17th Parliament · 1st Session
Mr. Speaker (Hon. T. S. Rosevear) took the chair at 2.30 p.m., and read prayers.
Motion (by Mr. Curtin) agreed to -
That the House, at its rising, adjourn to to-morrow, at 10.30 a.m.
Alleged Breach of Regulations at Bankstown.
– Has the Prime Minister taken any action in regard to matters raised in this House by the honorable member for Reid, other honorable members, and myself, concerning the building operations of a man named Fitzpatrick, at Bankstown? Does the right honorable gentleman propose to institute any prosecution in relation thereto ?
– I have considered the whole matter. I find that a prosecution is pending. It would, therefore, be quite wrong were I to make any statement upon the matter.
– Pursuant to the state ment presented to Parliament on the 30th June, 1943, I lay on the table the following paper: -
These reports have been revised with a view to the elimination, for security reasons, of information that is likely to be of use to the enemy.
– Will the Prime Minister state what is the purpose of the very interesting booklet inscribed “ Confidential “ and “ Proof “ which has just been delivered to honorable members, dealing with temporary alterations of the Constitution, the compiler of which is a very eminent legal authority in this country? Are the dis cussions upon proposed alterations of the Constitution of such a nature that the Commonwealth Government officially deems it wise that they should be confidential ?
– May I reply to the honorable gentleman? Out of courtesy to honorable members, some of whom were absent from the committee stage of the Constitution Alteration (Post-war Reconstruction and Democratic Rights) Bill, I collected all the explanations of each of the powers which I had made in committee, and forwarded them before their revision had been completed.I hope that the document will be completely revised to-morrow.
– Why give us something that is incomplete?
– I have not previously heard the honorable member complain when he had been given something; his complaint has always been that we have given him nothing. .
Control of Overseas Short-wave Services.
– Yesterday, the Leader of the. Opposition (Mr. Menzies) asked for information regarding changes in the control of overseas short-wave services. The only changes contemplated relate to administration. Short-wave broadcasts to enemy occupied countries will continue to be under the direction of the Minister and Department of External Affairs. Outgoing news services will be arranged through the Department of Information, which has taken over administration of the short-wave division from the Australian Broadcasting Commission, in accordance with a decision reached last October and announced by me at the time.
– On the10th March, the honorable member for Maranoa (Mr. Adermann) asked whether or not hospitals were receiving the benefit of the subsidy payment on the price of tea. The Minister for Trade and Customs has advised me that under the Government’s price stabilization scheme, and in accordance with principles announced at its inception, all hospitals which are wholly or partly maintained by State Governments are required to pay the higher price for tea, and do not receive the benefit of the subsidy.
Notice of Motion No. 2, in the name of Sir Earle Page, Objection to Speaker’s ruling - by leave - withdrawn.
– Has the Attorney-General been advised that in Sydney to-day an organized method of absenteeism is operating in connexion with important work that is being carried out by the Clyde Engineering Company? Will the right honorable gentleman see that action shall he taken against, and the same degree of courage shall be directed towards the treatment of, these absentees, as was recently displayed in the treatment of certain women who had absented themselves from canning factories in Sydney?
– This is the first that 1 have heard of the matter.
– The employees are absenting themselves on two days every week.
– I shall look into the matter.
Flying-boat Base at Bell Bay.
– When dealing with post-war civil aviation, will the Minister for Civil Aviation have an inquiry made with respect to the suitability for a flying-boat base of Bell Bay, in the River Tamar, Tasmania?
– I shall be glad to have inquiries made as to the suitability of Bell Bay for a flying-boat base.
– I ask the AttorneyGeneral whether, as the Launceston Examiner, of the 9 th March, reported, it is likely that, as the result of discussions which he had with the Premier of Tasmania, considerable progress will be made this year with the establishment of the aluminium industry in that State ? Is it proposed that Commonwealth legislation on the subject shall be introduced during the present sessional period? If so, will the right honorable gentleman, before taking further action, confer also with the Premier of Victoria, so as to ensure that that State shall be represented on any committee that is set up to deal with the matter, and that its claims, which have been frequently stressed in this House, will he adequately safeguarded.
– The Minister for Supply and Shipping, the Prime Minister and I have made statements on this subject recently. The Commonwealth Government is on the point of entering into an agreement with the Government of Tasmania for the establishment of an aluminium smelting industry in Tasmania, and after the agreement is reached it will be presented to this House for ratification. On that point, therefore, it would hardly be in order for us to consult the Premier of Victoria.
– Can the Minister for the Navy say whether any ships have been captured by units of the Australian Navy under conditions which entitle naval personnel to receive prizemoney? Has any prize-money been distributed to the members of the Australian Naval Forces?
– I am not able to answer the honorable member’s question forthwith, but I shall obtain the information he seeks and supply it to him later.
Exports from South Australia.
– I ask the Minister for
Transport whether action hasbeen taken by his department to prevent the export of apples from South Australia, and if so, why?
– Action has been taken by the Department of Transport to suspend temporarily the transport of apples from South Australia, it was reported to the department that apples were being sent to the Sydney and Brisbane markets at the same time that apples were being sent from Brisbane to Sydney. So that the matter might be investigated, the firm responsible for consigning apples from South Australia was asked to suspend its activities temporarily. There hasbeen no prohibition as such, and the matter is being urgently inquired into. I hope to be able to advise the honorable member further on the subject in a day or two.
– Has the Prime
Minister seen a statement published in the Courier-Mail, of Monday last, by Mr. F.Strutt, of the Allied Works subbranch of the south-eastern district of the Queensland Returned Soldiers League, that returned soldiers had been consistently thrown out of employment by the Allied WorksCouncil for the slightest fault? Will the Prime Minister inform the House regarding the policy of the Allied Works Council in relation to soldier preference? Will he have Mr. Strutt’s charges investigated, and make a statement on the subject to the House before it rises?
– If any officer of an organization who believes that returned soldiers are not being treated properly would himself write direct, either to me or to the Minister in charge of the department concerned, the complaint would be much more speedily investigated than when he merely recites his complaint to a newspaper reporter so that it is brought before theGovernment indirectly. Specific complaints should be brought directly to the notice of Ministers.
– The honorable member for Reid (Mr. Morgan) is not of that opinion.
– The honorable member who interjected will be surprised when all the information relating to the matter to which he referred is made available. To the honorable member for Moreton (Mr. Francis) I say that if I receive a direct statement from Mr. Strutt, I shall examine it, but I am not a reader of newspapers.
– A recent National Security Order gives the Minister for Transport wide powers over transport, and provides that his authority shall extend to any railway, road or air service. I ask him to take steps to ensure that a better service is provided to Canberra. At the present time, it takes 17 hours to travel by rail from Melbourne to Canberra. On the section between Goulburn and Canberra, an antiquated train covers the distance at the dizzy speed of approximately 15 miles an hour. Will the Minister for Transport confer with the Minister for Air to ascertain whether a few transport aeroplanes can be put on the route to Canberra for the benefit of honorable members ?
– Although the regulations give me extensive power as Minister for Transport, that power is exercised only in connexion with matters directly affecting defence activities. If I can be satisfied that the attendance of certain honorable members at the sittings of this Parliament is in any way connected with the country’s war effort, I may have something done on the lines which the honorable member has suggested.
– I ask the Prime Minister what is the usual and, therefore, presumably the proper method, for one member State of what is sometimes known as the British Commonwealth of Nations, to communicate with the government of another member State? For instance, if the Government of Canada, a member State, desires to communicate with the Government of Australia, does it communicate through the High Commissioner for Australia in London, or directly with the Australian Government?
– The reply of the Australian Government to such a communication is always made through precisely the same channels as those by which the query reached the Australian Government. If the Prime Minister of Canada were to communicate directly with me,
I would communicate directly with him. If he were to submit a matter to the Australian High Commissioner in Canada, our reply would go through the High Commissioner. If the representative of any other country were to have an interview with the Australian High Commissioner, and ask him to impart the purport of the discussion to the Government of Australia with a view to obtaining a reply, we would communicate with the High Commissioner, so that he could orally communicate to the seeker of the information, the information which had been orally sought.
Burrum Local Producers Association has stated that approximately 35 wireless sets are out of communication in its locality alone because “B” batteries are unprocurable. Seeing that country residentspay their licence-fees, and that wireless has become of great importance to them because petrol rationing has resulted in the irregular delivery of newspapers, and as the Government from time to time publishes new regulations over the radio, I ask the Minister for Supply and Shipping to do what he can to have supplies of “ B “ batteries made available.
– I shall have the honorable member’s representations examined.
– Has the Minister for Information seen the film Stalingrad screened recently in Canberra by the Russian Legation ? Has he read the protests of that legation in the press that the film cannot be shown elsewhere in Australia because the film distributing companies have displayed no anxiety to show it or for some other reason? Can the Minister do anything to ensure that this useful battle film shall be exhibited throughout the Commonwealth?
– I have not seen the film Stalingrad. It is not the function of the Department of Information to arrange the screening of films in theatres. We cannot command theatres to show any film.
– The Minister makes the theatres play Advance Australia Fair every night.
– We have to work in collaboration with the theatres. If it is possible for me to persuade picture theatre proprietors to show that or any other film dealing with the war, I shall be very happy to do so. The general policy of the Department of Information is to “ advance Australia fair “.
Development of Northern Territory - Housing
– I ask the Minister for Post-war Reconstruction whether special facilities will be given to enable the views of the Northern Territory to he placed before him or any committees that are set up to consider matters affecting the pastoral industry, mining, internal aviation and water conservation in relation to post-war programmes?
– I shall be very glad to do so. In fact, representations concerning the development of the Northern Territory are already before my colleague the Minister for the Interior.
– I ask the Minister for Post-war Reconstruction whether his department has made provision for the building of a number of houses in the near future. Has the department plans for the building of houses in country towns as well as in metropolitan areas ?
– The building of “ war-time “ houses in the immediate future comes under the Federal War Workers Housing Trust, the administration of which is controlled by the Minister for Labour and National Service. The trust has in hand plans for the building of 1,215 houses and such other houses as are required from time to time. The plans have been evolved in consultation with the States. The special job of my department is to plan the construction of houses in the post-war period, but it does work in very close collaboration with the Department of Labour and National Service in regard to the war-time housing programme which, I hope, will be expanded. We are now conferring with the State authorities, on the Treasury side as well as the post-war reconstruction side, as to such financial arrangements, by way of provision of subsidies, &c., as will enable theStates or semigovernmental bodies, as agents, to proceed at the earliest possible date with the post-war housing plan.
Camp at Darwin - Employment of Plant Operators.
– With regard to the advertisement in the press inviting men to nominate for a course of three months’ training as plant operators, is the Minister representing the Minister for the Interior aware of the great discontent existing at the Civil Constuctional Corps camp at Darwin because 35 men so trained are used solely on labouring and two others are engaged on the highly-skilled work of boiling billies?
– I am not aware of any discontent at the Civil Constructional Corps camp at Darwin. I have not seen the advertisement. I shall place the honorable gentleman’s question before the Minister for the Interior and ask that a reply , be furnished within a day or two.
– Will the Prime Minister endeavour to expedite an answer to a question I asked him some six weeks ago about State members of Parliament occupying Commonwealth positions. I know that the right honorable gentleman is a busy man, but this is a rather important question.
– The question relates, does it not, to a member of the Tasmanian Parliament?
– No, to State members generally.
– I had forgotten about the question, but I will ascertain what steps have been taken to provide an answer to the honorable gentleman.
– I have received from the right honor able member for Cowper (Sir Earle Page) an intimation that he desires to move the adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely, “ The provision of further assistance to enable the dairying industry to meet all its additional burdens, including those imposed by war conditions and the findings of the Federal Arbitration Court.”
.- I move -
That the House do now adjourn.
-Is the motion supported ?
Five honorable members having risen in support of the motion,
– To-day, despite the substantial assistance provided by the Commonwealth Government, the dairying industry is showing a loss of £8,000,000 a year in its total working. This loss mustbe turned into a profit; otherwise, the dairy industry will, like the sugar industry in the last war, cease to function at its full capacity. During the last war, Australian sugar production declined so much that, in 1917, we had to import sugar from Java at £100 a ton, and, in 1920, more sugar from Cuba at £75 a ton, when the price of Australian sugar was £18 a ton, with the result that for three years we had to pay twice the normal price for sugar. Therefore, in order to find some permanent means of bridging the gap between the cost of production and the return to the dairying industry, I have examined the figures for dairy production over the last 30 years and brought them into present-day terms. In every year, a comparison of the total expenditure with the total receipts of the dairying industry showed a loss varying, under the conditions laid down by the Government, from £4,000,000 to £10,000,000. The receipts included the sale of whole milk, concentrated milk, butter, cheese, pig meats and eggs.
The Government’s subsidy is only a temporary expedient which tends to deal with the industry by itself. Introduced last year, the subsidy will terminate on the 31st March next. I desire to prevent the dairying industry from being dealt with as an isolated problem. The prosperity of the industry touches every part of our national life, just as its produce goes into every home and to every individual. Its continued existence in a prosperous state is as important to the wageearner as to the fanner. If wages are to diminish, as every honorable member opposite, who has spoken on the Government’s pay-as-you-earn taxation proposals believes, ample food at reasonable prices will be vital to the community. Therefore, I desire to submit to the Minister a constructive proposal for bridging this gap.
– Why did not the right honorable gentleman think of this plan twelve years ago?
– First, because war conditions were responsible for this development, and, secondly, because the dairying industry was in a prosperous condition twelve years ago. Between 1920 and 1930, the number of cows being milked, the number of people employed, and the amount of capital invested in the dairying industry, doubled. In my opinion, a gap can be bridged for a long period only by a combination of three methods which will increase the farmer’s total returns and at the same time reduce his cost of production. In a word, the farmer must be assisted to work out his own salvation along sound lines, under a definite longrange policy. My first proposal is a more intensive use of all the farmer’s assets by the provision of requisite manpower, adequate mechanical aids and the necessary labour-saving devices for the purpose of increasing the total production and reducing the overhead. To-day, many farmers in my electorate are unable to plough their land and plant fodder crops to the extent that they desire to do.
My second proposal is that the Government should subsidize the cost of living in order to reduce the price of essential goods such as milk and butter, which have a high weight number in the basicwage regimen. That will automatically reduce the cost of labour and materials on the farm. If the payment of a subsidy enabled the price of milk to be reduced to 2d. a pint, the basic wage would fall by a couple of shillings a week and the dairying industry would benefit by £800,000 a year. The Government has already adopted this principle by subsidizing the prices of tea and potatoes. Such a scheme would improve the health of the people. By paying a subsidy of £14,000,000 for a similar purpose, the British Exchequer has been able to save about £50,000,000 by keeping the price stabilization system on an even keel.
Finally, any balance necessary to make the industry profitable should be provided by an increased subsidy rather than by an increased price. This subsidy must be sufficient to make the industry profitable, otherwise it will be worthless. The experience in Great Britain is that if food subsidies are not sufficient to stimulate and expand production, whilst at the same time assisting consumption, they are worthless.
The adoption of a combination of those three plans would assist the general stabilization of our economic system, improve the health of the people, and retard inflation. The prosperity and progress of the dairying industry would be assured; and its capacity to provide employment under satisfactory conditions for the sons of farmers returning from the war, and for many other men who have acquired a taste for outdoor life as the result of their military experience, would increase.
To secure such results, dairy-farmers must receive an adequate recompense for their personal labour, and must be assured1 a reasonable return for their capital investment in land, stock and machinery. They must receive sufficient to enable them to maintain their machinery and improvements in full repair. The domestic conditions of their families must compare favorably with those of other sections of the community. Until the basic wage findings were published, it was difficult to prepare a complete case for dairymen; but the findings of the Arbitration Court have proved beyond doubt that the cost of production exceeds by millions of pounds the total receipts of the industry from all sources. Obviously, dairy-farmers have been providing the public with cheap food at the expense of the living standards of their families, and by losses of capital. Dairying has carried on in the circumstances because in some years prices were high, whilst at other times seasons were exceptionally favorable. For twelve months after the last war, a price of 284s. a Cwt. was paid for butter. At other times, however, the dairymen and their families received for their work much less than the rural basic wage. Therefore, I welcome the basic wage determination. For the first time in our history the actual inescapable costs of the industry have been laid bare by the Arbitration Court’s determination. That wage-finding has given to the dairyfarmer an independent test which he can apply with ease in order to show the leeway that must still be made up so as to make dairying as profitable as are other industries to which the decisions of the Arbitration Court apply. Dairying can compete successfully for manpower with those industries only if the labour necessary to ensure its continuance can be paid similar wages.
The real difficulty in previous fights for an improvement of dairy prices has been the variation of the cost of prod notion ou different farms and in different localities and a lack of unanimity regarding the guaranteed minimum price sought. Now the Arbitration Court gives a basis for the whole industry. A simple arithmetical calculation shows the minimum amount that the farmer must receive if his industry is to be profitable. The government scheme, which provides a subsidy of £6,500,000, returns roughly la. 6d. per lb. for butter at the factory. But the Commonwealth Arbitration Court has fixed an annual basic wage of £250 for male and £160 for female workers. Even if the award wage bill were exactly met, the price of butter must still leave sufficient to enable the farmer to meet the other inescapable expenses and costs of the dairying industry. Interest on .the total sum invested in land, farm buildings, improvements, stock and machinery must be added to the wages cost. The cost of depreciation and maintenance of buildings, fences and machinery also must be met. Provision must be made to pay for the value of the fodder bought and fed to the stock, and of other goods used in. processing and in the course of production. Then, when al] these have been added together, margin for the skill and experience of the dairy-farmer ought to be allowed. A successful dairyman must work on seven days a week, and be a good organizer. He must have a good working knowledge of stock, crops, the land generally, animal diseases, and machinery. In fact, he must have qualities which, in industrial employment, would increase his remuneration over the basic wage by at least £2 or £3 a week. This factor of extra skill I have disregarded in a financial statement of the income and outgo of the dairying industry under conditions now imposed in Australia which I have drawn up on a most conservative basis. As a typical peace-time year I have taken 1935-36, the production of which was the average of the six years between 1930 and 1936. The application of the Government’s formula to the 1935-36 figures shows that an additional £8,000,000 over and above the present subsidy would be needed to put the industry into a position to pay its way. In 1935-36, at to-day’s costs, the total expenditure, to produce ail dairy products required, would have been £56,075,000. The total receipts for all dairy products, including pig meats, would be roughly £48,000,000, leaving a loss of £8,000,000. The details of expenditure are interesting. Wages amount to £37,575,000, paid to 124,700 males at £250 per annum, and 40,000 females at £160 per annum. Interest on capital investment totalled £8,750,000. There are more than 70,000 dairy farms in Australia, the average capital of which I have set down, on a very conservative basis, at £2,200, or a total of £154,000,000. There were 3,500,000 dairy cows in Australia, also a conservative estimate, worth £6 a head, or a total of £21,000,000. The fact that the price of 100,000 bulls would be included in this figure shows how low my estimate is. These give a total of £175,000,000 capital invested in farms and stock. A return of 5 per cent, on this investment is £8,750,000. Depreciation and maintenance of buildings, and so on, is put down at £4,250,000. On each farm the dwellinghouse would be of an average value of £500. This value, of course, is much less than the real cost in many cases, and is conservative. Bails and yards cost on the average £200, pig sties cost £100, barns £100, fencing at least £200, and machinery £100, or a total of £1,200 for each farm, leaving the actual land value at an average of £1,000 a farm. This is well below the actual position. For 70,000 farms this would mean a capital expenditure of £84,000,000, exclusive of the land. It would be reasonable to allow 5 per cent, to cover depreciation, maintenance and repairs over the whole of this amount. Machinery depreciation would be much higher than this, and house and other items lower, but maintenance and repairs of improvements, such as fences, is a constant current expense. This depreciation and maintenance charge would be £4,250,000. Fodder is included at £5,500,000. In 1935-36 £5,500,000 was paid for fodder fed to stock and for other goods used in the course of production. Thus, on the expenditure side, we have this table -
I now give the receipts to be set against these costs. For 433,722,000 lb. of butter at ls. 6d. per lb, the total would be £32,530,000. For 38,500,000 lb. of cheese the farmer would have received, at present prices, £1,450,000.
A total of 175,000,000 gallons of milk was used, of which 18,000,000 gallons were for condensing and concentrating purposes, and 157,000,000 gallons for other purposes. At, roughly, ls. 1 1/2d. per gallon, this would have given the farmer £10,000,000. For the year 1935-36, pigs and poultry products from dairy farms would have brought, at present-day prices’, roughly £4,000,000. The total receipts for all milk produced would thus have been, roughly £48,000,000, made up of the following items : -
I put down a round figure of £48,000,000. The expenditure necessary to produce this total, at basic wage rates, has been shown to be roughly £56,000,000, leaving a deficit of £8,000,000. The industry carries this, either by wasting capital assets or by accepting returns for its labour lower than the basic wage proclaimed.
The question is how to bridge this gap ? An increased Australian price for the product would only cover a part of the total production and, at the same time, would seriously damage the system of general price stabilization, which I support. An increase of the BritishAustralian contract price to the British-New Zealand price would give only £400,000 extra, even if one could obtain it by negotiation.
I strongly advocate, therefore, a combination of the three methods which I mentioned at the beginning of my speech. I am satisfied that their adoption this year would obviate any rationing in future years of fresh milk to the consuming public, especially to women and children. The three methods were: first, 100 per cent, use of farm assets to increase the total receipts and lessen overhead ; secondly, a subsidy to the consumer to lessen the cost of production; and thirdly, a direct subsidy as at present.
My colleagues will deal with the first point. With regard, to the direct subsidy, I shall say only that the subsidy should be for more than a year at a time. It should be either on a basis of five or ten years, with provision for variation according to current costs. I point out that a subsidy to the consumer would lessen the cost of production, because of its influence on nutrition and health. Very little more than the £3,000,000 to be provided by the Government for free medicine would give a” reduction of 2d. a pint in milk prices for domestic use, apart from the services and milk bars. Another £1,000,000 would give a reduction of butter prices by Id. per lb. The cumulative effect on the basic wage would be automatically to reduce it by 2s. a week. The effect on the cost to industry taken as a whole, would be to save at least twice its cost to the Treasury. On prewar employment figures in the dairying industry £800,000 a year would he saved in wages, and this saving would increase as the industry expanded. Action along these lines would help all exporting industries, including the dairying industry to face overseas competition more successfully.
Great Britain, Mr. Bevin informed me while I was in England, has determined to stay on the stabilized basis of prices brought about by the subsidizing of essential food productions. In the last analysis, our competition with Britain, and with all other nations, in all our primary and secondary production will be determined by the relationship of our wage system to theirs. The combination of these three methods, accepted as a permanent plan, will ensure expansion of the dairying industry and enable it to make provision for fodder reserves and a much more continuous supply of milk, thus eliminating the necessity for the rationing of whole milk to women and children. In fact, the consumption of milk may be increased, as has happened in Britain. I commend my suggestion to the Government for consideration. I do not know whether the scheme could bo incorporated in the plans the Government is now making to assist the dairying industry; but I ask that it be considered in connexion with any long-range plan intended to carry us through the first years of peace.
.- During the last year or two, the right honorable member for Cowper (Sir Earle Page) has been exceptionally voluble in this House in stating his views concerning the ills and woes of the dairying industry, but, unfortunately for the right honorable gentleman, an examination of the facts reveals that, during that period, the dairying industry has been on a better basis than ever before in its history. The right honorable gentleman has lost himself in a maze of statistics this afternoon. The figures, however, were of his own compilation. He did not’ quote any authorities. I advise him that the most authoritative source from which to obtain statistics in relation to this industry are the butter factories. If he would take pains to compare the monthly cheques being paid to dairymen at present by butter factories in his own district and elsewhere in the Commonwealth with the cheques that were paid out during the time he was Minister for Commerce, and when some of his present colleagues were administering that portfolio, he would realize the truth of my statement that the industry is in a better position to-day than it has ever been. If the right honorable gentleman will go to anyhonest man in this industry and ask him to compare his financial position now with his position when anti-Labour governments were in office, I believe that even he would realize how unsound his case is. I speak from bitter experience. In 1932, owing to force of circumstances, I gave up sheep husbandry and haygrowing and became a dairy-farmer. The handsome price that I received at that time for butter-fat was 8id. per lb., and that was when anti-Labour governments were in office.
– The price got down to 6d. per lb.
– That is so. To-day, the price is ls. 9£d. per lb., with a Labour government in office. The period of low prices corresponded closely with the period when the Paterson stabilization scheme was in force, and at that time we were told that nothing must be done that would interfere in any way with that scheme.
Honorable gentlemen opposite are very prone to refer to the employment of women in this industry. If it were not for the heritage that was handed down from year to year in the dairying industry, during the period of. anti-Labour administrations in this country, there would not be any need for women to go into the dairy yards. With the facilities available to-day, and I have in mind particularly milking machinery and the like, and with the prices being paid for dairy products, I say deliberately that there is no longer any need in Australia for women to go into the dairy yards to milk cows and perform associated duties.
– What rot!
– Any farmer who today forces his women-folk into the dairy yards to engage in milking and such work shows himself to be completely ignorant of the economics of the industry. Some women go to the farmyard or the dairy-yard from choice. I am not objecting to that. If it be done of necessity by women and little children, as honorable members opposite allege, then nobody in this country has been more responsible for such a state of affairs than were the governments which those honorable members supported in the past. What are the facts? Ever since the present Government assumed office, it has used every endeavour toplace the dairying industry, and all other primary industries, on a firm basis, so that no primary producer who was ordinarily efficient could fail to meet his obligations. No less an authority than the Commonwealth Treasurer (Mr. Chifley) has said that within recent years tie primary producers of Australia, have reduced their bank overdrafts by a total of £50,000,000. The press recently published the complaint by a member of the associated banks, in the course of an annual address, that the banks could not get customers for overdraft money. What is the reason? This Government has stabilized primary industry. It is true that there has been a reduction of the output of butter and other dairy products during the last twelve months; but in the main, that has been due to seasonal factors, an additional factor being that the Government has made other forms of primary production so profitable that there is an avoidance of that form which requires work on seven days a week. What sane, sensible man, who has his head screwed on properly, would work seven days a week with cows if, from the same area of land, he could dig, in an average year, 5 tons of potatoes to the acre, and obtain for them the Commonwealth guaranteed price of £13 10s. a ton, working only five or six days a week? What man in the electorate of the honorable member for Gippsland (Mr. Bowden) will bother with dairying when he can get 2 tons of flax to the .acre, and the price of £7 10s. a ton, which has been guaranteed by the Government? True, there are some far-sighted individuals, who, caring for and remaining in the dairying industry, are reaping substantial rewards by virtue of the assistance which has been given to it by the Commonwealth. Their returns are substantially enhanced by virtue of the subsidy which has been granted to the pig industry, be- cause they are able to raise pigs on separated milk and other by-products from the dairying industry. Shortly after this Government took office, it approved of an increase of the price of butter by Id. per lb. by the Commonwealth Prices Commissioner. Subsequently, a subsidy of £2,000,000 was provided for the industry; and latterly, acting on the recommendation of a committee which had been appointed to inquire into the conditions of the industry, the subsidy was increased to £6,500,000. I should like to walk into ali the butter factories in the electorate of the honorable member for Corangamite (Mr. McDonald), one of the greatest dairying districts in Victoria, and have laid bare to my gaze the books relating to the cheques that are being sent out to dairyfarmers in that district.
– If the honorable member coures to my district, he will learn something.
– The district of the honorable member for Flinders (Mr. Ryan), in common with many other primary producing districts, fared exceedingly well out of the subsidy provided by this Government to the apple and pear industry. Some of the apple and. pear growers are sad to-day, because that industry is no longer being assisted through the operations of the Apple and Pear Board. That, however, is a side issue. If more concrete evidence is required of the increasingly strong position of the dairying industry, I have only to refer to the report which appeared in the Melbourne press within the last three weeks of an all-time record on the .Melbourne market, when a dairy cow realized £37 10s. Is it contended that- a sane, shrewd farmer will pay an all-time record of £37 30s. for a cow out of which he does not expect to make a profit? Would he be so stupid or bereft of his senses? A week previously, another cow realized £29 10s. in the Melbourne market. There is no truer reflex of the condition of an industry than are the prices which dairyfarmers are prepared to pay for animal-5 from which they expect to make a return. These high prices are general throughout the Commonwealth. It will be contended, in the words of the honorable member for Indi (Mr. McEwen), that that high price was paid because the purchaser needed the beast in order to produce milk for the whole-milk industry. [Extension of time granted.’] Even if that were true, it is merely another illustration of the firm basis on which the. whole-milk industry has been placed as the result of the provision of subsidies by this Government. I admit that it is a difficult industry, and that it may never be 100 per cent, efficient; it could not he, unless all those engaged in it were 100 per cent, efficient in their methods. But we are well on the way to raising the industry to the maximum degree of efficiency and assuring a reasonable return to the farmer. It is true that under the pressure of war circumstances, steps should and could be taken which would encourage the greater production that is so sadly needed. I believe that, at the appropriate time, the Government will take whatever action may be needed in that direction. I regret that those who, for years, allowed the industry to drift into such a parlous condition, now have the effrontery to urge that something more be done for it by the present Government, which has already, with great difficulty, lifted it out of the depths of depression into which previous governments had plunged it.
Mr. BERNARD CORSER (Wide Bay; [3.30]. - It is imperative that immediate action be taken to enable the dairying industry to bear the additional burdens placed upon it by the war. Something must he done if we are serious in our efforts to produce more food for war purposes, to promote the welfare of Australia and to protect the interests of those engaged in this most valuable industry. We have a drift from the land and experienced farm hands have tasted the wages of secondary industries. No other industry employs so much labour in relation to the value of its product, and no other primary industry has been such an important factor in the pioneering of settlement. The men who pioneered the dairying industry in Australia have created towns and villages which, in turn, have been responsible for great development, including roads and railways. In peace-time, the value of the industry to Australia was £40,000,000. Dairying, with its subsidiary industries, produces commodities which are exported overseas for the benefit of the whole community. Over the years, the industry has suffered great disabilities. Those who sought to organize it upon a productive basis have always been hampered by section 92 of the Constitution. Several attempts have been made to overcome these disabilities, and some of them have been successful up to a point. First, there was the Paterson butter scheme, which conferred great benefits upon dairymen. This was followed by an agreement between the States, which remained in force up to the outbreak of the war.
I do not view this problem solely from the point of view of those engaged in the industry itself. The value of the industry to Australia is so great that its claims deserve the consideration of the Government, particularly at this time when such grievous disabilities have been placed upon it. Dairying, like all other primary industries, should be guided and controlled by rural industry boards elected on an Australian basis by the producers of the various commodities, such boards to arrange for organization, sale and marketing of products. That principle was embodied in a motion which I sought to have accepted by this House during the first five years that I was in Parliament. An effort was made to obtain an alteration of the Constitution toprovide for such an arrangement. The wording of the amendment, unfortunately, would have provided for the controlled marketing of everything, from a bootlast to a battleship, but the Labour organizations were frightened of so ambitious a project, and it was ruled out.
Now, however, the position has altered. We are working under national emergency powers, and the Government could create an organization which would ensure the payment of a reasonable price to dairy-farmers. The Government is affording assistance to the industry by way of a subsidy for a period of one year, though many people would have preferred a higher price. The Government grant was accompanied by the promulgation of a federal award providing for the payment of a wage of £250 a year to adult males and £160 to females employed in the dairying industry. This has made it impossible for the farmer who pays the award to carry on profitably. No dairyman wishes to pay a low wage, but it is impossible for the farmer to earn an amount equal to the award rate for himself, his wife and the members of his family, and outside labour as well.
The dairying industry produces the cheapest article of food in the Commonwealth. The dairyman receives for his product just about half the price that is paid in the United States of America. There, the price of butter fat is 50 cents per lb., and the consumer pays 55 cents per lb. of commercial butter. About double the amount received by the dairyman in this country for butter fat is paid in the United States of America. The dairyman here receives at the factory for commercial butter about ls. 6d. per lb. “We have been told that the low price is designed to prevent inflation, but why does the danger of inflation exist only in connexion with food prices? The public have to pay high, prices for bad clothing and fabrics manufactured here, but nothing is said about that. Food prices^ however, must be kept down, with the accompaniment of long working hours and small returns to the dairyman.
Many of the disabilities imposed on the dairying iudustry by the war can now be lessened or removed. For instance, it is now possible for the Government to release more labour to the industry, and to make available more machinery. Dairyfarmers are finding it increasingly difficult to get their products to market because they cannot get tyres for their trucks. Australia gave 20 per cent, of its rubber supplies to the United Nations, but there is no reason to-day why motor tyres held by the Army should not be released to primary producers. Farmers were asked to use horses instead of moto’vehicles, but they could not get harness. Now. harness held by the Army is being sold through the ordinary trade channels.
The Minister for Commerce and Agriculture (Mr. Scully) has told us that the production of milk has increased, but the volume of milk is not an accurate measure of the quantity of butter-fat produced. Our rightful place in the world’s markets has been taken by others, due to maladministration since the outbreak of war. In Canada, the production of bacon has been encouraged, and the number of hogs increased from 3,500,000 in 1933 to 8,000,000 in 1943. The price is based on the figure of 9d. per lb. live-weight, the top price being payable for hogs of 225 lb. weight. Canada now supplies 80 per cent, of Britain’s bacon imports, whereas, before the war, Britain obtained 70 per cent, of its requirements from. Europe. Canada will hold its share of the British market after the war, and Australia is missing its opportunity because insufficient inducement is offered to the producers here. If we do not now give attention to our post-war trade, the whole of the people will later suffer. A long-range scientific policy must be evolved. This is not a matter of politics; it is industrial.
– Order ! The honorable gentleman’s time has expired.
.- The right honorable member for Cowper (Sir Earle Page) should be the last man to move the adjournment of the House to enable a discussion of means of assisting the dairying industry, in view of the fact that for years he was Minister for Commerce or held other portfolios. If he had taken the steps which lay within his power ten years ago, he might have brought some benefit to the dairying industry. Lately, the position of the dairying industry has been most effectively debated in this House on many occasions, and I fail to understand why the right honorable gentleman has found it necessary again to take up the time of honorable members on this subject, unless it is to delay the Government’s programme of business or to gain political kudos. The right honorable gentleman’s contention that the dairy subsidy ought to be raised was most effectively answered by the honorable member for Ballarat (Mr. Pollard), who disclosed that dairyfarmers in a big way of business, like the right honorable gentleman himself, and, possibly, other honorable members opposite, are getting more than their fair share of the subsidy, because ‘this aid has induced dairy-farmers to compete for the purchase of dairy cattle, with the result that prices have soared from about £12 to £20 a head. The big operators are able to buy store cattle, fatten them on their irrigated country and then sell them to the farmers at much more than their fair value.
– Hear, hear!
– Prevention of that practice will be difficult for the Government, but that job ought to be tackled. Otherwise the dairying industry will be approaching this House year after year for an increased subsidy owing to the higher cost of cattle. The prices of cattle would chase the subsidy, and the subsidy the prices of cattle, and, doubtless, we should see cattle changing hands at £30 a head. I have moved among dairyfarmers and I have heard no complaint from them about the subsidy. Their only complaint is about the price of cattle, and that price is largely due to their own competitive buying. The Government has striven to stabilize the industry, and, in the circumstances, it has done a good job. It cannot be blamed for the shortage of materials and equipment brought about by war conditions. Honorable gentlemen opposite must realize that we have a harder job to do in handling the dairying industry under present-day conditions than they ever had. I am not a dairy-farmer, but I am a primary producer, and I know that the troubles of the dairyfarmers are similar to mine. In earlier years, although I should have liked to install machinery on my farm, I did not have the wherewithal to do so; now, when I have the wherewithal, I am limited in my purchase of equipment by the shortage. That applies equally to dairy-farmers. They are aware, however, that this Government has done in its short period in office more to place them on a strong enough financial footing to buy whatever equipment they need, provided that supplies are sufficient to go round, than governments composed of men like the right honorable member for Cowper ever did. Primary producers of all kinds appreciate what this Government has done to make available to them as much mechanical aid as is possible. The right honorable member for Cowper has proved himself to-day more than ever before to be a humbug. When he rose to move the adjournment I said to myself: “The carper from Cowper “. He was not sincere in his motion.
– On a point of order. The remark that I was not sincere is offensive to me and I ask that it be withdrawn.
– As the right honorable member for Cowper considers the statement offensive, I hope that the honorable member for Wannon will withdraw it.
– I withdraw it if the right honorable gentleman considers that it was offensive to him. Nevertheless, he could not make out any case in justification of his motion. His criticism of the Government was carping. His record belies his interest in the dairying industry. His motion is just another example of the Opposition’s time-wasting tactics. Honorable members opposite complain that the Government keeps them at business late at night, but it is their own fault that the Government should be so delayed in the transaction of its business that late sittings are essential. If honorable members opposite consider that the Government must be criticized, their criticism should be more constructive and less condemnatory when condemnation is not justified.
.- I listened with great interest to the excellent speech of the. right honorable member for Cowper (Sir Earle Page), whom I congratulate on the recommendations which he made to the Government for the improvement of the lot of the dairyfarmers. If the Government will carry out those recommendations, it will render invaluable assistance to the industry. The honorable member for Ballarat (Mr. Pollard) made an extraordinary contribution to the debate when he compared the increased returns to dairy-farmers to-day with those of some years ago, and contended that the dairy-farmer was better off. He ignored the fact that, side by side with those increased returns, the costs of production have substantially increased, especially under this Government. The Government has foisted on the industry a substantial burden in the shape of the award to workers engaged in it. The increased costs of production more than wipe out the increased returns, if any, that the dairy-farmers got to-day. Moreover, production has substantially declined and, out of that reduced production, he has to meet all his increased costs. The honorable member for Ballarat said that all the other primary industries to-day were
Sio prosperous that men were induced to transfer from dairying. He instanced how potato-growers work only a few hours a week for substantial returns and pointed to the flax industry as being more prosperous than dairying. He said that as all the other primary industries are reaping substantially increased prices, farmers are leaving the dairying industry. What a picture of despair for the farmers engaged in the dairying industry! What a forlorn hope he indicated for the dairyman when so many are leaving his industry to engage in more prosperous primary industries! This picture of despair, this forlorn hope for the future of this industry, is painted by one who is the assistant to the Minister for Commerce and Agriculture (Mr. Scully).
– On a point of order, Mr. Speaker, I say that the honorable member for Moreton is indulging in misrepresentation. I did not say that the dairying industry is in a forlorn condition.
– That is not a point of order.
– The honorable member painted a picture of despair and said that the industry’s hopes were forlorn.
– That is a deliberate lie.
– The honorable gentleman said that every other primary industry was so prosperous that the dairy-farmers were walking out of the dairying industry. I know that they are. But that is because not only are the other primary industries more prosperous than dairying, but also because the dairying subsidy is insufficient to lift the industry out of its precarious position. Furthermore, the industry is short of man-power and essential supplies. It is essential that this most vital primary industry he placed on a stable economic basis by the adoption of a long-range plan with an increased subsidy which would give to those engaged in the industry more confidence. Unless a policy of that character be applied and the attitude of despair adopted by the honorable member for Ballarat be abandoned, the dairying industry cannot hope to increase the production of the products which are so urgently needed. The annual subsidy paid by a government, whose scant regard for the industry is indicated by its neglect of the industry, leaves much to be desired and cannot create confidence. Without confidence in the future of the industry among those engaged in it no expansion of production can be hoped for. This is a most urgent matter because, the prosperity of the dairy-farmers touches every part of our national life, just as their products go into every home and to every individual. This subsidy must be sufficient to make the industry profitable, otherwise it will be worthless. The experience in Great Britain shows that if food subsidies are not sufficient to stimulate and expand production whilst at the same time increasing consumption, the money is being thrown away. The right honorable member for Cowper (Sir Earle Page) showed, on conservative calculations, that the present subsidy is £8,000,000 less than the conditions imposed by the war and the government warrant. Dairyfarmers and their wives and families must receive adequate compensation for their personal labour. The proposals of the Government will not give them adequate compensation. Dairymen must also ‘be assured of a reasonable return on their capital investment, land, stock and machinery. Under the Government’s proposals they will not get that reasonable return. They must be allowed sufficient to enable them to maintain machinery and improvements in working order. These proposals do not make that possible. The present subsidy is inadequate and must be increased.
The basic wage findings of the Commonwealth Arbitration Court prove beyond doubt that the cost of production exceeds by millions of pounds the total receipts of the industry from all sources. For a long time, dairy-farmers have been providing the public with cheap food at the expense of the living standards of their families and by loss of capital. The future of this industry must be established by a long-range plan, giving to the producers reasonable prices that will cover the cost of production and give an adequate profit. The cost of production must cover award rates that this Government has forced upon this industry. If that be not done, the sons of farmers, on returning from the war, will be compelled to seek employment in industries other than dairying. Without adequate man-power and essential supplies, the industry will not be able to carry on and increase production, which is so urgently required. If the returns to this industry are not adequate, and if the Government is not prepared to formulate a long-range plan including an increase of subsidy, the industry will not be able to carry on. For years it has been handicapped by a shortage of man-power and materials.
No longer must it be regarded as the cinderella of primary producing industries. Since the outbreak of war, dairy-farmers have been obliged to abandon pasture improvement, fodder conservation, improvements, fencing and herd testing. In order to resume them later, they will require substantial funds. Before dairymen will be able to reduce their cost of production, they must have machinery and the latest electrical devices. How will they be able to make provision for those things if the Government insists upon their carrying on at a loss? Do honorable members opposite want the wives and families of dairymen to work for practically nothing?
– I am glad that we have found a new supporter. If this industry does not, get the assistance that the right honorable member for Cowper has requested, the forlorn state mentioned by the honorable member for Ballarat will be its fate.
-Order ! The honorable member has exhausted his time.
– The speeches of honorable members opposite are only a repetition of the remarks that they have made on the numerous adjournment motions since the House met in February, and I can only conclude that this is another concerted move by the Opposition to delay the proceedings of the House. The right honorable member for Cowper (Sir Earle Page) and his supporters did not raise any matter of urgency. This debate is a deliberate attempt to obstruct Government business.
Honorable members opposite criticized the remarks of the honorable member for Ballarat (Mr. Pollard). I remind them that the honorable member did not say that the dairying industry was in a forlorn position, as the honorable member for Moreton (Mr. Francis) tried to make us believe. Those engaged in this industry are in a more prosperous condition to-day than they have been for many years. Indicative of that prosperity is the price that dairymen are prepared to pay for dairy stock. The honorable member for Ballarat mentioned the high prices that dairy cows are realizing in the Melbourne market, and the honorable member for Indi (Mr. McEwen) stated that they were for the metropolitan milk supply.
– That is quite true.
– I admit it. But I remind the honorable member that in districts where dairying herds are used solely for butter production, correspondingly high prices are being paid for dairy stock. Dairy cows at clearing-out sales in the dairying districts of New South Wales have brought prices unparalleled in the history of the industry. That, in itself, reflects the demand for cows for the dairying industry. If this industry is unprofitable, why would this demand for dairy stock continue? The demand is not spasmodic, but has been experienced since the introduction of the Government subsidy. The right honorable member for Cow,per referred to a period when the price of dairy produce was higher than it is to-day, but that was only a “flash in the pan”. Not. long ago, this Government appointed an expert committee of experienced dairymen to report to the Government upon the industry. Those men, who were not hand-picked, visited- all the principal dairying districts of Australia and made certain recommendations, which the Government implemented.
– The Government waited twelve months before acting on those recommendations.
– The Government not only acted upon the -recommendations, but also granted an additional subsidy for the purpose of encouraging production. The output figures to-day compare more than favorably with those of the period when honorable gentlemen opposite were in office, notwithstanding the extreme difficulties which war conditions have’ imposed upon the industry. Exports to Great Britain have been greater since I assumed office than they were in the previous year, despite these difficulties. Surely that is evidence that the Government has done its utmost to assist this industry to maintain and even increase production, and that it has succeeded where its predecessors failed. In fact, the Curtin Government has given the industry a better deal than it has had from any government since the last war. This has been recognized by leaders of the industry, who, in press and radio statements, have expressed their appreciation of the action of the Government in rectifying long-standing economic troubles which have beset the industry.
The terms of the motion of the right honorable member for Cowper show that he is unaware of the full extent of the Government’s assistance to the industry. I have already said sufficient to show that the problems of the dairymen have been tackled courageously and equitably, but it must not be thought that the benefits to which I have already referred represent the total assistance the industry has received.
The industry has benefited directly and indirectly on several other counts. The present Government has subsidized the wheat industry for the specific purpose of enabling wheat to be sold for feed purposes at 3s. 6$d. a bushel, freight paid. The feed wheat subsidy has totalled nearly £1,000,000. The demand for this wheat has been steadily increasing, and the Government has therefore decided that further supplies of feed wheat shall be made available on the subsidized basis for rural industry. When mill offal has been in short supply, dairyfarmers have taken full advantage of the benefits of the subsidy that has been provided. The scheme has been made applicable to all parts of . the Commonwealth. The freight charges which the
Government has to meet in respect of this feed wheat have reached as high as ls. a bushel. Districts in northern New South Wales and southern Queensland, in particular, have benefited substantially. The honorable member for Wide Bay (Mr. Corser) referred to the increase of pigmeat production in Canada. I am glad to inform the honorable gentleman that a highly satisfactory increase of pig-meat production has occurred also in Australia, and there is every expectation that the increased rate of production will continue. The subsidy for feed wheat has had a great deal to do with this increase.
The Government has now decided that other grains shall be subsidized, and that priority use of these subsidized grains shall be accorded to the dairying and pig industries. The basis of the subsidy in respect of cheap feed wheat will be applied to other grains, and the Government will pay freight to the grower’s siding. These decisions have been made on the advice of experts of the Commonwealth and State Governments and they give effect to decisions of the Australian Agricultural Council.
In accordance with these decisions, the amount approved by the Government to cover the feed wheat subsidy for the current financial year has been increased from £500,000 to £730,000. The Government has also provided for a subsidy on oats, grain sorghum and maize, as stock feed. This will greatly assist the dairying industry, which is a principal consumer of these grains. The Government has decided, further, to guarantee to producers of these grains the prices as fixed at growers’ sidings, hut stock feeders will be able to buy the grains, at buyers* sidings, at considerably lower figures. Oats will be sold for stock feed at 2s. Id. a bushel at buyers’ sidings. This will require a Commonwealth subsidy of about 8d. a bushel. Grain sorghum will be sold at 3s. 3d. a bushel, which will require a subsidy of 4d. a bushel, plus freight and handling charges, making a total subsidy of lOd. a bushel. Maize for stock feed in northern Queensland is to be subsidized by 2s. a bushel, plus freight, to reduce the price to stock feeders from 5s. 9d. a bushel to 3s. 9d. The Government has provided an amount of £450,000 to meet the cost of subsidizing these coarse grains as feed, thereby increasing to £1,180,000 the subsidies paid to stock feeders. As the dairying industry is a principal consumer of these stock feeds, it will receive further additional benefits from this largely increased subsidy.
In addition, the Government is assisting stock feeders, including dairyfarmers, by paying freight on these stock feeds. This is a big item which, when handling is included, exceeds 4d. a bushel. In fact, the cost of transporting cheap feed wheat to Queensland reaches as much as 7d. a bushel. The dairying industry has also received considerable assistance from the Government’s bounty on superphosphate. I concede that the superphosphate position, although improving, is still dependent on shipping to bring phosphatic rock from the northern hemisphere to Australia. These difficulties are some of the general difficulties caused by the war, and I can assure honorable members that we are doing everything possible to secure as much as possible of Australia’s allocation of 820,000 tons of superphosphate this year. Dairymen, particularly in the southern States, use large quantities of superphosphate, normally, for top-dressing, and on the superphosphate that they use they receive the Commonwealth bounty of more than £2 a ton. This costs the Commonwealth more than £1,000,000 annually, of which the dairying industry receives a share.
The right honorable member for Cowper has referred, in his motion, to the award for the dairying industry. I say most emphatically, that the subsidy of £6,500,000 was costed against that award, and that the subsidy, in effect, not only enables the dairying industry to provide decent wages for employees, but also gives additional benefit to dairymen employing family labour. This point was made clear by Mr. G. C. Howey, president of the Australian Dairy Farmers Federation, in a national broadcast last year. Mr. Howey, who is highly respected in every branch of the industry, said in his statement that it was his desire to clear up the many misconceptions which have developed following the making of an award for the industry. Dairy-farmers’ representatives, he said, would not have been able to justify the increase of the subsidy from £2,000,000 to £6,500,000, unless they were prepared to include in their costs, award wages and conditions for the industry. I credit Mr. Howey with knowing at least as much about the dairying industry as does any honorable member opposite. It is significant, therefore, that he also pointed out that the award benefited the families of dairyfarmers. About 90 per cent, of dairyfarmers employ family labour, and the result of the award has been to provide payment for hitherto unpaid family labour.
– That is not the case in Queensland.
– The figures I have mentioned are for the Commonwealth. I have found the families to be approximately as large in any dairying district I have visited as they are in any other part of the Commonwealth. Furthermore, I have seen family labour being utilized in those districts. I cannot see why Queensland, should be an exception. The figures that I have given reveal that the present Government is fully alive to the need for maintaining and, if possible, increasing dairy production; but, with the shortage of man-power and the other difficulties caused by the war, it is impossible to guarantee a substantial increase. If production can be maintained at a reasonable level, we shall have ‘reason to be satisfied. As the person responsible for the administration of the department which controls this industry, I say without fear of contradiction - my assertion being based on facts - that this Government has done more for the dairying industry than was done by any of its predecessors. It has explored every avenue with a view to maintaining production, and its efforts are appreciated by those who are engaged in the industry. The only exception would appear to be members of the Opposition, who, purely for party political purposes, try to raise bogies. However, their misrepresentations are easily exposed1 when they are analysed. I have travelled throughout Victoria, New South Wales and Queensland, which are responsible for the greater (proportion of Australia’s dairy production, and have found general contentment prevailing - a condition that was absent in past years. There is the realization that at last in the Commonwealth Parliament there is a Government ‘ which is sympathetic to the industry and is fully seised of the responsibility to deal with it equitably.
.- The Minister for Commerce and Agriculture (Mr. Scully) is always contradictory when he replies to suggestions from this side of the House designed to improve the condition of the dairying industry. He invariably charges Opposition members with obstruction and waste of time when they relate in this Parliament the very sorry position of that industry. Had it not been for the numerous motions for adjournment, which honorable members who sit on this side have submitted, and of which he complains, the measures which the Government has taken on behalf of the industry would have been avoided. The proof of the correctness of that statement is to be found in the sequence of eventsIn November, 1941, when the war had been in progress for two years, the industry applied for an increase of the price of butter by Id. per lb., but its application was rejected by the Commonwealth Prices Commissioner. Not until I had raised the question in this House did the Prime Minister (Mr. Curtin) promise further consideration, and, in February. 1942, an increase of Id. per lb. was sanctioned. It will thus be seen that the sequence of events was : Rejection of an application for an increase; action by the Opposition; and increase reluctantly granted. Similar circumstances have been associated with the granting of a subsidy. True, the Minister for Commerce and .Agriculture appointed a committee to which no exception could be taken. It was an excellent committee, and I have previously congratulated him on. its appointment. But when that committee submitted its report, after it had made considerable investigation, the Government took nine months to act upon it, despite the statement in it that the matter was of great urgency. How did the Government then act? Only under the spur of motions for adjournment in this House. After a motion had been submitted with a view to drawing attention to the Government’s neglect to implement the recommendations of the committee, a subsidy of £2,000,000 was granted, following which the Opposition submitted further motions and the amount was reluctantly increased to £6,500,000, thereby substantially implementing the recommendation of the committee. Step by step the Government has had to be driven to the assistance of the industry.. Yet it has the audacity to claim that it acted of its own volition, and to accuse the Opposition of having neglected the industry when it had the opportunity to assist it! It has had an advantage which honorable members now in Opposition lacked when they were in office, of being vested with power such as is conferred by the National Security Act. Only by virtue of the powers conferred under that act has it been possible for the Government to render assistance to the industry in time of war. How has it reacted to the suggestion that war-time powers which have enabled the industry to be assisted should be continued in time of peace? Tt, is proposed that primary industries shall be excluded from the provisions relating to protection in the referendum that is to be submitted to the people. If the Government can say at this juncture how it proposes to continue assistance to the industry after the war, the representatives of the industry will be pleased to hear the explanation. There is no waste of time on this side of the House in the presentation of this problem to the Parliament. As I have shown, only as the result of insistent and repeated efforts by the Opposition have the needs of the industry at last been recognized. The Minister has related the great help which ti te industry has received. Certainly it has not received any help to which it was not entitled, or which was not recommended by the special committee. What is the position in regard to the subsidy for the purchase of wheat ? A subsidy of £1,000,000 was granted in order that the dairymen might thus be enabled to produce more pigs; and when they did so, the price of bacon and pork was reduced with a view to the recovery of the £1,000,000.
– That statement is absolutely incorrect.
– I have stated a fact - the price of bacon and pork was reduced.
– The statement is incorrect. The price is higher to-day than it was previously.
– The price of pork and bacon was reduced by a half-penny per lb. in my district, and the official reason was that the dairy-farmer had been able to purchase wheat at a lower price, and had therefore been enabled to produce pigs more cheaply. When challenged, the Minister must meet the criticism which his statements provoke. This motion refers to the burdens which primary producers have to bear, and one of their principal burdens is the shortage of labour on the farms. In this respect, I exonerate the Minister for Commerce and Agriculture. I believe that he has done everything he can to ensure that farm labourers are brought back to the farms, but, unfortunately, he has not been supported by his colleagues or by the Army authorities. I protest against the obstacles which are being placed in the way of soldiers who desire to return to the farms to assist their aged parents. I have received a letter in which it is stated that those soldiers who make applications are sometimes submitted to the greatest humiliation by their commanding officers. When they apply, they are virtually told that they are “ cold-footers “ who want to desert their mates. The father who made application for the release in the first place found that it was necessary to obtain his son’s consent. His son replied that any man who wanted to be released must submit to the humiliating ordeal of marching along in front of his linedup company as an object of humiliation - as a. “ squib “. In some instances fa rmers, because of ill health, are on the point of collapse, but when they apply for the- release of their sons, those sons are submitted to treatment of this kind. In the case I have referred to, a friend of the father who applied for the release of his son has written to me as follows : -
The case of this man is indeed a hard one. He is a cripple from arthritis in the hips, and it is pitiful to see him hanging on with both hands to the bail rails as he gets up and down to every cow.
That man’s son was marched up and down in the front of his company in New Guinea, and made to feel that he was trying to desert his mates.
– The honorable member is making these assertions as if they were facts.
– I am stating what was written to me.
– The honorable member’s time has expired.
, - :So much has been said in the course of this debate about what governments have done and have left undone, that it is desirable to place on record what this Government has done for the dairying industry. The history of the dairying industry before the war was a sorry record of low-paid workers, over-worked families, and dairymen struggling along on a bare subsistence.
– They all were “ broke “.
– Yes, practically all were “broke”. They all had’ overdrafts at the bank if the bank could be induced to allow an overdraft. The honorable member for Ballarat (Mr. Pollard) referred to the high prices now being paid for dairy cows in the various dairying districts. There can be no better indication of the prosperity of the industry than the fact that men are prepared to pay high prices for cows. It leaves no doubt that the industry has become reasonably profitable.
Shortly after this Government earnt’ into office, the price of butter for domestic consumption was increased by Id. per lb. this increase being granted in March. 1942, by the Prices Commissioner. The increase to the producer was $d. per lb., but the price of cheese was increased by lid. per lb., whereas the producers had asked for an increase of only id. per lb. In October, 1942, the Government granted a subsidy of £2,000,000 a year to the dairying industry, pending the making of an interim award, after which the matter was to be further reviewed. In May, 1943, the Government increased the subsidy from £2,000,000 to £6,500,000 a year, which covered the total claims made by representatives of the dairying industry who took part in the discussions with the Government.
– At that time.
– That was in May, 1943 - not so long ago.
– They had made the claims nine months previously.
– The increased subsidy was made retrospective to the 1st April. Accompanying the subsidy was a provision for the payment of a basic wage of £4 16s. a week, whilst £6 ls. a week was allowed as remuneration to the proprietor. Up to May, 1943, this Government had met every request that the representatives of the dairying industry had made upon it.
Since the outbreak of war, the price of butter to the producers has increased by 4d. per lb. There had been an increase of -Jd. per lb. just immediately before, due to an increase of the overseas price, so that there has been a total increase of 4£d. per lb. to the producers, which represents an increase of 33^ per cent, on previous prices. These are hard facts, which can be supported by an examination of the books of the butter factories.
As the honorable member for Ballarat pointed out, the dairy-farmers themselves, and the people in control of the butter factories will tell you quite frankly that never before was the industry in such a satisfactory condition as it is to-day. There is less money owing by dairy-farmers to their storekeepers, and less money on overdraft from the. banks than ever before in the history of the industry. The existing prices are giving an average return to the producers of ls. 6£d. per lb. at the factory.
Reference has been made to the price of raw milk, and this matter has received much consideration. The average price of raw milk is now ls. 6d. a gallon, which represents, to the producer, an increase ranging from 33£ per cent, to 50 per cent, since this Government took office. That is the answer to that part of the right honorable gentleman’s case. 1 do not intend to deal with all the points that have been made so effectively by the Minister for Commerce and Agriculture (Mr. Scully), but the Government, in addition, has stabilized the prices of articles and commodities that the dairyfarmers use. Therefore, there has been no increase of their costs proportionate to the increase of the price of their products. The Minister for Commerce and Agriculture also referred to the heavy subsidy paid on superphosphate used by dairy-farmers. That has been of prime importance to them. Further assistance has been given in the purchase of wheat for stock feed. The honorable member for Richmond (Mr. Anthony) talked about the price of pig meats, but this Government has guaranteed to the producers of pig meats the price of 9d. per lb. They have never had that before.
– The Government reduced the price that was operating.
– I am talking about the price that operates now. Pig-raisers are guaranteed 9d. per lb. for pig meats.
– The first deputation I met when I became a Minister was from the pig industry. The members of that deputation asked that pig-raisers be guaranteed a return of 6-Jd. per lb. and said that that would satisfy them.
– That is a fair indication of what this Government has done on behalf of those engaged in the dairying industry. We did not know that this motion was to be made to-day, but last week the Prices Commissioner and other officials concerned in this matter conferred with representatives of the dairying industry in order to discover what additional costs have been incurred by the industry since the subsidy of £6,500,000 a year was granted in March, 1943. When it was claimed by the industry that its costs had risen, what did the Government do? It did not wait for this motion, for, during the last couple of weeks, indeed in the last couple of days, the Prices Commissioner and other officials have taken steps to ascertain what those additional costs are. If it be definitely proved to the Government that the industry has incurred additional costs, the Minister for Commerce and Agriculture will consider what should be done; but we do not propose to take action on mere generalities expressed in this House. Our policy will be based on mathematical calculation. I put the foregoing facts on record because they represent the history of what this Government has actually done for the dairying industry, not just talked about doing.
Motion (by Mr. Curtin) agreed to -
That the question be now put.
Original question resolved in the negative.
Debate resumed from the 21st March, (vide page1683), on motion by Mr. Chifley -
That the bill be now read a second time.
Upon which Mr. Holt had moved by way of amendment -
That all words after “That” be left out, with a view to insert in lieu thereof the following words: - “this House, while favoring the principle of basing income taxation on current earnings, is of opinion that the bill should be withdrawn and redrafted to eliminate those provisions which impose an additional burden of 25 per cent. of taxation by requiring taxpayers to pay, in addition to a current year’s tax, a further levy of 25 per cent. based on incomes earned in the year 1943-44 “.
As a member of the Income Tax on Current Income Committee, which furnished to this Parliament the report on which this legislation is founded, I am glad to have the opportunity to debate the bill, I hope dispassionately, with a desire to throw some light on a very much embarrassed debate - embarrassed, on the one hand, by ignorance of a large number of critics, and on the other, by self-interest. The approach to this measure should be divorced from such catch-cries as that this is merely chicanery or trickery on the part of politicians and a sort of grave-yard humour. I cannot imagine that that sort of talk contributes much to the debate on so vital a topic as is contained in this bill, which seeks to bring about a long overdue reform, for which there has been great agitation. I venture the opinion that no really worth-while reform has ever met with such hostile criticism as has this proposal for the introduction of pay-as-you-earn income tax.
Mr.Scullin. - Hear, hear !
– It is rather significant that, since the right honorable member for Yarra suggested that the bill might be withdrawn and another bill designed to restrict pay-as-you-earn taxation to employees be introduced, there has been a damping down of the criticism. The fact is that, as was frankly conceded by the section of the Opposition led by the Leader of the Australian Country party (Mr. Fadden), substantial financial benefits are conferred by this bill. The Leader of the Opposition (Mr. Menzies), however, sought to prove the contrary. He said that he spoke for a certain section of the Opposition. I am glad that he excepted me, because I would not adopt what he said. He said that instead of conferring on the public a substantial benefit this bill imposes a penalty - that instead of pay-as-you-earn taxation being a benefit conferred on the taxpayers, the provision that 25 per cent. of the tax that would otherwise be levied should still be levied, imposed an additional load upon the people. The honorable member for Fawkner (Mr. Holt) supported his leader. Indeed, he said in answer to me that if he were given the option of coming under the provisions of this legislation or staying outside, he would cheerfully stay outside.
– I repeat that.
– I hope that the option will be given to the honorable member to come in or stay out, but I also hope, on behalf of the honorable gentleman’s clients, that he does not give them that advice.
– The honorable member for Warringah does not know all there is to know about this measure.
– I do not suggest that I do. I would be the last to say that no one has the right to criticize. Wherever I chance to be I do not resist the right of men to criticize. I welcome criticism of this measure, but I do not welcome, and the public ought not to welcome, as criticism, something which is based on a false appreciation of the issues involved. I regret that the Leader of the Opposition is absent from the chamber because I intend to repeat a few of the things that he said. For instancehe contended that this bill was worthless. There can be no other interpretation of his words.
Yet the Leader of the Australian Country party said that the bill conferred substantial financial benefit upon existing taxpayers, and that the only question was how much the taxpayers should be required to pay for that benefit.
– That is assuming that the rates remain unaltered.
– I should like the honorable member to refrain from interjecting, because I intend to make my own speech in my own way. The Leader of the Australian Country party is to be congratulated upon his frank and fair approach to this problem. I can understand the issue that he has raised. It is one that must be examined. The question that he has pondered is whether, for the financial benefits conferred upon taxpayers by this bill, the 25 per cent, provision is too much to pay, whether the amount should be less; if so, what should it be? I and other honorable members can understand such an approach, but not the argument that this is merely a change of the basis of taxation and. that taxation merely passes from the income appropriated to one financial year to that of another. The contention of the Leader of the Opposition that .the Government is merely doing what is just and that, therefore, nothing should be paid for such justice, confuses the issue. It is well for honorable members to know the background of this proposal. I do not pretend .to be one who knows everything about the subject. I am only giving my views, though I hold them very strongly. Why also I would like the Leader of the Opposition to be present is that I have certain legal propositions to put and I should like him to contradict me if I put them falsely.
– That would be inviting disorderly conduct.
– I hope not. That interjection is almost as helpful as was the honorable member’s contribution to the debate. The issues should be made plain, to the country. It is time that they were reduced to simple compass, and I shall endeavour so to do. The dispute as to whether the 25 per cent, is an impost or whether there should be what is commonly called “ forgiveness “ of one year’s tax, is not peculiar to this country. The pay-as-you-earn principle was introduced by Mr. Ruml in the United States of America and was debated by Congress as the Carlson-Ruml plan. Mr. Carlson, a member of Congress, moved that the whole of one year’s tax - the year preceding the year of transition - should be forgiven. A select committee of Congress examined the proposal and produced an elaborate report upon the subject. As some of its conclusions are pertinent to the present discussion, I ‘shall read them to the House. They reduce to very small compass the real issue before this Parliament. The report is dated the 30th April. 1943, and the pertinent extracts are -
When the original committee bill was before the House, a substitute was offered by Mr. Carlson, the gentleman from Kansas, which provided for complete forgiveness of one year’s taxes. This substitute was defeated, and in this respect the House completely vindicated the action of the committee in opposing total forgiveness of one year’s taxes. After defeating the Ruml-Carlson Bill, the House voted to re-commit the committee hill Complete forgiveness provided under the Ruml-Carlson plan is most unfair, especially because, due to the high rates, it will be impossible to recapture the forgiven tax from the taxpayers in the higher brackets.
I pause here, because I desire to refer to the proposition which the honorable member for Fawkner (Mr. Holt) put to the House. I asked him these questions: - If it were true that the same amount of revenue can be obtained irrespective of the 25 per cent, forgiveness, would he not concede that, in the end, the money must be obtained from some one? Further, would he not concede that although some would escape individually, another section of the community would have to carry the burden ? The honorable member replied that he was not averse to asking posterity to carry some of the burden. I make it perfectly plain that I am opposed to handing on to posterity a burden that I am able to bear.
– The honorable member is distorting my statement.
– Order !
– The honorable member is not entitled to misrepresent me.
– Order ! The honorable member for Fawkner is being disorderly.
– I have no desire to misrepresent the honorable member for
Fawkner. He said that he had no objection to posterity being called upon to pay.
– I said that the present generation of taxpayers had carried a proportionately heavier burden of tax than had any other generation of taxpayers in the history of the Commonwealth, and ‘that it would not be an unfair proposition in the years immediately after the war to ask incoming taxpayers to carry a part of the burden.
– I accept that explanation. It means, if it means anything at all, that if I prove that taxpayers are excused from the payment of a. certain portion of the year’s tax during the war, it is fair that the burden shall be borne by some of those who come into the taxation field after the war.
– That is not posterity.
– May I explain to the honorable member that those who come “ post “ something come “ after “ something, and posterity means “those who come after us”. Those who come after us will be largely the children of the present taxpayers. 1
– That interjection is not very helpful. I, too, could go on the popular band-wagon and say that the Government’s proposal will exploit the people, but I do not propose to do so. I believe that during the war those who are capable of paying the tax should pay it, so that the burden will not be passed on to their children. The extract from the report of the Congressional Committee continued -
The central idea of the Ruml plan is to place taxpayers on a current payment basis hy forgiving one year’s taxes.
That is said to be nonsense now. The extract proceeded -
Thus, a taxpayer under existing law would I lay 1042 taxes in 1943. Mr. Rural proposes that 1942 taxes should be forgiven and that payments made in .1943 be credited to liabilities on 1943 income.
That is precisely what this bill proposes to do, with the exception of the 25 per cent, provision. The report continued -
Your committee is impressed by the fact that complete cancellation of taxes on 1942 incomes would constitute gross violation of the principle of ability to pay. The benefit would be distributed in inverse ratio to need. Cancellation would bestow the greatest benefit on those best able to make economic sacrifices and the smallest benefit on those least able to make such sacrifices.
I have read those passages, because our own parliamentary committee made recommendations similar to those of the Congressional Committee. We had before us the deliberations of Congress, the Canadian Parliament and the British Parliament and read their respective acts dealing with this subject. After long deliberation, we decided to recommend that 25 per cent, only of the year’s tax should be imposed. I do not know whether “ imposition “ fairly describes this, or whether the proposal may be more fairly described as “ asking people to pay for every £100 of income tax, which under existing legislation is unquestionably due, only £25 “. It depends upon whether one approaches the matter properly from the legal point of view, or as a political catch-cry. I have quoted from the American report because the Congressional Committee expressed a view that is very pertinent to this debate. This Parliament, of course, is not obliged to accept it, but I desire to know from those who criticize it how they can reconcile their argument with the facts that I have stated. Is it not a fact that when once a man becomes liable for income tax he remains liable for tax upon every penny of the taxable income he earns until the date of his death, and that his executors are required also to meet unpaid tax in the year following his death? The Canadian, plan applies to all income except investment income. The British plan is confined to employees whose incomes do not exceed £600. It has been said that the British Government has since decided to extend the plan to cover all personal exertion income, though that has not yet been done. The American plan covers all income except company income,, although a sliding scale was adopted in regard to “ forgiveness “. I submit, therefore, that in considering this subject, we should hear in mind the approach that has been made to it in other countries. Much of the criticism of the plan - and I do not necessarily refer to the criticism in this House only - has come from people who have not taken the trouble to read the report of the committee which inquired into the subject. If the critics have read that report, they have undoubtedly failed to appreciate’ the meaning of plain words. I direct attention to paragraphs 41 to 44 of the report, but particularly to paragraphs 41 and 42, which read -
The committee considered whether the deduction year ending on the 31st March could be continued under the .proposed plan. If this were done, the deductions made during the deduction year commencing on the 1st April would be applied to meet the tax assessed on the income of the year commencing on the following 1st July. Thus the deductions made from the 1st April, 1944, to the 31st March, 1945, would be applied to meet the tax assessed on the income of the year, 1st July, 1944, to 30th June, 1945.
The committee felt that the deduction year should conform exactly with the income year under any plan whereby current tax would be assessed on the current year’s income. If the deduction year commenced on the 1st April, a wage-earner who entered employment on the 1st July would only have available nine months’ deductions . from which to meet the tax on the income of the full year ending on the following 30th June. Moreover, the committee was of the opinion that a proposal which required an employee to commence paying tax three months before he commenced to earn the income on which the tax was based, could not be justified. It would also be a discrimination against employees as compared with non-employees.
If the plan proposed by the Leader of the Opposition (Mr. Menzies) were adopted, unquestionably employees would be required t© pay income tax far in advance of non-employees - in fact, nine months in advance. When the legislation was introduced which called on employees as from the 1st April to have deductions from their pay envelopes, we did not object on this side of the House to that being done. Only incidental matters were criticized. I hear honorable members of the United Australia party murmuring, but I remind them that I was then a member of the parliamentary party, and also a member of the taxation committee of the party, when- this subject was being discussed before it was introduced to the House.
– The honorable member has forgotten what happened.
– I have not forgotten. In considering this subject we were confronted, and are still confronted, with the same situation as had to be faced in Great Britain, Canada and the United States of America. In Great Britain the “forgiveness” applied to 75 per cent, of the income tax affected; in Canada it applied to 50 per cent. ; and, in America, it applied to between 58 per cent, and 83 per cent. I approach the subject in exactly the same way as it was approached in those countries, because the factors in them and here are similar.
– Post-war credits have been applied there.
– I do not see what that has to do with liability. That has to do with collection, and I - shall have something to say about it later. I wish, at the moment, to confine myself to the question of liability. The Leader of the Opposition laid great stress on the words “ the financial year in and for which the tax is payable “, which appear in section 10 of the Income Tax Assessment Act, 1915. I shall emphasize different words in the- same section, which reads -
Subject to the provisions of this act, income tax shall be levied and paid in and for each financial year upon the taxable income derived directly or indirectly by every taxpayer from sources within Australia during the period of twelve months ending on the thirtieth day of June preceding the financial year in and for which the tax is payable.
I emphasize the words “ income tax shall be levied and paid . . . upon the taxable income “. The remarks of the Leader of the Opposition on this point proved nothing. It is true that tax is imposed “ in the financial year in and for which the tax is payable “, but there can be no doubt that the tax was payable in respect of the preceding financial year. The right honorable member for North Sydney (Mr. Hughes) was AttorneyGeneral at the time the 1915 bill was introduced. I do not desire to refer -to the debates that took place at that time, except to say that they make it abundantly clear that the tax was being imposed upon the previous year’s income. If honorable gentlemen have any real doubt on that point I refer them to section 10 of the Income Tax Assessment Act (No. 2) 1915, which was assented to on the 15th November of that year, only two months after the previous act had been assented to. That section reads -
After section forty-six of the Principal Act the following section is inserted: - “4.6a. - (1.) Where a taxpayer dies on or after the first day of July in any year, and before furnishing a return of his income for the preceding year, his executors or administrators shall furnish a return of the income derived by such deceased taxpayer during the said preceding year and shall be assessable in respect thereof and shall be chargeable with and pay tax thereon. (2.) Where the executors or administrators are unable or fail so to furnish a return of such income the Commissioner may estimate same at and may make an assessment of the amount of which in his judgment tax ought to be charged.”.
I am sorry that the Leader of the Oppo sition is not present in order to deny my contention on the law on this point, if he considered it necessary to do so; hut, to my mind, the amending section which I have just read puts it beyond any doubt whatever that the tax was being levied upon the income of the financial year 1914-1915. The matter has been referred to in court, and a little later I shall have something to say about the decision in the Aitken case.
– Does the honorable gentleman agree that there is a lag?
– If by “lag” the honorable member means what I mean, in one sense there was a time lag, namely, having to pay out of income earned during this year tax on the income that I earned last year, and having to pay out of the income that I earn next year tax on the income I had earned during this year. That tax lag has been in existence since the statute was enacted. Those who oppose the bill say that wage-earners who come into the field of taxation under this pay-as-you-earn scheme will be liable to pay income tax immediately, and will continue to pay it until they die. That is true. They then ask: Why, then, impose an additional tax? ‘ That line of reasoning has caused most of the confusion that exists. What these persons have failed to observe is that this bill is designed to apply primarily to existing taxpayers. It is those taxpayers who will derive benefit from it. I shall prove that, during their lives, there will be one year of income upon which they will not
pay a penny in the event of full forgiveness, and only £25 in £100 if this bill becomes law. Let us consider the position of a man who came into the income tax field in 1941, and earned assessable income also in 1942, 1943, 1944 and 1945. Let us assume that he then goes out of the taxation field through death, incapacity, or from some other cause. There is income for five years, upon which he is liable to pay tax. That is indisputable by any one who cares to read the law. In those five years there is one year in respect of which, under this hill, no tax will be levied except as to 25 per cent. Let us, for the moment, leave out of consideration that 25 per cent. No income tax is to be levied in respect of that one year. Yet I am told that no benefit is conferred by the bill ! I venture to say that if, to-morrow, the option which I have suggested were given, there are not many persons who would fail to exercise it so as to come under the provisions^ of this legislation, and the first to exercise it in that way would be those who are in the higher ranges of income. I speak as one who has earned a large income and has paid high income tax. Any one who says that this measure does not confer substantial financial benefits on all existing taxpayers - as the Leader of the Australian Country party concedes - is,_ to say the least, not putting the case fairly before the public. No one will dispute that a man who comes into the income tax field is at the end of a financial year morally and legally obliged to pay income tax in respect of that year. At the end of this year, if this bill does not become law, all who are in the taxation field will be morally and legally liable to pay tax on the money they have earned in this financial .year. Yet the bill provides that, in substance, in the five-year period to which I have referred, the total amount of income upon which tax will be imposed will be that of not five years but four and a quarter years. If the period taken be three years, the tax will be on income for two and a quarter years, and if the period be ten years, the tax will be on the income for nine and a quarter years. The financial benefit will be greater to me, I frankly concede, than to a man who is earning £8 or £10 a week.
No one who approaches the matter realistically could argue otherwise. The Congressional Committee said that the matter had to be watched closely, because it broke away from the principle of the imposition of taxation in accordance with ability to pay. It may be argued that in any event the income tax is obtained from the taxation field. But it would be the result of a different distribution of the burden of tax from that which now exists, and those who are on the higher rates during war would escape some of the total responsibility. As I conceive it, the function of a member of a committee or of the Parliament is not to represent any particular section. The wealthy and the poor sections are entitled to have their positions investigated, understood, and debated in this Parliament without unnecessary heat, and certainly without the raising of false issues. I am not prepared to advance the proposition of complete forgiveness when in my opinion that would not only be wrong from a revenue point of view, but would also confer a greater advantage upon those who are in the highest ranges of income. It is claimed that the working man will derive no benefit. Let us consider the position of a man who came into the income tax field on the 1st July, 1942. Because he had not earned an assessable income in the preceding year, he was given a certificate of exemption until the end of March, 1943, and no deductions were made from his wages during those nine months. At the 1st April, 1943, he was obliged to have deductions made weekly from his wages in accordance with the existing law. At the end of June, 1943, he made a return in the ordinary way, having had deductions made from his wages in the intervening period of three months. He received his income tax assessment at the end of 1943 or early in 1944, in respect of the income he had earned during the year ended the 30th June, 1943. Probably, with a small adjustment, he was able to meet the payment of the tax with the stamps that he had in hand, but he still found that he was behind in respect of the year of income in which the payment had been made.
It is wrong to say that, because a certain base was taken in 1915, that base can be easily shifted. The matter must be more deeply examined in order to determine what legal liability was imposed, and what it has been throughout. That brings me to this proposition : Income tax in this country has been imposed upon a basis which makes every penny of income in the taxable field liable at some time to income tax. That also applies to the new taxpayers under the pay-as-you-earn system. I am quite certain that the Leader of the Australian Country party, who made a valuable contribution to the debate, will agree that existing taxpayers under this bill do not pay on the whole of their taxable income during their lives ; they miss one year, and they miss it at a time when the income tax rates are very high. That is a benefit.
– Did the original taxpayer miss a year?
– He did not. No one has missed a year to date because, from the moment the tax was imposed, it was imposed on money earned twelve months before, and that has continued until now. I have sought to establish that there is no foundation for the contention that the tax is really on the current year’s income as well as for the current year’s revenue. That contention is the basis for most of the objections which have been raised to this measure outside the House.
In order to make it clear that I do not depend on my own view of this matter, I shall refer shortly to a case decided in the High Court in1936. The Leader of the Opposition said that the position in regard to taxation remained the same from 1915 to 1941, and I therefore take for my argument a case during that period which related to a man named Chirnside. What is known as the Aitken case was an appeal by Chirnside’s executors. Chirnside’s assessments for income tax from the time income tax was first imposed in 1915 up to the time of his death, which was during the year 1933-34, had been paid by him. The grounds of the objection were substantially that Chirnside died on the17th April, 1934, before the beginning of the financial year in respect of which tax was sought to be recovered. Counsel submitted that no tax was imposed for that financial year until the 4th August, 1934, and that Chirnside was not a taxpayer having died before then, and was not chargeable with tax for the financial year. It was pointed out that the testator always adopted the calendar year instead of the financial year. He was assessed for a period ending on the 31st December instead of at the 1st July each year. He had paid all the tax he was bound to pay during his lifetime. The case, it was stated, was covered by the following propositions: - (1) Income tax is an annual tax; (2) it is a periodical tax and is imposed on persons in respect of income; (3) a person not alive during the year of charge, i.e., during the financial year, cannot, therefore, be a taxpayer; (4) executors can only be made liable by a provision which throws on them an independent and not a substitutional liability.
That argument sounds very like that which I have heard against this proposal both, inside and outside the House, but it failed. The court held that, although Chirnside had paid all tax for which he was assessed up to the time of his death, nevertheless his executors were liable for the amount claimed.
– I am sorry the honorable member did not read an extract from the judgment of the court.
– I did not wish to weary the House, but I can explain what took place. I have stated the argument of the appellant’s counsel, but the court held that, according to section 62 of the Income Tax Assessment Act - which is, in substance, section 217 of the present act - it was quite clear that all income earned up to the time of the death of the taxpayer wa3 controlled by the tax acts, and the taxpayer was liable, even though, at the time of his death, he had paid every penny he owed.
Seeing that there is a substantial benefit, to the taxpayer under this scheme, we have to ask ourselves, is it worth nothing? On this point I direct attention to the comments of the Leader of the Australian Country party. Contending that the real point was, what was the concession worth, he said that the taxpayer was being required to pay a premium in order to escape a future liability, and that the taxpayers as a whole were being required to pay a premium of £36,000,000 for a pre-war benefit amounting to £29,000,000.
– ro. I compared the amount of £35,000,000 with the combined pre-war Federal and State income tax collections amounting to £29,000,000.
– I cannot see the relevancy of the comparison unless it was to show whether or not the payment of £36,000,000 was a fair one in the circumstances. [Extension of time granted.] The right honorable gentleman did not say what he considered ought to be paid by the taxpayers for what he conceded to be a substantial benefit conferred upon them by this legislation. He said that 25 per cent, of the income tax that would be otherwise payable was too much to pay and that the amount should be something less. Perhaps it should be less, but I do not see that it should be. The 25 per cent, provision seems to be fair. The matter can be approached from two points of view. The payment is to be either £25 of every £100 of tax on earnings in a year in respect of which the taxpayer is not called upon to pay tax, or £25 per £100 paid for the financial benefit which this bill will confer upon him. I do not care how the matter is approached, because the substance is the same from the taxpayer’s point of view. But I think it is wrong to compare £36,000,000, which I take for the purposes of my argument, with the pre-war figure of £29,000,000. In the first place. I am not sufficiently optimistic to imagine that we shall ever return to that figure of £29,000,000. The history of the last war shows that we did not get a substantial reduction of war taxation until some years , after hostilities ended. I have before me the figures relating to collections of Commonwealth income tax. They show that in 1917-18 the amount collected in income tax was £7,200,000. In 1918-19 the amount was £10,300,000. The amount increased progressively after that war ended until, in i921-22, it was £16,600,000. It was not until 1927-28 that the level of income tax collections dropped to anywhere near to the highest amount of income tax collected during that war. At present the combined Federal and State income tax revenue amounts to £190,000,000, of which about £140,000,000 is paid by persons. One hopes and expects that some time after the war when the defence expenditure will be reduced the income tax will fall accordingly; it will not, however, fall immediately and it will not fall to the pre-war level. I do not expect it to fall rapidly to any figure less than half of the income tax collections for this year. If one took only £90,000,000 as the figure to which it may fall some years after the war ends, then £36,000,000 bears a favorable comparison.
Only this morning I discussed this measure with representatives of a certain organization which has engaged in a great deal of opposition to the measure. I asked them, “ You say that this bill imposes a 25 per cent, penalty on the taxpayers. Frankly, if it is withdrawn, will you be quite happy ? “ They said, “ Quite frankly, we concede that substantial financial benefits are conferred by it”. It is rather significant, as I pointed out, that since the right honorable member for Yarra (Mr. Scullin) suggested that the bill might be withdrawn and another substituted there has been a noticeable lessening of the criticism of the bill.
I have endeavoured to approach this matter dispassionately. I could quite easily get on the band-wagon and say, “It is an unjust imposition on the people “. But I do not see it as such, and I do not intend to support that proposition. It is quite clear that the bill confers great benefit on the people in that it not only gives to them, a remission of 75 per cent, of the tax for one year for which they would otherwise be liable, but also faces the difficulties with which the Income Tax on Current Income Committee was primarily appointed to deal, namely, what will happen to those whose income falls when the war ends? That aspect has hardly even been considered by the critics of this measure. Indeed, all the thunder has been directed to what is called an unjust imposition. I, therefore, sought to prove that under existing legislation taxpayers are compelled to pay income tax in respect of every penny of taxable income, whereas under this measure, subject to the retention of 25 per cent, of the tax for which the taxpayers would otherwise be liable, the tax in respect of one year is wiped out. That is as clear as I can put it to the people of this country, and I do not intend to say anything more on that aspect of this measure.
I turn now to the retrospective clauses of the bill. I believe that the principle of retrospectivity in taxing bills is particularly vicious and that, when a government seeks by ante-dating legislation to catch those who have been evading the law we must conclude, that no matter how contemptible we may view their actions, that there is grave danger of innocent people being damnified. I think that the Attorney-General will support that. In this bill there are several provisions which contain this principle.
– It is a bad principle.
– Yes. I instance clause 5, the operations of which will be retrospective to the 1st July, 1942. The clause seeks to remove the exemption from income tax of visiting personnel assisting in the defence of Australia. The Income Tax Assessment Act provides -
The following income shall be exempt from income tax: -
This clause proposes that the words “ or defence “ shall be omitted. The result will be that many men on small incomes who have come from England, where while they are here, they are not liable to pay income tax, will now be called upon not only to pay it henceforth but also to pay what will be, if the clause be agreed to, arrears of income tax dating back to the beginning of the financial year 1942-43. There can be no defence of such a proposal. These people were entitled to say that the legislature had decided that they were not required to pay income tax.
– The honorable member understands that many of those people were not paying income tax in any country at all.
– I agree. That is what I said. They were not paying it here or in England, hut that is because they were exempt. How could the Government justify saying, “We think” we made a mistake when we exempted you, and in order to rectify that mistake, we shall render you liable to pay income tax for the last two years “. If that principle were good the Government could say, “ We shall tax back for five years “.
– They might never have agreed to come here but for their exemption from income tax.
– I agree. I recall that when I was investigating the Bofors gun programme, I came across a man who had come to this country from England to work for less money than he had been earning because he thought that he could do a war job here. He is engaged in the manufacture of munitions and receives less than £10 a week. He broke up his home in England and, no doubt, has difficulty in meeting all his commitments here. Under the law at present, he is exempt from income tax. I can understand the Government saying that henceforth he shall be liable to pay income tax on his future earnings, but I cannot understand why, after he has expended the money he has earned on the footing that it was not taxable, he should be made liable for income tax on his remuneration during the last two years. I urge the Government to re-examine that matter.
Except in extreme circumstances, retrospective legislation should be avoided, particularly in taxation measures. I am aware that abuses come to the notice of the Treasurer from time to time, and that it is difficult for him to act quickly because so many other problems demand his attention. But the principle should be adopted that if the law permits a certain thing to be done, the Parliament shall not, except in the most special case, pass legislation to cover it retrospectively.
– Does the honorable member contend that the clause means a new impost and is not a provision to clarify the law so that some evasion can be corrected?
– It is a new impost to be applied retrospectively.
– That is so. Admittedly, some cases arise which must be dealt with, but as a general principle, the application of retrospective legislation to any number of cases that were not previously covered by the law, is bad. Even though the Treasurer may catch people for whom we can have only the utmost contempt because of the manner in which they have sought to evade taxation, none the less the Government will find that hard cases make bad law.
– Did it not apply in 1915 ?
– No. Clause 5 removes the exemption which applies to people who came to Australia for the purpose of assisting in the defence of this country. For example, many operatives from Great Britain have worked in our munitions establishments. They have not paid income tax either in Australia or in Great Britain, but they have spent their remuneration. If the Government considers that they should be taxed, I shall not object to the inclusion in the bill of a provision to make them liable in respect of their future earnings. But it is wrong to make the tax retrospective.
– Was not the principle of retrospectivity introduced in 1915?
– Yes, but the two cases are not comparable. When these operatives came to Australia, the law provided in the plainest terms that they were not liable to pay Commonwealth income tax. Now, the Government proposes to make them liable for income tax, not as from to-morrow, but for the last two years. That is indefensible. [Further extension of time granted.’]
Clause 6, which deals with the acquisition of depreciated property, also has retrospective application. Clauses 7 and 10 are undoubtedly retrospective. Clause 7, dealing with contributions to pension funds, will have a retrospective effect on appropriations on and after a certain date. Therefore, all those who made their appropriations before that date will escape, and all those who made their appropriations after that date, perhaps for the purposes of book-keeping, will be caught. That demonstrates the vice of retrospectivity. If the Government decides to alter the provision relating to pension funds, the proper course for it to adopt is to say that as from to-day they shall be liable.
Clause 10, which is most important, deals with the losses of previous years. We are told that some people, in order to evade income tax, acquired a defunct company for the purpose of carrying it on, or re-created a business in the company’s name and set off the losses which it suffered in past years against income from other sources. Such persons do not get any sympathy from me.
– This matter has been the subject of strong complaints.
– I do not dispute that. But when the Government seeks by retrospective action to catch those companies, we must remember that they have acted within the law-. Consequently, it is wrong to make this legislation retrospective, no matter how contemptible the offence may be. One finds continually in the law that cases which are designed to check people of that description frequently react upon innocent parties. Suppose a company has been genuinely carrying on business for some years and making losses. Then it is acquired in the manner that will make it liable under this clause. Are the original remaining shareholders of that business, irrespective of the shareholdings at different times, to be placed in a position different from that which they would have occupied if they themselves had carried on the business? Will they be placed in a different position from that of a public company? Suppose a defunct company is taken over by a public company. I believe that I am correct in saying that a private company would not be a private company within the meaning of the act if it were a subsidiary of the public company. So a public company can do what a private company cannot do. That is a vice inherent in this clause. It shows signs of having been arrived at ad hoc.
– Some of those so-called “ hard cases “ have already seen me, and I propose to submit an amendment which, I think, will overcome some of the difficulties. But that amendment will not affect the retrospective application of the clause.
– I have already expressed my views about retrospective legislation. This Parliament should seek to prevent it, except in a case of overwhelming necessity. The Commissioner of Taxation, or - the Board of Review, should have an opportunity to remove from the operation of this provision genuine companies carrying on genuine business. They should not depend upon the arbitrary formula laid down in this bill. In these matters I support the criticism of the Leader of the Opposition. The Board of Review should be given a chance to deal with companies that are carrying on genuine businesses, regardless of the other provisions of this clause.
– Is the honorable gentleman suggesting that the Commissioner of Taxation should be given the right to review the percentage rates?
– Where the Commissioner is satisfied a genuine company is involved, he should so decide or refer the case to the Board of Review.
– I am circulating an amendment on this point which I hope the honorable member will consider carefully.
– Retrospectivity, in my opinion, is wrong in this connexion. The Government should prescribe a day some time in the future and declare that the law shall apply to all appropriations made for this purpose subsequent to that date. It should not provide condition? which will tend to incite companies to take advantage of conditions which apply to a certain period before or after a date that has already passed.
To conclude, it is unfortunate that the issues in regard to this subject .of “ payasyouearn” have been clouded and that the motives of certain honorable gentlemen on both sides of the chamber should’ have been impugned. This subject was considered by an all-party committee. Such a committee can do only its best. It does not expect to escape criticism; but criticism, to be of value, must have regard to the facts of the case, which must be clearly stated. I do not think that that condition has been observed in some quarters. However, if the bill is passed I believe that, in the end. the people will regard it as a fine piece of work by the Parliament.
.- We are considering “ a bill for an act to amend the Income Tax Assessment Act 1936-1943 “ under which the Government proposes to introduce certain reforms of taxation, and to seal certain loopholes which permit avoidance of taxation in regard to excess payments to superannuation funds and the like. Provision is being made also to grant relief to certain members of the armed forces. Generally speaking, the amendments are of a benevolent and not of a punitive character.
One important part of the bill, how.ever. seeks to alter the basis of assessment of taxes. We are passing through abnormal times. This is recognized by tlie Government, because, when the rates of tax became so high in 1941-42, it introduced an important amendment of the law which was aimed at cushioning the impact of the heavy taxes on taxpayers in the salary and- wage earning classes. The Government frankly admitted that in bringing the taxation year forward by three months it was imposing an extra tax of 25 per cent. Taxpayers did not necessarily feel this at once, and the tax deductions were deposited against the liability of taxation in the following year. But because of action taken in other countries, and because of pressure brought to bear upon tlie Government in this country, it was decided to consider the possibility of applying the principle in Australia of basing the liability for income tax for each financial year on the income for that year. Unfortunately a great deal of confusion has been introduced into this discussion. It is necessary, therefore, that the issues should be simplified and stated in the clearest possible way. The Government appointed a committee, representative of all shades of political opinion in the Parliament, to consider the subject. The committee’s terms of reference were quite clear. The committee was required to inquire into and report upon -
The advisability of basing the liability for income tax for each financial year on the income of that year, or of adopting any other method of avoiding the hardship which may arise under the present system of -basing the liability for income tax for each financial year on the income of the previous year.
The old argument has been raised as to whether there is a lag in taxation. The committee did not inquire into that subject, because it had been furnished with legal advice which, in its view, stated the situation quite clearly. I refer to the High Court judgment which the honorable member for Warringah (Mr. Spender) mentioned in his speech. Honorable gentlemen should bear in mind that the liability to tax is clearly stated in the principal act, section 17 of which reads -
Subject to this act, income tax, at the rates declared by the Parliament, shall be levied and paid for the financial year commencing on the first day of July One thousand nine hundred and thirty-six and for each financial year thereafter. . . .
The concluding words of that section make the position quite clear. Taxpayers generally pay their taxes in the last quarter of a financial year and by that time they are liable for almost another year’s taxation. It is this recurring principle in taxation that is the governing consideration in the whole case. The committee had to meet the’ situation that then existed. The act provides that salary and wage earners start paying their taxes three months before the end of the income year. The act clearly lays it down that the tax is “ upon the taxable income derived during the year of income “, which is the twelve months immediately preceding the year in which the tax is collected. The year of income undoubtedly means the financial year next preceding the year of tax. The committee had regard to that provision.
I do not intend to defend the report of the committee, because it is an unbiased report by members of all political points of view. The report is phrased in simple language, and I can see no reason why any signatory to it should require to defend it in any way. The committee considered the subject in two parts, first, as it related to salary and wage earners, and, secondly, as it related to nonwageearners. It has been stated by some organizations that the Government is calling upon salary and wage earners to pay fifteen months’ tax in twelve months. That is a deliberate attempt to confuse and frighten taxpayers, and is not a correct statement of the position. Every wage and salary earner will be liable to pay the assessment that he has received during the last month or two, in respect of income earned in the year ended the 30th June, 1943. He is now paying the tax on that income. Prom the 1st April, deductions will be made compulsorily from his wage or salary, according to the scale for the income he is earning, towards his liability to pay tax in the year commencing on the 1st July next. In other words, at the 30th June he will have paid for a period of three months towards the tax for next year. The parliamentary committee was charged with the responsibility of finding a method which would remove from the mind of the taxpayer the fear that he would he liable for tax at to-day’s high rates upon the high earnings of the previous year, when his earnings ceased because he had become unemployed - as may happen with many women when munitions establishments close down or reduce their operations - or when his earnings had dropped through loss of overtime or any other cause. That is the crux of the situation. That fear is in the minds of hundreds of thousands of wage-earners at the present time. The committee viewed the matter objectively. The Government desired to have the change brought into being at the earliest moment possible. The earliest date was the 1st July, 1944, because it would be physically impossible to have the alteration approved by this Parliament and the machinery measures provided by the Taxation Department so as to give effect to it from an earlier date. The change will really commence in respect of the salary and wage earner on the first of next month. He will be clear of his tax liability when he pays his assessment this month. He must make adjustments either up or down. He will have to pay . in cash if he has short-paid by deductions, and he will be given a refund if he has overpaid and claims it. From the 1st April, weekly deductions will be made from his wages or salary. The committee decided that, as those deductions represent income tax paid by 1,500,000 taxpayers - three-quarters of those who are liable to pay tax in Australia - and a payment of £15,000,000 into Consolidated Revenue, repayment of which would embarrass the Government, such repayment could not be considered ; therefore, it should make a date line at the 30th June. The payments which salary and wage earners will then have made by way of deductions, subject to adjustments, will be accepted as a complete clearance of tax for the year of income 1943-44. In other words, the deductions for those three months will bring the taxpayer to the point of being free from tax debt. If he ceases to earn on that date, he will not owe any further tax. Under the law as it stands, having paid for that three months, deductions would still have to be made for a further nine months in order to meet the liability for tax which, under this scheme, he will have discharged at the 30th June, or when he can be assessed immediately subsequent to that date. Therefore, this is undoubtedly a boon to the salary and wage earner. There is to be no added deduction. The deductions will be made next year and in the following year, if the taxpayer continues to earn, at the rate that is commensurate with his salary or wage. The difference will be that those deductions will relate to the week of income in which they are paid, and if his salary or wage should go up or down his deductions will go up or down correspondingly; consequently, he will strike a. balance at the end of J une, 1945, and will then owe nothing to the Treasury. That will be a great relief to the minds of a very large number of men and women, particularly women engaged in war work whose income will undoubtedly drop in the future. To that degree, the objective of the Government has been fully met. There have been attempts to draw a red herring across the trail, and to convince the workers that they will pay tax for fifteen months in a period of twelve months. That is not correct. They will have had fifteen months’ deductions made ‘from their salary or wages over fifteen months, and will be free from tax debt at any time; in other words, forgiveness of taxation for a period of nine months, although their deductions will not cease at any time, but will continue to be made at the same rate throughout. I, in common with every other member of the committee, hold the view that, in relation to salary and wage earners at least, the benevolent objective of the Government has been completely fulfilled, and that the fear I have mentioned will ‘be removed from the minds of the people.
There 19 also, however, the section of taxpayers which consists of those who derive income from other than salary or wages. Here, the proposition is very different, because those persons are not having deductions made from their wages. It was contended, and the committee accepted the position, that onequarter of the taxpayers cannot be treated better than the other three-quarters, but that every one should he on, the same basis and be brought to the same date line for the commencement of payasyouearn taxation. I admit that, if a person whose income is from other than salary or wages maintains a steady income in each year until death, there will be no remission of tax, so far as cash payment is concerned, during his lifetime; the only remission will be at his death. Even so, that may represent a substantial addition to the estate of a very hig taxpayer, for the simple reason that the tax is so high at the present time. I have in mind a taxpayer on £10,000 a year. His present tax is approximately £8,200 annually. Under pay-as-you-earn, there will be a remission of 75 per cent, of the tax for 1943-44, amounting to £6,150. This would be added to the estate of a deceased person. The taxpayer might not derive any benefit while he is alive, but it must be admitted that his estate would benefit at his death. Such a taxpayer may say “ I have a grievance, because I am not to receive any remission but am to pay an additional tax for the next three years “. I frankly admit that in each of th/j next three years such taxpayers will pay one-twelfth of the tax for 1943-44. But that does not mean that individually they will suffer thereby.
– On the same line of reasoning, all will not benefit.
Sitting suspended from 6 to 8 p.m.
– The Government, wishing to spread the incidence of the tax evenly over all the people, has considered it just that the 75 per cent, forgiveness to salary and wage earners in order to make them fully paid up to the 30th
June should apply also to all other classes of taxpayers, except companies. I have explained that salary and wage earners made increased tax payments for 1942 to enable them to stand the shock of a heavy tax should their wages decline in the following or some subsequent year. As it turns out, the extra deduction for three months decided upon for this purpose actually has the effect which the Government had in mind, though I do not think that at the time the Government intended that the amount so raised, should be sufficient to clear a year’s tax. However, the committee recommended, three months’ deductions for this purpose, and the Government accepted the recommendation and embodied it in the bill. The Government takes the view, quite justly, I believe, that other income groups, which have not had that impost placed upon them, must now come into line and bear the added tax at some period if they are to obtain the protection that the system will give .them. There is no doubt that it does afford protection against hardship due to a declining income. A majority of people experience a decline of income at some time in their lives, and this does not apply only to salary and wage earners, who may lose their jobs through illness or from other causes; it can apply also to the professional man who falls ill, and his recovery is not aided !by the knowledge that he has a heavy tax liability hanging over him. It also applies to a large group of people upon their retirement. It can apply to members of this Parliament,who, having become Ministers of the Crown, revert to the status of private members, with a consequent reduction of income. It can also apply to people who leave the country. It can be argued that, under the pay-as-you-earn scheme, no cash benefit is conferred. I admit that there will be no benefit in cash during the lifetime of persons other than wageearners whose incomes remain steady until their death. In their case, the only advantage will be that their estate will benefit to the extent of 75 per cent, of the liability for tax for the income year 1943-44, when the rates are at their highest. In the case of a person who has been receiving a large income, the consequent addition to his estate may be considerable. However, to the man on a fluctuating income, the benefit will be immediate when his income declines. Let us assume, Mr. Speaker, that you were to be appointed next year as Australia’s representative in Washington. Under the act as it now stands, you would be liable to pay tax on your income for that year from the beginning of the year until the day you left Australia. You would also be liable to pay a full year’s tax on your income for the year 1943-44; but if this bill were law, you would pay only on that portion of your income received between the 1st July, 1944, and the date of your departure from Australia, plus 25 per cent, of your liability in respect of your present year’s income. In your case, that 25 per cent, would have to be paid in cash, but in the case of other taxpayers, it would be spread over a period of three years, one-twelfth of the total amount of the tax being payable in each of the three years. This provision would apply to that one-quarter of the number of taxpayers in Australia, who, between them, pay something more than half the total amount of income tax - the actual figure being £80,000,000 as against £60,000,000.
The 75 per cent, forgiveness applies to the taxpayer’s liability for the year 1943-44, because that is the year of transition. If it did not apply to that year there would be no need to insert in the bill a clause to prevent manipulation for the purpose of defrauding the revenue. A’ similar section was inserted in the act in the United States of America for the same purpose. There, 75 per cent, of the tax was forgiven, as is proposed here, but it was left to the discretion of the Government to nominate the year to which the forgiveness should apply. In Australia, it is provided that forgiveness shall apply to the present year’s income unless in that year the income is more than 25 per cent, greater than for the previous year, in which case the Commissioner for Taxation may grant the forgiveness for the previous year, plus 20 per cent.
A fact which impresses me very much is that, despite all the objections raised to the Government’s proposal to forgive only 75 per cent, of the tax to taxpayers other than wage and salary earners - and the objection is raised despite the fact that wage and salary earners have already paid the extra amount - no request has been made by any section that the present system be retained. If any section indicated a preference to retain the present system, I should be prepared to believe that there might be some real dissatisfaction with the Government’s proposal. As it is, I am forced to believe that the entire agitation that has been worked up against the proposal is born of a desire to get something for nothing - which is impossible of attainment. The committee would have been ill-advised to have recommended the introduction of a scheme that would cost the revenue £15,000,000. It is important that the war should be paid for, to as great an extent as possible, as we go along. The day will probably come when I shall be clamouring for reduced taxation, so that we may begin to rebuild our assets, but that time is not yet. The nation has voluntarily gone without a great many things in order that we may concentrate upon the war. I do not think that any accurate forecast can be made of the amount of revenue that will be raised next year, or during the next three years. Of course, the Government cannot look forward to receiving increased revenue from taxation. The £6,750,000 that will be raised in the form of added taxation from om1 class of taxpayer may offset in some measure the decline of revenue from other taxation sources. Those taxpayers whose incomes decline even by as much as one-twelfth will be able to bear this added impost without being any worse off than if the present system had remained in force. If it were not expected that there would be a general decline of income there would be no need for the Government to introduce this system. T believe that the bil] is a good one, and T commend it to the House.
.- The plan of income taxation that is being debated, and considered by this House is being referred to as “ pay-as-you-earn “, but that is not correct so far as the nonemployee is concerned. The employee will, from the 1st July next, be properly on the pay-as-you-earn basis, but the nonemployee will not he on the scheme that applies in Canada and the United States of America, where the non-employee pays his tax on the income of the year during that year in four equal instalments self -assessed, the tax being adjusted when he receives his final assessment. But in Australia a non-employee “who earns £1,000 this year and £500 next year will still pay tax next year on £1,000, not on the £500 which he will earn during that year, and he will get Ids adjustment in the following year. So we have not yet got a complete scheme of pay-as-you-earn taxation. The reason is that the Income Tax on Current Income Committee considered, on the advice tendered by the experts of the Taxation Department, that the administrative difficulties in ‘regard to equipment, staff and office accommodation were too great to enable a complete payasyouarn scheme to be introduced now. But the employees, who represent more than three-quarters of the taxpayers, will, if this measure be carried, have a very satisfactory pay-as-you-earn scheme operating as from the 1st July next. Two general grounds of objection have been raised to this proposal. First, it is alleged inside and outside this House that there is no tax lag and that- a person who pays his tax in a particular financial year discharges all his income tax obligation in that year and that the income earned in the preceding year is used merely as a measure. I have heard many arguments on this matter since the scheme was put before Parliament and the public. I have been almost persuaded to that view by some of its advocates. They may be right, but I am more influenced by what the High Court says as to what my liability is. I. know, and so does every taxpayer, that I should have poor chances of persuading the courts, from the magistrates’ court to the High Court, that I do not owe tax in respect of income I earned last year. In fact, the judgments of the High Court sustain the view of the Commissioner of Taxation that the taxpayer is a year behind in the payments of his tax right up to the date of his death, if his death occurs when he is earning or within twelve months of his ceasing to earn. That has been proved by the Aitken case, cited by the honorable member for Warringah (Mr. Spender). Therefore, whether those who argue that there is no tax lag convince themselves with their argument or not, no one has yet convinced the highest tribunal of this country, namely, the High Court. It is established beyond doubt that there is a tax lag and that each year every taxpayer is liable to pay tax at the assessed rate upon the income earned in the previous year. The Leader of the Opposition (Mr. Menzies) knelt, as he described it, at the penitent’s stool. He said that he felt guilty for having been Prime Minister when the Income Tax Assessment Act was amended in order to deprive the estates of deceased persons of the benefit of clearance from tax liability from the 1st July of the year in which the taxpayer died to the date of death; but that provision was wiped out by this Government and the amending legislation was introduced by the Treasurer (Mr. Chifley). Therefore, the right honorable gentleman was confessing to a sin he did not commit.
– The right honorable gentleman is so seldom humble that I let im go.
– When we discussed whether there is a tax lag or not, I, as a responsible member of the committee, was influenced by the legal position, not by controversy inside or outside Parliament. What is my liability and what is the liability of every member of the community? Upon that I founded my judgment. Another assertion is that the employee will be unfairly penalized under this bill. I suppose all members of this House have received green slips similar to those which I have been receiving by the score. What is printed on those slips is a lying distortion. I know people of repute who have signed them believing naively that because the documents are printed they must be true. These slips have been distributed in tens of thousands. They read -
The Taxation Department is asking for the payment of Income Tax for 1043-44 on or before March 31, 1944.
Taxpayers who pay their tax through deductions from pay envelopes would thus have to find an additional amount equivalent to six or seven months’ taxes, on top of normal taxinstalments, to meet their assessments by that date.
This is unreasonable and unnecessary, and is unacceptable to me.
I therefore call upon you, as my representative in Parliament, to see that this further imposition is cancelled immediately.
That is a complete lie for which there is no justification in any shape. The facts regarding employees have been stated by previous speakers. I merely repeat them for the purpose of indicating ray agreement. The employee from the 1st April to the 30th June next will bc paying in advance in respect of next year’s assessment. His payment to the 31st March will clear his liability, not to the 31st March, as a great many think, but only to the 30th June last, nine months back. Therefore, he is always nine months in arrears. His estate could be called upon to pay the amount involved if he died on the 1st April. The unfortunate wage-earner under the present system is always nine months in arrears because his current deductions relate not to his current income, but to the income he received last year.
– -That is correct.
– Therefore, he never catches up. He is always behind. If he loses his job and no deductions can be made from his pay, because he has no pay, the Commissioner of Taxation can present him with a demand for the payment of tax due from the 1st. July last to the 31st March, even if he’ does not earn a penny. It is very largely to avoid such possibilities that this measure has been introduced. From the speeches of some honorable gentlemen on this side, one would think that pay-as-you-earn taxation was not a plank of the policy of this party during the last general elections. It was one of the principal planks of the policy on which this party went to the country. It is true that there was no detailed scheme.
– This is not the scheme on which the Australian Country party went to the country.
– We went to the country on a general plan of payasyouearn.
– They are not sure over there what the Australian Country party did go to the country on.
– The right honorable1 gentleman should not take praise too readily from me because his side, if it did not resist, did not assist.
– Quite right!
– Only when the elections were over did the Prime Minister, in response to the suggestion of the Leader of the Opposition, constitute the special committee, with the Treasurer as chairman, to investigate the whole matter. I concede that, once having taken up the question, the Treasurer and the Government members applied themselves to it with thoroughness and fairness and with a desire to do equity to every section of the community.
– We have the same opinion about honorable gentlemen opposite.
– One would not have known from the discussions that took place to which party any member of the committee belonged. Therefore, I, as a member of that committee, intend to stand behind its report. I am not entirely, satisfied that everything that has been done is as I hoped at the time would be possible. When I applied myself to the examination of the problem and studied the implications of every move that might be made, I conceded that under existing circumstances it would be difficult indeed for the Government to go farther than it has and forgive 100 per cent, of the tax. The fly in the amber is the fact that the employee is to pay three months ahead of the financial year. If the deductions for the year commencing on the 1st July commenced on the 1st July and then continued for twelve months, it would have been possible to have a 100 per cent, cancellation without disturbance of the revenue.
Opposition Members. - Oh !
– I do not say that that would have been government policy, but it would have been possible. But employees’ deductions will begin for 1944-45 on the 1st April and therefore, if we had 100 per cent, forgiveness for the non-employee, we should have to take two steps to put the employee on a similar footing. First the Treasurer would have had to cancel the contribution from employees from the 1st April to the 30th June, amounting to about £15,000,000. I for one, in spite of all the hardship which may have to be borne by the non-employee taxpayer, would not be a party to cancellation of that liability at this period. As one who has stood resolutely for what I believe to be sound finance as a counter to inflation, I would not tolerate for one moment the idea of remitting this amount to the public at a time when it is necessary, to curtail spending power. Secondly, if the Treasurer had cancelled that debt, he would have had to make the amount good in some other way. How else could that be done but by the expansion of credit or by loans? We all know that a good many loans are filled by expanding credit. Therefore, the cancellation of £15,000,000 would have meant approximately £30,000,000 of inflation. That could not be approved by any honorable member on this side who has stood for sound finance and anti-inflation measures. Taking that view I, therefore, support the view of the Treasurer. 1 concede that there are alternatives. The £15,000,000 might still have been collected and credited to the employee’s account for the financial year ahead. Again, that would have defeated the purpose of pay-as-you-earn taxation, because it would not have related deductions to current income. Under the present scheme, from the 1st July next an employee will have deducted from his pay envelope exactly the amount of tax for which his income makes him liable.
But despite this measure we are still a long way from placing non-employees on a basis of pay-as-you-earn. The person whom it is aimed to protect, namely, the individual who loses his employment or whose income diminishes, will still in the year of diminished income have to meet a tax bill levied on a year of high income. If he were earning £1,500 a year on which the tax would be, say, £600, and in the next year he earns only £500, he will still have to find £600 in order to meet his liability. True, he will secure a refund in the following year when tho adjustment is made, but that basis is not pay-as-you-earn. Because of administrative difficulties, it is not possible to bring non-employees under pay-as-you-earn at the present time.
If this scheme be not adopted, what will be the position of the employee? It has been alleged that the employee, under this scheme, will .be burdened with a 25 per cent, surcharge. Whether or not this scheme be adopted, the employee will still pay exactly the same amount from April to June next. There will not be the slightest difference. The employee will contribute the so-called surcharge of 25 per cent, by reason of the fact that for 25 per cent, of the year he at present pays in advance of his commitments. Many cases will arise where employees will he called upon to pay a substantial lump sum because their earnings during the previous year were greater than their earnings this year. Last year, the employee may have earned a considerable sum of money from overtime. Perhaps overtime slackened this year, and his deductions during the period, April to June, will not be sufficient to meet the tax on the overtime that he received last year. For that reason, misunderstanding will arise among many people who will receive a hill from the Commissioner of Taxation and who will claim that under payasyouearn they should not be liable.
– When does the employee pay off the 25 per cent, tax?
– Between April and June next.
– Then it is not for next year at all?
– It relates to the forgiven year; and for the taxpayer that forgiven year will be this year. Prom the 1st July he will have a clean sheet. One of the benefits that this measure will confer upon people is that it will save hundreds of thousands of persons from financial embarrassment, from which they could never extricate themselves if they were left to their own devices. For example, tens of thousands of women are now earning £5 or £6 a week. After the war, or, perhaps, during the war, many of them will marry, leave their employment and establish a home. The annual tax .due on an income of £6 a week is about £55. After the woman has been performing her domestic duties for twelve months, she will be served with an account for that amount, and she will have to meet it. If her husband is a returned soldier, he will probably have to meet it from his deferred pay. That will be the position of tens of thousands of women if pay-as-you-earn is rejected. The primary producer also has to be considered. At present, many primary producers are enjoying the benefit of inflated prices.
– The dairy-farmers?
– The growers of potatoes and apples - fruit and vegetables in particular.
– And butter producers?
– I refer also to the producers of beef, mutton and lamb, but E exclude wool-growers. Some primary producers are now getting the benefit of war-time prices, but they will be among the first to suffer when the war ends. One reason is that fewer mouths will be demanding food, because many of those who are now consumers will return to the land as producers. The volume of production will increase, although the demand for it will decrease. ‘Consequently, the prices of many primary products must shrink. The primary producer who last year enjoyed a good income, might next year receive much lower returns for his produce. This bill will be a Godsend to him. I have heard a suggestion that . if this measure were voted upon by the public, it would be defeated. That would not worry me. I believe that the bill is one of the most beneficial taxation measures ever introduced in this Parliament and it will protect tens of thousands of people, who, if left to their own devices, would not take adequate measures to protect themselves.
– But at a premium.
– It is true that there is a premium, and I have given reasons why it is necessary to pay that premium. Some honorable members contend that the 26 per cent, tax should not be levied. I should have been pleased if it were possible to avoid it; but if I were in the Treasurer’s place I should not have cancelled it. He would be unappreciative of his duties if he had forgone that sum of money at this juncture.
This subject has been thoroughly debated. I intended to refer to other” aspects, but they have been adequately covered by preceding speakers, notably the right honorable member for Yarra (Mr. Scullin) and the honorable member for Warringah (Mr. Spender). This is a measure for which honorable members on both sides of the House can take credit; and if any responsibility as well as “credit attaches to support of it, I am prepared to assume my share of it.
– After all the learned and occasionally lucid and logical discourses to which we have listened, my remarks must necessarily appear very simple. As I listened to those honorable gentlemen who have such an air of actuarial authority and statistical exactitude, I felt positively intimidated. But I must confess also that I felt for them a degree of sympathy, because I was once a school-teacher. I have many vivid memories of countless hours spent in trying to elucidate some mathematical mystery for the benefit of my reluctant and unresponsive pupils. I have a particular horror in recalling the recurrent problems of A, B and C, who were always setting out to dig a ditch. They invariably started at different times and worked at varying speeds. But always the final question was : - “ How far behind was C at any given point ? “ As Stephen Leacock wrote when he dealt with this particular problem so effectively, “ It did not matter how hard C worked or when he began the poor mutt was always last “. The honorable member for Richmond (Mr. Anthony) has convinced me that C is the taxpayer because he is bound to lose, either here or hereafter, either by 25 per cent, to-day or possibly 125 per cent, when he is dead.
I propose to support the amendment, although I shall not vote against the bill. Before I give my reasons, I should like to join in the protest that has already been uttered by the honorable member for Warringah (Mr. Spender) - I hope in this that I shall not be considered to be carrying on too faithfully my character of a “ school-marm “ - against the atmosphere of accusation that so frequently marks speeches in this House. I am really desolated when I hear the Treasurer (Mr. Chifley) referred to in terms suggesting that he is half bushranger and half Chicago gangster. I am thoroughly distressed when it is suggested that any opposition to the 25 per cent, impost must be either shabby or shady.
– It has been suggested in this debate already that any opposition to this measure can come only from motives which are entirely unworthy, and that they derive from selfinterest of the most demeaning character or emanate from the most anti-social persons. Some one has said that this measure has been the subject of the most disgraceful propaganda. I have received a little propaganda - not many of those green and red slips, I must confess - and f shall read a little of it to the House, not because I consider that it is specially disgraceful, but because I believe that it indicates a certain state of the public mind which we should examine. First, I shall read a letter from a businessman. Perhaps, other honorable members have received a copy. It is -
When you are considering the new taxation bill now before the House, would you have a look at section 10 and section 26 (3). If I read these aright, they provide that part of the bill is to be retrospective to 1041-42 and that a private company that shows a profit in one year cannot write that profit off against losses in previous years unless shareholders during the year the profit is made are at least 75 per cent, the same as in the veur the loss was sustained. If this is correct it will inflict the gravest hardships on thousands of small shareholders, of whom 1. am one. I think, too, that retrospective legislation in connexion with taxation particularly is fundamentally bad. In no circumstances cun it be justified.
There is nothing reprehensible in that letter. My next letter is from a Methodist minister in Tasmania, one of my constituents. He writes -
I shall be glad if you as my representative in the federal House will oppose the 25 per cent, increase in income tax for this present year as contained in the “Pay-as-you-earn” tax plan recently adopted by Cabinet.
In common with the vast majority of wageearners I fail to sec the justice of this. To speak plainly it is an attempt to grab extra, and insult is added to injury by the statement that we are to be “ forgiven “ 75 per rent, of our liability for the current year.
The tax I pay this year is based on my last year’s income, but it is the tax for this year and not for last year. This is made clear by my notice of assessment. It states - “ In accordance with the Federal Income Tax Assessment Act 193R-42 I have assessed Income Tax payable by you for the financial year 1942-43 as under”.
This is a definite statement that the tax 1 paid on 12 May 1943 was for the year ending June 30 1943, and therefore I do not still owe tax for that year. The amount I expect to pay shortly will be for the year ending June 30 1944.
Further the weekly deductions are based on my income now and not on my income last year.
There is no suggestion anywhere that I have not yet pa Id my income tax for the year ended June 30 1943, and the only way in which 1 could be “ forgiven “ 75 per cent, of the current year would be by a 75 per cent, reduction in this year’s assessment.
Trusting that you will take this matter up in the House.
Perhaps honorable gentlemen opposite will be surprised to hear that the third letter is from the State secretary of the Tasmanian branch of the National Union of Railwaymen of Australia. It reads -
The State Executive of the National Union of Railwaymen has decided to ask all Tasmanian Federal Members to oppose the proposed “Pay-as-you-earn” taxation, which includes an increase of 25 per cent, in the workers’ income tax, commencing from the 1st of July 1944.
The letters come from persons representative of three classes in the community, the first being from a business man who understands the workings of finance and sees the danger to small, industrious careful citizens; the second, from a clergyman who is firmly convinced on ethical grounds that the Treasury is wrong, as it has sent out, year by year, a statementsuggesting complete liquidation of indebtedness on the making of each tax payment; and, finally, the secretary of a trade union, composed of working men who know how their always scanty budgets will be dislocated by this proposal, and who feel, in their hearts, that once again they are to be the victims of organized oppression.
I am not, at the moment, arguing that their view is justified. I am merely stating the cold fact of its existence - a fact which may well have very serious electoral repercussions for this Government, and which most certainly will affect the morale of the nation at a time when absolute faith in government must be sustained at all costs. Unfortunately, I was not able to be present in the chamber during the whole of the speech of the right honorable member for Yarra (Mr. Scullin), but, I am well aware that lie stated a powerful case for the bill. I am certain, however, that it will be wellnigh impossible to convince the great mass of the people of the existence of a “lag”, as we call it, when each year they have felt themselves discharged of their obligations for the current year when they have paid their taxes. All the technical explanations in the world “ will leave them cold “, to make use of the vernacular. Indeed, it may well leave them very angry. Although I am loath to suggest’ a possibility which could he of such grave consequence to the Commonwealth, I greatly fear its effects upon the small subscribers to war loans. Such people are not investors in the financial sense. They make their subscriptions on patriotic grounds and thereby show that they honour their own country and its institutions. I believe that their confidence in governmental institutions will be seriously shaken if this measure should be passed in its present form. It does not meet the case to say, “ Well, if you don’t do it this way you will have still more to pay - when you are dead “. That, unfortunately, is all too true, but I remind the House that there is thereby conjured up in every mind a picture of some horrific, rapacious monster, wearing, no doubt, the habiliments, and bearing the physical attributes, of the Treasurer, trailing the shrinking citizen into the very grave. And this, I submit, can hardly be regarded as a happy issue to the controversy.
With the main principle of this bill I am in hearty accord from every angle, and I shall not vote against it. I- have advocated it consistently for nearly 30 years. I believe that its adoption will clear away many hardships inflicted upon defenceless people by present practice - hardships which in the very nature of the case come at a time already marked by the misfortune of the sudden loss of income, or by death. But I am most anxious that this reform shall be achieved without inflicting unnecessary hardship at its inception, which, in a good many cases, would amount to real and complete injustice.
The test that should be applied in this instance is not one of technical and legal exactitude, but of government and community welfare. Will the Commonwealth lose by the straight-out introduction of pay-as-you-earn taxation, and, if so, to what “amount? Members of the parliamentary committee, of course, will answer, “ Tes, and by £15,000,000 in the year of adjustment “. I have very distinct memories of long and intimate associations with a State and Commonwealth Treasurer, and i have found it to be a general rule that the most pessimistic view always prevails when the original estimate is made. So I suggest that it would not be beyond the ingenuity of the Treasurer to find other means of bridging the gap. The real point to be considered, I believe, is that, in the long run, the Government cannot lose. That was made clear last night by the Leader of the Australian Country party (Mr. Fadden). The loss of revenue in one year, as he clearly pointed out, is balanced by the gain in another year. The state - and I use the term in its widest sense - goes on in perpetuity; the citizen Ls born, lives and dies. His activity ends, but the state remains and reaps the benefit of his activities long after he has passed from the scene of his life’s effort. Let the Government then be generous in this matter. I am convinced that the cost will not be too high for the establishment of greater confidence in government institutions. To-day such institutions are becoming more and more suspect. I am equally convinced that the price to be paid for the contrary course may well be out of all proportion to its value.
Not only do I approve of the main principle of the bill, but I would extend it by providing for a measure of selfassessment. Let there be established a system of tax saving certificates and stamps, on the lines of the present war savings stamps system. Then, when a citizen knows that his income is likely to be greater than the average in any one year, he could immediately purchase tax certificates to provide against greater tax liability later on. This would be of immense benefit to the farmer, the small trader, and to that innumerable body of frail humans who find, too often, that extra earnings vanish into the blue, leaving behind only the thin wraith of halfforgotten follies, and the grim shadow of the tax-collector’s maw.
I cannot too strongly urge upon the Government the excision from the measure of the provision for a 25 per cent, impost on current taxable income. I have not attempted to argue for or against the existence of a “lag”. Personally, I reject it, as indefensible on social and even ethical grounds, although I believe it to be a mathematically demonstrable fact. I have left that to others whose training and experience fit them more obviously for the task. I have not even mentioned the self-evident objection to making such an addition to personal liability at a time of maximum taxation, but I stress the view that, at this time, when all the channels of finance are open and freely flowing, there is no financial necessity upon the Government to resort to this course, and every reason, both of expediency and desirability, to forgo it.
.- We are indebted to the right honorable member for Yarra (Mr. Scullin) for his lucid explanation of the provisions of this bill and of the work of the Income Tax on Current Income Committee in relation to it. In marked contrast to the Leader of the Opposition (Mr. Menzies), who dealt in generalities, the right honorable member for Yarra restricted himself to a description of the purposes of the bill. What is the real position? In consequence of public demand and press agitation, the Treasurer (Mr. Chifley) decided to ask a departmental committee to investigate every aspect of what we now know as the payasyouearn system of taxation. Subsequently, an all-party committee of members of the Parliament, consisting of the Treasurer, the right honorable member for Yarra, and the Minister for Trade and Customs (Senator Keane) representing the Government, and the honorable member for Warringah (Mr. Spender), the honorable member for Richmond (Mr. Anthony), the honorable member for Henty (Mr. Coles), and Senator Spicer, representing other political interests in the Parliament, was appointed to make recommendations on the subject to Cabinet. This committee examined schemes propounded by committees of taxation officials that had been set up by the Treasurer, as well as the operation of pay-as-you-earn systems in the United States of America, Canada and Great Britain, and to-night this House is asked to consider its recommendations. The originator of the plan, Mr. Beardsley Ruml, in preparing to set the tax clocks ahead by one year, admitted that it would have to be a year of adjustment. The Government, in its generosity, is contemplating that that adjustment shall take the form of wage and salary earners being permitted to pay 25 per cent, of the amount of their tax liability for a full year, whilst the non-employee is to make the payment at the rate of 8J per cent, in each of three years. I understand that the parliamentary committee was prepared to accept the judgment of the High Court in the Aitken case, decided in 1936 and reported in 56 C.L.R.; 502. This was an appeal against an assessment of tax in the estate of the late Mr. Chirnside, who died on the 17th April, 1934. The High Court held that the executors of the estate were liable to pay income tax for the financial year 1934-35 in respect of income derived during the financial year 1933. In delivering judgment, Chief Justice Latham quoted the relevant section of the act -
Section 17. - Subject to the provisions of this net, income tax shall be levied and paid for each financial year upon the taxable income derived directly or indirectly by every taxpayer from sources within Australia during a period of twelve months ending the 30th day of June preceding the financial year for which the tax is payable.
Every honorable member knows that before Chief Justice Latham was elevated to the High Court bench, he was a political opponent of the present ministerial party; consequently, there can be no suspicion of this judgment having a pro-Labour complexion. He has stated the legal aspect of the matter. Then there is the commonplace aspect. I am amazed that the honorable member for Darwin (Dame Enid Lyons) does not realize that there is a “lag” in tax liabilities. Hundreds of thousands of men and women have gone into industry in connexion with the war. These are of various types. Invalid and old-age pensioners have forfeited their pensions for the time being; hundreds, if not thousands, of married women have accepted employment while their husbands are overseas, and probably thousands of retired men have re-entered the Commonwealth Public Service as temporary employees. The aim of all of these is to assist the war effort. In the first year of their employment, they would apply to the Commissioner of Taxation for an exemption from the necessity to have deductions made from their wages or salary, and this would be immediately granted to them. At the end of twelve months, they would have contributed nothing towards their tax liability. They would then lodge a return, and eight or nine months later would receive an assessment of their tax liability. They would then have been in industry for upwards of twenty months, proving conclusively that there is what is misnamed a lag, hut is really a deferred tax liability because no tax had been paid in the first twelve months in which income had been earned. A large number of young women had retired from industry in order to be married; I am personally acquainted with many of them. Months later, they have received an assessment of their tax liability, which their husbands have generously discharged. A young woman may leave her employment in March. She lodges a return in July and then forgets the matter. Time passes, and she becomes a mother. To her amazement, she receives an assessment of her tax liability in respect of income earned by her prior to ner marriage. This proves that there is a definite lag. Tens of thousands of men have joined the fighting services, either voluntarily or compulsorily. Those called up during March would have to make a tax return before the end of July. Many men who went to the Middle East or New Guinea had tax assessments sent to their homes while they were overseas fighting. That is another definite illustration of the lag,, which I describe as a deferred liability. I hope that the honorable member for Darwin is now convinced of this, and will enlighten the constituent who wrote to her. I have in my hand a tax assessment issued to me, which definitely states -
In accordance with the Income Tax Assessment Act 1936-43, I have assessed as under the total income tax payable by you in respect of your income derived in the year ended the 30th June. 1943.
That assessment is due to be paid not later than the 31st March of this year. Any honorable member who needs further evidence of the existence of a lag, or a deferred liability, should not be in this Parliament. Since last March, deductions from the wages and salaries of employees have been made continuously for 52 weeks, instead of for the 40 weeks which previously operated. Under payasyouearn, there will be no alteration, but deductions will continue to be made as at present. Even our friends opposite will not reject this generous offer of the Government. Right up to the date that an employee ceases to work, the deductions will continue to be the same as under the present system, even though the deductions commence three month? before the beginning of the financial year. The deductions for those three months will never have to be repaid in cash. No doubt this represents a windfall to the Treasury, but who would deny the Treasury a windfall at this time, when war expenditure has reached such colossal figures? If repayment was made to wage and salary earners the cost to the Treasury would be £15,000,000, and in respect of taxpayers other than wage and salary earners,’ the cost would be £21,000,000, or a total of £36,000,000, which would otherwise be devoted to the prosecution of the war. The only alternative to a corresponding reduction of the war effort would be increased taxation, and I am certain that no honorable members desire that taxation should be increased. As a matter of fact, we all wish taxation to be reduced at the first opportunity. During the last election campaign, the Leader of the Australian Country party went about Australia promising the people that, if he were returned to pow7er, he would introduce the system of pay-as-you-earn taxation, which would relieve taxpayers of the obligation to pay one year’s tax. Unfortunately, some of his supporters disagreed with him, and they started a brawl among themselves even before the campaign was over.
– It was not on that point.
– The Leader of the Opposition said that there could be no remission of taxation.
– The difference arose over the post-war credits proposal.
– Well, post-war credits could only be redeemed out of taxation. The Leader of the Australian Country party now denies that there is any tax lag, yet during the last election campaign he, proposing to be generous with other people’s money, promised that lie’ would remit a year’s taxation - his object being that he might again be Prime Minister. However, the people were not fooled. The present Prime Minister (Mr. Curtin) did not make any such promises, but the people put him into power.
Any taxpayer who retires, or loses his capacity to earn, will be released from his liability to pay one year’s tax, and if he dies his estate will be relieved of this obligation. The Leader of the Australian Country party admits that, under the pay-as-you-earn system, the taxpayer will benefit should he suffer a decline of income, or, retire, while his estate will benefit when he dies. It is true that there will be no loss of revenue to the Treasury, and I do not think that any honorable member would wish there to be. The taxpayer whose income declines or ceases will undoubtedly benefit under this scheme. Many members of the last Commonwealth Parliament were defeated at the general elections, and though their parliamentary allowances ceased, they were still required to pay tax on their previous year’s income. Similarly, if a taxpayer died, his widow or executor would receive an assessment stating that the estate owed so much to the Treasury. 1 am amazed that the honorable member for Darwin does not appreciate this point because, after her bereavement, the Treasury must have demanded a large amount in income tax from the estate of her husband, although taxation rates were not so high as they are now.
– That is why we advocate the pay-as-you-earn system, and we wonder why the Labour party opposed it during the last election campaign.
– The honorable member’s party urged it only to bribe the people to put it back into power.
– Why did the Labour party oppose the scheme then?
– We did not oppose it. We did not make any foolish promises. We told the people that we had done a good job. We had saved the country, and we asked the people to give us a chance to carry on. They gave us the chance. In spite of the confusion which has been created by the press, and by associations of taxpayers, I am certain that the people generally will appreciate the benefits that they will derive from the introduction of the pay-as-you-earn system. The honorable member for Warringah (Mr. Spender) realizes what it will mean to him. The honorable member for Parramatta (Sir Frederick Stewart) who, I am sure, pays a tax of 18s. 6d. in the £1 will, I am sure, also benefit. The honorable member for Fawkner (Mr. Holt) spoke of the taxpayer with an income of £5,000 a year. That is the sort of man for whom the honorable member would speak. Unfortunately, the honorable member for Reid (Mr. Morgan) cited the case of the man on £2,000 a year.
– I mentioned the little fellow, too.
– I did not hear the honorable member. I am going to cite the case of the wage “plug”. It is not the amount of tax taken from a man, but’ how much is left to him that matters. The man who pays tax at the rate of 1 8s. 6d. in the £1 must have the best part of £2,000 a year left to him ; but every £1 taken from the wage-earner represents something that he -has to do without. A man with a wife and two children on an income of £5 a week paid from the 1st June, 1942, to the 31st March, 1943 - a period of 40 weeks - tax at the rate of £2 18s. a quarter. When the instalments were spread over 52 weeks in the year, he paid an extra £1 7s. a quarter. I did not hear any honorable member of the Opposition protest at that time against the increased burden represented by the extension of the period from 40 weeks to 52 weeks. From the 1st July, 1943, to the 31st March, 1944, the man on £5 a week pays £4 ls. a quarter, and at the end of March of this year his tax liability will be practically the same. The Government proposes to continue the rate of contribution at the present level. There will be no increase whatsoever. The taxpayer will still pay an extra £1 7s. a quarter.
– But he will have to keep on paying for three months longer; that is, until the end of June instead of the end of March.
– Yes, but in return he will be released from the liability to pay tax that he owes in respect’ of a period of nine months. Surely that is a generous proposal, and it would be appreciated as such by every one but for the confusion that has been created for political purposes. When the situation is explained to them, the people will be grateful to the Government.
Some of us have reason to know what benefit this new scheme will confer. Last year, I received a higher income than I am receiving now, like thousands of workers whose income has fallen; yet out of this year’s reduced income we must pay tax on the larger income which we received last year. On the 31st March, I shall still owe the Treasury between £50 and £60. Under the new scheme, however, my deductions from the 1st April will be the same as they are to-day, but by the end of June I shall be relieved of nine months’ tax liability. Surely honorable members should be grateful for such a benefit, yet some of them are not satisfied. They want to get everything, as do some of the interests they represent. But I am pleased at what the Government proposes to do because I realize that by the end of June I shall have probably paid another £100 of tax and that I shall have been relieved of paying £300, which I know I owe because, if I died to-morrow, my widow and family would have to pay it.
– The honorable member is the first on the Government side to admit that there is a penalty for the benefit-
– There is no penalty. All the Government asks is that the taxpayers pay their tax for the next three months. They will then be relieved nf liability for the tax in respect of the other nine months. That is most generous. I am grateful, and I know that those whom I represent will be grateful indeed. It is easy’ to make political capital out of this bill, because money talks all languages. I point out, however, that both the Leader of the Opposition and the Leader of the Australian Country party are former Prime Ministers and Treasurers of the Commonwealth, but they took no steps to amend the Income Tax Assessment Act in order to relieve the masses of the people of the twelve months’ lag as it is called. I prefer to call it the deferred liability.
– During the last general elections we placed before the people a proposal that pay-as-you-earn taxation be introduced.
– As a bribe offered in the hope that the Opposition parties would be returned to power.
– That is exactly what the Government is doing now.
– Order! The honorable member for Griffith must address the Chair.
– Non-salary or wage earners do not pay income tax by means of deductions, but have to the 31st August, each year, fourteen months after the income on which the tax is levied was earned, in which to make a return of their income. Several months later they receive their tax assessment, and. their tax has to be paid in a lump sum. What they pay relates to the income for the previous financial year and they are still nine months in arrears. About three months later they make another return of their income and they still owe tax for twelve months. All honorable members will admit that that is the case of non-employees. Why should they be entitled to any more consideration than men on salary or wages.
– This bill was introduced by the Treasurer who is a member of the Labour party.
– He has been very generous in deciding to relieve the nonemployees of 75 per cent, of their tax liability for last year and has gone farther to assist them than he has in dealing with “ wage-plugs “. The non-employees will merely have to pay 81/3 per cent. of the tax, which they would otherwise have been liable to pay each year, for three years, concurrently with the tax levied in those years. Their incomes are probably high and, therefore, the increase of their annual tax liability by 81/3 per cent. each year for three years will be, to them, an important consideration, but in return for that 81/3 per cent. they will be relieved of a tremendous liability. Therefore, this proposal is generous, not only to the wage and salary earners, but also to the non-employees. I have a leading article published in the West Australian, of the loth March, 1944, which is in marked contrast to the biased opinions expressed in most other newspapers. I am prepared to read it if honorable members so desire it, but which otherwise I shall ask leave to have incorporated in Hansard.
– Is there any objection ?
– Is it a leading article?
– Yes. I advise the honorable member to read it.
– I will not agree. Enough nonsense goes into Hansard now.
Leave not granted.
-I maynot have impressed the honorable member for Barker, but I think I have convinced all other honorable members that under the present system the ordinary worker is a year behind in his tax payments from the day he starts paying tax to the day he dies and that when he dies his estate inherits the liability. I do not deny that the change-over to pay-as-you-earn may create a few anomalies, but there is little legislation passed in this country that does not do that, and whatever anomalies are created can be removed after the first year. A few anomalies are as nothing compared with the benefit that will be conferred on the public by this measure. There should be no need for me to remind the House that every person who does not pay income tax increases the burden on those who do. I commend the Income Tax on Current Income Committee for having made the recommendations on which this legislation is based. I should have welcomed a 100 per cent. forgiveness if it had been possible, but I readily realize that that would have deprived the Treasury of at least £36,000,000 of revenue that would otherwise have been collected - £15,000,000 from employees and £21,000,000 from non-employees - and that in order that the war effort might not suffer to that degree the Treasury would have had to recover that £36,000,000 by increasing the rate of tax. That would have meant that that which was given with one hand would be taken away with the other.
– If this bill were as generous as the honorable member for Griffith (Mr. Conelan) would have us believe, I should have expected supporters of the Government to fight among themselves for the opportunity to address this House, and through it, their constituents, about the benefits that they would receive ; but, of 49 honorable members opposite, only four have spoken on this measure, one of them, the Treasurer (Mr. Chifley), and another, the right honorable member for Yarra (Mr. Scullin), both of whom were members of the Income Tax on Current Income Committee, whose report is the basis of this bill. The honorable member for Reid (Mr. Morgan) was the third member of the quartet. He said that the bill was not generous. I do not want to quote any more of what he said than that. The last member is that eminent jurist, the honorable member for Griffith (Mr. Conelan), who quoted extensively from High Court judgments and made confusion worse confounded. We all realize the position in which honorable gentlemen opposite find themselves. The whole trade union movement, including the Australasian Council of Trade Unions and its constituent unions, are importuning Government members to resist the 25 per cent. tax penalty, and those members are running for cover because they are afraid to stand in their places and express themselves; they will do no more than tacitly support the bill. We all know why. The right honorable member for Yarra, an exponent of honeyed phrases, can speak acidly when he likes. He gave the House an example of the way he can talk when he feels like it, in his speech on the second reading of this bill lastFriday for he declared that if the Senate attempted to delay the measure he would see that it was withdrawn and that certain sections of the people would be excluded from the measure that would be substituted. The right honorable member for Yarra told the caucus, as acidly as he told us, that, if they did not agree, he would see that the bill was not proceeded with. He bared his teeth effectively, and put the steam-roller completely over any opposition to the measure that he encountered from Government supporters. That is why only four of the 49 honorable members on the Government side of the House, only two of the rank and file, have attempted to address themselves to this matter. Another reason for the stilled tongues of honorable gentlemen opposite may be found in the expression used by the honorable member for Warringah (Mr. Spender), who at great length told us that this plan was evolved by an American named Ruml. Instead of this being a Ruml plan, it is a rummy plan which honorable gentlemen opposite know that they cannot support with their voices. In deference to the honorable member for Darwin (Dame Enid Lyons), who said that she was devastated and distressed at the notion that any member on her’ side of the House could refer to the Treasurer as a Chicago gangster, I shall refrain from doing so. I do not want to call him a Chicago gangster, but the methods he has employed in drafting certain clauses of ‘this measure are questionable. This, I admit, is essentially a committee bill, hut it is equally essential that certain injustices proposed to be perpetrated be exposed in the House. In order to divert attention from the questionable clauses of this legislation, the Government has inserted provisions to “forgive”, as it calls it, 75 per cent, of the tax that would otherwise be imposed. Twice, lately, the Government has adopted a new technique. I do not know where it learnt it, but it was successful on the first occasion. Honorable members will remember that the Constitution Alteration (Post-war Reconstruction and Democratic Rights) Bill contained sugar-coating for the bitter pills contained in it. We find the same thing attempted in this bill. When the Treasurer wants to “get away with something “, he thinks of a proposal which is eminently attractive. I ask the House to recall the attitude of honorable members opposite to the pay-as-you-earn proposal when we advocated it before the last election. They severely criticized it also during the election campaign. When public opinion forced the Treasurer to adopt the proposal that he had previously resisted, he had to think of something attractive to distract the attention of taxpayers. These are the tactics of charlatans throughout the ages. When the people are brought to the proper state of mind through concentrating on something attractive, the conjurer “ slips something over “. If the technique is sufficiently clever, the people do not realize until a long time afterwards that they have been tricked. The Treasurer has dangled before the eyes of the public this glittering bauble of pay-as-you-earn in order to distract attention from his other hand. But if we refuse to be deceived we notice clause 10, which deals with losses of previous years. This clause inflicts grave injustices upon one section of the community and by making that injustice retrospective, it will do a double wrong. Clause 10 provides -
Section eighty of the Principal Act is amended by adding at the end thereof th* following sub-sections : - “ (5.) Notwithstanding any other provision of this section, in the case of a taxpayer which is a private company within the meaning of Division 7 of this Part, no loss incurred by the company in any year prior to the year of income shall be an allowable deduction unless the company establishes to the satisfaction of the Commissioner that, on the last day of the year of income, shares of the company carrying not less than seventy-five per centum of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than seventy-five per centum of the voting power on the last day of the year in which the loss was incurred.
That provision will bear onerously upon the minority of the shareholders of a company who, through no fault of their own, still retain their holdings. I ask the House to notice how this provision will affect private companies. In 1942 company “ A “ was classed as nonassessable. In the first four years of operation it lost £16,000 of the subscribed capital of £60,000. Those losses were due, in the main, to establishment losses. Later, the company made some profits.
Because of the losses, shares were sold to existing shareholders. There was no intention on the part of the company to go out of business. At the moment about 200 small shareholders hold shares in the company and although they were nonassessable for 1942, this provision will make them assessable retrospectively for two years. Losses in the early years will not be allowed, and the small shareholder who has had no control whatever over the changes of shares in the company will not be allowed to gain the benefit of the losses in the earlier years. This provision is designed to catch certain people who bought the shares of companies showing losses so that they might derive a benefit through their income tax returns. But when we attempt to apply a remedy in such cases, we must be certain that the remedy is equitable. In this instance, it is not equitable.
T shall cite another example. Company “ B “ has a capital of £50,000 subscribed by 303 shareholders. One shareholder originally took up 10,000 shares, two others, one a private company, each took 5,000 shares, whilst the remaining £30,000 of capital was subscribed by 300 shareholders, each of whom invested an average amount of £100, and none of whom invested more than £.1,000. Therefore, the company was not composed of big shareholders. It commenced business in 1939, but .because of the war and other conditions over which it had no control, it lost £13,000 in 1940, £1,500 in 1941, and £1,500 in 1942, but made a profit of £10 in 1943. In 1942, a public company, which was a competitor of the new company, bought one-half of the new company’s shares, including those of the shareholder who held 10,000 shares, and those of one of the shareholders who held 5,000 shares. As this position was considered to be harmful to the company’s business, a group’ representative of the independent shareholders induced the private company, which then held 5,000 shares, to buy out the public company, thereby converting the company “ B “ into a private company within the meaning of the act. This year, company “ B “ hopes to make a profit of £3,000 which justly would have been set off against past losses. But if clause 10 becomes law, this company will pay £2,000 of the £3,000 as tax. TSo taxation would have been incurred if the share transfers had not taken place. Therefore, the unfortunate small shareholders are penalized for happenings over which they had no control.
My third example, that of a small sawmilling company, was brought to my notice by one of my constituents. Bc writes -
This company has a capita] of £2,401 in fi shares of which an individual held 1,197, the balance being held as to 1,199 by another company and five signatories. The company holding the balance of power ran the show into an almost hopelessly involved, position through sheer bad management following upon initial difficulties of establishment and reached the stage where £4,828 was owed to the controlling company secured by mortgage and £1,394 to outside trade creditors.
In consideration of the controlling company transferring all its shares to the individual shareholders he arranged for a fresh mortgage of £2,000 and the transfer of certain timber rights to retire the mortgage of £4,828. At the same time he was able to arrange with the outside trade creditors to accept payment over an extended period. A condition of thi? new mortgage is that the shareholders must not draw any dividends and restrict his’ drawings to bare wages (£400 per annum) until such time as all the old creditors have been paid off.
This man has worked like a tiger and by June this year expected to have ali the old creditors cleared off.
If however the past losses are not permissible deductions it looks as though he has worked so hard simply to transfer the debt? from the trade creditors to the Taxation Department. In addition to having to pay the norma] tax on profits he has had to pay away, he will presumably be taxed to the limit for undistributed profits which lie never had available to distribute.
Those examples prove that this provision is likely to bear heavily and unjustly upon a section of the community which, though non-assessable at the present time because of losses, will become assessable retrospectively. Although New Zealand has a similar provision, its act gives the Commissioner of Taxation discretion to allow losses carried forward, notwithstanding change of ownership. If the ownership changes to the extent, of 50 per cent., the 50 per cent, of the losses of the previous years are allowed. Whilst this is a rough and ready form of adjustment which does not do real justice, at least it does assure some equity.
Another way in which the Government can obtain control over persons who, for the purpose of avoiding income tax, purchase an interest in a company that is showing losses, is by disallowing the losses in the income tax assessment if the new shareholders do not carry on the business in which they purchased their shares. But, so long as the business is carried on as a major activity, there is no valid reason why past losses should not be allowed. I am confident that if the Treasurer will give mature consideration to this matter, he will agree with my contention. The majority of honorable members opposite, if they were allowed to express their opinion, would agree that it is indefensible to make this provision retrospective. It will bear onerously upon a section of the community that should be protected. If the Government does not correct this injustice, the Opposition will submit the necessary amendment in committee.
The second glittering bauble which the Treasurer holds in his hand, is the mythical forgiveness of the 75 per cent, of tax under the payasyouearn provision. The original public outcry, if I interpreted it correctly, arose from a desire to relieve the taxpayer from liability to pay accrued taxation in the year of falling income. Repeatedly honorable members have heard of sections of the people who would be affected by diminishing incomes, particularly those whose incomes will be materially reduced by the cessation of war-time activities. The public sought permission to pay tax on income in the year in which the income was earned. The agitation originated’ from this side of the House. During the last election campaign, we placed the introduction of pay-as-you-earn taxation in the forefront of our policy. Last night the Leader of the Australian Country party (Mr. Fadden) stated that the pay-as-you-earn proposals that he had enunciated during the last election campaign were different from the scheme now put forward by the Government. Honorable members opposite claim that there is a tax lag. I make it clear that there is no doubt in the minds of members of the Opposition about the so-called tax lag.
– But there is doubt !
– I speak of the official Opposition, and not of the honorable member for Warringah (Mr. Spender) or the honorable member for Richmond (Mr. Anthony), who signed the report recommending the adoption of pay-as-you-earn taxation. No one member of the official Opposition believes that there is a “ lag “ in taxation. In support of this contention I invite the attention of honorable members to the provisions of the Income Tax Assessment Act, No. 34 of 1915, which was assented to on the 13th September, 1915, and I remind them that this was not an act of 1914. Part III. of the measure is headed, “ Liability to Taxation “ and sub-section 1 of section 10 provides -
Subject to the provisions of this act, income tax shall be levied and paid in and for each financial year upon the taxable income derived directly or indirectly by every taxpayer from sources within Australia during the period of twelve months ending on the thirtieth day of June .preceding the financial year in and for which the tax is payable.
The words “ in and for “, first occurring, make, it perfectly clear that although the tax is to be assessed on the basis of the income of the financial year ending the 30th June, 1914, the tax itself is in respect of income for the following year. In support of this contention I invite honorable members to consider also subsection 1 of section 28 -
For the purpose of assessment and levy of income tax every person whose total income derived from all sources in Australia during the year beginning first of July, One thousand nine hundred and fourteen, and ending thirtieth of June, One thousand nine hundred and fifteen, and during each succeeding year beginning first of July amounted or amounts to the sum of One hundred and fifty-six pounds shall when called upon by the Commissioner by notice published in the Gazette furnish to the Commissioner in the prescribed manner a return setting forth a full and complete statement of all such income derived by him.
I call attention to the words “ for the purpose of assessment and levy of income tax “, and submit that the year intended was the current financial year and not the preceding year. Sub-section 2 of the same section emphasizes the point for it provides^ -
The first assessment of income tax shall be as for the financial year commencing on the first day of July, One thousand nine hundred and fifteen, and each subsequent assessment shall be ‘as for the succeeding financial year..
The words are “ shall he not “ may be”. Consistently throughout the original act of 1915, it is clearly indicated that the tax was intended to apply to the current year. The honorable member for Warringah (Mr. Spender) referred to an amendment of the act which was made in 1916. His opinion with regard to the amendment he quoted may be correct, but I want to direct attention to section J 7 which reads -
Section forty-one of the Principal Act is amended by adding at the end thereof the following proviso: - “ Provided that when the Commissioner has reason to believe that a taxpayer may leave Australia before the tax on an assessment or the additional tax on an amended assessment becomes due and payable, the tax or additional tax shall be due and payable on such date as the Commissioner fixes and notifies to the taxpayer “.
In my view nothing in that provision supports the contention that a lag exists. Many subsequent amendments have been made to the act. In 1918 new sections 46b and 46c were added which applied to deceased estates. In an amendment in 1942 provision was made to apply a principle that had previously been enforced in respect of deceased estates and how the Government wants to extend it to estates of taxpayers still living; but I submit that nothing can be quoted from that amendment which will support, in any effective way, the contention that a lag exists. If Parliament has in some way created a lag, and if the High Court has held that such a lag exists, I contend that the Government should clarify the position without further loss of time, and revert to the circumstances created by the passing of the original act in 1915. Unless it does so, its procedure, in my opinion, will smack of sharp practice.
– The Leader of the Australian Country party (Mr. Fadden) admitted last night that a lag existed.
– I propose to make my own speech in my own way. If the honorable member for Adelaide (Mr. Chambers) is “game” enough to brave the wrath of the trade unions, he may address himself to the bill; but I do not think he will do so.
In my view the introduction of the pay-as-you-earn principle of taxation, to -which so much publicity has been given, could be effected merely by changing the basis of assessment from the previous year to the current year. That would be easy enough to do, and there would be no need for all the talk about “forgiveness “. The right honorable member for North Sydney (Mr. Hughes) introduced the original Income Tax Assessment Bill in 1915 and I would like to hear him address himself to the subject of the supposed lag. Probably he would be able to say something that would surprise honorable gentlemen opposite.
I shall make a few observations on the speech of the honorable member for Henty (Mr. Coles). It has been illuminating to honorable members generally to hear honorable gentlemen who signed the report of the parliamentary committee give the reasons which caused them to do so. The honorable member for Henty said that he had signed the report because the Government, having collected £15,000,000 in additional taxation without authority to do so, would find itself embarrassed if it were called upon to disburse that amount. I conclude, therefore, that that honorable member is more concerned about saving the Government from embarrassment than he is about applying the principle of pay-as-you-earn taxation. Clearly, in his view, the Government was not entitled to collect £15,000,000 that has been collected and paid into Consolidated Revenue. The Government will be much more embarrassed by the reactions of the workers of this country if it retains this £15,000,000, than it is likely to be by taking necessary steps to refund the money. The right honorable member for Yarra gave illustrations in his impassioned presentation of his case. For the first time in a lengthy period, I saw the right honorable member lose his temper and indulge in ‘unseemly threats against members of the Senate. He cited the position of a man with two children and an income of £400 a year. His tax of approximately £1 a week is at present deductible from the 1st April of one year to the 31st March of the following year- The payments made by employees in April, May and June, which in the aggregate amount to £15,000,000, will be used to liquidate the unforgiven 25 per cent. It is well that honorable members opposite should understand the position clearly, because they will have to explain it to their constituents. The worker will not commence his deductions for next year until the 1st July, but his deductions for the taxable year will cease on the 31st March. Therefore, tax collections will be made only during a period of nine months. If the Government intends to establish the July to June basis, it will have to require contributions for a further three months in order to complete the twelve-monthly tax obligation. This will be imposed in one of two ways: Either the wage-earner will be called upon to make a cash payment in liquidation of a tax based on £1 a week, aggregating £13, or the payments will have to be extended over a further three months. There is no doubt that the taxpayer is to be required to pay tax for fifteen months in a period of one year. The wage-earner will find that that is so, when he makes his contributions. The full weight of his displeasure will then fall upon the Government, and honorable members opposite will be glad that they did not commend this proposal to the people; nevertheless, they will have to explain their quiescent attitude to an enraged electorate. Both the right honorable member for Yarra and the Treasurer said that no additional tax will be paid. I invite honorable members to consider the specific provisions of proposed new section 160ag -
In addition to any income tax leviedin pursuance of section seventeen of this act, income tax at the rates declared by the Parliament shall be levied and paid for the financial year commencing on the first day of July, One thousand nine hundred and forty-four, . . .
I cannot understand the reasoning of the Treasurer and the right honorable member for Yarra. They have said specifically that no additional tax will be paid ; yet those very words appear in the bill. There is no doubt in my mind that an additional £15,000,000 will be collected from employees; or, as the right honorable member for Darling Downs (Mr. Fadden) said, an additional £35,000,000 will be collected from employees and nonemployees. That right honorable gentleman rightly asked whether the premium to be demanded for this insurance is not too great. I do not know of any legislation which caused such a wide conflict of opinion as has been caused by this pro posal. If there is a doubt as to whether or not additional tax will be paid, the Treasurer could make the position perfectly clear by the insertion of a new clause which, I am sure, we shall move in committee -
No taxpayer shall be liable to pay for any financial year any tax additional to the amount which would have been payable had this act not been enacted.
If no additional tax is to be paid, provision to that effect can quite easily be made, and thus remove all doubt from the minds of honorable members and the public. If the Treasurer refuses to accept this proposal, all the statements he has made inside this House, as well as outside to the press and others, must be discounted, and I shall charge him that he. by the use of knowingly false statements, sought to create a wrong impression in the minds of the people in regard to what the Government hopes to achieve. I put it to him that, by the means I have mentioned, he may resolve whatever doubts there may be in the minds of honorable members and the public.
– Prescribed by the daily newspapers for the edification of the honorable member.
– No. This was resolved at a public meeting of 2,000 persons, mainly of the working class, held at Sydney Town Hall, for submission to the Government. The meeting made it perfectly clear that it was prepared to accept this scheme if the taxpayers were not to be required to meet additional tax. Honorable members opposite should be made to state exactly where they stand. The Treasurer has at his disposal many ways of dealing with the problem. If he is not prepared to accept the proposal thatI have made, he might agree to commence pay-as-you-earn from the 1st April, and spread the tax for the first year over a period of fifteen months. Some time ago, he said that taxation had reached saturation point. [Extension of time granted.] If the honorable gentleman is not prepared to accept either of my suggestions, and wage-earners are to be required to provide an additional £15,000,000, this will be not a payasyouearn, but a take-as-you-earn measure.
I direct attention to clause 14, which is rather interesting. It provides for the insertion in the principal act of a number of new sections, including section160ah, which reads -
Where the amount of taxable income upon which tax is levied in pursuance of the last preceding section -
Although that is perfectly clear, it arouses doubts in my mind. Summarized, it means that when the income of the taxpayer in the transitional year is greater by 20 per cent. than his income in the preceding year, the rebate of 75 per cent. will not be allowed. Let me give an illustration. If the taxable income of a company is £1,000, then it will be allowed to make a taxable income of £1,200 before being penalized. But if by normal, just and legitimate means the income is increased to £1,500, the rebate of 75 per cent. will be lost. Honorable members know that, by normal means, a business can be increased and the profits be made greater. If that is not a clear indication of what one may describe as the “ straight Griffin “ to unscrupulous taxpayers to inflate their incomes to £1,200,I do not know what is. The unscrupulous man is told : “ You can inflate your income by any means that may appeal to you, and you will be given a rebate of 75 per cent.” But if an income is increased by honest methods, the rebate will not be given. That should not be tolerated for a moment. The Treasurer ought to study the provision afresh.
Let us consider the effect of this proposal upon members of the Defence Forces. Being a returned soldier of the last war, I have at heart the interests of these men, and I ask the House to give consideration to them. Honorable members opposite who are returned soldiers have the same feeling for them. I do not claim the sole rights in it because, even though we may differ politically, there is a blood brotherhood between returned soldiers in respect of anything that may affect their interests. A returned man may have given up a fairly substantial income in order to fight for his country and do all those things which are necessary in time of war. Under this scheme, he will be in extreme difficulty, because of the liability to pay tax on income earned in the year prior to his enlistment. Without the introduction of payasyouearn, he would receive relief in the year in which he resumed his civilian work. However, under the payasyouearn system, he must resume his liability immediately he is discharged. The 75 per cent. rebate, which is called forgiveness, will be of no use to him because his income is likely to have been small and non-assessable. I do not think that it is the intention of theGovernment to penalize the returned soldier. Something will have to be done to give him the same consideration as is to be extended to other sections of the community. The Government must amend the transition clause in order to make provisions for the two classes to which I have referred. 1 agree with the principle of the payasyouearn system. Its introduction will help to remedy a situation which has been developing over the years, and will do much to restore the prestige of Parliament.
– Honorable members opposite have described this bill as a generous measure which will have the effect of forgiving the taxpayers 75 per cent. of their liability for one year. If that were so, it should prove to be a most popular bill, and one would expect every Government supporter to make a long speech extolling the virtures of the bill so that he could get his 35 copies of the speech for circulation in his electorate. The fact is, however, that they are sitting as if they were glued to their seats, and all the talking is being done by honorable members on this side of the House.
Although this bill embodies a great principle, it is not a great bill. It cannot bo denied that it imposes extra taxation upon all classes of taxpayers. Honorable members have argued that no additional taxation is imposed, and that the provisions of the hill relate merely to something which they call a tax lag. There are. retrospective provisions in the bill which, I believe, strike at some of the underlying principles of sound law. The bill has been called by various names, such as pay-as-you-earn, pay-as-you-go, pay-before-you-go, rob-as-you-go, and bleed-as-you-go, but the names which it has been called’ inside the House are as nothing to those which it has been called by people outside. Indeed, I believe that the epithet hurled by the Minister for War Organization of Industry (Mr. Dedman) at the honorable member for Reid (Mr. Morgan) the other day was mild compared to some of the things which have been said about this bill by taxpayers. The tide of opposition to the measure has only just begun to rise, and the Government will be made to realize its full force when the people understand what the bill implies, and realize the obligation which it will place upon them.
The principle of the pay-as-you-earn system was placed before the people during the last general elections, and had been advocated some time before that. It was not the brain-child of the Government. It originated on this side of the House, and the Government was practically driven to adopt it. It has been recognized for many months by honorable members on this side of the House that a great problem will arise after the war which will affect all taxpayers, but particularly wage-earners. During the war, thousands of men and women have been enjoying large incomes, and it was recognized that, when those incomes decline after the war, they would be confronted with a tax demand of frightening proportions on the previous year’s high income. Members of the employing class would he ‘better off because, although their incomes might also decline, they generally have assets which they can realize. For the protection of wage-earners, however, it was imperative that something in the nature of the pay-as-you-earn system should be introduced, and that was why members of the Opposition advocated it. We expected that the introduction of the system would involve no more than an alteration of the base year for levying tax. Instead of that being done, we have placed before us this bill, with its impost of 25 per cent, extra on all wage-earners, the amount to be payable in three months, namely, from the end of March to the end of June. Every worker who is tc-day paying £2 a week in tax will pay an extra £26 for the right, to come under the new provision. It is true, as the right honorable member for Yarra (Mr. Scullin) cleverly, even guilefully, pointed out, that he will not pay any more per week, but he will have to go on paying for thirteen more weeks in this year. The wage-earner who pays £1 a week in tax will pay £13 extra between the end of this month and the end of June. If the wage-earner has been very wise, and has saved money over a period of years and invested it, he will, on the return from his investment, pay an additional 25 per cent, during each of the next three years. Those who are not employees will also pay an extra 25 per cent. tax_ over the next three years, and the tax will be assessed at the highest rate ever struck in the history of the Commonwealth. I have here a series of interesting graphs prepared by the Commonwealth Bank which show that the married man with two children, in particular, is taxed more in Australia than anywhere else in the world - higher even than in those countries which have introduced the system of post-war credits.
Why does the Government propose to collect this extra 25 per cent? It is because of an amount of £15,000,000 of taxation which was collected- between the end of March and the end of J une last year. It was stated that this tax had been collected for the following year, which is this financial year, and I shall explain why this was done, because I think it is very interesting. In 1943, just before the flotation of a war loan, a pledge was given by the Prime Minister that taxation would not be increased. Obviously, the pledge was given to induce people to invest in that particular loan. The Prime Minister was well aware that .a drift was taking place in the country’s finances, and that it could only be arrested by collecting more tax from those in the low income groups. The loan was filled, but the revenue drift became so pronounced that the Government was forced to raise £15,000,000> from those in those groups.
– ‘Not necessarily from them.
– It practically all came from them.
– It came from wage and salary earners, among whom there may have been persons receiving incomes of £10,000 a year.
– When the Treasurer eventually had to face the fact that Common wealth, finances were drifting and that taxation had to bc imposed on wage and salary-earners in the low brackets, he offered guilefully thu specious excuse that the additional tax was not an increase of tax for that year and ho thereby evaded the promise made before the previous Liberty Loan thai, the income tax would not be increased. The tax then imposed was raised ostensibly for the succeeding year, but the money was expended in the year in which it was raised. That is the genesis of the problem that confronts the Government to-day. Honorable members will remember that, when that additional taxation was levied, the principle of “ we keep the change “ was incorporated in the bill as it left this chamber. Under that principle, excess payments of tax made up to the 3l3t March of each year were to have been retained by the Government. That provision was altered only because the Opposition majority in the Senate said that the Government was not playing the game. That is how this £15,000,000, about which we have heard so much in this debate, came into existence, and because of that £15,000,000 the bill has been put before us in its present form. That is made quite clear in paragraph S5 of the committee’s report -
The committee had regard to the fact thai, of the 2,000,000 persons now liable to pay tax, approximately 1,500,000 are employees. At present the deduction year in respect of these employees ends on the 31st March, as explained in paragraphs 38 to 40. By the 30th June, 1944, they will have had deductions made from salary and wages of approximately 25 per cent, of the tax payable under the present system for the financial year 1944-45 on the income of the year ended the 30th June, .1944. The amount of the deductions made in this period will be about £15,000,000. Revenue requirements would not permit either of the refunding of this amount or of the cessation of deductions for one quarter of the year.
Therein lies the reason for this impostIt has nothing whatever to do with the tax lag which has been bandied back and forth across this chamber and discussed in the press, causing endless disputation everywhere. The imposition of the 25 per cent, tax penalty is proposed in order to save that £15,000,000 which came into the Government’s coffers last year out of the pockets of the taxpayers who had dust thrown into their eye* by the Treasurer.
The honorable member for Warringah (Mr. Spender), in a most learned address, talked about the tax lag. While he was speaking I interjected, “Dp you believe’ that there is any tax lag so far as thioriginal taxpayer of the Commonwealth is concerned?”, and he said with all hi? authority as a learned King’s Counsel, “ That all depends on what you call a tax lag and what I call a tax lag. If you think the same as I do about the lag you think so and so “. That is an admission. One can go from one person to another, from one lawyer to another, from one accountant to another, and from ovir taxation consultant to another, and from each get different ideas as to the existence of the tax lag, but I cannot see that there is any lag for the persons who paid Commonwealth income tax from its inception. That I am right in that contention is made perfectly clear by the Income Tax Act, No. 41 of 1915, which was assented to on the 13th September, 1915 -
Income tax shall be levied on and in the financial year beginning on the 1st day of July, 1915.
In the Income Tax Assessment Act. No. .47 of 1915, the following provision was made: -
Returns and Assessment.
For the purposes of assessment and payment of income tax every person who derived income from sources in Australia during’ the year beginning on 1st July, 1914 and ending on 30th June, 1915 . . .
It is undeniable that a vast number of taxpayers of Australia, if not the majority, commenced paying Commonwealth income tax in the year of its inception, and they are, therefore, in almost exactly the same position as will be the person who enters the field of income tax for the first time next year, when payasyouearn will first operate. The only difference will be that the first persons to pay the tax paid it on the basis of their income in the preceding year, whereas those who pay the tax for the first time next year and thereafter will pay as they earn on what they earn. So, whatever argument is advanced about those who entered the tax field after 1915-16, it does not apply to the original taxpayers. They are the men who for the last 30 years have done more than any other single class of individuals to develop Australia, its primary and secondary industries and its cities and towns. They have paid every year since the tax was introduced. If they die their estates are charged the tax from the 1st July to the date of their death. Yet to-day they are being asked to pay 25 per cent, extra for the privilege of going on to pay-as-you-earn. The lag has nothing to do with it. Had the £15,000,000 not been in the Treasury, possibly no argument would have been raised about the lag. Four problems face the Government and Parliament. The first is the problem of the wage-earner or the employer in the aftermath of the war, and the second is the revenue that is required in the next financial year. The Government has to decide on what basis such revenue should be raised and the methods of raising that revenue. Those are the four questions which the committee should have considered and which the Government now has to consider, and any question of lag goes by the board. If you accept pay-as-you-earn in order to obviate difficulties for taxpayers after the war, you then determine what revenue shall be needed and how that revenue shall be raised on the base chosen. That principle, and no other, was involved. The mechanics of raising it would be infinitely simpler had not this transitional year been brought in, and there would be a saving of labour, time and money in the Taxation Department.
I now deal with the additional impost entailed in this bill from the point of view of primary producers, but the remarks which I shall make from this point of view could, I dare say, be made equally from the point of view of most, if not all, other business men. I take the matter up from the primary producers’ point of view because I am one myself, and because I am aware of what they have been going through in the last two or three years. No matter how you argue the matter the plain fact remains that the primary producers, as well as all other non-employees, will in the next three years have to pay annually S-J per cent, extra tax at a time when the rate of tax is the highest it has ever been. That 8J per cent, extra tax will undoubtedly be equal to the amount of tax that would be paid in a full year in normal times. In addition, it will be assessed on incomes fictitiously swollen owing to war conditions. Honorable members will see how fictitiously swollen the primary producers’ incomes are when they realize that owing to the fact that about 150,000 men have left the land for the armed services or the cities and few have returned, labour is so limited that the maintenance work on which primary producers used to expend money has not been possible. Secondly, primary producers have not been able to expend money on artificial manures, principally superphosphate, because supplies are unavailable. Thirdly, primary producers have not been able to expend money on materials used on their properties, such as fencing, or on maintenance and repairs of vehicles and machinery, simply because they have not been able to get the materials or the labour. Those are three aspects,’ and, no doubt, there are others which I could mention if I had the time; but they are sufficient to prove my contention that the income of primary producers is fictitiously swollen, and that on that inflated income they will not only have to pay income tax at the already exorbitant rates but will also have to pay an additional impost of Si per cent, each year for three years. That additional burden will definitely be of disadvantage to primary producers, and accordingly to the whole country.
I do not desire to say a great deal now about the clauses that introduce retrospective action, because they will be amply discussed in committee. I content myself with saying that if we want people to respect the law, we must maintain faith in the law. If the practice that the Government has adopted in this hill becomes a rule, the law will be as shifting sand and the respect of taxpayers for it will be weakened. Once we weaken respect for the law, we /shall weaken the. whole of our social structure. In several clauses the Government makes this legislation retrospective to 1941 in order to raise increased revenue. These provisions, if agreed to, will weigh onerously upon many people. The principle cannot be supported ethically even if it can be supported financially. If the Government does not make an attempt to correct this injustice, the Opposition will submit a necessary amendment.
I support the amendment of the honorable member for Fawkner (Mr. Holt). I regret exceedingly that the fine principle of pay-as-you-earn has been marred to the degree that it has been in this bill. It is only a matter of time before the public will completely understand the guile which the Government has displayed in drafting this bill. When that time comes, retribution will follow.
.- Previous speakers have analysed this bill so thoroughly that I find it difficult to break any new ground. One important factor which has emerged from the debate is that honorable members are unanimous that the principle of payasyouearn, if applied fairly, will be most beneficial to taxpayers. Of course, we cannot give to the Government any credit for having adopted the principle, because it was forced upon the Treasurer (Mr. Chifley). He was most reluctant to accept the proposal. Now that the Government has introduced it, the Treasurer has included an Unjust imposition. Honorable memhers on this side of the chamber admit that, pay-as-you-earn will be most convenient to taxpayers. Many’ taxpayers find that, under the present system, their savings, which are scraped together with care for twelve months, are dissipated in one cheque to satisfy the demands of the Taxation Department. Under payasyouearn, they will not encounter that disability.
Another important fact which emerges from the debate is that the 25 per cent, impost is definitely unfair. Every one recognizes that, in war-time, taxation must be abnormal. The nation has to bear heavy financial responsibilities, and all legitimate avenues have to be explored for the purpose of obtaining increased revenue. Generally, the people do not complain about heavy taxation in wartime. But when something unfair is introduced, it is a different matter. Enough has been said this evening, particularly by the honorable member for Deakin (Mr. Hutchinson) to make it clear that the 25 per cent, tax is an impost. Far from calling it “ forgiveness “, as the Government chooses to describe it, I regard the 25 per cent, as a penalty and not a benefaction. Honorable members opposite are not happy at having to- support this proposal. Alfred Deakin, on one occasion when caucus had obviously made an unpopular decision and very few members of the Labour party would speak in support of it, said that he could not help feeling that they were “ a chain-gang of deaf mutes at the funeral of their own freedom Definitely, honorable members opposite appear in that role this evening. Only a few of them have ventured to support this iniquitous proposal. The Opposition will endeavour to defeat it.
– As the majority of honorable members opposite have .supported the bill, there was no necessity for us to speak.
– When the division on the amendment is taken, the Minister for Repatriation (Mr. Frost) will see that the Opposition does not support this surcharge. If the honorable gentleman is not in favour of it, he will have ai opportunity to vote with the United Australia party and the Australian Country party. I direct attention to paragraph 85 of the report of the parliamentary committee, as follows: -
At present, the deduction year in respect ot these employees “ ends on the 31st March. . . By the 30th June, 1944, they will have had deductions made from salary and wages of approximately 25 per cent, of the tax payable under the present system for the financial year 1944-45 on the income of the year ended the 30th June, 1944. The amount of deductions made in this period will be about £15,000,000. Revenue requirement? would not permit either of the refunding of this amount or of the cessation of deductions for one-quarter of the year.
That is perfectly clear. The committee contemplated that possibility. We admit that a benefit will accrue, but it will be spread over many years. When a taxpayer dies, he will not owe anything to the Taxation Department. That is small satisfaction to him. A suitable analogy would be if a life assurance company, which was in the habit of collecting premiums annually, suddenly decided to collect them weekly, and informed the insured persons: “For this benefit we shall seize your subscriptions for three months, because your widow will not have any premium to pay after your death”. That is precisely what the Government is doing.
In introducing this convenient and essential system of pay-as-you-earn taxation, the Government has slipped this surcharge of 25 per cent, into the bill. The result will be that the Government will receive £15,000,000 from wageearners in the period April to June, and £21,000,000 from non-employees spread over a period of three years. The Government will seize this windfall of £15,000,000 from salary and wageearners, regarding it as change left on the counter and waiting to be snatched. Non-employees will have their indebtedness to the Taxation Department distributed over three years. Superficially it appears that generous treatment is being extended to the employing class, hut an examination of the facts quickly dispels the idea. A person in receipt of an income exceeding £2,000 a year is taxed at the rate of 18s. 6d. in the £1. With the additional impost of 8$ per cent, tax for three years, he will pay at a rate exceeding 20s. in the £1. For the purpose of deluding this class of taxpayer, the Government has spread the liability over three years. The proposition looks seductive. Under the cloak of payasyouearn taxation, the Government will collect an additional £36,000,000. The Sun, a leading Melbourne newspaper, described the Government’s proposals as “ Hoaxed-as-you-go “ and that sentiment represents the views of many trade unions and others who have protested to the Treasurer against these proposals. The right honorable member for Yarra (Mr. Scullin), who is an authority on taxation and who has great debating ability, doubtless expressed his belief to caucus that these proposals will confer a great benefit upon the workers. He simulated great heat in the House when his opinion was challenged, but I believe that the Government would be happy if it could escape from its embarrassing situation. In a leading article, the Melbourne Sun stated -
We are told that we can have payasyouearn taxation at a black market price, namely, by paying fifteen months’ income tax in twelve months. And the Treasurer invites us to admire his magnanimity in not demanding 24 months’ tax in twelve months! By the end of this month wage and salary earners will have discharged their tax liability for the current year, but deductions from their earnings will continue until the end of June to pay off 25 per cent, of an imaginary tax “ lag “ - a debt which, if it exists, should obviously be paid in full.
In Great Britain pay-as-you-earn taxation has been introduced by the fair and simple method of not assessing salaries earned in 1943-44. Here, the proposal is that salaries earned during three months of this period shall be assessed twice. The English system will involve the Exchequer in no actual loss, since it merely means altering the date on assessment notices. Under the Curtin Government’s plan an additional £15,000,000 will be abstracted from the pockets of taxpayers. The - Government having some time ago admitted that taxation had reached saturation point, apparently shrinks from still further increasing it by orthodox methods, but sets out to achieve the same result by n blatant . piece of political dishonesty.
The honorable member for Reid (Mr. Morgan) expressed similar views; and that is the general opinion. If the Government wishes to be fair, it can allow wage-earners the benefit of the £15,000,000 by permitting it to stand as a credit against future assessments. This money could be regarded as a post-war credit, such as that which operates in Great Britain. Our troops have deferred pay credited to them, and it will be most valuable to them when they return to civil life. Is there any reason why taxpayers should not be told that a portion of their payments shall be regarded as a post-war credit?
Honorable members will be interested to know how they will fare under this proposal. The tax upon their parliamentary allowance of £1,000 will amount to £355, on the basis of £55 on the first £300, and £300 upon the balance of £700. That will leave a surcharge of £89. They may have no objection to paying that surcharge, but it is just as well for them to know their position. That it is clearly the intention of the Government to take from wage and salary earners three months’ payments of tax is clearly shown in the explanatory note to clauses 16 to 25-
Deductions made from salary or wages between the 1st July, 1944, and 30th June, 1945, will he used to pay tax on the income earned iu that period of twelve months. Deductions made during the next period of twelve months will be reserved to pay the tax on the income of that period.
Taxpayers who have paid their assessments up to the 31st March will not have discharged their liabilities until the 30th Tune; therefore, three months’ tax will be grabbed from them by the Government. Two pertinent facts emerge. The first is that the weekly deductions offer a more satisfactory method of collecting the tax than does the issue of an assessment requiring the payment of a lump sum at the end of the year. But the Government has levied an unfair impost in the guise of benefit to the taxpayer. The Treasurer should remove the doubts that are perplexing the people. Some honorable members opposite may have an honest doubt, but these unbelievers will be bludgeoned into line. Honorable members on this side of the chamber have differences of opinion over the findings of the parliamentary committee.
Even at this late hour I urge the Treasurer to accept the amendment of the honorable member for Fawkner (Mr. Holt) the object of which is to abandon the 25 per cent, excess; but if he desired to make some other variation of the bill to achieve the same end I am sure that the honorable member for Fawkner would be willing to withdraw his proposal. Our object is to avoid calling upon taxpayers to pay fifteen months’ taxation in twelve month.3. This is a matter of first-class urgency. If the Government persists stubbornly with its present proposal its conduct will be remembered’ for many years. I urge the Treasurer to exercise the moral courage necessary to abandon the stand he has taken. Another war loan is in the offing. I fear that persistence with this bill in its present form will seriously discourage many small subscribers who expect the Government of this country to keep strictly to honest taxing methods, but believe that this proposal is iniquitous in every way.
Mr. ABBOTT (New England) [11 .16 J. I shall refer to some points which, so far, have not been emphasized in the debate. For many months the people of Australia have been anxious for the adoption of a fair form of pay-as-you-g, an taxation, but they consider that the measure introduced by the Government is heavily loaded against them. They fail to see why they should be penalized in order that a change-over may be made to the new system. Any unbiased person who listened to the speech delivered to-day by the honorable member for “Warringah (Mr. Spender) must have been convinced that a future liability to taxation actually exists. However, it is a liability which would extend over very many years and which would be liquidated only by the application of varying rates of tax. The Government is proposing to compound the liability by calling upon all salary and wage-earners to contribute an extra. 25 per cent, of taxation this year. This i= a great injustice that the people concerned are asked to accept. The Government is entitled to do its utmost to obtain revenue for war purposes, but the Treasurer (Mr. Chifley) himself admitted as long ago as the 24th June, 1943, as the Leader of the Australian Country party (Mr. Fadden) has pointed out, that taxation had reached its limit. The rates of tax are just as heavy to-day as they were then, and it is very hard on salary and wage-earning taxpayers to ask them to pay an additional 25 per cent., amounting to £15,000,000, and non-employees 8^ per cent, extra for each of the next three years. On the information available, it is reasonable to assume that 50 per cent, of the employee taxpayers of Australia will not have met their current indebtedness by the deductions made by the 31st March. Therefore it may be assumed also that 50 per cent, of the £15,000,000 will remain in arrears. Early this month the Treasurer stated that 13 per cent, of the taxpayers were in arrears at the beginning of the month. Arrears become more evident towards the end of the quarter, and although it is not possible to obtain accurate figures, it may oe estimated safely that the percentage of arrears will be higher at the end of the month than at the beginning of it.
External evidence is available by which we may test the sentiments of the people on this subject. I direct the attention of honorable members to a statement made by Mr. A. E. Monk, secretary of the Australasian Council of Trad, Unions, on the 8th March -
The imposition of the 25 per cent, so-called “ tax lag “ concurrently with so many thousands of people endeavouring to make up the difference between their deductions and the amount due in their assessments, placed them in an intolerable position, and would mean, in effect, that many of the workers would have to live on the smell of an oil rag for months to come.
Seeing that the Treasurer has admitted that saturation point has been reached in regard to taxation, heaven alone knows how taxpayers who are now in arrears will be able to meet their current indebtedness and also meet an additional 25 per cent, .by the end of J une. In very truth, they will have to “live on the smell of an oil rag”. The President of the Australian Railways Union has felt obliged to approach the Taxation Department in order to obtain extensions of time until the 30th June to enable railway employees to meet their current indebtedness. It is ridiculous to suppose, therefore, that those men will be able in that time also to meet an additional 2B per cent, impost.
I ask the Treasurer whether he can deny that instructions have already been or are about to be issued that an additional 25 per cent, shall be deducted from the wages and salaries of Commonwealth employees during the April- June quarter? If such instructions have been issued, those employees will be hit very hard. I believe that the people will be unable to meet the increased rates and at the same time contribute the full amount of their current indebtedness. If this should prove to he correct, some substantial amounts will have to be written off and, in effect, the Government will be robbing Peter to pay Paul. In other words, an amount of £15,000,000 will be entered on one side of the national ledger and written off on the other side. The action of the Government comes strangely from gentlemen who have had so much to say in this House and elsewhere about the terrors of the depression years, the shortage of money, unemployment, and so on. I hope that even yet the Government will abandon its stubborn attitude and permit the pay-as-you-earn principle to be applied without the imposition of heavy penalties.
It is not difficult to understand the attitude of the members of the all-party committee which investigated this subject. No doubt differences of opinion arose in the committee and compromise was necessary. I believe that the desired end could be obtained without the unsatisfactory compromise with which we are faced in this bill. The Government could forgo the 25 per cent, of extra tax that it is demanding, and it ought to do so in justice to the working people of the Commonwealth.
I make an appeal, also, on behalf of the men and women who will be discharged from the fighting services. A discharged serviceman would get no benefit whatever from the so-called 75 per cent, forgiveness if the transition year happened to be the year in which he was earning probably the lowest income he has ever earned. It is well known that many servicemen are receiving less money to-day than they have ever received. I suggest, therefore, that they should be given the opportunity to choose the base year that shall apply in their case for the change-over to the payasyouearn principle. Unless they are given a choice in this matter they will be treated most unjustly, for they will probably be suddenly brought in on a year in which they will be earning at an extremely low rate.
I ask also for some explanation of the position with regard to certain primary producers, having in my mind the Correlation of the pay-as-you-earn principle with the averaging system under which they will he taxed. A five-year period has been adopted for averaging purposes, but I wish to know whether it will be the year ending the 30th June, 1945, or the year ending the 30th June, 1944. The answer to” that question will doubtless be very important, and mean a great deal, to many primary producers. I trust that when he is replying the Treasurer will clarify the position in this regard.
Finally I suggest that the - Treasurer, even at this late stage, should accept the principle of the amendment of the honable member for Fawkner even if he does not accept the exact proposal submitted. The Government should not, in the interests of mere legalism, demand the extraction of an additional 25 per cent, of tax from the people. It should realize that the men and women of Australia are flesh and blood now just as they were during the depression years, concerning which many honorable members opposite have had so much to say. Unless care be taken another artificial depression may be caused by the pig-headedness of the Government and its supporters on this issue.
Sitting suspended from 11.80 p.m. till , 12 midnight.
Thursday, 23 March,’ 1944-
– in reply - I take this opportunity to express my thanks to the Income Tax on Current Income Committee, the appointment of which was first suggested by the Leader of the Opposition (Mr. Menzies), for the patient way in which it deliberated upon a considerable volume of material, in order that it might present the report upon which this legislation has been based. I endorse the statement of the honorable member for Richmond (Mr. Anthony), that the committee was not in the slightest degree influenced by party political issues. 1 also thank the officers of the Taxation Department, upon whom devolved a tremendous volume of work for months prior to and succeeding the last elections, in the preparation of a number of proposals for the consideration of the parliamentary committee. I make it clear that the statement of press critics that Taxation and Treasury officials opposed or exhibited reluctance to the inauguration of a substantial measure of reform of taxation methods, is completely false. While I have been Treasurer of the Commonwealth I have never known a Treasury or a Taxation official to endeavour to influence policy in one way or another. Every man who has been Treasurer must speak in the highest terms of the fairness, impartiality, and extraordinary diligence and ability, of taxation officials in their relations with governments of all shades of political opinion.
It would appear that considerable confusion exists in regard to this proposal, and that a distorted view of it is taken by some sections of the public ; the honorable member for Darwin (Dame Enid Lyons) says that substantial numbers of the public are in that category. I have read press statements, and have heard others that have been made over the air. Many persons are either misinformed or incredibly ignorant. The authors of some of the statements I have seen, particularly the statement read by the honorable member for Richmond, have exhibited all the characteristics of the accomplished liar. No other term can be applied to the authors of some of the press statements. I have noticed criticism that has been a complete distortion of the truth, by persons claiming to represent the Taxpayers’ Associations of Australia. I should imagine that the members of those associations are not members of the working class, but are probably investors and the richer taxpayers. To them I merely say that those who represent them do a very great disservice by their failure to tell the truth in the statements that they make to the public. This desire to distort the truth seems to have spread into the columns of newspapers which normally have exhibited some degree of impartiality in their presentation of facts to the public. An article published in one newspaper at the week-end contained disparaging remarks about the right honorable member for Yarra (Mr. Scullin). I do not suppose there is any man in this House, irrespective of party, who commands greater personal respect than does that right honorable member. Certainly none has a greater knowledge of the taxation laws of this country in a general sense, or such an amazing grasp of the technical side of taxation. These attacks illustrate the depths to which some persons are prepared to descend in the attempt to bolster up an extraordinarily weak argument. They make reflections upon one who, although far from being in the best of health, has given great service to this country, some of the best of which has been on the committee which prepared recommendations in respect of this matter without hope of reward or preferment.
I have heard a good deal about the so-called lag which some persons claim does not exist. The Leader of the Australian Country party (Mr. Fadden) last night made a very fair statement of the case as he sees it, and I do not cavil at his presentation of it. He said that, in bis opinion, there is no lag. However, the fact that there is a lag, is generally supported. I have issued copies of legal opinion that I have obtained from a distinguished lawyer, and I hope that the press will publish it in full.
– Whether or not there is a lag, the merits of this matter are not affected.
– The issue has been raised. The High Court has ruled, and an eminent lawyer has given it as his opinion, that there is a lag. I have had handed to me by the honorable member for Martin (Mr. Daly) a copy of an advertisement that was published during the last election campaign. The photograph of my very good friend the Leader of the Australian Country party, who has always been co-operative in this House, appears on it. I take wisdom even from my opponents. Therefore, I am fortified in my belief that a lag exists by reason of the fact that, at the bottom of the advertisement, this statement appears -
Vote 1 for your All-Party-Government candidate. He is pledged to end the present unjust tax lag.
– The honorable gentleman should place emphasis on the word “ unjust “.
– The advertisement did not use the expression “ mythical “ or “ assumed “, but merely “ unjust “. It was authorized by Mr. W. H. Horsfeld, of 30 Hay Street, Sydney. I need not proceed further on that point. But I am more fortified by experience. Honorable members know that, under the present tax law, if they retired from their occupation or from this Parliament on the 30th June next they would receive an income tax assessment in respect of their earnings for this year, even though they were not earning income during next year. That is the experience of everybody. The Government frequently receives letters from persons who say that they have retired from one occupation or another, and nine months later have received from the Taxation Commissioner an assessment in respect of the income earned by them in the year prior to their retirement. But, as the Leader of the Australian Country party says, the matter is not greatly affected by the existence or otherwise of a lag. In my opinion, there has been much argument about nothing. Instead of the Taxpayers’ Associations expending money on the engagement of town halls, or the publication of advertisements, it could test the matter in the High Court. That has not been done except in the cases mentioned by the honorable member for Warringah (Mr. Spender), and the movers in the matter were ‘’ bowled over “ immediately they went to the court.
I want to deal with a few simple issues. I regret that the Leader of the Opposition did not bring to the discussion of this measure the clarity of mind, lucid reasoning, and impartiality which he usually displays. I always experience regret when a man of such great talents by-passes, for party political reasons, those things that matter, and deals only with that which is incidental to the proposal before the House. The right honorable gentleman endeavoured to extract ironic humour from the fact that this proposal will be advantageous to the beneficiaries of deceased estates. Quite frankly, I should have thought that that would be some consideration to the average citizen; because I have been told, in this House and elsewhere, of the large number of persons who have incurred insurance obligations for the purpose of making provision for their families after their death. The right honorable gentleman also entirely bypassed and completely ignored that which, as the honorable member for Richmond mentioned, impelled the Government to give consideration to this proposal, namely, the matter of falling incomes, and the position of persons who retire and perhaps have no income, or only a small pension, with which to meet a tax liability incurred in the year prior to retirement.
Three considerations were involved in this proposal. The first relates to persons who retire and receive, when they are, perhaps, in receipt of little or no income, a tax assessment in respect of the liability incurred in the year prior to retirement. The second is, that many persons who were receiving high overtime payments are now dropping back to lower incomes, and perhaps will drop to still lower incomes when normal rates again apply. In the year in which the lower income is received, they have to meet a liability incurred1 in respect of the income of the previous year, when their wage, salary or overtime was high. The third consideration was stressed very strongly by the honorable member for Warringah some months ago. In consequence of his representations, I referred to the Taxation Advisory Committee the question of the obligations which continued to exist af ter a man had died, and had to ,be met by his executors. The honorable member said that frequently these obligations imposed serious hardship upon the beneficiaries, particularly widows and children. Those are the three simple points covered by these proposals. Honorable members may go on urging that something more should be done, and such argument is proper, but it is disgraceful to distort the position as some have done. I was sorry to hear some honorable members, who are under the impression that they are intelligent, repeating the “ clap-trap “ that has been preached by certain persons outside. Some of the critics of this proposal - and this applies particularly to newspapers - are’ now condemning the very things which they so loudly approved before the elections. The Leader of the Australian Country party (Mr. Fadden), who was then Leader of the Opposition, advocated the pay-as-you-earn system before the elections. I am sorry to hear that the credit has been taken from him for being the “first person in this country to think of this plan. The honorable member for Darwin (Dame Enid Lyons) now says that she thought of it 30 years ago. When the plan was first proposed here, as party policy, some sections of the press applauded - it, and ‘expressed their approval of what had been done in the United States of America, and what was done later in Canada and in Great Britain. Under the American scheme, the same amount of taxation was forgiven as it is proposed to forgive here. One would imagine from reading the newspapers that the scheme was working smoothly in the United States of America, and although I had received cables showing that the contrary was the fact, the newspapers persisted in saying that everything was lovely, and that the American plan would be an ideal one to put into operation in Australia. It is now evident that things are not quite so pleasant as we were given to believe. The President of the United States of America has had something to say about the taxation system there. He has made a request to Congress that the taxation system be simplified, because, he said, it would need a man with a dictionary and a thesaurus to find out how it worked. Recently, I read an article in a Queensland newspaper saying that in America the queues of people waiting to get information about how to make out returns were so great that first-aid stations had to be set up to deal with those who collapsed. Some of the Australian newspapers which first praised the American system are now busy “ debunking “ it. The system introduced in Canada was not so liberal as the system proposed here, because it did not provide for any cancellation of tax on investment income in excess of 3,000 dollars, but the newspapers here said that we should adopt a similar scheme. They also praised the British scheme. “I have a copy of a booklet issued by the Treasury” in Great Britain to employers advising them how to assess their employees. I lent it to some honorable members to read, but they returned it to me saying that they could make nothing of it. The system is so complicated that it threw a tremendous burden upon the employers. The representatives of many firms in Britain have spent a great time trying to work out a simple system. Apparently, distance lends enchantment to the view. When it is proposed to introduce into
Australia, approximately the same system as is in operation in the United States of America, all sorts of things are found to be wrong with it. Statements have been made to the effect that Ned Kelly rides again. Such statements do not disturb me much, because I am quite content to put the scheme into operation, and to await results. If this bill be not passed, the deductions from employees’ incomes will continue to be made, because that is the law. Non-employees will continue to be assessed after the 30th June, 1944, on their full income for the year.
– There will be a surcharge of 25 per cent.
– When I explain the full extent of the benefits which will be derived by non-employees, honorable members on this side of the House may well feel that they are not justified in supporting the bill. My own feelings are much the same as those of the President of the United States of America when he said that the pay-as-you-earn scheme conferred great benefits on wealthy taxpayers. My training and associations do not cause- me to have much sympathy with the fellow who says that the Taxation Department will take £6,000 or £7,000 in tax from his income, and that he must contrive to live on a mere £4,000 or £5,000. My personal inclination was to do what the Government of the United Kingdom did, namely, apply the scheme only to persons who derive their income in the form of salaries, wages and fees. However, members of the committee which inquired into this proposal, held diverse views, and it was necessary to devise a plan to which all could agree. I recognize that, no matter whether persons are rich or poor, the law should apply to all of them equitably. The honorable mem-, ber for Parramatta (Sir Frederick Stewart) seems to think that the scheme will not confer much benefit upon the non-employee. There is no doubt, of course, that it will benefit the employee. When an employee is on a steady income, with his payments up to date, and retires or becomes unemployed on the 30th June of this year, he will owe nothing to the Taxation Department at any time in the future, but under the present law he will owe tax upon nine months’ in come. That is a simple statement of the difference between the present system and the proposed system. Thus, the proposals, so far as they affect employees, are simple and understandable to people of ordinary intelligence. I have no fear at all of my ability to explain to trade unionists what their position will be under the scheme, and I am prepared to abide by their judgment. Unfortunately, they have read misleading statements on the subject. I heard a statement broadcast over a Labour radio station in Victoria which was a mass of inaccuracies, and a disgrace to the authorities responsible for it. There is no need to indulge in arguments about whether or not there is a tax lag. It is only necessary to state the position of the wage-earner as I have just stated it, and I am sure the people will understand easily enough. It is recognized that until the end of the year the Taxation Department cannot compute to the last penny how much tax any one has to pay. That is why tax has always been assessed on the preceding year’s income. Under any scheme of this kind, some slight adjustments up or down are necessary at the end of the year. It is true that suggestions were made that the system applied in the case of the New South Wales wages tax should be followed, but that proposal was rejected by those who examined it. The honorable member for Parramatta, of course, assumes that, the nonemployees who will pay the 8$ per cent, tax, not, as must be understood clearly, on the year’s income, but only to meet the one-quarter tax on income of the transition year, have somthing added to their liability. That is not so. It is only because that 25 per cent, cannot be collected from them as easily as it can be collected from wage and salary earners that non-employees are allowed three years in which to pay that debt.
– It will be in addition to their tax for the year.
– Let us see what benefit comes to a taxpayer’s estate. I will not weary honorable members with lots of figures. A taxpayer with an income of £3,000 in each of the next two financial years-
– What sort of a taxpayer - a taxpayer without dependants?
– A single taxpayer.
– Without dependants?
– Yes. That taxpayer, with an income of £3,000 in each of the two years would, under the present law, be liable to pay over those two years-
– What class of taxpayer?
– These figures have been prepared by the Taxation Department. I am citing a taxpayer without dependants who has an income of £3,000 a year in the next two years. Under the present law, his tax liability would be £3,492. It does not matter when he pays it. The lag does not matter. What does matter is his liability in those two years. Under the proposed law, he would attract a tax liability of £2,184. That is a substantial concession - £1,308. In the papers, I have seen cited figures in relation to the tax liability of wealthy persons under the present law and under the proposed law. I cite the case of a man with an income of £10,000 a year.
– The Treasurer assumes that there will be no alteration of the rate of the tax.
– Other people have done so much assuming that I am entitled to do a little. That income of £10,000 a year would, in the next two years, under the present law, attract a tax liability of £16,310, which, under the proposed law, would be only £10,194. In other words his estate would show a profit from this measure of more than £6,000.
– That is only a half-truth, and the Treasurer knows it.
– That is not fair.
– The Treasurer knows that at the time of the taxpayer’s death the Commonwealth will at any rate get some of the concession back in estate duty.
– Put it in another way. Suppose he does not die at all.
– He will be lucky if he does not.
– Say the Leader of the Opposition, for instance, or some other eminent King’s Counsel-
– He is not to die at all?
– I listened patiently to the debate and I have patiently read a good deal about this matter. For the purposes of this illustration, we will not kill him. We will consider the case of a professional man, say a notable King’s Counsel, who earns in the two years before his retirement, which may easily be the next two years, £10,000 a year.
– He must be a King’s Counsel in Sydney.
– I should have imagined that the right honorable gentleman himself earned an income not far short of that, but, leaving that aside, I merely cite, as an illustration, a man with an income of £10,000 a year. He need not die. He can just retire. What will happen ? He will be more than £6,000 better off under this proposal than under the existing statute.
– Will the Treasury make or lose money out of this scheme? Will the Treasurer answer that?
– I will, but first let me answer the question asked by the Leader of the Australian Country party (Mr. Fadden). He said that £35,000,000 will come into the Treasury from the 25 per cent. tax. I accept his figures. That £35,000,000 discharges a tax liability of £140,000,000. I do not think any one denies that.
– The Treasurer assumes that the rate of tax will remain unchanged and that there is no hope of relief for the taxpayers.
– I know that the rate of tax will not be reduced next year and I do not expect any reduction in the year after. Those and the following year will be the transition years. The 81/3 per cent. of tax that will be paid by non-employees in each of the next three years under this proposal is equal to the 25 per cent. of tax in respect of employees’ income earned this year, which is not to be cancelled or forgiven, whichever term honorable members like to employ. I think it will be admitted by any one who examines the matter that the £35,000,000 mentioned by the Leader of the Australian Country party cancels the liability of taxpayers to pay £140,000,000.
– At some time in the future.
– That is all right.
– I did not say that it was not.
– Be fair to this extent : Some of it will be cancelled immediately.
– Yes, but most will be spread over the years.
– Some one said that about 90,000 persons annually passed beyond the reach of the Taxation Department in respect of income tax.
– If 90,000 go out of the income tax field each year the Commonwealth Treasury was “ broke “ long ago.
– Others take their place.
– At any rate that £35,000,000 cancels the liability of taxpayers to pay £140,000,000.
– Over generations.
– I am just saying that the liability is cancelled.
– Of course it is.
– The right honorable gentleman is being as fair as he usually is when he says that that is so, but not when he says that it will be spread over a long time. Consider the case mentioned by the right honorable member for Yarra (Mr. Scullin). A person who has been paying Commonwealth income tax since ten years ago will, under the proposed scheme, pay tax for only nine years and three months, whereas a person who becomes a taxpayer on the 1st July next will in the next ten years pay tax for ten years precisely.
– That is so.
– There is no denying it. So, the man who became a’ taxpayer ten years ago will derive a great advantage, as compared with the man who will become a taxpayer on the 1st July next. Moreover, the second man will be coming into the taxation field at a time when the rates of tax are high and are likely to be high for years, and he will not receive any forgiveness or cancellation of tax liability, whereas the other man, who will have paid tax in respect of only nine and a quarter years in ten years, paid some of that tax in years when the rates were fairly low. Therefore, he has a tremendous advantage over those who are about to become payers of income tax for the first time.
– But that taxpayer will also pay tax in the next ten years at high rates.
– He may. The fact of the matter is, as I admit at once, that always there are lots coming in and others going out. Surely honorable members have enough common sense to realize that the issue is, not whether the cancellation shall be 25 per cent., 50 per cent., 75 per cent. or 100 per cent., or whether the tax should be cancelled in respect of some taxpayers and not in respect of others. I am sorry that I had to disclose the figures which I have given, because government supporters will realize that the Government is giving tax concessions, which they probably did not anticipate, to wealthy taxpayers.
– They are not so gullible as that.
– I shall not go into technical matters. I shall merely repeat the three major influences that operated on the Government’s mind in leading it to bring down this legislation, namely, falling incomes, retirement, and the point raised by the honorable member for Warringah (Mr. Spender) last year about heavy obligations laid upon the estates of deceased persons. Principally the Government was actuated by its desire to meet the problem of falling incomes. I doubt whether the Government would have brought down this proposal but for that. The disability of the heirs of deceased persons could have been dealt with in some other way, I think. This radical change of the income tax law would not have been favorably considered by the Government had it not realized that a great manyworkers who, before the war, subsisted on the dole or on low wages are now receiving high wages and are not sufficiently thrifty to save in the year of their high income to meet their liability in respect of that high income when their wages suddenly drop.
– We agree to the principle of pay-as-you-earn, but object to the 25 per cent. impost.
– If honorable gentlemen opposite would stick to that instead of talking about mythical lags, they would do better. They know the opinion of the Crown Law Department, and they know what is the law that has been passed by this Parliament. During the election campaign I saw advertisements to this “effect, “If Curtin gets back you will owe this much, but if Fadden gets back you will owe this much loss”.
– Before the Treasurer sits down I should like him to deal’ with the other aspects of the bill.
– The right honorable gentleman admitted that the matters to which he had referred ought to be dealt with iu committee. The matter of provident funds was one. I have examined that closely and I am not prepared to accept any amendment of the proposal now before honorable members. There is a simple reason. It is known that certain companies have set aside provident funds for a limited number of highly paid executives. I concede that that is not so in the case which he raised. He said, “ Here is a firm “ - he did not name it although I think I know it as the result of correspondence I have received - ;< which has 5,200 employees to whom it gives considerable and generous benefits including superannuation and retiring allowances”. His objection was that the Government’s proposal, although giving to the Commissioner of Taxation discretionary power, would inflict grave hardship upon the company. I shall examine that statement. [Extension of time granted.] The ordinary citizen is allowed a rebate of £100 for contributions in respect of life assurance and. superannuation. Why should the Government give to an employee in some sheltered industry a greater benefit than that which is granted to the ordinary citizen? The employee in the sheltered industry may already have the benefit of the rebate in respect of his contributions to .superannuation and life assurance, and the company itself may also contribute £100 towards providing a pension for him upon his retirement. I remind honorable members that the articles that the company manufactures are sold to the public, and I assume that it obtained from the Prices Commissioner approval slightly to increase the prices of its goods. But. I rely upon one particular point. Why should the employee in the sheltered industry derive a greater benefit than the average citizen? When the Government allows the company to make that contribution for the benefit of the employee, a great part of it is really paid by. the Commonwealth Treasury because the company is granted a rebate of tax in respect of its contribution. If it be a public company, it may get a rebate of 7s. or 9s. in” the £1, depending on the method of assessment and whether it is subject to the war-time (company)tax. If a private company provided £40,000 for superannuation benefits, as much as £38,000 of that sum might be contributed by the Commonwealth Government. I am not prepared to accept an amendment of that provision, but I remind honorable members that the Commissioner of Taxation has discretionary power to deal with particular cases. As the Leader of the Opposition stated, hardships may be detected when this provision is applied. If so, the Parliament can take necessary action.
Some honorable members opposite re.ferred to a practice that has: become a racket, in some eases. Persons’ buy up’ shares in companies practically in liquidation.
– Only in - some cases.
– I made that plain.
– We only want the Treasurer to emphasize that point.
– The Leader of the Opposition and the honorable member for Fawkner referred to specific eases, and I analysed the position closely. I have received many representations from persons who would be affected by this provision. After consultation with them, I am prepared to submit an amendment to reduce the test of 75 per cent, of the shareholdings to 25 per cent, of the shareholdings. Later, I shall re-examine the position with’ the object of seeing whether the percentage is too low, because this practice has become an abuse. Other matters raised by honorable members will be dealt with in committee. Finally, I hope that honorable members will not join with certain people outside this Parliament, who are either incredibly ignorant or who have the characteristics of accomplished liars, in distorting the Government’s proposals for the introduction of pay-as-you-earn taxation.
Question put -
That the words proposed to be left out (Mr. Holt’s amendment) stand part of the question.
The House divided. (Mr. Speaker - Hon. J. S. Rosevear.)
Majority . . . . 25
Question so resolved in the affirmative.
Original question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 4 agreed to.
Clause 5 (Exemptions).
– This clause sets out the exemptions which will be allowed under this bill and it mentions, inter alia -
In the case of any person enlisted in or appointed to the Defence Force, the pay and allowances earned by him as a member of that Force during the year of income out of Australia.
I ask the Treasurer to agree to an extension of the application of these provisions to personnel attached to the Red Cross, the Young Men’s Christian Association, and similar organizations, and also to Army photographers, war correspondents and the like, for all such personnel accompany our men in their forward operations!. Photographers, for example, are attached to naval units, and also accompany bombing squadrons. Many photographers and such personnel as I have indicated have lost their lives during the war, and many more have taken risks similar to those taken by men of the fighting units. In the last war such individuals were given the temporary rank of captain, which they held, throughout the war. I understand that in this war such personnel are paid at the rate applicable to captains, but. I can see no reason why they should not be granted the concessions prescribed in this clause. Many of these men are attached to the Department of Information; they are public servants, and are virtually on active service.
– There appears to me to be a conflict between certain provisions of subparagraph (ii) which are proposed to be substituted for certain provisions in paragraph (s) which now appear in section 23 of the principal act, and certain other provisions which appear in proposed new sub-paragraph (iii). Men who embarked on the 1st July, 1943, enjoy exemption if they have served the requisite 90 days continuously out of Australia; but sub-paragraph (iii) appears to relate only to an exemption of 90 days from the 2nd October to the 30th December, 1943. Perhaps the Treasurer (Mr. Chifley) will be able to clarify the intention in this regard.
.I support the submissions of the honorable member for Wentworth (Mr. Harrison). Honorable members who saw the film Desert Victory will probably also have heard that many correspondents and photographers were killed during the making of it. I can see no reason why such personnel, and also Bed Cross, Young Men’s Christian Association, and Salvation Army workers should not be included. It appears to me that they have been omitted accidentally.
– I refer to the proposed amendment set out in paragraph (d) of the clause relating to exemptions in respect of income derived by certain individuals in Australia who came to this country at the request of the Commonwealth Government under contract of employment. These contracts provided that the men should work here for two or more years, or for the duration of the war, and that during the course of their employment their salaries should not be subject to Commonwealth income tax. The men were performing essential service in this country, instructing artisans in work of importance to the war effort. Although they were given exemption from income tax under the terms of their contract, the Government is now proposing to remove the exemption and, for taxation purposes, to follow their incomes back to 1942. That seems to me to be outrageous. Many of these men doubtless loft their wives and families in England, and they have been obliged to maintain a certain standard of living. I cannot see the justice of altering the conditions of their contract at this stage. In effect, what the Government is saying to them’ is : “ We are now changing a legal act into an illegal act, and you will be liable to income tax in respect of the period for which, hitherto, while you have been in this country, you have not been liable”, it i.« most unjust, to” niter the law in this way.
– The men naturally would have made no ‘ provision to meet such an impost.
– Quite so. I urge the Treasurer to give considera-tion to my’ submission, although the’ point may be dealt with more effectively when clause 28 is under consideration.
.-: Probably this point could be dealt’ withmore appropriately when sub-clause (ii) of clause 28 is before the committee, but. I take the opportunity to support the.request of the honorable member forDeakin (Mr. Hutchinson). Retrospective legislation of this description should ; be avoided as far as possible, but it is particularly undesirable to apply retrospectivity to financial matters, and I hope that the Treasurer will take notice of the requests that have been made.”
– The matter raised by’ the honorable member for Deakin (Mr. [ Hutchinson) has quite a long history.’ The provision for exemption was made” in 1942. It had its genesis in a request* conveyed to me by the honorable mem-“, ber for New England (Mr. Abbott), who . was then chairman of ‘ the Administra- , ti ve Planning Committee. The request, was that pay and allowances received bymembers of the naval, military and air forces of the United States and by civilian ‘ personnel employed by. .the Government of that country while they were engaged , in service in Australia in connexion with ; the present war should be exempt from income tax. This exemption Was granted, and it applied to civilians “’ yhj6 had ‘ come to Australia from the United King-/ dom, New Zealand and Canada for the.’ purpose of engaging in activities closely ‘ associated with the defence of this “ country. The visiting’ civilians were engaged mostly, while in Australia, iri _ the manufacture of munitions and war’ equipment. They included, chemists/; engineers, and technicians who were’ specialists in one phase or another of the manufacture of guns and torpedoes, * the production of explosives, .and the assembly of aircraft, or the organization of shipping in the transport of troops.’. The remuneration, as a general rule, was ‘ free from income tax in the respective ‘ countries in which the visiting ‘ persons continued to be resident, so that when- exemption was granted by the Commonwealth no tax was paid on the remuneration to any government. So far as can he ascertained, the visitors were not engaged under conditions which included exemption from Commonwealth income tax. After the exemption had been in operation for some months, there was strong evidence that the exemption of the visitors bad occasioned resentment and discontent among Australians with whom they were working, whose normal rate of remuneration was equal to or greater than that of the visitors, but, after the deduction of income tax, was in fact considerably less. A further aspect of the question was that the exemption applied only to visiting civilians directly assisting the Commonwealth Government. The exemption did not extend to the remuneration of visiting civilians who were employed by companies engaged in war contracts for the Commonwealth. The Government took the view, and takes the view to-day, that tax-free incomes of the nature under discussion could not be justified, in times of war, and it decided in May, 1943, that the exemption should be limited to those cases where the remuneration was subject to income tax in the country in which the taxpayer ordinarily resided, and that exemption should apply in respect of remuneration earned up to the 30th June, 1942, but not in respect of remuneration derivedafter that date.
In anticipation of parliamentary approval of this amendment, instalment deductions from the salary and wages of these visitors were commenced in May, 1943, so that each of the visitors has accumulated instalment deductions up to. the present time which will be applied in payment of the tax on the remuneration earned during the year ended the 30th June, 1943, that is, the first year in which the remuneration becomes taxable for Commonwealth purposes.
– The honorable gentleman contends, in effect, that it is not retrospective, but that this provision is to legalize a practice which he brought into existence?
– To legalize something which, up to now, has been illegal.
– We do not admit that. I am astonished that the right honorable gentleman should make such a charge.
– I am not making a charge. Under what law was the deduction made?
– Under a Cabinet decision as to who should and who should not be exempt.
– A Cabinet decision is not necessarily the law.
Mr.CHIFLEY.- I take it that honorable members were speaking of persons employed by newspapers when they urged concessions to war photographers.
– I had in mind those employed by the Department of Information.
– That department was not concerned in the other cases that were mentioned. The Leader of the Australian Country party raised certain points, which I asked the officers to examine. The answer is fairly complicated, and I prefer to hand it to the right honorable gentleman rather than occupy time in reading it.
– I still do not know what the Treasurer proposes in regard to photographers. He merely said that I had referred to press photographers, and when I assured him that I had not he shot off at a tangent and dealt with a matter that had been raised by the Leader of the Australian Country party (Mr. Fadden). May I draw attention to the position which exists to-day? War photographers have been appointed by the Department of Information, and war correspondents by the Australian Broadcasting Commission.
– They are not members of the forces.
– Certain recognition has been given to some of them. We know that the remuneration of these men is not comparable with that of men engaged in like capacities by the United Kingdom, the United States of America, and other countries. On that account, Australia has already lost an ace photographer in the person of Damien Parer, who, on commencing work for the
American forces, received a very big increase on the amount that had been paid to him by the Department of Information. These men are not numerous, but the Government has recognized them by allowing them to wear ribbons applicable to the areas in which they have served, and making available to them certain repatriation benefits which are enjoyed by the rank and file of the defence forces. It has thus acknowledged that they are in the defence forces. The majority of them are working in the forward areas. Many have lost their lives, and others have been wounded. The Government, having given consideration to them in respect of decoration and repatriation, says : “ This shall stop. We propose to exact from you a penalty”. I put it to the Treasurer that the concession which is to be allowed- will confer no benefit, because, in the main, their rate of remuneration is above that specified. Because, when they are in the field, , they run the same risks as those who are engaged in battle operations, equal consideration should be given to them. They are sacrificing more than is sacrificed by the average fighting man, because they are not permitted to use weapons of offence or defence, but go into the front line carrying merely a camera with which to obtain pictorial records that will help to maintain the morale of the people. They accompany war vessels which carry out bombardments in connexion with invasion operations, as well as front-line infantry troops, bombers, and tanks. The Government should recognize the value of the service which they are rendering.
– I press this matter, which has not been sufficiently considered. I instance the case of Keith Palmer, Herald writer, and- high aviation authority, who was killed in action while accompanying American forces. Surely the relatives of a deceased man who played such a part should be considered! The Treasurer should extend the concession to representatives of the Bed Cross, who take considerable risks and suffer great inconveniences, as well as representatives of the Young Men’s Christian Association and the Salvation Army. This is demanded by ordinary common sense.
I hope also that the honorable gentleman will not pursue those citizens of the United Kingdom who came to Australia in our extremity in order to help us to resolve some of the difficulties we were experiencing in the manufacture of munitions and guns. Apparently, a tax has been imposed upon them without legal authority.
– Those engaged by private, employers were already taxed.
– That is not the point. The honorable gentleman said that some employees had objected to the sums which these men -were receiving. They would not have been brought to Australia had they not been experts in the work upon which they were engaged, because there was plenty of work for them in their own country. Are we to adopt the miserable course of taxing these men without authority merely because others have said that the visitors were getting too much money? Attempts to justify illegal action of that sort will tend to undermine the whole fabric of justice, and the proposal should be abandoned immediately; otherwise, we shall disgrace ourselves in the eyes of people overseas.
– I endorse the concluding remarks of the honorable member for Balaclava (Mr. White). The Treasurer (Mr. Chifley) has given a most extraordinary explanation. He has said, in effect, that taxation has been collected from these individuals. The explanatory notes issued in connexion with the bill relate an entirely different story. Are they true or false? This is the explanation given on page 5, in relation to those who came from the United Kingdom to help us with our war effort -
The remuneration is not, as a general rule, subject to income tax in the United Kingdom or the country in which the visitor ordinarily resides, so, when exemption is granted by the Commonwealth, no income tax whatever is paid on such income either in Australia or elsewhere. These individuals thus enjoy a substantial monetary advantage over Australians with whom they are working.
It is, therefore, -proposed that the exemption provided for visiting civilians assisting in the defence of Australia . shall he limited to those cases where the remuneration is subject to income tax in the country in which the taxpayer ordinarily resides. . . .
A further .proposal is that the amendment shall ap.ply in respect of remuneration derived on and from the 1st July, 1942.
– “What is the honorable member suggesting?
– That a eontract has been broken.
– There is no contract.
– From now on, it will be quite all right to tax these people, but to tax them retrospectively is neither morally nor legally just.
– The law provides that I may either grant or withhold exemption.
– The law does not tax that individual. He has not committed any illegal act. By withdrawing the exemption back to 1942, he is being made to have committed an illegal act.
– The honorable member should bear in mind that there is - nothing illegal in what has been done.
– That’ seems to be a different tune from the one which the honorable gentleman was playing a few minutes ago. I understood him to tell us that this was intended to legalize something that he had done.
– -Exactly, in relation to visitors to Australia. In connexion with these people, the Treasurer has power either to exempt or to withhold exemption. The matter was considered by Cabinet, and a decision was reached as to what the Treasurer ought to do.
– These men have /been living in the belief that they were legally exempted.
Mi1. Chifley. - Those working for a private employer did not receive exemption. Exemption might or might not be granted to those working for the Government.
– According to the explanatory notes, exemption was granted to them.
– Did the honorablegentleman exempt them?
– Certain of them.
– And it is now proposed that such exemptions shall be revoked retrospectively ?
– Yes, because the deductions were made immediately.
– “Were these persons taxable outside Australia?
– They are not paying tax anywhere.
– Doubtless, that was iu their contract of employment when they came overseas.
– Have I to keep on repeating that there was no such contract?
– How does the honorable gentleman know that?
– I have read from the explanatory notes which accompany the bill. I presume that some person in authority prepared them. These notes say -
The individuals are usually engaged under contracts of employment by the Commonwealth for two or more years or for the duration of the war.
Is that false, or is the explanation of the Treasurer false? Are we to take no notice of any of these explanatory notes?
– They were under contract to work for the Commonwealth Government, but these were not necessarily contracts which affected their income tax liability.
– The honorable gentleman said that there were no contracts. Whatever may be done from now on will be defensible. But, retrospectively, to cause an illegality to have been committed ‘by a person who (believed that he was acting legally cannot be justified on moral grounds, whatever explanation may be offered on financial grounds. I ask the Treasurer how much money is involved. Probably it is a mere bagatelle, and an injustice should not be done to these people in order to collect a few miserable pence. For the sake of the good name of the country, I urge the Treasurer to abandon this proposal.
.- I support the appeal of the honorable member for Wentworth (Mr. Harrison) on behalf of officers of the Department of Information and of other departments who are attached to the Army as war correspondents, &c. I desire to widen the appeal to include Red Cross officers, and persons attached to the Young Men’s Christian Association and Comforts Fund services. I understand that when they are serving overseas they arc treated, for taxation purposes, as if they were Army personnel serving in Australia. I ask that they be placed on the same basis as Army personnel serving overseas. Many of them are returned soldiers from combat areas who have been discharged as medically unfit for further military service. Their only income is the remuneration they receive from the organization which employs them, and they serve in danger zones and are subject to military discipline. The present position is anomalous.
– I support the remarks of the honorable member for Deakin (Mr. Hutchinson) in respect of individuals brought from overseas under contract of service to the Commonwealth Government. If the purpose of this provision is to ensure that they pay tax in one country or the other, there can be no objection to it, but it should not be made retrospective.
– There seems to be a misunderstanding. The act provides that exemption from tax in such cases as have been mentioned may be granted at the discretion of the Treasurer, and I take it that he exercised this discretion, and granted exemption up to the 30th June, 1942.
– ‘That is .correct.
– Then, having regard to existing circumstances, he withdrew, the exemption, and these persons, who had been, brought under contract from overseas, became ordinary Australian taxpayers from whom instalments of tax were collected. If that is so, there can be no objection to the provision being made retrospective.
– Then why put it in the bill?
– In order to remove the right of the Treasurer to exercise his discretion.
– That is right.
– I doubt whether the explanation of the Leader of the Australian Country party (Mr. Fadden) goes far enough. Clause 5 seems to me to preserve the discretion of the Treasurer, because it retains the phrase, “ if in the opinion of the Treasurer “. The explanatory note to clause 5 includes the following paragraph : -
A further proposal is that the amendment shall apply in respect of remuneration derived on and from the 1st July, 1942. Exemptions already granted will continue in respect of income derived up to the 30th June, 1942, but not to income derived subsequent to that date.
If these exemptions were validly withdrawn after the income year 1941-42, then I am at a loss to understand why the hill touches this subject at all. Why change the law if the exemption was validly withdrawn?
– I take it that the discretion of the Treasurer applied to persons engaged in the development of the defence of Australia, but not to these engaged in civilian occupations.
– But exemption was granted to them by the Treasurer, and the exemption had not been withdrawn. Now it is proposed to terminate the exemption, not prospectively, but retrospectively, so that for the period between now and the 30th June, 1942, they will be treated as if, during that period, they had not been exempt. That is retrospective taxation. It is true that the Treasurer said that, by a prudent rather than by a legal decision, tax has been collected from some of them already.
– The law was clear, but I got a Cabinet direction as to what ought to be done in regard to the matter.
– The Treasurer said that it was proposed to legalize something which had been done, and the only inference is that, up to the time of legalization, something was being done without lawful authority. Either the exemption was lawful, in which case no further law is needed, or it was not. If it was not, then this bill proposes retrospectively to make lawful deductions already made from these men. That, in the plainest terms, is an example of retrospective taxation, something which is always deplorable, but is particularly deplorable when applied to people brought to this country to perform a real service at a time when the country was in great need.
– I shall examine the point raised by the right honorable gentleman.
Clause agreed to.
Clause 6 agreed to.
Clause 7 -
Section sixty-six of the Principal Act is repealed and the following section inserted in its stead: - “66. - (1.) Where a taxpayer sets apart or pays in the year of income any sum… “ (2.) For the purposes of this section, the Commissioner shall determine, in respect of any sum so set apart or paid after the thirtieth day of June, One thousand nine hundred and forty-three -
– I move -
That, in sub-section (2.) of proposed new section 60, after the word “ forty-three”, the following words be inserted: - “ or the last day of the accounting period, if any, adopted under this Act in lieu of the income year ending on the thirtieth day of June, One thousand nine hundred and forty-three.”.
There are other accounting periods than the year ending the 30th June, and this fact should be recognized.
– This clause imposes limitations upon the extent to which companies or persons may make provision for the welfare of their employees. The Treasurer, in his second-reading speech, took up what seemed to me an extraordinary attitude. He said that the opposition tosome of the welfare schemes now in operation was based on the assumption that the employees were being too well treated by the bosses - a remarkable statement to emanate from a Labour Treasurer.
– I did not use that phrase.
– The Treasurer said that, because of the liberal benefits provided by some firms, the Treasury was paying a good deal of the cost. That argument can be applied to the payment of wages over and above the basic wage. It can be applied to the concurrence by mine proprietors in directions by the Commonwealth and State Governments to carry out the requests of the miners’ federation. I should like to have time to examine the Miners’ Pension Act of New South Wales. Perhaps the
Treasurer might be able to say whether this provision would have the effect of suspending any legal obligation upon the mine-owners to make payments beyond the limit here imposed. It would be interesting to know whether the clause affects the provision requiring the coalowners of New South Wales to make a very generous provision for pensions to miners.
– What generous provision are they required to make?
– I cannot say; I have not had an opportunity to examine the matter.
– This provision will not affect any one receiving less than £500 a year.
– I definitely state that it will affect 5,250 employees of one firm ranging from the managing director to thelowest-paid manual labourer.
– No one would allege that the pensions scheme of that firm was deliberately invented some years ago so that the company, in this year, when taxation rates are high, would derive some benefit. If this clause is persisted in it will be impracticable for any corporation, or employers generally, to provide canteens or other amenities for their employees, because if they did so, they will be under suspicion that they are doing it in order to escape some measure of tax liability. I repeat that I am astonished that the Treasurer of a Labour administration should submit the argument which he has submitted. If it prevails, it will mean that, instead of employers being encouraged to take an interest in their employees, they will be encouraged to treat them as mere profit-makers, because they will be suspected otherwise of attempts to evade tax. They will be encouraged to pay the lowest wages possible and to do the minimum of welfare work. I hope that the Government will have a second thought about this clause.
– This is a very important clause. I spoke on it on the second reading and I propose, without unduly repeating myself, to speak about it in committee. It is a clause which concerns superannuation and pensions schemes all over Australia and which, if agreed to, will have a direct effect upon thousands and thousands of employees in Australia. I can only express my astonishment that we should have to discuss it at 1.50 a.m. in circumstances which suggest great urgency although the Prime Minister (Mr. Curtin) got the House to agree yesterday to sit at 10.30 a.m. to-day in order to avoid allnight sittings. We are witnessing a scandalous state of affairs in which important matters are discussed in the small hours of the morning, although all the year is before us and there is n°t, the slightest excuse for this alleged urgency. This clause is definitely designed to reduce the provision that can be made by a company or an employer for its or his employees. That puts the clause into its shortest possible form. It reduces the contribution that a company may make to the welfare and superannuation of its employees. I repeat the instance, which I gave on the second reading, of a company with 5,250 employees on its superannuation fund covering all grades of people. The company makes a contribution in relation to every employee of 12$ per cent, of his annual salary or wage. This clause says to that company and to scores of other companies, “ You shall not in future make a contribution of more than 5 per cent. If you do, there shall be no treatment of that as one of your working expenses. If you do that in future, you must do it out of your final net profits “. What is the effect of that? It is, for all practical purposes, to take a knife and cut. right down through that superannuation scheme.
– All superannuation schemes.
– Quite. Who will suffer from that? The employer is not the person who will suffer. He is not making some rake-off from this fund. It is a fund which exists for the benefit of his employees, and the employees will be deprived of the benefit as the result of this clause. The Treasurer (Mr. Chifley) rose and, I agree with the honorable member for Parramatta (Sir Frederick Stewart), made a most astonishing defence to the formidable case made against this clause. He said, “ Oh, well, you know the Tax Commissioner has to find some of this money because, if it is allowed as a deduction, the income that would be taxable in the hands of this company is reduced “. So, we are given the moth-eaten statement, which we are so tired of hearing, that it is the Government that is paying this money. We are always told that. If some generous citizen makes a contribution of £100,000 to a deserving charity we are told how much of it the Taxation Commissioner finds. That sort of answer never was good, but, if it were good in any circumstances, it would be equally good when applied to the wages paid to men. Let me take two instances. Suppose an employer decides that, for the purpose of giving a stable future to his employees, they shall have a proper superannuation scheme, he is hit by this clause. ‘ But suppose he says : “ I will not do it that way. I will enable my employees to build up their own provision for the future, and, so, I will pay to all employees a bonus, year by year, equal to 12$ per cent, of their wages or salaries, or increase their wages or salaries by 12$ per cent.” The Treasurer would not then ask the Parliament to say, “ You are not to pay 12$ per cent, above the legal minimum because the Commissioner of Taxation is finding it for you “. No Labour Treasurer would say that. It has not yet become an offence in Australia to pay more than the minimum wage, but if it be wrong to pay the money into a superannuation fund-
– Which is more secure.
– Which is more secure and is much more calculated to benefit the employee in the long run, it should be equally wrong for an employer to increase an employee’s wages for the same purpose.- It is the employee who is interested in these things. The company I instanced employs 5,250 people. The employees are the ones who are interested in the effect of this clause. They may never discover it, because they will not read about it in a debate which takes place at 2 o’clock in the morning. At any rate, they will not discover it in a hurry. but when they do discover it, they will find that they have been deprived specifically by this clause.
– The Treasurer called it “ shelter “.
– I speak for myself. They will find that they have been deprived of a very important element in the provision made by the employer they are working for. The only other thing I want to say about this matter is that, when one reads this clause, one is driven to ask what is the policy of the Government in relation to proposals of this kind? Is the Government really trying to knock out private schemes of social security as a policy? Is the Government’s policy that we should all be driven on to one level, that Government proposals are all right, but private proposals of an infinitely more generous kind are to be cut down or destroyed? If that is not the policy of the Government, there is no policy to be found in this clause at all. I read this clause when I first received my copy of this bill. I have read it two or three times since the second-reading debate. The more I read it and think about it the more I am gravelled to find one really good reason for putting it into the bill. It is true that the Treasurer said earlier that one reason was that in the war certain people had been putting up, in effect, bogus schemes, and that some one from the treasury bench interjected about a scheme which related to one or two high executives. I am not here to discuss some bogus scheme put up by some one who sees a good opportunity to do something for the managing director or assistant managing director and thereby save income tax. That does not deserve protection from anybody, and any clause designed to deal with such abuses shall have my support, but there was no inducement to resort to such expedients until’ income tax rose to the skies. I am talking about a scheme which has beenin existence for many years, for years before the income tax was more than nominal. If what the Treasurer is hitting at is this temporary problem created by the high rate of income tax, he should provide that this clause is not to apply to any scheme which was in existence earlier than 1939. After all, I have never heard it said before this bill was brought down> that these contributions were too big or wrong in principle. Nobody thought before then that such schemes were to be anything but encouraged. Now, because a few people put up what Americans describe as “ phoney “ schemes in order to evade tax, a clause is produced which destroys all those schemes with one broad sword. It 13 another example of throwing the net wide and catching 99 honest men so that one rogue shall not escape. It is a poor kind of law-making, and I hope that the committee will reject it.
– One hears a lot of mock sympathy about this kind of thing.
– That is not fair.
– I have discussed this matter with two companies, including the one about which the Leader of the Opposition (Mr. Menzies) spoke. The parent company is in the United States of America and is governed by a provision which closely resembles the one in this bill. Representatives of the life assurance companies interviewed the right honorable member for Yarra (Mr. Scullin) and myself and asked us to study the United States law on this subject.
– I did not refer to any American company.
– I did not say that the particular interests to which the right honorable gentleman referred are American.
– No, not in the case that I cited.
– Perhaps I am mistaken, but I, too, have information about a company which employs 5,200 persons. When the right honorable member for Yarra and I examined the American law, we found that it produced substantially the same result as will this provision. Of the 5,200 employees of the company only 80 come under the provident fund, and they are highly placed executives. I am referring to the provident fund only, not to the pensions scheme. All those employees receiving more than £500 a year could be affected. I examined this subject again only yesterday. Some questionable funds are springing up. One is mentioned in the explanatory notes to thisbill, and others are contemplated. The Leader of the Opposition urged me to adopt the year 1939 as the starting point. I remind him that one company started in 1941, and has a case for consideration. “Where shall we draw the line of demarcation? The Commissioner of Taxation has discretionary power in these cases.
– It will not help the poor fellow if he exercises it.
– This provision is designed to prevent rackets. Some limit must he fixed. I stated earlier that the ordinary citizen is granted a rebate of tax on a contribution of £100 to life assurance and superannuation funds. Is there any special reason why an employee of some particular company should receive, in addition to that rebate, a benefit of £100 from his employer?
– It is bad policy to reduce industrial welfare.
– The honorable member for Parramatta referred to the miners’ federation scheme. Evidently he is not familiar with the constitution of that scheme if he believes that it is likely to be affected.
-Can the employee still get a rebate of £100 on his own account?
– The employee will be allowed a rebate of £100 on his own account, apart from the contribution made by the company. To date, I have found only two companies which, even if the Commissioner did not exercise his discretionary power, would be affected.
Motion (by Mr. Forde) proposed -
That the House do now adjourn.
.- I direct attention to an article published in yesterday’s issue of the Daily Mirror and entitled “Brazen Impudence of Chicago Paper “. It reads -
Known as one of the most persistent and blatant snipers at the British and Australian war effort, ColonelRobert McCormack, owner and publisher of the Chicago Tribune, is seeking to have published in Australia a tabloid edition of his paper for distribution here to
United States troops. On McCormack’s behalf this sample paper is being hawked around Australia in a search for printers. So far there has been no takers, but while Parliament is sitting it should take some action to prevent this type of anti-Australian and anti-British propaganda being disseminated in this country and amongst the United States troops fighting in association with Australians.
This is not a question of any right to publish a paper in Australia. It is a question of preventing the fifth columnist McCormack distributing amongst front-line forces poison that might result in irreparable damage.
– He ought to be mentally certified.
– This man, McCormack, is the millionaire owner of the Chicago Tribune. He is an isolationist whose remarks have staggered the British Empire. He has been referred to by British and Australian newspapers as “ Cut-up-the-Empire “ McCormack. On several occasions be has attempted to break into the Australian newspaper field. Now he is endeavouring to use the American forces here for the purpose of gaining a footing with his isolationist propaganda in the Australian newspaper field. His faux pas have been legion. His attitude towards the British Empire has been so laughable that one would believe that the man was a buffoon or a “ stooge “ for Hitler. His particular type of journalism, which is a sort of Thompson machine gun to blast the relations between two great countries, has been freely commented on in the press of the world. On the 22nd April, 1943, the Sydney Morning Herald published the following item under the caption “ McCormack Plan for Empire “ : -
ColonelR.R. McCormack, isolationist publisher of. the Chicago Tribune, told the New York paper P.M. yesterday, that he would inaugurate an editorial campaign in the next few days urging the United States to acquire New Zealand, Canada, Scotland and Wales.
Colonel McCormack said: “Make these countries States like North Dakota and then we can guarantee them a Republican form of government. How else can you do it?” “But wouldn’t that carve up the British Empire?” P.M. inquired. “ Let them worry about that,” he replied. “ I don’t consider it my duty to conserve the British Empire.” P.M. says that Colonel McCormack spoke with nonchalance but strict seriousness.
This isolationist forgets that the west coast of America is threatened by the enemy. He is a bad American. People in the United States of America laugh athim, because he is considered to have a particular type of entertainment appeal to them. But when his attitude toward the free press, the subject of bases in Australia, and the division of the British Empire intrudes into the newspaper field in Australia, I consider that I am justified in raising this matter in the National Parliament. The Chicago Tribune, discussing the same subject, said -
If the British Commonwealth of Nations and Western Europe wish to enjoy close association with us, and we wish to similarly link ourselves with them, all they need is to adopt our written constitution and apply for membership. All we need is to accept them as we once accepted Texas. Britain could join the Union, e.g. four States - England, Scotland, Wales and Ireland. Canada could constitute another State. Australia, New Zealand and their near islands might form still another. This should be a particularly easy transition because Australia is now aware of the inability of the British Empire to furnish protection and of our ability and willingness to do so. Practically speaking, Australia is out of the Empire to-day as all but the most liberally minded know. Membership of our Union would give the British the opportunity to rid themselves once and for all of the incubus of their nobility and aristocratic systems. The British would have to give up their King, but his constitutional powers are said to be merely nominal, and the change to the republican form could be made without difficulty.
These extractsare significant enough to make McCormack, and his inroads into Australian journalism, a serious matter for Australia, for the Australian press and for the liberties that we treasure so highly. He is doing a bad disservice to Americans. He is laughed at and is treated with a certain amount of contempt by liberal-minded Americans, but I am not sure that his clowning is not a pose. By reason of his frequent and persistent requests for bases that have been won with American blood and his urgings to the British Empire to comewithin the constitution of the United States of America, he is an advocate of a new form of imperialism as dangerous as anything that has ever confronted any country at any time.
– He is not taken seriously in his own country.
– He is taken seriously enough for his remarks to be reprinted and for his newspaper to have a circulation of 1,000,000 copies. McCormack is playing the fool so that he may play more cunningly the role of a Hitlerite in America. I think that he is one of the corn-fed isolationists who have been a surprising adjunct to the liberality of American thought, and he has persistently tried to introduce into Australia in one form or another his pernicious doctrines. Imagine the soldiers, who have congealed in blood their fellowship, having a newspaper presented to them which would more than likely suggest all those stupidities which he represents as truth. Without placing any further emphasis on this matter, I direct attention to the dangers that confront Australia if we allow this fifth columnist and Hitlerite to come amongst us. I invite a responsible Minister to reply to my representations at the appropriate time.
Question resolved in the affirmative.
The following papers were presented : -
Audit Act - Finance - Treasurer’s Statement of Receipts and Expenditure for year 1942-43, accompanied by the Report of the Auditor-General.
Ordered to be printed.
Air Force Act - Regulations - Statutory Rules 1944, No. 46.
National Security Act -
National Security (General) Regulations - Orders -
Taking possession of land, &c. (29).
Use of land (3).
Regulations - Statutory Rules 1944, Nos. 47, 48, 49.
House adjourned at 2.15 a.m. (Thursday).
The following answers to questions were circulated: -
Members of State Parliaments Holding Commonwealth Positions.
s asked the Minister representing the Minister for the Interior, upon notice -
– The Minister for the Interior has supplied the following answers : - 1. (a) Under a determination operating from the first pay period after the 15th March, 1944, the following rates and conditions apply to members of the Civil Aliens Corps: -
Tradesmen when employed as such - £0 4e. per week.
Skilled members when employed as such - £5 5s. per week.
Unclassified members - £4 16s. per week.
Members employed by the Commonwealth Railways Commissioner - Award rates applicable to railway employees.
There is also provision for piece-work rates.
Hours - 44 per week.
Overtime - Limited to six hours per week - time and a half.
Holidays - Nine public holidays per annum.
Annualleave - Ten days after twelve months’ service.
Sickleave - Up to 88 hours of working time per annum.
Food and quarters - Members pay for food but are provided free with camp, messing and cooking facilities.
In addition, aliens injured whilst in Commonwealth employment receive the benefit of the Commonwealth Employees Compensation Act.
In the Senate on the 24th February, 1944, the Minister for Trade and Customs gave the following advice based on information supplied by the Prime Minister in regard to. the pay and allowances of a private soldier in the Australian Imperial Force: -
Deferred pay. - In addition to the above rates, a private soldier is credited with deferred pay of 2s. per day after six months’ service or from date of his embarkation for overseas service, whichever first occurs.
Allowances and Conditions.
Nations and quarters. - Rations and quarters are provided by the Army. If, however, rations and quarters cannot be provided by the Army, a private soldier is paid a subsistence allowance as follows: - Member able to live at home, 3s. a day: member required to live away from home if not maintaining a dependant, 4s.6d. per day; if maintaining a dependant, 5s. per day.
Clothing. - Uniform and necessaryclothing are provided free.
Leave. - The private soldier is eligible for leave with full pay on the basis of two days a calendar month (inclusive of Sundays and public holidays).In addition and where practicable, one rest daya week may be granted.
Subsistence allowance is paid at the rate of 3s. per day. Home leave travel is provided at Commonwealth expense.
Medical attention. - Free medical, dental and hospital treatment are provided for the member.
Note. - The daily rates of pay and allow ances shown above are paid on the basis of a seven-day week.
n asked the Minister for External Affairs, upon notice -
– I have referred the matters raised for examination by the appropriate Commonwealth authorities. Mr. Vaccari was not at any time appointed to represent the Italian community, but was merely authorized on humanitarian grounds to make representations to various Commonwealth departments concerned with the welfare of persons of Italian origin.
Australian Army : Africa Star Ribbon.
e. - On the14th March, the honorable member for Moreton (Mr. Francis) referred to dissatisfaction among the forces in regard to the way in which the Africa Star ribbon was being issued, as men who had served in the Middle East and New Guinea coming back home on leave were unable to get the ribbon while men in base positions had received it. He further stated that complaints had been made by Middle East veterans that men in Brisbane were wearing it while they on return from New Guinea were unable to get it.
I now desire to inform the honorable member that it was important that the issue of the ribbon in the first instance should be made on a regular and orderly basis, to those justly entitled to wear it. Commanding officers were required to notify ordnance depots of the requirements of their units, according to the entitlement of the members serving therein. When these quantities were ascertained the ribbon was despatched by registered air mail to advanced ordnance depots in the operational areas where it was held until instructions to issue were received. On the 25th February, 1944, instructions were issued accordingly to all ordnance depots and issue was to be made to all units in New Guinea and Australia simultaneously. After that issue had been effected, supplies of ribbon were despatched to the various States of the Commonwealth, and arrangements were made for quantities to be held in leave and transit depots for issue to those personnel who were proceeding on leave on the date authority was given for the issue of the ribbon. It is expected that, by this time, all members who are entitled to wear this ribbon will have, received their issue, but if there are any members who are still without the issue they should apply to their commanding officers or, if on leave, to the leave and transit depot shown on their leave pass.
Munitions Production: 25-Pounder Shells.
n asked the Minister “for Munitions, upon, notice -
With reference to the production of 25- poundcr shell* - 1. (o) Will he inform the House why the Colonial Sugar Refining Company Liaiited’s itnnexe was closed down when it was producing this component without any profit* (b) What io the finished cost of this component at that annexe? 2. (et) Has the government factory in Western Australia been allowed to continue to produce thiB shell when the forgings, which ure made in Newcastle, hare to be transported to Western Australia, machined at the government factory, and retransportcd back to Melbourne for filling? (ii) What is the cost of the component produced by this factory?
H. (a) What is the capital investment in the plant at Port Pirie producing this component? (ft) How many men are employed? (o) What is the finished cost of this component at this factory?
– The answers to the honorable member’s questions are as follows : -
I. (a) The closure of the Colonial Sugar Refining Company Limitcd’s annexe, together with four otlior producing centres, was effected as n result of the general depression in the munitions programme, and the very satisfactory supply position of 25-j)Ounder shells. Three centres only continued in production at reduced rates. Of these, one is situated in Western Australia and one in Tasmania, in which States the man-power position at the time was least difficult. The third is the Commonwealth Government factory at Port Pirie, where production was continued pending a change over to other types of manufacture. At the same time, filling of this type of shell was discontinued in New South Wales, where the production of forgings had already ceased. (6) Approximately 17s. Id. Forgings were supplied at a cost of 9s. 9d. each and finished at a unit cost of 6s. id. Charges on account of depreciation and amortization of plan supplied by the Commonwealth were calculated at approximately ls. 3d. per unit. 2. (a) The manufacturing unit concerned in Western Australia is a State Railways annexe, not a Commonwealth Government factory. As stated in No. 1 (a) above, forgings have not been produced in Kew South Wales for some time. Supplies taken from the eastern States are drawn from stocks and transported to Western Australia, where forging capacity is not yet equal to machining capneity. The finished shell is then returned for filling to South Australia, not to Melbourne as stated. ( b ) The costs at this annexe are identical with those of the Colonial Sugar Refining Company Limited’s annexe (see N<>. 1 (6) above). 3. (a) ?139,990. (6) As at February, 1944, the total number employed was 210, comprised of - (1) Salaried staff - 9 men, 8 women; (2) operating staff - 114 men, 79 women; (3) the finished cost of the product is ?1 6s. 4d. Forgings cost 14s. 6d. and machining lis. lOd. per shell. This cost includes the final charge to cover pre-production expenses, mid any further production would be approximately 2s. 6d. per shell Icsb.
n asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows : -
Use of Shale Deposits.
t. - On the 9th February, the honorable member for Calare (Mr. Breen) asked a question without notice concerning the utilization of the shale deposits of New South Wales for Ihe manufacture of gas. I am now in a position to inform the honorable member that the utilization of shale as a straight fuel and, in particular, for gas making, involves highly technical aspects which have never been exploited on a commercial scale in Australia, nor, it is understood, in any other country. However, preliminary inquiries reveal that major difficulties would be encountered iu substituting shale for coal in existing fuelconsuming and gas-making plants. To overcome these difficulties, substantial plant alterations would have to be ma<!cs. Further, problems of mining and transportation of shale would he as great, if not greater, than those associated with coal. The residue from shale is practically valueless as a heating medium, whereas coal produces a coke by-product which provides the heat requirements for manufacturing gas and for many other uses of importance in commerical and domestic applications. Any reduction iri production of coke would have the effect of increasing the demand for coal to cater for avenues now consuming coke.
Cite as: Australia, House of Representatives, Debates, 22 March 1944, viewed 22 October 2017, <http://historichansard.net/hofreps/1944/19440322_reps_17_178/>.