18th Parliament · 1st Session
Mr. Speaker (Hon.J.S.Rosevear) tookthe chairat10.30.am.,andread prayers.
MrHARRISON.-Ihave received a letterfroma constituent,anextractfrom whichreads -
Owing tothefailureoftheFederal Treasury tohonouranarrangementmadeinAugust, 1946,by theSydneyOffice ofthePrices Control Branch to paySydney Ferries a subsidy of6d.per weekfor eachemployee ofCockatoo Island carried by that company between the island and the mainland, theferry company hasinformed themanagement ofCockatoo Docks and EngineeringCompany that it will discontinue allferry services to the island after May31st.This will mean thatI andabout 2,600otheremployees ofCockatooDockswill be deprived of ourmeansof livelihood.
WillthePrime Minister state whether thearrangementmentioned inthat paragraphwas made ? Ifit were,what wasthereason for failuretohonour it, and whatactionwilltheGovernment taketopreservetheinterests ofthe 2,600employees ofCockatoo Island Dockyard?
Mr.CHIFLEY.-Thism atter was broughtto mynoticelastnightbythe honorablememberfor Reid, whosentto me a copy of a letter he had receivedin respectof it.Early in the operation of theprices stabilization scheme,it became evident that,becauseof increasedcosts, these ferriescould notcontinue to give the servicerequired ofthem atthefares then charged.ThePr icesStabilization Committee,nottheP ricesBranch,with aviewtoconformingwiththe Government’sdesiretokeepprices generally stabilized,andto obviate aincreaseof thewages oftheemployees, to which theywouldbeentitledif theywerere- quired topayadditional fares, decided thatasubsidyof6d.a week inrespect ofeachemployeeatCockatooIsland Dockyardshouldbepaid totheferry company.Thematterof remuneration no longer has to be considered. Iunderstand theposition to bethat themenare not preparedto payafare of2s. a week andthatthe company will notcontinue to provide this transport service unlessthe fare is 2s. weekly. Accordingto thedocument handed to me by thehonorable memberforReid,the continuance ofthe service isdependentupon whether ornotthe men willbear the. increasedchargeof6d. aweek. I canonly say,inreply tothe representationsofboththe honorable memberforWentworth andthe honorablememberforReid, thatI am having thematter re-examined.Involved in its consideration is the questionwhether the Government is,to subsidizethe fares whichworkmen have topay inorder thattheymay be transportedtotheir placesof employment.Ifthatweredone in thisinstance, therewouldbea strong claimfor theapplication ofthe principle in otherinstances.
Mr.BEAZLEY.-On a previous occasion,theMinisterfor External Affairswaskind enoughtoindicatethat aCabinet sub-committee wasconsidering theproblem of extraAustralianassistance to distressedchildreninEurope.
Is the right honorable gentleman yet in a position to inform me of the recommendations of the Cabinet subcommittee?
– Previously, the honorable gentleman raised this subject in connexionwith the International Children’s Emergency Organization and post-Unrra relief generally. As the Prime Minister announced on Monday, Cabinet proposes that a total sum of £4,000,000 be allocated by Australia in the current year towards those and other objects. That sum includes the grant to the International Children’s Relief Fund and general commitments for relief in the post-Unrra period, because the activities ofUnrra will terminate in June. It also covers our contribution to the International Organization and educational rehabilitation work byUnesco.
– Has the Minister for External Affairs read the press statement that over £30,000,000 has been lost by Unrra owing to rackets and maladministration? Will he make a statement on the position and inform the House, and the country, what precautions are being taken to prevent wastage of Australian money already in the fund? Will he also indicate how the Australian taxpayers can be protected from international racketeering in the new fund created to supersede Unrra, particularly in relation to its operations in China and theFar East?
– I have not seen the details of these charges, but I have seen a general statement in relation to them. I also saw yesterday a denial by the Unrra organization of some of those charges, or a statement that they were greatly exaggerated. However,I shall look into the matter, and the departmental committee that will be appointed to suggest a method of administering the post-Unrra relief fund will be made aware of the alleged deficiencies in the organization of Unrra. The administration of Unrra in certain respects was criticized by its own director, Mr. La Guardia. It should be possible to avoid the recurrence of causes for such criticism in the new organization.
Mr.FADDEN. - I ask the Minister for Commerce and Agriculture whether it is a fact that Australian butter is still being sold unlabelled in Great Britain? If so, as Australia should receive full credit and publicity for this product of which it is justly proud, what action does the Government intend to. take to introduce a proper branding system ?
– As the right honorable gentleman knows, Australian butter isnow sold to the United Kingdom in bulk ; and, possibly, under that system it looses its identity on the British market. The preservation of brands of Australian butter is an old problem. It is a very desirable objective, and anything’ that my department, or the Government, can do in that direction when normal trading conditions are restored, we shall be ready to do. In the meantime we shall watch the matter closely.
-I ask the Prime Minister whether the Government is prepared to expend a generous sum of money on a programme of developmental works throughout the Commonwealth? In particular, how much does the Government propose to expend in order to investigate the Bradfield-Idrices water conservation scheme for the inland portions of Australia?
– All developmental works, with the exception of those carried out exclusively by the Commonwealth itself in Commonwealth territory, such as the Northern. Territory or the Australian Capital Territory, are financed through the Loan Council. The States make application for their respective programmes. These programmes are prepared by theState Co-ordinators of Works in consultation with the Commonwealth Co-ordinator-General of Works, and an overall programme is presented to the Loan Council. It then rests with the Loan Council to decide what money will be made available through that body for particular works in each particular year. The establishment of. the National Works Council somewhat extended that scheme. Although that body has not the status of the Loan Council, Governments rely upon it to prepare a series of works for a number of years ahead. The money made available at the last meeting of the Loan Council ‘for various work? will not be fully expended this financial year. A. review of all works submitted by the States will be made at the next meeting of the Loan Council which will probably be held in August.
– I ask the AttorneyGeneral whether it is correct as reported in a section of today’s press that he told the federal executive of the Australian Labour party that a move to declare “ black “ the Australian guided weapons testing range, launched by certain trade union leaders, was inspired and directed from sources outside Australia? Is it also true that lie told the executive that he had a. pie evidence to prove this? If so, will he now say what that evidence is?
– I have not seen the newspaper report referred to. It is correct that I discussed, at the request of the federal executive, the recent threat by some organization to declare this project “ black “. I was not making a public address, and no note was made of it, so far as I know. I said that, in my opinion, the objection to the project was not based on concern for the welfare c-f the Australian aborigines, but was part of a plan to prevent the scheme from being operated at. all. I. also said that a pamphlet which was being circulated in Australia by the Communist party .showed clearly that their objection was to defence preparations, and was not. inspired by concern for the aborigines. That is, in itself, a very serious matter, mid the Prime Minister dealt with it in answer to a question yesterday. The pamphlet referred to, completely misstates the intention of the Government. The project is not an aggresive threat by Australia, but is directed simply to the defence of the British Commonwealth, so that criticism pf it is quite unjustified. That is the substance of what I said.
Refugees in Australia - S.S. “Mish”.
– In order to allay the anxiety of certain Tasmanians, will the
Minister for Immigration say how many of the total number of refugees who have settled in Australia since the outbreak of war, have gone to live in Tasmania since the end of the war, and what are their nationalities?
– I have no idea how many persons admitted as refugees since the war commenced have gone to live in Tasmania, but I do know, from figures furnished to me by the Commonwealth Statistician early this year, that of the 700 refugees admitted to Australia on landing permits issued since I became Minister for Immigration, the number who went to reside permanently in Tasmania was precisely four. I do not know that Victorians or South Australians or Tasmanians or Western Australians or people living elsewhere in Australia are justified in feeling anxious ‘ about any migrants who come to this country. Such persons are admitted if they are in good health and of good character. Those who seek to discriminate on racial or religious grounds between various sections of people who come to Australia are themselves not good Australians.
Recently the Leader of the Opposition asked rae a question about conditions on Misr and suggested that, I might have investigations made of the complaints of some of the passengers. I have had reports prepared by officers of my department who travelled on the vessel between Fremantle and Melbourne. I have shown the reports to the Leader of the Opposition and the Leader of the Australian Country party. I now lay on the table the following paper : - tin in ignition - Report on im migrants reinlihig Australia in April. 1 947, by Egyptian ship Misr
– Has the attention of the Prime Minister been drawn to the statement by the president of the Queensland Master Painters Association, Mr. Sargent, that disaster faces the painting industry owing to the further reductions in the supply of linseed oil, and that between 5,000 and 6,000 persons in that State will be directly, or indirectly affected by the reductions’
Inviewof theimportant partplayed by this commodityinovercoming wartimedeterioration , can thePrime Minister informthe Housewhether theGovernment; is able to do anything to remed y the position and prevent the threatened unemployment ?
Mr.CHIFLEY.- I have not seen, the statement towhichthehonorable member hasreferred.The question, of thesupply of linseedoilto the painting industry was dealt withfully last week by theMinister for Works,, and Housing,, w]y> indicatpd tliat, every effort was. beingj, made to, get nil, possibje. supplies,. inclu.dihg, the. quota that has. been,’ aljpt.ted, tft Australia by the organization that makes world allocations, of. linseed, oil:. Considerable, diflfc culty. exists, in, obtaining linseed, oil from India, due, tq internal, difficulties int that cqimtry^and.npt.tp any Jack of initiative qn the part, of the Commonwealth Go- enmient., I; assure: the honorable member that the;Minister for W,orks and, Hem sing and;the Government, are dbihg, everything possible to obtain maximum supplies of this necessary commodity.
Mr.FRASER. - L again* raiso.the ques.- tiOfii; of.’ the; development oil the- fishing industry.’ Some,, tiraai ago.. L received iufprma-tion that the Government- had plansjio.r.thedevelopment oirthis industry, particularly, to,, provide, e»Yrservic.errien with healthy, outdoor; occupations.) Can the. Miniisteiv fpj- Labour and– ^National Service,* now say what- has been- done-. to implementi these;, plans,- aaidiwhat action has / heen takeai or is. contemplated! to assist the development of this long neglected -hiit mpsttimpprta-nt industry,?
– The Government is continuing to develop the fishing industry. About eighteen, months ago the Minister for Post-war Reconstruction initiated, an investigation! of the. ind us-try to . ascertain what i could < be.-, done to., assists its. development.: Conferences were held. bet w.een-.tke.jIJix,ec;b&i: o£ . Qommonwealth;, Reconstruction Ta-aining^-and the iMsheriesnDivisiecri. of the! Department ofiOqmfneiPco and,Agrieulturej aud’.a.plan was . evolved to.- train.. a.p proximately- 360 ex-sservicemen* for the fishing: industry) rhe,.pjau,iwas- to take twoi’.years to.> com plete. Th&rnen.’wer.e tqODe.trainedljin,fpur mpnthjy- periods*, The first, schpql.- was established- in New- South , Wales- and started o,per;atipns. in-. ‘January of, this year, with; 58., tr.aine.es., Instruction w,as giy.en injna^gatipn^ control -.and, operation ofi diesel engines^care.i of modern, fishing equipment, the.i keeping of, record^ and the economics of the industry generally. Any doubf. that eXiSerivicemen> entering this, healthy outdopr industry would/ be permanently, employed; upon completion of. theiiv training^ hag. beem dispelled by a further, investigation, which shows ! that up, tp, date there has, been, a., continuous deina,nd fpi all categories o,ff employees ffprn orriinar.v, fishing^ hands, to m.en capable, of taking; charge, of trawlers.. The honorable. ‘member for; Eden-M.ona.ro. may r.egt. assured, that the Government has taken action that, will be of ‘ permanent assistance to the industry,, and’ that healthy employment- is being provided for ex-servicemen suffering from certain disabilities as the result- of’ their war service.
Mr.FALKINDER. - Before, the Minister fo;r! Civil )Aviationtyent overseas I. asked ham- a. question* relating to the installatioft- oft obstruction, lights- near Canijbit»idge aero.drpme:. So ia.fr, that has njotj been dene.!, There are two; vary daTbgerpus.thills.’W.ithan’jthe circuits area of tins. . aerodrromje. and ; I ask the Minister acting rf ojf, the . Minister ..-for-Giyil Aviation whether., he,- willi lia-ye- an< investigation rnade,.Wfith,a; view, to -ensuring -that these very* necessary, safeguards,, shall < he installed,-.
– I shall - make, mqiuiries.to.iaiscertaia.wfetiaction has been tajken following/ the: re-presentations- made by- ‘the: honpraibliQitfaemhejri-, I- shall . advise him as.:.ear]yJas,pa;act:icab’le w.bat-.has:been done-.and.what.>.is<]ikely.to>be done. in the n:ear fu-irive,
Mr.CLARK.-Ih view of the very urgent necessity for increasing timber supplies in Australia, , L. should like to know, what action has been, taken to utilize timber available in the territories over wh’ich> the - Minister; for External Territories ihas.tcontrol ?
– A survey of available timber,resources in the territories of the Commonwealth has almost been completed. The utilization of these timbers has been discussed by representatives of the Department of External Territories and of the Secondary Industries Commission. I hope to be able to indicate at an early datewhat the Government proposes for the utilization of these resources by the building industry in Australia.
– In view of the very greats importanceto Australia of the wool industry, which in pre-war years was responsible for approximately 42 per cent. of the total value of exports from Australia, and having regard to the fact that the United States of America is at present the second-largest purchaser of Australian wool. I ask the Prime Minister whether the Government has taken any action to protest against the bill now before the United States Congress providing, amongst other things, for the imposition of an import fee of up to 50 per cent. ad valorem on all. wool imported into the United States of America in addition to the existing tariff of 34 cents per lb.? If such a protesthas been made, was it only directed through the Australian delegation to the International Conference on Trade and Employment? In view of the fact that Mr. Douglas Boyd, chairman of the Australian Wool Board, is reported to have stated that if the measure was passed by Congress “ It might easily sound the death knell of the use of’ Australian wool in America”, I ask the right honorable gentleman whether any approaches have been made to the other great wool exporting countries, South Africa, New Zealand and Argentina, with a view to making a common protest to the United States Government against the measure? If not, will the Government immediately take up the matter with the governments of those countries?Will the Government also consider sending forthwith a delegation to Washington comprising a Minister, Mr. Murphy, chairman of the Australian Wool Realization Commission, and Mr. Boyd, chair man of the Australian Wool Board, to negotiate with the Government of the United States of America on the highest plane?
-The position is that the legislation, which is now before the American Congress, will give power to the Secretary for Agriculture to impose very high restrictions on the use of imported wool. Apart from that, of course, the present rate of duty on wool entering America is 34 cents per lb. I have no doubt that, if such a provision were made in regard to wool, it would probably apply also to woollen piece goods. The honorable gentleman asked whether a protest would be made to the United States Government. I do not know that it is the duty of the Commonwealth. Government to make public protests to any other government as to the type of legislations that it passes. That is not usually done. That is a matter for determination not by the Government, but by the people through their Parliament. Australia has delegates at the Geneva conference; at which this matter has come under discussion. The honorable gentleman may rest assured that the views of the Commonwealth Government, and,I imagine, of the other Dominion Governments, have been made perfectly clear on this subject. If the legislation should he passed, it could have very serious effects on the. general negotiations at Geneva. The honorable gentleman, asked whether representations had been made on, a ministerial plane. I myself, and the Minister for Post-war Reconstruction, who is handling this matter, have made clear in the proper way, not only to representatives of the United States of America but also to British Ministers, that this proposal would, in our opinion, seriously affect general negotiations at Geneva. In relation to ministerial: representation at the Geneva. Conference, I point out that during the last few weeks very little progress has been made in any direction at Geneva. I imagine that no great progress will be made until some time duringJune. The Minister for Post-war Reconstruction isready to go to Geneva as soon as if is. considered that ministerial representation is. desirable. In the meantime, the leader of the Australian dekgatiou, Dr. Coombs, is returning to Australia at his own wish in order to consult with the Commonwealth Government, probably next Monday or Tuesday. The honorable member also asked whether the Government was prepared to send a special delegation to confer with the American Government. The answer to that is “ No “. Any representations made to the United States Government or its representatives will be made entirely on a governmental plane. I believe that there would be much resentment in America if a special delegation were sent from Australia in order to try to exert pressure on the American politicians who are dealing with this subject.
– The Minister for Defence will recall that, on the 27th March, I put a question to him about the peace-time study of civil defence problems and the preparation of civil defence measures. He then indicated that, some time after Easter, he hoped to be in a position to make a statement on a number of defence matters, including the one mentioned. Can the Minister inform me. when lie expects to be in a position to make this statement?
– I did say prior to the Easter recess that I hoped at an early date to make a statement in regard to defence policy generally, including the matter mentioned by the right honorable gentleman. However, some complications have intervened, and, as a result, it lias not been possible yet to bring a submission to Cabinet in relation to (>ostwar defence policy a3 a whole. I trust that this will be done within a week or two, and 1. hope that, before the end of this month, T shall be able to make a statement in this House on the subject of defence, with “particular reference to the matter mentioned by the right honorable member.
Ingleburn Camp Demonstration.
– Has the Minister for the Army seen the report in the Sydney Daily T altigraph to-day that 700 soldiers at Ingleburn camp yesterday refused to eat breakfast as a demonstration against an alleged shortage of rations? The report proceeds -
The men filed through the mess huts, made no attempt to eat food on the tables, and returned to their quarters. When senior officers ordered them to breakfast an hour later about half the men again walked through the mess huts and refused to eat.
Is there any truth” in that statement?
– That report was brought to my notice earlier and I am already investigating the position. I do not think any shortage of rations is due to the- failure of the QuartermasterGeneral to forward supplies to the camp. 1 am confident that sufficient supplies reach it. I visited the camp recently, and not one complaint was made against the quality of the food that the men were receiving. If there is a shortage, it is evidently due to some men in the camp taking advantage of the rations sent there. Colonel O’Brien has-informed. me that he is already investigating the position. I hope to have the matter cleared up in a few hours.
– Some time ago, Mr. Herritch, a member of General Mac-Arthur’s staff in Tokyo, visited Australia. It was reported in the Australian press after his return that he had said - .
In Australian’ political circles there is a luck of complete information about the aims and progress of the occupation.
He was also reported to have said that Australia’s representation in Japan was not so complete as was desirable and that it should be more adequate and on a permanent -basis. Some time ago the Minister for External Affairs said that lie would set up a committee to study our position in relation to Japan. I take it that he referred to a parliamentary committee. In view of the apparent need for more parliamentary knowledge of the position in Japan I ask the right honorable gentleman when he proposes to set up -that committee.
– It, is quite correct .to say that representation of Australia in Japan is not yet on a permanent basis.
That is because the occupation period is continuing. Our representatives are in. Japan in a temporary capacity. “With regard to the suggested committee I hope to place proposals before the Cabinet before the present sessional period ends in order that work on the project may be started during the recess, if the Cabinet and the parliamentary leaders approve.
Arrests and Trials
– I ask the Minister for External Affairs whether discussions have taken place and decisions made among the Allied nations on whether a limit is to be set for the period for the apprehension and trial of suspected war criminals?
– As far as I know, no time limit has been fixed. I take it that the honorable member’s question is directed to the long period of time elapsing before completion of the trials. That, of course, is a matter for concern, hut it is equally a matter for concern that the defendants should be given an adequate opportunity of presenting their case at the trials. As an example, the trial of major war criminals in Japan, presided over by isi William Webb, has lasted many months longer than was anticipated. No time limit has been fixed for the completion of those trials and I. fear that they will not be completed for some months yet.
– Are apprehensions of war criminals still being made? 1 was going to suggest that there might be a limitation to the time within which they, can be arrested.
– I know that arrests are still being made in Germany, but I am not, aware of the authority on which they ure made. I will investigate the matters raised by the honorable member and inform the House of the result.-
– I notice that the British Government has found it necessary to impose an additional duty of 50 per cent, on imported tobacco in order to conserve dollar resources in the United States of America. Tobacco-growing is an agricultural industry and one which should he natural to this country, In view of the necessity for Australia to conserve dollar resources, will the Prime Minister consider appointing a special committee, including representatives of the Council for Scientific and Industrial Research, State “ departments of agriculture, growers’ organizations and other persons considered appropriate, to ex- ii mine the possibility of increasing production and of growing a. type of tobacco suitable not only for. home consumption but also for export to the United Kingdom?
– As the honorable, member knows there is a long story attached to the growing of tobacco in this country. Tobacco was attempted to be grown in a number of districts, and even American tobacco interests undertook extensive experiments in an effort to grow suitable tobacco in Australia. Unfortunately, the attempts proved unsuccessful in most districts, principally in New South Wales. The industry has .made some progress in Queensland, but there are complaints that the quality of leaf grown is such that- it cannot be used for manufacture unless it is blended with imported leaf. During the last few years it has been necessary to curtail the importation of American leaf, with the result that there have .been complaints regarding. the quality of tobacco manufactured in this country. I will consult the Minister for Commerce and Agriculture to ascertain whether anything can be clone to improve the quantity and quality of Australian tobacco.
– Has the Attorney-General yet reached a decision en the question I asked last week, namely, whether he will table the papers ‘relating to the trial of one. Rudkin, in Western Australia in 1940?
– I have requested, that all papers in this matter be sent to me. The papers have to come from Perth, but I expect them to be available shortly.
– Has the attention of the Minister for Commerce and Agriculture been directed to iseport in the press that the chairman of the Overseas. Shipping Association, Mr. Craig, had stated that .sixteen ships with refrigeration space bad .been div.erted from Sydney 10 New .Zealand .since the 1st January, 1947, for the pur.pose of ‘.loading meat, and that Australia :could not .supply sufficient quantities -of .meat to fill ‘all the refrigeration space provided ‘by Great Britain to carry food for that country? Will th.e Minister inform .the House what action, if any, the Goveiinment has taken to rectify this deplora.ble situation:? Has any plan been .evolved to jpre’rcnt .the continuance of such happenings.?
-.! have not seen the statement in -the press mentioned by the honorable member. .Under normal conditions, it :is quite usual for ships with refrigeration ‘spa.ce to be diverted to New Zealand at fch-is particular time -of the year. ‘Phis period is .the o&export season for Australian wovat and -.other products. Ships with refrigeration space available unload their ^cargoes in Australian por.ts, and are then diverted to New Zealand where ‘they pick .up meat, biitter and other products which axe available in that dominion. In that -cespect, there is bo departure ‘this -year from normal export conditions.
Workmen’s Food Supply: - Mr. G. Bignell
Me. .BEALE. - I .direct the attention of the Minister ifor “Works and Housing to a report in the press a few days ago relating to the march by more than 350 Australiaoi and British building workers to Parliament House .to demand better conditions at their quarters at Eastlake camp. According to the report, a deputation of three persons, representing the men, interviewed the Minister. One of that number was .Mr. G. Bignell, who was described as the president of the camp committee. “Will the Minister inform me whether this Mr. Bignell is the same Mr. ‘Bignell who spent two years in Russia -some ‘time ago, and who is, or was, a prominent member of the Communist-controlled Building Workers Industrial Union and has a “long record as ‘an agi’tator in many ‘industries? If so, ‘will the Minister ‘take action to .have Mr. Bignell .removed from the Eastlake camp, so that he may no longer make trouble among Australian and British workmen?
– I am not aware whether this Mr. Bignell is identical with the lilr. Bignell to whom the honorable meiriher referred. Speaking from memory, I believe that no member of the deputation Which waited on me was named Bignell. The name of the leader of the deputation, as given to me, was I believe, Mr Weston. However, I shall ascertain whether Mr. Weston is Mr. Bignell, .and if be is, I shall give conside i’.ati.on to the .remaining portion of the honorable -member’s question.
War Savings Certificates
– I address to the Treasurer a question relating ‘to income tax on war saving certificates which the staffs of certain departments of the Public Service gave to servicemen who, in civil ‘life, -were emplqyed in those -departments. These war saving certificates were presented weekly as a gift to the servicemen while they were serving abroad with the armed foi;ces. A constituent, who is an employee of the Melbourne Metropolitan Tramways Board, has’ .written to me stating that his income tax for 1945-46 has been assessed on- the basis of his earnings in that year aaid the total amount of ‘She ‘war savings -certificates which were presented to him -during that ^period. Will the Treasurer inquire into this matter with a ‘vies? to modifying tbe position ?
– I have not heard of such a case, ‘hut if tbe honorable member -wi’ll hand the ‘letter to me, I shall arrange to have the matter considered.
Motion .(by Mr. Lemmon) agreed to -
That leave ‘be given to bring in ‘a ‘bill ‘for an act ito amend ‘the Northern Territory (Aaministi;ation() Act 1 9.10-19.4<7.
Bill presented, <and read -a ;first time.
– by leave - I move -
That the bill be now read a second time.
The object of this bill is to confer a measure of self-government on the residents of the Northern Territory. Tor many years prior to the warthe Territories of Papua and New Guinea had legislative councils. The Government believes that the time has now arrived when there should be a Legislative Council in the Northern Territory also.Up to the present, all ordinances and regulations relating to the Northern Territory have been madeby the Governor-General in Council. The residents of the territory have had no- say in the legislation but as they live and work in the- territory, their experience and local knowledge would be of- real value in- the framing of legislation governing the country. The people of the Northern Territory and the northern parts of Australia, have- a real, live interest in the progress’ and’ development of the country. They may be relied; upon to elect representatives who- will cooperate with the- Government’ representatives in the passing of legislation which will be for the benefit of, and’ . in accordance with; the requirements of the territory. There will be considerable development in the northern parts of Australia, in. the near future, and the- people living there should, have some say in. the framing of its legislation, as is thecase in the a.ad joining States-.
In view of the fact that the Northern Territory is not self-supporting financially, and that- the greater part of the expenditure, on its development, must be providedby theCommonwealth, the bill provides that there shall be a. slight majority of. Government members in the Legislative Council. It is further provided that; an ordinance, vote, resolution; on question, the object or effect of. which, is to dispose of or charge any, part of the revenue of the territory, shall- not be proposed inth e- Legislative Council except by the- Administrator,, unless its, proposal has been expressly, allowed’ or directed by him. Estimates- of expenditure for the territory will continue to be providedin the estimates of the Department of the Interior..
The Council will consist of the Administrator, seven official members, appointed’ by the- Governor-General on the nomination of the Administrator, and six elected members-.. The preponderance of. official members will, therefore^ be two. The majority of the official. -members will be heads of departments.
In the Legislative Councils of Papua and New Guinea there was w larger preponderance of official members and the non-official members’ were nominated, and not elected^ Consideration was given by the Government to- the nomination of the -non-official members of the Legislative Council! of the Northern Territory, so that the various interests- and classes in the territory could’ he represented. It was decided^ however, that the members should’ be elected- and’ efforts have been made to- divide- tlie territory into electorates which will return- members representing all’ the- various- industries and- classes. The territory will be- divided into five electoral districts; viz-. : - Darwin; Batchelor; ‘Pennant Creek,. Alice Springs, and Still art.
The Darwin District will be represented’ hy two members, and each of the other, districts by one member. The Darwin District will! comprise the town of Darwin and the country immediately’ surrounding it, as defined” in the Darwin Land’s Acquisition Act, 194’5. Darwin is the capital of the territory and’ the seat of the Administration. It contains a large percentage of tlie total population of the territory.
The Batchelor District’ will comprise the whole of that part. of. the territory north of the 2.0th paralleL with the exception ofi the town of Darwin, and its surroundings and the town of Tennanti Creek. The greater, pant of this district is occupied, under, pastoral lease..
The Tennant Creek-: District; wi-li comprise an aiceai within a- circle having’ a radius of twenty miles’ measured- from the’ Tennant Creek; Post- Office. This is a’ purely mining district. The- populationconsists of persons engaged in. mining’ and the cornmercia-l community associated1 therewith-.
The Alice Springs District’ will comprise an area* within as circle having- a radius, of ten miles measured from’ the
Alice Springs post office. Alice Springs is the second largest town in the territory. The composition of its population closely resembles that of Darwin.
The Stuart District will comprise all that part of the territory south of the 20th parallel, but omitting the Alice Springs District. The population of this district consists in the main of pastoralists. There is also a small mining community.
It is considered that the division of the territory into the five electoral districts mentioned should result in the elected members being fairly representative of. the various industries and communities. Members will be elected, whenever practicable, at the same time as the member for the Northern Territory in the House of Representatives is elected. The first election, however, will have to be a special one. No salaries will be paid to members. The elected members will receive fees for the days they attend meetings of the council and travelling allowance for the period they are away from their homes.
The provisions of the bill have been drafted as closely as possible on the lines of those of the New Guinea Act. The Legislative Council will have power to make ordinances for the peace, order and good government of the territory. Every ordinance must be presented to the Administrator ‘for assent, but those relating to (a) the granting or disposal of crown lands; (b) the lease or grant of land or money or any donation or gratuity to the Administrator; or (c) aboriginals or aboriginal . labour, must contain a clause suspending them from, operation until the Governor-General’s pleasure has been signified. Every ordinance must be laid before each House of the Parliament.
For a considerable number of years, the residents of the Northern Territory have been asking for some measure of local government. They have protested against the existing procedure, whereby legislation for the territory is drafted and enacted in Canberra. The bill will confer upon them the power to enact their own legislation and the necessary precautions have been taken to ensure that the finances will be protected.
Debate (on motion by Mr. Menzies) adjourned.
In committee: Consideration resumed from the 13th May (vide page 2266).
Clauses 2 to 4 agreed to.
Clause 5 -
Suction twenty-three of the principal act is a mended -
by omitting From paragraph (m) the word “ forty-seven “ and inserting in its stead the word “fifty-two”:
Section proposed tobe amended -
The following income shall’ he exempt from income tax: - (m)income derived prior to the first day ofJuly, One thousand nine hundred and forty-seven, directly and in the first place from primary production, mining or fisheries in the Northern Territory of Australia by a resident of that Territory;
– This clause deals with the extension of income tax exemptions in the Northern Territory. I am sorry that it will not be possible for the honorable member for the Northern Territory (Mr. Blain) to be present until this afternoon. From a conversation that I had with him last week, I am sure that he proposed to say something definite on this clause. I put it to the Treasurer (Mr. Chifley) that it might be convenient to postpone the consideration of the clause until this afternoon.
– I am not . postponing anything.
– Only the reductions.
– That being the attitude of the right honorable gentleman, we know where we stand. Making a request of the Treasurer may be likened to addressing oneself to a block of marble, which is smooth and hard. Polish granite as much as one may, its heart retains its tough consistency. The time has come when better consideration must be given to the position of the Northern Territory than is proposed to be given under this measure. The Minister for Works and Housing (Mr. Lemmon) has just moved the secondreading of a. bill dealing with the administration of the Northern Territory. That measure will be received in the territory with as much enthusiasm as greeted Guy
Fawkes after he had attempted to blow up the House of Commons. I do not think that the Government has cause to feel very happy about its prospects in the Northern Territory. That is not a poor man’s country. Any one proposing to start in the grazing industry up there would need to have many thousands of pounds, and the man who proposed to engage in prospecting also would need a considerable amount of money, because financial risks would be encountered from the outset. Exemption from income tax for only five years would not be sufficient to induce people to invest their money in such ventures when they can do so much better, especially from the viewpoint of living conditions, in the southern States of Australia and Queensland. This proposal does not mee t the situation.’ A point that I raised last night, and I am emphatic upon it, is that when exemptions from income tax of this character are . made, the Government should provide that a certain amount of the money which the individual saves shall be devoted to the improvement of his property. The effective settlement of the Northern Territory should be the first objective of the Commonwealth Parliament. Income tax exemptions should bc granted not merely as such, but also with a view to obtaining a better and closer settlement of the territory. This is one matter which really ought to be postponed. It ought also to be referred to a committee for proper investigation, because there is at stake the future of not only the Northern Territory but also New Guinea and the islands in the Southwest Pacific. Such subjects cannot be considered very carefully in a committee of this House to-day. There I leave the matter for the time being, feeling quite sure that it will bc raised again in due course.
– The honorable member for the Northern Territory (Mr. Blain) has frequently discussed this, matter with Opposition members, and I presume also with honorable members who sit on the other side of the chamber. He advised me, to my regret, that it would be impossible for him to be present this morning. The concession granted by this clause is an extension of the period of exemption from income tax from1 947 to 1952. A period of five years passes very quickly, especially to a. grazier or leaseholder in the Northern Territory, who has to invest considerable capital in order to produce a reasonable income. Mr.R. G. Casey, who recently visited the Northern Territory, has said that he would not recommend any one to go there, unless he had a capital of not less than £15,000, and that even that amount would be insufficient to meet the adversities which a settler might encounter. The Government might well study Mr. Casey’s report; because, when all is said and done, whether he is a political opponent or not, he is an observer whose opinions are worth considering. Mr. Casey has pointed out that; the present population of the Northern Territory is only about 8,000, that the Payne report stated that if the territory were properly handled itswhite population might be increased to about 30,000 within ten or fifteen years, and that under present conditions there did not appear to be much hope of a large increase. Those who reside in the territory have extremely adverse living conditions. They are occupying that part of. the continent to the advantage of all Australians. I believe that there is only one woman to four Or five men, which is a very small ratio. The consequence is that men have to “ bury “ themselves up there for very many years, deprived of the companionship of wives or other womenfolk. In order just to preserve the Northern Territory and to maintain the “White Australia policy, and in order to have an answer to the teeming millions of the East who want to know what we are doing with our empty spaces, we are expending upon the territory approximately £1,000,000 a year. That is the cost of the territory to the Commonwealth, and the Commonwealth must be prepared to bear it; but the insignificant amount of total taxes which can be collected in the territory makes the imposition of tax hardly worth while, particularly if such imposts discourage settlement in those remote areas of persons who would otherwise go there. A possible inducement to settle in the territory is that after spending fifteen, or twenty years, or a. lifetime there, one would have assets which would be readily realizable sud thus be able to dispose of them : and spend the remainder -of one’s liife in retirement in the eastern States. >One of “the major inducements -for ‘the possible settlement of “the . Northern Territory would ‘be:complete. exemption fromincome tax -for a period -of ‘years that -.would make the concession really . worth while. The Government has idone a very . praiseworthy thing in extending the . exemption for ‘another five years:; but Izhe . Treasurer (Ma1. Chifley), yesterday, mentioned ‘that ithe iGovernment ; taok a ‘longrange view of taxation to a greater degree than the . Opposition suggested that it might. I : d:o not believe that, in -respect of ‘the Northern Territory, the granting of an exemption from income tax of ; five years represents a very long-range view,, having regard : to -fhe outlay involved in stocking aip, fencing and iin.provem.ents. I do not expect . the Treasurer to accept an . amendment at this stage, but I hope that, as the result -of suggestions made in this idebate, he will -consider . extending the proposed period . of exemption. When all is said and done,, the amount of tax which can be collected in , the Northern Territory is insignificant,; but the territory itself, in relation to the rest of Australia, is . of transcendent ‘importance . anc) we must encourage its . development.
.- I agree that certain -difficulties . arise in , this matter. The exemption from ‘income tax of certain primary producers . in the Northern . Territory also creates anomalies. . That is . borne out by the statement ..cited by -the honorable member for Richmond . (Mr. . Anthony) . that -a settler would require . a . capital of between £1-5,0.0.0 . and £20,000 to establish himself in the territory. When this matter came up for -consideration, T leaned to the view just expressed by . the honorable member for Barker ((Mr.. Archie Cameron),, that profits made in . the Northern Territory should to some degree ‘be applied in building’ . up . the territory. However,, a good deal of the money invested in the . territory and . the return ‘therefrom belongs to -people who do not live ‘there. Those persons are, in effect, absentee owners. My own thought in the first place was that the . exemption ‘from income tax should . apply ‘Only in t’he case of a company, partnership or property, provided 75 per -cent, . or ‘SO per cent. 10’f the shares, or -initerest -was held : by ‘persons residing in the territory. It is anomalous thalt. persons receiving sdividends . from companies established in the ‘territory., but living iunder (the fsame . conditions ‘as other citizens sno.utd receive this ; benefit. However, ‘the ‘Minister . for the Interior (Mr. Johnsoni) . agrees tbait a settler . in the Northern Territory ‘requires more ithan the ‘-normal amount of . capital. Therefee, ‘.taking:the iview that .sufficient capital may ‘.not (be attracted unless some . exemption from ‘income tax be granted, ithe ‘Government (decided to ‘extend -the period of exemption ‘for another (five years. The matter ‘can Jbe re-iexamined at ithe . expiration . -tff . that term. The poinits (raised Iby the ‘honorable member for . Barker were Su’Ily considered. There is . substance in n&at hoi)h -he <and ithe /honorable member for Richmond have said. The latter iremaiiked. that, in -any case, ithe amount <of tax ft’hat’conld be (collected in ithe territory wouM be insignificant. !However,, Treasurers nalturally take fthe view that everybody should make . -some contribution, to public ‘revenue. ‘There may be ‘reasons why ^certain concessions may be given to certain ‘-people, but complete exemption of ‘any section of ; thre fcommiunity from -‘tax is ‘not ‘sound. All of ‘the -points made “by both ‘the honorable member? have been ‘carefully considered, land will be further ‘considered.
.- I regret that the . Prime Minister and ‘Treasurer , (‘Mr. Chifley) will not accept the suggestion to postpone consideration of the clause until this afternoon, “when the honorable member for the Northern Territory(Mr. Blain), ‘whose health is indifferent for reasons of which we are all aware., intends to be present. This is the one clause in the measure which is ‘of particular concern to him,’ and one in respect of which, perhaps, ‘he -coald “possibly make the most usefiffl . contribution in debate. I ha<ve some -knowledge- of ithis matter feecoaso it was on ‘.my recommendation in l’ft’38 feat the ; provision which tfhe clause amends was inserted in the principal a;ct. At an earlier stage, ‘the view was he’ld ‘that : some ‘concession in respect -of income ax ‘to ‘persons /establishing themselves in the Northern Territory would : be a useful ‘ -and powerful coii’ttr-i’buti’oii ‘to ‘the ‘development *b’f ‘tihat part of fih’e Commonwealth; ‘rind i’t became ‘Government -policy to ‘exempt If rdm tax ‘incdm’es aeriived, ‘in -the fifs’t. place, from -primary industry -fcYr ‘a ‘pdrio’d k>i five . years. So far ‘as I recdlle’dt, that perio’fl’hacl been ‘renewed o’h-two’bcba’sibhs before I was % Minister. The -point was put -to imelth:a’t a iperibd df ‘exemption -of five years was harfily >miffficient *to Encourage the ‘iri-y”estei3nt “df substantial ‘capital inthe itcr-r-itbry; (“and I ‘was persuaded to th’a’t view, “witih ‘the Tresiilt ‘(ihat I advised the Lyons Gbverhmeift tlo itidre’ase ‘.’She p’driod > -t’eii ‘year’s, LVfbrtuhatdly, the *Kr bWereil riibs’t df lh’at . ip’eriba of feil years, ‘a’hd, ‘cbWdquWljly, there ‘could : be rib ‘ae^’elbpnieiit -of ‘th’e tciTitb’fy ‘by pVJva’te fe*iiferp’rise ‘in ‘th’e ‘normal sense. However, tbWe’wKs g^fciaH flevelopmeift of thfe ferfitbry during fthe ‘wai- in. -the pbvision of “roads, communications ‘and ae’rodrome’s.
– Ccmsi’dera^le adva’ncem’eh’t was made in the provision of roacls.
– Yes,; but not very much progress was made in the provision Of -ato’ck rdiites, and the watering of stock routes, or with other developmental projects which the Lyons “Government planned’. In . the - circumstances, I move -
That, in . ‘paragraph >f a.’),, the “word “ fiftytwo “ . be Jeft out with . a view . ito insert in -Heu thereof the word “‘fi’fty-seven
The theory ‘that -a promise of ten years’ ‘exemption -frctm tax would result, an substantial investment -of capital in the [territory has not syet been really tested. I believe ‘that (a longer period of immunity would be a useful cbn’tributing ‘factor. Whatever governmen’t Way be in power when “this period ex.pStf’es will, fta . ‘a-1 -probabifey-, h’enew it for (another -five years. I ‘-think ‘it has been renew.ed ‘at:five-yea”r!ly intervals ever since its inception in 19S23 ‘by th’e (Bruce Gove’irm’meirt. T-heirefore, if we were to extfemd 4toe period now ‘to ten years we shbtold airly be doing ‘something th’at will eventually be ‘done & any tease. In fact, C propose tfe Wove an teihendrafefit Vb this effect. I hiave ft-avel’led fexteitsiveljr in the Northern Territory-, awd I ‘a-m eohvinc’e’d tli&t there are pe’&u’liar problem’s associalfcd ‘with . its development. ‘A. spefci’afl measure of endburagement is JWceSSMfy to induce p’e’bple t’b go ‘fehfere ‘to five, a’nd to in&iice’pebpTe to’liivest-mohey ftrere. When -I was !a ‘member ‘of ‘the Lyons ‘Ministry, ‘I indu’ded !it to ‘tfgree ibat’a’ll revenue collected ^from petrol : tax in ‘the tdrritdry ‘should be exrpended in the territory, ‘but ‘the decision ‘was never impldmehtea.
TheCHAIRMAN (Mr.Clark).-The honorable member must ‘confine his r’erria’rks ‘to the ‘clause.
– Wh’at I am saying is a’p’pfrop’riate ‘to the ‘el aiise.
TheCHAIRMAN. - I rule ‘that ‘it is not relevant.
– Then I nius.t accept ydiir ruling. I believe that the incidence of taxation might be varied to induce people to engage in industry ‘in the Northern Tewwtory, and >to go ‘there ‘to live. The pastoral industry is the basic industry ‘of the territory, and the one u’p’o’n . which its prosperity will eventually . be established. T-here jare only two ‘daisses of persons ehga’ged in it. Tfn one -class ‘there -are thos’e persons who went into the pastoral industry ^wifch literally nothing. They s’eleo’ted land, -.and then increased their ‘Origin’al holdings. A_ bi.g proportion of them have been successful, but the total number -is not very great.
Mr.Scully.-iEt is usually the case that the ‘original settlers started with very little, and made !a success of ‘their enterprise. It is not necessary . that men should have a capital <o¥ l£15./000 witlh which >to istaTt-.
-Th’at MSs. ‘not been the ‘ex-p’er’ienee in -m’ariy parts df Victoria. St ‘has often foappen’ed ‘tfh’a’t the. nrst s^MIer w-h’o tddk up & bfeck of land went “‘broke “, ittffl ^he ‘o’rie who followed him wdnt “broke” !a’lso;; (flien ‘the Uhlrd manwho ‘carm:e along., b’SnetSting fgfi&A the work which the ‘others toad ‘dome, established hiMself ffn’d Ws su’cdeSsfnl. “As I haVe Said, in ‘the ‘Northern Tefr’ritory., there are those who went iti with litfer’a’lly nothing. Such men might ‘have beeh pir’dSp’ectdrs, drot’dtts, or w&rders from tbe ga’o’l. T’hdse are no’t ‘qui’te fhypo’th’etical infsfances:; t have ‘kn’oHim suclh m’eh. Evdhitually, ‘th’ey bed’am’e sudcessful pastorali’stSi but , it took : a igen’gr-a’tjkwi for them ; td ‘esta;bli’sh t’h’ewi selves. They “are -ideai pastoralists, but veuy ‘often tn’ey never married. In &b!e N’ort’h&rn TferrStbry to^’day there ‘are many successful pastoralists who have not married. The other kind of pastoralist is poles apart from the one I have just described. I refer to the great pastoralist enterprises that have established themselves with vast capital - quite often, overseas capital. This kind of enterprise has not contributed much to the development of the Northern Territory. It has exploited the territory, but has not contributed to its development or to the development of Australia. I have in mind onepastoral company which holds leases r.he size of Belgium, and the total area is worked by 30 white men.
Mr.Scullin. -and the owners are mostly absentees.
– And they are still wanting to extend.
– I. do not know about that, but I say that they are not the best kind of settlers. They have not devoted themselves to developing the country. In fact, I think that their influence has been bad. I have in mind one property from which, at the time I visited it, not one female beast had ever been sold ; they had all died at the waterholes. On some properties, rather than erect fences; the management preferred to leave unwatered a strip of country twenty miles wide in order to hold the stock. I have nothing to say in favour of pastoralists of that kind. I believe that the territory needs a kind of Australian who has not been attracted to ityet - one who has had experience, and who possesses a reasonable amount of capital. If such men are not willing to go there themselves, at least they should be encouraged to commence enterprises there. The Northern Territory is not the place to which a man can go with a few hundred of even a few thousand pounds, and expect to establish himself in a few years. A man s’arting on the ground floor would have to spend half a life time there in order to achieve success. The territory -needs experienced men with £10,000 or £20,000 or £25,000 to begin enterprises there, backed by the Government. I have discussed pastoral possibilities in the Northern Territory with experienced men possessing the necessary capital, but they will not go there because living conditions are harsh. In the territory amenities are meagre, and the people have to live in places remote from the centres of civilization. Therefore, a man with as much capital as is needed to settle in the territory prefers to invest it in some pastoralist enterprises in the more populous areas. I believe that something should be done to attract these people to the Northern Territory. Many young men ‘ with experience and with capital, although not prepared to live in the Northern Territory, would be willing to establish a pastoral enterprise there, to put a manager in charge, and to visit the property periodically. Such enterprises would be most useful. So, I put it to the Government that it would be well worth while to try the experiment, of giving a general immunity from taxation on income derived from private enterprises in the Northern Territory, qualifying it not by residence, bur. by some formula which would require the re-in vestment in those enterprises of a certain proportion of the revenue derived from them.
-How could such a provision be policed ?
– That would be difficult, I admit, but surely not impossible. As the right honorable gentleman ; is aware, there a.ve innumerable laws that are difficult to police and which, in fact, are not fully policed. Something worth while might well result from the experiment that I have suggested, even if events prove that we were not able to police the concession completely.
– Order ! The honorable member’s time has expired.
.- The Treasurer (Mr. Chifley) has put his finger on a point that I think should be discussed by the committee. The right honorable ‘gentleman referred to the fact that some people who own property in the Northern Territory but do not actually live there are exempt from taxes on income derived from the Northern Territory. On the other hand, as the law stands to-day, we have this state of affairs, particularly in regard to mining companies: A man who has gone to the Northern Territory to carry on an. enterprise may have exhausted his capital, and having definite prospects before him, he may have been obliged to secure outside assistance. A company has been formed and registered outside the Northern Territory. The result is that this man who may live with his wife and family, under the most difficult conditions, in one of the most inaccessible and inhospitable parts of the Northern Territory, and has done an excellent job, is. called upon to pay full Commonwealth income tax on all he earns from his property because the company of which he is a big share-holder is not registered in the Northern Territory.
– The. company could register in the Northern Territory if it so desired.
– Unfortunately, in cases like that, the lender is always right. If the lender wants the company registered in his own State, he tells the borrower that he must either agree to that or do without the money. A simple amendment of the Income Tax Act would get over that difficulty and still provide’ for what the Treasurer has in mind. In the main, I agree that the purpose of the exemption from the income tax of Northern Territory incomes is to encourage the development of the territory, and the residence of people in it, and not to encourage people to hold properties in the Northern Territory whilst’ residing in Melbourne, Sydney or Adelaide, and enjoying the advantage of exemption from income tax on income derived from their investment in the Northern Territory. On the other hand, a slight amendment would provide for the case of a man who is associated with a company registered outside the Northern Territory, but who derives his living and his income from inside the territory. These are two points that might very well be examined, and a solution of the problems involved might facilitate a very much better understanding of the position than I have observed in certain Northern Territory transactions that I have dealt with in the last three or four years.
.- The point I wish to make is this : Immunity from income tax to-day is enjoyed by the people for whom the concession was primarily designed, namely, those who live in the Northern Territory, and engage in enterprises there; but it is also enjoyed by companies - some of them controlled overseas - whose capital structure is big enough to enable them to maintain a board of directors in one of the capital cities, and to comply technically with the law by sending a director to the Northern Territory for sufficient months of the year to be regarded legally as establishing substantial control and management of the affairs of the company within the Northern Territory. I understand this matter has been resolved in the courts. I hardly think that the Government desires to perpetuate this state of affairs. I sympathize with the Government in its difficulty in devising some formula to exclude these companies from this concession. I have no doubt that it was the intention of the originators of this provision to exclude absentee owners. However, with their resources and ingenuity, these organizations have been able to avoid exclusion and to entitle themselves to the benefits.. If they cannot bc excluded, why not extend the benefits to the Australian citizen with moderate capital, who, for perhaps family reasons is not prepared to live on the Barkly Tableland, in the Wave Hill district, or in some other part of the Northern Territory, but would be prepared to invest his money in a Northern Territory enterprise and visit.it now and again, provided, his income from his investment were tax free? After all, is our primary purpose to induce into the Northern Territory, people who own land there, or only people who will live there? It seems to be the policy of the Government to encourage people to live in the Northern Territory, rather than .to induce landowners to settle there. That is exemplified by the Government’s policy of resuming all the land in the Darwin area from the original private owners, and transforming it into crown land, thus making it possible for residents of Darwin to be only lessees. I trust I shall not be misunderstood and be interpreted as arguing in favour of having non-owners there, because that i3 the very reverse of what I favour. However, if we cannot otherwise induce owners to live in the Northern Territory, and that has apparently been proved over- the years,, let us widen the provisions of. this legislation by granting tax immunity to the kind.” of people !’ have described, the. managers,, employees, and those- who would, in- the circumstances I. envisage, invest their, capital in. and. make, available their experience for the development, of the territory. I, am convinced that the Northern Territory could.’ produce vast quantities of live-stock,, much of which could be killed in fat condition, the remainder being brought to the adjoining States for fattening and’ ultimate killing, so contributing t’o the wealth of fliis country. The Northern Territory desperately needs a railway, not north from Alice Springs’ where the pastoral country is” not’ rich, but across’ the border fronr Queensland ‘ to the B’arkly Tableland’ *T! trust tliat the construction of such a railway will1 be’ tackled’ as one of’ the first steps’ of” tile Government’s railway construction programme: V have moved an amendment’ to t’lie’cla-use’for’the reasons1 1’ have stated! I trust’ the Government will see its way to accept it” and testf tilie effectiveness of tax immunity’ as a: means- of developing the Northern Territory- for a period’ of” ten1 years;
.- T agree with the honorable member for ludi; (‘Mr: McEwen) tliat’.in this measure every encoura’gement should be given’ to people to settle in the Northern- Terri^ tory. It is- obvious-“ that the’ development of’ that territory lias been retarded-, principally Because the choicest lands have been held1 by prtstora.l’ companieswhose sole interest in it has been the earning of dividen’ds- for shareholders resident in- other countries- or the- protection of thei’i” main investments in Argentina’ and elsewhere. Many of our young ex-servicemen who1 were in the Northern” Territory during the war were able f!o’ assess- its potentialities and’ are now extremely eager to settle1 there-. I am not neairly so’ pessimistic as! the- honorableineriiber foV Indii and. other honorable’ members- who’ contend that prospective settlers would need to have a capital of from £1.O;00OJ to> £20,000 to have any chance of’ success-. When Che honorable member for. Indi wtfs Minister for’ the: Interior *I accompanied- him’ on a visit to- the Northern Territory and met many men successfully established there1 who, when they. took. up. their* holdings, had very little- capital.. In developing our vast northern hinterland,, these . men. have rendered, wonderful service-, to Australia and. they are.- entitled to all the considera* tion and encouragement, it is possible to give them. I. am satisfied that a: young man. with- a capital of £3,000. or £4,000 could establish himself successfully in. the Northern Territory, particularly, if he were able -to acquire some-of the excellent country, now held’ by the big pastoral companies. I regret that this G’overnmeht ha.s. renewed the- leases- of’ many of’ these companies. Ifr the: Government! took a: realistic view of the situation i.ft would, also- assist new. settlers, by the provision of water, conservation, schemes.- and the like.
– The honorable member.’ is digressing; from the’ clause whialii deals with tax. exemptions.
– The one is interwoven with the other. By/ giving encouragement to young1 men tot settle’ in the Northern’ Territory- we’ shall build up a healthy, virile- population; which may berelied uponi to1 defend our northern outposts and thus reduce to some degree’ the taxes now levied’ for defence’- purposes’. The Government should1 take” a- more practical view of the need for the” development of the north. New. settlers slVouild be; guaranteed’ freedom’ from tax for a.t l’east twenty years..
– Would the honorable member extend the exemption to tKose already established’ there f
– I believe, that they, too-,, needi it. The’ Northern Territory could produce cheaply the stock required by/ the- great, pastoral areas! of. northern and: westerm Queensland) and northwes.tern New South Wales^, where, it^could- befattened and sent to- southern markets- of killed: asndi the ca>rcasses. shipped! abroad. The- assetei created’ by the- development, of the- Northern, ^fensitooey along- th^ lines* I have- suggested would recoup. the> Govecnment more than-, a hundred-fold, for- any, loss of: revenue it might, incur by exempting residents of the Northern- Territory from income tax. The” establishment of a virile andt contented population, in* the north would be of much, greater valuer to the Government than, the- comparatively paltry amount derived from income tax levied on. tlie residents of the Northern Territory. “We should, discourage large land-holders who merely send their managers to. the Northern Territory and visit their holdings, perhaps only once, in six months: The pioneers, who opened xp the southern. States and carved a home out of the virgin forests- had. to- contend with very much, greater disabilities than those which, confront settlers in the Northern Territory to.-day, and if sufficient ‘ inducement, were, offered many young men of, the right, type who are anxious to establish, themselves on the land would settle there.
.- I propose to submit an amendment to. this clicuse.
– Order! There isan amendment’ before the committee already. When that is disposed of, the. honorable member will be- entitled to move a further amendment.
– Am I entitled now to read the proposed amendment and speak’ to it?’
– The honorable member is entitled to refer to. the. clause in general.
– The amendment which t foreshadow proposes to, add. a new- subsections to section, 2-3 of the principal act. The proposed new sub-section is- in the following terms : - income arising from a scholarship, held by a person receiving full-time instruction a.t a university-, college, school or- other- education esta.blisltineii.t; either in or- out’ of Australia, shall bo. exempt f.rom income trcx and no account shall be- taken of’ any such, income in computing the amount of income for the purposes of this- Act.
In this section-, the- expression ‘'’scholarship” includes an exhibition, . bursary. . or any. othersimilar education, endowment,, whether payable, periodically or in a lump sum.
The- amendment, is- designed to. bring; before, the committee the. matter which I raised last nightiduring the-secondrreading.’ debate. Tinder the: present’ practice, of the: Taxation Department), not the-, previouspracticej recipients. o£ scholarships tenable in England and. elsewhere- abroad, are taxed, a. substantial part, of their scholarship moneys- at, the source;. Although- the statute hass remained- the same over, the- relevant period-, the depart ment, has changed, its attitude on this matter only in. the last few years-. I- refer to. a precise- case, the Gowrie Scholarship, which totals £475 per. annum,. and is intended to benefit, the sons: and daughters of poor.- people by enabling them, if they, are sufficiently knowledgeable, and skilful, to. go abroad, and study, so that they may return to. Australia and serve, their country, more adequately than would otherwise be.- possible. The Commissioner of Taxation . torday. takes no l’ess- than £12:6 from t.’ie total osE £47.’5 per. annum., leaving the recipient, after the payment of exchange, the g<rand sum of £262 per annum, with which to. live;, pay his- boardand his university fnes, buy text-books, and. defray all the: other expenses which he hast to meet. Students’ are not able to live on the amount which, isi left to them after the Commissioner’ of Taxation has taken his share. I particularly- draw the attention of Government, supporters to the. fact that this’ means- thait only tha sons and daughters, of well-to-do? citizens . can afford to, take up these, scholarships.. Within my- knowledge, more– than, one soil of. poor parents- has had. to refuse, one or other of these scholarships because of the high rate of tax..
In Great Britain, scholarship moneys ha-ver never1 ‘been, taxed. The- British Govermnent. has at all times taken the liberal, intelligent, and only reasonable view- that scholarship, money, first of all, is not income and; in any- case, should not’ be; taxed’. Therefore, it has refrained’ from doing so, as Commonwealth Governments. did in Australia until 1941. In 19-20; in order to put the- matter beyonddoubt; the- British Government inserted a new section in the Einance- Act in the terms of the amendment which I now propose. The., taxing of scholarship- moneys by the Commonwealth Government is, in effect, one step in the process of’ committing national suicide as- a democratic community. The- amendment has no party political, significance. It is designed to be more favorable to the sons and daughters1 of poor: parents than to the- children of rich parents-. For- that reason, I believe that: it should commend itself to honorable members on: both sides of the chamber: as- a. measure that should be enacted. In another scholarship, one- fromthe University, of Sydney; the sum of £375 per annum is granted by the trustees to enable a student to study at one of the English universities, always with the view that the student will return to Australia to serve, his country. After the deduction of tax and exchange, the student is left with the grand sum of £1S0 per annum. The amount of £475 per annum granted to Gowrie scholarship holders is considered to be large. Normal scholarships from the University of Sydney provide amounts of about £375 or £350 per annum. Honorable members will realize that, even with a gross amount of £375, any student would have a great struggle to make ends meet. The reduction of” that amount by a wicked tax impost leaves many scholarship holders in an impossible position. The result is that a poor man’s child is debarred from benefit.
Australia is the only country in the world, as far as I know, that does this ridiculous and wrong thing. That a Labour government should insist upon this pound of flesh, to use a melodramatic phrase, is beyond my comprehension. Of all governments in Australia, surely a Labour government should be the first to yield to my proposition! My proposal has been submitted to Labour- Ministers again and again during the last three or four years, but each time they have waved it aside. I spoke last night of the “ official mind “. I do not know what influence has prevailed 11 DOn the Treasurer (Mr. Chifley) and his colleagues in this matter, but every effort that wc have made to secure some amelioration. of the position has failed. If you tax learning, you do the worst thing that can be done in a democratic community. Furthermore, the practice is full of anomalies. Some scholarships are taxed,, and some are not. Obviously, the Commissioner of Taxation has a guilty conscience. He realizes that the practice is wrong and unfair. In respect of scholarships tenable in America, of all places, he does allow certain concessions which have the indirect effect of making the scholarship moneys not taxable. In the case of scholarships tenable in England he does not do so. He concedes something for the cost of books and university fees, but, as I have said, about nine-tenths of a student’s expenses are, not for books and fees - those items are extremely small - but for living expenses. Because of this, the son of a poorman is penalized. I am repeating much of what I said in the second-reading debate last night, because I feel very deeply about this matter and I consider that all honorable members, and the public of Australia, should have the facts brought to their notice. I make no apology for dealing repeatedly with these anomalies.
The taxation authorities make an extraordinary distinction in relation to the Rhodes Scholarship, the fund of which is abroad and therefore not readily accessible to them. If it can be proved that a Rhodes scholar is no longer a bona fide resident of Australia - in other words, if, although he was born here and domiciled here, he goes abroad and it can be assumed that he does not intend to return to Australia - then, for reasons best known to himself - no doubt because he has a guilty conscience - the- Commissioner of Taxation does not tax the scholarship payments. However, if a Rhodes scholar happens to have married in Australia and to have left his wife in this country, thus remaining a bona fide resident of Australia who is only temporarily absent, the money is taxed. That is a ridiculous position. All these anomalies point to the one thing: that this impost is utterly unjustifiable.
Another anomaly is that if the scholarships are granted in a lump sum, the Commissioner does not tax them. The difference between a periodic payment and the payment of a lump sum, as far as taxation is concerned, escapes me. Someone in authority, flourishing his stick, has said, “We will tax these people “ ; but, as the result of pressure, some concessions have been granted, and they are entirely illogical. Better legal minds than mine contend that the impost is probably illegal, because the money that winners of scholarships receive is not “ income “ in the normal sense. The recipient of a scholarship does not earn anything. What he receives is a gratuity or a donation to him for having qualified against competition to receive a scholarship. He cannot appeal against the tax because with cunning .and cleverness the Commissioner taxes the income at the source. He directs the trustees of the Sydney University, the Gowrie Scholarship Fund, the Walter and Eliza Hall Trust Fund, and other trustees of funds from which scholarships are provided to hand over to him the amount of tax levied and only the balance r.o the student. The result is that no one has the means or right of appeal. The student has no. link with the Commissioner of Taxation. So he cannot appeal, and the trustees of the funds have no right of appeal, either. Therefore, it is extremely difficult to have this tax challenged, but I suggest that if some student had the money to challenge the tax in’ the High Court it would not stand for a minute. The ‘ final anomaly is that the Commissioner taxes the money on the basis of income earned from personal exertion, whereas any one familiar with the income tax law knows that if it is taxable at, all it, is taxable as income from property, which carries a higher rate, because the money is paid out of earnings from investment in property. That again shows the guilty conscience of the Commissioner. Of course the money is not turned from persona,] exertion. It. is a gratuity, a gift, an allowance that the scholar has won. If it be taxable at all, it must be taxed as income from property. ., is condition cannot be allowed to continue one moment longer. If the Commissioner of Taxation, backed by the inertia of the Government, is not prepared to revert to the practice that prevailed before the ruling of August, 1941, it is time that we placed on the statutebook the amendment that I have foreshadowed in order to protect learning in Australia. By protecting learning we protect democracy.
– This clause exempts from tax for a further five years income derived by residents of the Northern Territory from primary production, mining or fisheries in that territory, and the amendment moved by the honorable member for Indi (Mr. McEwen) would increase the period of exemption to ten years. The concession is granted to promote the development of the territory. I support the amendment because I consider it desirable that the people who will benefit from the concession should have a longer period of exemption assured to them in the hope that it will encourage greater development. I consider, however, that the concession has failed to achieve the development that it was hoped it would achieve. It has not led to greater investment in the territory. I think greater progress would be obtained if the exemption were extended’ to income derived from investments in each of the three fields by people who do not live in the territory. I regard it as reasonable that’ if income earned by residents of the territory from mining, fishing or primary production is to be exempt from tax for five or ten years, whatever be the case, income earned from the same sources by people who do not live in the territory should ‘be exempt too. Such an exemption would undoubtedly encourage investments in the development of the territory by people with considerable funds to invest, but with other interests that compel them to live in another part of Australia. Of course, I do not advocate a system that would merely- provide people with a means of escaping income tax, but I do think that if my suggestion were adopted it would lead to considerably more development than has been achieved so far. There are vast mineral resources that could be developed. Even if those who make the investments that would lead to the development of those resources found it, inconvenient to live in the territory themselves, their investments would create employment and greater population. It is illogical to say that people should live where their capital is invested. Some investments flourish and others perish by the wayside and are forgotten, but successful investors in industry are not forgotten by honorable members opposite. Indeed, they are remembered with rage. They are regarded as cormorants that must be destroyed, instead of praised for the industries they have developed and the employment they have given. People who invest in the Northern Territory know what lies ahead of them - either loss of their capital or success that will be the envy of their fellow-men. They have to have courage to meet either, and we should give their courage stimulus by extending to them the concession of exemption from tax on income derived from the three categories of production provided for in ‘tliis clause. My ‘purpose vis to urge ‘the ‘Government to ‘-accept the proposal ior ‘extension of -this privilege. If we want -to - develop the Northern Territory, why -should -it ‘he necessary to ‘insist on a ‘man bringing his family with ‘‘him and residing there’? -Many men who might invest their capital in ‘ the ‘Northern Territory have homes in other ‘parts of Australia, where far greater amenities are available to’their wives and families. “Why should ‘the Government insist that they break up their homes and ta’ke their -children from school to move ‘them to the Northern Territory ? By ‘insisting -On -these things w,e . are discouraging the investment of capital in ‘the ‘Northern Territory, -not only ‘by , peqpTe resident ‘in Australia, ‘but by . people “in other . parts of the world. During : the war th’e Government “proclaimed that it was exploring every avenue to induce -developmental investment in this country, and . said -that it w,as doing everything . possible ‘to encourage investment by people in the United States of America and -in Great Britain. Bu’t ‘this . proposal must have the inevitable . effect o’f . discouraging them.. Wby should we adopt such a policy, . particularly when we realize that our . own efforts ‘in the past -to develop the NorAhexn ‘Territory have failed I The only ‘logical course to pursue is to extend the privileges to prospective investors. “We must face . the . realities . of the situation,, which are that people will not invest money iin enterprises in . such isolated country . unless they . are offered . every inducement to do so. That applies particularly . to mining . operations. Whilst it as a fact -that -there are a number of . great industries on the verge . of development., those industries tare insignificant “ -in . comipaa-ison with the known mineral wealth of the Northern Territory. People in -.other parts -of the world who are able to invest millions -of pounds in -dewelopmental en.terjpT.ises should not be required ; to take oip residence in the Northern Territory. Lt is not their presence which -the (development of that . country -requires, but itheir capital. In any event, the majority of large investors already have interests in Australia and in other parts -of the world which demand their ‘attendance elsewhere.
Businessmen i’of that type, ‘wherever -they may be- - -
-Order ! The honorable member . must >direct his remarks to the -clause under ^discussion.
-T -am urging that these -people should ‘be ‘given the same-‘coifcessions, fas ‘those -enjoyed by people resiHent’in the ‘Northern Territory. The <fadt -that we ‘have -hot been ‘able to induce !any ‘great ‘iiuniber «of ‘people to settle in that ‘p’a’rt of Aus’tralia shows that there is something lacking ‘in ‘our policy. The amehdment-‘df the honorable member -f or Indi - (‘Mr. McEwen’-) proposes to ‘extend’1 the period of ‘exdirip’t-ioh -‘to ten years. T say that we “should go further ‘than ‘that ‘and ‘not ‘attach any “provisos whatever to ‘the concession. Capital ‘is ‘-not gbingto be attracted to this country by concessions of tax exemption for periods of “five ‘or ten years; capital will ^orfly ‘be attracted here because o’f a belief -in investors’ minds that it ‘will return ‘substantial pro’frts. And ‘that is the principle ‘“on which all itforiey is invented. ‘Th’e-‘development of ‘major industries such ‘as rnining, ‘fishing and m’ea’t. requires long periods. We have ha’d experience ‘o’f large ‘mining cbhrpanies desiring to invest money in this Country becoming discouraged and withholding their Capital T trust ‘the ‘Government W-ill realize =’f)he impor’tance o’f attracting h’Cw ca’pitUl to Australia., and.particularly to the Northern Territory, where large-scale ‘developm’eht -is ‘so sorely needed.
.-The Government may not believe in . simplifying the Income ‘Tax Assessment Act,; at least., that was the impression one gained from the ‘renrarks -of ‘the Minister for -Post-war R-‘eCO’m’s-trucf’ion (Mr. Dedman)-, who ‘thought that the measure should remain in a complex state. Bu’t ‘even if the ‘a’ct is to remain a complex one, it should ‘a’t least be -made intelligible. As ‘it stands, it is not intelligible to most people, and certainly h’o’t’to myself. ‘Section 23 of the principal act provides -
Tlie ‘folltfwiiig ‘income shall be exem.pt ‘from income ‘tax : -
Section 44 (1) enacts -
The assessable income of a shareholder in a company (whether the company is a resident or a non-resident) shall,, subject to . this section -
If he is a resident - include dividends paid to him by the company out of profits derived by it from any source; and
If he is awn-resident - include dividends paid to him by the company to the extent to which they are paid out of profits derived by it : from sources in Australia.
Because of the decision of the court in a recent ease, it is proposed ‘by clause 7 of the bill to amend section 44 (1) by inserting the following new sub-clause: - (1a.) The operation of the last preceding sub-section shall not be affected by the provisions of paragraph (q) of section twenty-three nf this Act.
– The best joke we have heard in this chamber for months past was when . an honorable member who is a lawyer spoke last night of “simplifying taxation “ !
– I appreciate that. However, all I want the Treasurer (Mr. Chifley) to explain is why paragraph q is not to be -omitted altogether from section 23 of the principal act. The effect of leaving it in the act is simply to cause further confusion an the minds of taxpayers. Although no explanation has been offered for its retention, I assume that the Treasurer has some reason for retaining it. However,, in the absence of an explanation, it is quite incomprehensible to me why ithe clause . should be allowed to remain.
.- The honorable member for Parramatta (Mr. Beale) stated that . a ruling of the Commissioner of Taxation will debar . a brilliant son or daughter- of poor parents from taking advantage of the benefits of a university exhibition. I remind the Treasurer ‘(Mr. Chifley) . thatthe first Labour Governmentin NewSouth Wales, giving effect to the policy of the Labour party, introduced, in the face of considerable hostility, legislation providing for the granting ofbursaries to enable brilliant children of ‘poor parents to attend and graduate atthe university.
This excellent legislation has been a great credit to the Labour movement. If other countries financially assist brilliant students of poor parents to attend a university, it is improper that the Commissioner of Taxation should effectively debar them in Australia. As the result of the attitude . of the department, this class of student must stand . aside, and his place is taken by, a less clever student whose parents are able to pay for his university education. I cannot believe that the Government, after having been informed of the position, will . decline to rectify it. I shall be glad if the Treasurer will examine . this matter, and have the Taxation Department . alter this ruling.
One of the proudest boasts of the New South Wales Labour party was that the legislation which, provided for the grant-. ing of bursaries to the brilliant children of parentsin comparatively poor circumstances enabled the son of a miner on the northern coalfields of that State to attend high school and eventually the university. Ultimately, he became Professor “ J ohnny “ Hunter. Had it not. been for that legislation passed by a Labour government, this brilliant mind would have been lost to Australia and the world. Unfortunately, a greater Power than we are called him away while he was still a comparatively young man, and ‘we shall never know where his brilliance would have taken him. If the obvious anomaly created by the department’s ruling is not corrected, a grave injustice might be done not only to a brilliant student but also ito Australia. At one period, critics of the Labour party declared that our principal purpose was l..o protect the interests of “Bowyangs” and that we were opposed to intellectual development. The lie . complete has been given to that view, because we realize that democracy, in itself, is not sufficient, and that w,e must have an educated democracy. Therefore, the Labour party believes that those whoendeavour , to improve our intellectual standards should receive . every possible . encouragement, and that no barrier . should be erected to prevent the brilliant , son or daughter . of the humblest person inthe community from obtaining the highest education. In the circumstances, I urge the Treasurer to give careful consideration to the suggestion of the honorable member for Parramatta.
Silling suspended from J.2.J,5 to 2.15 p.m.
– I consider that portion of the clause will stultify one of the finest pieces of legislation ever passed by any Australian parliament. I refer to the legislation which enables the child of the humblest, parents in the community to pass through the schools to a university. The system of bursaries enabled a brilliant son of humble parents on a northern mining field to pass through the State schools to a university, and eventually to be appointed to a professorship where he was able to teach the professors who previously taught him. .The brilliance of Professor “Johnny” Hunter has been . recognized throughout the world. In its present form the clause is likely to disfigure that great principle and, therefore, I cannot believe that the Treasurer will allow it to remain. I am confident that he will, either by accepting a!> amendment or by a direction to the Commissioner of Taxation, ensure that a paltry few shillings shall not stand in the way of the continuance of thus excellent system.
– The honorable member for Flinders . (Mr. Ryan) referred to paragraph q of section 23. Those who study it closely will know that originally it was thought that the paragraph applied to income derived from sources outside Australia, excepting dividends. Ex-Australian income, other than dividends, is exempt, from Commonwealth tax if it is taxable in the country of origin. It was also thought that ox-Australian dividends were taxed by section 44, unaffected by section 23 (q). The effect of a High Court ruling was that .dividends were covered by paragraph q of section 23. Consequently, the act is being amended to give effect to the original intention of the Government and the ruling of the Commissioner of Taxation. The proposal now before the committee is to adjust matters in the light of the High Court’s ruling.
The honorable member for Parramatta (Mr. Beale) and the honorable member for Reid (Mr. Lang)’ referred to the taxation of scholarships and bursaries. That matter has been mentioned to rut.’ on various occasions by several Government supporters,, including the honorable members for Parkes (Mr. Haylen), Fremantle (Mr. Beazley), Hindmarsh (Mr. Thompson) and Lang (Mr. Mulcahy). I listened carefully to the remarks of the honorable member for Parramatta on thi? subject last night. He repeated his points a number of times probably in the hope that I would eventually see eye to eye with him. I remind the honorable member for Parramatta that this matter has a wider incidence than its effect on scholarships and that therefore it calls for careful examination. As new points have been raised during the debate, ali I can promise is that they will be carefully considered. Indeed, I discussed some of the points raised with the Commissioner of Taxation last night. At this stage, the Government will not accept amendments; but the representations of honorable members will be carefully examined before the next session of the Parliament, and it may be that administrative action to meet their desires will be taken, or that legislation will be introduced to meet the position.
– Will the right honorable gentleman accept an amendment?
– Not at this stage. This legislation was given much thought before it was introduced. Moreover, before agreeing to amendments I like an opportunity to examine their implications. As I have a suspicion that there has been an attempt at stone-walling during this debate, I intimate to the committee that this measure cannot be unduly delayed, especially as full opportunities ‘were provided to discuss financial matters generally when the financial statement was under review.
– -This bill had not been introduced when the financial statement was under discussion.
– The contents of this measure have. been, known to honorable members for a considerable time, and could have been discussed in connexion with the debate on the financial statement. I merely mention now that what appeared to be an attempt at stonewalling did not pass unnoticed.
. -In spite of the warning by the Prime Minister (Mr. Chifley) that the bill must be passed quickly, and his statement that no amendments will be accepted, I rise to support the amendment that the period of exemption in the Northern Territory should be extended to ten years. There was a time in the history of the United States of America when the popular cry was “ Go west, young man “. Many persons do not know that the complete couplet reads -
Go west, young man,
And grow up with the country.
As the result of that advice, large numbers of young men did go west, where they grew up with, the country. They learned to love and understand it. Sound advice to a young Australian would be, “ Go north, young man and grow up with the country “. Only by offering inducements to young men with the right spirit to go north shall we be able to populate the northern parts of this great continent. A much greater population is required there. The experience of many countries has been that those who have pioneered new lands have learnt to love them. I am reminded of the words of the Australian poet -
For those who love it and understand
The salt bush plain is a wonderland.
Those who have lived for any lengthy period in the Northern Territory and have learned to know the country, have also learned to love it. They will do more for the territory than can be expected from people who visit it for short periods hut do not make their permanent homes there. I therefore support the amendment.
– I support the remarks of the honorable members for Parramatta (Mr. Beale) and Reid (Mr. Lang) in regard to the necessity for the exemption of scholarships from income tax. I emphasize the fact that when travelling . scholarships and bursaries, particularly, the Rhodes Scholarship, were first made available to enable students to go overseas to enlarge their knowledge, the value of them was no greater than would permit of a bare existence, and certainly no margin was provided which would cover the very heavy income tax that is levied in Australia today. The levying of income tax on students who have won scholarships places a bar on higher education entering the homes of young men of poor parents. Recently I have been reading a work entitled The American Rhodes Scholarships. In the first chapter, “ The Vision of Cecil Rhodes “, the author, dealing with the seven wills which Rhodes made shows the’ development of Rhodes’s views on the desirability for the foundation of the overseas scholarships, which have meant so much to the world and have bound together the British and American peoples. Rhodes’s idea was that these scholarships should be awarded to men who had outstanding qualities, not only of scholarship but also of leadership. In a letter that he wrote to Hawksley, his solicitor, who was responsible for the drafting of his wills from time to time. Rhodes gave directions for the drafting of the sixth will, in which he showed how one idea led to another. He reasoned that the residential college in South Africa for which he had provided might, if successful, tend to prevent South African students from going to England to study, and thus promote a feeling of separation, which would run directly counter to all his ideas. The remedy which he proposed was to supplement that bequest with a provision for scholarships at Oxford University. In his letter, the whole of the scholarship scheme was outlined, often in the very words of the sixth and seventh wills. The author has quoted the letter, in these terms -
On thinking over my will I discover that 1 have made a mistake, in fact made a gift, which if not supplemented may rather defeat my ideas. I refer to the foundation of a residential college at the Cape, which if successful might lead to check . South African students from coming home for three years to our University and therefore, lead rather to promote the feeling of separation through want of intercourse. I therefore propose to add to the gift that every year three scholarships should be given ‘and that the amount should be £250 a year for three years for each or £750 per annum and that the successful winners should matriculate and reside for three years at the University of Oxford in England.
That quotation from the letter written by Rhodes to Hawksley, used in the preparation of the drafts of his sixth and seventh wills, shows, that the idea in his mind was that, scholars from. America,. South Africa,. Australia, NewZealand’, and other parts of the. British Empire, should mingle together, and. at the expiration of their scholarships should return to their homelands well, equipped to play a prominent part with their qualities of leadership, knowledge and ability. The honorable member for Parramatta (Mr. Beale) has pointed out that the Commissioner of Taxation, has ruled that if an unmarried man, when about to go overseas,, can convince the Commissioner that he proposes to’ relinquish his domicile in. Australia and to make his residence abroad after he has completed his university course at Oxford., he. willbe. exempt from income tax;but a married man who leaves a wife in Australia is forced to pay income tax here, and it is a very heavy impost on the comparatively small scholarship which the Rhodes Trust is able to give him. The. Treasurer (Mr. Chifley) is actuated by a paltry spirit when he merely says that the matter will-‘ be looked into..Why can he not do the straight and’ honest thing by those men who have won travelling, and other scholarships, included’ in whose ranks was the late ProfessorJohn Hunter, one of the most distinguished’ scientific men which this country has ever produced? While he was in the. second’ year. of. his medical course at- the University of. Sydney, Hunter coached men who were in. their fourth year, in work’ that’ he had’ not yet done: He was so far ahead of every otherstudent that he was- capable- of doingthat work. When he graduated, he brought to the study of medical’ science a capacity- for original thought, which, this country had never dreamedwas possessed by any man produced by the University of’ Sydney or any. other Australian university. I. recollect professors, at the University of Sydney, saying- at- the time- of his death that a brain like that of. John Hunter was” produced1 only once. in. a century.. His was. one of. the most- brilliant brains which, this country, has ever produced1. Yet’ he- was- the son of- poor, parents.. If bursaries and scholarships had/ then been- taxed as heavily asthey are to-day, probably John
Hunter would, never have been, heard, of in. the realms.- of. science. He died: at. the early age of 26 or 27’ years; in Chicago, while- engaged- on research’ work and lecturing on. scientific discoveries- that he had made in. Australia-. As the- honorable member for Parramatta, has- said,. Rhodes’ scholars will, in effect through the action of the taxation authorities, be prevented from, returning: to, Australia, and thusthe objectives which Rhodes had in mind will be- defeated.. Even at. this late hour, the Treasurer shoiild accept the amendment forecast by the honorable member for Parramatta.. I hope that- the’ honorable member will canty hist amendment to. a division, so that the people of- Australia may realize that there- is considerable hypocrisy among those who; are always pleading: that the sons of poor p.arents should have^ every opportunity to enlarge their education, and yet would deny, to anr. most: brilliant sons’oppor.tunir ties to go: overseas to. the* fountains, of research- and- learning- and to. return to. Australia better, equipped to> pl’ay. a- leading role, in the development of” this young Commonwealth.
– I should’ not have taken part in this debate but for some of the wild’ statements that have- been made. Governments supported By the Honorable member for New England (Mr. Abbott) did not do the right thing towards the poor section of our people in regard’ to education. I was a member of the- finance committee of the University of Adelaide for about: fourteen years; during the whole of which period’ not one ease was raised of income- tax having the effect alleged by honorable members opposite.
– But it was not so high then.
-i am speaking- of nine months ago.. The honorable, member for. Parramatta (Mr.. Beale.), has- r,er f erred, to events, that occurred, about 1941. I have spokeni to. the Treasurer, (Mr. Chifley) about, the matter,, and he- has assured, me that he will go into; it and endeavour, to- overcome- any, difficulties: that, exist. L am* prepared to- accept his.- woud.. It. would ill become, an honorable, member, whom the- right honorable gentleman hat! assured that he would see what could ‘be done after -an “investigation -o’f the *pro’bable effects on ‘Other sections, to do as the honorable member for New ‘England has suggested that the ‘honorable member for Parramatta should -do, namely, push the amendment to a division. I intend to stand by the Treasurer, because I believe that he will tlo what is ‘fair. But I shall not be stampeded ‘into voting for the amendment by statements o’f the kind made by the honorable -member for New .England, which, insofar as they purport to express his interest in the noor man, are merely hollow shams. “That is not the way to achieve what the honorable member believes to be .desirable. M.£ .experience in these matters is that provided one has a good case - rand I believe that a [good case can be made out in this Instance - those in authority will be prepared to recognize it and deal with it accordingly. I hope that the Treasurer. when he studies this matter, will take” into consideration the desires of persons who have made bequests, or gifts, for the establishment of bursaries and scholarships. As a member o’f ‘the Adelaide University finance committee, 1 am aware <of the difficulties with, which a university lias to .contend in ‘order to gain the ‘greatest ‘possible financial return from gifts made for the establishment .of bursaries and scholarships and thus .meet the desires of donors. [ believe that the Treasurer will give full consideration to this matter and will deal wi th it equiitably . ,
– I .congratulate the honorable member for Parramatta. (Mr. Beale) on bringing forward this matter. I believe that many honorable members opposite, like those’ on this side of the chamber, .agree with .the honorable member for Hindmarsh (Mr. Thompson) that an excellent ease has been made -out for setting aside the present practice in respect of this matter. There .can be wo doubt that taxation seriously limits the power of ‘these trusts to advance the cause of education. .1 also believe ‘that many honorable members share the vision of an Australia of the future which will be not only « centre in the South Pacific of social legislation in advance -df ‘that of the rest of the world, but also a centre of science, -culture and art. The day when that ideal can be realized will be ‘very much -more .quietly reached if we have contact .with other parts o’f the world. It is a sad thought that .at this moment, when, ‘at length, the whole of the people of Australia are -beginning to realize that we can no longer develop our possibilities to the full degree in .complete isolation, we should have any obstacle at all placed in the way -of the extension of the scope of our .contact with the outside world I believe that here in Australia, particularly in ‘Canberra, where we have made possible the establishment df a National University, this should be ,au obvious po’int of view. I am glad .that the Treasurer has assured the committee that hi! will .give it his sympathetic consideration. I believe that when he has gone carefully into it, and considered all its ramifications, he will accept, if not the amendment foreshadowed by the honorable member for Parramatta, at least .the spirit of that amendment,, and that we shall have a course of action taken which the honorable member urgently desires. T again congratulate the honorable member for Parramatta on bringing this matter before the -committee, and hope that he will achieve his objective in. the very near future.
– I am content to accept the assurance given by the Treasurer (Mr. Chifley) that the proposal foreshadowed by the honorable member for Parramatta (Mr. Beale) will be looked into. I agree with the. honorable member for Hindmarsh (Ma-. Thompson) ‘that we can safely le’ave it in the hands of the Treasurer. A great many honorable members feel deeply on this matter: I rose simply to place on record the fact that I am in favour of the ‘amendment. However, .1 accept the assurance given by the Treasurer.
.- 1 should like to .remind the committee of the terms of the amendment which I foreshadow, and also to state what I propose to do in view of the undertaking given by the Treasurer (Mr. Chifley). The amendment I have drafted is as follows : -
That the following new sub-clause (s) be inserted: -
Income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other education establishment, either in or out of Australia.
In this section, the expression’ - scholarship - includes an exhibition, bursary or any other similar education’ endowment whether payable periodically or in a lump sum.
The Treasurer has exhibited a glimmering of sweet reasonableness in this matter, and in those circumstances it would not be fitting that I should fail to exhibit at least an equal degree of sweet reasonableness. The Treasurer, having said that this matter will be carefully examined, a nd having, I believe, by a hint, indicated that my proposal will receive something more than sympathetic consideration, supported as it undoubtedly is by a strong body of opinion among honorable members opposite as well as by the Opposition us a. whole, I do not propose to press my amendment at this stage. I do not want this extremely important matter to become the subject of party hostility which might result in my objective being defeated; because, the Treasurer, soI am told, has a habit of what, is colloquially known as “ getting his back up”. I do not want to get any one’s “ back up “ in this matter. I want to ensure that income in respect of scholarships for Australian students going abroad shall be exempt from tax and, regardless of the. method employed, I shall be content so long as that objective is achieved. Therefore, in view of the Treasurer’s assurance, I shall proceed no further with the matter. I am obliged to the honorable member for Reid (Mr. Lang). I do not agree with his politics. Indeed, I dislike his politics and his past political history; but. when he spoke ro-day as he did, he spoke with the authentic voice of Australian Labour at its. best. There is no doubt about that; and I am. grateful for the support which he gave to my proposal. I am equally grateful for the support which has been expressed by the honorable member for Hindmarsh (Mr. Thompson) and the honorable member for Bourke (Mrs. Blackburn), and also the unspoken sup port of honorable members opposite: 1 hope that it will not be long before my proposal is implemented. Indeed, even an amendment is not required; it can be implemented by a departmental directive that the conditions which existed in 1941. be applied.
– That, alone, would require examination.
– Maybe, but it was good enough from the time Commonwealth income tax was first introduced until 1941. No one did, or could, challenge it, and I should like to know why we cannot get back to it again. I have been accused by the Treasurer of repetition. In this I have been merely imitating Labour tactics. Members of the Labour party have made a speciality of repetition. Very often what they repeat is not worth repeating; the difference between them and me is that what I was saying was well worth repeating, and I trust that it will produce a favorable result..
A m end ment negatived .
Clause agreed to.
Clauses 6 to 8 agreed to.
Clause 9 -
Section fifty-four of the Principal Act -is amended by inserting in paragraph (b) of. sub-section ( 2. ) after the word “ purposes “ (second occurring), the words or structural improvements, bores or wells expenditure on. which has been allowed or is or has been allowable as a deduction under paragraph (g), (h) or (i) of sub-section (1.) of section’ seventy-five of this Act from the assessable income, of any year of income, of the taxpayer or of any other person “.
.- I move-
That thu words “or of any other person” be left out.
This clause contains one of. the most objectionable provisions in the bill, and my amendment is intended to correct an anomaly. The effect of the clause as drafted maybe illustrated by quoting the case of a primary producer who sinks a bore which might cost £3,000, £4,000 or more. He can get a deduction in the year of expenditure and, if the expenditure is excessive for that purpose, the resultant loss may be carried forward for seven years. Upon the sale of the property, the taxpayer who sank the bore would not be assessable on any amount which he might receive in respect to the bore, but the purchaser, and any subsequent owners, will not be entitled to any depreciation on what they pay for the bore. At first sight, it would appear that the Crown is entitled to some consideration because of the full allowance in the year of expenditure, and that it should not be obliged to make a further deduction. If that be so, it is an open question whether it would be more equitable to require the one who sank the bore to submit to taxation what he received for the bore upon sale, but . not exceeding the amount of his expenditure, or whether the Government’s proposal ought to deny the deduction to purchasers. The Treasurer (Mr. Chifley) may have chosen his method because the tax on the sale of t he bore, even when subject to the averaging provisions, may be very high. However, in my opinion, the Treasurer should not seek any quidpro quo for the allowance which, after all, is the Government’s contribution towards encouraging primary producers to provide against alltoofrequent droughts.If expenditure on water improvements is contrasted with expenditure already allowed and now proposed to be allowed under section 75, e.g., preparation of land for agriculture, clearing and cultivation, draining of swam ps, erosion and preventive measures, it will be seen that the Treasurer is prepared to allow as a deduction for income tax purposes such expenditure which is admittedly of a capital nature; and he allows such capital expenditure without seeking any quid ‘pro quo other than what he would indirectly get as a result of the greater productivity of the land. Consequently, the Treasurer ought to be similarly satisfied with regard to bores, and should reconcile himself to the one loss ashe does with regard to the other expenditure under section 75. A highly artificial position will be created if depreciation is denied, on certain asset3 that normally carry depreciation, and intending purchasers will not know where they stand for taxation purposes. The secrecy provisions of the act will forbid the department to give information on the point.
. I believe that thu provision affords some additional relief to primary producers, particularly graziers. . I have asked the officials to make a particular note of his remarks, because 1 haveno doubt that he believes that there is some substance in them. The matter will be examined.
. - I am not sure how some taxpayers will stand under this clause as drafted.It is clear that the Government has at last given way, and accepted the proposal of the Opposition that money spent on the construction of bores and wells should be an allowable deduction for income tax purposes, but the clause does not make it clear . whether this concession will extend to expenditure or. reticulation schemes which, of course, are necessary in connexion with bore sinking. [ should also like to know what will be the position of the taxpayer who has spent money on such work in the past. Under the act as it stands, he is allowed so much a year for depreciation on a diminishing scale. This clause abolishes the allowance for depreciation in respect of expenditure in this and subsequent years, but the position in regard to past expenditure is not clear. I should be glad if the Treasurer (Mr. Chifley) would explain the point.
– It is not intended that the legislation will be retrospective. i do not profess to be able to give a technical interpretation of the provision at this stage, but I shall have the matter looked into.
– I do not suggest that an allowance should be made in respect of capital expenditure undertaken on works of this kind in previous years, but I should like to know whether the taxpayer who has in the past been allowed depreciation on such expenditure will continue to receive this benefit.
– The Commissioner of Taxation indicates that the clause will be read in such a way that the allowance for depreciation will be continued.
Clause agreed to.
Clauses 10 and 11 agreed to.
Section seventy-five of the Principal Act is a mended -
Section proposed to be amended -
– Paragraphb of the clause deals with soil erosion and specifically excludes from exemption expenditure incurred on fences used for preventing or combating soil erosion. I am accustomed to living iu. various parts of Australia in which soil erosion- is one. of the great curses inflicted on the farmer. One of the means by which it has been possible to stop soil erosion has been by the erection of brush fences or the expensive type of cord fence-. I cannot sea why expenditure on fences should be excluded. The whole question of soil erosion is of such importance to the Commonwealth that money expended to combat it, either on the. planting of trees, shrubs or grasses, on contour ploughing, on the trenching of hillsides or on the erection of fences, barriers or ditches, should be an allowable deduction. In. view of the many methods, which, may be employed, according to the. varying circumstances of soil erosion in various parts of Australia, I would be obliged if the right honorable gentleman would indicate why fences should be excluded while expenditure on other methods of prevention are allowed.
– I, too, believe that the Treasurer (Mr. Chifley) should explain exactly what is meant by the term “ fences “’. Recently, T had a small lucerne paddock which was being rapidly eroded. In order to counteract the erosion, I put in two dolphins where the water changed its course. These dolphins could be classified as a fence. They were built of timber and had logs thrown up against them. They were not used for the purpose of holding stock in a paddock, but solely for the purpose of diverting water.. For the “purpose- of preventing sheet erosion taking place as the result, of gulleys forming in the hills abovey another means of preventing erosion of that kind is by the erection of a wire, fence, which collects the: rubbish coming down with the water and. forms, a. kind of: dam thus, diverting the water to its proper course-. That, too-, might, be regarded as, a fence within the meaning of the clause. Unless there is a clear definition of what is meant by the term “fences” the. Commissioner may classify a dolphin such asI have described, or a wire structure intended to. create a small diversionary dam,, as a fence-.
– How is it possible to give a practical definition of the term?
– If it be not possible to give- a practical- definition of the term-, why not omit the words- “ otherwise than by the- erection of fences “. If the ViceP’resident of the Executive Council (Mr-. Scully) does, not know what- is meant by “’ fences “, why leave the words in the bill? The. honorable gentleman admits that the word’ “fences:” is incapable of being defined’, but he proposes that it should, be: left in the bill’. Should the taxpayers be. taxed in respect of expenditure they incur on something the: Minister himself admits is. incapable, of definition ? If. the, words are to. remain, let, us have an accurate’ definition, of what is meant by “ fences. “ so that people: will not be called upon to pay tax on structures used solely for the prevention of soil’ erosion which may otherwise be regarded as fences.
– I support the remarks of the honorable member for Barker (Mr. Archie’Cameron) and the honorable member for New England (Mr. Abbott). A fence is ohe of the great preventives of a class of soil erosion, particularly erosion of the type which, perhaps more than anything- else, is troubling the farmers of Australia. The greatest advocates of protection against erosion urge that certain portions of a property be fenced off from time to time and be regrassed. If money expended on the erection of fences for that purpose is not’ made an allowable deduction, how. can the farmer afford to carry out the regrassing? All expenditure on fencing erected solely as a preventive against erosion should be an allowable deduction. It is of no benefit to the-., fftrnier for. the, commissioner to grant;, a- concession, in, respect; of expenditure.- on . preventive measures of one type-. and. to refuse, it. in 4 relation- to another. The . erection- of i fences, is necessary to encourage the;growth.of natural grasses and herbage^ which i ensure immunity from.. sheet . erosion.
.-The-pro- visions of ‘this clause are- desirable and admirable in that* they give encouragement to the expenditure -of ‘money for the control ‘of ‘soil lerosion. The. whole future of - any -country depends- primarily- upon water,- and upon . what has been . described as the very- thin smear of soil on the surface of the -globe. ‘ There, are. various kinds-jof soil erosion,- and. ‘it- as apparent that i the . officer who drafted- this clause has not been advised . of ; that fact.. We have the kind of soil erosion -that. -occurs in, say, the Mallee areas of Victoria, where wide areas of loose and sandy soils are exposed it o- wind . ‘erosion. The^provisions of this-; clause will, I . assume,- cover ex^ penditure.on’.the, planting >o£iwind. breaks and, the, like- to.- counteract the effect of - wind erosion-.;. There is,:, however,water, erosion-, of,’ the gully: type, which may -.be ‘controlled by contour fa,rming, the grassing of -gullies.; and various devices which- have been explored . far - more, fully in the United. States’- of America . than in Australia. There, is, however, a ikind ofcrosionr, which- is -very- serious in -.its cbnr sequences,’ and in respect of which no controls . have-yet been devised-other than by protecting the land by-.encour.aging the growth of natural, herbage. . If one drives by. motor.- cai- from Canberra; to. Albury one will’ pass..a.- section of ‘billy; outcropswhere.the whole surfaced the hills has been, eroded- by water: Most- of -this land is -very cheaipiand-ofj extremely <I6w carry-, ing capacity, land upon, which no’ farmer would contemplate spending money for the planting.1 of trees or ‘grasses. Some of those hilly . -outcrops ‘extend, over areas . of from- 20 to 100 acres in a paddock -of from ljOOOi to 2,000’ acres.- The outcrop, er.ochjs- progressively : becausei- it . has; no protection, from- stock- and- rabbits.– The one protection that -scan arrest that kind of soil . erosion’ is - fencing’ the- place, off from, stock, and rabbits. That, as every practical, land’ mam knows,-, is, the only effective in ctionv’that ; canhe-taken to check the -erosion of thousands of acres- in Australia/ The only , alternative, is close con^ troliof grazing-.. I am not. able at. the momenti to.- suggest an amendment that wipuld meet, the circumstances., I- realize that , one,- could not- permit . any, taxpayer to . say,-.” I, erected that. fence to -stop isoi-l ei;osion.(‘.
– That ‘is th’e difficulty. ‘
– I agree. The VicePresident of the . Executive . - Council and the - Tfeasuiser . know - enough, about the picture [-that. I. am>.tryin.g to: present -to realize-that it is a.-.real ‘problem and that there is a need to > encourage the fencihg -offilof’some areas : from domestic stock and wild animals,– , such as -rabbits.’ I. ask therTreasurer (Mr.’ Chifley) to hegood..enoughito. have his advisers, examine this’.-matter- with,,asviewvtoextending.’by either administrative action oriegislation; thei pr.inci.ple(-introduced;iin this clause to west -that kind. of : soil erosion.
– Thehonorable member for Barker (Mr. Archie. Cameron’) has. spoken about representations made. to. the Government by. Opppsitiom members, concerning, soil erosion, but representations have been, made to the-. Government by -.all. interested parties,, including, primary producers’ organizations, and we have had . many con-i ferences. Any one . looking at the . problem, frankly, would, I . think,, be. reluctant tomakeiundue allowances for. . expenditure on soil erosion. because they are open . to. abuse and ‘ difficulti to, police.. I suppose -. that applies to ‘all aspects, of . taxation-; I foresee all sorts -of ridiculous.- claims being lodged: The honorable member for Indi (Mr. . McEwen) knows -that . an . allowanceis. already- made- for the, depreciation, of fences . -and that expenditure on dog? proof and- rabbit-proof . fences! is also a. deduction;- Every one must . admit that some, of the- erosion has arisen from the carelessness, of property-owners who haveoverstocked, particularly on lightlygrassed areas.-. Their “bad husbandry has produced, the.’state of -affairs . that . we now proposes to assist : them to remedy. That does not- apply to all ‘ land-holders, of course;- but i many - of ‘ them . have been, guilty of over-stocking, and, thereby: they have caused erosion. I know considerable stretches of country where the owners have got the last penny out of it by over-stocking. A dry period followed by heavy rains has then caused erosion that could have been avoided had owners not been guilty of bad farming. One sees fairly steep hillsides from which every true, has been cleared after ringbarking. That has invited erosion, because the soil has been left without protection. Even now one can see great stretches of country in which the trees have been ringharked before clearing. Of course, the owners will get a far better return for a while from their land, but the ultimate result will be erosion. Any fair man will agree that this concession is open to grave abuse. Our intention, is to assist people to overcome the troubles that they have brought upon themselves by their own bad management. I have been asked by the honorable member for Indi to examine the exemption from tax of money expended on the erection of fences to keep stock off areas prone to erosion. L cannot promise to give the honorable member’s request favorable consideration, but it will bc examined when the Income Tax Assessment. Act is under review again.
.- Soil erosion has been dealt with considerably by other honorable members. I merely point out that regardless of the money expended and means of expenditure in the fight against soil erosion it should be receiving consideration from the Taxation Commissioner because of the serious nature of the problem, which is yearly becoming worse. I entirely agree with the Treasurer (Mr. Chifley) that it is .difficult to police income tax concessions in respect of expenditure on measures to provide against soil erosion. I also know how difficult it is for local governments, State governments and even the Commonwealth Government to induce primary producers to adopt protective measures against soil erosion. The right honorable gentleman said that if consideration were given to desires expressed by honorable members difficulties of policing would .be increased,
– The way would be open for abuses.
– Yos, but the local governing bodies could, I think, act as agents for the Co in mon wealth Government in the policing of the scheme. It must be borne in mind that each district has its own problem. I suggest that any scheme for combating soil erosion that is acceptable to the local governing authorities should be acceptable to the Commonwealth Government. The local governing authorities could police the provisions and prevent abuses.
– They are very often interested parties themselves. The honorable member is conversant with the responsibilities of shire councils.
– Yos, but I remind the right honorable gentleman that the State governments and the Commonwealth Government are also interested parties, sometimes.
– Yes, they provide the money.
– My main reason for speaking is to deal with allowable expenditure on the sinking of bores and wells. Men prospecting for water sometimes employ water diviners and sometimes, at greater cost, geologists, but more often the ordinary farmer bores till he finds water. After having lost two or three drills, he may find water that is too salty for the stock. That is an unsuccessful bore. Honorable members may know the quantity of .salt that stock will take. Four or five bores may be sunk before suitable water is found. That costs money, but no allowance is made for expenditure on unsuccessful bores. I know what it means, having had several unsuccessful attempts at boring for water myself. Provision ought to be made to cover expenditure on unsuccessful bores. Water is the greatest need in any farming community. Soil conservation is second.
Speaking on the financial statement which the Treasurer presented to the House recently, I urged the right honorable gentleman to grant as an allowable deduction money expended in combaning the encroachment of salt on properties. The Minister for Works and Housing (Mr. Lemmon) will confirm my statements on this subject. In. parts of Western Australia and Victoria, the encroachment of salt presents a serious problem.
Primary producers use various methods of combating it in order to maintain the prolific productivity of their farms, and the Government should give every assistance to the men who are fighting this battle, not only for themselves, but also for posterity. Combating the encroachment of salt is a big task, and considerable sums of money are expended annually in this way. I should like to hear the Treasurer’s opinion on this proposal, I. have written to him about the matter, but I have not yet received a reply, I should also like to hear his views regarding my suggestion that expenditure on unsuccessful bores should be an allowable deduction for income tax purposes.
– I inform the honorable member for Swan (Mr. Hamilton) that under this provision, expenditure on unsuccessful bores will be an allowable deduction for income tax purposes. Several honorable members, including the honorable member for Swan, have urged that expenditure on combating the encroachment of salt on properties should also be an allowable deduction. This is a comparatively new problem.
– It is not a new problem for the farmers.
– The Murray River irrigation area in South Australia has experienced the problem since 1927. In Western Australia, the encroachment of salt has occurred in rather peculiar circumstances on the light lands, as the result of a wash-off apparently from the higher areas. The problem has also arisen in the Murrum bid gee area. I am not able to promise that the honorable member will receive an early reply to his letter, because 1 must examine all aspects of this matter. However, I shall reply to his communication as soon as possible.
.- I congratulate the Government on its decision to grant the concessions set out in proposed new paragraphs g. h and i of sub-section 1 of proposed new section 70 of the principal act. At this time, when we are looking forward to great developments in Australia, it is appropriate that the Government should encourage people who are prepared to expend money on developing their properties. These concessions become even more important at the moment, because the heavy rates of tax which have been imposed for a number of years, have prevented land owners from saving money to pay for the development of their holdings. The decision to allow as a deduction money expended in combatingor preventing soil erosion or in constructing dams, bores and irrigation channels, on land used for primary production, will give definite encouragement not only to land-holders but also to those people who would like to settle on the land. In the long run, the Government will reap the benefits of these improvements to the land, because it will be an annual source of income which will be taxable for many years.
I invite the Treasurer (Mr. Chifley) to answer the request of the honorable member for Barker (Mr. Archie Cameron) for elucidation of the proposed concessions. I should like to know whether the concession, applicable to the construction of dams, bores, wells, underground tanks, irrigation channels or similar structural improvements, will be extended to piping. If it will not, the Treasurer should give earnest consideration to the advisability of allowing expenditure on that kind of improvement as a deduction for income tax purposes. Once a person has expended a large sum of money in establishing a dam, well or bore, he may possibly use the water to better advantage by reticulating it to surrounding country than by sinking another bore or installing another tank. He might, also reticulate country where he is not able to construct a dam or sink a well. This suggestion is worthy of careful consideration, because people to an increasing degree are making better use of existing water supplies instead of providing additional ones. The Treasurer, if . I understood him correctly, is rather obsessed with the idea that the bulk of soil erosion in Australia has been deliberately caused by land holders.
– I said that it had been caused by careless land-holders.
– When settlers originally came to Australia from the northern hemisphere, ‘theyencountered an. entirely different type of ‘country, and different . climaticconditions from those to “which they’ha’d bcen’acGustonred. They and their . successors ‘ had ‘-a . ‘good udeal ito learn about Australian conditions, and unfortunately, they learnt iby trial and error. Individuals are ‘not ‘.the only culprits in this ‘respect. After World War L, “State . governments made iland available ‘for* tie settlement of i exr’servicemen. They . encouraged ‘settlers ; to clear “the land,. and “the . ‘destruction ‘of the trees has caused -soil erosion in those areas. ‘In the circumstances, any suggestion : that soil ‘erosion ‘in Australia has . been deliberately man-inade “would “be “unfair and incorrect. The country I bears definite evidence of natural soil “erosion. . Huge areas of sand dune3 which extend over large ..parts of the country were there before settlement took place. Obviously, that is natural erosion. Now that wo have acquired greater ‘knowledge o’f what can be. done with different types of country, it is gratifying . to see that the problem of soil erosion has impressed itself upon the , public mind to -such a degree that the. government of the day is encouraging primary producers to combat this definite menace. I am in entire accord with the . proposal. However, I agree with those honorable members who-state’d that one of the methods of combating soil erosion is to fence the affected areas. By that means, those lands will be regenerated. During the last ten or fifteen years, this Parliament has heavily subsidized settlers in the marginal areas. Therefore, this Parliament has a definite interest in combating erosion. One of the best methods is to fence off the affected areas and prevent stock from intruding on them. I. am not’ impressed by the objection voiced by the ‘Treasurer , that expenditure on fencing for the purpose of combating and . preventing soil erosion, would be difficult to. police. . All methods for combating soil erosion will be . difficult to police. Channelling, contour ploughing and other methods for combating soil erosion may also be employed to conserve land before erosion begins. Whilst that in itself “ is desirable, I believe that the’ “Government does not intend . -to -allow expenditure- on: it as a’ deduction for income- . tax purposes. Surely the ‘fact that erosion. is. present is evidence of the need for-‘the particular -method that is ‘being used -to . combat it’! if ‘that be so,’ the same ‘kind of -evidence’ can be ‘used in “/respect -Of fencing as can ibe used -in respect’ of every . iother method ‘for ‘combating ithis menace. Attempts ‘-will undoubtedly she made . to evade the purposes cif f the proposed”amendments, ‘‘and people wilh endeavour to derive an. advantage to which they are not entitled. -However, those -‘attempts ‘will . not be rcon’fine’d. ito persons ‘who . -fence .:off areas damaged by soil erosion. iEencing is one of the forms of . protection jin which this ‘Government is vitally interested, -.because of the huge sums ‘that : this Parliament . has provided for the regeneration of ‘.marginal areas. After having gone . so far ito -provide’ this desirable assistance the ‘ Government will make a, great mistake: if it disregards this one suggestion which, -in my opinion, is one of the. most, important for. combating erosion.
Mr.ANTHONY (Richmond) [3.25].I appreciate -the -action’ that the Government is taking- to ‘encourage ‘ the adoption of -jmeasures ito xombat soil erosion. ‘This is a very ibigi-problem, -and ‘anything -that the Government does to help land occupiers io counter it . deserves the . commendation o’f honorable members : of all.parties. I shall not quibble about ..the provision in regard to fencing,, although T consider it” . would have been more generous on the part of - the ‘Treasurer (‘Mr.’ Chifley) had he omitted this qualification ‘from ‘the bill. Reference has ‘been made, chiefly to soil erosion by ‘water, hut we all know that wind, can also’ be a destructive agency. When land ‘has “been recently cultivated a strong wind- may rise” which will sweep thousands df tons of top soil away. The erection of fences can do something to prevent that heavy loss, just -as ‘can the growing of ‘a ^holding crop to ‘ bind ‘the surface ‘soil. I suggest to the ‘Government, . though ‘«not . necessarily for immediate; action,- thaUa: more generous- depreciation allowance -: should . be , granted . in regard: to irrigation- plant. It is’generally recognized’ thatreverything that is done to encourage effective, irrigation. i.and water conservation -generally is well ‘worth while. At ‘present a deduction, of only 5per cent. ; -is . permissible int. respect of irrigation /plant. This would . mean, in broad terms, that it would take twenty years to recover the capital cost of the plant.
– It would never be possible to write it all off.
– That is so; but I do not desire to go into fine decimal points. I remind the Treasurer that one assurance that the Government has that there would be no abuse in this regard is that the farmers themselves have to pay for their irrigation plant. Land-owners should be encouraged to install plant and machinery, apart altogether from government installations of such plant and machinery.
– There is no reference in this provision to machinery.
– I shall not pursue, that point, but I earnestly ask the Treasurer to provide, in a future amendment of the act, for a more liberal depreciation deduction.
– One of the most serious problems of the man on the land to-day is soil erosion. Every year millions of tons of top soil are swept into the ocean, and so the earth’s surface becomes denuded of its- best growing quality.. This is true of the United States of America and also of Australia. All possible encouragement- should be given to land-owners to do everything, they canto counter the menace-. The amendment of section 75, which we are considering, provides that expenditure incurred by a taxpayer engaged in. primary production in -
– I have already dealt with this subject.
– But not in the way that I desire it to be dealt with. I sincerely trust that the Treasurer will give the subject further consideration And not decide, in an ‘off-hand way, to reject the requests that are feeing’ made.
. Most honorable members who have addressed themselves to this subject have referred to erosion by water, but in northern YictoYia, and’ also in many parts of South Australia, a great deal o;f soil erosion has occurred through wind. In some of those areas’ there are great hills of sand as high as this building: Surely if the erection of fences would prevent erosion of that kind’, an’ assertion with which L do not agree, a deduction should be allowable in respect of the cost. Does the Treasurer (Mr. Chifley ) really mean that all expenditure incurred in- the prevention of soil erosion “ otherwise than by the’ erection of fences” shall’ be an allowable deduction ?’ I bring, to the notice of the right honorable gentleman the value of the sowing of rye corn for this purpose. Bye corn, is growm in our northern areas as” a means of countering soil’ erosion with very good results, but,, generally Speaking it” is not a payable crop. If a farmer planted an area to rye corn, would he be permitted to claim a’ deduction in. resp’eet of tef The’ intension, must- have; been to” include’ the’ sowing’ of rye co’Kn,- otherwise’ it would have been’ specificaHy’ excluded. The- cost” should be1 allowed a”s’> a deduction, seeing that”the;cro’p-is’mo”t,.as-a’. rule; a payable- one. Those” who” are” tiding to- combat soil’ erosion tttroughoutf the northern parts of Victoria will agree with that statement. I do not hold the view that fencing assists very greatly to combat soil erosion in northern areas. Those who most need relief by means of a deduction in respect of the cost of fencing have properties in areas in which soil erosion is considerable, and causes their fences to become covered.
– That would be taken into account under the heading “’ repairs “.
– The matter is not one of making repairs. The fences disappear. I should like to take the VicePresident of the Executive Council (Mr. Scully) to parts of my electorate in which the fences may be 10 feet under the surface of the sand. Many fences are only about 2 feet’ high. It is on record that 7-ecently some men in a certain district spread the wire preparatory to erecting a fence and then went to their dinner. “When they returned, they could not find the wire, because, during their absence, it had been covered by dust. The knowledge of soil erosion that is possessed by many Government supporters is confined to the mud with which their cars become covered in the city after a dust and rain storm. I have visited what a few years ago was a very productive farm, on which dairying operations were conducted. The construction of a water channel through the property put an end to natural drainage, with the result that the salt is coming to the surface and nothing can be grown on it. Such a condition of affairs can be combated only by drainage. The unfortunate farmer has to have the land specially drained, and that is very costly. I should like the Treasurer to state whether or not he is prepared to allow this cost to be a deduction from income. The problem is very serious, and I urge him to give the matter his kindliest consideration.
.- I understood the Treasurer (Mr. Chifley) to say that a reason for disallowing the cost of fencing which had been erected to combat soil erosion would be the difficulty of policing the matter. That is a sound reason. Nevertheless, the objection could be overcome through the instrumentality of officers of the State Departments of Agriculture, who do not belong to localgoverning bodies or committees. They are the best type of public servant. ‘They do a remarkable job, by advising farmers as to the best methods of dealing with soil erosion, and are completely unbiased. If they were to recommend the erection of fencing to cheek soil erosion, they could give a definite estimate of the probable cost, and when the work had been completed they could make certain that their recommendation had not been exceeded. I therefore ask the Treasurer to consider an amendment to include the cost of fencing authorized by such officers.
– - I am pleased that some assistance is to be given in regard to soil erosion. In South Australia, an expert has been appointed to give advice on the subject, and quite a lot of work has been done through the agency of State officers. Any action recommended, apart from the erection of fences, will be taken. Honorable members opposite have complained that the existing income tax return is complex, yet they are now submitting proposals which, if given effect, would increase its complexity. The honorable member for Calare (Mr. Howse) has asked that the cost of fencing erected on the recommendation of officers of State departments of agriculture should be allowed as a deduction. That would necessitate a statutory declaration that the fencing had been erected solely for the purpose of combating soil erosion. There are some honorable members on this side of the chamber whose knowledge of soil erosion is fairly considerable. Many land-holders consider that one of the best methods of preventing soil erosion is to subdivide their land into small paddocks, keeping the stock on one paddock and growing feed on the others. “What would happen if the cost of fencing were allowed as a deduction? When a man went on to a big area, he could subdivide it and then claim that he had done so solely for the purpose of preventing soil erosion. It is well known that subdivision considerably increases the carrying capacity of a property. The difficulty would be to prove that the subdivision had been carried out merely to prevent soil erosion, and not to increase the productive capacity of the land. Take a property which has a small sandhill in the centre. If stock were allowed to pass over that hill, the sand would gradually drift and there would be soil erosion which would embrace the surrounding area. If the owner of the property were to erect a fence around the sandhill, he could claim that he was preventing soil erosion, and that consequently he should be allowed to deduct the cost. Yet the probability would be that he had purchased the property ax a reduced price because of the existence of the sandhill in the middle of it. The only way in which to prevent soil erosion in many places is to subdivide the land and keep the stock off those portions of it that are likely to erode. I do not doubt that legitimate claims can be made that fencing has been erected for the purpose of combating soil erosion. If the cost of fencing were an allowable deduction, the person making the return would have to produce evidence which would satisfy the department that the fencing had been erected solely for the purpose of combating soil erosion, and this would add to the difficulties and complexities of the situation. The proposals of the Treasurer (Mr. Chifley) will be of great assistance to those who want to take measures to combat soil erosion. I compliment the right honorable gentleman, and appreciate the difficulties with which he is confronted. The honorable member for Wimmera (Mr. Turnbull) has argued that allowance should be made in respect of all that is done to prevent soil erosion. I point out that the object pf erecting fencing is not solely to combat soil erosion; it is essential if farming generally is to prove successful. We on this side of the House appreciate what soil erosion, means, and the need to fight it. We also appreciate the difficulties that will be encountered unless some limitation is enforced in respect of fencing for the prevention of soil erosion.
.- I move-
That, at the end of paragraph (b) of the clause, the following new paragraphs be added : - “ (j) the case of areas of land planted with timber trees deemed by a State Department of Forestry to be suitable to the growth of such trees an amount equal to live per centum of the capital value of theland upon which such trees are growing ; and
the case of land planted with olive or walnut or other trees of a variety approved by a State Department an amount equal to ten per centumof the capital value of the land on which such trees are growing tor fifteen years from theplanting of the trees: “.
If th at amendment be agreed to I intend to move that the following new subsection he inserted in section 75 : -
Where planted forest trees have been sold there shall be allowable as a deduction from the total price realized for the trees a sum equal to three per centum for each year in which the trees were owned by the seller thereof; and
The need to increase supplies of both softwoods and hardwoods in Australia is very urgent. In to-day’s Adelaide Advertiser there is a two-column article on the production of timber in South Australia, and it is published at an opportune time. In that State it is proposed to produce from 60,000,000 to 75,000,000 super, feet of timber within three years, and 150,000,000 super, feet within nine years. This may seem a large quantity, but less than¼ per cent, of the total area of South Australia is under forest. Even in Western Australia, where there are large forest areas, only one acre out ofevery 187 carries forest of a suitable kind. When we compare Australia’s timber resources with those of such countries as Norway and Sweden, and the countries in the neighbourhood of the Carpathian mountains, we realize how much better off. those countries are than is Australia. I believe that the Commenwealth Government should do more to assist afforestation projects by private enterprise. Private land-owners should be encouraged to plant trees on country in suitable rainfall areas which is not particularly suitable for grazing, hut which is suitable for the production of timber, and special taxation concessions should be granted to them provided the trees planted are of a suitable type approved by State forestry authorities. In the Kuitpo area of South Australia, near Adelaide, where the rainfall is satisfactory, the forestry department, about 25 years ago, tried broadcasting the seeds of forest trees. Nine different kinds of eucalypts and . piries, were left to grow under natural- conditions,, and it was found that certain varieties of pine and the spotted gums showed -the -most prolific growth. Out afforestation enterprises’ are . pf “two” kinds, ‘one for the production of softwood,, and the other for the production of hardwoods-. In this country,, the softwoods are mostly of pines, which give a return iri about 35 years1. Thi* -p.rbce.ss i’S1 comparatively simple’ a’s c’erirpared’ with the’ growing -o’f hardwood’s, sonfe’ ‘of wfecli take over 100 years’ to mature’. The Treasurer -(Mr. Chifley) may thiri’k that we are ‘looking fa.t ahead,, but it should- be -remembered that -Austrafia is worse off* for timber than almost any other part of the ‘world, except perhaps- the Gobi and Sahara deserts,, the Pamirs and. . pair ts of Turkistaai. Every . year,, timber is being used for more and- more industrial’ purposes. Scientists are always devising -new ways for manufacturing plywoods, boardsj &e.
Professor Wood has . puib’lisbed a book on this -subject,, carrying, a foreword by W.. S.
Robinson,, so that it ‘ought to receive -the approval -of, the Attorney-General (Ite. Evatt), at least. . At page 163 of this book, Professor Wood writes-*-
Tmportamt instances of the substitution, of -iustralnin -grown timbers, for . previously iraported mafe’ri’al in’clii’de scented satinWood for (urah in aiircraft plywood-, and ‘for walnut in rifle fnrcnitiire, ‘hoop pine for ‘Port ‘Oxford cedar in . battery separators, Queensland- maple -for mahogany : in aircraft propellers and boat- l/uiTcIrh’g, white birch arid, radiata pirie ‘for kaftan1 in ma’tches, spo-tite’d gum for ‘lfickory ‘in axe -and ‘hammer liaindles, ‘‘silver ‘qunmdo’ng and hoop p’i-ne for spruce in spoon-bladed -oars, Queensland maple and scented satinwood -.f or G’a’boon mahogany “rtri’d birch ‘in plywood ‘panels, ulid slfe-oak tirid myrf&‘e beech ‘for maple in ‘boot lasts.
So far, we halve not properly Hlvestigstted die ‘quality amd Carige tff our ‘natural timbers. This is a work which can ‘be tinderta’keri -only by properly Kjonstitoted iimthoritaes, such as !the St’tite forestry departments, the Council for . Scientific fti’fd (E’ndusftr-ial Research ; tod -some -of ‘the manufacturing ‘industries. The ‘tragedy ‘is that ‘so ‘many of <d»r ‘cdastal areas ‘have been denuded of ; good tirrib’er. 3Ftfr ihRtahce, Irh Queenslajitd a’hd in northern !5?e:w -South Wales practically ‘the w’h’ole -bf ihe ‘boo’p . pirie ‘-forests have ‘been -cut “out,, aiid the ‘land has ‘not been replanted. Iri’ fact, ‘along pradtic’ally the whole -of the
New South Wales coa’stal-belt, Witch of the valuable timber has ‘already been reriioved, while in’ the Strezlecki Ranges arid the’ Otway’ Ranges of Victoria imiri’ens’e’ quantities’ of timber have- been der stroyed, while’ very little1 has’ been ‘done to repla’ce it. I should like to see private la-hd-bwriers’ eri’c’ou-rage’d’ to- pla’n’t ‘trees. I would ‘go so far as to; say that a man should be given’ a -taxation aTlbwaiiee in respect tff niShey expend’e’d ‘on the- planting of feng wind’ breaks of ‘ suitable- pines. I. Woul^ ri’ot give ‘Mm.’ ah “ open go “ ; I w’ould’ insist -that he plant suitable1 trees and look after th’erii. The State’ -forestry d’epartm’eri’ts toe: “a:lways prepared’ to ‘give uiforriratioii about the kind’ ‘of frees that Ought -to be planted, and the number which should be planted to- the acre.
Pairfes of South Australia are suitable for the . growing «£ walnut trees . and -olive trees, pa-rtieuferly . those -areas,, including Eangairoo Island,, which enjoy what may be ‘called a . mediter-ranean! climate; Olive tuees -do not . give- amy retuaan for twelve years after ‘they are1 planted, and it is another seven ‘or eight years before they begin to* . produce fee’ely. . 1 believe thatwe should’ encourage the . production within Australia of . all ‘the -commodities We need. We . have here the land and the labour, and already in South Australia1 . there are treatment plants for ithe production of olive ‘oil. ‘South . Australian ‘cylive:- oil has won ‘championships »at ‘exhibitions in Gre’at Britain find ‘other fetropeain countries, 5so that its quality is beyond1 question. A royal ‘commission., which inquired into “the development *©f -E’angaisoo -Island, recommended the ipl-anting ‘of fcarob trees tfnd ‘olive itrees as ^kid ‘breaks. ‘Kiangaroo island i’s ^notoriously deficient ‘in -high “tree’s. ‘Caro’b trees ; are slow sgrowing, hut the b’eans’ are . a “v-aluable (food for ^’t’ock. It is not a timber tree, but “it is a rery ‘useful ‘ohe, ‘nevertheless.
Those people who are cutting and marketing ‘timber which they themselves planted -30 . years Ja’gb deceive ‘very bad treatment from the taxation ‘authorities. I know some men. who, ‘during the war, ‘cut timber ‘which they had planted ‘more than
SO years ago. The whole of the ‘proceeds frb’m ^the sale of ‘the ‘‘timber “Were put into their income -f or the year in . which it was sold, although ithey had been . paying land tax and ratfesc- f ort more, tHana 30’: years on the i land ion.- whichi the’ trees were) grown, Landi which; is« planted i with pine cannot be. used fort grazing;, Because grass’ will not? grow: under, pines;. I do nott suppose tha*, the; Treasurer; or- anyone ini the Treasury-,., considered this-“ matterr when’ the. uniform’tax legislation > was: being prer pared.
– No; but’ we have received, representations- on tile subject, fi-om’N’ew. South Wales.
-Then the Treasurer is- already informed. I was- giving, him., tha benefit, of, the doubt; The. Treasurer- will, admit* that when’ tim* her takes. 30 years to> grow,. and. is> then out and. sold,, it is. ai bit tough, to. take 15s. or 16s- tax- out. ofl every. £1 realized. While, tliisi sj’stem continuesj it- is. not likely that la-ndThold’ers.- Avill plant trees, so that , our present taxation, law is a deterrent. to.- afforestation, rather than, an incentive. Having: regard, to. our. extremely limited, timber resources, and the limited, areas upon, which, suitable, timber can.be. grown, I suggest that the Treasurer, should, give, favorable consideration to my amendment, so. as- to encourage afforestation., by private, land-owners instead ofleaving.it entirely to State enterprise.
.- I support: very warmly the- amendment, moved by the. honorable member for Barker (Mir. Archie Cameron.), and I hope that it- will; receive’ the serious-consideration- of the Government. We started off with, a country bearing valuable forests, but during the last hundred years” we have been despoiling’ these forests- at a terrific rate, and not replanting them. Forests have three main functions. The> first is closely connected with the’ subject which we have* just been discussing3 - erosion. The’ Treasurer (Mr: Chifley)- must realize the enormous amount of erosion which has1 taken. place’ in various’ parts of eastern1 Australia), including Gippsland’,’ wherer- forests have- been’, destroyed. Once the ‘trees are removed s the- rain, washes’ the soil off the hillsides: and down, into the rivers; thus causing; damage not! only: in the - immediate area’j buti also in-, other places’; remote- from the.: highlands- thenr-r selvesa Eorests- have’ ant effect* on. the water- supply,;, and in Australia we: are naturallyshort ofiwater. In forest. areas, the:. water; which falls^as rain’ is absorbed by the accumulated humus- on. the. forest, floor, and: only gradually seeps into; the waterways.. When the: forests’, are destroyed;, the:, water; flows rapidly down thehi’llsi’des;- and makes its’ way. along-the rivers to’ the sea, doing very little good i to’- the1 land” owned by pastoralrats, or. agriculturists: The- third function’ of forests, is to provide- timber. We are; dependent for- hardwood on. our own fbrests, while for softwoods we’ are dependent on imports from other countries. We- know to - our’ cost the price which- we have’ te pay for imported softwoods for. the.’ construction of houses and for- hundreds’- of other purposes. There have been increases’ in- the past1 in a num*ber of softwood forests planted; but these increases have not represented anything like whatv isi required. If we are to continue’ the heavy use of timber’ we shall have to fall back- on our own resources, and we will be able to do- that only bycarrying’ out an- intensive- system o.” afforestation. Flew governments- - certainly not’ the. Commonwealth- Govern^ ment - have encouraged the conservation and” restoration of our forests, the planting of new forests or of new woods. It is- mainly the responsibility of ‘ the State governments to look after these matters, and’ at last they are beginning to- realize the necessity for afforestation work. In Victoria, recently, an organization known as ‘the “Save the forests” organization was formed with a membership spread over tine whole of the State. Amongst other things the organization issues - propaganda designed to teach the- people of Victoria the value of- their forest’s in the three senses’ I have described! It also sends out to; its members young trees and plants and endeavours to- keep- the forests growing and replenished with young: seedlings: The- Commonwealth Government lias not’ done anything in this direction. In proposing this amendment the honorable member foi” Barker- has rendered the country a good service, and F. trust he has” planted’, in the mind of the Government a thought which- one daywill bear good- fruit.
As” the’ honorable member for’ Barker has said, consideration, must be1- given’ to the long’ and short- range aspects* of our forests policy. The long-range aspect includes the replenishing of our forests, particularly our hardwood forests which nave been seriously depleted and which in many cases cannot be restored to their former plenitude of wood for many years. The conservation and restoration of our forests should receive every encouragement from the Government. The restoration of our hardwood forests is a problem which concerns, not only the State governments, but also private individuals. “Within a short distance of my home, there are a number of plantations which have been developed during the last 30 or 40 years by private persons. These are mostly planted in Pinus radiata and have done exceedingly well. Such plantations are of tremendous importance to Australia. Although there are large ureas of land not suitable for other than the growing of trees, little, or no encouragement is given to the people to develop them and grow timber to supply, our future needs. The suggestion of the honorable member for Barker that money expended on the extension of our forests should be an allowable deduction for income tax purposes is very sound because such expenditure will not be reproductive for many years. Planting trees is not’ an inexpensive process. First, the land must be cleared, then the holes dug, then the trees bought and planted, and after all that has been done the trees must be looked after. When the timber is finally cut and marketed only then do the owners of these forests receive a’ dividend on their investment of time and money. One man who in the last few years. cut a very large area of Finns radiata was taxed by the , income tax authorities on the whole amount received for the timber, notwithstanding that it represented the accumulated value of trees planted over 35 years ago. The taxation authorities took the greater part of the revenue derived by this man from that source. That is grossly unfair. A reasonable and realistic attitude should be adopted in connexion with this matter. The proceeds of sales of timber from privately owned forests should be spread over a number of years for income tax purposes. I support the amendment proposed by the honorable member for Barker and trust that the Government will give it serious consideration.
– I strongly support the amendment proposed by the honorable member for Barker (Mr. Archie Cameron). A great deal of the field has already been covered by the two previous speakers, but there is one matter to which I should like to refer, namely, the position of Australia in relation .to timber for case-making. The fruit industry particularly is dependent to a large extent upon imported timbers for the casing, of fruit for export. At present our hardwoods are . suitable for the making of dump and picking cases. We have used hardwood cases for exports in the past, but they have been found not entirely suitable for that purpose. At present we are dependent largely on Canada for the supply of pine woods for the making of fruit cases for the export crop. The amendment seeks to encourage the production of our own pine timbers and, at the same time, to reduce the cost of export cases by producing the suitable timber in Australia. Canadian pine timbers sell at high prices, and many fruit exporters, not being able to afford Canadian pine for their cases, exported their fruit in hardwood cases to the detriment of good advertising for the Australian fruit-growing industry. In order to conserve our markets abroad our export fruit should arrive at its destination in good condition and be marketed in the most attractive condition possible, but that is not always possible where hardwood cases are used. The amendment has a most desirable objective and accordingly I strongly support it.
– I, too, support the amendment proposed by the honorable member for Barker (Mr. Archie Cameron), and I associate the Australian Country party wholeheartedly with it. Any one with a knowledge of Australian .timbers, particularly of the softwoods of northern Queensland, must realize that this amendment is not only timely but also desirable as a means of stepping up reafforestation and giving encouragement to the harvesting of the stands of timbers that are available. As the result of the war, the softwoods of northern Queensland, were rapidly cut down, to meet defence requirements, thus rendering future supplies doubtful During the war our forests were rapidly denuded but, because of the shortage of man-power, it was impossible to carry out reafforestation schemes. Any one with even a meagre knowledge of. the timber industry knows that the heavy demands of the war detrimentally affected the future timber resources of this country. The forests of northern Queenslurid produce some of the most beautiful and useful softwoods in the world. A sympathetic implementation of the principle of the amendment submitted by the honorable member for Barker will provide a desirable fillip to the production of Australian timbers. I and members of my party tender our thanks to the honorable member for his far-sightedness in bringing forward bis amendment.
.- I support the amendment proposed by the honorable member for Barker (Mr. Archie Cameron), and in doing so I” should like to raise one or two matters. We are all agreed that Australia is desperately short of suitable timbers.Not only have we to replace timber wantonly wasted in the past, but we must also increase the forest areas because timber is used for so many purposes. Australian supplies are now very low and accordingly we must utilize every possible means for increasing them, not only through State instrumentalities but also by encouraging private persons to plant forests. In the big timber-producing countries of the world, Sweden, Canada and the United States of Amenca, for every tree cut down two trees are planted in its place. The governments of those countries are fully alive to the importance of replacing their stands of timber. In Canada that policy has paid handsome dividends.In looking through an American magazine the other day 1- saw an advertisement inserted by a firm of tree surgeons, indicating how important trees are regarded in that country. These tree surgeons operate, on trees and advise growers as to the best methods of treatment and cultivation.
Mr. BERNARD CORSER (Wide Bay) ‘ 4.3 7]. - I support the amendment. A shortage of timber in Australia is inevit able and accordingly every assistance should be given to people to plant private forests, engage in the production of commercial woods, and to foster their timber resources, even though they obtain no return from their investment for many years. The amendment proposes to grant to such people some measure of assistance by relieving ‘them of some liability for income tax in respect of the proceeds of the sale of their timber. All aspects of the timber industry, and of the tax levied on the sale of timber, should be thoroughly reviewed. The Treasurer will remember that some time ago I brought before him the case of a man who sold over 30,000 super feet of timber which had been growing on his property for thirty years. This man was compelled to pay income tax on the whole of the proceeds of the sale, yet had he sold the timber as it stood in his paddock he would not have been taxed on the proceeds. Surely that is an anomaly which should be rectified. The Treasurer will surely agree that in such circumstances no tax should have been levied. If the person concerned had held his timber until it matured and disposed of it as a job lot in his paddock he would have escaped a heavy load of tax. Timber growers should be relieved of income tax on this form of production. All Australian governments are concerned about Australia’s timber resources. The Commonwealth Government has expended more than any other government on reafforestation and on forestry research and the instruction of scientists and forestry officers. The assistance advocated in the proposal of the honorable member for Barker would be a small addition to what the Commonwealth Government has already done in the national interest, to ensure the conservation of timber. I hope the Treasurer will accept the amendment in order that there may be an added inducement to people to hold timber until it has matured to the cutting stage for the nation’s benefit.
___ I support the amendment moved by, the honorable member for Barker (Mr. Archie Cameron). I am confident that, knowing the scarcity of timber in Australia, the Government will do everything possible to encourage the planting of trees for the production of timber,which is not only a long-term project, but. also involves considerable risks. A person might grow trees almost to maturity and then lose them in a. forest fire. The Commonwealth Government is aware of that risk because only a few years ago a fire swept through and destroyed thousands df pines it had planted above the Cotter clam in the Australian Capital Territory. It is unreasonable to expect private people to engage in this form of production on any scale without reasonable . assistance, because it is not only expensive but also risky. I am sure thatowing to : our desperate need for timber anything that the Government does in the way advocated by the honorable member for Barker will give a returnto the nation.
. - The Government cannot ‘accept theamendment of the honor able member for Barker (Mr. Archie Cameron) ; hut some of the aspects raised by himwill be examined. We do not propose to alter the act as proposed by him. There are many arguments against doing so ; but I will not weary the committee with them mow. Forestry workis more and more devolving upon the governments -of -Australia. Very little reafforestation is done by timber-getters , . unless . they are ; compelled to do it.
-The right honorable gentleman knows that there are . forestry companies’?
– Yes. We had . experience . of certain . forestry companies in New Zealand, and I know one or two companies in my own electorate. More and more ‘the tendency -is for the work to be done by the governments. Most timbergetters replant ‘only -when they are compelled to -do so by forestry departments.
Clause ragreed to.
Clause 13 agreedto.
Clause14 . (Deduction forresidentsof isolatedareas).
Mr.FADDEN(Darling Downs - Leader ofthe Australian Country party) [4.25]. - This clauseincreases from£40 to£120 a year the. deduction for residents of Zone “A”. Lt “is noteworthy that ‘no increased allowance lis ; proposed for residents of -Zone “ B “. “Measures like this produce all sorts o’f complications. A’man on -one side of the artificial “line is allowed a -deduction of £120 . and a -man on the other side, in exactly the . same circumstances, is allowed . only £20. I am not sufficiently expert to . ‘know whether the line between the zones, which is like . the -outline of a piece of a ..jigsawpuzzle, is justified, but it looks a horrible mess . to me.
-Strange to say . there havebeen , no complaints.
– Then probably no one . knows any thing . about it. Iamsure that . theGovernment will receive some complaints.
Clause agreed to.
Clauses15 to 23agreed to.
Section one hundred and sixty . o£ the Principal Actis amended - (g)byomitting -fromsub-paragraph (i) of paragraph(b) of ; sub.section (2.) -the words “……. (h)by omitting from subparagraph (ii)of ‘that paragraph the words
Section -proposed -to ; &e amended - l60. -(1.) . A. taxpayer shall bet entitled ‘to a rebate in his assessment : of tax -equal to an amount ascertained by applying - (2. ) . The amounts in nespectof whicharebate of tax shall be allowed under the last preceding sub-seetion shallbe - .
Mr.FADDEN (Darling Downs Leader of the AustralianCountry party) [4.27]. - Consideration of thisclause gives me theopportunityto say something abouttaxrebatesversus deductions. I willnot gointo detail, because Ithink honorable membershave “beensufficiently bored ‘over ‘the years -by the contentions of . the . right honorable memberf or Yarra (Mr.Scullin) . and. mine.ButIdirectthe attention of honorablemembers andthe country to the -fact- that the- Commissioner of Taxation told’ me that- the- cost of ‘increasing the rebate for a1 wife- from £100 to £1’5X) and for- a child1 from- £75 to. £100 would in - the aggregate be/ £11,500,000. I’ direct: the attention, of: the. committee te the tables-,. which T. incorporated’ in *Ilansard: during, my* second-reading speech, that’ show the participation- in that: £11,500,0.00 by taxpayers on: various., grades- of income..
The following table shows” the” extra tax adVantage that will be gained by a man with a wife : -
This table shows the result to a man with a:, wife and child -
The third table shows the result to a man with a wife and two. children- -
Those, figures are indisputable. The concession granted for the maintenance of a wife must be the difference between the tax that will be paid by a taxpayer with no dependants and a taxpayer with a dependent wife.
I accept” the challenge spectacularly offered last night by the: Minister- for. Post-war Reconstruction (Mr.. Dedman).; but. I desire no. mistake about, the circumstances and conditions* The press, report of the incident states*-
Mr. Dedman offered to pay £100” to any charitable institution if. Mr. Fadden could prove that the taxpayer was better off’ under the deduction system before: uniform taxation than under the rebate- system.
– Up to’ £500’.
– He referred to all ‘ incomes up to” £-500. He said -
I issue a challenge to the’ Leader of the Australian’ Country- part3’ and say that in r,esp.ect, of all incomes up to £500 a year the taxpayer is much better off under the rebate system - that is to say, he has to pay less in taxes - than he would have been had the deduction system,, as it- operated, up to- the time uniform tax was introduced, been continued’.
I lay particular stress on the conditions of that challenge. He said “ all incomes up to £500 “. There is no qualification. He produced a statement in which he said1 -
The following, tables, based’ on the proposed 1047-48’ rates”-
They - are the ones that we are: considering - of income tax and social services contribution, set: out a comparison of the levy payable, under tlie two systems.
The levy, payable under the deduction system has been, calculated, in. accordance, with, the law as., it applied’ to. assessments for the financial’ year 1941-42, the last year- of the deduction system.
He stated in broad, terms that he would pay £100 to any charitable institution if I could prove that the taxpayer was better, off under the deduction system before uniform taxation than under the rebate system. I could take undue advantage of that phraseology if I desired. He referred to. all incomes up to £500 in making, his challenge. I’ direct attention to the history of uniform- taxation. Before its introduction in the year ended the 30th. June, 1943, al] the State governments and the Commonwealth Government collected income tax. under varying conditions: Therefore, ‘ the test whether taxpayers are better off under the- existing rebate- system than they were under the- deduction, system may be made with the- following figures :: - In 1940-41, before the uniform tax: operated, combined Commonwealth and. State, taxes, including: the dividend tax, amounted to £11 4s. Sd. per. capita.-. In. 1.942-43, the first year, of uniform income taxation, the amount increased to £20 13si 2d. In. 1943-44,. it further increased, to £25 9s- lid., and in 1945-46. to £29 ls. per capita. If I desired to quibble - and, this submission is quite within the bounds of the challenge -it is obvious that the taxpayers of Australia are not better off under the rebate system compared with their position before the introduction of uniform taxation. That is conclusively proved by the facts.
Mr.Dedman. - The Leader of the Australian Country party is twisting my statement.
– I am not taking advantage of the Minister, or twisting his statement. He was guilty of most dishonest advocacy in this House last night. He asked the people to believe that the basis of his comparison was a true one, and he invited me to accept a challenge on a basis which he knew was absolutely wrong and impossible, having regard to the way in which he presented it. His offer was like that of Sir Harry Lauder who agreed to pay £1,000 to the widow of the Unknown Soldier. The Minister asked me to accept the challenge on his figures that the system of rebate - £150 - which prevails to-day is comparable with his, deduction basis of £50. He presented a table, calculating a deduction prior to the introduction of uniform income taxation on the basis of £50 for a dependent wife, and he made an unfair and dishonest comparison with the proposed rebate system of £150 for a wife. However, I shall use his own figures, and make comparisons which should be true and acceptable to a reasonable man. I apply the rebate of £150 and the deduction of £150 to the’ figures which he presented. “What do I find ? Under the rebate system, a man in receipt of £250 a year would pay £3 7s. in tax, and under the deduction system he would not pay any tax. Therefore, there is an advantage of £3 7s. in that instance. A man in receipt of £300 a year would pay under the rebate system £11 2s. and under the deduction system £5, so that the advantage in favour of the deduction system is £6 2s. A man in receipt of £350 would pay £21 under the rebate system, and £10 16s. under the deduction ‘ system - an advantage in favour of the deduction system of £10 4s. A man receiving £400 per annum would pay under the rebate system a levy of £30 6s. and under the deduction system £18 14s., the difference in favour of the deduction system being £11 12s. On an income of £500,. the tax under the rebate system would be £50 6s. and under the deduction system £38, so that the advantage in favour of the deduction system would be £12 6s.,
The Minister, in asking me to accept a basis of comparison of only £50’ under the deduction system, and £150 under the rebate system, was most unfair. However, I shall use some of his own ammunition, and regard the deduction as £100 as against a rebate of £150. What do I find? On an income of £250, under the rebate system, a taxpayer with a dependent wife would, pay £3 14s. and under the deduction system £5, which is a variation against the deduction system of £l6s.
– Will the right honorable gentleman repeat those hypothetical figures ?
– They are completely hypothetical.
– Of course, the figures which the Minister presented to the House were not hypothetical! He is a greater comedian than Sir Harry Lauder was, and he is not paid- half as much.
Mr.Chifley. - I am not taking part in the fight. I am only seeking information.
– The Treasurer will obtain all the necessary information if he will agree to the incorporation of my tables in Mansard. I am applying a deduction of £100 and a rebate of £150. The advantages in favour of the deduction system in these circumstances are : on an “income of £300, 4s.; £350, £2 6s.; £400, £2 6s. and £500, £1 14s. However, I shall discard that, and use the basis which the Minister used, having particular regard to the wording of his statement. I ask honorable members to follow this very carefully. He said -
The levy payable under the deduction system has been calculated in accordance with the law as it applied to assessments for the financial year 1941-42.
It does no such thing.
– Order ! The right honorable gentleman’s time has expired.
– As no other honorable member has risen in his place, I shall take my second period now. The Minister used only a part of the law. He used the law as it is applicable to the allowances for a wife and child. Under the deduction system, before the introduction of the uniform income tax, there was a special deduction that the Minister or his advisers, either inadvertently or wilfully, overlooked. I refer to section 81 of the Income Tax Assessment Act, which provided what it described as an “allowable deduction” to any person, other than a company, of £200, less £1 for every £1 by which the income exceeded £200. This section was’ repealed when the uniform income tax was introduced. However, that is a deduction under the law as it applied before the introduction of uniform income taxation. It was a deduction that, the Minister, if he had been an honest advocate, would have included in his calculations. Therefore, on the basis of that consideration and the facts it behoves the Minister to pay £100 to a charitable institution, and I shall nominate it.
– The right honorable gentleman is not to be the judge of this matter. Does he propose to nominate an arbitrator?
– I shall nominate the c ha r i t a bl e institution.
– I rise to order. I should like to know whether the Minister is entitled to lose his temper as well as his money.
The TEMPORARY CHAIRMAN.That is not a point of order.
– I suggest that the Minister should pay £100 to the Scottish primary schools in order to encourage a proper utilization of the simple arithmetical tables. His logic is as odd as an elongated Eskimo in kilts. He asked me to foolishly accept a challenge on the basis of a deduction of . £50, compared with a rebate of £150 in his favour. No doubt he was only displaying his shrewd Scottish caution, but I refuse to fall for that. In- addition, I remind the Ministor that I have not taken the full advan tage that I could take of his suggestion because he stated -
The levy payable under the deduction system has been calculated in accordance with the law as it applied to assessments for the financial year 1941-42.
Under the law! I remind the Minister and his advisers that the Commonwealth income tax law was not the only law that operated up to 1941-42. He has used only a part of the Commonwealth law. He neglected the State income tax laws that allowed deductions and statutory exemptions. If 1. wanted to take that point, I could do so, and where would he be? He spectacularly and blatantly threw out his chest and issued a challenge to me. It behoves him now to pay £100 to a charitable institution. I emphasize that the Minister stated that the levy was computed in accordance with the law as to deductions as they operated before 1943. when the uniform income tax took effect.I shall give him the advantage of applying only the provisions of the Commonwealth income tax law to the deduction system. The Commonwealth law provided a deduction of £50 for a dependent wife, £50 for the first child, and a special deduction to any person other than a company, the sum of £200, less £1 for every £1 by which the income exceeded £200. The honorable gentleman must not take half the argument. He cannot say - “I. shall take a. deduction of £50 and apply it”, particularly as he applied £150 to support his own case, and allowed me only £50. He cannot ignore the statutory allowances, namely, the deduction of £200 on a reducing scale. Let us apply the provisions of the Commonwealth income tax law to the exact terms of the challenge, and I shall show where he has failed. He declared that in respect of all incomes up to £500 per annum, a taxpayer is much better off under the rebate system than under the deduction system. If I prove that in one case the. deduction law was more beneficial, the Minister must lose his challenge according to the terms in which he issued it. Now, a taxpayer in receipt of £350 a year, with a dependent wife, would pay under the rebate system, according to the table which the Minister incorporated in Hansard/, an amount of £21. He then applied , his . own version of the law . relating to deductions prior -to the:introduction of uniform . income . taxation. In fact, he took only part -of the Commonwealth income tax law, providing ‘for a deduction of £50 in respect of the wife. He subtracted ; ‘£50 from the income of ; £350, leaving ; £300, looked at’.therates.-proposed for 1947-48 for . an . income -.of £300 per annum,and discovered that the . tax would be £28. Therefore, : he gave as his view that under the rebate system, a. jtax of £21 is better than -the deduction ‘system, involving, a tax of . £28 on a comparable income of -£350. Unfortunately for the Minister,she overlooked some allowable deductions which operated before the introduction of the uniform income tax.
Under section 81 of the-Commonwealth Income Tax Assessment Act, . which was the law - and -the Minister referred ito tie law - thesum -of -£100, which was the allowable ‘deduction, must also be taken into account. That ‘leaves an -amount . of £200. Applying the Minister’s own formula,I find that the proposed levy on the1947-48 rateswould be£10 l7s. under the . deduction system, -or -£10 3s. ‘less than he would have . to pay ‘under . the present rebate system. on a comparable income of £350.Ido not consider that there is any necessity for me -to . cite further instances. The Minister either wilfully misled ‘this committee, ashe ; accused . the honorable member . for Reid(Mr. Lang) last night of having done, or’ignor antly stated ‘What he believed to . be the facts. Whatever ibe the explanation, the . is ‘a dangerous man for the Government to isend : abroad , to represent Australia at ian important international conference.
Mr.THOMPSON (Hindmarsh)[4.50]. - When the Header . of the Australian Country party . (Mr. lEadden) spoke ‘on this subject a few . days -ago, hefore the Minister for Post-war Reconstruction (Mr. Dedman) issued the challenge, I told ‘him . that he was using, figures unfairly. I desire to refer ito thcstatemerit df the Leader of the Australian Country party in “which he tided to make it ‘appear that a . married man with . a wife: and two dependent Children was ..not ‘.receiving . the same ratio . of ‘benefit ; as Ithe ‘single man under the -new scale of (taxation now proposed by the (Government. “IThe right honorable gentleman/jinidealing . with this matter previously, ‘inadvertently referred to men with an income of . £300 instead of ; ‘£350. H wish to ; giv,e . the . committee the ractnal ‘.position of . a smarried . ‘man with a wifeiand twoichildren.and afsingle man >without ‘dependants, each ‘with an income iof : £350. . Under ‘.the wa-r-iti’me rates ithe . single . man . without dependants paid . a ta-x of ‘£75 . 2s. <and-a married man with ja -wife and two dependent children paid a tax . of . £3.1 , 2s., or tihree-:sevenths, approximately 42 . per . cent., of . the total ^aid by the single man. *Under . the. present rates the single. man , pays,£53.,19s. and . the married man -with ; a wife . and two dependent children pays £21 j3s. or roughly two-fifths, or . 40,per . cent, of the amount ; paid . by . the . single . man, a . reduction of two per cent, in . ‘favour of the married . man in comparison with the war-time rates. ‘Under the . new rates to come into t operation on . the 1st July, . a single man with an income of . £350 will pay about £38_, and a . married man with a wife , and two dependent children will pay £5 5s., or five . thirty-eighths, approximately T4 per cent., . of the amount , payahle’by’the single man. ‘The . percentagereduction, therefore, in favour o’f ‘the mar.isiedmian with a<w.ife«andftwo;children has been ifrom ‘42 *per cent, fat Jthe ‘wartime rate, : to <40 >per . Gent, . at tthe present rate, and it will fall to 14 per ccerit. under the relaxation that -will ^operate from the 1st July next. As.L challenged the accuracy of the “former statement of the fLeader -of ; the Australian ^Country party, I /felt ‘it ^incumbent ‘upon me ‘to substantiate : my -figures especially ias ‘challenges are flying around.
Mr.Fadden. - I shall meed ‘to employ a bookmaker soon.
– There is , no need df a bookmaker as . far as I am ; concerned, for T -am not ‘making my statements on the ibasis ‘df -a monetary wager ‘but on the basis df *polifical accuracy. I . do ‘not consider that ‘the Leader of the Australian -.Country party put the position fairly. The figures that I have just cited indicate that ‘the ‘reduction of income tax-o’f -a married man with a wife and two ‘dependent chilaren compared with that df a smgle^man was from ‘42 per cent, -on ^the -war-time ‘figures, ‘to ‘40 ; per cent, -‘on the -present rate, ana it -will ‘‘be 1’4 per cent, on the new ‘-rstte that will operate; from the. 1st J’uly, I ‘Consider that it was necessary for me to, substantiate my figures, or to apologize, igad “what I have now . said “indicates that there is. no call for an apology on my part.
The Leader of the . Australian Country party introduced a . good deal of fire into this discussion, particularly in regard, to, the relative merits of the rebate an! deduction systems. Bu.t what matters to the taxpayer is not whether . ‘one system or the ‘other is ‘applied., but whether- the amount of tax he pays will be reduced or not. I regard the -statement of the . Leader >of -the Australian Country party this afternoon as in the nature -of another’ manipulation -of’ fig.ures. I’ believe that, he will agree with me -tin ait at the . beginning of the speech of ithe Minister for Post-war Reconstruction ‘(‘Mr. DedmanD on ithis subject yesterday- that honorable gentleman pointed out that when the change was made from dedw> tions to rebates the amount was increased from £5.0 to £100, in order to . counteract any former benefit of >the deductions system. That is ajl I desire to, say on the subject.
. -I hope that the Minister for Post-war Reconstruction (Mr. Dedman) will . return to ‘the chamber presently, after he has. dug up the bottle from the garden and extracted from it the necessary £100 t.o meet the ‘challenge that ‘he issued to the Leader of the Australian Country party (Mr. F-adden^).
The TEMPORARY CHAIRMAN.I (ask the honorable . member for Richmond to deal with the clause.
– I intend to do «o. We are discussing the subject of concessional deductions. In regard to. the challenge that has been issued I shall say only that I hope the Treasurer will allow the Minister for Post-war Reconstruction to regard the £100 as a concessional deduc-T don seeing that it may be considered as a fair business risk in respect of which the Minister ‘” fell in “.
Mr.Chifley.-I hope that honorable members will soon. return to the considerafcion of the clause.
– The Treasurer (Mr. Chiftey) issued to honorable members a schedule (showing what purported . to be. comparable rates ip. the United Kingdom,. Nfew Zealand, and Australia, in respect, of tjie taxation ‘of a mar.rie.d : man with a. wife and two . dependent-children, The . purpose of the right honorable gentleman was. to indicate that %he Australian taxpayer in that -class w^s in a better position than similarly <oircumst.anced . taxpayers elsewhere. It is, significant, howeveii, that the right, honorable, ..gentleman cho,se. to refeT only . to. rates imposecl under . systems operated hy selected socialist gpy-ernments elsewhere.
Mr.Chifley.-i am not, ashamed of the governments that I selected.
-That may he so.; but I wish to refer ‘to the Liberal’ ‘Government of Canada in order to ‘show that a taxpayer there with a wife -and . two dependent -children as ‘better- ‘off than a similar tax-payer in the United Kingdom, New Z’ealand : or- . Australia, where ‘socialist governments are in ip’ower..
Mr.Chifley.-Is the honorable member proposing to ref er- to *the total -‘amount of tax ‘payable an respect of both the provincial and federal governments ‘ in Canada, or tQ only the Fe.der.al Government ?
Mr.ANTHONY.-I am taking the
Canadian tax, jus.t as the Treasurer . took the. United Kingdom, New/ Zealand and the. Australian taxes, and diil not specify local (government imposts’.
Mr.Chifley.-i dealt with this ‘subject, last night and pointed put that I had compared properly comparable, taxation Systems.
– We should be strictly . fair in this matter. . 1 intend to give, the total, . amount -of tax that, would be payable, to. ithe Canadian Liberal. Government, -On’ an income ‘of £9.23 in Canada the tax would be. £3% compared with an Australian tax on a. similarly cir^ cumstanced taxpayer of £130. The amount payable in Australia is almost double. If the . tax in . relation to higher incomes be compared* . the disparity in favour- ; of the Canadian taxpayer- becomes still greater.
I do not desire to enter into, the details of the discussion between the Leader -of the Australian Country party and the Minister for Post-war Reconstruction except to say that the Minister must answer the case of the Leader, of the Australian Country party oi- put up his money. The challenge will not be met unless the Minister satisfies an impartial adjudicator. He cannot expect to run to Commonwealth taxation officers for information and submit the information received as a conclusive answer. He should name an independent arbitrator and I am sure that any independent person of repute whom he cares to name would be acceptable to honorable gentlemen on this side of the committee.
– I again ask the honorable member for Richmond to confine his remarks to the clause before the Chair.
– The subject is concessional deductions in respect of which a challenge was issued by the Minister for Post-war Reconstruction. I submit that the Minister should name an independent arbitrator to whom the figures should be submitted for adjudication. Unless he does so he will be discredited and must “ put up “ his money.
– I am hopeful that honorable members will be ready, at once, to return to a consideration of the clause. I wish to refer briefly to the remarks of the honorable member for Richmond (Mr. Anthony) regarding taxation in Canada. I said last night, when.1 dealt with this subject, that it was not possible to give satisfactory comparable, figures for Canada, such, as had been asked for by the honorable member for Fawkner (Mr. Holt), because the. taxation system of Canada, like that of the United States of America, was not properly comparable with” the Australian system. In both America and Canada the State and provincial governments levy taxes which they collect altogether apart from the collections made by the Federal Government and there is no satisfactory way of obtaining full information in respect of the total of ‘both the State and provincial and federal taxes. In response to requests”! gave to honorable members comparable figures in relation to the United Kingdom. New Zealand, and Australia.
– Were the currencies also comparable ?
– The figures were all given in comparable currencies. In each of the three countries all the taxes were levied by the Central Government.
– Was account taken of the compulsory savings in the United Kingdom?
– No; but allowance was made for the national insurance contribution in the United Kingdom, and for the contributory social service tax of New Zealand. The systems of taxation in the three countries are properly comparable. I assume that the figures cited by the honorable member for Richmond referred only to the federal tax imposed by the Canadian’ Government. In regard to local government taxes, I gave figures last night which I believe were clear, although they were not given in the form of a schedule. I said that, in Australia, indirect taxes, including local government taxes, amounted to approximately £23 per capita, and that, the comparable impost in New Zealand was £27 10s. per capita, and in .the United Kingdom £42 per capita, including borough taxes. 1 did not give the committee the figures with any intention to deceive anybody. I -did not. give the Canadian or American figures because the systems there are different, in that, as I have said, both the federal, provincial and State governments levy taxes. The comparisons that I made related to three countries in which the whole of the taxes were’ levied by the central governments and could not be disputed.
.- I had another matter to raise on this clause, but deferred dealing with it until honorable members hod dealt with other matters which preceded it. I shall comment first on what the Treasurer (Mr. Chifley) has just told the committee about the comparative rates of income tax in this and certain other countries in respect of which he has supplied figures. My comments will be brief, because I believe that most honorable members are familiar with the arguments that have been advanced.
My first comment is that the Treasurer has supplied details in respect of three countries which have Labour-Socialist governments. It is natural to expect that a very considerable proportion of the expenditure in those countries will be governmental expenditure. ‘ I believe that the people of Australia will be interested to learn what the proportion would be likely to be in countries in which private enterprise is the system favoured by the Government; for example, in the United States of America, in Canada - to which reference has -just been made - in South Africa, and in many other countries. I understand that even in France the rates are very much lower than they are in Australia. If we are to have a balanced picture of what is a reasonable quantum of tax for a government to take from the national income in order to provide those essential services to which so much reference has. been made - protection by way of security, the provision of social services and of essential utilities, and matters of that kind - we must look to what is happening in other countries which we believe possess a comparable degree of civilization and a standard of living which, broadly speaking, is similar to ours. We shall not obtain such a picture from a study of the figures in relation to three Labour-Socialist governments. The United States of America consistently pursued, right up to the war years, the policy of comparatively low taxation, yet it has been able to give to its people the highest standard- of living, generally speaking, that is known to the world. If the Treasurer wants to convince the people that, having regard to the responsibilities of government to-day, our taxes are no greater than they should be, he should place before them a balanced picture which would show what is occurring in those other countries to which I have referred.
My second comment is that, even if we’ narrow our examination to the figures which the Treasurer has presented to us, his argument cannot be sustained; because, in order to make his case he has had to include social services contributions in Great Britain and New Zealand. Of course, the figures in relation to those services in Australia also have been included. But the right honorable gentleman has ignored the fundamental point that if a man with a substantial income in the United Kingdom or New Zealand contributes to the scheme of social services .in either of those countries, he becomes entitled by reason of ‘those Contributions to the benefits which the scheme provides. But that is not the position in .Australia, where the so-called .social services contribution is, in point of fact, a direct tax, from which no benefits can be obtained unless a means test can be satisfied. Only a small proportion of the people of Australia. - I believe that I saw it estimated some time ago at about one-third of the population - would ever become entitled to the benefits for which contributions are made at the present time.
– Sixty per cent, is means-test-free now.
– The social services contributions in the United Kingdom and New Zealand, countries which the Treasurer has used to bolster up his case, can rightly be claimed to be social services contributions, because they confer benfits as a right. In Australia, on the contrary, the social services contribution is a tax, from which some may not benefit in the future. The Treasurer has said by way of interjection that 60 per cent, of the people who make this contribution will be entitled to the benefits of the scheme.
– What I said was that 60 per cent, of the benefits are free from the means test.
– The figure that I have been given is very rauch lower than that. But even if we accept that figure, 40 per cent, of those who are. now making what is called a social services contribution will never receive any benefit. I invite the Treasurer to examine the matter further. Let him ascertain how many of those who to-day are making the social services contribution will, in the ordinary course of events, if the law as it now stands remains unchanged, become entitled to social service benefits with the present means test provisions operating.
I come now to the third test that I apply. I ignore indirect taxes so far as the detailed figures are concerned. The test which can be applied in order to determine whether the Government is taking more than a reasonable proportion for governmental expenditure is that proportion of the total national income which is. flowing through, governmental hands. I invite the: Treasures to produce figures which will pro..ve- that in the United. Kingdom and.. Kew Zealand an amount equivalent to approximately one-thir.d of the total, national income is devoted to governmental purposes as is the case in this country. Jin Australia, notwithstajiMliijg ‘the alleged, remissions of tiax.es, the’ quantum, of taxes, collected to-d;ay is. in excess of that collected during tha yeaj’s of the wai:,, when our wai: expenditure’ was at its peak. Oan the Treasure* claim, that in the United Kingdom or Kew Zealand approximately one-third of the national isncome is devoted to, governmental expenditures-? I am certain that he cannot produce such figures- in respect of Canada, the United States of America-, or South Africa..
– I shall. ha,ve inforrnabion preparod) for the honorable mem,ber.
– Perhaps- we shall then be able to exchange challenges.
Flie other matter which arises on this clause relates to rebates for medical and similar expenditure. I understand that some liberalization of the present conditions is proposed’. But I again raise with the committee the removal’ of the limit of the amount which may bc claimed by way of rebate where such expenditures have been properly incurred for medical, dental and similar services. We have pointed out in the past that those persons who- have the most serious illnesses, and consequently the heaviest expenditure, receive proportionately the lightest relief. If1 the expenditure of one’ year amountsto £50) the taxpayer receives a rebate on the total sum. But if’ one lias undergone one or more major operations, involving a long period of. hospital treatment, at a cost of £100- or more, one can obtain, a rebate in respect jc-f only £50’of that amount. With income tax at the existing high rates, the serious- illness of any member of a family, particularly one in the middle ranges of income, can be a disaster to the whole family. If- proper medical treatment has to be given after operations have been performed, the charge for hospital care is high. Many persons in the middle ranges of income, from £500 to £1,000 a year and even higher, have experienced the unhappy fate that one or more of the. members, of their families has had a serious- illness in the’ one year and they have been; unable to meet the expenses incurred.. ISTo. one would seriously suggest that any person incurs- heavy medical expenses- voluntarily; that, because’ a rebate is given, a. person would prolong, an. illness or undergo- a major operation involving heavy expenditure.. Hardship exists^, and it will- continue to exist as. long, as the- present provision ret mains, unaltered. If. the Gcovernment were returning to om citizens in the middle ranges of income a higher proportion, of their total’ incomes, instead of taking- from them; as- much, as it does by way of- income tax, it. would not be necessary to press this point.; but the- legislation; having become not merely- ar taxing instrument but also a social’ document; with all sorts of provisions to- meet the anomalies that arise, pressure- of the point is necessaa-y. I know of no* object bion. in principle to the proposal’ that I have’ made. The cost to; the revenue would be very small, and advantages would accrue to. those persons who. have nob merely- to’ undergo the pain and misfortune of a serious illness or operation; but also- to shoulder the very heavy- expenses that are associated’ with- it.
.- I have considered for a long time that the politics of this country in respect of income tax have become badly out of proportion. Elections may well be fought on principles of taxation or the expenditure of tax proceeds, but a bald statement in regard to a reduction of rates is a fatal ground on which to stage an electoral battle. From time to time, the honorable member for Fawkner (Mr. Holt.) has compared the tax laws of Australia with those of other countries, and has sought to show that Australia is the most heavily taxed country in the world. As he has been challenged and defeated in those fields, he has regularly shifted his ground”, until to-day he has resorted to. a comparison of countries that are not comparable. Having been shown, on perfectly legitimate grounds, that, the tax systems of the principal British countries which axe somewhat alike in character reflect in favour of this., country,, he has. sought to compare Australia, with the
United States of America and the Dominion of. Canada, in which the conditions are such as to allow of no comparison. In the United States of America, there is a direct income tax which, is fairly new in character. It was not possible of implementation until the American Constitution had been amended. There are other taxes, such as the federal income tax, the State taxes and tha city tax, which are sodiverse in character that they cannot be compared with income tax in Australia. They have all the ordinary taxes as we know them, and, in addition, other complicated and onerous: taxes, such as the general property tax, which are unknown in this country.’ The honorable member introduced this discussion to save face, but it has- not strengthened his. argument, and certainly hehas not proved that people in Australia are more heavily taxed than people elsewhere. As a matter of. fact, taxation systems in the United States of America are very much more complicated: than ours. In the House of Representatives, in the United States of America, a motion was tabled recently de- manding the introduction of a more simple system of taxation, just as the honorable member suggested here, but it was. done with more reason in the United States of America. We come back, therefore, to the question whether the Government is taking from the community more in taxes than is necessary. In order to decide this point, we. should examine, not the total national income, nor even. the quantum - to use the word which he loves so much - of revenue collected by the Government, but the incidence of taxation on each individual, having regard to his family responsibilities. We should then examine how revenue is expended. I believe that if. this is done, every honorable member will, be forced. to agree that present government expenditure is. fully justified. No one will suggest that existing social services are undesirable or unnecessary. In fact, they make possible a greater revenue return, because they represent latent purchasing power in the hands of the community. So far. as taxation is concerned, Australia cannot be compared in all particulars with any other country, but conditions here probably resemble more closely those in the. United Kingdom and in New Zealand. The position in. South Africa is different, because there the. economy of the country is dependent so largely upon mining,. and. much of the national revenue is derived from that source. Anexamination of the figures shows that in Australia taxpayers, in the lower and middle income ranges pay less per head to-day than they did. before the war in both Commonwealth and State taxes. This is true, despite the fact that very heavy expenditure was incurred for war purposes, and that social service benefits have been increased.
– Does the honorable member include indirect taxation when he makes that statement?
– No, that, is something completely different.I refer to income tax as- such. If the honorable member wishes to include indirect taxation we might. have a profitable discussion on that; also.. The honorable member forFawkner,, when a. Minister, introduced some valuable social services, and that is to his credit, but. they were financed by a. pay-roll tax, something, which is completely, bad in principle because among other faults it. penalizes the good employer of labour. The employer who pays the minimum, wage to his employeesis required to pay less- tax- than the employer who treats1 his workers well. During the life of. the lastParliament the honorable member, I believe, suggested that the pay-roll tax should be- increased in order to endow the first child under the child endowment scheme- As I’have said, those in, the lower and middle income groups pay less income tax now than they did before the war. Ifwe accept, the challenge of honorable members opposite, and separate social service contributions from income tax proper, the position in. regard to income tax, so far as the bulk of the population is concerned, is found to be. still more favorable. Honorable members opposite have repeatedly stated that any social services system should be contributory. We can fairly claim that this Government has granted greater exemptions than has any previous government.
– But the overall taxation is a great deal higher.
– That; does not enterinto the matter. There are more people: in employment to-day so that, although most of them individually are paying less than they used to, the total revenue is greater. There is nothing extraordinary in that. Before the war, 500,000’ men and women were out of work. Had they all been in employment, the total revenue collected would have been much greater. The real question is, how much tax does each citizen have to pay, and how does it affect his domestic budget? I maintain that, haying regard to its heavy commitments, and the expanded social services, this Government has done a remarkable job in reducing taxes by as much as has been done.
We frankly admit that, on the higher incomes, taxation is greater than ever before. If those in receipt of high incomes were not taxed- so heavily, they would make a greater demand on the limited quantity of commodities at present available. They would, of course, also stimulate the demand for luxury goods, something which should be encouraged only when the supply- of basic goods is assured. By improving social services, we fulfil a social need, and by increasing the general purchasing power of the community we also stimulate business. Every person whose pension has been increased from 21s. to £2 a week is able to buy more basic goods than he could before. This must necessarily stimulate industry, and this, in turn, will increase the national revenue.
At the present time, when government expenditure is high, we believe that taxes should be imposed first on those who suffer least by it, and social services should be provided for those who need them most, and who, by spending the money in their possession, will most benefit the community. I maintain that the Government’s approach to this matter has been eminently sensible and practical. The whole problem must be examined carefully in order to discover by how much taxation can properly be reduced. To talk about the national income, and the total volume of taxation returns, without considering the ordinary financial requirements of the Government, and the nation’s commitments in the way of social services, is to show a lack of appreciation of the fundamental issues involved.
– Last night, I directed the attention of the- Treasurer (Mr. Chifley) to certain matters in the hope that he would give consideration to a suggestion which I then put forward. However, as I have received from him no intimation that he proposes to do anything about it, I have prepared an amendment which, I think, will meet the situation. At any rate, it should provide the Treasurer with a basis for a further examination of the position. I move -
That, after paragraph (h) of the clause the following new paragraph be inserted: - ” (ha) by inserting after the first proviso of that paragraph the following further proviso: - ‘Provided further that, in the case of a female taxpayer whoso rate of remuneration is lower than that of a male taxpayer performing similar work, the rebate oE tax allowed under this paragraph shall be equal to the rebate which would be allowable had her rate of remuneration been the same as that of the male taxpayer: ‘: “.
As I intimated last night, women are limited, at least in the field of industry, to the earning of only a fixed proportion of the male rate of pay. Of course, the reason for this provision lies in the assumption that the male is the breadwinner for the family, and that on him devolves the responsibility for their sustenance. , Unhappily, it is true that in many instances the mother of a family, through widowhood or because of desertion, becomes the sole support of her children. I wish to point out how great are her difficulties in those circumstances, and under the further economic difficulty which she has to face under our present system. All my life I have wondered why the Holy Scriptures paid such attention to the widows of the community; but -having myself become a widow, I realize, as perhaps many others cannot who have not passed through that experience, the great difficulties encountered by any woman who has to make provision, either through the acceptance of a widow’s pension, or by her own efforts, for the material welfare of her children ; who must give them the guidance which she would normally be required to give as a mother, and in addition that guidance which the father would normally .give ; and who must give them that physical care necessary for their full development. Last night I cited the case of a Penvale school teacher, who is paid kiss than a male teacher similarly classified in the department, who pointed out that if the male officer were married and had two dependants’ he would bc in a position similar to her own in that she is a widow supporting two children. A man with two dependants normally would support a wife and one child and would, therefore, get a greater tax concession than the woman supporting two children. Yet, under our law, she is not permitted to receive the same remuneration as the man.. Not only has the married male teacher, or a person similarly circumstanced in another occupation, an- advantage hy way of income tax concession, he also enjoys the further advantage that one of his two dependants’ provides certain services in his home for which the woman either must .pay some one else or must herself exert a tremendous effort in addition to keeping on the work she has to do. That, of course, presents a great difficulty to her. I suggest that it is well within the capability of the Treasurer to meet this situation, partly, at any rate, through the income tax legislation. I know perfectly well all the demands that are made upon- the right honorable gentleman to meet this, that, o:- the other situation; but, as was pointed out ‘by the honorable member for Fawkner (Mr. Holt) in connexion with concessions relating to medical expenses, the sum total of a concession such as this’ should not be very great. To each individual concerned, however, it would represent quite a considerable amount. After all, if this woman were to relinquish her employment and accept instead the widow’s pension, as would be her normal right, the charge upon the Treasury would be very much greater than the granting of such a concession as I have suggested. I commend the case to the Treasurer, and hope that he will give it his earnest attention. I believe it will’ at least have his sympathetic consideration.
– I have already given some consideration to the matter raised by the honorable member for Darwin (Dame Enid Lyons) since she spoke about it last night. I regret to say that her proposal is impracticable.
The rates fixed must have general application. If special rates were fixed forwidows with dependants it would become necessary to fix similar rates for widowers with dependants. I regret that I am unable to accept the honorable member’s suggestion. When I looked at it last night I was amazed that she should, think that I was likely to accept it.
– Will the right honorable gentleman consider granting concessions to such widows?
– Tha t is a different matter. I regret that I am unable to do what the honorable member wishes.
.- The clause with which the committee is now dealing is designed to effect certain amendments of the rebate system, particularly as applied under section 160 of the principal act. In general, I agree with the Treasurer (Mr. Chifley)- that the clause effects some desirable improvements; but there is one further amendment which also has relation to section 160 of the act which the Government might well have considered. I refer to rebates on gifts made for the relief of our kinsmen in Great Britain. To-day the people of Great Britain are in distress and a number of public institutions’ and organizations in this country are doing their best to obtain funds to relieve that distress. One of these institutions, the Australian Bed Cross Society, is placed at an advantage by comparison with others in that gifts made to the society are subject to rebate of tax under section 160. Donations made to the fund conducted by the Lord Mayor of Melbourne and to other funds established for similar purpose are not subject to rebates. Some time ago, I raised in the Parliament the question of admitting such gifts to the income tax concessions group, and on the 30th April last the Treasurer sent me a letter which reads, inter alia -
As you arc aware, there is no’ provision in the law under which the desired concession may be provided. An amendment of the Income Tax Assessment Act, involving an extension for the ‘concessional allowances for gifts, would., therefore, be necessary to enable the concession to be granted. It is impracticable for the Government to adopt this course, however, owing to the serious difficulties which stand in the way.
Theright ‘honorable . gentleman then proceeded to. enumerate the difficulties.Itis ou this particular point that I should like to make a few observations. The letter continues -
Foremost among these difficulties is -the fact that the provision of the concession would involve the ..departure “from . a long established principle ‘of . taxation. This principle is . that, to the extent that concessions are provided for gifts, they should be restricted to gifts for application to specified ‘public ‘purposes within Australia. The desirability . of strict adherence to this principle is evidenced, firstly, by thef act that the principle has . been observed by successive -governments in . Australia irrespective of . their political views, . and, secondly, by the fact that no other country, as far as I am aware, iprovides income tax concessions in respect of gifts . for application outside the country concerned.
What taxation principle is involved’? Surely it is merely a question of the opinion of the rgovernment concerned . as to whether taxes . should be applied for purposes wifh’in or without the country. There are many cases in which ‘taxes applied in this country are utilized abroad. Our contributions to Unrra represent . a case in point. There ls no hard . and fast principle in ‘this ‘matter. We are dealing Tw’i’th ‘a situation to-day which nas never ‘previously arisen in the history of Australia. It is mot asthough we were contemplating -sending money to -a foreign country devastated ‘by “an earthquake, a famine, -or vby warfare ‘or some -ofher calamity, to -a country which, hasno direct relation to ourselves, either materially or of *blood. “We -are sending help to ‘a . country ‘to which we owe -our very security and . a great deal o’f our prosperity. I ‘ask ‘the Treasurer why, in this -case, ‘he –wi’ll not consent to an amendment, to meet this extraordinary situation ‘which exists to-xlay and which may continue to exist for some months to come. T see no difficulty in the way ‘df ‘principle. It is apparent that the ‘Government has decided that it does not want to accept my suggestion and . that it is resolved not ito dosso. What I ask would not involve verymuch-.; the Government -would not lose a large sum ‘of money if my proposal were agreed to. Thegreater proportion of these . gifts is contributed by individuals in the . community and the -amount of tax due in respect of the gifts would represent probably only a small proportion of the tax imposed’ -on their indicvidual (incomes. Further, the acceptance of my -suggestion would -encourage donors to increase their contributions to this worthy cause. I vf’eel sure fthat my -proposal has ‘the support, not only of members -on this side of the chamber; but also of many honorable’ members opposite. I trust that ‘before very long the ^Government will . review its decision . and . grant this small iaillev’iation of tax.
.- I . should like . an -opportunity to 3;eply to car-tain statements made by . the Treasurer . (Mr. Chifley.) and other honorable members, I do not suggest that in presenting his comparative . statement of the taxes levied in Australia, New /Zealand . and the -United Kingdom, tthe Treasurer intended to mislead the committee.; but I ‘do. . say that the right honorablegentleman did not give the whole -f acts -which were available. In my earlier . remarks I traversed what had been ; done in the m atter of tax reductions by- the Canadian Finance Minister, Mr. Abbott, only as recently . as the 30th A;pril last. In making his comparison between the . differing . taxes imposed “in Australia, New Zealand , and the <United Kingdom, the Treasurer sought to . show that the . Australian taxpayers enjoyed an advantage . over those -in ‘.New , -Zealana and the United . Kingdom. The figures . submitted by the right honorable gentleman might Jlead ‘the Parliament and the taxpayers ito fbelieve ithat Australians had reason to be . grateful ibr . the comparatively low -rates . of taxes . supposedly levied in this (country. . 1 showed in . my . earlier speech that . the taxes . collected in panada represent approximately . only one-half of those obtaining in Australia.
Mr.Chifley.- Upon ‘what ‘information does the honor able xmember base that assertion.?
Mr.ANTHONY.-On the speechof the. Canadian Finance Minister, made in theCanadian Parliamenton tthe30th April last,a copyof which I have inmy possession.
Mr.Chifley.- Did the Canadian Finance “Minister make any reference ‘to taxesimposed by the ‘provincial governments’?
– Yes. The Treasurer charged -me with having submitted an unfair argument. Ilimited my comparison to ‘the rates applicable in ‘the United -Kingdom ‘and Australia because those two countries have an identical system of taxation, neither having ‘to consider taxes imposed by provincial governments. It wasa levy by the central government on all the taxpayers. The Prime Minister said in reply to my argument, “ You cannot say that of Canada and, therefore, you cannot make a basis of comparison “, but I point out that the Minister for Finance inCanada said -
If six of the provinces are included in . the uniform taxation scheme and if the three remaining provinces ‘entered -into -the ‘tax . agreements effective “this . year federal expenditures would be increased by an additional £33,846,153.
Six of the provinces -are included in this over-all tax, and if the remaining three were included, it would increase ‘the central government’s expenditure by about £33,00q,000. I point ‘ out to the Treasurer that the surplus budgeted . for by the Canadian Minister for’’ Finance on the basis of : the reduced . taxation is £58,000,000.If -allowance is made for the other three provinces : on the basis of a uniform tax, the surplus ‘is about £25,000,000. That is the answer ‘to the statement that Australianincome tax is comparatively low. The Minister for Financein Canada made this potent statement in his budget speech -
I hopeit -will . be a -cause -of gratification . and confidenceto . members . of this House and ‘to all Canadians that we are able to drop the tax on gasoline and make . very ‘substantial reductions.
Canada has dropped the -petrol tax, but in Australia the tax on petrol is. about lO.d. a gallon.
Mr.Chifley. - Does the honorable member mean by ‘“‘dropped’” abolished -or reduced’?
– Abolished, apparently. I am giving the exact text of ‘the speech and I interpret it as -meaning that the tax on petrol has been abolished. Therefore, when comparisons are made, they should he made on the basis of all the dominions ; but I leave South Africa out laltogether because I have no figures relating . to that dominion. The fact that ‘in countries under socialist governments-
TheCHAIRMAN(Mr. Clark).Order’! ‘The honorable member is not discussing the clause, which deals with concessional rebates.
– I am discussing the tax levied on a -man with -a wife and two children and the rebate for depend’ants. The honorable member for Perth (Mr. Burke), -whom I am about to reply to, made a long speech that did ‘not once touch upon-
TheCHAIRMAN.- Order ! I will not -allow the -honorable member to make a speech on this clause that he could have made on the financial statement -of the Treasurer.
– The honora’ble member for Perth did.
– Order! If the honorable member disobeys my ruling, T will ask him to resume his seat.
– I will resume my seat. if . I -am not given treatment equal to that given to Government ‘supporters. .
– The honorahle member must (withdraw ; and apologize.
– I withdraw and apologize if that is your desire, but if that is the way ithe Chair intends . to treat honorable members -on thisside-
– Order !Iask the honorable member to resume his seat. The honorahle member has lost his temper, hut I will -overlook it on this occasion.
-i rise to order, lt has been customary to allow honorable members on one side to answer an argument developed by an honorable member on the other side. That inalienable fight of honorable members has always “been . observed by the Chair. Your ruling is a departure from that custom when -you permit an honorable member on one side to make statements and refuse honorable . members on this side permission to reply.
– Order! I have been absent from the Chair for about half an hour and I . have no knowledge of speeches made in that time. I have allowed the honorable member for Richmond considerable latitude. I consider thathis speech was wide of the clause before the committee, and I will not permit him to proceed further at this stage.
– Speaking to the point of order, Mr. Chairman. My speech was interrupted by your ruling, hut I was about to reply to -statements made by the honorable member for Perth that were broadcast. Honorable mem- mers on this side are entitled to correct what they consider is incorrect.
– Order ! There is no point of order. The Chair has ruled against the honorable member. If he disagrees with my ruling he knows the procedure to follow.
– May I have leave to continue ray remarks ?
– Not on the lines the honorable member was following.
Clause agreed to.
Clause 25 -
Section one hundred ‘and sixty aa of the Principal Act is amended by inserting after the word “mining”’ (twice* occurring) the words “ or prospecting “. flection proposed to bc amended - I.OOaa. - (!.) Where « taxpayer lias, in the year of income, paid vails on shares owned by him in- a mining eo-mpnmy or syndicate carrying on mining operations in Australia for gold, silver, base metals, rare minerals or oil, or in amy company carrying on afforestation in Australia as its principal business (not being calls which are allowable deductions under this Act), he shall be entitled to a rebate in fcts assessment of the . amount obtained by applying to the amount of the calls (nol exceeding the amount of the tamable income of the year of income) a rate equivalent to - (a.) where the taxpayer is nol a. company - one-third of the rate of taa; appropriate to a tamable income from personal exertion equal to the taxable income of the taxpayer; or
where the taxpayer is a company - one-third of the rate of tax payable by eompanies for the year of taa.
.- This clause amends section 160aa of the principal, act. which provides for the allowance of a rebate in respect of calls paid on shares in a mining company or syndicate carrying on mining operations in Australia for gold, silver, base metals, rare minerals or oil, or in any company carrying on afforestation in Australia asits principal business. The amendment extends the concession to shareholders in prospecting companies. I should like toknow whether it is possible to extend it to shareholders in companies engaged in. prospecting for water.
Mi-. BOWDEN!- Yes. The ‘ section, deals with natural resources of which water is one. I have in mind certain engineering companies already formed orin process of formation that hope to tapsubterranean waters in Australia and possibly water the deserts, because water runs underneath the soil as well as on the surface.
– A, long way down.
– That does not matter. It can be brought to the surface. Water is a natural resource that is probably much more valuable to Australia if used in the proper places, than all the base metal that may be discovered. It would be a simple matter to insert a provision covering calls on shares held in such companies. I think the Treasurer (Mr. Chifley) need have no fear that that concession would get out of hand or be the subject of claims by people not, entitled to it. No one would incur the risk of losing capital merely to bore holes all over the country in places where there is no likelihood of striking water merely to . obtain a rebate of tax. The only claims that would be lodged would be legitimate. 1 do not think that the country’s finances would be jeopardized by that concession. I should like to know whether I need to move an amendment.
– It is an . amazing suggestion. I may think about it while we are at dinner.
– It is a good suggestion. I will move an amendment if necessary. Do I need to, Mr. Chairman ?
– If the honorable member decides to move an amendment, he must put it in. writing.
– I move-
That the following new paragraph be added to the clause: - “ (6) by omitting the words ‘or oil’ and inserting in their stead the words ‘oil or water’.
Sitting suspended from 6 to 8 p.m.:
– Australians, generally, know that very ‘ large tracts of country in central Australia are barren wastes because of the lack of water. The Government freely offers tax concessions to those who prospect for gold, silver, base metals, rare minerals or oil. In certain parts of Australia, water would be much more valuable than any one or all of those minerals and oil. I have not submitted this amendment facetiously, although certain honorable members appear to think that I was trying to be humorous in doing so. I know of a company of engineers interested in prospecting for water in Central Australia. They claim that they have already established that Cooper’s Creek and other streams, which ran freely 50 or 100 years ago and which are now silted up as the result of wind erosion, are still running underneath the surface of the earth. If they could be tapped by artesian boring and the water raised to the surface in those barren areas where no human being can now subsist, Australia could support a larger population, which would be distributed throughout the length and breadth of the country. Under existing conditions, the people are confined to the coastal fringe. I submit this amendment in the sure knowledge that it will not, make any demands on the Treasury. People who are altruistic enough to expend their money in the search for water will not waste it on boring holes in the hope that they will receive a tax concession. The money will be expended for the purpose of finding water, and only when boring operations are unsuccessful will the company possibly ask for this concession. I am being frank with the Treasurer when I say that I have been requested to submit this proposal to him, because certain people are interested in the matter. The request is simple. Prospecting for oil is no different from prospecting for water, unless we believe that oil is much more valuable than water. I submit that it is not. In these circumstances, water would be more valuable than all the minerals which I mentioned and oil. I hope that the Treasurer will accept the amendment.
– As I promised, I have examined this matter, but I am not, able to accept the amendment. I have not been able to discover any instances of companies which are engaged in prospecting for water other than those which hire on their plant for sinking wells or constructing dams, and some large manufacturing organizations which make provision for their own supplies of water on their own properties. Primary producers who expend money on providing water are adequately covered, first, by the depreciation provisions’ of the taxation law and, secondly, by the amendments contained in this bill. I mentioned this afternoon that money which a primary producer expends on unsuccessful bores is an allow - able deduction. In this instance, primary producers in the position which the honorable member for Gippsland (Mr. Bowden) described, are adequately covered. I am not able to visualize an ‘ organization prospecting for water for purely altruistic reasons. As I study this proposal, oil and water will not mix. The honorable member has selected a bad combination. However, that is not the reason why I am unable to accept the amendment. Perhaps there are some aspects which I have not had an opportunity to examine. I congratulate the honorable member on having made a completely original proposal, but the most I can say now is that I shall ascertain whether there is any justification for giving to the proposal favorable consideration.
.- I support the amendment. I appreciate the assurance which the Treasurer (Mr. Chifley) has given, that if any new factors can be adduced in favour of the amendment, he will re-examine the proposal. However, the attitude which he has adopted is rather narrow. On the eastern coast of Australia, there are extensive water-bearing areas in the sand beds. A good deal of discussion has taken place recently in the Newcastle and lower New England area regarding the use of the water in the Tomago sand beds. The word “ Tomago “ is becoming well known throughout Australia as the result of the fight to secure for Samuel Courtauld and Company (Australia) Proprietary Limited the right to use water from the
Tomago, sands, which are under the. jurisdiction of the Hunter District Water Board. However, the Tomago sand’s are not rare. Similar; sandbeds exist over much of. the- eastern coast; of Australia. Artesian water engineers state that two-fifths of: the total rain that falls on these sandbeds is trapped by the impervious clays beneath the sandbeds, is held there, and forms a reservoir.. There is a. tremendous scope for the development of. these areas.. Yesterday, I read the latest- issue of: SouthWest Pacific. It contains- some glorious photographs’ of. the extensive underground lakes which exist; beneath, the limestone of the Great Australian. Desert, particularly the Eucla artesian basin adjacent to the Great Australian. Bight. There; there is tremendous- scope, for. the development of. water both for irrigation, and for general purposes.
There are two theories: in: geology about artesian: waters in. Australia. The: theory advanced by the late Erofessor Baldwin-Spencer is based: on. the plu tonic origin of water. According to this view, the waiter is driven up, apparently through; tha pressure of the rocks; no one: quite understands how that occurs. The. second theory is- that advanced by the late Professor Sir Edgeworth David with regard to- the- intake of the waterbeds’ on the western slopes of the Dividing’ Range. In addition to- that is the intake of water into places like the limestone formations in the Great Australian Desert. Just as engineers- have shown that two-fifths of the rain which, is- precipitated on. the sandbed areas is trapped, so a tremendous quantity of. the rain which falls on these limestone areas throughout Australia, admittedly- at infrequent periods, but floods do occur there, is trapped and retained. in enormous underground lakes. No other country has so much underground wateras Australia- probably has-. No company has approached me to support the. amendment, submitted by the; honorable mem: bar for Gippsland, and I am not associated with any organization, interested in artesian boring. However; I have’ some knowledge- of the methods which the company that: the honorable member for Gippsland mentioned, proposes:’ to use.
Thisorganization operates- the Raineysys- tem of boring in. Australia f or the Rainey Corporation of the United States of America. The method is to- sink a shaft, and then put out radial horizontal drills in a star- shape to trap the wholeof the waters in the beds’ in the area, and raise a much larger quantity of water than can be obtained by putting down a vertical shaft. Therefore; I suggest to the Treasurer that, whilst’ oil and water-will not mix; an excellent case has been adduced for reexamining the amendment. Any company which proposes to prospect for water in the barren areas of central Australia deserves every possible encouragement.
Clause agreed, to.
Clause 26 agreed to.
The Principal. Act is amended, by inserting after PartIIIa. the. following Part: - “ Part IIIb. - Relief from Double Taxation. “160f. - (1.) In this. Part, unless the contrary intention appears -
– Proposed new. section 160k relates- to the ascertainment’ of Australian tax: on dividends-.. This: provision enables- honorable members to emphasize the necessity for, a. simplification of income tax assessment’s. This; proposed new -section contains no fewer than 27 provisions which set out: the- method to be applied for1 the ascertainment; of Australian tax on dividends”. The widespread demand for. a further simplification of assessments may well be understood, when we consider the complexity of this- proposed new section. The Treasurer (Mr. Chifley) would grasp the opportunity to simplify assessments if he considered that the general community would obtain some relief from it. The task is one of considerable magnitude. By addressing questions to the Treasurer; we have ascertained’ that assessments: for business’, and even private individuals; have been delayed for. two or three years. A few days ago, the Treasurer told me that the reason for the delay was the shortage- of staff” -in the Taxation Department. I am rather interested in that, because I’ have been informed: that- &: departmental’ committee was’ appointed recently to. investigate ‘the advisability iof reducing -the number ofreturns submitted to tbe department, with particular reference to . tbe elimination, if possible; of returns -Jrcm persons in the lower income . groups. As ‘the result . of those investigations, a recommendation was made to “the effect ‘.that no -returns should be required from, first, . married persons ‘with incomes less -than£ 300 a year, -and secondly, . single persons receiving less than £150 a year. If something of the land could be . adopted, I am sure that . it . would have beneficial . results, f understand that the officers who made the investigation considered that if their proposals were adopted a saving of at least 1:5 per cent, could be made in staff forthwith, and that, -when the system was in full operation, the saving would be as much . as -25 per -cent. The recommendation was -not approved for the Teason, I am . inf ormed, that it would mean a substantial -.retrenchment of . staff in the Taxation ^Department, . which the ‘Government would not contemplate. That appears ‘to : me to be quite contrary to the opinion expressed in a ‘reply given -to me by the Treasurer recently to ithe effect that there was not ‘Sufficient staff available in the Taxation Department to do all the work required.
– Order ! I direct the attention of the honorable member to the fact that this clause deals only with double ta-xation.
– I am aware of that fact. Because there is need for a simplification of taxation -forms in this connexion as well as generally ~L submit that T am ‘in order in discussing the subject.
Mr.Chifley. - The clause really embodies . the provisions of an agreement between the Governments of the United Kingdom . and Australia ‘in . relation to double taxation.
– I appreciate that fact, rand . 1 am -putting . the ‘.case for . a simplification -of the returns that -are necessary Jin ‘that connexion. All . the forms which -taxpayers : are required to furnish . are -far more icomplex Ithan is . desirable, jand I ask ‘that something be done to simplify them -whether -they relate ‘to double taxation or (otherwise. >I : should like the ‘Treasurer to give jme -some iinfor- mation about the investigation which,I understand, has been made with the particular object of . Tendering it luamecessary for certain taxpayers in -the . lower income groups to jsuhmit . returns-
The Treasurer has addressed two letters to me recently on the . subject of difficulties arising from tbe complicated returns taxpayers are required to furnish. One of these read, in part, as follows: -
The Commissioner informs -mc -that it is not the practice . to subject to provisional tax any part of the remuneration received in the circumstances described by ‘Mr. Paterson, and that the assessment issued “was -not in accordance with . that -practice.
The Commissioner also informs me that a notice of amended assessment and a cheque in refund of the amount overpaid will be forwarded to Mr. ‘Paterson by the Deputy Commissioner of ‘Taxation a;t Sydney at an early date.
A returned soldier of whom I have some knowledge has also found difficulty with his -returns.
– The honorable member is again a little wide of the clause.
– My purpose in referring to these matters is to indicate that ; some -degree of chaos must exist even ‘.within the Taxation . Department, because it -would appear that some of the officers -do not clearly understand the provisions of the -act. ‘Very many taxpayers withhold from lodging complaints in respect of their assessments because they find it so difficult to understand the details of the matters involved. This is not surprising . seeing that some of the taxation officers, themselves are also in doubt as to the real import of the law. If people who . consider that they have been over-assessed do not apply for refunds they can be sure -that -no ‘.refunds will be made in their cases, because errors in the department . are not likely to be discovered unless, by some means, the particular . assessments come to the notice of high-rrankiiig officials. I consider it necessary to direct attention to the ‘.need to simplify the returns. If a recommendation -such as that ito ‘which I referred earlier has (been made, I -should like to know . why it -was mo.t adopted, particularly as ft jam unformed that Ithe result would -be an : immediate saving -of 15 iper cent, . and : an ultimate . savingof -25 ?per cent, in staff. The fact that such a recommendation could be made seems to indicate that the department is overstaffed and not understaffed. At any rate, it is quite obvious that if the taxation forms w ere simplified the staff could ‘be reduced.
– I ask the Treasurer (Mr. Chifley) to give me some information concerning the amount of tax that a singer like John ‘ Charles Thomas, who is at present visiting Australia, would be called upon to pay if lie earned, say, £10,000 while he was in this country. It is highly desirable that everything possible should be done to encourage first-class musicians and artists to visit Australia so that our people may obtain some entertainment apart from films, which, at times, can be very boring. Information of the kind T am seeking would be invaluable in helping artists to make up their mind whether it would be worth while to visit Australia or not.
– The matters referred to by the honorable member for Wentworth (Mr. Harrison) are under constant examination by officers of The Treasury and, particularly, of th, Taxation Department. Speaking for myself, I have considerable misgivings about, leaving people to decide for themselveswhether they should furnish a taxation return or not. I am also dubious abour, any measures that might leave the way open for tax evasions.
The matter mentioned by the honorable member for Wimmera. (Mr. Turnbull) has been the subject of investigation, but it would take a considerable time for me to place all the details before honorable members. Representations on the subject were made to me by Mr. E. J. Tait, and all the relevant provisions of the law were set out exhaustively for his benefit, and for that of other theatrical entrepreneurs. I shall be pleased to show the honorable member for Wimmera a copy of the statement that was prepared.’
As a matter of fact, the speeches of both the honorable gentlemen to whom I have referred had nothing to do with The provisions of clause 27, which deals exclusively with the agreement reached between .the Governments of the United
Kingdom and Australia on double taxation. The amendments, proposed in the clause are intended to bring our taxing legislation into conformity, in certain respects, with the terms of that agreement. The agreement was reached only after the most thorough investigations. Expert taxation officers of the United Kingdom and Australia have spent a great deal of time on this subject, which was also taken up in Great Britain by the High Commissioner for Australia, Mr. Beasley, and the Attorney-General (Dr. Evatt). The negotiations did not seem to be proceeding very rapidly, so, when 1 was in England, I took up the subject, in company with the Attorney-General, on the highest plane, and, as a result of our discussions, an agreement was reached with Dr. Dalton, the Chancellor of the British Exchequer. I do not pretend that either Goverment considers the agreement’ to be perfect, for the subject is extremely complex ; but an understanding has been reached and, so far as is necessary, the terms of the agreement are being incorporated in our Income Tax Assessment Act by means of the provisions contained in this clause. . The agreement’ must be described as a compromise, but 1 have reason to believe that it is regarded as affording relief to financiers in the United Kingdom who propose to invest in industries in this country.
– Will a similar agreement, be made with the United States of America t
– That matter has been mentioned to me through the American legation in Canberra, but not on a governmental basis. A tentative approach was made through the .legation on behalf of certain American business interests. It may be that, later on, the subject will be taken up on a governmental basis. A somewhat similar agreement may possibly then be made with, the United States. When Mr. Walter Nash, Finance Minister of the Government of New Zealand, was in Australia, not long ago, he discussed with me the possibility of making an agreement on the subject with the Government of New Zealand. I do not suggest that complexities would have to be considered in relation to an agreement between Australia and New Zealand, such as those which had
*o be faced in the discussions with the United Kingdom. There would be much simpler issues in an arrangement between New Zealand and ourselves, but I believe that there would be great difficulties in many respects in an agreement with the United States of America. As Australia is a young nation, and it is considered that many American industries will be establishing subsidiaries here, we shall certainly give favorable consideration to the making of an agreement with the United States of America. The Leader of the Australian Country party (Mr. Fadden) knows from experience that the matter of double taxation has proved very difficult. I am not attempting to blame anybody for not having reached an agreement upon it, because of the great difficulty of making one even when taxation in other countries was not so heavy as it is now. I rose merely to make it clear that the clause has no relation to some of the other matters that have been raised, but is designed entirely’ to enable the agreement to operate in relation to the principal act.
.- I seek a little further clarification of the fla use. It is headed “Relief from double taxation “, and contains many proposed new sections. According to my reading, it will ultimately, if not immediately oh the passage of the bill, relieve companies, if not, individuals, of double tax. Insofar as it, does that, there is wisdom in ‘the proposal. Encouragement will be . given to British industries to commence operations in Australia, because they will not be taxed in two places. I should like to be clear in that regard, as well as in regard to the effect on the individual, because there is a good deal of point in the matter that has been raised by the honorable member for Wimmera (Mr. Turnbull), who has asked for an explanation of the position of artists. We know that to-day Australia does not get its fair quota: of artists and members of the legitimate stage. Australians find that if they. wish to follow a stage career they have to go -abroad, and it is quite unfair that they should be required to pay income tax in two countries. This anomalous position has arisen because that is the case. A Hollywood film star receives a colossal income.
I would not say. that it is earned in every instance. I believe that Sinatra has an income greater than that of the President of the United States of America, and so have Laurel and Hardy, the reason being that, the making of films is concentrated in a few centres, and they are circulated throughout the world, paying no more than a nominal rate of duty when they enter a country.
– Order ! The honorable member is straying from the clause.
– I am sorry that the Chair cannot see the point that I am making.
The- CHAIRMAN. - Order ! The honorable member must make no reflection on the Chair. The clause refers to an agreement between the Governments of the United Kingdom and Australia in respect of double taxation, and the honorable member must confine his remarks to that subject or resume hi? seat.
– I consider that I have the right to state ray case in my own way. An English film artist pays no income tax in Australia ; but a member of the legitimate stage or a singer who caine to this country would-be required to do so. I believe the intention of the Treasurer (Mr. Chifley)- to be to remove an anomaly. He has not made clear to me whether that purpose will be effected. He was asked a question about an American artist. Will the agreement operate in respect of a company and an individual when the bill becomes law?
– Yes, it will cover the whole field.
Clause agreed to.
Clause 28 agreed to.
Clause 29 (Deduction by employer from salaries and wages).
– This clause deals with the salary or wages paid in respect of any piece-work performed by an employee, or any services rendered under a contract which is wholly or substantially for the labour of the employee. It is rather tricky from the point of view of the employer. This is another excellent illustration of the desire of the Government that every- taxpayer snail become’ a> tax collector for the Commonwealth Treasury. It is- not the. function of any man: who. lets a contract! for. a. lump– sum, to police, payment of faxes* that’ are. due to the. Government: Furthermore, the statement that it- is “ substantially for the labour of the employee “ automatically admits- that?, a certain* amount may not be for wages but maybe, in respect’ of materials supplied. It would not be for the employee in that case to. say whether the man concerned was even making fair wages. When, a man undertakes to do certain work on contract,, he runs risks, r have had1 some experience in that respect. The employer,, or the man who arranges for” the contract price, should not be obliged t’o make tax deductions and supply wage stamps in connexion with piece-work, and especially contracts. That is asking too much. Tlie compilation of tax sheets, and’ the rendering of them at the; end’ of each year; require the use of a’ rather’ complicated piece of clerical machinery. Many persons find that? they have- much clerical work to- do apart from their normal’ f arming and Business operations. We’ are reaching- the stage- at which some check ought” to< be placed on the extent- to- which private persons should’ be asked to do this sort of work, without payment, for the- Commonwealth Treasury. The- filling in of forms’ of various sorts- is becoming almost a1 disease in Australia-. During the war; the people were prepared: to put up’ with that- sort of thing, and- to accept itf as* a- burden’ that was inseparable from the prosecution’ of the war: With the cessation- of fighting’ more’ than two years behind us, many persons consider that quite a few of the restrictions. should be lifted, and that the placing, of responsibility for this sort, of thing on the average’ taxpayer should cease. I know that it is useless to* ask the Treasurer to ag<ree to an amendment, Because’ his Bills, although’ they do not- become law until they pass, the- Parliament and receive the royal assent, are; like- the’ laws* of the Medes- and Persians; not to be called’ in question iki any shape- or form-.. I should like the’ right honorable gentleman to- explain why it is necessary; under,- present conditions;. tO’ make- every employer, or every, person who lets a- contract practi- cally a. policing authority for the Commonwealth. Taxation’ Department.
.- The matter with which the clause deal’s, and to which the honorable member for Barker (Mr. Archie Cameron) ha’s referred,, is concerned1 with the principle’ of the pay-as-you-earn system,, and tlie collection of income tax by instalments:. -I believe that collection by instalments from wage and salary earners was introduced under the auspices of the Leader, of the. Australian Country party Q/Lr. Fadden),, or while he was a Minister ; because,, as tax rates crept” up, particularly in relation to individual’s, it .was considered’ that many persons would experience considerable difficulty in meeting their income tax assessments if they were presented at the end of the year.,, and’ that it was far more satisfactory to wage and’ salary earners to have, deductions- made from their incomes, periodically. The deductions, may not be the precise amount for which they are liable - they may be more or less - but ali least the taxpayers are relieved of the difficulty of discharging a big liability at’ the end’ of the-, year. I may say in passings tha* some employers, have spoken- to me about the- need, for.’ greater accuracy in the calculation of the deductions that should be made., Some employees find: at the. end of the year that, for various reasons;, the deductions have not been sufficient, to meet the amount’ of the assessment,, whilst in other instances the total deductions exceed’ the assessment and refunds have to be made.-. The: United Kingdom has adopted a- system under which the employer becomes the: assessor from month) to month. That places* a tremendous amount of- work upon him. In conversation with the representatives! of one> employer/ not! long; ago,- 1! pointed- out, that some.’ of the difficulty might be: overcome if ai measure- could be introduced providing, that- the employer should’ be the assesson, something along the lines of the- , system, in- the United Kingdom-. One of the reasons; for, our not having attempted: to- adopt such a proposal was that in, war-time much man-power would’ have? .been, needed, and- an unjust burden would have.’ been, placed om the employer: The provision in the billwas made . necessary by tbe; fact thalv under1 tbe instalment’, plan, we have called’ npoir farmers- and’ othersi engaging labour’ to- make . tax- deductions f rom> the pajyanents’tbey have made, particularly, in connexion with piece-work.. I understand that, the matter- waa brought: to a head because, . an-, employee of a. gentleman named Broome bad’ been engaged, in. the picking–of onions a>t piece-woiib xates. A dispute’ arose,, because . it was claimedt that in the circumstances the ‘employer, should liothave’toKJoll’ect the tax- instalments. The case went to the High- ‘Count of Australia. I believe that it is- known, as- JUroome v. QfocriQiweth, Ghenoweth. being the Deputy Commissioner of Taxation, in- “Victoria. The court ruled that the employee received a salary or wage because he was employed at piece-work rates, but that his employment did’ not have any relation to a period of time. I believe that all’ honorable members agreed that tax deductions should be made from . wages or salaries wherever that was possible. That general principle having been agreed to, there cannot very well be an avoidance of its a pplication to cases such as this.
– The explanation of the Treasurer (Mr. Chifley) ha:s not thrown a great deal of light on the matter. The right honorable gentleman has assumed tha* every honorable member on this- side of the- chamber was in favour of the payasyouearn. system. The records will dis- close- that I had quite a lot to say against that proposal when it came before the Parliament..
Mr.Chifley. - Not in. regard to the principle.
– Yes, the whole show.
– We supported the principle,, but not the scheme propounded by the present Government.
– I put it to the right honorable gentleman that, in relation to contracts, the time factor does not. enter into- the matter, except: in those very odd instances, in which a time limit, may be imposed on a man. for the completion of a contract.
Mr.Chifley. - This applies to work at piece-work rates.
– The clause- definitely mentions the word “ contract “.. It. is well! that we should stack to the language of the bill; because it is on that, language- . that, any poor devil who goes’ before . the; -court will be condemned,. not on what we- think it ought to be:. The . clause reads; “in respect of any services rendered under a-, -contract which is- wholly or -substantially for the labour- of the employee “. A man may take a -contract for, fencing, or clearing land, or: sinking, wells, or making dams. Whale doing- ‘Mie work he- may be separated by a. great: ‘distance from his. employer, who> will, not know hy just how many weeks, he should divide- the contract price in> order- te arrive at : » figure from which to make weekly tax deductions. The Treasurer- said that; in some instances, it might turn out that too much would be deducted. That is one of the GOmiplaintB- 1 have against the income tax administration. Many people have complained to me that they are unable to get . squared up in regard1 to their annual assessments! It may be that at the end of the year, they have a credit with the department, but they are unable to get, the money refunded. If a man owes something to the Taxation Department, and does- not pay on the due date, he is Sable tar certain penalties. In the same way, if the- department owes a taxpayer money, and refuses to refund the amount within 30 days, it should be subject to the same penalties. There appears to-be one law for the. poor devil who pays the tax, and another for the Taxation. Department,, from the decisions- of which there is no appeal. It often happens that the taxpayer,, to whom the department owes money, is -working on an overdraft on which he must pay interest from day to d:ay; but no amount of writing or interviewing oan get from the department the money it owes- him. A man might as well go to Moscow and try to get an audience with; “ Joe “ Stalin, as to get an interview with any of the chief officials of the Taxation Department,, unless he is: a member, of Parliament, and. even then he will, have to spend five minutes explaining who he is.
Some time ago,. I asked a question on notice in- an endeavour to. find out. in how many instances money was> held by the
Treasury on behalf of taxpayers, but the Lord only knows when I shall get a reply. When I spoke last year about the delay in issuing assessments, I was told by the Treasurer to supply a list of those who had not received an assessment for three years. I am not going to do it, because t hat is a matter for the taxation authorities. However, I know of cases in which no assessment was issued for two years, and then it was eventually found that £100 had to be knocked off the assessment. I know wage-earners who have not had a settlement with the department for two years, although they have written asking for a refund of the money due to them. Of course, the department handles over £100,000,000 a year, and -officials may believe that it is a small matter that a “ fiver “ or a “ tenner “ should be owing to this taxpayer or that. Those are small amounts in the total -accounts of the department, but to the poor fellows to whom the money is owed they may mean a good deal. Therefore, it is high time the department was forced to make prompt settlement in cases where it owes money to taxpayers. It cannot claim ignorance of the fact that the “money is owing because it sends out notices to taxpayers stating the position. The taxpayer is just as much entitled to the money due to him at the end of 30 days as the department is entitled to the money clue to it, but in this instance what is sauce for the goose does not appear to be sauce for the gander.
– I deprecate the attitude of the honorable member for Barker (Mr. Archie Cameron) and other honorable members who spend much of their time attempting to discredit public servants who have “been rendering good service to the country under difficult conditions. It seems to be the desire of some to blackguard these officials. As Treasurer, I say that these men gave magnificent service to the country during the period of the war, as can be vouched for by. other honorable members, such as the Leader of the Opposition (Mr. Menzies) and the Leader of the Australian Country party (Mr. Fadden), who have themselves been Treasurers in the past. They know that these officials are honest, and are doing a difficult job in a very capable way. It must be remembered that the number of taxpayers has increased very greatly. The honorable member for Barker seems to think that taxation officials take a fiendish delight in obstructing and frustrating people, and withholding money to which they are entitled. He said that if the taxpayer did not pay up by a certain date he was subject to a penalty. 1 should like him to cite one instance in which a man who had a reasonable case for an extension of time has. been refused time to pay.
– That does not help, because it turns the department into a court of inquiry.
– I should not be surprised if there are people in this House who have asked for, and have been granted, an extension of time in which to pay taxes, or have been allowed to pay by instalments. I have become a bit fed up with these ‘ continual attacks on officials. I do not say that they do not sometimes make mistakes. They may have their failings. Among any group of men there may be some who do not measure up 100 per cent., but as a body they no more fail in their duty than do members of this House.
– I was interested to hear the Treasurer (Mr. Chifley) say that it was the policy of the department, in cases where there were good reasons why a taxpayer could not pay the tax. not to exact the penalty inv mediately. ‘
– I said that the department permitted taxpayers to pay by instalments, and in many, instances did not exact a penalty.
– It is that point which requires clarification. At the present time, a great amount of tax is uncollected. In the main, it is due from business people and property owners whose properties normally produce revenue. However, because’ of bad seasons, the owners were not able to meet their taxation commitments in a particular year. The general run of taxpayers who earn wages or salary are not in that position, because the tax is deducted periodically from their earnings. Even though there may be good reason . why the taxpayer cannot meet his commitment on the due date, the Taxation Commissioner may demand the payment of an additional 6 per cent, on the outstanding amount. As the honorable member for Barker (Mr. Archie Cameron) pointed out, the department does not pay interest on the money which it holds on behalf of a taxpayer. When a taxpayer is required to pay interest on money due to the department, it represents a heavy burden if he is working on an overdraft. I remember bringing to the notice of the Treasurer, two or three years ago, the case of a proprietary company, of which the principal had an income of about £15,000 from the company.
– The honorable member i3 getting away from the clause.
– I think the principle is clear.
– The honorable member may not widen the scope of the debate.
– This man was not drawing a salary. His income was drawn from his interest in the business, but for the year under discussion the tax, plus the penalties, amounted to more than the business earned. That, admittedly, is an extreme case, but it shows what can happen. I hope that the Treasurer will view sympathetically the plight of those who, year in and year out, provide revenue for the Government, but who, in a lean year, arc unable to meet their commitments.
.- I understand that the purpose of this amending clause is to close a gap which was revealed by a’ judgment of the High Court in December of last year. In the case in question an employer was paying a man a certain price per bag to pick onions.- Under the act, the employer could not be compelled to deduct tax nl the source, because the contract did not mention any time, but merely, the rate to be paid per bag. That gap has now been closed by this amending clause, and the deductions must now be made whether the employee be engaged under contract or the piece-work system. As persons of this class will essentially be casual workers the rate of deduction, if they are working for, say, a fortnight, will be their rate of earning throughout the whole year. Consequently, their deductions are disproportionately heavy. They may not earn anything like the casual rate . throughout the whole year. People engaged in casual employment need their money very badly. If the casual work is very remunerative they find themselves subjected to heavy deductions, much of which will be handed back at the end of the year. I ask the Treasurer to issue an administrative order stating that where it is clear that a man is engaged on casual work the rate of deduction may be adjusted to meet his expected annual income.
.- I. had intended to refer to the same point as that raised by the honorable member for Fremantle (Mr. Beazley). I should like the Treasurer (Mr. Chifley) to clarify ‘ what is covered by the word “ contract “. What will be the position, say, of drovers who sign contracts to drive stock from one place to another and who, in turn, employ one, two, or more men to assist them ? In such cases, is the owner of stock or the contractor regarded as the employer of the casual men and who would be responsible for making deductions from their wages? The same position applies generally to contract shearers. Is the owner of the sheep responsible for the deductions to be made from the wages of all the men engaged by the’ contract shearer? Another type of contract over which difficulty may arise is that in which the owner of a threshing plant contracts to thresh the crops of farmers, going from one place to another as the work cuts out. Such a contractor may employ casual labour to assist him in his work. Who is responsible for the deductions, the farmer or the owner of the threshing plant who engages such casual labour?
.- Perhaps, of all people my constituents are most concerned in this matter. The dried fruits industry established at Mildura, Redcliffs, Merbein, Nyah and Woorinen employs large number of seasonal workers who come from Melbourne, and other parts of the country by special train or by any other means of transport at their disposal. Last season there was great misunderstanding in the industry becausegrowers did not know whether or not they had to make tax deductions from the wages of these workers. Mr. F. R. Messenger representing the growers . went to Melbourne and secured from the Commissioner of Taxation a temporary ruling on the point. That it was verytemporary is apparent by the clause in this bill on which I am speaking, for under this amending provision fruit-growers and others employing seasonal workers in large or small numbers will be compelled to collect thewhole of the appropriate deductions from their employees,notwithstanding the length of engagement, or conditions of employment. The men resent the deductions being made in many instances, for as many depend on the harvest time for their chief income, their total yearly income may not be subject to tax. I protest strongly against the dried fruits-grower being called upon to act astax collector when his full time is required in the management of his block, and when his management is a vital necessity to thereapingof the full fruits ofhis year’s labour.
.- I should like some information relative to the tax imposed -on living allowances paid to ex-servicemen undergoing training courses under the post-war reconstruction training scheme. As honorable members are aware, a singletraineereceives £3 5s. a week, . and there are various additional payments for married men and those withdependants. Payments of living allowances by the department are at presentsubject to deductions for income tax,notwithstandinga ruling given.some time ago by theCommissioner of Taxation that such allowances constituted neither wage nor salary and because of that there was no power to tax them. InWestern Australia I saw an instruction passed through the department to the effect that deductions in respect of these allowances, which were neither salary nor wages, were to be exacted until such time as the ex-service- men complained, whereupon the deductions were to cease immediately pending an alteration of the law togive to the department power under the Income Tax Assessment Act to levy : such deductions. When I questioned the Treasurer (Mr. Chifley) on this point the right honorable gentleman indicated that the Income Tax Assessment Act already gave the department power to do so. For the benefit of all ex-servicemen undergoing training Ishould like the right honorable gentleman to indicate whether there is power in the act enabling the department to make these deductions.
Mr.CHIFLEY (Macquarie - Prime Minister and Treasurer) [9.10]. Honorable members have raised a number of questions relating to the collection of income tax from salaries andwages. The main principle is that the employer of the labour shall be responsible -for the collection of the tax. The honorable member for Fremantle (Mr.Beazley) instanced the case of men employed on seasonal labour at high rates of remuneration for short periods and who at the end of the year may receive a total income below the taxable amount. I donot know that there are very manypeople so circumstanced. However, the Commissioner of Taxation -and the Deputy Commissioners havepowertomake adjustments to meet cases of that kind.
The points raised by other honorable members are covered by “the main principle’ that the employer of the labour is responsiblefor the collection of the tax. Since 1942, employers of labour with but few exceptions have, continued to make the deductions from the salaries and wages of their employees. It was only because some dispute arose, that a ruling was given by the High Court which rendered necessary the insertion in the bill of this amending clause. I am aware that the collection of the tax imposes additional strain on the employers, but the continuance of that practice is necessary for the working of the pay-as-you-earn system. I am surprised to learn that in some areas employers have refused to collect the tax from casual workers. In ray own electorate farmers employing casual labour have been making these deductions ever since the . -system was instituted. If em-ployers decline to make these deductions that system would quickly break down. I shall askthe Commissioner of Taxation to prepare a statement covering ‘the points raised by honorable members during thedebate on this ‘clause.
Clause agreed to.
Clauses 30 to 32 agreed to.
Clause 33 (Annual notice by tax agents).
.- Ever since the. experts succeeded in making income lax assessment a science, the general public has found thai it has been blinded by science, and the more amendments that have been made the more scientific it heroines and the more frustrated and helpliw. become the members of the general community. Consequently, in their frustration they lurried to experts for help. Sonic of the bright and more enterprising officials in the Taxation Department found that whereas they were en ruing hundreds of pounds a year in the department . they could earn thousands outside by going to the help of taxpayers. They formed a new profession. They became what are called “tax agents “. The tax agents are. now seen in their proper perspective. The department introduced registration of tax agents. Thetax agent was supposed to safeguard the interests of the taxpayer. That was his duty and what he was paid for. When the tax agent became registered there entered into the matter a now factor, beca use the tax agent: found that he had conflicting interests. His job was not only to serve his clients - that was what, he was paid for and what he was supposed to do - but also satisfy the Taxation Department. If he fought too hard for his client, the taxpayer, he necessarily came into conflict with the department. Fortunately, most agents regarded it as their duty to attend to the interests of their clients, the taxpayers. As the result some of them had their registration wiped out by the Tax Agents’ Board. It may be said that they were properly deregistered. I should expect that answer to be given in the ordinary course of debate. But the tax agents who were deregistered appealed to the court, and they appealed successfully. That was the position until this further advance in the science of taxation assessment was produced. It now seems that the board proposes to meet the position in another way. Competent agents apply to the board for registration. They are registered. They fight for their clients. They come into conflict with the Taxation Department, and they are deregistered. Against, that injustice they appeal and the court upholds their appeal. Is the proposed amendment of the principal act. in clause 32 intended to defeat the court’s decision? Is it designed, as other parts of the bill are designed, to get. around the decision of the court and frustrate the court? If so. the committee should be very chary about overruling the rights of the individual by making tax agents register every year. We do not do that to doctors, architects, dentists or any other professional men.
– But they have to pass examinations.
– So have the tax agents.
I wish the honorable member would follow what I say. Time does not permit me and it is too tiresome to go into every detail. I said that the Taxation Department was losing some of its ablest and enterprising officials, including its legal men, because they find the remuneration outside is better than in the department. Those officers are trained and skilled. They have been approved by the board. It had registered them. They are qualified and their qualifications are attested. They have higher qualifications than some of their juniors, who now have their jobs. Yet they are disqualified. To defeat the court so that it shall never again be able to do terrible things to the department it says, “ We will just refuse to register them”. When it does that it does a grave injustice. This is a bad thing. It takes away the rights of individuals. By making tax agents register every year the board will have them constantly under its power. Why, the autocratic British Medical Association cannot deregister its members unless they are guilty of infamous conduct! If doctors, lawyers, dentists, optometrists and other professional men had to come up every year for re-registration what tremendous power would be given to the little coteries in control for the time being. That is a power that I submit we would never grant to an autocracy. Why should we allow it to be in the hands of the Tax Agents’ Board ?
– Does the honorable member say that the right of appeal has been taken away?
– That is the honorable member’s view.
– This amendment does Luke away the appeal, because the board will not re-register some of them. If a man isregistered as a tax agent and the registration is taken away.from him, he has the right of appeal to the court; but, with annual registration, the right of appeal is taken away.It is a roundabout way of destroying the jurisdiction of the court. It is wrong if men of the highest repute, who become tax agents, and put up a fight for the people who engage them, can be crucified by the board for having done what: they consider to be their duty. If an agent has to work under the everpresent fear that he will not bo re- registered, the profession may as well be abandoned, because he will not even be able to pretend to be the agent of- his client.
– Clause 34 provides for the right of appeal to the Supreme Court.
– Not, in the respect that I refer to - annual renewal of registration. The agent will bc no longer his client’s agent, but the agent of the Taxation Department. The Taxation Department will be his master, and will always have the powerto refuse him registration. What I have said should be sufficient to convince the committee; but, finally,I submit that if a tax agent gets at crosspurposes with the board, or the Taxation Department, if he fights too strenuously and conscientiously for his client, who is the taxpayer, he will lose his livelihood, and that is the worst, threat one can hold over the head of any person.
.- The story told by the honorable member for Reid (Mr. Lang) would conveythe impression that; the Tax Agents’ Boards consisted of officers of the Taxation Department. That is entirely incorrect. He implied that if a tax agent offended the department, the. agent, would not be reregistered. I can best answer that statement by citing the names of the members of the Tax Agents Board in New South Wales. The chairman is Mr. Williams. M.L.A., a member of the State Parliament, and a public accountant, whilst the other two members are Mr. E. H. Swift, the State Auditor-General, and Mr. Weir, theUnder-secretary to the State Treasury. None of these gentlemen is associated with the Taxation Department. The Tax Agents’ Boards in other States are substantially similar.It is apparent, therefore, that the Taxation Department has notmuch to do with determining whether tax agents should be registered or deregistered. The fact is that for a long lime it has been recognized that throughout Australia many people, by posing as tax experts, have been really deceiving the taxpayers. It is time that persons who claim to be taxation experts should be obliged to prove their qualifications. The provision with respect to annual review of registration is made in order that the boards may exercise a more effective control over tax agents. That provision is a protection to the taxpayers, as is also the creation of the boards. That is why similar boards had been in operation in some States for some time, prior to uniform income tax.
– The board in Queensland was established in 1920.
– There is nothing new in this proposal. No charge is made in respect of the annual review of registration. That provision is not unusual. Persons are not allowed to run a motor car unless they renew registration annually. In fact, one cannot own a dog without renewing the registration annually.I simply rose to indicate that the Tax Agents’ Board in New South Wales, in which State the electorate of the honorable member for Reid is situated, does not include any officer of the Taxation Department. I regard it as a reasonable and impartial body.
.- Whilst on the surface the explanation given by the Treasurer (Mr. Chifley) might appear to be satisfactory, he left ouite a number of matters unexplained. The legislative provision by the Commonwealth for the registration of tax agents was introduced inJuly. 1943. That is three years ago. It was then provided that registration should continue indefinitely until such time as the tax agent was found guilty of misconduct, or so-nic of l.it-r -offence,, or was disqualified ihi the ground of bankruptcy or on other specified grounds. T.’sually, the, registration of an agent continues indefinitely. The Treasurer has slated that the object of annual re-registration is to enable, a check to bo made on agents: and he intimated that . an agent might be refused renewal of registration because of unsatisfactory conduct. That is the only reason that has been given for the annual renewal of registration of agents. fn view of tlie fact that the Treasurer has slated that the Tux Agents’ Board is completely independent of the. Taxation Department, it would be interesting to know who is to make the objection to the renewal of an agent’s registration. Doe> the Taxation Department submit the objection, or do clients of a particular agent submit iff 1 rather think that a. client’s remedy is to refuse to do any more business with a particular agent., just as a client withdraws his business from an unsatisfactory solicitor. Therefore, it would appear that the only objection which can be submitted to the board against re-registration of a tax agent must come from the department itself. Quite a number of applications for registration from persons in my ‘electorate, who prepared income tax returns prior to the operation of this provision, were refused because the department did not consider that the applicants possessed the necessary experience and qualifications. Therefore, the most opportune time for the department to exercise its judgment, as to the qualifications of an applicant is when the original application for registration is submitted. I shall require more than the Treasurer’s statement to convince me thai; once registration is granted it is really necessary to oblige the ageni to apply for renewal of registration annually, because the only authority in a position to object to re-registration is the Commissioner of Taxation. The Commissioner is in much the same position in relation to the board as the police authorities stand in relation to the Licensing Court. When an hotel-keeper applies for a renewal of a licence from time to time, usually objection against the application does not come from a member of the public as a rule, but from the Police Department. I agree with the honorable member for Keid (.Mr. Lang) I hat one can apply the same reasoning to ihe registration of solicitors, doctors, ilcii tints or other professional men. A tax agent is not compelled to pass an examination, but must, satisfy the Taxation Department of his fitness to prepare, taxation returns. Having satisfied the taxation authority with respect, to those requirement”, 1 submit that, except wheir an agent is guilty of some offence which ill-serves disqualification, his registration should continue without further challenge. This is a further imposition by luireaciacy upon the community. Tax agents will be compelled to submit themselves to officialdom year after year in erder to be accorded what should belong lo them us a matter of right.
– The official mind!
-I agree. Although the Treasurer has endeavoured to defend this, proposal, no argument has been adduced to justify this departure from a practice that has obtained for a number of years.
– This proposal may contain a good deal of merit, but T fail to understand why chartered accountants, most of whom submit’ returns for taxpayers because they have the necessary knowledge to compile the required information, should be required to apply annually for registration. The compilation of tax returns is often the principal part of their business, yet under this bill, every year, they must join, the form-filling class. Does the Government propose to require lawyers, due-tors and dentists to re-register every year? Certainly not! Surely one registration should suffice. No honorable member desires to see bogus tax agents establish themselves, or people who defraud the Taxation Department, but riirely the Government should dismiss from its mind the idea that it must conr stantly legislate for a nation of “ crooks ‘.’. Chartered accountants arc doing this work. The average sitizen . is not able to fill in his income tax return. How many honorable members fill in their own. tax forms?
– I do.
– Obviously, the only income which the honorable member for Griffith (Mr. Conelan) derives is his parliamentary allowance. If he had any other income, he would find that it paid him to employ an accountant to fill in his return. Yet the Treasurer (Mr. Chifley), acting on the advice of the Taxation Department, has proposed this alteration which will further regiment the business community. The honorable member for Reid (Mr. Lang) stated that no appeal will be allowed if an application for reregistration is refused:
– Provision is made for an appeal.
– Once a firm of tax agents has established itself in the esteem of the Taxation Department, it should not be obliged to submit to the humiliation to apply for reregistration every year. When Australia required a total war effort, all the activities of the people had to be related to those of the government, and . yet some ridiculous forms which existed during the war, still endure. If a person, required a tyre for his motor vehicle, he is obliged to fill in a form declaring that in effect his neighbour does not possess a horse and jinker that he can use, state who is his doctor and give similar irrelevant information.. The Government should not attempt to restrict the activities of tax agents in this way.
– I do not agree with, the honorable member for Reid (Mr. Lang) to any substantial degree on. this matter, because I am mindfulof the fact that people in many callings such as an auctioneer, butcher, wheat-grower and dairy-farmer, are obliged to register every year. A person must take out a licence for his dog or bull. My list of licences is piling up. I have not any particular objection to this provision which requires that tax agents shall register annually. For various reasons, these agents shall be subjected to some surveillance. A few years ago, I had a disagreement with the Taxation Department regarding several people in. different parts of Australia. In one instance, I discovered that a well-known firm of tax agents had been compiling returns for one of my constituents for a number of years. The agents had accepted payment, from him for their services; but, without informing him of what they were doing, they attached a certificate to his returns stating that they did not, guarantee the accuracy of any of the information contained in them. If a lawyer acted in a similar manner towards one of his clients, he would quickly be summoned before the law society. That firm of tax agents was selling its client and his interests behind his back. Tax agents should have a certain code of morality. If an agent is to be licensed and permitted to charge a fee for making out a return for a client, his services should be at the disposal of the man who employs him.
– The agent cannot guarantee the accuracy of the returns unless he audits the taxpayer’s books entirely.
– Why did this particular firm of tax agents attach that certificate to the client’s returns?
– The agents merely pointed out that they had not audited the client’s books.
– The firm stated that it, could not guarantee the accuracy of the information contained in the returns. The taxpayer who employed the firm had complete confidence in it. He did not discover, until a difficulty arose with the Taxation Department, that his agents had been selling him behind his back. As I stated, a code of morality should operate here. If a. tax agent accepts payment from a client for his services he should not act inthe manner in which, this particular firm did without: informing the taxpayer.
– The taxpayer would obtain from the agent a copy of his return with a copy of the certificate attached.
– A. copy of the certificate was not, attached to the copy of the return. If honorable members like to take up the case of the tax agents. T do not mind, but I know where I stand in this matter. The first person that the agent, should tell that he is dissatisfied with a return is the taxpayer who employs him. If he fails to do that, he should be “ rail-roaded “ out of his job. Therefore, when the Treasurer insists that tax agents shall register annually, I contend that, on a few matters which have come to my personal knowledge, some of. the agents should not be re-registered, but de-registered.
.- I find it difficult to understand why some honorable members opposite object to this proposal. The sole purpose is to require a tax agent to inform the board in writing every year that he desires to continue as an agent. The board will obtain from him all particulars regarding himself and any other information that it requires. A tax agent holds an important position in the community. He has a quasi-professional position - a confidential position - and he is entrusted with all the business secrets of his clients. Consequently, tax agents must be reputable persons whom the public can trust. As the Treasurer (Mr. Chifley) stated, this provision is designed for the protection of taxpayers. Therefore, I am astonished that honorable members opposite should quarrel among themselves about this matter, and object to a sensible proposal. The Board that has been referred to by the Treasurer has no connexion whatever with the Taxation Department. It is an independent board of reputable people who have control over tax agents. The Government is to be commended for introducing this simple amendment providing for an up-to-date register of these individuals who are in a position to collect substantial fees from clients for the handling of their confidential business.
– I cannot see any great abjection to a register of tax agents. Everybody knows that the Government will squeeze out of the community the last oz. of tax. If taxagents have escaped this imposition in the past they have been lucky. The honorable member for Barker (Mr. Archie Cameron) cited quite a number of occupations in. which people have to register from year to year. Even the simple dairyman who carries on an industry of the greatest value to this country is called on to register each year, although I could never quite understand the necessity for this. Once a property has been examined, there should be no need to make it a yearly event; but year after year officials inspect dairy farms to see that dairies are far enough away from milking sheds and so on. That costs a lot, of money. I cannot, see anything wrong in insisting upon a register of tax agents. Even auctioneers have to register every year. This provision may do something towards keeping the occupation as clean as possible, and I am quite sure that the Australian Country party is not opposing it for that, reason. The honorable member for Barkerhas claimed that in some cases tax agents have been dishonest in forwarding returns which they have not verified on behalf of their clients. I. point out, however, that on taxation return forms is a question asking whether the agent certifies as to the correctness of the figures that have been entered on the form. The tax agent replies in the negative, stating that the figures have been supplied tohim by his client. I have no doubt that that was done in the case to which the honorable member for Barker referred. The client himself would have received a. copy of the return sent in by the agent. If he did not insist upon that, he must be a curious type of taxpayer. I cannot sec anything discreditable to the tax agent in regard to that matter, because the form prescribes that he must make that declaration and that the taxpayer himself must be satisfied with the information that he signs.
.- I have; no particular objection to this clause. These days, we are all running round virtually with numbers on our backs and the addition of another number cannot, matter very much. However,I “cannot allow the observations of the honorable member for Barker (Mr. Archie Cameron) to pass without some comment. I am sure that honorable members opposite, including the Prime Minister. (Mr. Chifley) will be pleased to find honorable members on this side of the chamber at variance to some degree.
– It is a very minor point.
– Nevertheless. I see a pleased expression on the face of the right honorable gentleman. I understood the honorable member for Barker to suggest that tax agents were acting wrongly, dishonestly, or improperly in stipulating in the taxation returns made on.behalf of clients that the information given was not necessarily within their knowledge, thus excluding themselves from any personal undertaking or obligation in regard to that information. That is obvious, and. I cannot understand the objection that has been raised by the honorable member for Barker.
– I would not expect the honorable member to understand it.
-I do not speak in terms asstrung as that.I have sometimes been in the same position as the honorable member but I have not said so. What I have, to say now on the matter is not uttered in any party spirit, but in the interests of truth. Surely no agent, whether he be an accountant or a tax agent, or anybody else, can be expected to give an undertaking with respect to thu information that a client submits to him. How can an agent undertake to say that the details of his client’s business arc correct? How can an agent verify the facts that are submitted to him ? He can only do that, to the degree permitted by the documents, vouchers, receipts, &c, submitted to him by his client. He could not go beyond that. He is only an agent, and. the taxation return itself contains a specific clause which makes that very clear. The honorable member for Barker suggested that an agent should implicate himself by guaranteeing the information submitted to him by his client.
– I did not make any such suggestion.
– I can see, of course, that I have not the qualifications of the honorable member for Barker in this matter; but I did understand him to make the representation that there was something dishonest or crooked about agents who prepared returns on behalf of their clients and refused to guarantee the information contained in them. Obviously, no man who prepares a return on behalf of a taxpayer can guarantee the correctness of the information that his client supplies. A solicitor, tax agent, or any other of the one hundred and one kinds of agents with which we are all familiar in the business world today, may prepare a return and put it before his client. The client has to satisfy himself that the return is correct, and has to sign it. It docs not go beyond that, and. while I am a. member of this chamber I shall not be a party to any attack, direct or indirect, on. any person who acts as an agent for someone else, by suggesting that in preparing a document he necessarily makes himself responsible tor the truth of its contents.
.- The honorable member for Parramatta (Mr. Beale) has misrepresented the case submitted bythe honorable member for Barker (Mr. Archie Cameron). The honorable member for Barker said that the tax agent to whom he referred, signed a return to the Taxation Department stating that he did not vouch for the figures contained in it, but did not, mention this fact to his client. Therefore, the honorable member claimed that the agent had taken money under false pretences.
-Order! I do not. like interrupting the honorable member, but’it appears that the debate is developing into an argument between the honorable member for Barker and other honorable members. I ask the honorable m ember for Griffith to refer to the subject of the clause, namely, the. registration of tax agents.
– The divergence of opinion amongst members of the Opposition on this clause is very interesting. The Opposition takes great exception to the proposal that agents shall be required to register each year. The honorable member for Reid (Mr. Lang) and the honorable member for Parramatta and. some of his colleagues claim that professional men, such as doctors, dentists, chemists and architects, do not have to do likewise. However, such men. have to carry out long years of study at universities in order to qualify for their degrees, whereas tax agents can obtain registration without undergoing training of a similar character. Many tax agents have left employment in the Taxation Department, and taxation agencies in order to engage in that profession. I agree with the honorable member for Reid (Mr. Lang) that some of them did so for the sole reason that, al though they had reached high positions iu the department, they were not earning nearly as much in salaries as they now earn as tax agents. Anyman who has served in the Taxation Department can resign and set himself up as a tax agent, whatever his qualifications may he. I object to the fact that such men do not have to pass examinations in order to start in business. I. sincerely hope that, in the near future, any person who desires to become registered as a tax agent will be required to pass an examination set bv the Public Service Board. Any person who wishes to practise as a tax agent should be qualified to do so, and there is no reason why heshould not be required to register each year, as certain other professional men are required to do. .
. -Usually.Iam able to make myself understood in this committee, but apparentlyI have not been able to do so to-n ight. The case, which I stated simply, is this : If a man acting as a tax agent accepts a taxpayer’s money for preparing tax ret urn, and if he. has any misgivings regarding that return, his duty is to inform the taxpayer of the fact first, not, to submit the return to the Taxation De par tment together with private information whichhe has not, given to his client. None of my colleagues in Opposition can justify a registered tax agent conveying to. the department information about a taxpayer’s affairs, together with his opinions about them, which he has not conveyed to the taxpayer. Such an agentis recreant to thu trust reposed in him by’ his client. He is not paid by the Taxation. Department. The honorable member for Parramatta (Mr. Beale) was most eloquent ‘ in his ability to misunderstand me. If he, as a barrister, went to a party opposing one of his clients and said, “ Look, J. will give you some information, about my bloke that you can use, but I will not let him know thatI have done so “, I have a strong suspicion that any law society, withthe possible exception of the one in Sydney, would kick him out.I have had experience of dealings, with legal men in Sydney, WhatI have said would hold good,. 1 believe, in any law society outside of that city. If a barrister or solicitor undertakes a case, he does not convey to his client’s opponent information that he has not given to his client. In fact, he is not supposed to convey anything to the opposing party. He supplies his services for a fee to the man whose case he undertakes to fight. A tax agent is in much the same position as a. solicitor or barrister. He does certain work for a “taxpayer and accepts a fee for doing so. The taxpayer places confidence in him. and, in my opinion, the agent should not convey any information to the Taxation Department which he has not conveyed first to his client. Ifhe does so, he is recreant to the trust reposed in him and should not be allowed to continue to act as a tax agent.
.Much of this discussion has nothing to do with the case. Under the existing law, any tax agent’s licence can be cancelled. The proposal in the clause now before the committee merely provides that: agents shall register every year. The point at issue is whether this clause should be agreed to or not. I remind the honorable member. for Barker (Mr. Archie Cameron) that a bad agent can be deregistered under the provisions of the existing law. I consider that the army of accountants, lawyers, and others who act as tax agents, should not be required to join the already overburdened ranks of government form-fillers. This clause should be considered in conjunction with the succeeding clause. If honorable members read both of them, they will realize that nobody may render a tax return for a fee unless he is a registered tax agent. Therefore, probably every legal firm in Australia will be required to register as a tax agent.
– That is right.
Mr.WHITE. -I am glad that the honorable member agrees with me. He. did not appear to realize that fact when he addressed the committee. According to the succeeding clause, every lawyer, every trust company, and every other organization that makes income tax returns on behalf of individuals, will be required to register annually, and will be liable to a penalty of £100 for failure to do so. This provision is unnecessary. Bogus agents can be dealt with by calling them before the board which was mentioned by the Treasurer (Mr Chifley). The board appears to be a valuable instrumentality; it oan attend to tax agents who do not do their work properly, ft would be wrong to put agents on the basis of subservience proposed in the clause.
Mr. LANG. (Reid) L10.4].- 1 regret that so much debate has occurred over such a simple matter. The present law provides that the registration of an agent shall continue indefinitely until cancelled by a board for one of a number of specified reasons, such as death, bankruptcy, and misconduct. Therefore, the board now has the power .to control all registered agents. If there be any misconduct on the part of an agent, his registration can be cancelled. If an injustice should be done, the deregistered agent may apply to a court and have justice done and may have his registrant ti on restored. That has been done. A registration has been cancelled, there has been a successful appeal to the court, and
I ho registration has been restored. The hoard now seeks to circumvent the court, by doing away with the right of appeal and compelling agents to register annually.
– Not to register, but to notify the board of the desire to continue to be registered. .
– An honorable member has said that tax agents have the right of appeal. According to my reading, they have not. The right of appeal lies to the County Court, the Supreme Court, or whatever may be the name of the court in any State, upon cancellation of registration. The board will be able to circumvent that, by refusing reregistration. The act does not state how the board is appointed. Those who compose it may be most reputable men. I want to know what is the justification for this amendment of the law. The explanatory note states that at present the board has certain powers, and goes on to say that it has been found in practice that the board should be given greater control. Why should it. be given greater control? It lias been decided that tax agents shall be made to register annually. With one registration, the office file is complete; but with an annual registration there will have to be a staff of officers, which will have tQ be paid - by whom? Later, there will be a demand that tax agents shall be made to pay for their annual registration, on the ground that it is only just and proper that they should pay for the upkeep of the board’s staff. This is not imaginary; it has happened at other times in similar circumstances. Points will be raised, like that mentioned by the honorable member for Barker (Mr. Archie Cameron). In the ranks of lawyers, and among all classes of agents and auctioneers, it has .happened that a miserable type of person has acted dishonestly. Should that occur, there will be a demand for the protection of the person who has been robbed or otherwise despoiled. That will lead to the establishment of a fund similar to the existing funds to cover defalcations by an auctioneer, agent or lawyer. The staff will grow, and we shall ,have a complete bureaucracy. The committee should view the matter reasonably. Is this the first step towards the establishment of :.. staff to deal with annual registrations? Will it do a very wrong thing, by circumventing the law of the land ? Will a bureaucracy be established which will Lave an appetite for power, and grow on that on which it feeds? I contend that this is the first step in that process, and that, this is the proper time to mention it. I shall not stand idly by when I see the first step being taken, without stating my views, because I will not have it said later that in. the year in which this provision was .inserted in the act I had remained silent. I enter my protest now, because 1 see that what appears to be quite an innocuous clause is a move towards the establishment of a bureaucracy, and the doing of acts of injustice.
– The honorable member for Reid (Mr. Lang) has been misleading the committee. He would have us believe that the right; of appeal which tax agents now ‘have is being taken from them. It is not. Under the position as it. stands, the tax agent is registered. Ordinarily, he would register once, and his registration would carry on from year to year. This amendment of the act will make it obligatory that he shall notify the board every year that he desires to continue to be registered. There is no injustice in that. A solicitor has to register every year, pay fees, and make provisionfor carrying on his practice. As I have pointed out, tax agents act in a quasi-professional capacity. They have the confidence of taxpayers, and their clients deserve protection. That is the object of this proposal. The board is entitled to have up-to-date particulars in respect of every tax agent.
– Does the honorable member say that refusal of a renewal to register would be a cancellation of registration?
– There is no provision for refusal to renew a registration. All that the proposed new section provides is that, in each year, the tax agent shall notify the board, in a form approved by the board, that he desires to continue to be registered, and that he shall furnish the board with the particulars that are specified in the form. The right of appeal which has existed is not to be affected. Even though a tax agent may be disqualified for the reasons set out in section 251k, he will still have the right of appeal. It is idle to argue that any injustice is being done. All that is proposed is that the board shall be placed in a position to obtain full particulars concerning any person who is carrying on the business or profession of a tax agent. To argue that the right of appeal will be affected, or that an injustice will be done, is to mislead the committee.
. -I cannot see any reason whatever for the enactment of the proposed hew section, except that mentioned by the honorable member for Eeid (Mr. Lang) -the establishment of another department. It is easy for honorable members to smile when such a statement is made. Unfortunately for the people of Australia, that is continually happening. Under the principal act a person had to make application to become a registered tax agent. Section 251k provides-
A board may cancel the registration of any tax agent upon being satisfied that -
b ) the tax agent -
Why have these agents to be registered annually? Apparently an agent was competent when he was registered by the board. Is it proposed under this clause that another section shall be added to provide for an annual examination by the board? The honorable member for Robertson (Mr. Williams) said that a solicitor has to register his office each year; but there is no question of testing his competence each year to decide Whether he is entitled to continue in practise.
-It is not proposed to do that under this clause.
– Then why is an agent required to register every year?
– That is the same thing.
– No, it is not. A taxation agent has to register, and the purpose of that registration is to ensure that he is competent to practise. This provision will result in the establishment of a pretty little staff and there will probably be a fee charged for reregistration of an agent. I cannot see any reason why the agent should have to be reregistered. Then there is the case mentioned by the honorable member for Barker (Mr. Archie Cameron), in which a taxation agent was apparently sending secret information , to the department that certain taxation returns’ were not true. I am not altogether satisfied with the composition of the board. There are two government officer’s, one from the Sub-Treasury and the other a nominee of the chief audit officer of the State concerned. The third member is appointed by the Governor-General. If a question of assessment arises they might tend to encourage taxation agents to furnish secret information to the department, because those agents have to serve their masters. If any member of the board knew what was happening in the case mentioned by the honorable member for Barker he flagrantly violated his duty in that he did not ensure that the tax agent was deregistered. The only purpose I can see for requiring tax agents to reregister every year is to create an embyro department and to extract an annual fee from them.
Clause agreed to.
Clauses 34 to 37 agreed to.
Clause 38- (6.) The amendments effected by sections four, fourteen and twenty-four of this Act shall apply to all assessments for the financial year beginning on the first day of July, One thousand nine hundred and forty-seven, and all subsequent years. (7.) The amendment effected by paragraph (rf) of section five of this Act, so far as it inserts paragraph (x) in section twenty-three of the Principal Act, and the amendments effected by sections seventeen and eighteen of this Act, shall apply to all assessments for the financial year beginning on the first day of July, One thousand nine hundred and forty-six, and all subsequent years.
– I move -
That, in sub-clause (5.), the words “four-, teen and twenty-four “ be left, out with a view to insert in lien thereof the following words: - “and fourteen, and paragraphs (a) to (o) of section twenty-four”.
Clause 38 sets out the assessments to which the several amendments to be made by the bill shall apply. The amendment proposed to be made by paragraph p of clause 24 is complementary to that proposed by clause 17. It was accordingly intended that both of these amendments should apply to assessments based ou income derived during the year ending the 30th June, 1947, and subsequent years. With respect to clause 17, this intention will be given effect by sub-clause 7 of clause 38. Through inadvertence, however, the complementary amendment made by paragraph p of clause 24 was expressed to apply to the same assessments as the other amendments included in clause 24. Thus the amendment to be made by clause 24 (p) has been incorrectly expressed to apply to assessments based on income derived during the year ending the 30th June, 1948, and subsequent years. The proposed amendments to clause 38 will ensure that the amendmentsmade by clause 17 and paragraph p of clause 24 shall apply to the same assessments, namely, to assessments based on income derived during the year ending the 30th June, 1947, and all subsequent years.
– Is the proposed amendment to provide for “ pay-as-you-earn “ deductions ?
– The clause covers some of that ground.
Amendment agreed to.
Amendment (by Mr. Chifley) agreed to-
That, in sub-clause (7.), after the word “eighteen “, the following words be inserted: - “and paragraph (p) of section twenty- four “.
– I desire to refer to a certain proposition which I previously suggested, and I understand that in discussion of this clause it is permissible for me to refer to it. I shall not repeat the story which I related previously or refer in specific detail to the amendment I proposed for consideration by the Treasurer (Mr. Chifley). I am fully cognisant of the fa.ct that the Treasurer was good enough to give consideration to the suggestion that I advanced last night in connexion with female taxpayers who have to support a family. I have recognized from the outset the difficulty of giving legislative effect to the proposition which I had in mind, but I am not completely satisfied with the reply which the Treasurer made this afternoon.
– Order ! The clause under discussion deals with the application of various amendments.
– Does not this clause specify the date on which the amendment to clause 24 will operate?
– I am not offering any objection to the remarks of the honorable member for Darwin, but I thought the committee had disposed of the clause.
– The honorable member for Darwin must confine her remarks to the clause under discussion, namely, the application of the amendments.
– I wish to reply to certain remarks which the Treasurer made concerning clause 24-
– The honorable member is not entitled to refer to any previous debate, but only to the proposed application of the amendments.
– I rise to a point of order. I draw attention to the fact that sub-clause 5 of this clause provides that amendments effected by section 24 of the act shall apply to all assessments for the financial year beginning on the 1st July and all subsequent years. Therefore, I suggest that the honorable member for Darwin (Dame Enid Lyons) is quite in order in offering reasons why those amendments should not apply to those assessments, and to do so by showing that the amendments made by section 24 are inappropriate.
– The honorable member is not entitled to discuss whether the amendments are appropriate or not. The matter has already been decided.
– But no decision has been made in respect of clause 38.
– A decision has been made on clause 24.
Clause, as amended agreed to.
Title agreed to.
Bill reported with amendments; report - by leave - adopted.
Motion (by Mr. Chifley) - by leave - proposed -
That the bill be now read a third time.
– A great number of the amendments ‘ written into the Income Tax Assessment Act are, as we have observed during the discussion on this and other bills of the kind, designed to get rid of the operation of certain decisions of the courts - to render them no longer applicable to a similar set of circumstances. [ take this opportunity to point out that this practice has done more than anything else to clutter up the income tax laws by converting them from a statement of general principle into a wilderness of single instances. In order to deal with one particular case a particular formula must be worked out. My experience, and that of most other persons who have had to consider these provisions in detail, is that every time we amend the legislation we add to the difficulties of construing the act, and of reconciling one provision with another. I do not say that by way of criticism of taxation officers. My experience of them has been very happy. I think they are a very able lot of men, and in my own State, where I have my own modest transactions with them, the Deputy Commissioner is, I think, an uncommonly wise man. The only complaint I have against taxation officials is one which I could perhaps make against most of us in this House - they have an easy disposition to believe in their own omniscience. “When they find that the High Court has knocked out their interpretation of a section, their immediate reaction is to amend the act, because their view of the matter must be made right, whatever the lawyers have to say about it. The result is that a long list of amendments comes along to meet that particular case.
– Quite properly in some instances, I believe.
– In some instances, yes ; but as to others I have grave doubts. The result of applying this policy so resolutely is that a complicated set of rules has been built up, and the job of interpreting the act is very difficult. In 1934-35 a royal commission was established to examine income tax law, with the result that we made a fresh departure with what is now the principal act. Since then, however, the same policy has been continued. I beg the Treasurer (Mr. Chifley) to lay a restraining hand on the powers that be in the Taxation Department so as to get them to consider that occasionally the taxpayer may be right, in addition to being told by the High Court that he is right; and to consider, also, that these attempts to alter the law to meet the one particular case may create confusion in twenty other cases.
Question resolved in the affirmative.
Bill read a third time.
Bill returned from the Senate with amendments.
The following papers were presented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c- 1947-
No. 26 - Amalgamated Postal Workers’ Union of Australia.
No. 27 - Commonwealth Public Service Clerical Association.
No. 28 - Amalgamated Postal Workers’ Union of Australia and others.
No. 29 - Commonwealth Temporary Clerks’ Association and Federated Clerks’ Union of Australia.
Nos. 30 and 31 - Fourth Division Officers’ Association of the Department of Trade and Customs.
No. 32- Commonwealth Public Service Clerical Association.
House adjourned at 10.32 p.m.
The following answers to questions were circulated: -
e asked the Minister for Commerce and Agriculture, upon notice-
– The answers to the honorable member’s questions are as follows : -
t- On the 29th April, the honorable member for Darwin (Dame Enid Lyons) asked the following question: -
I ask the Minister for External Affairs whether the Government has received the report of the Australian observer who accompanied the Japanese whaling ships to Antarctica. If so, will the report be tabled for the information of honorable members?
I have now received a preliminary report, which I shall make available to the honorable member and to other honorable members who desire to read it.
Cite as: Australia, House of Representatives, Debates, 14 May 1947, viewed 22 October 2017, <http://historichansard.net/hofreps/1947/19470514_reps_18_191/>.