continues the greater will the injustice be.
.- I agree that the only fair system of company taxation is one of complete rebates when the profits are distributed to the shareholders as dividends, but we never have had that system. The amendment introduced by the Government of which the honorable member for Fawkner (Mr. Holt) was a member, took away the rebate, but even if that were restored, it would not do justice to the shareholders, because it would not benefit people who did not have a taxable income, whilst the full rebate never went to any one unless his rate of tax was equal to the company rate. When the company rate is 6s. in the £1, the. shareholder would not receive a full rebate unless his rate of tax were also 6s. in the £1.
– There is an opportunity for the Labour Government to improve on our policy.
– Yes; and I believe that, but for the exigencies of war, the improvement would have been effected. I have always favoured the English system : Taxation of profits in the hands of the company and, when they are distributed to the shareholders, the company tax to be rebated in full to all the shareholders. I supported the abolition of the rebate because it was not a just system of rebate.
The Leader of the Opposition (Mr. Fadden) referred to the taxation ceiling of 18s. in the £1, Commonwealth and State combined. I agree that negotiations might be re-opened with the States on this matter, but I do not agree that any further concessions should be granted at the expense of Commonwealth revenue. The Commonwealth has already made its contribution, and any concessions in respect of excess State taxation should now be made at the expense of State revenue.
Sitting suspended from 6.15 to 8 p.m.
.- Although this bill is essentially a measure for consideration in committee, I desire to direct the attention of the Treasurer (Mr. Chifley) to various matters so that he may ‘have an opportunity to draft the necessary amendments. When the uniform income tax legislation was being debated, I pointed out the complications that would result from the system of rebates which was then introduced, instead of the usual concessional deductions. I informed the House that no ready reckoner would ever be able to cope with the new form of rebates, and that every assessment would have to be dealt with individually. I also indicated the different formulae for calculating the rates of tax on income from personal exertion and from property, and I believed that the experience of the Taxation Department in dealing with these matter-; would result in the introduction of amendments to overcome the difficulties. Every individual should have the opportunity to follow intelligently his own personal assessment. He should have some knowledge of the amount of tax that he will be required to pay, and should not be expected, if his assessment be a little complicated, to seek advice from taxation experts. But that will happen under the present method of computing personal assessments. I should like the Treasurer to say whether he will evolve a simplified method, so that every taxpayer may have a knowledge of the way in which his assessment is calculated.
The bill provides, inter aiia, for the partial exemption of income derived from certain rnining operations. In my opinion the allowable deduction of 20 per cent, is little enough. Most mining companies, particularly those engaged in tin mining, have wasting assets, and the present, method of taxation makes it impossible for them to repay the capital subscribed during the life of the mine. In many instances 50 per cent, of the capital of the company will be absorbed by taxes. Whilst I agree that 20 per cent, is a useful concession for most companies, it is not excessive, and it will not be completely equitable. Where cases of hardship occur, the Treasurer should be prepared to grant to them lenient treatment.
One anomaly seems to have passed unnoticed. It appears in section 122 of the Income Tax Assessment Act and has been repeated in clause 6 of the bill. The clause provides that mining companies shall be allowed a deduction of 20 per cent, from the taxable income as a depletion allowance, and this exemption will extend to dividends paid wholly and exclusively out of profits represented by the special allowance. Another allowance is provided in section 122 of the Income Tax Assessment Act which reads -
Where a taxpayer who derives income from carrying on mining operations in Australia (other than coal-mining) expends capital in necessary plant and development of the mining property from which that income is derived, a proportionate part of the amount expended, arrived at by distributing that amount proportionately over the estimated life of the mine as at the date of the expenditure, shall be an allowable deduction.
The section provides that the allowance shall extend over the capital consumed during the life of a mine. As this represents capital,’ I submit that when a dividend is paid wholly and exclusively out of such funds, that dividend shall be exempt in the hands of the shareholders. That anomaly should be rectified. Earlier I was under the impression that it would be ironed out, but evidently no attempt has been made to do so.
Proposed new section 72b provides that expenditure incurred in connexion with air raids precautions shall be an allowable deduction ; but sub-section 2 states - (2.) Where any such expenditure creates an enduring benefit to the taxpayer, other than the benefit of such protection, the deduction otherwise allowable under the last preceding sub-section shall be reduced by an amount equal to the value of the enduring benefit so created.
Whilst I am in accord with that provision, I consider that it should not be left to the Commissioner of Taxation to determine what constitutes an enduring benefit. A board of referees, who shall be specialists, should be appointed to judge whether the work undertaken, such as air raid shelters, will be of enduring benefit to the firm. The Commissioner of Taxation may have no knowledge of this subject. I feel sure that the Treasurer will see the wisdom of this contention.
Proposed new section 81, which relates to deductions for members of the defence forces, is one of the most contentious provisions of the bill. At present, the military pay of a member of the Australian Imperial Force beyond Australia is exempt from taxation, and this amendment seeks to extend that exemption to all soldiers whose military pay does not exceed £250. By a series of graduations, the exemption disappears when the military pay exceeds £350 per annum. From time to time, honorable members have directed attention to anomalies created by the Income Tax Assessment Act. A pilot may operate a bomber based at Horn Island or Darwin. Over Port Moresby his machine is met by a screen of fighters. He unloads his bombs upon enemy targets, and returns to his base. The fighter pilots at Port Moresby arc not required to pay taxes, but the pilot of the bomber is not exempt. This anomaly is inexplicable, but I concede to the Treasurer that, regardless of where the ceiling may be fixed, anomalies will occur. The only solution is to create one force, and to tackle the problem on that basis. The Treasurer should try to overcome the problem by adopting the most liberal basis. Doubtless he will inform me that the Government could not afford to forgo the revenue that the adoption of my suggestion would meaD. The exemption should be granted to all soldiers in operational units or in operational areas. Though the scope is wide and will involve a large sum of money, I remind the Treasurer that the greatest taxable field in Australia is still untouched. It is only fair that men who are laying down their lives for their country should receive some consideration. I do not know how my proposal can be given effect, or whether it will be possible to apply a scheme whereby all those in “cushy” jobs shall be compelled to contribute to a fund to reimburse the Treasury for the loss of revenue incurred by granting the exemption to members of the forces. Some workers are earning £15 a week, and enjoy security and comfort, whilst soldiers are laying down their lives for a much smaller remuneration. Many of them will return to Australia so injured that they will be unfit to work. They should receive protection. The income-earning groups under £400 a year constitute a field of £590,000,000, which contributes comparatively little by way of taxes.
– Does the honorable member say that the man who is earning £15 a week is not taxed!
– No ; but he is not being taxed on the same basis as is the soldier.
– Many workers would have enlisted for service overseas if they had been allowed to volunteer.
– Does the Minister suggest that they should pay little or no taxation, while the soldier is penalized?
– The honorable member referred to men in “ cushy “ jobs, who are shirking their duty.
– I did not say that they were shirking their duty. The Minister should not misrepresent me. I said that those men who had remained in industry still enjoyed the comforts and security of civil life. The soldier abroad has no security and very little comfort. Their conditions are not parallel. Whilst I realize the difficulties, I contend that some portion of that taxable field of £590,000,000 should be earmarked for the purpose of defraying the sum that will be lost to the Treasury if military pay and allowances be exempt from income tax. I have no doubt that the Treasurer is aware of the anomaly, but he should be reminded of it from this side of the House.
I am not unmindful of the fact that the introduction of the uniform income tax has necessitated a tremendous amount of collation and co-ordination in order to restore our system of taxation to an equitable basis. The Treasurer must grant to private companies a greater measure of justice. If he neglects to do so, many of them will be forced to adopt means to evade their obligations. Some private companies pay the primary tax of 6s. in the £1 and other taxes up to 18s. in the £1, with the result that they ultimately pay at a rate exceeding 20s. in the £1. This forces them into partnerships, and to adopt various methods to evade the payment of taxes. People who by initiative and enterprise have developed valuable businesses and have formed them into private companies should not be penalized. They must not be forced into bankruptcy because their taxes amount to more than they earn.
– Does the honorable member not think that the principle of private companies is bad?
– The proprietary company gets all the benefits and bears none of the disadvantages of the public company.
– The honorable member apparently believes in monopolieswhich swallow all the small concerns. I always had the impression that the honorable member’s party was opposed to monopolies.
Another matter which ought to occupy the Treasurer’s attention is the fact that costs incurred in unsuccessfully fighting a legal action are not allowed as deductions from the income of companies in the assessment of their income tax. Having been expended, the money cannot be distributed as dividends. These legal expenses must have slipped by the attention of the Treasurer’s advisers. They were allowable under the New South Wales Income Tax Management Act. Under section 141, which relates to private companies, the expenditure was allowed for the purpose of arriving at the amount of undistributed income; but the uniform income tax legislation cuts across that. The Treasurer also ought to give his attention to the expenditure of companies on gifts. This expenditure is not allowed as a deduction; but I think it should be.
In his second -reading speech, the Treasurer said that the Government had decided to refer to the Special Committee on Taxation for consideration a recommendation of the Taxation Advisory Committee that periodical payments of alimony and maintenance be treated as assessable income in the hands of the recipient, and that a deduction of the amount paid be allowed to the payer. The Treasurer should ensure that the amount of alimony paid to the nonguilty wife who is keeping herself and the children of the guilty husband should not be so reduced on account of taxation that the wife was not able to rear her children in the manner befitting them. In an endeavour to do justice to the man the Treasurer may do an injustice to the wife, and I know that is not his wish. The Treasurer is working towards a just income tax system; but I suggest that the system would work more smoothly if the formula were simplified.
– in reply - I do not propose to deal with all the matters raised in the second-reading debate. The honorable member for Robertson (Mr. Spooner) and the honorable member for Wentworth (Mr. Harrison) raised the matter of the taxation of private companies. Their position will be examined ; but that examination cannot be made in this chamber while the bill is being passed. From time to time matters come to the
Taxation Office, which, prima facie, seem to have a lot of merit; but examination frequently discloses that they have none at all. This bill has been closely examined byme and my taxation officials, with the valuable assistance of the right honorable member for Yarra (Mr. Scullin) and the Special Committee on Taxation. I take this opportunity to express my appreciation of the work that has been done by the members of that committee. Its members, from the Government side and the Opposition side alike, have had a great deal of experience, technical and political, of taxation matters, and they have done most valuable work. I recall that when I was formerly a member of this Parliament governments did not have the assistance of such a committee, and the result was that taxation legislation was amended as it passed through the chamber, and very often the result was that, in seeking to correct certain anomalies, honorable members intensified them or created others. All the points raised by honorable members will be examined by the taxation officials, myself, as Treasurer, and the committee, which, I remind honorable members opposite, includes such qualified representatives as the right honorable member for Kooyong (Mr. Menzies), the honorable member for Robertson (Mr. Spooner). the honorable member for Warringah (Mr. Spender) and Senator Spicer. If necessary, a further amending bill will be brought down. The only matter contained in this bill which was not dealt with by the special committee is that relating to the taxation of soldiers’ pay. The Opposition members of the committee, on the ground that it was a matter of government policy, decided that it was not worth while going into that matter.
– The committee agreed to allow the matter to be dealt with when it came before Parliament.
– Yes. All the other aspectsof the bill were closely examined. In view of that, it would be foolish to fiddle about with this measure again. The matter of alimony has had the consideration of the committee, which recommended that it could be more properly dealt with by regulations than by amending legislation. Possibly the courts will be able to take into consideration the changed circumstances that have arisen as a result of the increased taxation. I hope that the Attorney-General (Dr. Evatt) will inquire what can be done to meet the position. I think I have read in the newspapers that the registrars are already givingsome consideration to that matter in cases which come before them.
Contrary to the opinion of some other honorable members, I think that the system of rebates of tax is preferable to concessional deductions from income. We were told that it was not possible to prepare a ready reckoner that would completely satisfy needs; but I have had handed to me by the Taxation Office a most complete ready reckoner, possibly the best ever prepared in this country. It will save a tremendous amount of work for those who have to compute assessments in regard to companies and individuals. Honorable members will find the ready reckoner a most useful compilation.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 5 agreed to.
Clause 6 -
After section twenty-three of the Principal Act the following section is inserted: - “23a. - (1.) Where a person carries on mining operations in Australia (other than coal -mining) for the purpose of producing any base metal or rare mineral which is specified in the regulations as required for use in, or in connexion with, the prosecution of the present war, so much of the assessable income derived from those operations as is equal to twenty per centum of the amount remaining after deducting from that income -
all allowable deductions which relate to that income; and
any other allowable deductions, or part thereof, which, in the opinion of the Commissioner, may appropriately be related to that income, shall be exempt from income tax.”.
Amendments (by Mr. Chifley) agreed to -
That in proposed new section 23a (1.) the words “ the purpose of producing “ be left out with a view to insert in lieu thereof the following words : - “ a purpose which includes the production of “.
That in proposed new section 23a (1.) the words “ so much of the assessable income derived from those operations as is equal to twenty per centum of the amounts remaining after deducting from that income “ be left out with a view to insert in lieu thereof the following words: - “an amount equal to twenty per centum of the amount remaining after deducting from the assessable income derived from those operations”.
– I drew the attention of the Treasurer to an anomaly that will obviously arise out of this clause. Will he consider introducing an amendment now in order to remove that anomaly?
– I do not admit at this stage that there is an anomaly.
– I should like the honorable gentleman to investigate the matter with a view to taking action to rectify any anomaly that may exist.
– I agree to do that.
Clause, as amended, agreed to.
Clause 7 -
Section forty-four of the principal act is amended -
by inserting in paragraph (b) of sub-section (2.), before subparagraph (iii), the following subparagraph : - “ (i) so much of the income derived by a company as is exempt from income tax by reason of section twentythree a of this Act; or”; and
Section proposed to be amended -
(2.) The assessable income of a shareholder shall not include dividends -
– I move -
That the words “ so much of the income derived by a company as “ be left out with a view to insert in lieu thereof the following words: - “the amount of the income derived by a company which “.
– Will the Treasurer give some explanation of the meaning of these amendments ? The committee is not aware of the effect that they are likely to have and it is essential that we should know something about them. The work of the special taxation committee which drew up these amendments is shrouded in great mystery. The results of its deliberations are made known only to the Treasurer, and honorable members and taxpayers generally have no knowledge of what the amendments mean. If the Treasurer will explain them now, we shall know what bearing they will have on the taxation law.
– A list of explanations has already been circulated to honorable members.
– And they are very lucid. I appreciate that.
– We have gone to a great deal of trouble to inform honorable members of the Government’s proposals in this measure. The proposed amendment is designed to express more clearly the intention of the Government to exempt from income tax any dividends paid wholly or exclusively out of the amount of income exempted under the proposed new section 23a. It does not alter the purpose of the original clause.
.- As the Treasurer has said, this amendment will express more clearly the intention of the bill that, when a mining company pays dividends out of the exempt income that is created by clause 6, that exempt income shall be free of tax in the hands of the shareholders when distributed in the form of dividends. I believe that the effect that the Government has in view would not be achieved unless a company declared a separate dividend in respect of all these amounts of 20 per cent. In the opinion of legal authorities the proposed amendment will express the Government’s wishes more clearly.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 8 agreed to.
Clause 9 -
After section fifty-nine of the Principal Act the following sections are inserted: - “ 59b. - Where any building is constructed “ (4.) For the purposes of this section -
the term ‘building’ shall include any alteration, addition or extension which is made, after the thirtieth day of June, One thousand nine hundred and thirty-eight, to any existing building;
the net cost of the building shall be deemed to be an amount equal to all expenditure of a capital nature incurred in constructing or acquiring the building less -
any sum provided, or to be provided, directly or indirectly, by the Commonwealth or a State, or by any public authority of the Commonwealth or a State, towards the cost of constructing or acquiring the building, not being a sum provided or to be provided by way of loan;” “59d, - (1.) The Treasurer may, on the recommendation of a Board of Referees, appoint such expert and technical advisers as the board recommends to assist the board on the hearing . of any application under section twenty-three a, section fifty-nine a or section fifty-nine b of this act.”
– I move -
That in proposed new section 59b (4) (b) the word “ less “ be left out with a view to insert in lieu thereof the following words : - “ , and, where the taxpayer, in consequence of the construction or acquisition of the building, has ceased to use any other building which he had used in carrying on his business, shall include such amount of any loss (not being a loss which is an allowable deduction) sustained by him as a result of that cessation as the Board of Referees determines, less in any case”.
The purpose of these amendments is to include within the provisions of the principal act cases in which a taxpayer, in consequence of the construction or acquisition of a building, ceases to use some other building which he had used previously in carrying on his business. It has been stated that, in some cases, a taxpayer, instead of extending his existing building, has removed to new premises because the old premises were unsuitable for war production purposes. In these cases, the taxpayer may have suffered a loss through vacating the old building. The proposed amendment provides that, in calculating the net cost of the new building, any loss which the taxpayer may have suffered as the result of vacating the old building will be included. The amount of the loss to be so included will be determined by the board of referees.
Amendment agreed to.
Amendment (by Mr. Chieley) agreed to-
That, in proposed new section 59d (1.), the words “, or section fifty-nine b”, be left out with a view to insert in lieu thereof “, section fifty-nine b or section seventy-two b”.
Clause, as amended, agreed to.
Clause 10 agreed to.
Clause 11 (Rates and taxes).
.- Recently I drew the attention of the Treasurer to the fact that complaints have been received from various parts of the Commonwealth as the result of the action of municipalities in increasing rates, at a time when rents from propertieswere fixed by national security regulations . The Treasurer said that there would be some difficulty in taking Commonwealth action to limit municipal valuations, even though the effect of the increases might be to deprive the Commonwealth Treasury of a certain amount of income. However, he said that he would investigate the matter, and I now ask him whether he has had an opportunity to do so, and if so, whether he has any statement to make.
– The honorable member for Fawkner (Mr. Holt) has touched on a delicate subject. I have received several letters which indicate that certain localgoverning bodies are increasing their rates. For that reason I have caused inquiries to be instituted to discover whether the move in that direction is widespread. I have also drawn the attention of the Government of New South Wales to the matter, pointing out that it is causing some concern. Such action by the local-governing bodies could be dealt with in two ways: First, steps could be taken to prevent such increases, and, secondly, increases of rates could be allowable deductions for income tax purposes.
– Increases of rates could be made only with the consent of the Treasurer.
– In either case the result would probably be unsatisfactory. It seems to be rather impertinent for local-governing bodies to increase rates at a time when they are unable to render the service that they formerly provided for their ratepayers. Because of war conditions, it is not practicable for localgoverning bodies to maintain their roads in the order that was formerly reckoned to be desirable, for road-making machinery has been requisitioned for other purposes and man-power is not available for normal road work, nor are ratepayers able to use the roads as much as they formerly did because of petrol shortages and other restrictions. I am having the subject examined, and I shall refer it to Cabinet in due course.
.- This is the time for the Government to take action to prevent local-governing bodies from increasing rates. As a rule, rates are struck in January or February, and if action be not taken within the next month or two, it will be too late. What is happening is that localgoverning bodies and some semi-governmental authorities are finding that their normal financial resources for works programmes are restricted. Usually, moneys for such purposes are raised from current revenue and from special loans which are sometimes raised with the endorsement of State governments, and sometimes, for larger amounts, with the approval of the Loan Council. Very properly, in view of war conditions, loan money is not now available to local-governing bodies in any great amount.It is proper that the Commonwealth Government should have at its disposal all the financial resources of the country in order to proceed with our war effort. Some local-governing authorities, having found that their loan resources are not now available in the normal way, are striving to increase their funds by increasing their rates. If this procedure be permitted to continue, the financial resources of the Commonwealth Government will be adversely affected, because ratepayers who are called upon to pay increased rates will have so much less money to contribute to war finance. At a time when private individuals and companies are being required to restrict their spending to essential needs, thus reducing the demands upon man-power and material and releasing money for war purposes, it would be proper to oblige local-governing authorities to conform to the same requirements. Action should be taken at once to achieve this end.
I wish now to refer to the proposal of the Government of New South Wales to impose a land tax on rural land-holders. If that proposal becomes operative, the result will be the same as if localgoverning bodies are allowed to increase their rates, for in each case the capacity of taxpayers to make more money available to the Commonwealth for war purposes will be reduced. No State authority should be allowed to increase its imposts on citizens at a time like this. All the money available should be at the disposal of the Commonwealth Government for war purposes. It has been stated that the proceeds of the proposed land tax in, New South Wales are to be paid into a special fund and used for repatriation purposes. I have always understood that repatriation was a Commonwealth function. I therefore hope that the Treasurer (Mr. Chifley) will give immediate consideration to this subject. State taxes should not be increased at this stage. During the war period it will not be practicable for the State governments to increase the income tax, so we should make it impossible for them to increase other taxes.
– I appeal to the Treasurer (Mr. Chifley) not to be influenced by the remarks of the honorable member for Robertson (Mr. Spooner) about the proposal of the Government of New South Wales to impose a hand tax. I agree with the general proposition that in these times State governments should refrain from increasing taxes in order that all the money available shall be at the disposal of the Commonwealth Government for war purposes ; but the proposed land tax in New South Wales is for a special purpose. The proceeds are to be paid into a special fund for the purchase of land for closer settlement, and particularly for the settlement of the soldiers who return from the war. The object of the State Government is also to break up large estates. I regard that as an excellent objective. If it can be achieved the result will be advantageous to the general public, and particularly to the returned men who will ultimately be settled on the land.
– It would be utterly wrong at a time like this to allow a State government to increase its taxes and, particularly, to enter a new field of taxation, as the Government of New South Wales is proposing to do. I am prepared to go a long way further than the honorable member for Darling (Mr. Clark) appears to be willing to go in dealing with State governments in war-time. I suggest to the Treasurer (Mr. Chifley) not only that he should take steps to prevent State governments from increasing taxation, but also that he should obtain access to the enormous revenues which the State governments are at present drawing from their transport systems. In my view, it is utter hypocrisy for the honorable member for Darling to talk, at this stage, about settling returned soldiers on the land. Very few soldiers have returned, so far, from this war; and we do” not know how long the war is- likely to last. Moreover, it would be difficult at present to obtain surveyors to survey and subdivide any large estates that might be acquired. Apart from the merit or demerit of the proposed State land tax, it must be obvious to all honorable members that this is not a time to apply such a policy. The Prime Minister (Mr. Curtin) has called upon the people generally to participate in an austerity campaign, and the State governments, in common with private citizens, should withhold from unnecessary spending.
.- An effort has been made by several honorable gentlemen to create a false impression concerning the intentions of the Government of New South Wales in connexion with its proposed land tax. The honorable member for Robertson (Mr. Spooner) and other honorable gentlemen opposite have suggested that the Treasurer (Mr. Chifley) should bring pressure to bear upon the Government of New South Wales to prevent it from imposing land tax. I point out that the purpose of the tax is not to raise revenue for ordinary governmental needs, or to impinge upon financial resources that should be available to the Commonwealth Government for war purposes. I make a comparison between the imposition of customs duties for the purpose of protecting industry and the imposition of a land tax for the purpose of encouraging closer settlement. It is a common thing for the Commonwealth Government to provide a bounty for the encouragement of industry. The Government of New South Wales is proposing to do something that will encourage closer settlement. The proceeds of the proposed State land tax are to be placed in a fund to be used to acquire large estates for subdivision for closer settlement. That is a policy that should be encouraged.
– How does the honorable member know that?
– I am not subject to cross-examination by the Leader of the Opposition in respect of what the Government of New South Wales is doing. I am making a statement upon information that has been broadcast by the Premier of that State, and by various speakers on behalf of the Government that he leads. The honorable member for New England (Mr. Abbott) stated that tremendous revenue was derived by the Government of New South Wales from its transport system. Both that Government and the Commonwealth Government have expended on the transport system large sums that are not producing any revenue. A fund that contains no finance could not provide sums for the purpose which the honorable member regards as meritorious, but not practicable at the moment. In a letter addressed by Mr. Cecil Hoskins, general manager of Australian Iron and Steel Limited, to’ Mr. Dunstan, secretary and executive member of the Development and Information Bureau of the Government of New South Wales–
– Is it confidential?
– Yes. But most of what is said in this Parliament is partly based on confidential information imparted to honorable members. When the information was conveyed to me, I was not asked to regard it as confidential; consequently, I consider that it ought to be made the property of this Parliament. At a discussion in Sydney between the general manager of the Australian Iron and Steel Limited and Mr. Dunstan, mention was made of the sum of £3,000,000 that had been expended by the Commonwealth Government and the Government of New South Wales on the transport system of that State.
The CHAIRMAN (Mr. Prowse).Order ! The honorable member must connect his remarks with clause 11.
– I am endeavouring to do so. A false impression was given to honorable members by a statement of the honorable member for New England, and I am attempting to correct it. A government that had expended £3,000,000 in assisting the war effort of the nation by placing its transport system on an orderly footing would not be able to draw from that source a very large amount with which to give effect to a policy that the honorable member for New England regards as laudable. I hope that I have disabused the minds of honorable members of the idea that the Government of New South Wales is deliberately encroaching on preserves which at present are the inalienable right of the Commonwealth.
Clause agreed to.
After section seventy-two of the Principal Act the following sections are inserted: - “72b. - (1.) Expenditure incurred by the taxpayer in the year of income for the purpose of protecting from hostile action by the forces of any country with which His Majesty is at war -
– I move -
That, at the end of proposed new section 72b, the following new sub-sections be added : - “ (6.) Where, in any assessment, the amount claimed by the taxpayer to he an allowable deduction under sub-section (1.) of this section is reduced by the Commissioner in pursuance of sub-section (2.) of this section, the taxpayer may, within sixty days after service of the notice of the assessment, in writingrequest the Commissioner to refer the claim to a Board of Referees, and the Commissioner shall refer the claim accordingly. “ (7.) Upon every such reference the Board of Referees shall determine whether the amount of the deduction allowed by the Commissioner should be confirmed, increased or reduced and every determination made by the Board under this section shall be final and conclusive. “ (8.) The provisions of Division 2 of Part V. of this Act shall not apply in respect of any matter which, under sub-section (6.) of this section, may be referred to a Board of Referees.”.
The clause provides for the allowance of deductions to taxpayers in respect of expenditure incurred in precautionary measures against enemy raids. Where, however, the expenditure creates an enduring benefit other than the benefit of protection from enemy raids, that expenditure shall not be allowed as a deduction. Differences of opinion may arise between the taxation authority and the taxpayer as to whether the expenditure has resulted in any asset of enduring post-war value to the taxpayer and as to the value of any assets so created. Under the present provisions of the act, a taxpayer who is dissatisfied with the decision of the Commissioner of Taxation on matters affecting his assessment has a right of reference to the Income Tax Board of Review. By the amendment, it is proposed to divert from the Income Tax Board of Review to the Board of Referees constituted under the War-time (Company) Tax Assessment Act cases in which the taxpayer is dissatisfied with the decision of the Commissioner in disallowing the whole or a part of his claim for deduction of the enemy raids precautions expenditure on the ground that an asset of enduring postwar value has been created by the expenditure. The functions of the War-time (Company) Tax Board of Referees are being enlarged in order to determine, in those cases that may be referred to the board, whether the special deductions for depreciation of plant and buildings used in connexion with the present war should be allowed. The Board of Referees is considered to be the appropriate authority to determine questions of a similar nature arising in claims for deduction of expenditure on enemy raids precautions.
.- Under the proposed new section 72b, expenditure incurred by the taxpayer in the year of income on enemy raids precautions is to be an allowable deduction. Returns will already have been lodged in respect of the year ended the 30th June, 1942, and these will not include claims for such deductions.
– I am informed by the taxation officials that the matter may be re-opened, and a fresh claim may be lodged in respect of such items.
.- As has been said, the bill gives to the taxpayer, in appropriate circumstances, the right to claim a deduction in respect of expenditure on enemy raids precautions during the year of income; and the Treasurer (Mr. Chifley) has stated that if the year of income should be the year ended June, 1941, amended returns may be lodged. There is another expenditure that I foreshadow. Eventually, it will be necessary for many taxpayers, at their own cost, to restore premises to their original condition. I hope that that time may be not far distant, even though many persons fear that it is a long way off. It will then be necessary to amend the income tax law, so as to enable the taxpayer to derive the benefit of a deduction on that account; because the cost of restoring premises to their original condition would be just as much war expenditure as the cost of establishing shelters in the first place. The Special Taxation Committee agreed with the Treasurer that the matter might be left over for the time being. I hope that the Government will deal with it in the next bill that is brought forward.
I take this opportunity to commend the Treasurer for having proposed to amend clause 12, so as to provide for claims to be submitted to the Board of Referees. Claims made by taxpayers in respect of expenditure on enemy raid shelters will relate to suras that are not ascertainable in the first instance. The cost of the air raid shelter will have to be decided. I have no doubt that the Commissioner will be able to deal with that matter. But in addition, whether or not the shelter creates an enduring benefit will have to be determined; and probably an inspection will be necessary in every case. The circumstances of the business will have to be considered, and a determination made as to whether or not the shelter as constructed is likely to-be useful. Obviously, that will be a matter of opinion. Therefore, it should be dealt with by a board to which this Parliament has given discretionary power in the determination of such questions. The Treasurer is acting wisely in amending the bill in that direction.
.- The Treasurer (Mr. Chifley) has given the assurance that if returns that do not include a claim for deduction in respect of amounts spent on air raids precautions have already been lodged, the matter may be re-opened. I have made inquiries from departmental officers, and from them I understand that special action will not be taken to communicate individually with taxpayers in order to bring to their notice the existence of this right, although I believe that wide publicity will be given to the fact that it is open to them. Will the Treasurer bear that in mind; because unquestionably many thousands of taxpayers may not be made aware in the ordinary course that it is open to them to lodge a fresh return including such deductions, and in many instances substantial sums may be involved?
– I support the points raised by the honorable member for Robertson (Mr. Spooner) and urge that they be given consideration by the Treasurer (Mr. Chifley). Although there has been expenditure on air raid shelters and other precautionary measures, the first air raid on a capital city will immediately disclose the weaknesses of the present structures and these will have to be strengthened to a marked degree. Whereas in the first place they may not have been of enduring benefit, they may subsequently cost so much that, at the termination of the war, the amount that had to be expended on restoring the property to its original condition would be substantial.
– This particular matter has associated with it some sticky problems that were raised by members of the Opposition who were on the special taxation committee. One of them relates to the cost of not only erecting air raid shelters, but also of demolishing them later in order to restore the property to its original condition. Another point is that where the lessee is responsible for the erection of the shelters, and later the property returns to the owner, he may then become responsible also for the cost of pulling down the shelters, and restoring the property to its original condition.
Again, should the lessee’s lease expire during the period of the war, and the obligation continue under State regulations to maintain the air raid shelters, the lessee may be called upon, perhaps years after the expiration of his lease, to restore the property to its original condition. Those are difficulties which were examined by the committee, and are receiving the consideration of the Government.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 13 (Deduction for member of defence force).
– This clause provides for an exemption of £250 for members of the defence forces, and the exemption diminishes upon incomes beyond that amount until it disappears when the income reaches £350. I submit that there should be a flat rate exemption, irrespective of the income of the taxpayer.
.- As the clause is drawn, this concession would apparently, apply to part-time members of the defence forces, such as members of the Volunteer Defence Corps. I do not think that the Government ever intended that it should apply to men whose association with the forces may be confined to a period of eight or ten days in camp. Whilst I agree. with the principle of a flat rate of exemption, I believe that it should apply only to members of the fighting forces. The concession was designed for the benefit of members of the fighting forces, not because they were in uniform, but because they were fighting, or could be called upon to fight. On this principle, also, the flat rate exemption is justified, because the concession is properly related to the service which the taxpayer is rendering to his country, and not to the amount of his income.
– Does the honorable member suggest that the principle of disappearing exemptions should not apply to members of the fighting services ?
– I do. I say that there ought to be a flat rate, irrespective of rank, and irrespective of pay and allowances. I also maintain that, since the concession should extend only to members of the fighting services, there is no reason why it should apply, for instance, to some members of the pay corps, who, though in uniform, are engaged upon duties exactly similar to those which they performed in peace-time. I summarize my submissions by stating that the concession should be given only to those engaged on full-time defence work, and then only to persons in operational units or such units or personnel as the Governor in Council shall from time to time determine.
That is designed to cover cases which are difficult to provide for under a specific formula. I recognize that some men not in operational units may, because they are serving in lines of communication, for instance, be as much entitled to the concession as those serving in operational units.
– The honorable member’s proposal would give the government of the day, as distinct from the Parliament, discretion to determine who should be taxed and who should not. That is an entirely new principle.
– I agree that taxation should be exact, but in the matter of deductions and allowances, the principle is already admitted that discretion may be left in the hands of some one other than Parliament - the Commissioner of Taxation, for example. The difficulty is in finding a proper formula.
.- I support the submission of the Leader of the Opposition (Mr. Fadden) that there should be a flat rate of exemption. Men serving in the defence forces are on a different footing from members of the civil service, and this justifies the granting of the exemption. Moreover, the majority of men serving in the forces are separated from their families, and des- pite the allowances made, their expenses are heavier than if they were living at home. That is a further justification for granting the exemption of £250. However, I cannot follow the argument of the honorable member for Warringah (Mr. Spender) when he seeks to make a distinction between men in operational units and those other units such as in the pay corps. Members of the pay corps are liable at any time to be sent to pay troops at Darwin and Port
Moresby, where they will share the risks with the troops. They are, therefore, equally entitled to this concession.
There is no reason, in my opinion, for including the field allowance in the total income to be taxed. In most instances, the field allowance is never received by the soldier ; he draws rations instead, and it is only when he goes on leave that he gets the actual money. No one likes to be taxed in respect of money which he does not receive. The Treasurer (Mr. Chifley) might well waive this claim, and I am convinced that if he did, the loss to the Treasury would not be great.
– In my second-reading speech on this bill, I suggested to the Treasurer (Mr. Chifley) that this exemption should apply to those at operational stations and to members of operational units. Wherever the Treasurer places the limit, there are certain to be anomalies. The object is to give the greatest measure of justice possible; but I should not like it to be confused with the existing exemptions granted to members of the Australian Imperial Force. Whilst an operational station may well be outside Australia, the same consideration will not be given to a non-member as to a member of the Australian Imperial Force, who is even protected for a period of three months after his return to Australia.
Although I see the advantage of a flat rate applicable to members of the services generally, I believe that such a method would not be fair. For example, it would place in an advantageous position men on lines of communications who continue to live under civil conditions and suffer no disabilities created by the war. At the same time, circumstances may bring some of those men into operational areas, and they may be attached to operational units. In my opinion, protection should be afforded to men while they remain in operational areas, and for a period of three months after their return. The committee has already approved a rebate of 20 per cent, to mining companies, and the anomaly impresses one immediately. An Australian with an income of £2,500 derived from mining investments receives a rebate of nearly 18s. in the £1. Surely a soldier should be entitled to at least equal consideration. Earlier, I directed attention to the fact that the lower ranges of income represent a taxable field of £590,000,000. In my opinion, some of the persons whose incomes are represented by that sum should be required to contribute to a fund designed to compensate the Treasury for the loss that it would incur by granting this exemption to soldiers. One honorable member mentioned that primary producers had evolved equalization funds so that well-to-do producers would assist the less fortunate producers. In this instance an equalization fund could be created by persons who still enjoy the comforts and security of civil life. The suggestion is worthy of consideration.
.- A few days ago, I directed the attention of the Treasurer (Mr. Chifley) to an anomaly that is created by the present policy of the Government. I refer to units of the Royal Australian Air Force which, operating from an Australian base, fly hundreds of miles from Australia and come into direct contact with the enemy. Their service exposes them to greater hazards than those which fighter squadrons, based beyond Australia, face.
– The term “fighting services “ has been described in a variety of ways. Does the honorable member consider that it should include merchant seamen ?
– I understand that the honorable member for New England (Mr.’ Abbott) proposes to refer to the position of merchant seamen in a few moments. I am of opinion that the principle should apply to them also. They carry on most hazardous work. The Prime Minister (Mr. Curtin) will be immediately impressed with the anomalies created by the present provision. The man who fights under hazardous conditions hundreds of miles from the Australian shore is not regarded, for purposes of taxation, as being beyond the territory of Australia. I stress the desirability of making special provision in such cases.
.- Under this clause, members of the fighting forces are granted complete exemption from income tax on their military pay provided the amount does not exceed £250. On incomes exceeding that figure, the exemption diminishes gradually until it disappears at £350. So long as the matter remained one of government policy, the Special Taxation Committee could not serve any good purpose by considering it. If the Treasurer (Mr. Chifley) is impressed with the case that has been submitted for an extension of the exemption, the Government should not attempt to deal with the matter this evening. The Treasurer uttered words of wisdom when he said that any one who tries to make amendments “on the run” to an income tax bill is seeking trouble and will most assuredly find it. But if the Treasurer is impressed with the case - I hope that he is, because I think that it is just - for an extension of the exemption of £250, the Government might well refer the matter to the special committee to-morrow, so that the subject may be considered before the Senate receives the bill. First, the Government must determine whether it will agree to reconsider the scope of the exemption. When that has been settled, the points which have been raised this evening must be carefully analysed. The whole matter bristles with anomalies, which operate not only within Australia but also as between servicemen now in Australia and those abroad. The problem must be handled with the utmost care. I hope that the Government will adopt the suggestion for a flat exemption of £250 a year, and ask the special committee to consider the matter.
– If the Government sees fit to endorse the principle, it must be careful as to what formula is adopted regarding operational areas. My warning should be heeded, or the Government will strike trouble. A few months ago no one would have thought that Sydney Harbour would be an operational area. The men who slept on the Kuttabul off Garden Island and were blown to pieces as the result of enemy action, never thought that they were in an operational area, and that danger lurked in the harbour.
The Prime Minister (Mr. Curtin), by interjection, referred to the claims of merchant seamen. I plead for, not only merchant seamen, but also naval personnel, and the personnel of minesweepers. They may be in an operational area at any time, though only a mile from our coast. We owe a great debt to our merchant seamen, and it would be a grave injustice to them if they were obliged to pay tax, while navy personnel were exempt. Like the honorable member for Robertson (Mr. Spooner), I. consider that this matter is as full of points as a porcupine. It requires careful consideration. If a flat rate is to be struck, the merchant seamen should not be excluded.
– I inform honorable members, without any disrespect, that their submissions were not novel to the Treasurer (Mr. Chifley) and myself. The Government has most carefully reviewed the whole matter. Once a case has been made out in principle, its application is capable of infinite extension to like categories, so that the matter becomes one of extraordinary difficulty. The Government considered that it would be an insuperable task to draw a line which would be fair and just, because of the many anomalies that would be caused. For example, the introduction of a flat rate would mean that those members of the services to whom the honorable member for Wentworth (Mr. Harrison) referred, would benefit, whilst the merchant seamen would not. Again, there are some men who are not technically in the fighting services, but whose avocations, indispensable to the war, can be most hazardous. Those men include wharf labourers at certain places which have already been bombed by the enemy. Speaking broadly the statement applies to certain civil occupations that non-enlisted men follow in locations which are not operational areas, but which, under the suggestion of the honorable member for Warringah (Mr. Spender), would expose the Government to the duty of having to define whether they should be granted exemption from tax on the basis of a flat rate. It would be a very dangerous precedent in taxing systems for a government to have the authority to grant exemptions from liability to pay tax. But the honorable member for Warringah made a distinction. He said that the Government should not have the authority to impose the tax; but the honorable member will realize that where authority is vested in the Government to relieve the taxpayer, most certainly it has the power either to enforce the tax or not to enforce it. Hitherto, this power, where it has been given, has been strictly reserved to the Commissioner of Taxation, who in this matter exercises a quasi-judicial function. Having examined all aspects of the matter, the Government came to the conclusion that a distinction should be drawn ‘between the civil population as such and the enlisted forces. But, whilst that distinction should be made clear, the other basic principle in all tax systems should be preserved, namely, taxation according to capacity to pay. Therefore, the Government considered that, in relation to enlisted men, the case for a disappearing exemption was as valid as for the rest of the community. Tax systems, as such, have regard to capacity to pay rather than the functions performed by the taxpayer.
– There should be a flat rate of exemption in respect of all members of the armed forces, but there should be a limitation so far as the upper limits of income are concerned.
– The honorable member, who was once Treasurer of this Commonwealth, would not like to have the task of administering that principle. He would make a decision to-day and, to-morrow, when asked to apply that decision to a somewhat analagous case, would find that he had given relief to someone who ought not to have been relieved. We are standing to what we have put before the committee, not because we have not carefully examined the various submissions that have been made to-night, but because we cannot find any common formula which would preserve sound taxation principles and at the same time guard against either too extended or too restricted application of the relief. We consider that any tax which conforms to capacity to pay is less irksome to any member’ of the community, whatever be his vocation, who has the capacity to pay, than is a tax which strains the capacity to pay.
The proposition of the Leader of the Opposition is that there should be a flat rate of exemption for all members of the forces, and that a man earning £2,000 a year should pay tax on a presumed income of £1,750.
– That is so.
– That a man earning £1,250 a year should be presumed for income tax purposes to have an income of £1,000 a year, and that a man earning £500 a year should be taxed on a presumed income of £250 a year. That means that, regardless of the greatly increased capacity to pay of the man on £1,250 a year, his relief from taxation would be identical with that of the man receiving less than half of his income.
– That does not necessarily follow.
– It follows in all cases where the income is restricted to service income.
– A man earning £450 a year as a member of the forces has to keep his wife and children.
– Allowances for wives and children are exempt from taxation.
– Yes, but compare that man with a civilian earning a similar income. Should not the soldier receive a concession over and above that enjoyed by the civilian?
– I have agreed that there should be a distinction between the great majority of the enlisted personnel and the great majority of the civilian population. We have made that clear by having for the enlisted personnel a rate of exemption different from that of the civil population, while retaining the principle, which has marked all taxation in the Commonwealth sphere since the beginning, that there shall be a disappearing exemption. In no other way can we have a graduation which does not produce anomalies. I have the utmost sympathy for the views put forward by honorable members opposite, but I direct their attention to the fact that the cases that they have put forward are not altogether identical. Varying submissions have been made. The honorable member for Warringah, for example, asks us to avoid giving a flat exemption to the services because, as he quite properly points out, some of the enlisted personnel are engaged in vocations which are practically identical with those in which they were engaged in peace-time and are not exposed, even though they wear uniforms, to the hazards of war. If we accept his formula, we are faced with what I conceive to be the impossible duty of defining an operational area in a war in which bombing attacks cannot be put cut of account. The honorable member for New England (Mr. Abbott), espousing my own view, drew attention to the fact that merchant seamen have in many respects a better case for exemption than have some of the enlisted personnel. So, having regard to the anomalies that we should be creating in accepting the principle put forward by the Leader of the Opposition, and to the departure from the accepted principles of taxation, while having the utmost sympathy with the pleas made, the Government finds no way in which it could equitably find a formula.
– Does the right honorable gentleman see any objection to exempting the subsistence allowance from tax?
– The honorable member means the field allowance. The field allowance is in a different category from the allowances to wives and children, which are not subject to taxation. I am advised that the field allowance is regarded as something in the nature of an addition to salary and, therefore, taxable. That is the view of the Taxation Department, and, like any humble taxpayer, I have neither the resource nor the wit to dispute with it.
– Does this provision cover those who are engaged in limited part-time activities with the Defence Forces ?
– Not those who are not paid.
– Would the Government give consideration to placing members of the deep-sea merchant marine in the same position as is occupied by enlisted members of the defence forces in regard to taxation?
– I shall consider the honorable gentleman’s suggestion, but I am not certain whether that can be done.
– The more I hear of this subject the more I realize what a difficult problem it is. A close examination was made of all alternatives, particularly in respect of those who serve at operational sta tions, whose case was raised by the honorable member for Warringah (Mr. Spender).
– Operational units, not stations.
– No one can tell what officially becomes an operational unit.
– That is not so.
– According to those who understand these matters it is not so easy. The Prime Minister dealt with that point. Other people may very easily be in as dangerous a situation as are members of the forces, and very often they may not have the means to defend themselves. Members of the Volunteer Defence Corps do not get the benefit of this provision until they go into camp and are in receipt of pay. It is only fair to direct attention to the fact that the introduction of uniform income tax benefited no one more than the soldiers. Last December we exempted the dependants’ allowances from taxation. Then, when the uniform income tax was introduced, the soldiers derived further benefit. In some States the earnings of soldiers, including dependants’ allowances, were taxed if they exceeded such a small amount as £100, but that has now been wiped out since the States have vacated the field of income tax. The estimate of the loss of revenue involved in exempting dependants’ allowances is £2,000,000 for 1942-43, and about £3,000,000 for 1943-44. The revenue involved in granting to members of the defence forces an exemption of £250 with a deduction of £94 diminishing by £1 for every £1 over £261 is £1,000,000 for 1942- 43, and about £1,500,000 for 1943- 44. Those are very substantial concessions. The honorable member for Warringah talked about people in barracks who do not go into the danger zone, but they are always liable to go there. The honorable member for Fawkner (Mr. Holt) spoke about members of the air force who fly to sea and go into combat. The Minister for the Army (Mr. Forde) who is threatening to travel to advanced operational bases might put up a similar argument. So I have to be very careful about that. It cannot be denied that the concessions we have given are great. I know that no treatment of the defence forces can be too generous, but there must be an end somewhere. I am still awaiting a suggestion whereby I could get more money for the Treasury. All the suggestions I have received so far since being Treasurer have involved paying money out of the Treasury. All the matters that have been raised in this discussion are worthy of consideration, but, once you give one concession, you come to the borderline of another. At some point we have to stand firm. The concessions that the Government has given since December last are reasonable. I am willing to examine the other points that have been raised, but I remind honorable members that, before adopting any proposal, I must ascertain what effect it will have on the revenue.
Clause agreed to.
Clause 14 (Payments to fund providing benefits to persons on war service).
– The provisions of this clause relate only to payments made under the terms of a written agreement. I should like the benefits of the clause to extend to persons making payments under oral agreements on behalf of fellow members of their professions overseas. I know of many members of the British Medical Association who are contributing voluntarily, without written agreements, to funds for the benefit of doctors serving abroad. They did not enter into written agreements, because they envisaged circumstances which might prevent them from being able to maintain their contributions. I know that the Treasurer (Mr. Chifley) is anxious to extend relief to such persons, and I suggest that the requirement of a written agreement be removed from the clause. Such a payment is a fact which can easily be established without production of a written agreement.
– I believed that I had met every body’s wishes in this clause. The suggestion that these concessions be granted was made on the last occasion when an income tax assessment measure came before Parliament. I promised then to consider that suggestion, and officers of the Treasury and I consulted members of the legal profession. At first there was disagreement between lawyers in different States, but eventually agreement was reached, and I believed that this clause would satisfy everybody’s wishes. The suggestion just made by the Leader of the Opposition (Mr. Fadden) has not been made to me previously. I am prepared to examine it, and if I have overlooked any point I shall rectify the omission. I hope to be able to make a decision before the bill is dealt with in the Senate. I should not like to accept the proposal without examining fully its implications.
Clause agreed to.
Clause 15 -
Section one hundred and three of the Principal Act is amended by omitting the proviso to paragraph (f) of sub-section (2.) and inserting in its stead the following proviso: - “ Provided that this paragraph shall not apply to the profits or income specified in subsection (2.) of section forty-four of this Act, to the extent of the amount of any dividend paid wholly and exclusively out of those profits or that income.”.
– I move -
That at the end of the clause the following words be added: - “; and (b) by adding at the end thereof the following sub-sections: - (5.) After the commencement of this subsection, any election in pursuance of subsection (3.) of this section shall be made in writing, signed by the public officer of the company, and notified to the Commissioner -
where the election commences to apply in ascertaining the distributable income of the year ended on the thirtieth day of June, One thousand nine hundred and forty-one or of the year ended on the thirtieth day of June, One thousand nine hundred and forty-two, or the accounting period adopted under this Act in lieu of either of those years - on or before the thirty-first day of December, One thousand nine hundred and forty-two, or within such further time as the Commissioner may allow; and
where the election commences to apply in ascertaining the distributable income of any subsequent year - on or before the date of lodgment of the return for that year or within such further time as the Commissioner may allow. ( 6. ) Where a private company makes or has made an election under sub-section (3.) of this section, the income tax payable under this Act in respect of income derived during the year ended on the thirtieth day of June, One thousand nine hundred and forty-two, or the accounting period adopted under this Act in lieu of that year, shall, for the purpose of this section, be calculated as if in paragraph (a) of the Seventh Schedule to the Income Tax Act 1942 the words “ forty-eight pence “ were substituted for the words “ seventy-two pence ‘ “.
Under sub-section 1 of section 103 of the principal act, a private company, in arriving at its distributable income for the purposes of private company tax, is entitled to deduct Commonwealth income tax and State income taxes which have not been allowed, or are not allowable as a deduction in arriving at its taxable income and which are paid during the year of income. State income tax paid in respect of the financial year 1941-42 is not an allowable deduction, and is accordingly allowed as a deduction in the year in which it is paid, in arriving at the private company’s distributable income. Under sub-section 3 of section 103, a private company is given the right to elect that in lieu of deducting Commonwealth ordinary income tax paid during the year of income, it may deduct Commonwealth ordinary income tax payable in respect of income of the year of income. Under the uniform income tax plan the Commonwealth rate of ordinary income tax payable by companies was increased to 6s. in the £1. This rate of 6s. represented, in effect, the existing Commonwealth rate of 4s., plus an average rate of 2s. to replace the State income tax formerly payable by companies. In the great majority of cases the State income tax assessed for the financial year 1941-42 would be paid by the companies during the year ended the 30th June, 1942, or the accounting period substituted for that year, and would thus, under section 103 (1) of the principal act, be deductible in arriving at the private company’s distributable income of the year ended the 30th June, 1942, or its substituted accounting period. As mentioned above, however, the private company is entitled to elect that in lieu of Commonwealth ordinary income tax paid during the year of income, it may deduct Commonwealth ordinary income tax payable in respect of the income of the year of income. The effect of this provision therefore is that in arriving at the private company’s distributable income for the year ended the 30th June, 1942, or the substituted accounting period, the private company which elects to adopt Commonwealth ordinary income tax payable in respect of the income of the year of income in lieu of Commonwealth ordinary income tax paid during that year, is entitled to receive the following deductions : -
Amendment agreed to.
Clause further verbally amended, and, as amended, agreed to.
Clause 16 -
Section one hundred and thirty-eight of the Principal Act is amended -
by omitting the word “thirty” and inserting in its stead the word “ten”; and
– I move -
That at the end of the clause the following words be added : - “ and inserting in its stead the followingsub-section: - (2.) In ascertaining the gross income for the purpose of the last preceding sub-section there shall be deducted from what would otherwise be the gross income -
the amount of any customs duty paid in respect of the importation of any film imported for the purpose of carrying on the business;
the amount of any sales tax paid in respect of any copies of any such film which are printed in Australia; and
the amount of any customs duty paid in respect of the importation of any unexposed sensitized film on which any such copies have been printed, which, in the year of income, is paid to the Commonwealth (whether directly or indirectly) by the non-resident and which is not an allowable deduction to the person carrying on the business in Australia’”.
It has been represented that the amendment made by clause 16 will result in anomalies between the companies concerned, and also in the taxation of amounts which have already been paid to the Government in the form of duty or taxation under other acts. The clause as it stands provides that 10 per cent. of the gross income derived from Australia by the non-resident film company shall be included in its taxable income. There is a heavy duty upon imported films which has been increased since the war began. There’ is also a duty upon unexposed sensitized film upon which copies of the film are made for the purpose of exhibition in Australia. This sensitized film was, until last year, imported duty free. There is also a sales tax of 25 per cent., increased progressively from 5 per cent. in 1930, upon the prints so made in Australia. In some cases, the contract between the overseas company and the local distributor company provides for the payment of these duties and sales tax by the local company which is then entitled to a deduction thereof in its assessment. In other cases, the contract between the overseas company and the local company provides for the payment of these duties and sales tax out of the overseas company’s share of the gross income arising under the contract. In these cases, no deduction is received by the local company, and the overseas company would be assessed, under the amendment as it now reads, upon 10 per cent. of its share of the gross income before its reduction by these duties and sales tax. It has, therefore, been decided that where the duties and sales tax are paid by the overseas company out of its share of the gross income arising under the contract, such share shall be reduced by the duties and sales tax, and the 10 per cent. calculated upon the net amount. The amendment ensures that this will be done.
Amendment agreed to.
Clause, as amended, agreed to.
Clauses 17 to 20 agreed to.
Clause 21 -
Section one hundred and sixty c of the Principal Act is amended by omitting from sub-section (1a.) the definition of “mutual income) “ and inserting in its stead the following definition: - “ ‘ mutual income’, in relation to a life assurance company (other than a mutual life assurance company), means -
Amendment (by Mr. Chifley) agreed to -
That at the end of the clause the following words be added: - “and (b) by adding at the end thereof the following sub-sections: - (5.) For the purpose of ascertaining that portion of the taxable income of a company which has not been distributed as dividends, the company may elect that, in lieu of deducting from its taxable income any income tax paid in the year of income under thisAct (other than the further tax paid under this Part) or any tax paid under any Act passed by the Parliament imposing a war-time tax upon companies, there shallbe deducted any income tax payable under this Act (other than the further tax payable under this Part) or - any tax payable under any Act passed by the Parliament imposing a war-time tax upon companies in respect of the income of that year of income. (6.) Where any company has made an election under sub-section (5.) of this section, that election shall, unless the Commissioner otherwise directs, be deemed to have been made also for the purpose of ascertainingthat portion of the taxable income of that company which has not been distributed as dividends, for all subsequent years. (7.) The election which may be made in pursuance of sub-section (5.) of this section shall be made in writing, signed by the public officer of the company, and notified to the Commissioner -
where the election commences to apply in ascertaining that portion of the taxable income derived by the company during the year ended on the thirtieth day of June, One thousand nine hundred and forty-two, or the accounting period adopted under this Act in lieu of that year, which has not been distributed as dividends - on or before the thirty -first day of December, One thousand nine hundred and forty-two, or within such further time as the Commissioner may allow; and
where the election commences to apply in ascertaining that portion of the taxable income derived by the company during any subsequent year which has not been distributed as dividends - on or before the date of lodgment of the return for that year, or within such further time as the Commissioner may allow. (8.) Where a company makes an election under sub-section (5.) of this section, the income tax payable under this Act in respect of income derived during the year ended on the thirtieth day of June, One thousand nine hundred and forty-two, or the accounting period adopted under this Act in lieu of that year, shall, for the purpose of this section, be; calculated as if in paragraph (a) of the Seventh Schedule to the Income Tax Act 1942. the words “ forty-eight pence “ were substituted, for thewords “ seventy-two pence”.’”.
Clause further verbally amended and. as amended, agreed to.
Clauses 22 to 29 agreed to.
Clause 30 (Gifts and contributions).
.- This clause is designed to effect an alteration of the method of claiming deductions for gifts to charitable institutions. I understand that the Government has approved of an arrangement under which the past practice in this respect will continue in relation to gifts during the financial year ending the 30th June, but that after that date a new system will operate under which a taxpayer who makes such gifts will be able to claim only a rebate calculated on his rate of personal exertion tax. This arrangement is causing a great deal of concern to many charitable institutions. I know that the Treasurer has received representations on the subject from all parts of the Commonwealth. It is pointed out with considerable force that many charitably disposed persons may feel, in these days of heavy taxation, that they cannot continue to make the contributions to charitable institutions which they were able to make when a deduction of the amount was allowable for income tax purposes. It is feared by those charged with the responsibility of maintaining charitable institutions that on this account they may lose considerable sums which they might otherwise receive. This is a matter to which the Minister for Health (Mr. Holloway) should give close attention. Whilst the new arrangement may result in an increase of revenue to the Treasury it may also conflict with’ sound policy. I believe that the Treasury is making a mistake in this matter. The greater revenue may be offset by greater expenditure, because of the drying up of donations to charitable institutions. It has never been easy for persons charged with the management of charitable institutions to balance their budgets and we should not make it harder for them to continue the laudable work in which they are engaged. The proportion of persons in the community able to make substantial gifts to charitable institutions is small, and we should not do anything to reduce it. We should take the long view in this matter, and maintain the past practice. A strong case has not been made out for the new procedure, and I doubt whether the Treasurer can justify it. In the view of many honorable members of the committee this is a retrograde step, for it will discourage gifts to charitable institutions, and so diminish the valuable work that they have been doing.
– Under this clause gifts made by companies for charitable purposes may be deducted for income tax purposes during this financial year and next financial year, but such gifts made by individuals may be deducted this financial year but not for next financial year.
– In the next financial year a rebate will be allowed to individuals. A deduction from income will not be allowed except to companies.
– That is so. Representations on this subject have been made to me by many charitable institutions. The Children’s Hospital, the Women’s Hospital, and the Queen Victoria Hospital are three big Melbourne institutions which will be affected, and the authorities of each of them have written to me on the subject. They fear that their finances will be seriously affected. I understand that the Treasurer (Mt. Chifley) is convening a conference in Melbourne at an early date to explain the exact position to the representatives of hospitals. I commend that step, but I trust that the conference will be truly representative. Representatives of all charitable institutions should be invited to attend.
– Of what use is it merely to explain the position to them?
– Many of them do not understand what is being done. They fear that no deduction will be allowable in respect to gifts to .hospitals. They have had only a garbled account of the Government’s intentions. I feel that the Treasurer could well have left this subject alone. Donations to charities and educational institutions should he regarded with the utmost sympathy, for the work that these institutions do is of primary importance to the nation. No one will say that we have enough hospitals in Australia. No one will say that Australia leads the world in the social sciences. Whilst that may have been true at one time, it is no longer true. It is only because we have recently passed legislation dealing with child endowment and widows’ pensions, and have liberalized our invalid and oldage pensions and certain other social service measures, that we can claim to have recaptured some measure of progressive outlook. Probably, in the future the State governments will not spend as much as they have spent in the past on social services, owing to the enforcement of our uniform income tax legislation, and, ultimately, the Commonwealth Government may have to assume complete control of social services. We should at all times do our utmost to encourage gifts to hospitals and educational institutions.
We cannot claim to occupy a leading place in relation to education. In some States children of thirteen or fourteen years of age are being chased into factories, and far too many permits are issued in this, regard. The importance of scholarships to children of working class parents to enable them to pursue their studies cannot be overestimated. Without such help many children would be unable to continue their studies at the secondary schools and at the universities. It would be difficult to say how many men and women owe their present position in life to the help they received from scholarships and bursaries. We shall render no service to the general community if we do anything to discourage gifts for those purposes. The Melbourne University is not so richly endowed as is the Sydney University, and in both universities many faculties are entirely missing. Our contact with some of the young Americans in our midst to-day reveals the value of a schoolleaving age of sixteen or seventeen years. I hope that the Treasurer will give early consideration to the desirability of altering the provisions in our income tax law which tend to discourage gifts for educational and charitable purposes, and of enacting provisions which will recoup such institutions for losses that they may have sustained owing to the inclusion of these provisions in the law. If more money be needed by the Government, it could be obtained from State sources. We all know that the surpluses of State governments are much greater than have been disclosed. We have been told that the combined surpluses of the States for the last financial year total £3,000,000, whereas, in fact, they amounted to about £6,000,000. The Commonwealth should draw upon the undisclosed surplus money, and the States would not suffer. As a matter of fact, the State governments to-day do not know what to do with their swollen revenues. They cannot spend the money they are receiving, because the Commonwealth Government is using all the labour and nearly all the material available. Apparently, the Commonwealth is afraid to tackle the States on this issue, and is prepared to allow them to continue to disguise their financial position. We are well aware that various State governments are paying into trust funds and in other ways trying to dispose, for the time being, of money which they cannot spend. No doubt, by the end of this financial year, they will have exhausted their ingenuity in this regard, and I suggest, therefore, that, instead of the Treasurer hampering the work of educational and charitable institutions by including in his taxation machinery provisions such as that now before us, he should call upon the States to disgorge some of the money which they cannot spend. Strong public comment is being made upon the action of the Government in eliminating the provision for rebates or deductions in respect of gifts to charitable and educational institutions. I hope that before the next income tax assessment bill is introduced the whole matter will have been re-examined with a view to liberalizing these provisions. I hope also that before the Treasurer introduces his next budget - and, of course, he will introduce another budget - he will have found it possible to frame his financial programme generally on more radical lines.
.- The provisions of this clause are much misunderstood. In order to put the subject in proper focus, it is necessary for us to consider what has been done in the last few months, particularly in relation to the uniform income tax policy. The introduction of uniform taxation involved the discarding of legislation dealing with concessional deductions. In future, rebates are to be made to taxpayers at the rate of tax paid by them at personal exertion rates. The representations made to honorable members by persons responsible for the management of charitable institutions appear to be based on the assumption that, in the future, taxpayers will not be allowed any consideration in respect of gifts for such purposes. That is a misstatement of the position. It is true that, as gifts become classified as rebates instead of as concessional deductions, the taxpayer will not receive as much as he did when the amount was a deduction from his gross income. But it would he quite wrong to say that the benefit of the deduction will disappear entirely. Actually, it will still be very considerable. At the rates of tax that now operate, a taxpayer with a substantial income will receive by way of a deduction in respect of a gift, immeasurably more than he received before the war. That point has to be driven home. I have seen letters from institutions which may be genuinely under the impression that the taxpayer is to lose the benefit of the deduction. That is not the ease. Take a taxpayer whose personal rate is 15s. in the £1. The deduction of a gift to a charitable institution might mean that in the first place the taxpayer would pay on so much less income, and in the second place the whole of the income would be reduced to a lower rate because of the reduction of the net amount. As against that, such a taxpayer will in future obtain a deduction, at the rate of 15s. in the £1, of the gift that he has made. In other words, if a taxpayer has made a gift of £100, and the personal rate of tax on his income is 15s. in the £1, he is to be allowed a deduction of £75 from his tax because of the gift. Thus, the ‘Commonwealth Government will pay £75 towards that gift of £100. Let tie matter be stated in proper perspective. It is not a fact that the taxpayer is losing the whole of the benefit of the deduction, or that the alteration will be so considerable as to affect gifts previously made to charitable institutions; but it is a fact that in cases such as I have cited the taxpayer who makes the gift -will receive from the Government by way of deduction from his income tas, no less than 15s. in the £1 on the gift that he makes. The bill very wisely leaves the position as it was in the uniform tax legislation introduced last May, so far as concerns individuals. There is no case for an alteration. The Government has provided that, in respect of the year 1941-42, the full concessional deduction shall, be applied ; because it has been represented that, prior to the introduction of this legislation and the uniform tax legislation, certain taxpayers had already made gifts and expected to receive the full concessional deduction in respect of them.
– By implication, does not that mean that they will get a lot less on the next occasion?
– If the man who made a gift of £100 received the full deduction from his gross income, he might benefit to an amount of £80. If, on the other hand, the deduction were by way of rebate at his personal exertion rate, he might benefit to an amount of only £75. He says to the Government, “ When I made the gift, I did not know that you were going to alter the incidence of the tax “. The Government says, “ All right ; because you did not know that, and you claim that you are entitled to what you thought you were to get when you made the gift, we will allow you the deduction of £80 for last year; and if you make the gift next year you will still receive not less than £75 “. From the observations .that are being made, and circulars that I have received, one would think that the Government was withdrawing the whole of the deduction. That is not so. The Government has fairly decided to regard gifts as a concessional deduction for last year only. The taxpayer is being treated very well if in the future he is given a rebate of the amount of the gift at the appropriate personal exertion rate.
The amendments now circulated go farther, and provide that in respect of companies such gifts will be not a rebate but a deduction from the gross income. There is a reason for that, which it is very hard to avoid. It is somewhat similar to what I heard the honorable member for Wentworth (Mr. Harrison) refer to earlier. He mentioned that legal expenses are not taken into account foi the purpose of arriving at the tax on undistributed profits, notwithstanding that they have been paid in cash, and that consequently a company cannot obtain a deduction on their account because they are not of such a nature that they can be deducted from the gross income. The position in regard to gifts is very similar. If companies cannot be given, in respect of gifts, a deduction from their gross income their position in relation to the tax on undistributed profits, the war-time company tax, and the super tax will be affected, and will have to be put right. The advantage that the individual derives in respect of a deduction on account of gifts will be far greater than that of a company; because a company pays at the flat rate of 6s. in the £1. Therefore, the advantage of a gift to a company is the flat rate of 6s. in the £1, plus any indirect effect the gift may have upon the tax on undistributed profits. But the benefit to an individual may be at the rate of 12s., 15s., or even 18s. in the £1. It also happens that a company is not affected by any other form of concessional deduction. It does not have deductions in respect of dependants, or life insurance. The position in regard to companies can be simplified by the deduction being made from the gross income. For that reason, the bill very wisely restores the position so far as the companies are concerned, and also very wisely leaves - for the future at all events - the position in regard to individuals that was contemplated by the uniform tax legislation.
.- The honorable member for Robertson (Mr. Spooner) has made a very good explanation on behalf of the Treasurer (Mr. Chifley). I am not challenging his exposition. Unfortunately, however, the general run of charitable donors have not the same intimate knowledge of taxation laws as the Treasurer and the honorable member may have. In the past, the position has been quite clear to them. When they made a donation for charitable purposes, they could deduct the item when making up their income tax returns. Henceforth, however, the amount rebated as a benefit to them after the deduction has been made, will be indeterminate from their point of view. That is a factor which, in the mind of a man who is trying to decide what he shall do with money that he has available for charitable disposition or some other purpose, may sway him from the decision to give it to charity to a decision to make some other disposition that may not be in the same degree in the general public interest. I press that point upon the Treasurer. I recognize that perhaps I do so without much hope of success. For the amount of revenue involved, this step is not worth while, because in its consequences it may be opposed to rather than in the public interest. The Treasurer has intimated that he will grant an interview in Melbourne to repre sentatives of some of the big charitable institutions. I did not know that they were to be confined to Victoria. It happens that, as the honorable member for Melbourne (Mr. Calwell) has pointed cut, those of us who come from that State have had widespread representations made to us in this connexion. In my electorate, the Alfred Hospital, the Blind Institution, the Braille Institute, and others have brought to my notice their very real concern as to the effects which this amendment will have. I hope that the Treasurer will attend the conference in a receptive frame of mind, determined to hear the cases that these institutions are able to place before him ; that he will go there, not merely to lay down the law to them, but to explain the exact position and at the same time to see whether that position represents, in their view, very real cause for concern in the future. It is his responsibility to see that this amendment, which may be designed to assist the finances of the Treasury, does not at the same time weaken the position of our major charitable institutions, which are doing such valuable public service.
– I am often inclined to think that the big proportion of gifts for the maintenance of public institutions are made by persons who do not claim an allowance in respect of them in their income tax returns. As a matter of fact the majority of our public institutions are maintained by the great mass of the people who purchase tickets, buttons and a hundred and one other things. Many honorable members repeatedly make donations, but I should be greatly surprised if they claimed a deduction on that account in their income tax returns. Those who make such claims are fairly wealthy, and are substantial donors. I do not suppose that one would be justified in saying that their motive is entirely altruistic; in many instances, an advertisement is obtained from the donation. The explanation of the honorable member for Robertson (Mr. Spooner) makes perfectly clear the substantial reduction of tax that they now get. What is happening is that the Commonwealth, not the man who gets all the publicity, is making the greatest contribution. There was the extraordinary case of a donation of £500 having been made for a certain purpose. The wealthy individual who made it received the benefit of an allowance in connexion with the income tax payable by him. He would have paid at the rate of 17s. in the £1. The Commonwealth Treasury having in reality contributed most of the gift, I, as Treasurer, was asked to remit the excise payable in respect of certain goods that were to be bought with the gift. I found that the final cost to the Treasury would be approximately £647. That is -the sort of thing that can happen. Needless to say, I did not regard the proposition with very great favour. I am grateful to the honorable member for Robertson for his clear exposition. Apart from his technical knowledge, he is a member ofthe Special Taxation Committee, and no one is more qualified than he to state the position. It is true that a large number of persons believe that they are not to receive any concession in respect of gifts that they make. They will be given a rebate at the personal exertion rate appropriate to the taxable income. That is a very fair concession, in view of the fact that a substantial proportion of every gift is contributed by the Treasury, which does not get any of the advertising that is associated with it. Many persons who contribute guineas and half-guineas do not get either a deduction or very much publicity.
Clause agreed to.
Amendment (by Mr. Chifley) proposed -
That the words “ section nineteen “ be left out with a view to insert in lieu thereof the following words : - “ sections twelve a, seventeen a, and nineteen “.
.- This clause refers to the amendments effected by clauses 6 and 7 of the bill, and clause 7 refers to section 23a of the principal act. This is the section which has to do with the granting of concessions to those engaged in the production of certain metals. I suggest that, for the sake of clarity, the metals should be specifically named. For instance, iron is not named, and yet it is indispensable for war purposes. Many people in New South Wales, actuated by patriotic motives, are devoting their time and capital to the working of iron ore deposits.
– The difficulty is that a metal which is wanted to-day may not be wanted to-morrow, or the need may suddenly arise for a metal which at the present moment is not in demand. That is why the metals are not specified by name, but provision is made for defining them in the regulations.
– I understand that the mining of iron ore is excluded from the benefits of this concession. Because one big company has practically a monopoly of the mining of iron ore, there seems to be an attempt by honorable members opposite to prevent the discussion of the matter.
The CHAIRMAN (Mr. Prowse).The honorable member should have made these observations during the discussion on clause 7.
– But clause 31 refers to clauses 6 and 7.
– Yes, but the reference is only to their application. The honorable member is not in order.
Amendment agreed to.
Clause, as amended, agreed to.
New clause 12a.
.- I move-
That the following new clause be inserted: - “ 12a. Section seventy-eight of the principal act is amended -
By inserting in sub-section (1.), before paragraph (b), the following new paragraph : -
In the case of a taxpayer which is a company, gifts of the value of One pound and upwards of money or of property other than money which was purchased by the company within twelve months immediately preceding the making of the gift, made by the company in the year of income to any of the following funds, authorities or institutions in Australia: -
a public hospital;
a public benevolent institution;
a public fund established and maintained for the purpose of providing money for public hospitals or public benevolent institutions in Australia, or for the establishment of such hospitals or institutions, or for the relief of persons in Australia who are in necessitous circumstances;
a public authority engaged in research into the causes, prevention or cure of disease in human beings, animals or plants, where the gift is for such research, or a public institution engaged solely in such research;
a public university or a public fund for the establishment of a public university;
a residential educational institution affiliated under statutory provisions with a public university, or established by the Commonwealth ;
a public fund established and maintained for providing money for the construction or maintenance of a public memorial relating to the war which commenced on the fourth day of August, One thousand nine hundred and fourteen or the third day of September, One thousand nine hundred and thirty-nine;
a public institution or public fund established and maintained for the comfort, recreation or welfare of members of the armed forces of any part of His Majesty’s dominions, or of any allied or other foreign force serving in association with His Majesty’s armed forces; and
the Commonwealth, when made for purposes of defence.’; and (b)by inserting after sub-section (1.) the following sub-section: - (2.) For the purposes of this section, the value of a girt of property other than money shall be the value of the property at the time of the making of the gift, or the amount paid by the company for the property whichever is the less.’ “.
The purpose of this amendment is to allow to companies, both public and private, deductions of gifts to the institutions and funds mentioned in the amending clause. The deduction will replace the rebate of tax which is allowable under section 160 of the principal act. The effect of the amendment will be to place the concessional allowances for gifts made by companies on the basis that applied before the introduction of the system of allowing concessional rebates of tax.
The amendments effected by the Income Tax Assessment Act of June, 1942, provided, inter alia, that there should be substituted for the concessional deduction from assessable income pre viously allowed in respect of gifts, a rebate of tax calculated, in the case of individuals, at the taxpayer’s personal exertion rate and, in the case of companies, at the rate of ordinary tax payable by the taxpayer.
By clause 31 of the bill, it is proposed that the rebate provisions, so far as they relate to gifts, shall not apply until the financial year 1943-44, and that gifts shall be allowed to all taxpayers as deductions from assessable income in assessments for the financial year 1942-43, i.e., from assessable income derived during the year ended the 30th June, 1942.
It is now proposed that, in respect of companies, the principle of the deduction of gifts from assessable income instead of the rebate of tax should continue to apply for the financial year 1943-44 and subsequent years.
Companies, unlike individual taxpayers, are liable to pay taxes on income additional to the ordinary income tax at the rate of 6s. in the £1. Both public and private companies pay taxes on undistributed income, and public companies are liable to pay super tax and war-time company tax.
All these additional taxes are based on the taxable incomes of the companies as calculated for ordinary income tax purposes. If a deduction for gifts is not allowed in computing the taxable income of a company, no relief from the additional taxes is granted to the company in respect of the gifts. The amending clause will remove this inequity.
New clause agreed to.
New clause 17a.
.- I move-
That the following new clause be inserted: - “ 1 7a. Section one hundred and sixty of the principal act is amended by inserting in paragraph(g) of sub-section (2.), after the words ‘ year of income ‘ the words ‘ (not being gifts which are allowable as deductions under this act in the assessment of the taxpayer) ‘.”.
This amending clause is complementary to the amendment which is being made by the insertion of a new clause contained in clause 12a of the bill. The effect of the amending clause is to withdraw the rebate of tax allowable to a company in respect of gifts, as the amounts of those gifts are being allowed as deductions from assessable income.
New clause agreed to.
Title agreed to.
Bill reported with amendments ; report - by leave - adopted.
Bill - by leave - read a third time.
Motion (by Mr. Curtin) - by leave> - agreed to -
That Standing Order No. 70 - eleven o’clock rule - be suspended for this sitting.
Debate resumed from the 11th September (vide page 281), on motion by Mr. Chifley -
That the bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 -
Section three of the principal act is amended -
by inserting after the definition of “ person “ the following definition : -
.- I move-
That the following words be added to the clause: - “ ; and (d) by inserting at the end thereof the following sub-section: - (2.) For the purpose of calculating the deduction under paragraph (a) of the definition of “taxable profit” in the last preceding sub-section, the income tax payable by a company for the financial year commencing on the first day of July, One thousand nine hundred and forty-two, shall be calculated as if in paragraph (a) of the Seventh Schedule to the income Tax Act 1942 the words “forty-eight pence “ were substituted for the words “ seventy-two pence “.’ “.
This amendment and those that I shall move later are the result of recommendations by the Special Taxation Committee, for the purposes of clarification.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 4 agreed to.
Clause 5 -
Section twenty-two of the principal act is amended by adding at the end thereof the following aub-eection : - “ (6.) A claim under sub-section (5.)’ of this section shall he made not later than the end of the first year of tax in the assessment for which it is claimed that the greater statutory percentage should apply.”.
Amendment (by Mr. Chifley agreed to-
That the following proviso be added to proposed new sub-section (6.) : - “ Provided that a claim in respect of an assessment for the year of tax ended on the thirtieth day of June, One thousand nine hundred and forty-one or on the thirtieth day of June, One thousand nine hundred and fortytwo, may be made at any time prior to the first day of January, One thousand nine hundred and forty-three.”.
Clause, as amended, agreed to.
Clause 6 -
Section twenty-three of the principal act is amended by adding at the end thereof the following sub-section : - “ (5.) A claim under this section shall be made not later than sixty days after service of the notice of assessment upon the taxable profit of the accounting period in respect of which the claim is made.”.
Amendment (by Mr. Chifley) agreed to-
That the following proviso he added to pro posed new sub-section (5): - “ Provided that where a notice of assessment of the taxable profit of any accounting period was served upon a company prior to the commencement of this sub-section, a claim in respect of that accounting period may be made at any time prior to the first day of January, One thousand nine hundred and forty-three. .
Clause, as amended, agreed to.
Clause 7 agreed to.
Clause 8 -
Section 25 of the principal act is amended by adding at the end thereof the following sub-section : - “ (6.) An application under this section shall be made not later than 60 days after service of the notice of assessment upon the taxable profit of the accounting period is respect of which the application is made.”.
Amendment (by Mr.Chifley) agreed to-
That the following proviso be added to proposed new sub-section (6. ) : - “ Provided that where a notice of assessment of the taxable profit of any accounting period was served upon a company prior to the commencement of this sub-section an application in respect of that accounting period may be made at any time prior to the first day of January, One thousand nine hundred and forty-three.”.
Clause, as amended, agreed to.
Clauses 9 to 11 agreed to.
Title agreed to.
Rill reported with amendments; report - by leave - adopted.
Bill - by leave - read a third time.
In Committee of Ways and Means: Consideration resumed from the 11th September (vide page 281) on motion by Mr. Chifley -
That, in respect of all assessments for the financial year which commenced on the first day of July, One thousand nine hundred and forty two and all subsequent years (vide page 281).
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Mr. Chifley and Mr. Beasley 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.
Debate resumed from the 18th Septem ber (vide page 538) on motion by Mr. Chifley -
That the bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without amendment or debate.
Special Taxation Committee - Clothing Trade Contracts: Preference to Unionists - Military Call-up : Case of Noel Hackett.
– I move -
That the House do now adjourn.
On behalf of the Government, I desire to express my appreciation of the work that has been performed by the Special Taxation Committee, which is representative of all parties in this chamber. The work which has been accomplished not only is conducive to order and good government in the Commonwealth, but also has demonstrated the workability of the democratic system. I am sure that we can, with the consent of the people and the collaboration of their representatives, do their work in a time of great peril.
. - On the motion for the adjournment of the House which the right honorable member for Kooyong (Mr. Menzies) submitted last week, I mentioned the names of a number of firms in Sydney which had refused to sign an agreement with the Clothing Trades Union in connexion with work on government contracts. In fairness to all concerned, I desire to announce that three of the firms have since signed the agreement. They are Murdoch’s Manufactories Proprietary Limited, Lowe’s Limited, and Gowing Brothers Limited. Three other firms which I mentioned during the debate, namely, Anthony Hordern and Sons Limited, Marcus Clark and Company Limited and David Jones Limited, have refused to sign it.
.- Since raising in the House the case of Mr. J. A. Mendes, of the Mayfair Hotel, Darlinghurst, I have had brought to my notice another case which, in my opinion, calls for a searching investigation by the Minister for the Army. The case to which I wish to refer is that of Noel Hackett, of “Amberwood”, Milfordstreet, Randwick. Hackett, I have been informed, is about 28 years of age, is in good physical condition, and has passed the military authorities as Class Bl. Recently, according to my information, he inherited a considerable sum of money from his father, the late J. Hackett, a bookmaker, and he has boasted on several occasions that he would not be called up and could always buy his way out of the Army. I have been further informed that he was called up in January last and since then he has evaded military duties in every possible way. This, it is alleged, had been brought about a good deal with the assistance of a Doctor Guiney, who is his own doctor in Randwick, and also the doctor who examines recruits at the Area Office at Randwick.
This, to my mind, raises an important question as to whether a medical man who had been attending a family for a number of years in a professional capacity should be the examiner of a member of that family who is called up for military duties. I should like to hear the views of the Minister for the Army on the subject.
I have also been informed that Hackett at one time made a very foolish statement in front of a woman whose sons had fought at Tobruk. I believe that this woman communicated with Captain Gardiner, in charge of the military division at Randwick, and, it is stated, found out that Hackett had evaded military service since January last. My further information is to the effect that last month Captain Gardiner again called up Hackett, and Doctor Guiney passed him as Class Bl.
I come now to a really serious aspect of this matter. According to my informant, three or four days after Hackett was called up and told to report for duty, a letter was received from the Man-power Office, signed by the Deputy DirectorGeneral in New South Wales, Mr. Bellemore, to the effect that nothing was to bo done in reference to Hackett reporting until the 31st October. The lady who first complained to Captain Gardiner then wrote to the Man-power Office asking why Hackett was not being called up until the 31st October. She drew attention to the fact that he had evaded service for several months and stated that Hackett had told a certain person that he was getting a member of Parliament on the job and that he would never go into the Army. Twenty-four hours after this letter was received by the Man-power Office, I am informed, urgent instructions were given that Hackett was to be called up immediately.
The information which I have received reveals a really serious state of affairs. I ask the Minister to make a detailed statement concerning this particular case, indicating the grounds on which the Manpower authorities issued instructions to defer Hackett’s call-up. I suggest also that this man should be called up to undergo an independent medical examination, and if it be proved that he has evaded military duties, appropriate action should be taken against him.
– I assure the honorable member for Bendigo (Mr. Rankin) that it is news to me that an exemption has been granted in this case, and in the circumstances which he mentioned.
– It is not an exemption. His call-up has been postponed.
– I shall make immediate and complete inquiries into the matter.
Question resolved in the affirmative.
The following papers were pre sented : -
Lands Acquisition Act- Land acquired for Defence purposes -
Fremantle, Western Australia (2).
Gawler, South Australia.
National Security Act -
National Security (General) Regulations -Orders -
Control of -
Prohibited places (2).
Prohibiting work on land (3).
Restriction of celery planting (South
Taking possession of land, Ac. (201).
Use of land (30).
National Security (Land Transport) Regulations - Order - Western Australia (No. 3).
National Security (Liquid Fuel) Regulations - Order - Liquid Fuel (Substitute fuels ) .
National Security (Supplementary) Regulations - Order - Provision of first aid facilities.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Regulations - 1942 - No.9 (Building and Services Ordinance).
House adjourned at 11.15 p.m.
The following answers to questions were circulated: -
Commonwealth Aircraft Corporation.
– On the 25 th September the honorable member for New England (Mr. Abbott) asked a question with regard to the hold-up over week-ends of trucks loaded with wool at Darling Harbour. I desire to inform the honorable member that the conference to which I referred in my reply on the 3rd September to his previous question on the subject has met. Certain terms of settlement have been arrived at, but these are subject to approval by the members of the Storemen and Packers Union and the National Council of Woolbrokers. No announcement of the terms can therefore be made at this stage.
Ministerial Duties: Assistance by Private Members.
Cite as: Australia, House of Representatives, Debates, 29 September 1942, viewed 22 October 2017, <http://historichansard.net/hofreps/1942/19420929_reps_16_172/>.