18th Parliament · 2nd Session
Mr. Deputy Speaker (Mr. J. J. Clark) took the chair at 2.30 p.m., and read prayers.
page 2327
– In view of the Government’s decision to establish the Australian Broadcasting Control Board, will the Prime Minister inform me whether the Broadcasting Committee and the State advisory committees on broadcasting, which were established by the Australian Broadcasting Act of 1942 will be retained? If it is not proposed to abolish those bodies, will the Australian Broadcasting Commission and the commercial stations be required to answer to the Postmaster-General, the Australian Broadcasting Control Board, the Broadcasting Committee and the State advisory commitees ? If so, will the Prime Minister consider the establishment of another body to co-ordinate the decisions of the various authorities which I have mentioned, as officials of the Australian Broadcasting Commission are also responsible to the commission?
– The Minister representing the Postmaster-General will answer the question.
– The answer to the first and second questions is, “Yes”, to the third, “ The existing practice would not be disturbed “, and to the fourth; “ No “.
– I understand that age and invalid pensioners are required to pay only one-half of the ordinary annual wireless listeners’ licence-fee. As a wireless set is no longer a luxury, will the Postmaster-General . consider extending this concession to pensioned miners?
– I shall bring the honorable gentleman’s suggestion to the notice of the Postmaster-General. It will need investigation, because the concession is now granted only to age and invalid pensioners who live alone. It is not granted to such pensioners who live in the homes of relatives. The Postmaster-
General is under no obligation to reduce the wireless listeners’ licence-fees which are paid by people who are working and can afford to pay the full fee, even if age and invalid pensioners are living with them. I shall ask the Postmaster-General to consider the honorable gentleman’s suggestion, and in due course I shall inform him of the result.
page 2327
– Can the Minister for Works and Housing report to the House the findings of the committee of experts that inquired into the diversion of the Snowy River waters? If not, can he say when the committee’s recommendation will be announced?
– The committee will meet this week when it hopes to conclude its report, which will be made available to the Premiers of the States concerned and to the Commonwealth Government. The report will be considered by each government when it is received, which will probably be next week.
page 2327
Broadcasting of Proceedings
– I desire to ask you a question, Mr. Deputy Speaker, because I presume that you are in charge of the broadcasting of the parliamentary debates.
– No ; I am only a member of the Parliamentary Proceedings Broadcasting Committee.
– I understood that you were more or less in charge of it.
– That is not so.
– Anyway, I shall ask the question and you may answer it as you see fit. I asked the Prime Minister a question yesterday about the secret documents case. I have received from broadcast listeners in Victoria information that the rebroadcast of my question last night-was interrupted and mutilated. One telegram that I have received states that silence for several seconds mutilated the question. Will you ascertain the cause ?
– Order ! All I can promise is that I shall refer the honorable’ gentleman’s question to the Parliamentary Proceedings Broadcasting Committee.
Later:
– Information has just been supplied to me in answer to the question by the honorable member for Richmond in relation to the re-broadcasting of a question which he had asked. The general principles for the broadcasting of parliamentary proceedings, which were adopted by the Parliament on the recommendation of the Parliamentary Proceedings Broadcasting Committee, provide for the re-broadcasting of questions and answers. Accordingly, the rebroadcasting is restricted to questions and answers. Other matters, such as personal explanations and points of order which arise during question time, in either the Senate or the House of Representatives are omitted. A point of order arose during the question which the honorable member for Richmond asked yesterday, and its deletion from the record would account for the short gap in the rebroadcast. There was no mutilation of the question which the honorable member had asked.
– Will you, Mr. Deputy Speaker, inform me whether you used the words “ restricted questions “ ? I am only seeking information.
– I said that re-broadcasts of parliamentary proceedings were restricted to the rebroadcasting of questions and answers only, and that any other matter which is raised during question time is eliminated from the record. Only questions and answers are re-broadcast.
page 2328
Australians in Japan.
– In view of the press report that the Director-General of Medical Services, Major-General Norris, has just returned to Australia from a visit to Japan where, I understand, he reviewed British Commonwealth Occupation Force medical facilities, can the Minister for the Army say whether he has received a report from that official on the conclusions reached by him during his visit? In view of the Government’s decision to reduce the British Commonwealth Occupation Force to a token strength by the end of the year, can the Minister say whether adequate medical facilities are available to Australian troops in Japan?
– Major-General Norris has just returned to Australia. Although I have not yet received a report from him, I think I can say that he was delighted with the medical and hospital facilities provided for’ the British Commonwealth Occupation Force in Japan and that he would also say that the health of the troops and their families in Japan is better than that of most people in Australia. In reply to the second portion of the question, although it is the intention of the Government to reduce progressively the British Commonwealth Occupation Force, the honorable member may be assured that the present proportion of medical officers to serving personnel in Japan will be maintained during the lifetime of that force.
page 2328
- Sir John Newman Morris, president of the Australian Red Cross Society, is reported as having said, “ Every one in Europe feels that war will come “. Is the Prime Minister in possession of any information that will throw any light on the matter? As I have twice previously requested, will the right honorable gentleman undertake to afford honorable members an opportunity to debate foreign affairs prior to the end of the present sessional period ?
– I am unable to prophesy the probable course of events in Europe. As I have said previously, I am hopeful that war in Europe will be averted. Of course, I am not able, any more than is anybody else, to foretell whether the trend of events in Europe will precipitate such a tragic happening there. My personal view is that the odds are against war eventuating. A notable statesman in Europe is reported to have said that the world will get neither war nor peace. In regard to the latter portion of the honorable member’s question, whether a statement will be made to the House on external affairs, I have indicated previously that if I considered such a report would be of any value, or that a sufficiently up-to-date report, which would enlighten honorable members any more than they are enlightened by the world news, could be presented, I would certainly endeavour to do that. The discussions at the United Nations in Paris on the Berlin situation are such as to indicate all the time that there is a chance of that matter being settled. Any statement that may be prepared could conceivably become out-of-date between the time of its presentation and the subsequent debate. However, I shall try to make a report available to the House.
page 2329
– Several weeks ago L brought to the notice of the Minister for Repatriation the case of the widow and children of the late» Padre Leonard Kentish. As the matter did not come under his jurisdiction, I understand it was referred to the Prime Minister. Will the Prime Minister inform the House whether he has made a decision in the matter, and if not, when can honorable members expect that a decision will be reached ?
– Investigations have been made into the matter raised by the honorable member, but some details yet remain to be ascertained. I shall endeavour to have a decision made in the matter this week.
page 2329
– I direct the attention of the Minister representing the Minister for Shipping and Fuel to the fact that Australian fruit-growers are endeavouring to establish markets abroad, and that the sailing dates of ships are indefinite. Will the Minister for Shipping and Fuel arrange to hold a conference of representatives of shipping companies in an endeavour to have definite sailing dates fixed, so that the fruitpacking houses will not be inconvenienced and fruit will not be lost through shipping delays ?
– I realize that it is important that fruit-growers and fruit- packing organizations should know what ships will be available to transport - their fruit overseas and when the ships will sail. I shall take the matter up with the Minister for Shipping and Fuel. I hope that he will call the shipping companies together. If he does so, I am hopeful that satisfactory arrangements will be made.
page 2329
– Has the Prime Minister received from the president of the Country Women’s Association of Queensland a letter suggesting the passage of legislation dealing with subversive organizations in accordance with a resolution of a conference of that organization? If so, has the right honorable gentleman considered the proposal, and will he state the Government’s intention in regard to it?
– My recollection is that the president of the Country Women’s Asociation of Queensland, Mrs. Sterne, and another member of the organization called upon me in Canberra. ‘ They discussed the question of the provision of a site in this city on which to erect a centre for the association. They requested that taxation concessions should be granted to their organization and asked how a proposed allocation of £15,000 for certain housekeeping services was to be expended. I wrote to the president and replied to her questions on those three matters. Representations were made by the Country Women’s Association with regard to the subversive activities of a particular organization in Australia. On previous occasions I have explained the Government’s policy in that connexion. If individuals engage in subversive activities, proper action will be taken against them, irrespective of the organization to which they belong. I receive many letters dealing with so-called subversive activities. It is a subject upon which I have received representations from the. Country Women’s Association, but I do not knowat the moment from which branch therepresentations emanated.
– A letter was. addressed to the Prime Minister.
– I was told that the. ladies were calling to see me and I waa warned by my secretary that that was probably what they wished to talk to me about. However, when I saw them I found that they desired to discuss other matters as well. I shall cause further inquiries to be made.
page 2330
Mental Treatment
– On the 2nd Septem ber, I asked the Minister for Repatriation a question about ex-servicemen who are inmates of civilian mental asylums, but I have received no reply. Will the Minister state the reason for his reluctance to reply? Has he something to hide? When may I expect to receive a reply?
-I have nothing to hide. The Repatriation Department is run too well for there to be anything to hide in connexion with its administration. I regret that the honorable member’s question has not been answered before this, and I shall endeavour to expedite the preparation of a reply.
page 2330
– I ask a question of the Minister for the Army about the theft of 51/2 tons of rifle ammunition from Mangalore, including 46 boxes of armour-piercing cartridges, and 67 boxes of cartridges of other kinds. It was stated in court that the ammunition was stored in a shed half a mile from the main depot, and hidden from sight; that no guards were maintained in the area; and that inspection was made daily from a jeep, with closer inspections at irregular intervals. Does the Minister believe that the practice of storing ammunition in such isolated depots should be continued? Would it not be better to store it in a central place, so that it might be more effectively guarded, and thus kept out of the possession of unauthorized persons ?
– The press report quoted by the honorable member is inaccurate. I thought he knew something about the storing of ammunition.
– I have seen that very shed.
– If the honorablegentleman know? all about the subject, he should know that ammunition must be stored in isolated places. I have inspected all the areas where ammunition is stored, and I am quite happy about the position. If some ammunition is missing, it is not for want of guarding. Probably there are other reasons to account for it.
page 2330
– In view of the statement by Mr. Gurney, Trade Commissioner in the United Kingdom for Victoria, South Australia and Tasmania, that employers and employees in Britain are working hand in glove to develop Britain’s export trade, will the Prime Minister say what has been done in Australia to increase production since his recent appeal to that end to employers and employees ?
– I have not seen the statement referred to by the honorable member. I have felt it a duty, as have other members of the Government, to urge employersand employees to do their best, in the interests of Australia and of other countries, to increase the production of those goods which are necessary to maintain and improve the standard of living in this country and in others. It is impossible to gauge the effect of such an appeal. I hope that what we and others have done will have impressed upon the workers the importance of doing thier best to increase production in their own interests and in the interests of others.
page 2330
Police Uniforms
– In response to a question which I asked in the House last week relative to the clothing allowance granted to police officers in the Australian Capital Territory, especially women police, I have received a letter from the Minister for Labour and National Service, which reads as follows: -
These allowances were fixed by the Police Arbitral Tribunal. This tribunal fixed the plain clothes allowance of the plain clothes branch of the force at£1 per week, and the allowance to the members of the uniform branch of the force (male or female) at 7s.6d.
Police women in the Australian Capital Territory are not attached to the plain clothes branch, and receive the same clothing allowance as the male members of the uniform branch of the force.
Will the Minister state when these allowances were fixed by the tribunal and when women police were introduced into the police force of the Australian Capital Territory ? Will the honorable gentleman consider the possibility either of transferring women police to the plain clothes branch or of providing police women with uniforms 1
– I have been informed that there are no female officers of the police force in the Australian Capital Territory who are entitled to a clothing allowance, and that if police women were attached to the uniform branch of the force they would be entitled to the same clothing allowance as is paid to male members of the force. I have no information about the Police Arbitral Tribunal other than that it is a special body which was established to deal with conditions in the police force in the Australian Capital Territory. I do not know for how long the tribunal has been operating or for how long a female officer has been attached to the police force in theAustralian Capital Territory. Only one female police officer has so far been appointed. I shall ascertain how the tribunal operates, for how long, it has been functioning, and why no police women have been appointed to the uniform branch of the force. I shall furnish the additional information to the honorable member as soon as practicable.
page 2331
Mr. Gullett having addressed a disallowed question to the Prime Minister,
– Order ! Honorable members are not entitled to discuss what has taken place in the Senate, and consequently are not entitled to base questions on such subjects.
– On a point of order, Mr. Deputy Speaker, my question arises out of-
– No point of order can be taken in relation to questions over which the Chair has complete control.
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Inter-union Dispute in New South Wales.
– As the Prime Minister is aware,, there is at present a serious coal strike in New South Wales which has resulted in unemployment among thousands of innocent workmen and others who are not participants in the strike. In view of the failure of the Australian Workers Union and the miners’ federation to reach an agreement, and in view of allegations that an agreement has been prevented by certain interests who desire the strike to continue, is it the intention of the Government to protect the livelihood and interests of thousands of people, or is the Government prepared to surrender its constitutional authority to outside bodies ?
– Yesterday, I answered a question which related to precisely the same .matters as those which the honorable member for Richmond has now raised. I then indicated that the Minister for Shipping and Fuel and I, in conjunction with other interested parties, were endeavouring to find a solution of the problem. Apparently, an agreement was reached between officers of the Australian Workers Union and the miners’ federation at the instance of -the Australian Council of Trades Unions, but was repudiated or was not endorsed by the council of the miners’ federation. The Minister for Shipping and Fuel and I thereupon endeavoured to re-open the negotiations. We were more than profoundly disappointed by the failure of the council of the miners’ federation to endorse the original agreement. Yesterday, I communicated with the two officers who had convened the original conference between the Australian Workers Union and the miners’ federation, and also with Mr. Monk and Mr. Clarey, the president and secretary respectively of the Australian Council of Trade Unions. Mr. Monk and Mr. Clarey left for Sydney this morning, and convened a conference for 2.30 p.m. to-day. I am fully alive to the difficulties and hardships which the stoppage is imposing on many people and upon industry. If it were not for those difficulties amd hardships, I would not be bothering about the matter. It is because the interests of the community are threatened that I have taken such an active interest in the dispute.
page 2332
– I have noticed in the press a report that Dr. A. H. Stauerzenhosecker, a German medical officer, who was born in New Guinea and was interned at the outbreak of World War II., is to be deported to Germany with his four children, three of whom were born in an internment camp in Australia. There may be good reasons for deporting Dr. Stauerzenhosecker ; if so, I should like the Minister for Immigration to inform the House of them. As Italians, who were former enemy subjects, are being admitted to Australia, does the Minister consider that it will be advisable to send this doctor and his young children to Berlin, where, he states, he has no home, under the conditions existing in that city at the present time?
– I have some recollection of the case. The German concerned was given the opportunity to appear before Mr. Justice Simpson, who was a commissioner appointed under an act which this Parliament unanimously accepted, to determine which internees who were enemy aliens during the war should be repatriated’ to Germany, and which should be allowed to stay in Australia. Mr. Justice Hutchens,,’ of Tasmania, examined the cases of overseas internees. They all must have been enemy aliens to be subject to those inquiries.
– Dr. Stauerzenhosecker was born in New Guinea.
– Order ! The honorable member for Balaclava must not interject when the Minister is answering a question.
– If he were born in New Guinea, he would not necessarily be an enemy alien, although, under the dual nationality which exists in regard to certain peoples, he could technically nave been regarded as an enemy alien-
– He was born in German New Guinea.
– In any event, he was deemed to be an enemy alien under our law, and Mr. Justice Simpson recommended that he be repatriated to Germany. I think that this case came to my notice last year, when, on compassionate grounds, I did not insist upon his departure in the first batch of people who went back to Germany on General Heinzelmann. Because winter was approaching in Germany, I allowed that gentleman the opportunity to stay longer in Australia, not for his own sake, but for the sake of his children. I understand that Dr. Stauerzenhosecker wants to go to New Guinea. Mr. Justice Simpson has recommended that he should not go there. I think that His Honour was prepared to allow Dr. Stauerzenhosecker to stay in Australia, but he preferred to return to Germany if he was not permitted to go back to New Guinea. He has made his choice, and I have no option but to carry out the law.
– According to the press reports, he does not desire to return to Germany.
-Order! If the honorable member for Balaclava cannot control himself, he should bring a. caretaker with him into the House.
– I rise to order 1 I was supplying information to assist the Minister to answer my question.
-The honorable member for Balaclava is distinctly out of order in interrupting a Minister who is replying to a question. The honorable member’s persistent interjections make him a complete nuisance in the House.
– I think that you, Mr. Deputy Speaker, should withdraw that remark. In the House of Commons, an honorable member is permitted to ask for a supplementary answer.
– Order ! No point of order is involved.
page 2332
Formal Motion for Adjournment
– I have received from the Acting Leader of the Opposition (Mr. Harrison) an intimation that he desires to move the adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely -
Maladministration in the Repatriation Department and in particular the attitude of the Minister for Repatriation in endeavouring to influence the judgment of the war pensions entitlement appeal tribunals by improper means.
– I move -
That the House do now adjourn.
-Is the motion supported?
Five honorable members having risen in support of the motion-,
– The words I use are grave, but they were carefully chosen. I propose to reveal to the House, amongst other things, a gross example of ministerial duress and intimidation of the war pensions entitlement appeal tribunals. It will be necessary for me to quote extensively from a document in my possession. It is not a secret document. I propose to table it at the end of my speech so that it shall be public property. I have the full authority of the person who supplied it to do so.
– What is his name?
– He is Mr. M. A. Hickey, a former member of the No. 1 War Pensions Entitlement Appeal Tribunal. It is necessary for. me to quote extensively from the document, because
Attempts have been made to prevent the Parliament, from obtaining the full facts of the maladministration of the Repatriation Department. The only chance honorable members have of obtaining the true picture is provided by the statements of a responsible one-time member of the No. 1 Tribunal. Recently we had placed before us the report of the No. 1 Tribunal. I do not propose now to debate what is contained in it. I hope the time will come when we .shall be able to debate it. All that I intend to do is to direct attention to the following damning statement on page 7 of the report : -
At the present time inefficiency persists ^through every stage in the handling .of pensions -claims even up to the appeals of this Tribunal.
The No. 1 Tribunal recommended in the final paragraph of its report -
That a general inquiry into the administration of the Repatriation Act, including an investigation into the matter raised in the report be conducted by a competent authority having no association with the Repatriation Department.
That is all I propose to say about about it, but it is sufficient to show that the presentation of that report caused members of the tribunal to lose their jobs. They lost their jobs because they dared to criticize the Minister for Repatriation (Mr. Barnard). The Minister used duress and intimidation. When he failed to achieve his object by those means he refused to reappoint the tribunal. He disposed of the tribunal by a subterfuge, notwithstanding that the tribunal is essential to the welfare of ex-servicemen. There was delay in presentation of the report to the Parliament. Certain members of the tribunal were slandered. I now_ propose to quote from a letter sent to me by Mr. M. A. Hickey, of 18 Kelletstreet, Kings Cross, formerly a member of the No. 1’ Tribunal. In it he says -
The simple fact is that the whole tribunal resisted political pressure placed upon it. It persisted for years in trying to have justice done to ex-servicemen, and in the process demanded that the Repatriation Department, now become an entrenched and powerful bureaucracy, not only carry out the law of the land, confirmed by the Attorney-General, but also improve its grossly inefficient .methods. In doing its duty it antagonized successive Ministers of Repatriation. In the case of Mr. Barnard, as I shall show later, it resisted political pressure placed upon it in connexion with its parliamentary report and persisted in reporting the facts to the Parliament. Finally, having battled for years, the Chairman resigned in disgust last February.
The Attorney-General (Dr. Evatt) of the present Government, mark you, gave his opinion about the law referred to, but that opinion was entirely disregarded by the Minister for Repatriation and the Repatriation Commission. Mr. Hickey goes on to refer to Mr. O’Sullivan, who was chairman of the tribunal and who stood on a couple of occasions as a Labour candidate for election to the Parliament. His party political qualifications cannot be questioned. Mr. Hickey states -
O’sullivan can speak for himself. I know, however, that he did not resign because he had got another job. He got another job because he had had enough and wished to resign from the tribunal. Before he left the tribunal he issued a virtual ultimatum to Mr. Barnard, together with the other tribunal members, that if the mess was not cleaned up he, Mr. Barnard, would have to explain himself before the Parliament. This, of course, was the proper action for any self-respecting body to take. This ultimatum is contained in the last paragraph of the tribunal’s letter to Mr. Barnard dated 28th February, 1948, and contained in the annual report. Neither Dibdin nor myself were under any illusions about the likely effect it would have upon our future. We were not mistaken. A fortnight later we were told by Mr. Barnard that the Government did not require our services.
Honorable members can thus see the result of the tribunal’s having dared to make a report to the Parliament uninfluenced by ministerial direction. I pass ou to page 6 of the letter, on which Mr. Hickey poses the question, “Why did Mr. Barnard get rid of the tribunal ? “ He says -
In my opinion he sacked the tribunal because the tribunal refused to be intimidated by him j because the tribunal refused to be intimidated by one of the parties to its appeal, the Repatriation Commission; because .the tribunal insisted that the Repatriation Commission should obey the law of the land, and finally, because the tribunal persistently reported the facts to the Parliament, originally against pressure placed upon it by Mr. Barnard.
Those are grave statements made by a person who is not apt to make statements lightly. A former member of the tribunal says that it was subjected to intimidation and political pressure to influence it to refrain from placing before the Parliament certain abrogations of the repatriation law, even in the teeth of the opinion of the Attorney-General in regard thereto. In order to demonstrate the truth of these assertions, we have only to remember certain facts. The first is that the tribunal was established in 1929 at the request of ex-servicemen whose discontent with the decisions of the Repatriation Commission was becoming far too vocal. That fact was pointed out in the report. The second point that I wish to make is that the independence of the tribunals, which was the main reason for their coming into existence, almost as the high court of ex-servicemen, was destroyed by Mr. Frost, a former Minister for Repatriation and a compatriot of the present Minister, when he appointed an employee of the Repatriation Commission as the nominee of the Government on the tribunal. That was opposed to the whole spirit of the sections of the Australian Soldiers’ Repatriation Act, under which the tribunals were brought into being. The essence of those sections is that the tribunals must be completely independent of the Repatriation Commission. A mockery was made of the sections when an employee of the commission was appointed to the tribunal. I have nothing to say against Mr. James, the employee concerned, in a personal sense, but he was sitting in judgment on his own decisions, because the tribunal heard appeals from decisions made by the Repatriation Commission. The decisions were made when he was an employee of one of the parties to the appeal. Subsequently, as a member of the tribunal, he was called upon, annually, to make reports to the Parliament against his employers. It is a pretty affair when a person must sit in judgment on his own decisions, and then be called upon to make a report on the matter to the Parliament. That set-up has been adopted by the respective Ministers for Repatriation from time to time, in order to stifle the appeal tribunals. Mr. Hickey’s letter refers to the efforts that have been made by the tribunal to get the commission to preserve the repatriation laws. There has been a long fight between the tribunal and the Repatriation Commission. In his letter, Mr. Hickey said -
It should be obvious from the Report that we failed to make any headway, although the law which we were attempting to demonstrate to the Chairman of the Repatriation Commisssion had been confirmed by the AttorneyGeneral, Dr. H. V. Evatt, two years before.
We then decided that the position hari reached the stage that, in addition to the statements made in our Parliamentary Report the previous year, we should specifically present the issues to the Parliament. We thought, however, that it would be proper to provide the Minister with a final opportunity of clearing up the mess. We therefore wrote him on the 28th February, 1948, advising him of our intention and demanding that something be done. This letter is included in our last Report. No reply was received to the letter.
The next development was a visit by the Minister to the Tribunal’s rooms in Sydney on Monday, 15th March, 1948. Barnard then advised me that he had decided to dispense with the services of Dibdin and myself after the end of June. A minute of that interview prepared immediately after the interview had concluded from notes taken at the time, is attachment “Gr” to this letter. It is self-explanatory and is a great deal different from the “ reasons “ Barnard is now advancing.
I now quote from the minutes of an interview between Mr. Hickey and the Minister, held at the tribunal’s rooms in Sydney on the. 15th March, 1948. It reads -
Barnard said that he had been embarrassed by actions of the Tribunal. I said a Tribunal’s job had legal and moral obligations, regardless of who was embarrassed and asked what action he meant.
I said . . . The Tribunal for years had tried both with Mr. Frost and the Repatriation Commission and himself to have rectified what was a scandalous position, and had made no headway. It was, therefore, bound to report the whole matter to Parliament. The fact that it embarrassed him, the Minister, who also appointed the Tribunal, could not be helped. . . The Minister said that towards the end of Mr. O’Sullivan’s term of office lie, O’sullivan, had seen fit to write a spiteful letter to the Repatriation Commission upon the question of the “ Onus of Proof “. I said that the letter in question was from the Tribunal, was entirely objective and set out the true position in law and fact. I said I was astonished that the Tribunal, which was only carrying out the law, and trying to stop injustices to (ex-servicemen, had been met not only with non-co-operation but also with active resistance. He said he thought the Tribunal had been indiscreet. I said one important aspect of the law was being broken in defiance even of Dr. Evatt’s direction.
Honorable members will therefore gainsome idea of the fight that has been carried on . by the members of this tribunal, in the interests of the exservicemen, to have the repatriation laws implemented. At every stage the tribunal was blocked by the Repatriation Commission and the Minister. Finally, when this matter had to be brought before the Parliament, the Minister dismissed this tribunal, which dared to criticize his administration. Only under pressure over many months did he place upon the table of the House the report which is such a damning indictment of his inefficiency and maladministration, and of the duress that was directed against that particular tribunal. Thus is revealed the gross maladministration of the department. Honorable members should now be able to understand clearly the reason for the Minister’s delay in tabling the No. 1 Tribunal’s report. In the subsequent debate, the Minister grossly slandered one of the members of the tribunal, a soldier of World War II., who is well thought of by exservicemen’s associations. In this connexion the Minister, on the 20th October, said -
One of the two tribunals was already without a chairman and I regarded a certain member of the tribunal that was discontinued as not being a suitable type for the appointment, and indeed so did the service organizations because he was placed fourth on a list supplied to me when I had asked for three recommendations. The service organization? therefore upheld my view about him . . .
The chairman of the tribunal had resigned, one member was entitled to superannuation right and was cared for, and the other was considered to be unsuitable by the service organizations and was not re-appointed.
Honorable members will recollect that the Minister made play on an allegation that this man was not acceptable to the ex-servicemen’s organizations. What he failed to tell the House was that Mr. Hickey was a government appointee. He was appointed by the Government, not by the ex-servicemen’s organizations. The Minister said that the reason that Mr. Hickey was not re-appointed was that he was not acceptable to the ex-servicemen. In that connexion Mr. Hickey, in his letter, states -
Barnard’s statement regarding myself is a blatant lie. It is a deliberate attempt to mislead the House and the public, and is a monstrous reflection upon my reputation, made under Parliamentary privilege and broadcast ali over Australia. You will appreciate that no more serious reflection could he made against the reputation of any ex-serviceman than the statement that his comrades in the ex-service organizations do not consider him a suitable person to administer justice to sick and wounded ex-servicemen.
Now, however. I find, as did Mr. Blain, another ex-prisoner of war, that I have to fight to protect my reputation against slanderous attacks made against me by Barnard. ] knew only too well that I had been victimized for doing” my duty to my comrades ; but I was prepared to’ forget it. “i am not prepared to overlook the lying abuse which has now been made. Like Mr. Blain. T am simply not prepared to take that.
I shall not deal fully with Mr. Hickey’* record. However, “diggers’.’ are well aware of this man’s splendid record. He was wounded during the seige of Tobruk ; he was wounded at El Alamein, and lost an eye ; and he saw service in North Africa and in Greece. In view of his excellent service and his connexion with the” Red Cross, the Government appointed him as its nominee. He was appointed by the Labour Government of that time. The late Mr. John Curtin was then Prime Minister. There was no need for this man to be on a panel of ex-servicemen. In that connexion Mr. Hickey’s letter states -
You will understand, of course, that the Entitlement Tribunal consists of a Chairman and a Government nominee, both appointed by the Government, and a third member, selected from panels of names submitted by ex-service organizations. I was the Government nominee. I did not therefore require nomination by exservice organizations. [Extension of time granted.] Mr. Hickey’s letter continued -
Yesterday, I discovered for the first time, that when the ex-service organizations were asked for nominations just prior to June, two bodies, the Legion and the T.B. Association, included my name in lists submitted to the Government. I stress that, being the Government nominee, I neither sought nor needed these nominations. The organizations concerned will confirm that their action waa entirely spontaneous, was done without my knowledge and, indeed, was not solicited by me in any way.
This man, who has been grossly abused and slandered by the Minister, was a government nominee. However, the Minister conveniently forgot that and said his name was the fourth on a panel of names prepared by an ex-servicemen’s organization. There was no need’ for Mr. Hickey’s name even to be mentioned on that panel. That is one of the methods that are employed to prevent people from reporting honestly to Parliament what they think about the administration of the Repatriation Department. It shows the depths to which the Minister will descend to blacken the character of a man who committed the mistake, in the Minister’s view, of criticizing him and upholding the cause of ex-servicemen.
During the debate on the Australian Soldiers’ Repatriation Bill, I said that the report of No. 2 War Pensions Entitlement Appeal Tribunal was a milk and watery document and that obviously the Minister had exercised some duress. The honorable .gentleman, with a great show of indignation, said that he strongly resented the inferences and implications of my statement that this tribunal was to some extent under his thumb and was influenced by him. He went on to say -
I think it is a most insulting and damning indictment-
– Hear, hear!
– In his letter to me of the 23rd October, Mr. Hickey said -
A member of the No. 1 Tribunal, in Canberra on another matter, called on the Minister for Repatriation and was advised by him, Barnard, that he had just received the annual report of the No. 2 Tribunal for the year 1946-47. Barnard stated that he did not agree with the contents of the report, that he was not prepared to table the report in the House and that he had returned the report to the No. 2 Tribunal. Barnard also stated that he hoped that our tribunal, the No. 1 Tribunal, would not put anything in its report which would embarrass him, Barnard, politically. The member of the No. 1 Tribunal replied that the tribunal was not concerned with politics, but would report what it felt ought to be reported. This was political pressure and intimidation.
The member concerned then returned to the No. 1 Tribunal and advised myself and the other member of the interview with Barnard. We all agreed that we would not be intimidated and promptly submitted the report for the year 1946-4.7, which has already been tabled in the House. This report criticized the Repatriation Commission for its non-observance of the benefit of the doubt and the onus of proof (S47) and observed that more eases should be allowed by the commission without the necessity for an appeal to the tribunal. All this would be proven before an independent inquiry. Because the member concerned is not at the moment in Sydney, T am not at liberty, without his permission, to divulge his name.
In the meantime, we had been requested by the No. 2 Tribunal to return the report which it had sent to us. We did so. I have now discovered that substantial alterations were made in the original report. I make no charges against the members of the No. 2 Tribunal, who are all ex-servicemen. It could well be that the members of the tribunal altered the report quite voluntarily. I realize that my statement about this matter could well be interpreted as spleen on my part. It is not so. I do say, however, that neither the members of the No. 2 Tribunal nor Barnard should ever have been placed in a position for this to happen. If war pensions tribunals were given the independence of courts it would never have happened.
Please refer to attachment “E” to this letter. This is the original report of the No. 2 Tribunal which Barnard refused to table. In connexion with this report, Barnard had a statutory duty to perform. He was bound, under section 82 of the Australian Soldiers’ Repatriation Act, to present the report to Parliament. It was the privilege of the Parliament to receive the report.
Barnard did not carry out hie duty under the law. He breached the privilege of the Parliament and returned the report to the No. 2 Tribunal. To that extent he was, in my opinion, censoring what the Parliament had every right to know. He should be asked to explain by what legal or moral right he did this.
I have a copy of that report, and I have underlined the portions that were excised from it. The criticisms of the Minister for Repatriation and his department that were deleted from the original report would have supported the report that was made by No. 1 Tribunal. However, when the Minister saw those criticisms he said that they would embarrass him politically and instructed the tribunal to take it back and to give him a doctored report. In the Minister’s view, Parliament has no right to know what is happening in his department. He told the members of No. 2 Tribunal that if they dared to prepare a report that would embarrass him, the price of their refusal to delete the embarrassing portions would be their jobs. He said that he had already, disposed of No. 1 Tribunal, and that if No. 2 Tribunal adopted a similar attitude the heads of its members would also fall. No. 2 Tribunal took its report back and amended it by deleting references to the defects of the present system. One portion of the original report was as follows : -
From the foregoing it would seem that there is no unnecessary delay in hearing entitlement appeals. Yet the interval between lodgment of an original claim with a State Repatriation Board, and its initial hearing by the tribunal, is rarely less than nine months.
Returning to the considerations detailed above, it is felt that in spite of their substance they hardly compensate for the serious delays and inconvenience inevitable under the present system. Of them, numbers (a) and (6) apply with equal force to questions of assessment, yet in such appeals they are disregarded. Further, the Commission, by a series of circular letters, keeps the various boards well acquainted with its current policy, and endeavours to secure their administrative uniformity.
However, the Commission frequently has allowed appeals to the tribunal prior to transmitting them to that body, even though it had already rejected such appeals when previously made to it from the original board decision. An automatic review along these lines of all appeals lodged for hearing by the tribunal could quite effectively replace the present system of appeal to the Commission. At the same time it would reduce not only delay but also the complexity of operations undoubtedly termed “ red tape “ by the bewildered former member of the forces.
After all, he is the person for whose relief and assistance the Repatriation Act was devised. It is his convenience that boards, commissions and tribunals alike should serve. If the number of forms to be completed - of processes to be observed - and of months to elapse prior to his securing satisfaction of his claims (or the knowledge of why they should remain unsatisfied) can effectively be reduced only the most substantial reasons could warrant their maintenance at present. levels.
That is the sort of matter that the Minister sought to have deleted from the report of the No. 2 Tribunal, and succeeded in so doing. If a Minister is prepared to .ask that a doctored report be placed before the Parliament, the Parliament can only demand that he be suspended until the matter has been fully investigated. The Opposition, therefore, demands that the Minister for Repatriation be suspended until these allegations have been investigated. I propose to table these documents.
– The honorable gentleman is not entitled to table the documents. The Standing Orders provide that papers may be presented pursuant to statute or by command of the Governor-General. That can only be done by Ministers. There is no authority for an honorable member of this House other than a Minister to table a paper. Successive rulings to that effect have been given from the Chair.
– I ask the Minister to be “ game “ enough to table the papers.
– Order I
– I ‘ am surely entitled-
– I rise to order. Would it be in order for a member of the House to move that the papers to which the Acting Leader of the Opposition (Mr. Harrison) has referred be tabled? If not, would it be in order to move that they be printed?
-Order! I have given my ruling.
– I was on a different point altogether.
– I rise to order. Can the Acting Leader of the Opposition ask that the papers be incorporated in Mansard 1 That would overcome the difficulty.
– Unread matter may be incorporated in Hansard provided no objection is raised by any honorable member of the House.
- Mr. Hickey has rendered a great service to ex-servicemen, and to the people in Australia, by showing how the administration of the Repatriation Department has been perverted by an irresponsible Minister. The Opposition demands the suspension of this Minister. In order that the contents of the documents to which I have referred may become public, I ask for leave to have them incorporated in Ilansard.
Government Members. - No
Leave not granted.
– This debate was initiated by the Acting Leader of the Opposition (Mr. Harrison) on a motion for the adjournment of the House in order to discuss -
Maladministration in the Repatriation Department and in particular the attitude of the Minister for Repatriation in endeavouring to influence the judgment of the war pensions entitlement appeal tribunals by improper means.
The arguments of the Acting Leader of the Opposition were directed to what I, as Minister, did, or did not do. They contained very little reference to the Repatriation Department as such, except insofar as it was concerned in the forwarding of cases from the commission to the War Pensions Entitlement Appeal Tribunals. Therefore, we may dismiss at once the charge of maladministration of the Repatriation Department, although there may be room for argument whether there was undue delay in the forwarding of certain documents, files and information about cases from the department to the tribunals. The charges of the Acting Leader of the Opposition are based upon a letter written by Mr. M. A. Hickey, a former member of No. .1 War Pensions Entitlement Appeal Tribunal, which has now ceased to exist. The Acting Leader of the Opposition said that Mr. Hickey had been nominated by two organizations of ex-servicemen, and that, originally, he was a government nominee on the tribunal. That is correct. He was appointed by my predecessor,. Mr. Frost, in 1942, and when the term of appointment ex pired, I re-appointed him for a further fifteen months. Members of the tribunals are appointed under the act. for a specific period. They have no right to assume that their appointment is for life. 1 notified each member of the tribunal that I proposed to extend his term until the 30th June last, when I would examine the work of the tribunals. Three months before the expiration of the term for which Mr. Hickey was appointed, I had an interview with him, .and told him thai I did not propose to extend further the term of his appointment. I desired to give him an opportunity to seek another position if he had one in view, or was able to find one. I did that, not because I was obliged to do it, but out of consideration for a man who had been a member of the tribunal for four year? and three months.
– Had the Minister received the report of the tribunal at that time?
– No, that was three months before the report was due to be presented.
– But the Minister had the previous year’s report.
– That is true. I informed Mr. Hickey that it was not likely that he would be re-appointed. We talked about a number of things at that time. He has used what purports to be an account of the conversation, which was purely of a personal character, in a document that has been placed in the hands of the Acting Leader of the Opposition. I leave the matter there. The public will judge whether such a document should be used in an attack upon a Minister of the Crown. We come now to Mr. , Hickey’s nomination for a position on the tribunal. There were previously two war pensions entitlement appeal tribunals, but one has been abolished. When, in the ordinary way, I called for nominations to fill vacancies on the remaining tribunal, Mr. Hickey’s name appeared fourth on the list submitted by the Australian Legion of Ex-Servicemen and Women. The normal procedure in such circumstances is to appoint the first choice cf the organization. The Federated Sailors, Soldiers and Airmen’s Association of Australia also placed Mr.
Hickey’s name on its list, where it occupied third place. Finally, the first nominee of the Returned Sailors, Soldiers and Airmen’s ‘Imperial League of Australia was appointed, because I believed that, as in future there was to be only one tribunal, the nominee of the largest organization of ex-servicemen should be given the position. That nominee Was Mr. Cotton, who was duly appointed. The Government nominee, and the chairman, both of whom had previously served as members of a tribunal, were also appointed. The work of the appeal tribunals has been the subject of controversy and criticism for many years. Ever since I have been a member of the Parliament, criticism has been levelled against the interpretation placed by the department upon section 47 of the act. Indeed, that section was freely criticized long before I became a member of the Parliament. On the 10th May, 1939, when the present Acting Leader of the Opposition was Minister for Repatriation, the then honorable member for Barton, Mr. Lane, asked the following question : -
Will the Minister for Repatriation examine iiic present administration of the Repatriation Department, having regard particularly to the appointment of the chairmen of the various tribunals, and the representation of soldiers on those tribunals? Will he agree to the appointment of a select committee of this House to inquire into the administration of the department?
The Minister replied -
I shall give consideration to the matters raised by the honorable member.
Nothing more was heard of it until the 26th May, 1939, when the present Acting Leader of the Opposition, speaking on the motion for the adjournment of the House as Postmaster-General and the Minister for Repatriation, said in referring to the then honorable member for Denison, Mr. Mahoney -
With respect to the remarks of the honorable .member concerning repatriation, 1 need only say that I take second place to no man in this House in my sympathy with deturned soldiers. The honorable member should know that the cases referred to me are in the last resort adjudicated upon by a tribunal which is far removed from ‘ political control and cannot be influenced by the Minister in charge of the department. That tribunal hag on it representatives of returned soldiers’ organizations, who consider claims of returned soldiers, and give a ruling which is final. Therefore, the extravagant phrases used by the honorable member, in charging past and. present Ministers with hard-heartedness, cut no ice. Any case referred to me will receive courteous consideration.
Honorable members will see from these quotations from Hansard that it is not unusual for criticism to be levelled at the Minister for Repatriation and his department and for such criticism to evoke the sort of reply made by the Acting Leader of the Opposition, when he was the Minister fer Repatriation, He claimed then, as I do now, that the department is very well administered.
– It was well administered in the past.
– By his interjection, the honorable member reflects upon the work of a very eminent soldier, General Wootten, the chairman of .the Repatriation Commission, who rendered distinguished service to his country in two wars. The honorable member also reflects upon the work of the large body of ex-ser icemen employed in the Repatriation Department. He has charged me to-day with having caused certain officers to act under duress. He said that inefficiency prevails in my department. He has charged me with having delayed the tabling of deports of the entitlement appeal tribunals. When referring to that charge a few days ago, I informed honorable members that the reports of the tribunals were tabled without delay. On the last occasion, the reports of the No. 1. and No. 2 Tribunals were tabled eight days after the report of the No. 2 Tribunal had been received. As the Acting Leader of the Opposition knows, it is in accordance with normal practice to present both reports simultaneously. There is no foundation for the charge that the tabling of these reports was delayed in order to avoid criticism of my administration of the department. It is inevitable that there shall always be controversy over the interpretation of section 47 of the act, because that section deals with ex-servicemen who believe that they have been the victims of injustice. I am proud to be able to say that very few complaints have reached me concerning the administration of my department. In the main, people regard it as satisfactory. It is most regrettable that, for the purpose of securing some trifling party political advantage, the honorable member should reflect in any way upon the members of the Repatriation Commission and that great body of ex-servicemen employed by the Repatriation Department to administer the act.
– And others.
– I agree that a few youngsters are employed in the department who are not ex-service men or women. I remind the honorable member, however, that 99 per cent, of the employees of the department are ex-service men and women.
– The criticism of the Minister’s administration was made, not by honorable members on this side of the House, but by the “War Pensions Entitlement Appeal Tribunal.
– Naturally there are some complaints. To the 31st August, 1948, the department had dealt with 1,078,339 claims, of which 794,084 were successful. At that date, 418,901 war pensions were being paid. It is only to be expected that some of those whose claims have been rejected will express dissatisfaction. There is also a potential field of dissatisfaction among those who feel aggrieved because they receive reduced pensions. This attack appears to have been directed against me principally because of the allegations made by a man who is obviously suffering from a sense of frustration because he was not reappointed to the’ No. 1 War Pensions Entitlement Appeal Tribunal.
– What about. Colonel Dibdin, the other member of the tribunal ?
– He has not complained to me. He has written to me on only one occasion, when he wanted to change his place of residence.
– Is he happy about not having been reappointed?
– As he has not expressed dissatisfaction to me, I can only assume that he has nothing to complain about. Mr. Hickey, however, has complained to me in very bitter language. No doubt he feels aggrieved at the turn of events.
– Order ! 1 ask honorable members to remain silent. If they disregard the ruling of the Chair I shall enforce .the Standing Orders against them.
– This organized interruption is being indulged in solely for the purpose of preventing the listening public outside of this House from hearing my remarks. The Acting Leader of the Opposition was heard in silence while he was presenting his case, but honorable members opposite are now seeking to prevent me from replying. The Acting Leader of the Opposition is one of the worst offenders. A story has been presented to this House about the tribunal, its reports, and the failure of the commission and myself, as Minister, to grant substantial justice to ex-servicemen under section 47 of the Australian Soldiers’ Repatriation Act. Reference has been made to an opinion which the Attorney-General (Dr. Evatt) gave, when he was a justice of the High Court, in a case before that tribunal. Certain matters are decided in courts of summary jurisdiction before a magistrate, and dissatisfied litigants may appeal to a higher court or courts in turn against judgments unfavorable to them. When a district court or some other superior court hears an appeal, the decision of the inferior court or courts is reversed in a large proportion of cases. In the same way, the decisions of deputy commissioners of repatriation, State boards and the Repatriation Commission may be reversed. [Extension of time granted.] I thank the House for its courtesy. Often, different decisions are given by various courts on the same evidence. Because magistrates or judges have differing views, decisions differ as between court and court. Differences of opinion arise even among judges in the same court, as, for instance, in the Botts case. Four justices of the High Court decided against the applicant and one justice decided in his favour. Therefore, the question whether the onus of proof has been discharged often gives rise to differing opinions between the various bodies which hear an application. In many courts, majority and minority decisions are announced. Mr. O’Sullivan, who was the chairman of the No. 1 War Pensions Entitlement
Appeal Tribunal, supported by Mr. Hickey, persistently endeavoured to obtain for applicants the right to be represented by legal practitioners before that body. Both gentlemen have endeavoured to force the commission, through me, and, indeed, by by-passing me, to allow the representative of the commission to be present in order to put the case against the applicant. I have on record evidence that ex-servicemen’s organizations have not expressed a wish that applicants should be permitted legal representation in hearings before the tribunal. The establishment of a full-dress court would be objectionable because it would tend to frustrate timid people. Personally, I should never agree that the commission should have a representative before the tribunal to cramp the style of an applicant ex-serviceman who felt aggrieved about the decision of the commission itself.
Honorable members have not heard the whole story. On the 29th August, 1946, shortly before I became Minister for Repatriation, so many difficulties had arisen in connexion with section 47 of the Australian Soldiers’ Repatriation Act that the chairman of the Repatriation Commission, General Wootten, shortly after his appointment, wrote to the deputy commissioners in the States a long letter dealing with the subject. He expressed his opinion as to what they should do in the cases which came before them. He pointed out that the onus of proof was on the commission as well as on the State board, so that applicants in making their claims, should receive natural justice. He emphasized that if any doubt arose the benefit should be given to the applicant. Mr. O’Sullivan, the chairman of the tribunal of which Mr. Hickey was a member, wrote to General Wootten as follows: -
Receipt is acknowledged of your C.li. 352. Many thanks. If you will permit us to say so, my colleagues and I feel that the circular focuses attention very clearly upon the implications of section 47, and places that section in a proper perspective.
At that stage, Mr. O’Sullivan was satisfied, and apparently Mr. Hickey was satisfied that applicants would receive even-handed justice as the result of the instructions which had been sent to the deputy commissioners in the States. In an earlier debate, I said that when I became Minister for Repatriation, I desired to see two things done. The first was that the commission and the State deputy commissioners should give prompt decisions. The second was that we should accept the full responsibility of section 47 of the Australian Soldiers’ Repatriation Act, which places the onus of proof on the various tribunals up to the War Pensions Entitlement Appeal Tribunal. That is the position. I have done everything I can to ensure that no cases get through the net but if some do they must go to the tribunal. However, when so many cases come before the other tribunals, it is inevitable that some will get through the net. Honorable members may not be aware that 44,728 appeals have been determined, and .that, at the moment, 679 cases are awaiting hearing and 184 have been deferred. In view of the large number of ex-servicemen in Australia, the percentage of cases which still await hearing is small. Despite all precautions, some cases may not receive proper justice. It is because of that circumstance that in the civil jurisdiction applicants appeal from inferior courts to superior courts. For a similar reason, ex-servicemen appeal from the decisions of deputy commissioners through the intermediate bodies to the War Pensions Entitlement Appeal Tribunal itself. Even since I have been Minister, it has been the practice to re-open cases because a little fresh evidence has been uncovered. A tribunal is not infallible.
The Acting Leader of the Opposition has read a letter from a man who is obviously sour. He feels aggrieved because he has not received an appointment to which’ he considers he is entitled. Actually, I granted him an extension of his term of office of fifteen months, and, before his term expired, he received reasonable notice that I did not propose to reappoint the tribunal. He has used what few men would use as the basis of his complaint. I refer te a personal conversation which he had with me. Most of his statement is untrue and distorted, but the Acting Leader of the Opposition has used it as an argument in support of his claim that I should be suspended from office.
– The Acting Leader of the Opposition is a great actor.
– He should have been on the stage. He has missed his vocation. I have nothing to hide in my dealings with ex-servicemen since I have been Minister for Repatriation. The wisdom of the appointments which I have made to the tribunal has been borne out hy what has happened in this debate.
.- Any person who has heard or read the extracts from the letter written by a former member of the No. 1 War Pensions Entitlement Appeal Tribunal for which the Acting Leader of the Opposition (Mr. Harrison) has quoted must be impressed with the fact that it was a vigorous denunciation of the administration of the Repatriation Department. The remarks of the writer are so vigorous that they cannot be explained away by any statement so anaemic as the reply which the Minister for Repatriation (Mr. Barnard) has made. I expected something better from the honorable gentleman. Moreover, the remarks of the writer cannot be explained away by an endeavour to discredit him. I ask honorable members to note that the letter was not so much a condemnation of the Repatriation Department as it was a criticism of ministerial ineptitude. From this debate, we gather that two distinct matters merit the serious consideration, not only of this Parliament, but also of the country. We must regard very seriously the authoritative charge that the Repatriation Department is so badly administered that the interests and the welfare of sick and wounded ex-servicemen are adversely affected.
In my opinion, an administrative principle is also involved which transcends in importance any temporary maladministration. The Public Service should always be free to give decisions on public matters, regardless of political implications and possible political repercussions. The evidence leaves no room for reasonable doubt in my mind that the charges which have been made are true, and, in the circumstances, we are descending to the tactics which, heretofore, we have associated mainly with Tammany Hall, because they are completely foreign to the usages of demo cratic institutions. The Australian public, always tolerant, is quite prepared to make allowances for members of Parliament because of their party affiliations, but the public has always believed, and is entitled to continue- to believe, that the Public Service can exercise its legitimate functions without fear of reprisals or without being influenced by intimidatory tactics. In contradistinction to the practice in many other countries, where public office is subject to political patronage, the Public Service in the units forming the British Empire has always been made a permanent institution, because it must always be above party politics. The position must become completely untenable if a tribunal appointed by the Government is made to feel that it must give decisions favorable to the government of the day or accept the consequences. Nothing could shatter public confidence more completely or do a greater disservice to the parliamentary institution than departure from that principle.
In the brief time at my disposal, I propose to deal with the facts of the case, and the circumstances in which the report was written. The Minister for Repatriation has not replied to a single charge of incompetency made by a former member of the No. 1 War Pensions Entitlement Appeal Tribunal. A difference of opinion appears to exist about the onus of proof of a disability. The tribunal, supported by an opinion by the AttorneyGeneral (Dr. Evatt) when he was a justice of the High Court, considers that the onus of proof rests upon the department, whereas the view of the Repatriation Commission, apparently, is that the onus of proof rests upon the applicant. To the man in the street, the matter is elementary. The onus of proof must be on the department because it must be wrong either at the beginning of a man’s service or at the end of it. If the military medical authorities accepted a man as Al medically fit for overseas service, obviously, if anything happened to him on that service, his disability is due’ to war service. That appears to be the reason for the dispute between the Repatriation Commission and the tribunals. This defect, with the other defects that this former officer acquaints the Parliament with, has so exercised the minds of members of the tribunal and other people that they have tried in every way to induce the Minister to take some effective action to remedy it, but apparently without effect. Finally, ‘the officer sent a letter to the Minister pointing out the many defects and stating that unless something were done, the tribunal would be forced to take certain action. The letter concludes with this significant paragraph -
The only remaining alternative otherwise is to place the whole .position before the Parliament in the next annual report, fully documented and supported by actual cases.
Such a drastic action would have the deplorable effect of interfering with the rehabilitation of sick and wounded ex-servicemen by shaking their confidence in the administration of the “Repatriation Department.
Apropos of that intention to make those disclosures to the Parliament, Mr. Hickey, as the Acting Leader of the Opposition has said, makes this statement -
Neither Dibdin nor myself were under anl illusions about the likely effect it would have upon our future. We were not mistaken. A fortnight later we were told by Barnard that the Government did not require our services.
What would have happened had those exservicemen not had the courage to remain loyal to the cause that they were appointed to serve and to their own consciences? They are men whom we expect to act in the way they have acted. The only alternative would be the appointment of a crowd of sycophants who would pay more attention to their pay envelopes each week than to the public service that they were appointed to give. That envisages political patronage and the appointment of “ Yes “ men such as we see creeping into every institution in this country that we formerly regarded as free and above suspicion. I have not sufficient time to deal with the matter very thoroughly, but the Minister claimed that the tribunal was redundantand he consequently had not re-appointed it. He denies that the failure to re-appoint the tribunal is tantamount to its dismissal. He draws a fine distinction between dismissal and failure tr re-appoint.
– I thought the honorable member for Gippsland (Mr
Bowden) considered that there were too many people in the Public Service?
– I shall deal with that matter at its proper time in a manner that will not he to the Minister’s liking. The Minister for Repatriation says that the tribunal was redundant. Two thousand appeals come up for hearing each year, and Mr. Hickey says that no tribunal can hear more than 1,000 appeals in a year. That would be a pretty fair job, too. Now, instead of three tribunals, which are necessary to do justice to ex-servicemen, there is only one. I daresay that soon the Minister for Repatriation will appoint another tribunal that will give decisions to hi.liking and the liking of the Government. We shall therefore get Tammany Hall methods in this country. Institutions will be subjected to political patronage. I therefore approve of the motion. The charges are so grave that they cannot be Lightly brushed aside by such statements as the Minister for Repatriation made. They should be the subject of full investigation.
– Order! The honorable member’s time has expired.
– It is regrettable that the honorable member for Wentworth (Mr. Harrison) should have seen fit to use the Parliament to voice what appears to be a feeling of disappointment and vindictiveness on the part of a former member of the No. l War Pensions Entitlement Appeal Tribunal. I sympathize with the honorable member because I regard it as possible that, as a representative of the people, lie was asked to ventilate the matter on the floor of the House. It is rather unfortunate that a former member of the tribunal, who has a famous war record and has suffered acutely as the result of war service, should have indicated in the very terms and nature of his letter that he is actuated by frustration and vindictiveness towards the Minister for Repatriation (Mr. Barnard), possibly because he was not re-appointed to the tribunal. The gentleman who wrote the letter that the honorable member for Wentworth read indicated his frustration and vindictiveness.
It is perhaps understandable. But his state of mind is plainly indicated by the fact that all through his letter he referred to the Minister for Repatriation as “ Barnard “. I have had negotiations from time to time with people whom I utterly dislike, but although they may be distasteful te me, I always address them as “Mr.” or “Mrs.” or “ Madame “, and do not refer to them baldly by their surnames. The writer of that letter has continually referred to the Minister by his surname. That indicates that he is overstressing his feelings against the Minister simply because he was not re-appointed. The Minister has been accused of having applied duress to influence the tribunal. Any one who knows the Minister and his most earnest and sincere efforts to have the Australian Soldiers’ Repatriation Act and everything associated with it administered with the utmost liberality must know that he would be the last man in the world to subject- to duress or intimidation any instrumentality associated with repatriation. Even if the charge were true, what does it amount to? In effect, it is a charge against members of the No. 1 Tribunal. They are charging themselves and members of the No. 2 Tribunal with being men of no backbone or substance. When the No. 1 Tribunal says that the No. 2 Tribunal’s report was of a different complexion from its report on the problems that were dealt with, what does it mean other than the returned soldier members of the No. 2 Tribunal are so weak and so lacking in backbone, even though they are returned soldiers, as to allow themselves to be subjected to. duress and are willing to come to heel when the Minister wields the lash. I am sure that the honorable member for Bendigo (Mr. Rankin) would not subscribe to an allegation of that sort against members of the No. 2 Tribunal. After all, members of both tribunals are completely independent. They were appointed by virtue of an amendment of the Australian Soldiers’ Repatriation Act made in 1929. The terms of their charter are clear and concise. The act provides that they shall be completely independent. They are . not required to work under the Commonwealth Public Service Act. They are circumscribed in their activities only in that, like other governmental and semigovernmental authorities, they are appointed for a term of years. To suggest that the Minister for Repatriation could weaken the will of these men and bring them to heel or sack them if he did not succeed in getting them to do what he wanted them to do i9 too grotesque for any intelligent man to believe.
– It is childish.
– Yes. The members of the tribunal are, with one exception, in the inviolable position of judges of a court.
– One tribunal has been sacked already.
– The honorable member says that one tribunal has been sacked. If that is true, and the man referred to was sacked because he did not come to heel at the request of the Minister, which is not true, I remind honorable members opposite that their political allies in the Victorian Parliament sacked a man from the Ballarat Water Commission because he was not of their political colour and replaced him with a member of the United Australia party, who was my opponent at the last general election. The honorable member for Gippsland (Mr. Bowden) talks about this country being dominated by political patronage, but I remind him of what happened at Ballarat. I do not object to what did happen, because my opponent at the general election was a good style of man and a returned soldier. Perhaps the Victorian Government decided that it wanted on the commission a man who subscribed to its political philosophy. There is nothing wrong with that.
Probably some of the problems met with by the tribunals resulted, not from an unsympathetic attitude of the Minister for Repatriation, but from an obligation that the Australian Labour party placed upon the tribunals when it was in opposition in 1940. At that time, the onus of proof was on the applicant for a pension or on the appellant against a decision of the Repatriation Commission. The then honorable member for Hindmarsh, Mr. Makin, moved an amendment to the Australian Soldiers’ Repatriation
Bill that was then under discussion the effect of which would have been to place the onus of proof on the commission and its associated bodies, including the tribunals. Let us examine the division list, in order to see which honorable members were really interested in the welfare of ex-servicemen. I am reluctant to do this because I know that every one is basically interested in the welfare of returned soldiers, but when on that occasion deplorable matters are raised in the Parliament to make petty political capital, one is forced to retaliate. The Votes and Proceedings of the House of Representatives for the 30th and the 31st May, 1940, which record the various stages of consideration of the Australian Soldiers’ Repatriation Bill 1940, contains the following passage : -
New Clause -
Mr. Makin moved, That the following new clause be inserted in the Bill: - . “ 10a. Section forty-five w of the Principal Act is amended by omitting the first proviso to sub-section (2.), and inserting in its stead the following proviso: -
Provided that if the appellant or a representative of the appellant makes out a prima facie case that the incapacity from which a member of the Forces is suffering or from which that member has died was caused or aggravated by some occurrencewhich happened to him after the commencement of his war service, the onus of proof that such incapacity was not in fact caused or aggravated by war service shall lie upon the Commission.’ “ Debate ensued.
The question was put and the committee divided. The “ Ayes “ numbered 28 and the “ Noes “ 25. That grand old soldier, the honorable member for Bendigo (Mr. Rankin), was one of three Government supporters to vote for the amendment, but whom do we. find amongst the “ Noes “ ? We find the honorable member for Richmond (Mr. Anthony) ; the right honorable member for Darling Downs (Mr. Fadden) ; the honorable member for Indi (Mr. McEwen) ; the honorable member for Warringah (Mr. Spender) and severalother supporters of the then Government, some of whom are no longer members of the Parliament.
– Order! The Minister’s time has expired.
– I desire to make a personal explanation.
– The honorable member for Balaclava (Mr. White) was not here then, and I exonerate him.
– I was overseas.
– Had the honorable gentleman been here, undoubtedly he would hare crossed the floor with the grand old soldier from Bendigo.
Motion (by Mr. Scully) put -
That the question be now put.
The House divided. (Mb. Deputy Speaker - Mr. J. J. Clark.)
AYES: 34
NOES: 26
Majority . . 8
AYES
NOES
Question so resolved in the affirmative.
Original question resolved in the negative.
page 2346
In committee: Consideration resumed from the 27th October (vide page 2262).
Clause 8 -
Section seventy-eight of the Principal Act is amended -
by omitting from sub-paragraph (ix) of paragraph (a) of subsection (1.) the word “and”;
by adding at the end of that para graph the following subparagraph : - “ (xi) the United Nations Appeal for Children ; and “;
Section proposed to be amended - 78.(1.) The following shall, subject to this section, be allowable deductions: -
.- I move -
That, in section 78, sub-section (1.), paragraph (a) of the Principal Act, after proposed sub-paragraph (xi), the following subparagraph be inserted: - “ (xii) all subscriptions for ex-servicemen’s memorial halls; “.
It was stated that if a gift is for some static memorial that is in stone or other similar material, or for a hall to which the public has access,the gift would constitute an allowable deduction but not otherwise. In my opinion, that is splitting straws. Generally speaking, the memorial halls where ex-servicemen meet are frequently let to other members of the community. I know that it is not the Government’s habit to accept amendments proposed by the Opposition. During the last seven years it has only agreed to two such amendments, one of which was moved by the honorable member for Fawkner (Mr. Holt) and the other by me. In both instances the amendment was innocuous. However, this proposed amendment should be agreed to by the Government. There should be no need to refer such a matter to caucus. Such a provision would assist many of the sub-branches which are at present homeless to get subscriptions. In some instances the existing provision has been circumvented by saying that there will be a chapel in the hall. Gifts, in those instances, have been allowed as deductions. In the suburbs of St. Kilda, Brighton, and Caulfield in Melbourne, the municipal councils, whilst they are not flush with funds, have given over £9,000 to assist the subbranches to acquire premises. On each occasion when such gifts have been made the applications have been lodged for exemptions from tax they have been refused and the Government has exacted the full amount of tax from the councils. The Returned Sailors, Soldiers and Airmen’s Imperial League of Australia is one of the few organizations in this country that will not have Communists within its ranks. Notwithstanding a certain judicial decision, the league intends to see that these disrupters of democracy will not be allowed to destroy the form of life that we know in this country. Many of the people who make gifts for the construction of memorial halls are not wealthy. Many of the ex-servicemen themselves are helping their comrades by lending money without interest, and by giving as much as they can affort to various worthy causes. Many honorable members must know of instances where ex-servicemen and their families are living in one room. In those instances the only places in which such ex-servicemen may congregate are the League’s clubs. Surely the Minister for Post-war Reconstruction (Mr. Dedman) must be convinced that the building of memorial halls is an essential part of the rehabilitation of the ex-servicemen, because such halls make an appropriate meeting place for former war-time colleagues. If the Minister cannot make an immediate decision in this matter, will he refer it to Cabinet? This matter has not only just arisen. I have raised this matter on several occasions, and I have correspondence from the. Prime Minister dealing with it. The position should be clarified to avoid confusion. Honorable members will recollect that the Prime Minister unveiled something in the nature of a war memorial in Sydney. That memorial was built as a result of a large gift by an affluent citizen and by smaller gifts by other citizens. All subscriptions to that memorial were allowable deductions for income tax purposes, because it was called a war memorial ; yet other memorials both to our heroic dead and to the living are taxable even though the funds come from the pockets of former war-time comrades.
– The Government cannot accept the amendment moved by the honorable member. This matter is to some degree already covered in section 78. Exemption is provided in respect of funds for the construction and maintenance of public memorials relating to the war.
– The word “ public “ vitiates the value of the provision.
– That is as far as the Government should he expected to go in this matter. If ex-servicemen’s organizations or any other organizations wish to erect private memorials, to which the public will not be admitted, that is their business, but they should not expect gifts for the erection of such memorials to be allowable deductions for income tax purposes. The act already covers public memorials.
.- 1 wish to make a protest against the scam consideration that the Minister has given to the proposed amendment. He does not seem to realize that an obligation rests on the Government to do all that it possibly can. to - help ex-service men and women to settle down- and, in a way! repatriate themselves. This Government, by maladministration, has made it difficult for people in Australia to obtain homes. Nobody has been affected more than the young men of this country who served the nation in a period of war. One way that the Government can atone for its maladministration is to assist in making it possible for ex-servicemen to build their own halls for the purpose of memorial clubs. Many subversive organizations are trying to undermine the morale and loyalty of our young men. The activities of such organizations can be nullified, at least in part, by the establishment of memorial clubs in which the men who fought in World War II. could meet and perpetuate their war-time spirit of comradeship. It would not be unreasonable to request the Government to provide the whole of the money for that purpose. All that is being asked, is that amounts donated for memorial halls which are te be used as clubs by ex-servicemen shall be regarded as an allowable deduction. Throughout Australia there is a great lack of the amenities that the people desire. A memorial hall is an amenity to which ex-servicemen are entitled. Many of them who live in small rooms and tiny house; now have no means of relaxing after « hard day’s work, and, by granting this concession, the Government would do something to help those who gave of their best to their country in war-time. In my opinion, it should be regarded as a privilege to subscribe money for this purpose, even though it is not treated as an allowable deduction, but there would be an added inducement to subscribe if the subscriptions were so treated. I appeal to the Minister to reconsider his decision. The honorable gentleman explained that gifts for the erection of public memorials are not subject to income tax, but it would be unreasonable to ask exservicemen’s organizations to throw their halls open to everybody. Such halls provide a favorable atmosphere in ‘which, exservicemen can discuss the engagements in which they took part and their war experiences in general. The whole atmosphere of such a place would be foreign to people who have not served in the forces, and they would be uncomfortable in it. I hope that before the bill reaches another place we shall be told that the Minister has reconsidered his decision for it is one which is unworthy of him and the Government, and I protest against it.
.- Last night, when another amendment was under discussion, the Prime Minister (Mr. Chifley) entered the chamber, announced that no amendments would be accepted, and walked out. On every occasion- when a bill is being discussed in this chamber, the Government might well put up a neon sign, “ No amendments will be accepted “, because that is the position in which the Parliment now finds itself. A bill is discussed by caucus, which decides what will happen. Having regard te the consideration that is now given to proposals made by the Opposition, the doors of the Parliament might just as well be shut.
This amendment is not one that has been thrown in haphazardly. It is based on the fact that organizations which ave in need of funds have been mulcted in large sums of money. The Caulfield Central branch of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia set out to obtain a sum of £13,000. Another branch of the league made a gift of £1,000, and members and nonmembers subscribed to the fund, but the £13,000 that was needed to acquire the property that the branch had in mind was not obtained. A deposit was paid, and an overdraft secured from a bank. The halls envisaged by the amendment would be memorials to the men who fell in the war, as well as assembly points for those who returned. That being so, the ex-servicemen appeal to the Government to treat as allowable deductions all subscriptions to funds that are raised to build them. The loss of revenue in volved would be small. Although the Government takes £500,000,000 a year in taxes from the people and squanders hundreds of thousands of pounds at .a time upon its socialistic enterprises, it has little sympathy for ex-servicemen. Doubtless on Remembrance Day the Prime Minister and other Ministers will attend at memorials and mouth words of remembrance of the men who did not come back. They have done so in the past, but their actions do not prove that they believe what they say. A new significance is given to the phrase “ Lest We Forget “ when the Government forgets so soon after the war that it can help in practical ways. The Minister for Post-war Reconstruction (Mr. Dedman) explained to the committee that money donated, for the erection of public memorials is an allowable deduction. Although an inanimate memorial of stone or bronze is the subject of this concession, the Government will not agree to extend it -to something that would be of use to our living memorials, that is, the men who were injured and maimed in the war. The money subscribed to the United Nations children’s appeal was an allowable deduction, and hundreds cf thousands of pounds were donated by the Australian people. The money will, of course, be put to good use, but it may well go to countries to which those> who gave it do not wish it to go. Although I wish the appeal every success, I do not see why it should take precedence of appeals in respect of the defenders of our country.
If the Minister proposes to follow the usual procedure and to say that the Government will accept no amendments, we might as well abandon the debate.
– How many amendments did the honorable member for Balaclava (Mr. White) accept when he was a Minister ‘i
– The Minister is comparatively a newcomer to the Parliament, and I remind him that during the period of office of the Government of which I was a member, if .a member of the Opposition moved an amendment that had some merit in it, the responsible Minister at least had the courtesy to admit that that was so and to say that he would take it to Cabinet and see whether approval could be obtained for it. What is the attitude of the Minister for Post-war Reconstruction (Mr. Dedman) ? When the committee was discussing the Reestablishment and Employment Bill, he sat at the table, sneering and jeering at the Opposition parties. He said, “ There will be no amendments “. He said it, and he got the Prime Minister to say it also. When the Opposition moved an amendment asking that training be given to men who were over the age of. 21 years when they enlisted, the Minister rejected it with contumely, yet he is the man that the Government pushes forward whenever a proposal affecting exservicemen is discussed in the Parliament.
I am sorry to show heat in dealing with this matter, but, having spoken to the amendment in reasonable terms, I thought that the Minister would say that there was something in it In Geelong, which the honorable gentleman represents or misrepresents, the local branch of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia has a very fine building, but it inherited it from the men who served in the first world war. I have already referred to the position in Caulfield. In Elwood, where the ex-servicemen have no building of their own, a few thousand pounds has been collected, and the municipality has made a gift of £3,000. The same thing is happening in Brighton and many other places. Great efforts are being made to raise money to build memorial halls. The Government could encourage those efforts by accepting this amendment.
Question put -
That the sub-paragraph proposed to be inserted (Mr. White’s amendment) be so inserted.
The committee divided. (The Temporary Chairman - Mr. T. Sheehan.)
AYES: 25
NOES: 35
Majority . . 10
AYES
NOES
Question so resolved in the negative.
Clause agreed to.
Clause 9 -
Sections one hundred and three and one hundred and four of the Principal Act are repealed and the following sections inserted in their stead: - “103. - (1.) In this Act, unless the contrary intention appears - distributable income ‘ means the amount obtained by deducting from the taxable income of a company -
– I move -
That, in proposed new section 103, subsection (1.), at the end of the definition nf “distributable income”, after paragraph (d), the following new paragraphs be inserted: - “(e) any expenditure incurred by the company in the course of gaining or producing any income or profit derived during the year of income, not being expenditure of capital or nf a capital, private or domestic nature, and not being expenditure which is an allowable deduction, or. where the income or profit is not included in the assessable income, which would have been an allowable deduction if that income or profit had been assessable income; “ (/) the amount necessary to restore unrecouped losses of paid-up capital : Provided that where the Commissioner is satisfied that it was necessary for a company to retain profit of the year of income to meet losses which, at the expiration of nix months after the close of that year, appeared certain to arise, he may make such allowance from the distributable income of that year as he considers just having regard to the total profit of the company for the year of income and to the undistributed profits of the company; “.
In arriving at the distributable income of a company for the purposes of Division 7, the starting point is the company’s taxable income. Where a company incurs expenditure which reduces its accounting profits, but which is not allowable in calculating the taxable income, such as donations to non-admissible charities, superannuation benefits in excess of the statutory maximum, and the like, undistributed profits tax falls on a figure which legally cannot be declared as a dividend. Similarly, when consideration is being given to the dividend which may be declared, events which have occurred after the close of the financial year may indicate that losses are certain to arise. The position may well occur in the case of companies engaged in primary production where seasonal conditions may have deteriorated sharply. The amendment would provide against such contingencies. It is based on sections 141 and 145 of the New South Wales Income Tax Management Act 1941. This is a machinery amendment, and I ask the Minister for
Post-war Reconstruction (Mr. Dedman) to accept it.
– The Leader of the Australian Country party (Mr. Fadden) remarked innocently that his amendment was a machinery provision. It is a great deal more than that, and the Government cannot accept it. In calculating the distributable income of a private company, allowances should be made for - (a) business expenses (other than capital expenses) not allowed as deduction in arriving at the taxable income; (b) amounts necessary to restore losses of paid-up capital; (c) amounts to meet future losses that appear certain to arise. These propositions were considered by the Taxation Commission of 1932-34, of which Mr. Justice Ferguson and Mr. E. V. Nixon were members. The commission reported on the matter as fellows : - 217. At first sight it might seem unreasonable that the section should be applied to a company, if it can be proved either that cash was not available for distribution, or that it was in the circumstances inadvisable .or even imprudent to make a distribution, because the amount was required to meet liabilities, recoup past losses’, or provide for losses certain to arise in the future. But if the liability to tax of an individual is compared with that of a shareholder, this argument is found to be somewhat difficult to maintain. 2 IS. The whole income of an individual, whether derived by him solely or from « partnership, is taxed at the rate applicable to its amount. No regard is had to his liabilities, capital losses, or possible losses in the future. The law does not inquire what use he makes of his income, what amount he draws’ from his business, whether he receives it in money, or whether it is capitalized or otherwise applied for his benefit. It is the amount of the income and not its distribution that is material. 227. The existence of liabilities cannot be accepted prima facie as a reason for nondistribution. Some liabilities arise in the ordinary course of business, and if they cannot be met as they mature it is clear that the capital of the company is inadequate. Other liabilities may have been voluntarily assumed by the company as part of a scheme for th, purchase of its undertaking or repayment of a loan. In many instances, these are bona fide and open to no objection except in so far as they relate to the obligation of the company to pay additional tax. In other cases there is reason to believe that the obligation has been entered into as part of a deliberate scheme to make a distribution impossible and thereby avoid additional tax. It has, therefore, been found necessary to provide both in the Commonwealth and British acts that any part of a company’s taxable income applied for the purpose of acquiring its undertaking or in redemption of capital or loans shall be regarded as income which could reasonably have been distributed. 229. The next question to be considered is whether in determining the amount that could reasonably have been distributed, allowance should be made for unrecouped losses of paid up capital or of accumulated trading profits which had been invested in the business. 230. The provisions of the section in regard to these matters are not as wide as they might appear to be. In the first place, if such capital or profits are invested outside the business no allowance is made for any loss thereof. In the second place, if the company elects to recoup the loss in any manner other than by the appropriation of taxable income, the loss is not taken into consideration. 231. These distinctions suggest that the only losses considered are those which have arisen either directly or indirectly from trading operations, which the company is not in a position to recoup from any other source. 232. Now companies, in common with all other taxpayers, are allowed to deduct from the taxable profits of any year business losses sustained during the four years last preceding. But companies are granted the further concession that in applying Section 21 consideration must be had to any excess of trading losses over the losses of the preceding four years, and in addition, any unrecouped loss of paid up capital. This further concession, which is not allowed to any other class of taxpayers, does not appear to be justified and we recommend that it be withdrawn. 233. The next question is whether in determining the amount which could reasonably have been distributed regard should be had to losses which the directors considered were certain to arise during subsequent accounting periods. 234. The allowance is restricted to cases where it can be proved that the directors, at the time of considering the distribution, had evidence in their possession which clearly indicated that such losses were “ certain “ to arise. 235. The concession holds out hope that is largely illusory, and thereby is responsible for a great deal of the present dissatisfaction with its operation. 236. We quote again from the statement referred to in paragraph 202 - “ Officials of companies sweat and strain to convince the Commissioner that at the time of considering the distribution the directors had contemplated all manner of probable future losses, and, in many cases, are able to prove that subsequent to the contemplated distribution events have occurred which justified the directors’ deci sion. But without the above-mentioned evidence of certainty at the time when the distribution was considered their efforts are invariably fruitless. . . .” 237. If directors are required to be prophets and say what losses are to arise in the future, an impossible task is thrust upon them. Directors of companies have probably foreseen all sorts of losses which have not in fact occurred. If it were known at the time when the balancesheet was prepared that a loss was “ certain to arise “, directors would be open to criticism if they then failed to make proper provision therefor either out of current profits or existing reserves. If, however, the loss could be then regarded only as probable, while provision might be made in the accounts, the actual loss should be considered for any purpose of taxation in the accounts of the year in which it actually occurs. 238. In either event the problem for the directors is no different from that which presents itself to an individual trader in the same circumstances, and we see no justification for continuing to the company a privilege which is denied to the individual.
The Government is unable to accept the amendment, as it is contrary to the principles enunciated by the commission. The Government prefers to rely on the recommendations of that commission.
– The findings of the commission are out of date.
– The recommendations of the commission deal with principles, and principles are the same to-day as when the commission prepared its report.
.- I take this opportunity to answer the observations of the Prime Minister (Mr. Chifley) and the Minister for Post-war Reconstruction (Mr. Dedman) on the subject of avoidance of taxation. They suggested that it was a wrong thing to seek to avoid paying income tax, but the law courts have drawn a very clear distinction between the avoidance of tax and the evasion of tax. It is lawful for a citizen to seek to avoid taxation when he can, though it is not lawful to evade the payment of tax. A good illustration of this was provided last night when the committee was discussing donations for missionary purposes. The honorable member for “Wilmot (Mr. Duthie) suggested that, it might be necessary for church authorities to arrange their financial statements in different compartments in such a way as to enable contributors to avoid taxation on certain gifts. According to the interpretation of the Prime Minister and the Minister for Post-war Reconstruction, such an arrangement would carry with it a suggestion of jiggery-pokery, yet it would be quite lawful, and is the kind of thing which individuals and companies quite properly do every day. It is lawful and proper for a company so to arrange its affairs as to put itself outside the ambit of a taxation measure if it can do so. Does the Minister for Post-war Reconstruction pay more tax than he is obliged to pay under the law ?
– No.
– I am glad to hear it. So much clap-trap and nonsense has been talked on this subject, and it has so often been suggested that there is something shameful in trying to avoid taxation, that it is time some one got up to defend the right of citizens to avoid, as far as they lawfully can do so, the effects of oppressive legislation. It is utterly disgraceful that efforts should be made to mislead honorable members in this chamber and listeners to broadcasts of these proceedings by suggesting that it is wrong to try to avoid taxation. I come now to ‘the subject of limited liability, about which the Prime Minister is always talking as though there were something wrong with a group of individuals seeking to limit their liability. Since 1862 in England, and not long after that in Australia, the statutes have provided for groups of persons who otherwise would have to act as partners forming companies and limiting their liability. If people put their money into a venture they are entitled to a degree of protection. They should not be mulcted for debts of the venture beyond the amount which they agreed to subscribe. There is nothing wrong with that.
– The Parliament was responsible for that provision being incorporated in the law. The people would not enjoy that benefit had the law not been passed by the Parliament.
– The development of commerce in Great Britain and in this country made these laws necessary. Of course the Parliament was responsible for these changes in the law. Parliament gave its legal and moral sanction. I object as strongly as I can to the suggestion made in a sort of delicate and indirect way, that there is something wrong about the limitation of liability. It is not only normal common-sense business practice, but good morality too, which the Minister for Post-war Reconstruction (Mr. Dedman) might keep in mind.
Dealing with private company taxation, which is covered by Division 7 of the principal act, and by clauses 9 to 13 of the .bill, the Prime Minister said when replying to the forecast of Opposition members that these provisions would lead to injustice being done to certain private companies that our contentions were all wrong. The right honorable gentleman, in effect, said that we do not know anything about this subject, that private taxation experts throughout Australia do not know anything about it, and that the only people who know anything are the Commissioner of Taxation and his satellites. The gentlemen who sit in the seats of the mighty in the Taxation Branch of the Department of the Treasury are very respectable gentlemen. As citizens they have my respect; I know many of them. But I repudiate the idea ‘that all taxation knowledge resides in them and that nobody else knows anything about this subject. That is rubbish! Out of the corner of my eye I see a gentleman from the Taxpayers Association sitting in the gallery. Is it suggested that this gentleman, whose name is well known to most people in Australia, is not an expert in taxation matters? If so, the Government has been foolish in calling upon his advice and experience in the past. Is it suggested that the Institute of Chartered Accountants, which submitted to the Government a knowledgeable and restrained report on this subject, does not know something about it? Is it suggested that responsible taxation authorities who have foreshadowed what is involved in this measure, know nothing about the subject? For the Government to say, “ You must not suggest any amendment; you must not oppose this measure because you know nothing about it; it is only our bureaucrats who know anything about it “, is to take us one step closer to the authoritarian State. The law reports o£ this country reveal that” the- so-called pundits and’ experts in the Taxation Branch themselves know little enough, about, this subject. If honorable members will browse through the income tax reports, and the High. Court reports they will find that not merely in many cases but, indeed, in most cases the appellate courts have placed a different” interpretation on legislation from that placed upon it by these gentlemen in the- Taxation Branch. I do not disagree” with the proposal to bring private companies into line with ordinary individuals and ordinary public companies: I agree with most of what has
Seen said’ on that aspect of the subject: But I disagree with the proposition1 that private companies should be treated unfairly and disadvantageously in comparison with individuals. That is’ the proposition which we on this side1 of the chamber submit to the Government. If it is * question of putting private companies on parity with individuals or groups of individuals, well and good. An examination of the Government’s proposal, however, reveals that private companies are not to be put on a basis of parity with individuals and groups of individuals. Many private companies’ will either have to change their status and become partnerships or be driven into bankruptcy. “What will happen then ? Nobody on the Government side seems to be worried about it. Other people, will suffer besides those who are driven into bankruptcy. I observe that by section 221 of the Income Tax Assessment Act 1936-1947, which was passed last year, the ancient position which used to prevail under section 84 of the Bankruptcy Act, whereby the Commissioner of Taxation had only one year’s priority for tax due, is removed. As the section has been amended the Commissioner of Taxation has an unlimited priority over all other unsecured debts in the- cases of the estate of a bankrupt.’ That means that many private traders who have -extended credit to concerns which may become bankrupt will find themselves having to take second place to the
Commissioner of Taxation. Previously the priority was extended to the Commissioner for only twelve months. Now the priority is to be unlimited. The Commissioner has only to fail to issue an assessment or to fail to collect its taxes and. th& trader, a. humble, private citizen, will find- himself out in. the cold. The Government should look into this matter more carefully. It should be pdepared to accept advice other than that of its own so-called experts.
– I have no option but to accept the rejection of the amendment, but I do not accept the specious reasons advanced by the Minister for Post-war Reconstruction (Mr. Dedman) for its rejection. The honorable gentleman could very easily have, said that he had been instructed, to reject all amendementsbecause, the Prime Minister (Mr. Chifley) last, night- stated- in no uncertain terms that no amendments would be accepted. The Minister, however, tried to mislead the committee by stating that he- rejected the amendment’ because” it conflicts with the findings of Mr. Justice Ferguson and Mr. E. V. Nixon, who conducted an exhaustive1 inquiry into this subject: The honorable gentleman’s contention is’ ridiculous. The findings of Mr. Justice Ferguson and Mr. E. V. Nixon were- based on circumstances entirely different from those which prevail to-day. Their findings were presented after considering lengthy evidence and disputation many years ago. Then the rebate’ system on dividends and the rates of tax were both vastly different from those of to-day. At that time, there was in existence a provision which enabled companies to transfer to reserves 33^ per cent, of their profits. Totally different conditions prevail to-day. My amendment was rejected solely because the Government is stubbornly determined not to accept any amendment of this very important measure.
.- The Leader of the Australian Country party (Mr. Fadden) is not the only person in Australia who knows something about company taxation. In fact, nearly every one of the matters mentioned in the amendment proposed by the right honorable gentleman was submitted by the Institute of Chartered Accountants and was given very serious consideration by the Government.
– Before the bill was presented to the Parliament? This is the place in which these matters should be considered.
– The right honorable gentleman suggested that the Government had decided to reject all amendments out of hand without giving them any consideration whatever. It has rejected the right honorable gentleman’s amendment, not because of the implications made by the right honorable gentleman but because the substance of his amendment, which was submitted by the Institute of Chartered Accountants, had already been seriously considered.
– The Minister for Post-war Reconstruction (Mr. Dedman) has just said that the amendment proposed by the Leader of the Australian Country party (Mr. Fadden) had, in fact, been considered on a submission by the Institute of Chartered Accountants before this measure was brought before the Parliament. That shows the extent to which parliamentary government has receded in this country. From time immemorial bills have been referred to committees of the House in order that they might be considered clause by clause and that due consideration might be given to amendments proposed by honorable members. Last night the Prime Minister, adopting a dictatorial attitude, strode into the chamber, made a declaration that not one amendment of any clause of this bill would be accepted, and then strode out of the chamber as though he were Abraham Lincoln and had just concluded his Gettysburg address. That attitude of the Prime Minister indicates that it is of no use for members of the Opposition to make suggestions for the improvement of legislation introduced by this Government. If [ understood aright the declaration made by the right honorable gentleman last night, it is a waste of time for the members of this committee to discuss this bill. Only by the courtesy of the right honorable gentleman are we given an opportunity to do even that. But we have certain duties and we intend to carry them out. If we cannot secure an amendment of the legislation introduced by this Government, ‘ such as that proposed by the Leader of the Australian Country party, we shall take other action when the appropriate time comes. In deference to the look in your eye, Mr. Temporary Chairman, I shall deal with the clause under discussion. The statement that this bill will have the effect of forcing many private companies out of business is scoffed at by the Government. The Minister fer Post-war Reconstruction said last night that, of the 20,000 private companies in Australia, 10,000 will not be affected in any way by this bill. When the honorable gentleman was asked to explain why that number would not be affected by it, he replied, in effect, “ Because I have said so “. His assertion has to be regarded as final proof that 10,000 private companies would not be affected by the new proposals.
– I did not make that statement.
– As usual, the honorable gentleman said a little bit too much. By a process of elimination, he reduced the 20,000 companies to 750, and attempted to show that the fears which the Opposition has expressed about the proposal were unjustified. He has stated that he has a great respect for the opinions of the representatives of the Institute of Chartered Accountants, but he tas failed to inform honorable members that those experts, who represent industry in all parts of Australia, have told the Government exactly what we are trying to tell it now, which is, that the present proposals will ultimately destroy private companies. No one has suggested that immediately the bill becomes law, all private companies will go into liquidation. The destruction of the private companies will take time, but a big percentage of them will inevitably be destroyed for the simple reason that they will be subjected to double taxation of the worst kind. A few private companies may benefit under this bill. Perhaps half a dozen individuals and members of a family have formed themselves into a private company. If they go into liquidation and are taxed as individuals, they will be infinitely better off than they will be as members of a private company.
– According to the honorable member’s view, the taxation of public companies is also double taxation.
– Of course it is double taxation. That is admitted, but the impost on public companies will be only a fraction of that to which private companies will be subjected under this bill.
– There is little difference.
– There is only the difference of 2s. in the £1 on the undistributed profits and the personal rate in respect of those undistributed profits when they are applied to the private incomes of the shareholders in the private companies. The difference in some instances may be small, but in other instances it may be large. If a public company retains 75 per cent, of its profits in undistributed dividends, the maximum tax that will be payable will be the ordinary company tax or approximately 6s. in the £1 plus undistributed profits tax of 2s. in the £1, making a total of 8s. in the £1.
– Does the honorable member know of any public company which does not distribute 75 per cent, of its profits?
– I have not access to the information which the Prime Minister has revealed. He stated that he had specific information, which should have been secret-
– Another stolen document.
– How the Prime Minister obtained that information, I cannot say. He stated that he had obtained it in a perfectly proper manner. He emphasized that the information was not supposititious. As he unfolded history, we realized that the right honorable gentleman was revealing information about the private affairs of a company in order to support his argument. He stated that he had obtained the information from an employee of that particular company, and the only conclusion which I can reach is that the person responsible for supplying it was false to his trust. The source of the information will not. bear examination.
Under this bill, a private company will be prejudiced compared with a public company or private individual. If the Government intends to destroy the small private companies, it is adopting a most efficacious means of doing so. Some members of the public have said to me, referring to this proposal, “We are not interested in the private companies. They can look after their own interests. There are only 20,000 of them in Australia, and they should be able to fight their own battles “. The fallacy of that argument is obvious. If we concede that the Government is entitled to smash a system which has established many of’ the big industries of Australia, we must be prepared to support the Government’s policy and programme. Private companies have done a great deal to extend our range of manufactures, and people have , been encouraged to invest their savings in small but expanding business concerns. Through prudent management, many of the companies, after a modest beginning, have developed into large flourishing enterprises. Some of them had their origin in a small store, the owner of which developed his business with the assistance of his family or employees and formed a proprietary company. Although members of the Opposition may talk for a long time without the faintest1 hope of securing any redress on this occasion, we can state the case, and announce our determination to do everything in our power to block the Government’s onward march to socialization.
– Never before have I seen such a derogation of the working of the parliamentary system. Following the example of the Prime Minister (Mr. Chifley) last night, the Minister for Post-war Reconstruction (Mr. Dedman) has refused to consider the amendment which the Leader of the Australian Country party (Mr. Fadden”) has submitted. Last night, the Prime Minister entered the chamber .and announced that, regardless of their merit, -he would not accept any -amendments. Evidently he was prepared to disregard any -mistakes that may have been made in the drafting of the .legislation. This afternoon, the Minister .for Postwar Reconstruction has told us that the Leader of the Australian Country party is not ‘the only authority on taxation in this .chamber. The Prime Minister and the .Minister .for Post-war Reconstruction -have told the House that .they have discussed the provisions of this bill with the representatives of the Institute of Chartered Accountants. The Minister has now told honorable -members that the Government has reached its decision, no.t as the ..result of views which honorable members have expressed, but as .the result qf .its .conversations with the accountants and certain mysterious authorities, .including, I .venture to think, some of its friends who inhabit the purlieus .of Marx House, in lower Ge.0rge7stre.et, Sydney.
– Do mot associate ‘the Institute of Chartered Accountants with Marx House.
– I am npt doing so. This refusal to .accept amendments shows that the Government is .becoming .more totalitarian. .Every day, ,and in every way, the Prime Minister is exhibiting the signs of a dictator,. . According to .reports in the press, the .Government has ever denied to .caucus the right to discuss .the provisions of this hill.
The TEMPORARY ‘CHAIRMAN (Mr. ‘Lazzarini). - Order! What the Government does to caucus “has nothing to do .with this debate.
Mk. Fadden. - That is quite right.
– You have indicated, Mr. Temporary -Chairman, -that caucus is .not involved in any of the decisions which the (Government has made on this bill, because caucus -was not consulted about it. I thank you, sir, for the information which you have so kindly and considerately given to honorable members.
The TEMPORARY CHAIRMAN.Order!
– The Minister .for Post-war Reconstruction has stated that the report -which Mr. Justice Ferguson and Mr. E. V. Nixon compiled is opposed to the view which the Leader of the Australian Country party has expressed in submitting his amendment. Thehonorable gentleman ; has .also -said’ that the -report is* an uptodatedocument, despite the fact that it is more than twelve years old, and” that the Government has decided to abideby the recommendations in it. Of course,. the Government and the Minister have ai particularly apt way of resting their decisions, not on -a complete report of a royal commission, but on certain selected.’ recommendations or statements -which they twist to their own use. The Government and the Minister regard that practice as evidence that they are abiding by the recommendations in a report. The Minister .and his colleagues - acted .in :a similar -manner in .relation to the -report of -the Royal Commission -on Monetary and Banking Systems. I usethat example to illustrate that the .policy ci -the Government is .to .use small partsof a .report, torn from .their (context, as it has -done with the report by Mr. Justice Ferguson .and .Mr. E. V. Nixon on taxation, to support its .case -in thisinstance.
I do . not propose to deal with the technicalities of the amendment. The Institute of Chartered Accountants and members of the Opposition have said that public companies, private . companies,, partnerships and individuals should hetreated in the same manner under theIncome Tax Assessment Act in order to achieve an equitable ‘form of taxation. This bill will make confusion worse confounded. Not the .slightest effort hasbeen -made -to simplify our taxation system. I cannot see why it as not possible te treat every company in exactly the same way as .a partnership is treated. Preferences havebeen made to the necessity for providing reserve funds so that companies may expand their activities. Are not privateindividuals, under a system of privateenterprise, equally obliged to establish reserves so that they may develop theirbusinesses ? Why all taxation cannot ‘betreated the same way, I do not know. If a company earns a certain income for taxation purposes and that income is- not distributed among all the shareholders, the notional dividends, for taxation purposes, could be given to all the shareholders for inclusion in their income tax returns. By the adoption of that method, we could depart completely from company taxation and introduce a perfectly equitable distribution of the earnings for taxation purposes of public companies, private companies, partners and individuals among the final recipients. Instead of adopting such a policy, the Government has put forward complex and conflicting proposals which, as members of the Opposition have shown, are grossly unfair, particularly to private companies. The Government is doing a disservice to the people of Australia by refusing to appoint a competent royal commission, similar to that constituted by Mr. Justice Ferguson and Mr. E. V. Nixon to examine its tax proposals. I understand that Mr. Justice Ferguson is dead. I advocate the appointment of a commission to investigate and recommend the simplification of taxation in order to grant justice to public companies, private companies, partnerships and individuals.
.- This clause is most important. It singles out the private companies for punishment. As was remarked in the secondreading debate, the Prime Minister (Mr. Chifley) is obsessed with the thought that he must pursue certain people even to the length of bringing down legislation that will bear unreasonably and harshly on other people whom he professes not to be pursuing. The amendment moved to the motion for the second reading of the bill by the Leader of the Australian Country party (Mr. Fadden) seeking reference of the bill to a royal commission or a select committee for investigation and report was defeated, but it may not be too late even now to appeal to the Prime Minister for reconsideration of this punitive legislation. I direct the attention of the committee to the fact that ‘competent people have shown clearly that there should be some amelioration. The Prime Minister should not be adamant. He is not one of the staff of the Sultan of Turkey.
– Order! I ask the honorable gentleman to keep to the clause.
– I am drawing a parallel. I am coming back to Australia and am only passing through Turkey. The Sultan of Turkey used to appoint governors of provinces who had the authority to extort from the subjects of the Turkish empire as much as they liked. Extortion is the Prime Minister’s practice, too.
The TEMPORARY CHAIRMAN.Order !
– Well, King John also had a reputation for extortion. But he was a novice compared with the Prime Minister. Mr. J. M. Greenwood, a wellknown chartered accountant who collaborated with Mr. J. A. L. Gunn in the writing of the standard text-book, Commonwealth Income Tax Law and Practice, wrote an article which was published yesterday iri the Sydney Morning Herald in which the following passage appeared : -
Now is a golden opportunity to jettison the whole cumbersome, antiquated structure of private company tax, in which the little man pays the big man’s taxes.
What he says is fact. This legislation will wipe out the little man, who is the real strength of the community. It is not so much the few great corporations as the many small business concerns that make for the prosperity of the community. Yet the Prime Minister, because he has found a flaw in the Income Tax Assessment Act, in a fit of pique, has brought down such a punitive piece of legislation for the purpose of removing that flaw that its removal will sound the death knell of most private companies. In this connexion he is acting as he did when the Melbourne City Council defied his banking legislation. It was that action which caused him to bring down the legislation to nationalize the private banks. The Institute of Chartered Accountants cf Australia submitted to the Prime Minister the following statement concerning private companies : -
The limited liability company is a form of business organization which has been evolved over centuries as the most effective means of enabling the finance necessary for the carrying on of business undertakings, beyond the means of more than a few people, to lie obtained by aggregating the savings of a large number of individuals.
The largest business undertakings are usually carried on by public companies.
At the other end of the scale, where a few individuals are able between them to provide the necssary finance for a business of a smaller size, the business may be carried on by the individual proprietors as sole traders or in partnership. In the case of sole traders and partnerships the ownership of the business and the functions of management are vested in the same people for, other than in exceptional circumstances, every partner has a right to take part in the management of his firm.
On the other hand, in the case of public companies, the functions of ownership and management are divorced and the shareholders, although the proprietors of the business have no right to take part in the direction or management of the undertaking. The directors, under whose control the company is carried on, are responsible to the shareholders for the efficient conduct of the company’s business but are otherwise free to conduct the company’s affairs in the manner which they consider is in the best interests of the company and its shareholders.
Private companies from the connecting link between sole traders and partnerships carrying on small businesses at one end of the scale and public companies carrying on large businesses at the other. In the smaller private companies it is common for the principal shareholders to exercise functions which correspond with those exercised by partners in a partnership. In such cases, the shareholders concerned are in general the directors and are thus able to take part in the management and control of the business.
The private company system is a form of commerce that was developed in British communities. Their lead was followed by the rest of the world. Many a private company has been formed through a man of enterprise breaking the bonds that tied him to working for wages. He has set himself up in business as an employer. His trade has expanded and he has taken some one, perhaps an employee gifted with similar initiative, into partnership. Then, with the growth of the partnership, the partners have decided that they need more finance. Shares in the concern have then been offered to and accepted by people and so what began as a one-man concern and became a partnership in turn becomes a private company. With the expansion of business, many private companies subsequently register on the stock exchange. The private company stands in the middle of the road between proprietary concerns and partnerships and the great public companies. They are to be called upon to pay more in tax than the big public companies. That is an unwarranted penalty on initiative. Why should family concerns, which is what private companies often are, be forced to pay more tax than public companies? Such private companies are often created by the beneficiaries in the will of the founder of a business who maintained it under his sole control, lt is strange that a Labour Prime Minister should treat private companies less generously than he is prepared to treat great public enterprises with millions of pounds worth of capital. Surely, on reflection, the Prime Minister will admit that he is in the wrong. I propose later to make three suggestions to the right honorable gentleman. They are based on the proposals of the Institute of Chartered Accountants, members of which know that many unnecessary anomalies and complexities will be created if the bill becomes law as it stands. We all know how difficult it is under the present Income Tax Assessment Act to estimate our own income tax, no matter how small our possessions may be. More and more people, year by year, find it necessary to ask an accountant to prepare their returns of income for taxation purposes. These proposals will make the situation even more complicated than it is. Shareholders in private companies with incomes . from other sources will have incomes from both sources assessed on different bases, and all sorts of injustices will be perpetrated as between shareholders in individual private companies. The private companies will not know what their tax assessments will be. Without that knowledge they will have difficulty in budgeting year by year. I foresee repercussions in the labour market. As I forecast in my second-reading speech, some private companies will remove their names from the register of private companies and become partnerships again. That will lead to a considerable impairment of business. The concerns will be less progressive. A trade recession is possible at any time in Australia, especially if prices for our primary products overseas .drop, as seems certain. Men will then lose their jobs.
The Prime Minister, by pursuing his present course, will promote a depression. Let him beware of the consequences of his causing men to be thrown out of work by adopting a system of punitive taxation. Occasional and inadequate reductions of income tax will not save him from the consequences of this present course of conduct. These concessions are paraded as a gift to the community and people do not seem to be conscious of the huge amounts they are called upon to pay in indirect taxes.
– Order ! That has nothing to do with the subject before the Chair.
– A tax of this kind is an onslaught on the sources of employment provided by the private companies. The Prime Minister’s banking policy restricts bank advances.
The TEMPORARY CHAIRMAN.Order! Neither has that anything to do with, the subject.
M.t. WHITE. - Indeed, it has, Mr.
Temporary Chairman; because the restrictions on bank advances may affect private companies. I know that the Prime Minister has. decided that no amendment proposed by the Opposition is to be accepted. His attitude is such that all that seems to be necessary is for the Parliament to meet for a day or two, for Ministers to mumble a few words and declare that no amendments will be accepted, for certain legislation to be passed and then for us to go home. If the Prime Minister is really concerned about the prosperity of Australia and really desires to achieve full employment, let him beware lest he, by this legislation, he does harm to employer and employee alike. The three suggestions that I make to the right honorbale gentleman are first, that a proper inquiry should be held by an impartial tribunal to determine the proper method of assessment of private companies and their shareholders; secondly, that if the existing amendments are to stand, and the law is not to be reviewed completely, all private companies should be granted the right to retain a uniform reserve of at least 30 per cent, of the distributable income; ;ind thirdly that, ns an alternative to my second suggestion, that those private companies which make reasonable dividend distributions on a scale commensurate with that adopted by public companies and be taxed on the same basis as public companies.
Amendment negatived.
Progress reported.
Sitting suspended from 5.55 to 8 p.m.
page 2359
– I move -
That the bill be now read a second time.
The principal objective of the. bill is to give the Government power to control the activities of persons in Australia who act as agents in connexion with applications for the admission to this country of intending migrants or who arrange or secure passages for migrants. This will be achieved by (i) requiring such agents to be registered, and prohibiting unregistered persons acting as agents; (ii) prescribing the fees or charges which may be made by agents for services rendered; (iii) providing for the cancellation of the registration of those agents who neglect the interests of their clients or are guilty of misconduct; and (iv) providing that amounts paid in excess of the prescribed fees or charges shall be refunded.
Numerous complaints have been received by the Department of Immigration of misrepresentation and excessive charges having been made in connexion with the preparation and lodgment of applications for the admission of aliens who wish to settle here. It has been stated that in some cases the fee charged for such a service has been £100 or even more. To justify such a charge an unscrupulous agent would allege that, if he was to succeed in obtaining approval for a migrant’s admission, it would be necessary for him to make a special visit to Canberra. In not a few cases the agent was alleged to have claimed that, if the case was to be brought to a successful conclusion, a gift of money was essential. I am happy to say, however, that in not one case has any public servant accepted money from an agent.
– Have any of the people who have actually paid, made application for the return of their money
– I understand that some of them have made application, but have only been paid that portion of the amount lodged in respect of the passage money for their intending migrant relatives. Other charges were also claimed and made, and this bill deals with some aspects of that matter also. Action will be taken to compel the agent to pay back every penny he received in excess of what is deemed to be fair and reasonable, and not only the passage money.
– Will that be done on the written testimony of the people who have been defrauded?
– We shall ask for receipts and other documentary proof. I have already announced publicly on more than one occasion that there is no necessity whatever for any agent to visit Canberra in connexion with an application for the admission of a migrant, that such visits were not welcomed and, in fact, they only hindered the work of my department. That is still the case. The Department of Immigration has an office in each capital city where applications for the admission of migrants are dealt with and all that is required is that an application in the prescribed form shall be lodged at such an office. It will then be dealt with on its individual merits in accordance with the policy laid down by the Government, and the employment of an agent does not, and will not, in any way influence a decision in favour of an intending migrant. The form of application for the admission of a migrant is quite a simple document which any person, who is not an illiterate, is capable of completing properly without calling upon the services of an agent and, furthermore, officers of my department will render any assistance necessary if an applicant is in doubt on any particular point. In regard to persons who arrange or secure passages to Australia for intending migrants, instances have come under notice where charges have been made which were not warranted by the services rendered. It has been reported that in the case of one agency, in addition to the actual cost of the passage to Australia, it charged an agency fee of £5 and 10s. for postage. I think that is the matter to which the honorable member for Fremantle has referred. At no time did the company for which this agency acted, have at its disposal any ship which could bring migrants to Australia. Yet this agency hooked over 800 passages and in every case retained f 5 10s. for agency fees and postage. That is not bad business from the agency’s point of view. It made about £4,000 in twelve months.
It has been stated that another company stipulates that if a passage is provided and the migrant is unable to take advantage of it - he may have excellent reasons for not doing so - only 50 per cent, of the passage money will be repaid. It is also understood that this company claims the right, in the case of damage or delay, to disembark passengers at any port, to retain the whole amount of the passage fares without any obligation to forward the passengers to their final destination.
– Are all of those companies operating outside of Australia?
– Unfortunately, they are all operating inside Australia. It is to regulate them that this bill is being introduced. .
– A number of cases have been brought to my notice where it was shown that Egypt is the place where immigrants are being delayed and charged more money before being brought on to Australia.
– I am not referring to those cases. The people who were detained at Port Said because no ships were available to bring them further, or because of delays of various kinds, had to pay excessive amounts for board and lodging, which in many instances caused their relatives in Australia to become nearly bankrupt. That is a matter over which we cannot exercise control.
– They are outside of Australian waters.
– Yes. The Government cannot, of course, control the activitives or charges made by persons or companies operating outside Australia. That answers the point. It can do so in respect of persons or companies operating here, and the bill will enable the Government to take effective action in respect of those acting as agents for overseas firms who seek to charge exorbitant fees or render inadequate service. Irrespective of any agreement entered into with any person or company in Australia, the bill will ensure that moneys paid in Australia for a migrant’s passage shall, at the direction of the Minister, be repaid in full if the passage is not provided within a reasonable time. This will apply not only to passage moneys paid in future, but also to those paid before the act commences to operate. In addition, the hill provides for the imposition of heavy penalties for breaches of the law and enables a court to grant adequate reparation to any person who suffers loss by reason of any offence committed by an agent. Complaints of misrepresentation and the charging of extortionate fees by unscrupulous agents are not a new experience for my department. Numbers of such complaints were received in pre-war days, but unfortunately there was no legislation in existence under which these undesirable activities could be banned or curbed. The Government’s view, with which I am sure all honorable members will fully agree, is that such a state of affairs should not be tolerated any longer. The bill seeks to put an end to the abuses which unscrupulous agents have perpetrated in the past and, therefore, fills a long felt need. As such, I strongly commend it to the favorable consideration of the House. One point which I shall like to make clear is that the provisions of the bill will apply only to persons who accept payment for their services. Individuals who desire to aid intending migrants out of friendship, and institutions and organizations which are interested in migration, but which are not profit-making concerns, will not be required to register as agents.
The introduction of the bill affords an opportunity to make certain amendments to existing immigration laws which for some time have been regarded as desirable. The principal one of these amendments is in relation to persons who have been allowed to enter Australia tem porarily under certificates of exemption, and have overstayed the period for which they were admitted, or have failed to comply with the conditions of their mission. Under the law, as it now stands, action can only be taken to enforce the departure of these persons after they have been given notice in writing to leave within a specified period. In practice this provision has proved anything but satisfactory, as on receipt of the notice many of the persons concerned disappear and the department is put to considerable expense and -trouble, sometimes entailing months of work, in endeavouring to round them up.
– Does that refer to Asiatics ?
– Yes, and any person declared a prohibited immigrant. We have declared a number of Europeans prohibited immigrants for very good reasons. If the honorable member will bear with me for a moment I shall indicate the class of Europeans to which I have referred.
It has, therefore, been decided to revert to the practice, which originally operated under immigration law, by which an order can be issued by the Minister for the deportation of any person whose exemption has expired or been cancelled, without having first to serve notice on him.
The remaining provision of the bill which calls for comment is a machinery measure designed to provide that an immigrant shall be in possession of a passport issued by a government recognized by the Australian Government, instead of, as is now the case, a government recognized by the Government of the United Kingdom. This amendment will also rectify .an existing anomaly in that it will enable legal recognition to be given under the act to vises granted on foreign passports by an Australian consular or passport officer, as well as to. those granted by other British officials.. The honorable member for Parkes (Mr.. Haylen), who asked me a question a fewmoments ago, can rest assured’ that those Europeans against whom, we issue deportation orders are persons who, being aliens and not: having lived here for more than five.. years, are liable to deportation if they have committed certain offences, and to aliens who, even though they have lived here for a longer period, have been found guilty of offences the penalty for which is twelve months’ imprisonment or longer. These persons are still liable to deportation. It may be of interest to honorable members to know that only recently I signed deportation orders against gentlemen from Queensland who had been associated with the Black Hand gang. We do not want that type of person in this country. I commend the bill to the consideration of honorable members.
Debate (on motion by Mr. Harrison) adjourned.
page 2362
In committee: Consideration resumed (vide page 2359).
Clause 9 -
– 1 move -
That, in proposed new section 103, subsection (1.), the definition of “private company” be left out, with a view to insert in’ lieu thereof the following definition: - “private company’ means a company which is under the control of not more than seven persons, and which is not a company in which the public are substantially interested or a subsidiary of a public company; “.
The definition of a private company in the bill is too wide. The result will be to bring within the scope of Division 7 of the principal act many companies which are at present regarded as nonprivate companies, and which have all the normal commercial characteristics of public companies. As a matter of principle, Division 7 should be restricted to those companies which; because of their shareholding constitution, closely resemble partnerships. Pending a full inquiry and an examination of comparable legislation in other parts of the world, the present definition should be continued. My amendment aims to restore the definition in the principal act. Although reference has been made in the Treasurer’s explanatory notes to the dicta of the High Court, in its decisions in the Adelaide Motors and Western Australian Tanners cases, it is my view that no injustice was done to the revenue by the principles laid down in those judgments. The stock exchanges of Australia have laid down rigid rules, which must be complied with before the privilege of listing is granted to companies. No company whose ordinary shares have been granted official listing should be regarded as a private company. The amendment seeks to provide protection against its being so regarded.
.- The Leader of the Australian Country party (Mr. Fadden) is endeavouring to retain the present definition of private company, which, so far as is material, means a company that is under the control of seven or less persons. It’ is clear that the definition in its present form is unsatisfactory, in the light of the edicts of the High Court in the Adelaide Motors and Western Australian Tanners cases. For all practical purposes the present definition means that unless the Commissioner is able to demonstrate by positive evidence that actual control of a company is exercised by seven or less persons, the concern is not a private company. As has already been explained, as a general rule the Commissioner is not in a’ position to gather the evidence necessary to determine the number of persons who actually exercise control of a company. Accordingly, it has been found necessary to re-state the definition in a form in which it is capable of practical application by the Commissioner. In my opinion, the definition of “ private company “, as proposed by the bill, and as modified by the amendments that I shall move, provides a very fair and reasonable method of classifying private companies. In actual effect, I doubt whether the proposed definition will enlarge the scope of private company taxation beyond what, was intended when the legislation was first enacted in 1934. In these circumstances, I cannot accept the amendment thus moved . by the Leader of the Australian Country party (Mr. Fadden).
Amendment negatived.
Amendments (by Mr. Dedman) agreed to-
Thai, in the definition of “ private company”, paragraph (c), the words “ (not being a company in which the public are substantially interested) “ he left out.
That, in the definition of “ private company”, paragraph (c), after the words “but is not”, the following words be inserted-. - “ a company in which the public are substantially interested or “.
That, at the end of the clause, the following new sub-clause be inserted: - “ (2.) Notwithstanding the amendment effected by this section, and the provisions of section twenty-three of this Act, a company shall be deemed not to have been a private company within the meaning of the definition of ‘ private company ‘ in section one hundred and three, or for the purposes of any other provision, of the Principal Act, as amended by this Act, at any time during the year of income which ended on the thirtieth day of June, One thousand nine hundred and fortyeight, if, in relation to that year of income, the company would have been deemed to be a company in which the public were substanstantially interested within the meaning of paragraph (a) of sub-section (2.) of section one hundred and three of the Principal Act, if this Act had not been passed.”.
Clause, as amended, agreed to.
Clause 10 agreed to.
Clause 11 -
After section one hundred and five of the Principal Act the following sections are inserted: - “105a.- (1.) . . . “ i05b.- . . .
– Having regard to the practical difficulties that will beset the universal application of the proposed new sections, L am apprehensive that they might be applied in some instances and not in others. In my opinion, the committee is entitled to an assurance by the Government that the new sections will be applied in all instances.
– I shall reserve my remarks until the right honorable gentleman has moved the amendments of which he has given notice.
.- Proposed new section 105a (1.) (a) reads in part - . . the Commissioner may, subject to the next succeeding section, ascertain the amount of tax, additional to the tax payable by that person . . .
I should like to be informed of the significance of the word “ may “. As I read the proposed section, it means that the Commissioner has power to make certain assessments, and that that power may be exercised at his discretion. If that is so, a degree of uncertainty will exist among the companies that will be subject to these provisions. I am appalled at the complexity of the proposed new sections relating to the assessment of the tax payable, by companies. There is a great deal of uncertainty in them, and if the Commissioner is to be vested with the power to apply certain provisions at his discretion, the uncertainty will be even more pronounced. The committee will probably agree that the proposed sections are so obscure that no company will know where it stands in regard to assessments of taxes. I feel that we are entitled to an explanation from the Minister of how it is proposed that the Commissioner of Taxation will administer this legislation.
Before an assessment can be made of the tax that is payable on the undistributed profits of a company, a number of decisions must be made, all of which will be based upon factors that are completely unknown to the company. First, the amount of the company’s undistributed profits must be ascertained. That would not present much difficulty. Then the names of the shareholders must be found, and a differentiation made between the various classes of shareholders. Next, there must be ascertained the shares held by them in other private companies, the undistributed income, as defined by Division 7 of the principal act, of each of the companies in which each shareholder holds shares, and the amount of the undistributed income of each of those companies to which the shareholders would be entitled if a notional distribution was calculated for each of them. Lastly, it will be necessary to determine the total income of each shareholder from all other sources from which he obtains income; It is only then that the Commissioner of Taxation can begin to assess what tax is payable on the undistributed profits of the company itself. It is impossible fairly and efficiently to administer the act in its present form and to issue assessment? within a reasonable time. To be good, a law must possess two qualities. First, it must be understandable by those who are effected by “it. I defy any member of the committee or anybody connected with a company to say exactly what the proposed new sections mean and how they will affect the companies to which they will apply. The second quality of a good law is that it must be capable of easy administration. This law, owing to its complexity, cannot be easily administered. Why has the Government produced a measure that is so obscure . and . difficult to administer? In some countries, the system of company taxation is much simpler than the Australian system. I refer, for instance, to the British system. In replying to the debate on the motion for the second reading of this bill, the Minister for Postwar Reconstruction said, I think in good faith, that British companies are regarded as entities in the same way as in Australia, that is, that they are subject to taxation. He inferred that the method of administering company taxation in Australia was the same as in England, and in so doing he misled honorable members. I do not know whether he did so intentionally or unintentionally, but, being of a friendly nature, I shall assume that he did so unintentionally. In Britain, company tax is imposed at a flat rate of 9s. in the £1. On every dividend that is declared by the company, tax is paid by the company at the rate of 9s. in the £1. The dividend is passed on to the shareholders at the rate of lis. for every £1. The 9s. in the £1 that was paid by the company is credited to the shareholders, and is available to be set off against the income tax to which they are liable as individuals. If the income tax payable by a particular shareholder is at a rate higher than 9s. in the £1, then he pays the difference between 9s. in the £1 and that higher rate to the Treasury. If the rate is lower than 9s. in the £1, he receives a rebate from the Treasury. No intricate calculations are involved, because all companies pay tax at a flat rate of 9s. in the £1. In addition, the tax on undistributed profits is again imposed at a flat rate. If that system were adopted in this country, the Treasury officials would be relieved of a great deal of worry in making involved calculations, and private individuals would be saved much time and uncertainty. To adopt such a system would not mean that a loss would be incurred by the Treasury, but that, as the system would be simpler than the present system, a great saving of time would be effected. I hope that the Government, even at this late hour, will consider adopting such a system. Our company taxation laws need to be as simple as possible. They must possess the qualities of equity and simplicity. I suggest that the Government should introduce a measure to simplify company taxation legislation and abandon the obscure, complex and objectionable system that is in operation at the present time.
– I rise mainly to ask for a ruling from the Minister on the precise meaning of the word “ may “, which occurs from time to time in this bill.
– The word “may” means what it means in all legislation, that is, “ shall “.
– The word has appeared in our taxation legislation for a long time, and the experience of accountants shows that it is interpreted as meaning “ must “. Whilst the word gives to the Commissioner a discretion to do one thing or another I am informed by accountants that in practice in the majority of instances, and in fact, in all of the cases of which they know, the word “ may “ has always been interpreted as meaning “ must “. The normal person would assume that the use of the word meant that an option was being given. If it is intended that an option shall be given to the Commissioner of Taxation that should be stated plainly, and accountants will then know what the position is. This measure will further complicate the present procedure.
As a result, it may take– some years for the: Commissioner of Taxation to assess the tax liability- of a private- company. It is a just ground for complaint that, even after much expense, has been incurred’, and. the company receives its assessment, it still’ will not’ know how the assessment was reached. The complexity -of the”, provision is a fundamental fault.
:. - Does the Minister for Post-war Reconstruction (Mr, Dedman.) really mean, that the. word “ may “ is to- be interpreted as meaning “shall.”?. If. so, that is- a new interpretation, to- mei. The Minister, should either correct his statement,, or amplify it. I move -
That,, in. proposed, new section- 1.05a, at’ the end of sub-section (1. ) , the following- proviso be inserted’: - “Provided that this sub-section shall apply only where the Commissioner’ is of the opinion that the incorporation’ of the group of companies was undertaken, for the purpose of avoiding or altering the. incidence of taxation’.”.
Proposed- section 105al is designed to. meet the device adopted in- certain quarters, of forming multiple companies, for the purpose of minimizing, tax. liability. While I. do not object, to this loophole being closed, I am concerned at. the effect of the amendment, on the majority of companies which are normally constituted. The grounds of. my objections to this clause are: (1) The procedure will seriously aggravate the complexity of division 7 calculations; and in. fact, may cause its provisions to be totally unworkable; (2) it is considered wrong that the interests of one shareholder in a private company should he adversely affected because another shareholder may happen to have substantial interests in- another company; (3) it will be impossible for the Taxation Branch to advise’ a company as to calculation of division 7 tax or for a company to verify its assessments. It is wrong that, even with the consent of all its shareholders, a company should not be- able to check its division 7 assessment. The objective of preventing the avoidance of tax could be achieved without extending these .provisions to normally constituted companies if the application of the proposed section were limited to cases: where; the* Commissioner of Taxation! formed the. opinion that the1 incorporation of a group, of- companies was undertaken for the purpose of. avoiding or altering; the incidence- o£ taxation. That is what the amendment proposes to. do.
– If the amendment were accepted,, the application, of. the proposed’ section 105a would.- be- made to depend, on. the formation- of an opinion by the Commissioner of Taxation that the incorporation of the group of companies was undertaken for. the” purpose of: avoiding- or altering the incidence of taxation; The practical effect of the amendment would. Be to render the section substantially inoperative. Before the section could be applied’, the Commissioner would be obliged to enter upon some inquiry or’ investigation in an endeavour to determine the purpose for which the company was formed. A company or group of companies might Have been incorported for any one. of a number of reasons which might or might not. include the avoidance of taxation. If avoidance of. taxation were a purpose of incorporation,, that purpose would be known to the incorporators alone and, as a general rule, there would be no evidence on which the- Commissioner, could base an opinion, that the purpose. of incorporation was the avoidance of taxation. The section is being, enacted, to counteract a device that has. been, employed, for the avoidance of taxation. It. is true that initial difficulties may be encountered by the Commissioner in applying the section, but. administrative difficulty is no- reason why the section should be modified. In the majority of cases-, the avoidance of taxation, is designed where a number of companies’ have been incorporated to engage in. activities which could be carried on, by one company. Under the provisions of the section, only a fair measure of taxation from private companies will be obtained. There may be inconveniences to private companies- as a consequence of the. application of the section’, but that is no reason why the avoidance of taxation should not ‘be prevented. The Government is unable to accept the amendment.
– There is no reason why the Commissioner should not form an opinion as to the reasons for the incorporation of a group of companies.
– Is the honorable member suggesting that he should form an opinion without evidence?
– He does that now.
– The honorable member for Parramatta (Mr. Beale), like all honorable members opposite, is always ready to criticize public servants.
.- The Minister for Post-war Reconstruction (Mr. Dedman), in answer to an interjection by me, said that I, like all other honorable members on this side of the committee was always willing to criticize public servants. Of course, if there is reason for criticizing public servants, if, is our duty to criticize them. However, it is untrue to say that I, and other honorable members on this side of the chamber, are always criticizing public servants. From time to time, we have paid them high tributes. I turn now to the amendment which the Leader of the Australian Country party (Mr. Fadden) has invited the Minister to accept the purpose of which is to invest the Commissioner of Taxation with discretion. The Minister’s utterly feeble and unconvincing reply was that it would be improper to invest the Commissioner with discretion because he might not have evidence upon which to base an opinion. In various sections of the principal act, the Commissioner is given discretion in regard to other matters, and I see no reason why he should not do so in this one. There is no reason why he should not make such inquiries as he can, and form an opinion to the best of his ability. The taxpayer might believe that the opinion which the Commissioner arrived at was unfavorable to him, and he might gird at it, but we must assume that the Commissioner would act in a bona fide way. The Opposition is merely asking that this unfair and unworkable provision should hp made workable. We do not wish to attack public servants. We want to give the Commissioner of Taxation wider discretion in the interests of the taxpayers so that justice shall be done.
.- Members of the Opposition have asked for guarantees that the provision which we are now considering will be administered equitably. Now, the Leader of the Australian Country party (Mr. Fadden) has moved an amendment, the effect of which would be to ensure that the provision would not be administered in the same way for all persons. The fact that other sections of the act confer discretionary power upon the Commissioner of Taxation does not affect the present issue. The amendment would place the Commissioner in an intolerable position. He would have to decide whether, when a group of companies was incorporated, the purpose was to avoid taxation, or whether the incorporation was undertaken for purely business reasons. It could be that two groups of companies were incorporated in exactly the same circumstances, and yet the Commissioner might decide in one case that the reason for the incorporation was to avoid taxation, but that in the other case, the incorporation was undertaken from ordinary business motives. The amendment would require the Commissioner to have the discernment of the Deity. If the incorporation of two different groups leads to the same business result, then the taxation appropriate to the situation should be levied in both cases irrespective of the motive.
.- The Minister for Post-war Reconstruction (Mr. Dedman) has failed to explain how this provision can be made to work effectively. The Leader of the Australian Country party (Mr. Fadden), and other honorable members on this side of the committee, have objected that a company will be. required to obtain and supply a great amount of information before a.n assessment can be made, but their objections have been brushed aside by the Minister. I have very grave doubts, not about the capacity of’ the Commissioner of Taxation and his officers, but about the power of any man to take the necessary steps to obtain the requisite information and make the necessary assessments in sufficient time not to imperil greatly the efficiency and business outlook of the companies concerned. The Minister might make it his business to explain to the committee how the exercise of the opinion of the officers of the Taxation Branch will work out in practice. I made an alternative suggestion that we should simplify the whole matter by adopting the British practice, which has worked extremely well in the past without causing undue delays and without inflicting injustice on anybody; but again the Minister maintaineda stony silence as has been his habit during the course of this debate. We want to know how these provisions will work. We do not talk merely for the sake of talking. We try to make a bad act a good one and a good act a better one; but we are stultified in our efforts by the Minister and by the example set to him and the other members of the Government by the Prime Minister himself. It is time we had a little enlightenment on these proposals. I trust that the Minister will endeavour to enlighten us about them.
– I propose briefly to reply to the assertion that because of the complexity of the proposed amendment an intolerable burden of responsibility would be thrown upon the Commissioner of Taxation. First, I desire to emphasize the importance of the amendment and its relation to this very complicated section. The provisions of Division 17 of the principal act demonstrate that heavy responsibilities have already been placed on the Commissioner, but nevertheless he has carried out his functions to the entire satisfaction of the taxpayers and the Government. Section 160aj provides - (1.) Where the Commissioner is satisfied that, in any case to which sub-section (3.) of the last preceding section would, but for this section, apply, the taxable income of the year next preceding the year of income was less than the amount of the taxable income which might be expected normally to be derived in a year by the taxpayer, the Commissioner shall determine that amount, and the provisions of the last preceding section shall thereupon apply as if the amount so determined had been the taxable income of the next preceding year.
That desirable provision leaves the determination of these matters to the discretion of the Commissioner. Section 167 reads - if-
That and other sections show the degree to which the Commissioner may exercise his discretion. Those provisions have been implemented for a number of years. To say that an addition to the discretion of the Commissioner of Taxation in the manner proposed in the amendment would throw an intolerable burden on him is ridiculous in the extreme.
– I again refer to a matter which I have already raised without avail. I ask the Minister to interpret what is meant by the word “ may “ in the phrase “ the Commissioner may”. I ask for this interpretation, not only for my own information but also for the information of people who have asked me for a definite ruling. When I referred to this matter previously the Minister said, “ ‘ may’ means ‘ shall ‘ “. I point out that “may’” gives the Commissioner an option, but “ shall “ is mandatory. If the word “may” is correctly used in the clause it should be left in the clause; but if the word “ shall “ is more appropriate it should be inserted in place of the word “ may “. The words “ may “ and “ shall “ do not mean the same thing.
– The honorable member for Deakin (Mr. Hutchinson) has been long enough a member of this chamber to realize that when the word “ may “ is used in legislation it has the same meaning as the word “ shall “.
– Not necessarily.
– If the honorable member will refer to the principal act, for which the Opposition parties were responsible, he will find that “may” is used in a number of sections in the connotation meaning “shall”. For example, section 104 of the principal act reads -
Where a. private company has not, before the expiration of six months after the close of the year of income or, if the company is a non-resident, before the expiration of nine months after the close of that year, made a sufficient distribution of its income of the year, the Commissioner may assess the aggregate amount of tax. . . ..
In that connotation the word “may” means “ shall”. In section 170 the word “ may “ is again used as meaning “ shall” If the honorable member desires further evidence I refer him to Craies on Statute Law, 4th edition, by W. S. Scott, where he will find at page 255 the following passage: -
It is, however, a well recognised cannon of construction, as Lord Cairns said in Julius v. Bishop of Oxford, that, “Where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the legislature of the conditions upon which they are entitled to call for its exercise, the power ought to be exercised, and the court will require it to be exercised. “ InR. v. Bishop of Oxford, “ so long agoas the year 1693, it was decided in the case of R. v. Barlow, that when a statute authorises the doing of a thing for the sake of justice or the public good, the word ‘ may ‘ means ‘shall ‘ “.
That ruling has been acted upon ever since 1693.
. - I shall leave the Minister to wallow in the bog of “ may “ and “ shall “ in which he is stuck, as I wish to discuss another aspect of the clause. What the right honorable member for Darling Downs (Mr. Fadden) said about this matter of discretion is correct. Glancing through the act in a hurry, I find that sub-section 5 of section 160am reads -
When a person who has been or is liable to be assessed to tax to which this section applies -
appears to the Commissioner to be about to leave Australia:
What else is contemplated there but that the Commissioner of Taxation should exercise his discretion? Obviously the
Commissioner is to form his opinion upon such evidence as he can obtain. The right honorable member for Darling Downs also referred to section 170 , (2) which reads -
Where a taxpayer has not made to theCommissioner a full and true disclosure of all , the material facts necessary for his assessment, and there has been an avoidance of tax, the Commissioner may -
The sub-section then sets out the actions which the Commissioner may take in such circumstances. There again is an instance of discretion being vested in the Commissioner. Section 205 of the principal act reads -
Where the Commissioner has reason to believe that a person liable to pay tax may leave Australia . . .
The section then provides that he may do certain things, again indicating that the Commissioner is given discretionary power and is permitted to exercise his judgment on such evidence as he has before him. I turn now to section 213, which reads - (1.) Where the Commissioner has reason to believe that any person establishing or carrying on business in Australia intends to carry on that businessfor a limited period only, or where the Commissioner for any other reason thinks it proper so to do he may, at any time and from time to time require that person to give security . . .
That section shows that the Commissioner can act if he has reason to believe that a person is about to do a certain thing. Here again is an instance of discretionary power. This merely underlines what the right honorable member for Darling Downs has said and shows that right through this legislation - and I have quoted only a few sections of it - the Commissioner is given all sorts of wide discretionary powers to act on such evidence as he can obtain and upon his opinion. For the Minister to say that we should not add to the burdens placed on the Commissioner by giving him further discretionary power is, in my view, arrant nonsense.
.- The speech which has just been concluded by the honorable member for Parramatta (Mr. Beale) attempts to defend the thesis of the Opposition members that the discretionary power contemplated in the amendment should be vested in the
Commissioner. I do not think that the instances quoted by the honorable member make a very good analogy. The honorable gentleman quoted the section which provides that if the Commissioner is satisfied that a man intends to leave Australia, or is leaving Australia in the near future, he can order an assessment to be made and interfere in the man’s affairs. The act of leaving Australia is a physical act which can be completed within a specified time. There would be definite signs of intent, such as the purchase of a ticket, the booking of a seat and arrangements to close the business or to hand it over to somebody else. Obviously the use of discretionary power in such a case would not be the same as its use to determine whether a group of companies had been incorporated in order to avoid tax, or to serve other business reasons. What endless litigation there would be if companies were not satisfied- with the Commissioner’s decision. No company would be satisfied if it were deemed to have incorporated in order to avoid the payment of taxes. The other instance invoked by the honorable member for Parramatta was equally unconvincing. The honorable member quoted the section of the principal act which provides that where the Commissioner is satisfied that a company intends to operate for a limited period only he may take certain steps. There again the Commissioner’s decision could be based on definite evidence. The intention would proceed to a conclusion. At some stage the Commissioner would be proved to be either right or wrong; but if he were called upon to determine whether a group of companies had incorporated for the purpose of avoiding taxes or for some sound business reason he would never know whether his decision was right or wrong. Honorable members opposite have established nothing other than a contradiction of their initial thesis that they were concerned that this legislation might be administered inequitably by the Commissioner. They complained also about the obscurity which the Government had left in a section of the principal act. That section was inserted in the act by a government formed - of the Opposition parties. If the sections read by honor able members opposite were intended tobe models which the Government might follow in order to avoid obscurity in legislation they were very poor models indeed.
Amendment negatived.
– I move -
That proposed new section 105b be left out.
Under this proposed new section, the calculation of tax under Division 7 will be made on the assumption (o) that the shareholder’s actual income is wholly from property and, (6) that the shareholder is not entitled to any dependent or concessional rebates. The apparent purpose is to simplify the calculation of tax. I object to the proposed new section on the ground that it will increase the burden of tax on companies, whose shareholders are in the lower income groups, and that it will diminish the value to taxpayers of concessional allowances. The provision is contrary to the avowed purpose of bringing the taxation of private companies into closer line with partnerships.
The increase of tax as the result of the proposed new section may be illustrated by a simple example. A shareholder supporting a wife has an income of £800 per annum from personal exertion. The share of a company’s undistributed income attributable to the shareholder is £300. Adopting the rates of tax for the income year ended the 30th June, 1948, I find that the additional tax payable under the present law on the £300 would be £110 3s.’ Under the proposed new section, the additional tax would be increased to £134 3s., an increase of 21.8 per cent. If the Government will not accept this amendment, we had better close up and go home.
– I have studied the amendment. As the Leader of the Australian Country party (Mr. Fadden) has stated, this provision has been included in the bill for the simplification of the calculation of undistributed profits tax.
Before the bill was drafted, extensive tests were made in actual cases covering a wide range of private companies. The Leader of the Australian Country party has taken a hypothetical case. The tests which the Government made revealed that the adoption of the provision would have a negligible effect upon the amount of undistributed profits tax payable by private companies. There will be only a difference of . 1 per cent. between (a) the calculation, taking into account the personal exertion income of the shareholder and the concessional rebates to which he was entitled, and (b) the tax calculated after disregarding those two factors. The difference of . 1 per cent. is negligible.
– I did not cite a hypothetical case. I gave a real case in round figures.
– If the right honorable gentleman will submit the case to me, I shall ask the Commissioner of Taxation to examine it.
– I shall not disclose to the Minister my private affairs.
– The Minister expects as to submit our information to him, but he will not submit his information to us.
– The Commissioner of Taxation is the only individual who has access to all the returns of private companies.
– Did he give them to the Minister?
– No, he did not give any of them to me. A wide variety of tests has shown that the difference between the two methods of calculation is negligible. Although the Leader of the Australian Country party has cited a hypothetical case showing an alleged increase of 21.8 per cent. in the undistributed profits tax in the, case of one small shareholder, the application of the provision to actual cases shows that the difference in the tax will be negligible. The provision will make a substantial contribution to simplification, which has been achieved at small cost to the taxpayers. The difference between the proposed simple method of calculation and the complicated method which it replaces is 1 per cent. The amendment which the Leader of the Australian Country party has submitted is not acceptable to the Government.
.- The Minister for Post-war Reconstruction (Mr. Dedman) has stated that the adoption of proposed new section 105b will have a negligible effect upon the amount of undistributed profits tax payable by private companies. I should like the honorable gentleman to produce some figures to prove his case. In this debate he has frequently made assertions which he has supported with his own word. If he can prove his cast with figures, he should do so. We are not satisfied with his submissions when they are not supported by evidence.
Amendment negatived.
Clause agreed to.
Clause 12 agreed to.
Clause 13-
Section one hundred and seven of the Principal Act is repealed and the following section inserted in its stead : - “107. - (1.) A person shall be entitled to a rebate of the amount by which his income tax is increased by the inclusion in his assessable income of -
dividends paid to him by a company ; or
amounts in respect of dividends paid by a company to any company, trustee or partnership interposed between that person and the company paying the dividends, where the dividends are paid wholly and exclusively out of one or more of the following amounts : - “ (2.) Where a dividend is paid either wholly or in part out of an amount specified in paragraph (e) of sub-section (1.) of this section, a person in whose assessable income that dividend, or an amount in respect of that dividend, is included shall not be entitled to the rebate provided by that sub-section unless -
the shares in respect of which the dividend is paid; and
any shares in an interposed company the payment of a dividend on which has resulted directly or indirectly in the inclusion of the amount in that person’s assessable income, are shares in respect of which a distribution was supposed to be made for purposes of the assessment of the tax or contribution referred to in that paragraph.”.
– I move -
That, in proposed new section 107. subsection ( 1 . ) . the words “ where the dividends are paid wholly and exclusively out of one or more of the following amounts” be left out, with a view to insert in lieu thereof the following words : - “ to the extent that the dividends are paid out of one or more of the following funds “.
Paragraph e of sub-section 1 of the proposed new section proposes to limit the profits available for rebatable distribution. The past practice of enabling a company to distribute as a rebatable dividend the whole of its taxed profits, may not have been completely logical but it had the effect of counter-balancing to some extent the otherwise heavy burden of tax on the company and its shareholders. As it is now proposed to severely restrict this privilege it is suggested that a small but important concession be granted. The condition of section 107 of the principal act that dividends must be paid wholly and exclusively out of taxed profits constituted an onerous burden on companies in identifying profits available for rebatable distribution. Many cases have come under notice where, because of differing opinions as tothe analysis of accumulated profits, the whole of a dividend drawn principally from taxed profits has been taxed without rebate.
– The condition that dividends shall be paid wholly and exclusively out of the taxed fund was incorporated in the law in 1934 in order to give effect to a recommendation by Mr. Justice Ferguson and Mr. R. V. Nixon. The purpose of the provision was to avoid the complications of the rebate calculations where dividends were paid out of mixed funds which had borne tax at varying rates and some of which were free from tax. If the amendment which the Leader of the Australian Country party (Mr. Fadden) has submitted were adopted, the law would partly revert to the position that it was in prior to 1934, and that would result in complicated calculations of the rebates to which taxpayers would be entitled in respectof their dividends. The provision to which the right honorable gentleman has ob jected should be retained in the interests of simplicity, and, therefore, the Government cannot accept the amendment.
.- The explanation which the Minister for Post-war Reconstruction (Mr. Dedman) has given is that this section is simplicity itself, but I should like to point out the way in which simplicity, as the result of the operation of this provision, has become confusion. On a few occasions in this debate, I have ventured to make some mild and not unfriendly comments upon the statement by the Prime Minister that it is only the Commissioner of Taxation and his officers who really know anything about the way in which this legislation will strike against companies. If honorable members will pay attention to an illustration which I propose to give, I shall prove to them that the Prime Minister (Mr. Chifley) is wrong in assuming that those who are in charge of the administration of this legislation always know what they are doing. I shall show that results will flow from this legislation which could never be intended by any reasonably minded Commissioner of Taxation. Clause 13 reads as follows : -
Section one hundred and seven of the Principal Act is repealed and the following section inserted in its stead: - “107. - (1.) A person shall be entitled to a rebate of the amount by which his income tax is increased by the inclusion in his assessable income of -
dividends paid to him by a company; where the dividends are paid wholly and exclusively out of one or more of the following amounts: -
the amount remaining after deducting from the undistributed amount of any year of income subsequent to the year of income which ended on the thirtieth day of June, One thousand nine hundred and forty-seven, the aggregate of the amount of tax payable under this Division and the amount of contribution payable under the Social Services Contribution Assessment Act 1945, or that Act as amended, in respect of that undistributed amount. “ (2.) Where a. dividend is paid either wholly or in part out of an amount specified in paragraph (e) of sub-section (1.) of this section, a person in whose assessable income that dividend, or an amount in respect of that dividend, is included shall not be entitled to the rebate provided by that sub-section unless -
the shares in respect of which the dividend is paid; are shares in respect of which a distribution was supposed to be made for purposes of the assessment of the tax or contribution referred to in that paragraph “.
I direct attention to page 43 of the memorandum which the Treasurer (Mr. Chifley) has circulated in order to show the amendments proposed to be made to the Income Tax Assessment Act. The right honorable gentleman has given an illustration of what, he describes as “ tax avoidance “. The purpose of the proposed new section is to circumvent that method of tax avoidance. It is true that tax avoidance will be- circumvented to that degree, but it is also true that other effects’ will follow which, I do not think, are contemplated by those who have drafted this bill. Under the existing law, profits which have borne the further tax under division 7, as provided in section 102, may be paid, to shareholders without again attracting tax in their hands. But in the proposed new section 107 it appears that dividends to be received by shareholders out of profits which have borne tax under division 7 will be free of tax in their hand’s only when such dividends are at the time of payment related to shares which are identifiable as the shares in respect of which tax under division 7 was previously paid. Paragraph 5 on page 4& of the explanatory memorandum supports that interpretation. Consider as an illustration of how this will work a private company with an issued capital of 40,000 shares of £1 each, all the 40,000 shares carrying equal rights, and having, at its disposal £7,000 of income retained., in the company from the profits earned after the 30th June, 1947, which have borne division 7 tax. I ask the committee to assume also that the beneficial shareholding is in the hands of only one person, making a clear-cut private company. The shareholder, for any good reason whatever, perhaps the desirability of expansion of business, decides to issue 80,000 shares with the same rights as the 40,000 that already exist. That is, he trebles the shareholding pf the company. He issues the. shares to members of the public in such a way and in such a spread of shareholdings that on the 30th June next the company, viewed in the light of division 7,. ceases to be a private company and becomes a non-private company. Two years after becoming a non-private company, the board decides to pay a dividend of £6,000 out of the fund of £7,000 - and that is a tax-paid fund - and accordingly declares a dividend of 5 per cent, on its paid-up capital of £120,000. If the interpretation, that I am contending for of the proposed new section 107 is correct, rebates will be given to those shareholders who’ at the time of receiving the dividend hold shares from No. 1 to No. 40,000, that is the original shareholders, but not to the holders of shares from No. 40,001 to No. 120,000. As the company will be a public company, we- shall inevitably have differing market prices for shares which necessarily, under the company’s articles, have equal rights in every respect. I do not imagine that any Commissioner of Taxation would intend that absurd’ result. I apprehend that one of the purposes of the amendment moved by the Leader of the Australian Country party (Mr. Fadden) is to prevent such a happening.
– Only one of them
– Yes. I have taken the trouble to work this illustration out to the best’ of my ability. I commend consideration of it to the Minister. Unless a remedy is provided, a ludicrous result will follow.
Amendment negatived.
– I thought perseverence might bring its reward, but I have six or’ seven more amendments to move. I move -
That, in proposed new section .107, subsection (2.), after the words “are shares”, the. following words be inserted: - “of the same class as’ those shares “.
Sub-section 2 of proposed section” 107 is apparently designed to nullify another tax-saving device but its application will extend to many perfectly bona fide cases. The effect appears, to be to restrict the section 107 rebate to dividends paid on such shares as. were, the subject of supposed distributions of undistributed profits of preceding years. In cases where capital is increased anomalies and complications will arise when previously taxed profits are distributed. If . the increased capital is of the same class, for example, ordinary shares, as the shares the subject of the supposed distribution, the identification of shares, the dividends on which are subject to rebate, and shares, the dividends on which are not rebatable, will be most complicated. Where the distribution is made from the taxed profits of several years the complications will be acute. Since the Companies Act and the usual Articles of Association prohibit discriminatory treatment between holders of the same class of share it will follow inevitably that a proportion of the rebate to which shareholders are equitably entitled will be lost. It is suggested that the amendment would avoid this result.
– That covers my point.
– Yes.
.- The Leader of the Australian Country party (Mr. Fadden) is near the mark this time. When the proposed new section was under consideration the draftsman considered the very wording that the right honorable gentleman has suggested, but the wordingwas finally discarded for a good reason. As the right honorable gentleman has stated, proposed new section 107 (2.) is designed to nullify a method that has been employed for the avoidance of taxation. In the course of the drafting of the sub-section; consideration was given by the draftsmen to the proposal expressed in the amendment proposed by the right honorable member. The provision was not expressed in that form, however, as it was considered that the avoidance of taxation could be continued. It wouldbe open to a company to attach specialrights and privileges to shares which were not attached to other shares of the same class. The disabilities to which reference has been made when fresh capital is brought into the company may be avoided by utilizing the taxfree reserves prior to calling for fresh capital. After a thorough examination of the proposed sub-section I do not think any injustice will be inflicted on bona fide companies. The Government is unable to accept the amendment.
.- What does the Minister (Mr. Dedman) say about the illustration that I gave of the effect of the clause which will result in shares that under the law cannot be discriminated against having a different value on the share market? How does he propose to avoid that ?
– The shares cannot be identified.
– Of course not. The desire of the Government to circumvent tax avoidance could be given effect toby the amendment moved by the Leader of the Australian Country party (Mr. Fadden). If. the Minister accepts the amendment, it will protect the position in respect of which I have given the illustration, and will so avoid discrimination between shares of equal value.
Amendment negatived.
Clause agreed to.
Clause 14-
Section one hundred and sixty of the Principal Act is amended -
by omitting from paragraph (e) of sub-section (2.) the word “ Twenty “ and inserting in its stead the word “ Thirty “ :
Section proposed to be amended - 160.- (2.) The amounts in respect of which a rebate of tax shall be allowed under the last preceding sub-section shall be -
Amendment (by Mr. Dedman) agreed to-
That, after paragraph (a) the following paragraph be inserted: - “(aa) by inserting in paragraph(g) of sub-section (2.), after the word Australia’ (wherever occurring), the words ‘ or the Territory of New Guinea’;”.
.- This clause proposes to disallow any rebate of tax in respect of payments for social services. Section 160 (2.) (f) of the Income Tax
Assessment Act allows a rebate of tax on up to £100 a year in respect to amounts paid to life insurance companies or to a superannuation fund, or to sustentation, widows’ or orphans’ funds. The Treasurer has frequently stated that the 1s. 6d. in the £1 charged for social services contributions is not taxation, and on taxation assessment notices it is shown separately as the social services contribution. He has sought to justify the imposition of the flat rate of1s. 6d. in the £1, whether a person’s income is £500 or £5,000, by the same contention, that it is not tax, but a contribution to a social services fund from which the contributor would derive benefit. However, he is now facing in the opposite direction, and denying men on the lower incomes the benefit of this deduction. But he continues to allow a rebate in respect of the £100 life insurance premium that men on the larger incomes can afford to pay. As will be seen, the rebate is allowable for payments to a “ sustentation “ fund. As child endowment, unemployment payments and the like are paid out of the National WelfareFund, for whichthe contributions are appropriated from the Consolidated Revenue, it would seem beyond doubt that the rebate, in default of this amendment, would be allowable. Actually, when the national insurance scheme was in contemplation, the bill was so framed as to allow a deduction in respect of payments made to the national insurance fund. If this amendment were not introduced into this clause everybody making the contribution for social services would be entitled to a rebate. This clause is being put in to deprive them of that, while still allowing up to £100 a year to those who, because they are in a better financial position, are able to pay for life insurance. I point out that when the national insurance scheme was in contemplation in this Parliament the section providing for that rebate was so framed as to allow a reduction in regard to payments made to the national insurance fund. The Government, by this amendment, now deliberately takes away that benefit which would accrue to a large body of salary and wage earners, but still allows the benefit to a very limited number of people who can afford to pay £100 a year for life insurance.
I point out that the memorandum showing the amendments proposed to be made, which was circulated by the Treasurer, shows that not only is the means test allowable, but that the abolition of it is proper and just to all sections of the community. The following statement appears on page 45 of the memorandum, under the heading “Explanatory Note “ : -
Under the proposed sub-section (6.) of section 160, a rebate of tax shall not be allowed in respect of any social services contribution paid by a taxpayer.
On the following page this note appears -
The sub-section is being enacted to remove any ground for a contention that a rebate of tax is allowable in respect of social services contribution as being -
a payment to a fund established by an Act relating to insurance for the personal benefit of the taxpayer or of his spouse or children - section 160 (2.) (f) (iii); or
a rate which is annually assessed - section 160 (2.) (h) (i).
Under the taxation laws of the country at present, all those who are paying social services contribution are entitled to rebates. This measure proposes to negative that provision. I draw the attention of the committee to this aspect particularly. The final words of that explanatory note read -
The sub-section will apply in assessments based on income derived during the year ended 30th June, 1946, and subsequent years.
I contend that legislation is bad when it makes a retrospective provision. The very fact that this provision is madretrospective is proof that the Governments intends to take away from a large number of taxpayers a legal right that they at present have. It proves conclusively that social services contributions are subject to rebate. I have no doubt that there are in the Taxation Branch numerous applications for rebates. They must date hack to 1945. Under the law to-day, taxpayers must be legally entitled to rebates. Indeed, the taxation experts, who know everything except how to be fair and just to the taxpayers, have said to the Government, in effect, “ Here are these claims for rebates ; they are legally right, but they are too much for us to pay.
Therefore we propose to take the provision away from these taxpayers”. I enter my protest in this matter. It is only just another mark on the road which calls for an answer from those who say that we cannot afford to abolish the means test, and that these contributions are not a tax, because the word “ rate “ is being eliminated. The Government has stated that it is a contribution for social services for a taxpayer, his spouse, and his children, yet the provision that allows a rebate is to be removed. That is the position purely and simply. A person is called upon to pay ls. 6d. in the CI as as a contribution towards the provision of social services, but now the Government, in effect, says to him, “ If you will receive any benefit out of a superannuation fund you will get nothing; if you will receive an insurance payment you will get nothing; and if you have saved during your working life you will get nothing. Although you have paid ls. 6d. in the £1 in order to become eligible for social service benefits in the future, you will not get anything’’. That clearly proves that the Government intends to take some legal right away from the taxpayers. The so-called contributions are tax, and should be incorporated in the one tax, as I have said on another occasion. As matters stand the law in this regard just means that the people who have been good citizens are to be penalized.
– As usual, the honorable member for Reid (Mr. Lang) has made quite a number of mis-statements. By proposed sub-section 6, it is proposed to make clear that a rebate of tax shall not be allowed in respect of any social service contributions paid by the taxpayer. No rebate has ever been allowed in regard to any social services contributions paid by a taxpayer, and therefore, since none has ever been allowed or paid, it cannot be claimed that this measure will take anything away from anybody.
– Will the Minister say that nobody has ever claimed such rebates?
– I am making my own statement. I am making it clear that no rebate has ever been allowed. Because none has ever been paid or allowed. this clause cannot possibly take anything away from the taxpayers.
– Then it is a useless provision.
– It was never intended that a rebate should be allowed in respect of social services contributions. The only reason for the introduction of this particular sub-clause is because some doubts were expressed as to the meaning of the provision.
– Does the Minister mean the meaning of “ may “ as compared with “shall”?
– No. Section 160(2) (/) (iii) provides that a taxpayer shall be entitled to a rebate on - payments made by the taxpayer to any fund established by any Act or State Act relating to insurance for the personal benefit of the taxpayer or of his spouse or children;
It is quite obvious why. that particular section was included in the act. It is clear that payments made by an individual for instance, in order to make provision for his wife and children, in the event of his untimely death, are rebatable. It was never intended that contributions for social services should be subject to rebate. It is only because doubt has arisen in some quarters about whether rebates come within this particular provision which related to insurance, that this clause is now proposed to be included in the principal act in order to make the position perfectly clear. I repeat that it was never intended that social services contributions should be subjected to a rebate. No rebates have actually been paid. They have never been allowed. The statement made by the honorable member for Reid, that we are taking away something which the taxpayer is at present entitled to, is entirely wrong.
.- 1 desire to raise a matter which I commend to the consideration of the Minister for Post-waT Reconstruction (Mr. Dedman) and other Government members. It deals with the position of rural co-operative societies and their disabilities under existing legislation. I wish to suggest that either now or at another time a provision should be included that dividends paid by co-operative societies shall be allowed as rebates, or, I would prefer, as deductions, before arriving at the taxable income of such societies for ordinary federal tax purposes. This is perhaps not the most appropriate time to bring this matter forward, but it is the only occasion on which I shall have an opportunity to do so. I point out to the Minister that rural co-operative societies, which are, for the most part, established in country districts to protect the interests of primary producers, at present pay at the rate of 6s. in the £1. on net profits, and 2s. in the £1 on undistributed profits. Prior to the introduction of uniform taxation, these societies paid only ls. in the £1 federal tax, and they were exempted from State tax altogether, if 90 per cent, of their business was done by their own members. That is the normal position of a rural co-operative society. It is a non-profit society, which exists only for the benefit of its members. In the main, 90 per cent., or perhaps more, of the business, is done with its members. Usually societies of this type disclose very little profit, because it is their practice to distribute the bulk of their net earnings amongst their suppliers as rebates on purchases or sales to or from the society each year. Suppliers generally do not regard their shares as of any great value, but rather as a means to obtain better services and to share in the rebates under the co-operative societies’ system. The shares are therefore generally valued at less than par for ordinary sales, or for probate purposes. When, therefore, capital is required, the members put in their £1 per share, but normally the shares are devalued to less than par. It is normal that no dividend shall be paid on capital, the shares being regarded as subscription money, not share capital, in the view of the lending authorities. The 8s. in the £1 now levied on them is paid on net profits retained to pay dividends. Therefore the members of such societies simply do not declare dividends. They are driven to that course as a nor- mal matter of tax avoidance, a matter which has been looked upon with contempt by the Minister, but which, as I said before is a normally logical and justifiable course of action.
– It is quite legal for the Government to prevent tax avoidance.
– Anything the Government puts in the law is legal, but sometimes it may be quite unjustifiable.
– On occasions, the High Court has ruled that the Government has not acted legally.
– When the High Court has considered whether the gentlemen who advise the Commissioner have advised him correctly or not, the court has often said that their advice was wrong. These societies by not declaring dividends lose a potential loan security because any one who lends them money does not see any value in a share unless it pays a dividend. The result is that, when they want more money, they are not able, as are the directors of any ordinary company, to go to a bank or some other lending body and say that security for the loan exists in the form of their shares. They must raise the money from other sources. The only source of repayment is the amount by which the sum set aside for depreciation of plant exceeds the sum expended on new additions. There is virtually no means of reducing a loan of money for a new building except out of what is left of the undistributed profits after paying taxes at the rate of 8s. in the £1. It is suggested that if taxes were reduced, loans could be reduced more quickly, with a resultant saving of interest. Anything that will result in increased dividends because of lower expenses will have that effect of easing the task of raising further capital when rural co-operative societies desire it, thus making this worthwhile type of organization more popular among the people who support it. I suggest, therefore, that the Treasurer (Mr. Chifley) and those with whom he is conferring should consider ‘ the proposition that the dividends paid by rural co-operative societies should be allowed as deductions before arriving at the taxable income. I suggest that no real loss to the Treasury would result from such action, and that a benefit would accrue to a very desirable form of trading society. It is certainly a form of corporate activity that cannot be subjected to the criticism that the Prime Minister and the Minister for Post-war Reconstruction (Mr. Dedman) have been pleased to direct at other forms of cooperation. I therefore ask that consideration be given to making an amendment to this effect in another place.
– The honorable member for Parramatta (Mr. Beale) has not supplied me with a copy of his proposal and it is, therefore, not possible for me to say whether an appropriate amendment could be made in another place. I suggest for the honorable gentleman’s consideration that he present a case to the Treasurer (Mr. Chifley) for consideration.
Clause, as amended, agreed to.
Clause 15 agreed to.
Clause 16 negatived.
Clauses 17 and 18 agreed to.
Clause 19 -
Section one hundred and sixty c of the Principal Act is amended -
by omitting sub-section (1.) and in serting in its stead the following sub-section : - “ (1.) For the purpose of the further tax imposed on that portion of the taxable income of a company which has not been distributed as dividends, that portion shall be ascertained by deducting from the taxable income of the company -
taxes which are paid in the year of income being -
. ..
Mr.FADDEN (Darling DownsLeader of the Australian Country party) [9.50].- I move-
That, in section160c, proposed new subsection (1.), after proposed sub-paragraph (iii), the following new sub-paragraph be inserted : - “ (iv) taxes paid or payable under assessments made pursuant to Division 7 of this Act to the extent provided by sub-paragraph (i) of paragraph (b) of sub-section (1.) of section 103, hereof,”.
In cases where a company is converted from a private company to a public company, the present law provides that payments of Division 7 tax, assessed after conversion but in respect of a year prior to conversion, are deductible under section 160c of the act. Under this clause, this deduction is not provided for, and such a company may be seriously prejudiced because of the delayed issue of the Division 7 assessments. It is suggested that the clause be amended to allow as a deduction the payment of Division 7 assessments to the extent provided by paragraph (b) (i) of the proposed section 103 (1.).
– The position of a private company which is converted to a public company was considered when the legislation was being prepared. The conclusion reached was that no special provisions are necessary for application to the case where a company, liable to tax under Division 7 in respect of income of the year of income ended the 30th June, 1947, and prior year, becomes liable to tax under PartIIIa. of the act because of a change of status to that of a nonprivate company. Such a company, if it so desires, may, in respect of the year ended the 30th June, 1948, and each subsequent year, exercise the election provided by section 160c (5.) as proposed by clause 19 of the bill. The exercise of that election will be within the power of the company, as it will not previously have exercised the election under Part IIIa., and as it was incorporated prior to the 1st July, 1947. By exercising the election under section 160c (5.) the company will become entitled to the deduction of any tax paid in the year of income under the act, other than further tax paid under Part IIIa. This deduction will include the amount of any tax paid by the company under Division 7 of the act. A company, previously assessed as a nonprivate company, but becoming a private company under the proposed new definition, will be in a comparable position, by reason of the election exercisable under section 103 (3.), as proposed by clause 9 of the bill.
In these circumstances it is felt that it is in the hands of any company to obtain the deduction of Division 7 or Part IIIa. taxes, as the case may be. paid in respect of income derived up to the conclusion of the year of. income ended on the 30th June, 1947, on the basis of taxes paid if that basis is regarded as being more suitable to the company than the basis of taxes payable. In these circumstances the amendment proposed by the Leader of the Australian Country party (Mr. Fadden) is unnecessary.
Amendment negatived.
Clause agreed to.
Clauses 20 to 22 agreed to.
Clause 23- (1 . ) The amendments effected by section two, sections four to thirteen (inclusive), paragraph (a) of section fourteen, and sections fifteen to twenty-two (inclusive), of this Act shall apply to all assessments for the financial year which commenced on the first day of July, one thousand nine hundred and forty-eight, and all subsequent years.
Amendment (by Mr. Dedman) agreed to -
That, in sub-clause (1.), the words “paragraph (a) “ be left out, with a view to insert in lieu thereof the following words: - “paragraphs (a.) and (aa) “.
Clause as amended, agreed to.
Title agreed to.
Bill reported with amendments.
Motion (by Mr. Dedman) - by leave - proposed -
That the report be adopted.
– I move -
That the bill be now recommitted for the reconsideration of clause 4.
I desire, at the appropriate stage to move the following amendment to clause 4: -
Section 23 of the Principal Act is amended by adding to paragraph (m) the following words : - “ and wages earned by employees in these industries “.
Section 23 (m) of the principal act exempts from income tax income derived directly and in the first place from primary production, mining or fisheries in the Northern Territory by a resident of that Territory. I do not think that a Labour Government could refuse to extend to workers in the Northern Territory the same concession in respect of income tax as is granted to the owners of cattle stations, pearl luggers and gold mines in that part of the Commonwealth. Justice demands that the workers in the Territory should be treated in the same way as their employers in this regard, and for that reason I am sure that the House will not hesitate to recommit the bill to enable this amendment to be made to it.
The future of the Northern Territory depends upon whether mechanics, fitters, artisans and miners can be attracted to it. They are the men who are needed to develop it. Although high wages are paid to men who work in the Northern Territory, the harsh and unjust taxes that are levied upon those wages deter other men from going there. If this concession were granted, men wouldbe attracted to the Territory. They would be able to save money while they were there and were receiving high rates of pay. They would be enabled to become what the Minister for Post-war Reconstruction (Mr. Dedman) dislikes, that is, “ little capitalists “. They would be able to accumulate capital, because their money would not be taken from them by the Treasurer in taxes, and, having done so, they could return to the southern States of Australia, with their more salubrious climates, to buy small properties and lead a happy and. contented existence. I trust that the Government will accept the amendment, and thus do justice to hard-working men who live for years in the hot climate of the Northern Territory.
– It is amusing to hear a member of the Opposition sponsoring a proposal of the kind put forward by the honorable member for New England (Mr. Abbott). Taxation exemptions for primary producers in the Northern Territory were granted by a non-Labour government.
– And extended by the Labour Government.
-I assure the honorable member that I know something of this matter. In the past, I have never observed among honorable members opposite any solicitude for the welfare of the lower-paid workers in the Northern
Territory. It is true that a Labour government extended the exemption of primary producers, but we are not too enthusiastic about it. The extension was granted because the Minister for the Interior (Mr. Johnson) believed that, as a large amount of capital was needed by a primary producer in the Northern Territory, the taxation concession was justified. However, some featuresassociated with the exemption are not as satisfactory as we would like. This Government introduced the zone system, under which persons living in certain areas are taxed at lower rates, and this is of benefit to workers in the Northern Territory. When that provision was introduced, it was criticized by honorable members opposite, some even going so far as to say that it was unconstitutional - not that I ever bother about whether a proposal is constitutional if it involves giving something away. It is only when the Government proposes to take something from some one that it has to begin worrying about the constitutional position. Two years ago, an exemption of £120 for income tax purposes was granted to residents of the Northern Territory. That is something which the Government has done for the workers in the Northern Territory, the people for whom the honorable member for New England has suddenly developed such solicitude, although he did nothing for them when he was a Cabinet Minister.
– I was not there long enough.
– That was probably a disappointment to the honorable member, but a great benefit to the country. Because of the low rates of taxation applicable to lower incomes, and the exemption of £120, the lower-paid workers in the Northern Territory pay practically no income tax at all. Indeed, even social service tax is payable only upon the middle range of incomes. Naturally, the Government cannot accept the honorable member’s suggestion, which was probably put forward with the idea of winning a few votes.
– The statement of the Prime Minister (Mr. Chifley), like the curate’s egg, was good in parts. Because the Northern Territory is not a State or a part of a State, the Constitution does not apply to it. Therefore, the Parliament may grant what taxation exemptions it likes to residents of the Northern Territory. The Prime Minister chided the Opposition parties with not doing this or that for the workers of the Northern Territory when they were in office, but 1 remind him that income tax rates were then so low, and the exemption was so high, that very few workers in the Northern Territory paid any income tax at all. Under present conditions, however, the meshes of the taxation net are so small that if the worker were no bigger than a sardine he would still be caught. Even the exemption of £120 does not amount to very much, having regard to the high cost of living in the Northern Territory, and to the cost of transport. I believe that the proposal of the honorable member for New England (Mr. Abbott) is a very sensible one, which should receive favorable consideration. The Prime Minister chided the honorable member for New England with not having done certain things while he was in office for a short time. As a matter of fact, if the Labour party had had the courage to put the issue to the test it would have been in office much sooner, but in 1941 it was avoiding office as it would the plague. In the end, it acted only because the people demanded that it do something. The Prime Minister has done for the people of the Northern Territory what he has done for all other taxpayers in Australia; he has taken from them everything he can get. He has now admitted that even the extension of the exemption to primary producers was granted unwillingly and ungraciously, so that he cannot hope for much credit for that.
Question resolved in the negative.
Report adopted.
– I ask for leave to move the third reading of the bill forthwith.
– No.
Leave not granted.
Motion (by Mr. Dedman) proposed -
That so much of the Standing Orders be suspended as would prevent the remaining stage? being passed without delay.
.- The Standing Orders provide that if a bill is amended in committee, a clean copy of the bill, incorporating the amendments. shall be prepared and circulated before the third reading is moved. I should like to have such a copy. There is no great hurry, and no reason why the third reading should not be postponed until tomorrow.
– On the notice-paper, under the heading, “ Contingent notices of motion the following appears: -
Contingent on any Report being received from a Committee or on any Report being adopted - Mr. Chifley: To move, That so much of the Standing Orders be suspended as would prevent the remaining stages being passed without delay.
This makes it clear that only the Prime Minister (Mr. Chifley) may make this motion.
– Any Minister may make the motion.
Question put-
Thatso much of the Standing Orders be suspended as would prevent the remaining stages being passed without delay.
The House divided. (Mr. Deputy Speaker - Mr. J. J. Clark.)
AYES: 30
NOES: 22
Majority . . 8
AYES
NOES
Question so resolved in the affirmative.
Motion (by Mr. Dedman) proposed -
That the bill be now read a third time.
– I move-
That the word “ now “ be left out and the following words be added: - “this day six months “.
I submit this motion with a view toenabling the Government to appoint an expert committee thoroughly to investigate this bill and to present recommendations to the Government, designed toensure that, in the interests of the private companies of Australia, a better enactment than the bill now before us shall be placed on the statute-book.
Question resolved in the negative.
Original question resolved in the affirmative.
Bill read a third time.
page 2380
In Committee of Ways and Means: Consideration resumed from the 8th September (vide page 269), on motion by Mr. Dedman -
That a tax be imposed upon incomes at the following rates: - . . . (vide page 266)..
Question resolved in the affirmative.
Resolution reported.
Standing Orders suspended; resolution adopted.
Ordered -
That Mr. Dedman and Mr. Lemmon do prepare and bring in a bill to carry out the foregoing resolution.
Bill presented by Mr. Dedman, and passed through all stages without amendment or debate.
page 2380
Motion (by Mr. Dedman) proposed -
That the House do now adjourn.
.- I am glad to see the Minister for Repatriation (Mr. Barnard) present in the House. The honorable gentleman is looking a little battered, but I hope that he will wait to hear what I have to say. A correspondent has written to me regarding the invention of a plastic artificial arm by Mr. Gilbert Henderson,_a dentist, of Perth. Mr. Henderson was on” the staff of the Heidelberg Military Hospital, and during his spare time he perfected this very intricate and rather wonderful contrivance. He was selected to deliver the Joske Oration in Melbourne. I was present at the oration and examined the contrivance. High tributes were paid to Mr. Henderson for his invention by one of the greatest plastic surgeons in the Commonwealth. Mr. Henderson donated his invention to the Government. He could have patented it and made a lot of money from the sale of the world rights to manufacture it ; but in a spirit of patriotism and in a desire to help disabled soldiers, he presented his invention to the Repatriation Department, hoping that the department would adopt it for the benefit of ex-servicemen who are now equipped with more cumbersome appliances. I understand that the department has done very little about it. I ask the Minister to ascertain why Mr. Henderson’s magnificent gesture has gone unrewarded, and why his contrivance was not manufactured and issued to disabled soldiers in order to assist them in their rehabilitation. I could describe the invention in detail but I do not wish to detain honorable members by doing so. I content myself with saying that it constitutes a wonderful improvement on other artificial arms. By its aid an ex-serviceman who had lost both arms would be able to use a pen or a knife and fork. Prom his knowledge of the products of the artificial limb factory the Minister is well aware that the artificial limbs now supplied to ex-servicemen are cumbersome and heavy. The Henderson artificial limb being constructed of plastic is extremely light and constitutes a great .advance on the limbs supplied by the Artificial Limb Factory. I ask the Minister to ascertain why the manufacture of this limb has not been proceeded with. [Quorum formed.”]
, - The honorablemember for Balaclava (Mr. White) has referred to an artificial arm which is said to be superior to other artificial limbs. This contrivance was brought tomy notice by the honorable member for Perth (Mr. Burke) and by other honorable members. I assure the honorablemember for Balaclava that any invention which would make the lot of our disabled ex-servicemen any better is considered most carefully by the Government. In order that the honorable member may be supplied with the fullest information relating to the Henderson artificial limb and the reasons why it has not been manufactured and issued to exservicemen, I shall call for a full report on the matter. I shall let the honorable member have a copy of the report in due course.
Motion (by Mr. Scully) put -
That the question be now put.
The House divided. (Mb. Deputy SPEAKER - Mb. J. J. Clark.)
AYES: 28
NOES: 15
Majority 13
AYES
NOES
Question so resolved in the affirmative.
Original question resolved in the affirmative.
page 2382
The following paper was presented : -
Lands Acquisition Act - Land acquired for Postal purposes - Beverley, Western Australia.
House adjourned at 10.33 p.m.
page 2382
The following answers to questions were circulated: -
Rabbit Destruction.
Treacle and Golden Syrup.
y. - On the 12th October, the honorable member for Deakin (Mr. Hutchinson) asked me the following questions, upon notice: -
I then promised to obtain the information sought by the honorable member and let him have a full reply at an early date, r now furnish the following answers to the honorable member’s* questions:- -
Cite as: Australia, House of Representatives, Debates, 28 October 1948, viewed 22 October 2017, <http://historichansard.net/hofreps/1948/19481028_reps_18_199/>.