20th Parliament · 1st Session
Mr. Speaker (Hon. Archie Cameron) took the chair at 2.30 p.m., and read prayers.
Bill returned from the Senate without amendment.
Assent to the following bills re ported: -
Apple and Pear Organizatio Bill 1953.
Appropriation Bill (No. 2) 1952-53.
Appropriation (Works and Services) Bill (No. 2) 1952-53.
Atomic Energy Bill 1953.
Banking Bill 1953.
Canned Fruits Export Control Bill 1953.
Commonwealth Bank Bill 1953.
Commonwealth Employees’ Furlough Bill 1953.
Customs Tariff Validation Bill 1953.
Dairy Produce Export Control Bill 1953.
Defence Bill 1953.
Dried Fruits Export Control Bill 1953.
Egg Export Control Bill 1953.
Flax Industry Bill 1953.
Heard Island and McDonald Islands Bill 1953.
Income Tax and Social Services Contribution Assessment Bill 1953.
Loan (Temporary Revenue Deficits) Bill 1953.
Meat Export Control Bill 1953.
National Service Bill 1953.
Public Service Bill 1963.
Patents, Trade Marks, Designs and Copyright Bill 1953.
Queensland Tobacco Leaf Marketing Board Guarantee Bill 1953..
Seamen’s Compensation Bill 1953.
Supplementary Appropriation Bill 1951-52.
Supplementary Appropriation (Works and Services) Bill 1951-52.
Supply Bill (No. 1) 1953-54.
Supply (Works and Services) Bill (No. 1) 1953-54.
Tractor Bounty Bill 1953..
Wine Overseas Marketing Bill 1953.
Wool Use Promotion Bill 1953.
– I have received a message from the Governor-General reporting the Queen’s assent to the Royal Style and Titles Bill 1953, which was reserved for Her Majesty’s pleasure.
– I have received from the President of the Second Chamber of the States General, The Hague, a letter enclosing the text of a resolution passed unanimously by the Second Chamber on the 11th February, 1953, expressing the gratitude of the people of The Netherlands for the help given to those who suffered from the floods which ravaged parts of that country.
– Pursuant to Standing Order 17,I lay on the table my warrant nominating Mr. Thomas Frank Timson to act as Temporary Chairman of Committees when requested to do so by the Chairman of Committees.
– I desireto announce to the House that during the absence abroad of the Minister for Health (Sir Earle Page) and the Minister for External Affairs (Mr. Casey), the Minister for Social Services (Mr. Townley) will act as Minister for Health and I shall act as Minister for External Affairs. The Minister for National Development (Senator Spooner) will be represented in this chamber during the absence of the Minister for External Affairs by the Vice-President of the Executive Council (Mr. Eric J. Harrison).
Petitions in relation to the Super annuation Act were presented as follows : -
By Mr. CHAMBERS, from certain citizens of the Commonwealth.
By Mr. . BRYSON, from certain citizens of the Commonwealth.
By Mr. JOSHUA, from certain citizens of the Commonwealth.
By Mr. LAWRENCE, from certain citizens of the Commonwealth.
By Mr. KEKWICK, from certain citizens of the Commonwealth.
Petitions received and read.
Mr. DALY presented a petition from certain residents of Mascot, New South Wales, praying that action be taken by r.he Department of Civil Aviation to alleviate danger ,and noise from low-flying aircraft in that vicinity.
Petition received and read.
Mr. PETERS presented a petition from certain electors of the division of Burke praying that the House of Representatives direct the Government to refuse recognition to the Communist regime in China.
Petition received and read.
Mr. WHITLAM presented a petition from 1,100 members and supporters of the Miranda sub-branch of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia praying that the Government make increased provision for war pensions and allowances.
Petition received and read.
– Will the Prime Minister inform honorable members whether any proposal has been placed before the Government relative to the sale of ships of the Commonwealth line of ships? If so, what decision has been made on thai matter 1
– The matter of the future of the Commonwealth line of ships has been before Cabinet on several occasions. No decision has been reached on the subject.
– I ask the Prime Minister whether it is a fact that the legal representative of the Australian Council of Trades Unions, which is affiliated with the Australian Labour party, stated yesterday before the Pull Court of the Commonwealth Arbitration Court that the inflationary pressure had virtually disappeared from within Australia, and that employment was rising? In view of the constant reiteration to the contrary by the Leader of the Opposition, can the right honorable gentleman say whether the representative of the Australian Labour party in the Commonwealth Arbitration Court or the Leader of the Australian Labour party in this House is right?
– The point appears to be well taken, but so that I may be in a position to answer by the book, I would be grateful if the honorable member would ask his question again to-morrow. In the meantime I shall read the transcript of the proceedings in the appropriate case before the Commonwealth Arbitration Court.
– Will the Prime Minister state whether the Australian press is to be represented by Australian pressmen at the atomic explosion which is to take place at Woomera? If it has been decided to prohibit Australian pressmen from being present, will the Prime Minister confer with other interests and authorities with a view to having that decision reversed so that Australian press interests will be placed on the same basis as those from overseas ?
– The honorable member may take it that no Australian newspaper will be at any disadvantage in reference to any publicity about these very important matters. The degree to which there should be publicity involves some consideration of security. In order that there should be a completely satisfactory result on this matter, I have arranged to confer with the Australian press so that the arrangements that are made will be fair, and . will, of course, apply to everybody. Perhaps implicit in the honorable member’s question is some suggestion that there has been discrimination. I want to say that there has been none. I did read in one or two sections of the press recently that because there was some photography to be engaged in at Woomera, there was some discrimination against Australian newspapers. The photography in question was at the aerodrome and in the village of Woomera, and it did not involve access to the work at Woomera. Some time ago, on my arrangement, a great number of Australian press representatives went to Woomera on the occasion of the testing of the pilotless aircraft, the Jindivick. I believe that the press will agree that on that occasion as much access as possible to all relevant matters was granted. It is also desirable that I should point out that some of the assaults that have .been made on this recent matter of a news gazette or film being made, have been directed against a very distinguished Minister of the United Kingdom Government, Mr. Sandys. As I said yesterday, and as I desire it to be better known than it is liable to be judging by what I have read to-day, he had nothing to do with that matter. An application was made to the relevant departments of the Australian Government, and was dealt with by those departments. It is nonsense to say that a visiting Minister was himself responsible for any decision that was made. It is only fair that those facts should be made known. If there is any abuse engaged in, let it be directed at the Government. Certainly Mr. Duncan Sandys had nothing whatever to do with it. We need not exaggerate that matter, because I have no doubt that the arrangements that will be made in connexion with this matter will be satisfactory to all fair-minded people.
– My question, which is addressed to the Prime Minister, concerns the return to Australia recently of a notorious Communist who, for the last few years, has been in China carrying on activities considered by most people to be prejudicial to the security of Australia. Had the Government any prior knowledge of this man’s impending return ? Has the
Government considered his legal status here and his eligibility for readmission to Australia ? Is he entitled to harborage here regardless of his activities abroad?
– The position of Ernest Thornton, who, as the honorable member has said, is a very well-known Communist, has engaged the attention of the Government and, in particular, of the Minister for Immigration and the Attorney-General. It is true that as Ernest Thornton, though not born in Australia, came to this country a long time ago and became an Australian citizen, he was in a position to conform to citizenship requirements under the Nationality and Citizenship Act. In the view of the Government’s legal advisers he cannot he refused entry into Australia. In other words, as an Australian citizen, he cannot be excluded from Australia under the immigration power. This problem, as I understand it, is a constitutional problem which involves a constitutional right.
– Any old alibi !
– A constitutional right is not an alibi, and I hope that it never will be in this country. Insofar as Mr. Thornton possesses a statutory right to re-enter Australia, it was given to him by the Government which the honorable member for Yarra is occasionally supposed to have supported. However, I do not think my friend Thornton supposes for one moment that we are unaware of his presence or, indeed, that we are unaware of what he is doing.
– My question is addressed to the Prime Minister. If the constitutional rights of the individual who has left the lotus palace in Peking are sacred to such an extent that they cover his activities in enemy countries while Australian blood was being shed in Korea, does the Government intend to put out the red carpet of welcome to the Australian journalist who broadcasts propaganda against American and Australian forces from the same country?
– There will be no red carpet of welcome. I say quite bluntly that if we had power to exclude from this country the Thorntons and the other people to whom the honorable gentleman has referred, we should do so with infinite pleasure, but we have no power to exclude them from Australia.
Mr. Keon interjecting,
– We might have had power to deal with them in another way if the honorable member for Yarra had remembered that he was an antiCommunist during the last referendum campaign.
– Has the Treasurer given consideration to repeated requests from the States, particularly from New South Wales, for assistance to alleviate the deplorable condition of schools in which there is no adequate accommodation for children because of the contraction of building programmes which, it is said, has resulted from the restriction of finance by the Australian Government? Will the Government consider the taking over of responsibility for education generally, or at least make available adequate sums of money to the States to enable uncompleted schools to be finished?
– The question involves Commonwealth and State financial relations. Responsibility for schools in the States obviously rests with the State governments - in this instance, the New South Wales Government - which, in common with other State governments, receives its loan allocations from the instrumentality established for that purpose, namely, the Australian Loan Council. It is the responsibility of the State governments to decide the manner in which loan moneys received through that source are expended.
– I address a question to the Minister for Labour and National Service. Last week, the Government, through the Minister, took certain action to remedy a very serious situation which had arisen in connexion with the loading of beef and sugar at Bowen. Certain leading public men, including the acting Premier of Queensland and the Communist secretary of the Waterside Workers Federation, have made statements regarding this Government’s action which are entirely false and misleading.
For instance, the Government is now charged with the failure to honour its obligations-
– Order ! Will the honorable member ask his question?
– He should raise the matter on the motion for the adjournment.
-Order! I need no assistance.
– Will the Minister, at a suitable time, make a statement on the whole subject which will correctly inform the House and the general public of the situation? In particular, can he now state the true position regarding the provision of transport and accommodation for additional waterside workers at Bowen ? This matter was determined at a recent conference, and the Government is. now charged with having failed to carryout its obligations.
– I think that the proper course is for me to prepare a statement on the episode as far as it was carried to the conference on Friday which could be laid on the table so that the House could discuss it, if it desired to do so. The honorable member for Dawson has referred to the events which have since transpired, and I want to make it perfectly clear that this Government has not committed a breach of any undertaking whatsoever. The matter which, apparently, is now in issue involves the terms under which certain waterside workers were to be brought on a temporary basis from the port of Brisbane to the port of Bowen. The quota which was to -bring the registered strength of the waterside workers in Bowen itself to ISO has been obtained, and the one matter, apparently, which remains at issue is the transfer of the 40 waterside workers from Brisbane. I thought that the proposal of the Government was eminently fair and, indeed, generous. We suggested at the conference that such accommodation as we might be able to provide would probably be of an emergency character. We indicated its nature, and it was accepted by the conference. We also indicated that we would be prepared to cover the cost of the movement of those waterside workers to Bowen, because they would be required there for only a comparatively short time. It is now suggested, apparently, that we should also carry the cost of the victualling of those waterside workers while they are in Bowen. I point out that at the port of Cairns, which is a little north of Bowen, we have provided hostel accommodation for waterside workers. This accommodation is entirely satisfactory to the local branch of the Waterside Workers Federation, which has commended the service that the men have been receiving. Board at the rate of £4 a week is charged, and no complaint has been made about it. We have proposed that we provide free of charge the actual accommodation for the waterside workers concerned in the hangar at Bowen, which has been equipped for that purpose, but that the waterside workers should be required to buy their own meals. I thought that such an arrangement was eminently satisfactory and reasonable. I have been advised that an item in the midday news service mentioned the report of a telegram sent by the president of the Australian Council of Trades Unions in which he, too, expressed his view that the Waterside Workers Federation should honour the undertaking which it gave us and see that the men were sent to the port. I shall keep the House informed of any developments in the matter as they occur.
– Is the Minister for Social Services in a position to inform the House when legislation will be introduced to ratify the reciprocal social services agreement with the United Kingdom Government ? Can the Minister say approximately when the first payment will be made under the agreement?
– I am afraid that I. cannot give a precise answer to the honorable members question, but it is hoped that the reciprocal agreement will begin to operate on the 1st January next.
– Will the Prime Minister state the Government’s attitude to red China? Is it the intention of the Government to give official recognition to red China? What negotiations, if any, have been undertaken ?
-Order! The question relates to a matter of government policy.
– I propose, at an early date, to make a statement to the House on one or two of these matters, because I think that the chamber would like to have the opportunity to discuss them. All I want to say at the present time about the recognition of red China is that I have read a great deal about the matter in the correspondence columns in the newspapers, but it has not engaged the attention of the Cabinet.
– I said that it has not engaged the attention of the Cabinet.
– And the honorable member for Watson said “ Yet *’.
– I thought that he said, “ Yes “.
– No, I said “ Y-e-t “.
– I might have known that the honorable member would not say, “ Yes “.
– Order ! Interjections are out of order.
– I wish to say, so that there may he no ambiguity about the matter, that some of the forces of this country have been engaged in hostilities in which, among their enemies, have been Chinese Communists. I do not discuss recognition of my enemy while I am in the field with him. The whole problem of the future of Communist China is s» problem that simply does not arise at this moment. When it does arise, the Cabinet will consider it. The Cabinet, has not so far been asked to consider it. Therefore, most of !the reports that I have read about this matter are complete nonsense.
– My question* are directed to the Minister for Commerce and Agriculture. Did the Government give a public undertaking to continue the guarantee of farm production costs for butter production ? Did it further undertake that, where the cost could not be met appropriately by price, it would be met by subsidy? In view of the facts that ‘ the Government last year reduced the subsidy by 2£d. per lb., and that the farm production cost increased by 1.73d. per lb., commercial butter basis, in the twelve months that ended on the 30th June, does the Government propose to adhere to its guarantee?
– -The Government undertook to take action to stabilize the dairying industry, and that undertaking was transformed into legislation which, if my memory is correct, the honorable member supported with his vote. The Government has provided very substantial sums in ! the form of subsidies on butter and cheese. Those sums have gone, without exception until this year, to the consuming public of Australia. Last year, the Government, in negotiating this arrangement to stabilize the dairying industry, informed the State governments and the representatives of the industry, who were the other negotiating parties, that it intended progressively to reduce the consumer subsidy, which had reached the very high level of £17,000,000 a year. Notwithstanding that explicit declaration of policy, the Government has this year, for the purpose of maintaining the level of consumption, in the interests of the stability of the dairying industry, sustained the consumer subsidy unaltered, and to that degree it has made a contribution involving the budget in millions of pounds of expenditure more than was intended in order to provide for the stability of the dairying industry.
– Will the Prime Minister advise the House of any information that he may have in relation to the progress made by the trustees of the prisoner-of-war trust fund in distributing to former prisoners of war the sum of £250,000 which was made available by the Parliament for the alleviation of distress and hardship arising from the captivity of prisoners of World War II.?
– The honorable member was good enough to tell me that he intended to ask this question.
– Dorothy Dix!
– Dorothy Dix is seldom unexpected, but she is always respectable. I have recently received a report on the first year of the operations of the ‘trustees of the fund, who have made considerable progress towards their objective. Up to the 31st March last - that is, after twelve months of operating - claims had been received from nearly 4,000 ex-prisoners of war, nearly 3,000 of whom had been prisoners of the Japanese and over 1,000 of whom had been prisoners in the European zone Of these, approximately 1,750 claims have been satisfied at a total cost to the fund of £133,587. The number of claims that have been refused is 1,949. A few claims are still to be examined. Because there may yet be some former prisoners who have not made claims on the fund but who may be eligible for assistance, the Government has decided to continue the fund until the 31st December next.
– The question that I wish to . ask the Prime Minister deals with the circulation in this country of so-called comics and magazines of an unsavoury nature. Is the right honorable gentleman aware that the Premier of South Australia has intimated that it is difficult for the State governments to deal with such publications? If the Australian Government has no plans for dealing with these magazines, which are destroying the morals of the youth of this community, will the Prime Minister convene a conference with representatives of State governments so that speedy action may be taken to deal with the menace in the way that State governments recently acted when desiccated coco-nut threatened to destroy the bodily health of Australians?
– The subject of these publications has, in fact, been raised at conferences of Commonwealth and State Ministers. The matter was introduced either at the most recent of these conferences or at the previous conference. The honorable member will realize, of course, that the power of this Parliament to deal with the internal circulation of published material is extremely limited; in fact, it is non-existent. We are able to deal with matters only on the Customs side. I have not had the dubious advantage of seeing any of these publications, and therefore, oddly enough, I am entirely uncorrupted by them. However, I know that great numbers of what I believe are known as comic strips or publications come into Australia in ordinary letter form and are then reproduced. Thus, they involve a problem which is peculiarly a problem for the States. When the subject was raised by one of the Premiers at the last conference of Commonwealth and State Ministers, we all exhibited our interest in the matter, and I must say at once that, if the Premiers consider that there is something that ought to be done by the Commonwealth to supplement what they are doing, their views will receive the most sympathetic consideration of this Government.
– Is the Minister for Commerce and Agriculture aware that there is increasing concern in Australia at the delay in assuring the stabilization of the Australian wheat industry? Is it a fact that the chief cause of this delay is the refusal of the Labour Government of Victoria to agree to a plan that was approved by a majority decision of the Australian Agricultural Council on the 27th July, 1953? What are the prospects of overcoming this deadlock, and what action is being taken in this connexion?
– It is a fact that a very serious situation has developed owing to the failure of governments to reach agreement for the continuance either of stabilization plans for the wheat industry or even of a system of orderly marketing of the Australian crop. It is true also that the difference which prevents unanimity from being reached between the six State governments and the Australian Government does not involve any matter that touches upon Commonwealth policy or Commonwealth authority. It concerns only the price to be charged for wheat within Australia, which is a matter within the jurisdiction of the State governments. Three State governments took one line on the 27th July last, and the other three took a different line. Since then, the Government of Tasmania has changed its attitude so that to-day the view of the Australian Government is uniform with that of the governments of New South Wales, South Australia, Western Australia and Tasmania. The Government of Victoria, which, as the honorable member has reminded me, is a Labour Government, and the Government of Queensland, are standing out. That is what is preventing unanimity from being reached. Except in respect of the winding up of past pools, the Australian Wheat Board will go out of existence in less than three weeks’ time. Then there will be no authority in Australia to receive, handle, pay for or market the Australian wheat crop. I have invited the State Ministers for Agriculture to come to Canberra next Friday to make a final effort to try to achieve unanimity in this regard. I say deliberately that, unless the State governments themselves can reach agreement, there is a grave risk of real and serious disorganization of the Australian wheat industry. If the State governments fail to reach agreement, I see no prospect of this Government being able to invite the Parliament to ratify the International Wheat Agreement, because, without a central marketing authority in Australia, we could not carry out our obligations under the agreement.
– Will the PostmasterGeneral say whether his department manufactured equipment in its workshops at a cost level with which private enterprise could not compete? Have those workshops now been directed to cease their manufacturing activities, and have orders for equipment for the department been given to private enterprise? If so, why?
– I am unaware of any alteration of policy in respect of the manufacture of equipment. It is probable that we have executed all outstanding orders for particular equipment and that we do not require further equipment of that kind to be manufactured at the present time. I have given no direction to the department in respect of any alteration of policy.
– Will the PostmasterGeneral inform the House whether any official action has been taken about the 600 misplaced ballot-papers not included in the Postal Department returns to the Sydney branch of the Boilermakers Society of Australia? Has any departmental inquiry been held to discover why those .ballot-papers were misplaced ? Why were the ballot-papers, when discovered after a period of two months, delivered to the secretary of the Sydney branch instead of to the returning officer to whom they were addressed? Will the department reimburse the Boilermakers Society -of Australia for the cost incurred in reopening and recounting in this ballot?
– A full inquiry has been made by the Postal Department into the non-delivery of about 600 ballotpapers issued in an election held by the Boilermakers Society of Australia. There is a system of sending letters known as the stamped reply system. The Boilermakers Society of Australia used that particular system in its ballot. Under this system the sender does not have to put a stamp on his envelope. Arrangements were made by the secretary or officials of the union or by its returning officer, with the postmaster at the Haymarket post office, to the effect that envelopes containing ballot-papers should be placed in the postmaster’s strong-room and called for periodically by the returning officer. The postmaster carried out hia part of the arrangement, but unfortunately a number of ballot-papers were placed in the staff strong-room and the postmaster did not know that they were there until some time after the ballot closed. Then it was discovered that the ballot-papers were there, and had not been delivered. The postmaster informed the proper authorities of this matter, and the Postal Department investigated to ascertain whether any sinister circumstances were associated with the incident. The staff were closely questioned but wo are now satisfied that Inhere was nothing of a wrongful nature in the whole matter.
– What does the PostmasterGeneral means by “ the staff strongroom”?
– The postmaster had a strong-room, and there is a second strong-room for the staff. An arrangement was made that the ballot-papers should be placed in the postmaster’s strong-room but one or two lots of ballotpapers were inadvertently placed in the staff strong-room.
– In view of the handicap that is suffered by blind people and the great benefit and pleasure that they would derive from the installation of a telephone in their homes, will the PostmasterGeneral consider the provision of a telephone for each blind person free of charge? Alternatively, will he discuss the matter with the Minister for Repatriation and the Minister for Social Services with a view to the departments for which they are responsible paying the rental of telephones for blind people as a repatriation or social services benefit?
– This proposition has been placed before successive governments over a period of many years, but, for a number of reasons, it has not been practicable for any government to accede to the request.
– I refer to the abandonment of the war service land settlement scheme by the Queensland Government. Can the Minister for the Interior confirm a report that, despite claims by that government that it had not received sufficient funds to enable it to carry on with the scheme, it did not expend between £200,000 and £300,000 of the money made available to it last year for that purpose, and, in addition, that a further sum for the purposes of the scheme was included in the estimates that were placed before the Loan Council when the grant of funds to Queensland for the present financial year was considered?
– The information that this Government has received from the Queensland Government is to the effect that, in future, war service land settlement in Queensland has got to take its chances with ordinary civilian settlement. Some time during the last financial year, this Government became very disturbed by the low priority that was being given to war service land settlement in two of the three principal.
States. As a result, it asked the appropriate State Ministers to attend a conference to discuss the matter, and to consider whether arrangements could be made to increase the allocations of money that were being made in New South Wales and Queensland for this purpose. The conference was held in March. Shortly afterwards, in April, a meeting of the Loan Council took place. The proceedings of that body are secret, butI presume that on that occasion Queensland, as it had done on previous occasions, included in its list of items for consideration by the council a proposed allocation in respect of war service land settlement. At that meeting, when the Premiers made their decision on the financial allocations for the year 1953-54, no mention was made of the fact that the Queensland Government intended to drop war service land settlement in that State. An announcement to that effect was made at the end of July. I think the information was received officially by this Government in the middle of August. I speak subject to correction, but I understand that between £200,000 and £300,000 of the £676,000 that was allocated to Queensland last year for this purpose was not expended. I hope that during this financial year the Queensland Government will carry on with the scheme with that money, plus the proportion of the loan funds that it obtained from the other Premiers at the Loan Council for use in respect of war service land settlement. There are about 80 farms in Wandoan, and some in Fairymead and Nerada in the Innisfail area, that have reached the stage when exservicemen could be settled upon them in a very short time. If Queensland would carry on in those areas this year, we could in the meantime discuss what is to happen in the next financial year. I was in Brisbane about a fortnight ago. As a result of that visit, I feel that perhaps I ought to make the request to the Queensland central executive rather than to the appropriate Minister of the Queensland Government.
– My question relates to the desire of tenants of State government houses in New South Wales to purchase them. Will the Minister for
Works say whether it is a fact that the Commonwealth and State Housing Agreement stipulates that, if the tenant of a government house purchases the house, the State government concerned must hand to the Commonwealth the full amount of the purchase money? Does that provision make it impossible for the New South Wales Government to meet the wishes of its tenants who wish to purchase their houses?
– I do not think the matter really concerns me. I understand it was dealt with at the recent conference of Commonwealth and State Ministers. The Government has nothing further to add to the decisions made at that conference or to the arrangements made at it with the State Premiers.
– I preface a question to the Minister for Commerce and Agriculture regarding the production of margarine, by pointing out that recently State governments increased the quota of margarine permitted to be manufactured in Australia. That increase is claimed to have increased seriously the proportion of table margarine used in this country with consequent inroads into the local butter market following an increase of the price of butter. Will the Minister consider the need for an early inquiry by the Tariff Board, or the adoption of some other method, with a view to an assessment being made of the quantity of imported fats entering Australia, which are the product of cheap native island labour and which are being used in the production of table margarine ?
– The manufacture of margarine in Australia is regarded by the dairying industry as a threat to its wellbeing. In fact, experience in every country has shown that where margarine can be produced uncontrolled it has proved a most serious threat to the dairying industry. The arrangement in Australia for many years has been that State governments, which alone possess the necessary constitutional authority, have stipulated limiting quotas upon the production of margarine. In recent times the Labour Government of Queensland has practically abandoned all such control notwithstanding the importance of the dairying industry to that State. At present Queensland, which until two or three years ago had engaged with the other States to limit the production of margarine to about 600 tons a year, is permitting, according to the latest information I have, the production in Queensland of about 5,000 tons of margarine. There is every evidence that all control of the production of margarine in Queensland has now passed. It is as a result of that failure of the Queensland Labour Government that the suggestion has been made that there ought to be some control of the importation of one of the constituents of table margarine - that is, the product of the coco-nut. I can only say that copra is by no means used in Australia only for the production of margarine. A duty could not be imposed upon it for the purpose of limiting its application to margarine only. I believe that the control of this matter is entirely within the province of the State governments, and that the public interest really demands that the Queensland Government ir-examine its policy in this regard.
– I ask the Minister representing the Minister for Health whether it is a fact that fees charged by ambulance services are not included among the new social service and hospital benefits, and that age pensioners and indigent persons are compelled to pay for conveyance by ambulance from their homes to hospitals. If this is a fact, will the Minister give consideration to the inclusion of payment of ambulance fees in the medical benefits scheme?
– For many years the provision of ambulance services in the various States has been a matter for determination by the State governments concerned. There is nothing in Commonwealth social services legislation, nor is there likely to be anything included in it, designed to assist ambulance services in the States. The State Premiers have methods of obtaining funds from the Loan Council and by means of special grants. If they consider that they have a claim for finance for ambulance services they can advance it in the proper way.
– I ask the Minister acting for the Minister for Health whether some reported irregularities in the past, in connexion with the medical benefits scheme have been brought to his notice, and whether any steps have been taken to prevent such irregularities.
– It is possible for a person to insure in two medical benefits associations, and it has come to my knowledge that it would be possible for a person, having insured in two of those organizations, to claim two Commonwealth benefits. The Commonwealth took cognizance of that irregularity, and has taken steps to prevent irregularities of that kind. When a medical benefits organization presents accounts for medical or hospital service we require them to be stamped in an appropriate way, and there would be no possibility of a person, obtaining two benefits from the Commonwealth, despite the fact that he or she was a member of two funds.
– Will the Prime Minister say whether it is a fact that in 1951 the Government appointed a committee of inquiry, presided over by the chairman of the Commonwealth Public Service Board, to investigate the problem of overlapping “in the administration of Federal and State departments? Is it a fact that the report of that committee has never been made public? In view of the legitimate interest that this House has in matters relating to public expenditure, will the right honorable gentleman give consideration to the tabling of that report.
– I shall examine the matter. I remember the appointment of the committee, and I remember having a report from it. I shall certainly give consideration to the honorable member’s suggestion.
– Is the Prime Minister aware that during recent months a number of temporary employees of the Commonwealth Public Service have been discharged and replaced by permanent officers, and that although those exemployees have served faithfully and well for continuous periods of more than eight years, they have been refused salary in lieu of furlough? In view of the fa ft that the Commonwealth Employees’ Furlough Act was amended last year to provide for the payment of salary in lieu of furlough to public servants who had given more than- eight years’ satisfactory service, I ask the right honorable gentleman whether he will have the matter to which I have referred investigated and ensure that the exemployees concerned will he paid salary in lieu of furlough.
– Naturally I do not carry in my mind an answer to the honorable member’s question, but I shall have the matter examined, obtain a report in relation to it, and convey the result to the honorable member.
– Will the Minister for Territories say whether there has been any expansion of the acreage planted to kenaf in Papua and New Guinea during the past season? Will he also indicate thu future prospect of this crop, and state whether there is any further information available regarding experiments being conducted with kenaf?
– As the planting season is just commencing I am unable to give a figure for the acreage planted to kenaf, but in a matter of a few weeks T may be able to furnish the honorable member with that information. In the meantime, a great amount of experimentation on the industrial uses of this fibre has been carried on, mainly regarding its use for wool packs, and these experiments have confirmed earlier work done which showed that it is admirably suitable for that purpose and measures up to ;ill requirements.
– I ask the Treasurer whether it is a fact that the only reason why the New South Wales Government is unable to commence the actual construction of the Blowering Dam on the Snowy River is the Treasurer’s failure to provide that Government with adequate .finances. Is it also a fact that the completion of that dam is essential to the Snowy Mountains hydro-electric power scheme? Will the right honorable gentleman make the funds required by New South Wales available immediately so that no further avoidable delay will be caused by the Menzies Government in relation to the completion of this great Chifley Government project?
– The answer is “ No “.
Motion (by Mr. McEwen) - by leave agreed to -
That leave be given to bring in a bill for ai> aCt to amend the Pearl Fisheries Act 1952 as amended by the Pearl Fisheries Act 1953.
Bill presented, and read a first time.
– by leave - I move -
That the bill be now rend a second time.
This bill is for the purpose of amending the Pearl .Fisheries Act of 1952-1953. Negotiations which have been proceeding for some months with a Japanese delegation for the purpose of reaching by negotiation an agreement to limit, control and regulate Japanese pearling operations in waters contiguous to Australia, have been broken off. During the course of these negotiations the Japanese moved their fishing fleet into an area which they had been requested to abstain from pearling, and announced their intention to take in these waters a tonnage of shell considered by our expert advisers to be excessive. The Government’ is quite firm in its intention to exercise all its rights to protect our interests, and the. amendments now proposed are to facilitate full, firm, and immediate control and regulatory action. A formal assertion of sovereignty over the Australian continental shelf will be made. This will be done by issuing a. proclamation similar to that made by the government of the United States of America. This sovereignty will relate to all the natural resources of the sea bed and sub-soil of the continental shelf.
The Pearl Fisheries Act, introduced in 1952 to permit a system of licensing and control of pearl fishing in waters over Australia’s continental shelf, .as amended, will be brought into operation. The licensing system and control measures introduced under the Pearl Fisheries Act will be enforced on all pearlers and ships engaged in pearling in Australian waters irrespective of nationality. Any infringement of the licensing provisions will be enforced in the normal manner in our courts. Before proceeding to outline in detail the nature of the amendments which it is intended to make, I propose, for the information of honorable members, to review the fisheries negotiations with Japan and certain related matters.
It will be recalled that in the debate on the Fisheries Bill and the Pearl Fisheries Bill, early in 1952, I explained that before entering into negotiations with any other governments for agreements for the regulation or limitation of fishing and the conservation and development of fisheries in waters adjacent to Australia, there should be adequate Commonwealth legislation providing for the management of fisheries in our own waters. I clearly indicated that Australian Government policy is that there must exist proper controls to prevent the serious depletion and ultimate ruin of these valuable fisheries. I said -
From our previous experience with foreign pearlers, it is necessary to lay down strict, regulations in the fishery to control pearlers and thereby ensure a proper conservation programme.
At thattime I reminded the House that Japan was under an obligation, according to the terms of the recent peace treaty, to enter into negotiations for an agreement in respect of fishing rights, if it were called upon so to do by any one of the parties to the treaty, and I indicated that Australia would exercise this right asa means of taking a positive step towards safeguarding our fishing interests. Accordingly, fisheries negotiations with Japan commenced in Canberra on the 13th April. The object of these negotiations was to reach an agreement with the Japanese to ensure the orderly development of the pearling industry and the conservation of pearl shell near the Australian coasts.
During the course of the negotiations I made two press statements, one on the 13th May, the day that the Japanese fleet left Japan, and the other on the nth June when the vessels had arrived in Australian waters. In the course of these statements I made reference to the assurances that the representatives of the Japanese Government had given us about the organization and management of Japanese vessels which should prevent any prejudicing of Australia’s interests. In my first statement I said -
It will he recalled that at the request of the Australian Government the Japanese Government agreed to withhold the sailing of the Japanese pearlfleet in advance of negotiations. The Australian Government felt that the operation of the fleet before there was broad agreement on the necessity for control and conservation, and before methods of implementing such control had been discussed, would seriously prejudice, the possibility of reaching an agreement between the two countries. In the view of the Australian Government, discussions could not be carried on satisfactorily about ways and means of protecting the pearl fisheries if, at the same time, fishing operations were being carried on without regard to proposals put forward by Australia and being seriously considered bythe Japanese Government.
In view of the stage which discussions have now reached, and the assurance of the Japanese Government that the operations of the fleet will be managed in such a. way as not to prejudice a successful conclusion to the negotiations now in progress, the Australian Government has not sought a further postponement. It is understood that the Japanese fishing vessels will leave Japan tomorrow.
In my press statement of the 5th June. I stated-
A Japanese mother ship anda fisheries inspection vessel, accompanied by 25 pearling luggers, have now reached waters adjacent to Australia.
In harmony with the understanding reached with the Japanese Government, specific measures will be taken by the Japanese fisheries inspection vessel to ensure that fishing operations will be conducted along lines at present being discussed in Canberra between representatives of the Australian and Japanese Governments.
Also in harmony with the understanding reached with the Japanese Government, the Japanese vessels plan to carry out operations in an area of some 000 square miles to the north-west of Bathurst Island. This area is about 150 miles from Darwin at its closest point and 35 miles from the nearest Australian territory (Bathurst Island). Fishing operations accordingly will be well outside Australian territorial waters. The presence of the mother ship makes the fleet selfcontained in every respect.
I quote these extracts from the press releases to indicate the nature of the understanding between the Australian and
Japanese Governments on the area in which pearling operations were to be conducted pending the completion of the agreement. Until the 10th August last, these negotiations gave promise of a successful conclusion. In discussions with the Australian delegation, the Japanese indicated that they might be expected to be agreeable to conclude a pearl-shell fisheries agreement for an initial period of three years along the following lines. The Japanese would agree -
The Navy and the Air Force, in the course of their operations in these waters, have kept the activities of the Japanese pearling fleet under almost daily surveillance and they have reported to me on behalf of the Government. I am glad to be able to say that this continuous survey of the activities of the Japanese fishing fleet by aircraft of the Navy and Air Force, upon which officers of my department travelled on occasions, revealed no infringements of the arrangements made with the Japanese which I have just recounted.
However, on Monday, the 10th August, the Japanese notified us that they were transferring operations immediately to a specific area closer to Darwin where Australians are at present fishing. The Japanese also announced their intention to take a certain tonnage of pearl shell in this area. If, in fact, such a tonnage were taken from the area, Australian pearlers could take only a relatively small catch without seriously depleting the resources of the area. No prior notice was given of this intention despite the fact that at the time a previous offer made to the Australian delegation was under consideration.
It will be recalled that the Japanese entered the area to the north of Australia about the year 1935, yet by 1940 they had taken approximately 12,000 tons of shell from it. This uncontrolled fishing and marketing was responsible in large part for the serious economic difficulties which faced the Australian industry pre-war and which necessitated the granting of subsidies and other assistance by the Australian Government. Although the pearlshell beds recovered during the enforced discontinuance of pearling during the war, it is thought that the announced intentions of the Japanese in regard to this specific area and the tonnage to be taken would severely prejudice the recovery of the Australian pearl-fishing industry based on Darwin. If the Japanese adopt a policy of over-fishing any area, it would seem to be onlya matter of time before other areas more distant from Darwin would suffer progressively from the same practice.
Moreover, the timing of this notification by the Japanese, as well as the substance of the notification, indicated lack of co-operation on their part. The notification was incompatible with the continuance of the discussions and accordingly the Japanese were informed that their action must be regarded as having broken off the negotiations. Clearly, the Australian Government will not accept a situation in whichthe operations of the Japanese in the absence of an agreement can be expected to deplete the pearl-shell resources and jeopardize the Australian industry. It is determined to exercise to the full its authority to control and regulate all pearling activities whether Japanese or our own.
The problem of control and regulation of pearl-shell fisheries is entirely different from that of other fisheries - that is, swimming fish. Pearl-shell is attached to a specific area of the sea-bed.It grows in well-known areas which do not change their location. Accordingly conservation measures, to be effective, must be applied to individual areas on much the same basis as conservation of natural resources on the land. International law and custom regard sedentary fisheries as being in a different category from swimming fish. The problems of pearl fisheries and sponge fisheries have been treated on a different basis from that of ordinary fisheries. As a result of very recent developments, even during the last fewweeks, international law has come to recognize that there appertain to a coastal State sovereign rights over the sea-bed and subsoil of the continental shelf contiguous to its coasts to a depth of 100 fathoms, for the purpose of exploring and exploiting the natural resources of that sea-bed and subsoil.
– Is any distance from the shore stipulated in respect of the definition of the continental shelf?
– The distance is determined by the depth of the ocean, and the 100-fathoms depth is accepted internationally as the delimitation of the continental shelf. Naturally, that distance varies from a few miles to perhaps more than 100 miles.
-The shelf is not the limit nf our jurisdiction.
– As I understand the situation, the shelf is not necessarily the limit of the capacity of the Parliament to legislate; but I think the Leader of the Opposition will agree that the capacity of this Parliament to legislate does not represent a law that would be upheld by an international court. The Leader of the Opposition says, in effect, that the Australian Parliament may legislate in respect of a wider area, but to control, with confidence, the activities of Australia only. This provision is directed to foreigners as well as to Australians. That is the whole nub of the matter.
There are a few well-known sedentary fisheries off the coasts of other continents, where foreigners have operated from time immemorial. Under international law, these foreigners may be regarded as having an established right to fish for oysters or sponges, as the case may be. on the continental shelf of another State ; hut even rights of this kind are still subject to regulation by the coastal State.
In view of all this, the Australian Government intends to exercise Australia’s rights to ensure both the conservation of pearl-shell resources on its continental shelf, and the preservation and orderly development of the pearl-shell industry. As I have already indicated, the Government intends to proclaim sovereignty over our continental shelf. It will enforce a system of licensing and control of pearl fishing in waters over our continental shelf; and this system will be applied irrespective of nationality. It is clear that the waters beyond the continental shelf, that is beyond the 100-fathoms depth, are not waters in which pearl-shell occurs.
In taking this action, the Australian Government is concerned to ensure conservation of pearl-shell resources, orderly development of the pearl-shell industry, and preservation of the reasonable economic interests of the Australian indus-. try. The Japanese will be permitted to participate in pearling in our waters, but only in accordance with the law and in harmony with the orderly development and economic interests of the Australian pearl shell industry.
The amendments which I shall submit provide for the definition of Australian waters extending to the limits of the continental shelf and the proclamation of the boundaries of the continental shelf, and will make explicit provision for the application of this measure within these waters to foreigners and foreign ships. To the extent that this amendment is designed to amplify and/or clarify provisions previously made, the explanation is that legal advice regarding aspects of national authority on these matters, that is on aspects of sovereignty beyond territorial waters, has very recently indeed supported this course.
In detail the amendments cover - (ft) A definition of “ Australian waters “, which will be limited to waters above the continental shelf.
– Has the Minister a map that will clarify, the position?
– I have not a map here, but I shall make one available to the honorable member for Melbourne.
– Probably a copy of the peace treaty with Japan will suffice.
– Perhaps the Leader of the Opposition can supply the honorable member for East Sydney (Mr. Ward) with a copy of the peace treaty with Japan.
– I refer to the soft treaty that this Government made with the Japanese.
– Order ! These interjections are disorderly. This bill deals with pearl shell.
– Other amendments cover -
This shelf extends approximately 150 miles to the westward of the Trobriand Islands and approaches within 5 miles of the Papuan coast. This would also be done by proclamation by the Governor-General.
Pearl Fisheries Act includes in its application foreign persons, ships and boats.
In commending this bill to the House, I repeat that, in taking the action it proposes, the Australian Government is concerned to ensure conservation of pearl-shell resources, orderly development of the pearl-shell industry, and preserva tion of the reasonable economic interests of the Australian industry. The licensing system and control measures will be enforced on all pearlers and ships engaged in pearling in Australian waters, irrespective of nationality.
Debate (on motion by Dr. Evatt) adjourned.
Debate resumed from the 26th February (vide page 410, Vol. No. 216), on motion by Mr. Menzies -
That the following paper be printed: -
.- The subject of uniform taxation came before the House on the 26th February, when the Prime Minister (Mr. Menzies) made a statement which arose from discussions that had taken place at a conference of Commonwealth and State Ministers on the 20th and 21st February. No subject has caused greater political controversy than has the issue of uniform taxation and the financial arrangements between the Commonwealth and the States. Uniform taxation was instituted in 1942. It was then intended to remain in operation for the period of World War II. and twelve months thereafter, but, in fact, it has remained in operation ever since. When the original term expired, many State- Premiers criticized the continuance of the uniform tax system. Such criticism increased when the present Government parties came into office in 1949. In fact, the comments of Premiers have passed beyond the stage of reasonable criticism to a point at which many of them, particularly those who lead Labour governments, are taking advantage of the opportunity to gain party political advantage for themselves.
Many attacks on the uniform tax system have been made by Premiers after conferences of Commonwealth and State Ministers at which the financial arrangements of the Commonwealth and the States have been discussed. That statement applies particularly to the Premiers of Victoria, New South Wales and Queensland. Victoria took such a serious view of the continuation of uniform tax that it even commenced litigation in the High Court of Australia in an effort to determine whether the system was constitutional.
– That was the Country party Premier of Victoria, who is in office no longer.
– But he acted entirely upon instructions from the Labour party in Victoria. I refer honorable members to a statement that was made by the Prime Minister at a conference of Commonwealth and State Ministers on the 7th July, 1952. The right honorable gentleman said -
I have on previous occasions told the Premiers of the States sitting at this table that if they request the return of their taxing powers, wc as a Common wen 1th Government, ure prepared to give consideration to that matter. I now carry that offer substantially further by telling you that we have considered this matter and that in point of principle, we are entirely in agreement with the necessity for the States to have their own taxing authority because we believe that it would mean that the States would, to that degree, be masters of their own budgets . . . The return to the States of their power to levy income tax would do more than anything else that 1 can think of to rationalize financial relations between the Commonwealth and the States … I think that it would be the general view of the Premiers that the first thing to be done is for the Secretary of the Commonwealth Treasury and the UnderTreasurer of each State to come together and work out the technical problems that are involved … In the absence of dissent, I take it that we ca.n record our approval that the officials get together with all due speed to deal with this matter.
Those officers met, and they made a report on the 19th January last. It is a public document which is available to all honorable members. As a result of that report, a conference of Commonwealth and State Ministers was held on the 20th and 21st February. Like many similar conferences that have been held in recent years, it developed into a veritable Donnybrook. The people of Australia are sick and tired of such meetings between State Premiers and Treasurers and the Prime Minister and Commonwealth Treasurer.
The treasury officials pointed out in their report that the problems involved in the abolition of uniform taxation were not easy of solution, and they commented that the retention of one form of tax return and one assessment was desirable.
That should be obvious to any schoolboy in the community. It is most undesirable that a taxpayer should receive separate Commonwealth and State assessments. I contradict the Leader of the Opposition (Dr. Evatt), who said in February, when this debate commenced, that if the States regained their former taxing rights, individual taxpayers would receive as many as six or seven tax assessments a year. An individual can reside in only one State and, therefore, except in a few unusual instances, a taxpayer would receive not more than two assessments - one from the Commonwealth and one from his State of residence. However, in my opinion it would he possible to devise a system under which each State and the Commonwealth would use only one form of tax return and would issue assessments on a common form.
– But different States would levy different rates of tax.
– That is a problem that must be solved. At this juncture it is not possible for us to forecast the probable variations of State taxing procedure. The treasury officials also declared in their report that uniform tax legislation was desirable. Few honorable members will disagree with that statement. I realize, of course, that it would not be easy to maintain uniformity of legislation, particularly over a long period of years. With the passage of time, there would be a tendency for the various States to depart from a common system in order to pursue their own ideas on the subject of taxation.
The major problems involved in the proposal to abolish uniform taxation also include that of the extent of the income tax field that the Commonwealth should vacate in favour of the States. Should it be only the field of income tax on individuals? Should it .be only the field of company tax? Perhaps the Commonwealth should partially vacate both fields. Even if the Commonwealth abandoned taxation of individuals to the States, many further problems would remain. The States would have to determine whether an individual should he taxed in relation to the place of origin of his income or solely in relation to his place of residence. Such problems are capable of solution by reasonable men. Unfortunately, the Premiers have given no indication that they are reasonable men. However, they could readily overcome these difficulties if they applied their minds to the task.
I wish to make a few remarks in relation to Queensland because no more dishonest statements have been made about what the Commonwealth has done for a State government than those which have been made by the Premier of Queensland, Mr. Gair, by the Treasurer of that State, Mr Walsh, and by every Minister and Labour member in the Queensland Parliament. This campaign of misrepresentation was started by Mr. Hanlon, and it has been continued by Mr. Gair, who, as honorable members from Queensland will recall, during recent months made what he called a goodwill tour through the western and northern areas of that State. Practically every day while he was engaged on that tour the press published reports of criticism that he made of the Australian Government on the ground, as he alleged, that it would not make sufficient funds available to the Queensland Government. That campaign has been carried on by the Queensland Treasurer, by the Acting Premier of Queensland, Mr. Duggan, and by every Minister and member in the Queensland Parliament. I believe that when the facts are made known the people will realize that the Queensland Government has made a completely dishonest effort to undo the good that this Government has done for that State in the financial sphere.
The relevant figures in respect of Queensland for the last five years show that tax reimbursements in 1948-49 amounted to £8,800,000, and in 1949-50 to £10,200,000. During those two years the Chifley Government was in office in this Parliament. In 1950-51, when the present Government assumed office, tax reimbursements to Queensland amounted to £11,500,000 and, in addition, an amount of £2,800,000 was made available to that State. In 1951-52 the corresponding amounts made available to Queensland were £14,000,000 and £5,000,000 respectively; and in 1952-53 the sums of £17,500,000 in tax reimbursement and £4,200,000 by way of special assistance were made available to that State. Thus, whilst the payments that the Commonwealth made to that State averaged £9,500,000 for each of the two years that I have cited in which the Chifley Government was in office, the payments made to that State for the last three years by the Menzies Government have averaged no less than £18,300,000. 1 point out that the amount of tax reimbursements represents approximately only one-half of the total financial assistance that the Australian Government has made available to the States. Payments, such as aid roads grants, bounties to primary industries and other items of assistance to the States, are equal to the amount of tax reimbursements. Having regard to that fact no one can justifiably criticize the Australian Government in respect of the financial assistance that it has made available to Queensland. That observation applies also with respect to the financial assistance that the Australian Government has made to the States as a whole. In 1948-49 and in 1949-50 the amounts of tax reimbursement made available to the States during the regime of the Chifley Government were, respectively, £53,500,000 and £62,300,000, or an average of £57,900,000 for each of those years, whereas the amounts made available during the last three years by the Menzies Government to the States have been as follows :- 1950-51, £70,100,000 tax reimbursement and £20,000,000 special assistance; 1951-52, £86,300,000 and £33,500,000; and, 1952-53. £108,800,000 and £27,100,000, or an average of £115,300,000 for each of those three years. That is very generous treatment of the States by this Government when one defines generosity to mean the provision of assistance over and above that which the Australian Government is obliged to make, available to the States. The Australian Government is obliged to pay to the States an amount that is determined under a formula which was worked out and agreed to by the State Premiers and by the Chifley Government. In point of fact, no Australian government prior to the present Government gave one penny more to the States than the amount that was determined under that formula. Yet, during the last three years, this Government has paid to the States no less an amount than £80,600,000 over and above the total sum that it was obliged under the formula to make available to them. Having regard to that fact, this Government has been more than generous to the States. That additional payment represents 30 per cent, more than the total sum which it was actually obliged to make available to the States. It is well to point out that if the Australian Government had not made those additional payments it would have been able to reduce personal income taxation by approximately 10 per cent. Obviously, if this Government had desired to take advantage of such an opportunity for party political purposes it would have followed such a course, hut, on the contrary, it followed a course which it believed to be in the best interests of the States, and, for that reason, made those additional payments to the States.
Reverting to the proceedings at the conference of Commonwealth aud State Ministers that was held in February last, I direct attention to certain statements that were made by the Premier of New South Wales, Mr. Cahill, and the Premier of Queensland, Mr. Gair. Mr. Cahill said -
I consider that a State that handles money without having the responsibility of raising it is like a man who wins money at the races. H comes easily and goes easily.
Honorable members should bear that statement in mind. Surely, it is an admission of inefficiency and abuse of trust on the part of the Labour Premier of New South Wales in respect of the taxpayers’ money. Mr. Cahill continued -
I am praying for the day when our taxing powers will be restored to us. I believe that the States will perish unless they are provided with some means of raising their own revenue.
At the same conference Mr. Gair said -
Wc subscribe to the Prime Ministers statement that the levying of taxation by thu States is a distinctive clement of sovereign Government.
How can members of the Opposition suggest that the States do not desire to have their taxing powers returned to them when the State Premiers attend such a conference and make statements of that kind? Surely, we .must conclude from such statements that the States desire to recover their taxing powers but are frightened to accept them ‘because by doing so they might lose some party political advantage.
In the limited time at my disposal, I shall deal briefly with several othermatters. At the conference of Commonwealth and State Ministers, one Premier suggested that the Australian Government should reduce its taxation by an amount of £250,000,000 and another Premier suggested a reduction of £200,000,000. I remind honorable members that last year the amount made available to the States by way of tax reimbursement and special assistance totalled £135,000,000. In order to avoid, after the return of taxing powers to the States, a substantia] increase of overall taxation in Queensland and Tasmania,, it was suggested that the Australian Government should withdraw from the income taxation field to the extent of £200,000,000. Obviously, if the Australian Government had followed such a course the Governments of Victoria an( New South Wales would have been given the opportunity to make good fellows of themselves with their taxpayers by reducing their taxes immediately and, at the same time, receiving increased1 revenue. The Prime Minister was not slow to. perceive that point. The right honorable gentleman made his offer in relation to Queensland, not merely to the Labour Government of that State, but in the interests of the people and taxpayers of that State. His offer was that the Commonwealth would assist the Queensland Government in relation to the difficulty which would arise owing to the high taxes that Queensland would have to levy. He said that special compensation would be paid to Queensland in order that the direct taxes levied by that State would bear comparison with those levied by other States. He suggested that expert officers from the Commonwealth and Queensland should confer with a view to devising appropriate machinery to assess the amount of the grant, and further, that the Commonwealth should place the whole matter upon a contractual basis to give it statutory effect. He offered such further elements of security as Mr. Gair’s advisers might suggest.
I believe that in relation to that conference the Prime Minister, on behalf of the Commonwealth, made a most generous offer to Queensland. Yet in that State we are subjected continually to criticism and to wild howls from the State leaders that the Commonwealth is not doing the decent thing by Queensland. A Queensland Minister had the temerity to say at a function, when asked whether the State Government would paint the inside of a school, that it could not do so unless it got extra loan moneys from the Commonwealth. That statement illustrates the mentality of some Ministers of the Queensland Parliament who are endeavouring to gull the taxpayers of Queensland, and to lead them to believe that this Government, which is giving every consideration to that State, is not doing the fair thing. I believe that we shall never have responsible government in the States until the States themselves are responsible for collecting the moneys that they expend.
.- If ever any nonsense is talked about uniform taxation, it is always contained in speeches made by members of present Government parties about what they want to do in regard to the return of taxing powers to the States. This Government has decided that to get rid of uniform taxation would pay it politically, but it knows very well that the abolition of the system would harm Australia. The Labour party stands for the maintenance of uniform taxation. It is a plank of our platform. That platform binds every member of the Labour party in this Parliament, every member of the party in every State parliament, and every other member. There is no question about where the Labour party stands in regard to uniform taxation. We stand for the maintenance of uniform taxation, and for a revision of the formula under which grants are made to the States.
We say that there is nothing wrong with uniform taxation. If there is any trouble, it arises because some States are not getting sufficient money to enable them to exercise adequately the residual powers which, under the Constitution, it is their right and privilege to exercise. As the honorable member for Petrie (Mr.
Hulme) has said, uniform taxation was introduced originally as a war-time measure. But the States, very foolishly, rushed in and challenged it in the High Court. The decision of the court surprised the States as well as the members of the Curtin Government, of which I was one. The decision was that the Commonwealth had authority to enact that legislation, not only under the defence power, but also under other provisions of the Constitution. The court stated that section 51 of the Constitution, under which the Commonwealth was given power to levy taxes, the authority given to it under another section of the Constitution to make grants in aid and various other provisions enabled the Commonwealth Parliament, under its peacetime powers, to enact such legislation. The court declared all of the relevant acts that had been passed by the Commonwealth Parliament to be a valid exercise of power. For some time after that, there was no question whether the States did or did not want their taxing powers back. I have my own ideas about what the decision of the High Court would have been if the States had postponed their challenge for two or three years. Possibly it would have been different. But the court made its decision in the midst of a war, and that decision still stands. Uniform, taxation was challenged by the McDonald Government, now happily relegated to history, but the Labour Government now in office in Victoria has not yet seen fit to carry on with the challenge in the High Court, and I do not think it will do so.
– The Premier of New South Wales was prevented from challenging uniform taxation.
– It is true that a Premier of New South Wales, who subsequently became Governor-General, proposed to challenge the action of the Commonwealth in continuing uniform taxation. Happily, a Labour conference met about that time. On the very first day of the meeting, it almost unanimously told the Premier of New South Wales that he was not to go on with the challenge. “ Mr. Curtin. - The voice of the movement.
– That is so. We do what the people say. We govern in the best interests of the people. We do the greatest good for the greatest number, in accordance with the great democratic principle on which the great Labour movement is founded. There has been a lot of talk at Premiers conferences about the return of taxing powers to the States. I have never believed that any Premier, Labour or non-Labour, wants the return >f taxing powers. I think that any Premier who has advocated the return of taxing powers has only put forward an argument in the hope that, out of the discussion, he would get a better allocation of funds for his State. That is legitimate enough. This Government found that the Premier of South Australia, the last of the Philistines in office in Australia, outside the Federal Parliament - of course, the days of this Government are numbered too - abused the Prime Minister (Mr. Menzies) and the Treasurer (Sir Arthur Fadden) at a meeting of the Australian Loan Council. Fie lined up with Mr. McLarty, the Premier of Western Australia, and with 8 11 the Labour Premiers. As a matter of fact, the Liberal Premiers expressed themselves in stronger language than did the Labour Premiers about the niggardliness of the Menzies-Fadden Administration in looking after the interests of the States. -So, at a conference held in, I think, July, [052, the Prime Minister said that his Government was prepared to ip-turn taxing powers to the States.
– Is the honorable, member for Melbourne (Mr. Calwell) about to quote from the report of a debate of the current session?
– There is always a certain amount of laxity in these matters. 1’ want to quote what the Prime Minister «aid so that I can refer to his argument. At a conference of Commonwealth and State Ministers held on the 7th July, 1952, he said- f say at once that, as a Government, we agree that this is thoroughly unsatisfactory.
He was referring to the action of the Commonwealth in continuing to collect all taxes and to allocate a proportion of them to the States. He continued -
In principle, it would be most desirable for the States to be in command of their tax revenues. Therefore, I tell all the States here represented that the Commonwealth Govern ment is abundantly and promptly willing to discuss with them the return of their taxing power.
Later, he said -
My Government believes that the present position is completely unsatisfactory and that we should do our best to resolve it by repealing the relevant law. That would be an arbitrary act in which I should not engage in a hurry. It is far better, if we find we are on common ground, for us to sit down and work out proper ways and means of effecting the transition.
I come now to the following day, and here I quote from Current Politics,, which, of course, is not a document of the Parliament, and is certainly as not as accurate in recording facts as our parliamentary Hansard is. However, this is a verbatim account of what the present Treasurer said at that conference, as reported and publicized by the Liberal party -
We are firm believers in the Federal system, and an effective Federal system means that the States, as partners, must accept their share of financial responsibility, even if this responsibility has to be thrust upon them.
– Hear, hear !
– I should imagine that the honorable member for Riverina (Mr. Roberton), who wanted to rob the natives of New Guinea of their lands, would believe in direct action against the States, the natives or anybody else. The Treasurer’s statement concluded -
The Commonwealth is now determined that the issue shall be resolved. It is up to th, State Premiers to show where they stand. They must accept responsibility as well as power, and they now have the opportunity to rationalise Commonwealth-State financial relations.
I repeat that that was on the 8th July, 1952; but nothing has been, done by the Government to make the States accept their responsibilities. The Treasurer threatened to force their responsibilities on them fourteen months ago, but he has done nothing by way of legislation to mak? them accept those alleged responsibilities. I do not believe that the States will decide to take back their taxing powers. There is a good reason why there should be uniform taxation in Australia in respect, of every item of taxation. Before the days of uniform taxation, the tory-ridden upper houses of this country levied State taxes and, in States where those houses were strongest and most conservative, the burden of tax was placed on the lowerpaid workers while wealthy interests were allowed to escape. That has not happened in Queensland because, fortunately, for the last 30 years, Queensland has had a uni-cameral system of government. Indeed, it never happened in Queensland because in that State, as in New South Wales, the upper house constituted under the original legislation passed by the British Government, was a nominee chamber in which the government of the day could effect its will. In Victoria, Western Australia, South Australia and tasmania, however, members of the upper houses were elected on a property franchise. They were returned on the votes of about one-third of the voters at legislative assembly elections. The result was that the burden of taxation was not fairly distributed. Uniform taxation changed all that. Every taxpayer in Australia, no matter where he lives, pays the same amount of tax according to his income, and portion of the revenue derived by the Commonwealth is paid back to each State in accordance with a formula that was accepted by the States and the Commonwealth. The formula was prepared by three persons, the late Professor Mills, as chairman, the late Mr. J. H. Scullin, and the late Mr. Eric Spooner. The latter two, of course, were members of this House. The formula was based on the amount of money expended on social services during the preceding three years by each State. Because Victoria had a tory-ridden upper house, the social services provided in that State were disgracefully inadequate compared with those provided elsewhere, and so Victoria got a raw deal under uniform taxation. Even although the formula was varied in 1947, Victoria continues to be badly treated. However, if we were to abolish uniform taxation, we would be returning the taxpayers of South Australia, Tasmania and Western Australia to the control of the conservative upper houses. In Victoria, fortunately, a miracle revolution occurred and the upper house is now elected on a democratic franchise. Therefore, we need not fear that chamber any ‘further. Labour will control it after the next election, provided .the sturdy common sense of the people remains as sound as it is at the moment. The taxpayers of the other1 States, however, would suffer if uniform taxation were abolished. In underdeveloped States where the taxable capacity of the people is not as great ae it is in the more settled areas - I refer to South Australia, Queensland and Western Australia - the average taxpayer would have to pay proportionately much more than he is paying at present. I believe that those who have wealth, wherever they may live, should contribute their fair share towards the development of the whole of Australia. Our States are not six watertight compartments. Our war-time enemies did noi regard them as such. We were one people then, and we should be one people when it comes to the imposition of taxes for th, maintenance of social services, for the carrying on of the ordinary affairs of government, and for the effective defence of Australia. If uniform taxation we if abolished, Queensland would lose about £8,000,000 because it has not the taxable capacity to raise that additional sum from its own resources. Where could Queensland get that money ? It could become a claimant State like South Australia, Western Australia and Tasmania and plead that, because of the disabilities’ of federation, it had to be given special assistance. I do not think that the people of Queensland relish that thought, and 1 do not think it should be necessary for up to compel Queensland to become n claimant State. I have seen a good deal of Queensland and of Western Australia. It is a terrible pity that the development of those States is not going alone faster than it is to-day. It is a pity that development in Victoria and New South Wales is proceeding at an abnormally fast rate compared with development in the rest of Australia. That is aggravating many of our economic and social problems; but they would he further aggravated if uniform taxation were abolished. The States would find themselves in the same position in regard to taxation as they now find themselves in over prices control. One has only to read the newspapers occasionally to see how difficult it is for the economic life of the community to be effectively regulated by the six States trying to exercise prices control. The same would occur in regard to taxation. I think that the Chifley Government handled Queensland’s problems well. The honorable member for ‘Petrie says that this Government had done much for Queensland because it has given that State more money than it would have been entitled to under the formula. The weakness of that argument lies in the fact that more has been done for every other State than has been done for Queensland. But more had to be done for every State because the inflation which this Government created and has failed to control has robbed the money that the Commonwealth pays to the States of much of its value. Therefore, more and more money has had to be handed out to the States every year to enable them to carry on. Money has lost its value. The value of our currency has not been restored as honorable members opposite promised. Therefore, I believe that, although the Government has handed more money to Queensland, it has not faced up to the problems of Queensland. I do not believe that any Premier really wants his taxing powers restored. All of them, however, want a better deal than they have been getting, and I believe they could have been given a better deal. I think that Victoria should receive more money than it has received for a number of years past, and it is not the fault of the present Labour Premier of Victoria, nor of his two Country party and Liberal party predecessors, that Victoria is in its present position, which, in fact, has stemmed from the actions of upper houses in other days which were dominated by the Baillieus, and which would not allow reasonably designed tax laws to be passed. Not only the wealthy people like the Baillieus are at fault, but also the squatter families who for too long had too much power in Victoria. The Prime Minister has not faced up to the issue of uniform taxation. He is hoping that the Premiers will solve the problem for him by taking it off his plate. The Treasurer (Sir Arthur Fadden) has the same hope. A little gentle pressure is being applied from time to time in an attempt to make the States take back their taxing powers, but the members of the
Government know’ that time is running out, and if they have not prepared thenecessary legislation for this session to provide for the return of taxing powers to the States, then it will not be introduced in the lifetime of this Parliament. Whoever controls the next Parliament will have to handle the problem. We have reason to be grateful for the amount of information that has been provided by the Government through this committee of officers which was appointed to examine the whole matter. The information is of a complex nature, but it has been interest- ingly arranged and well stated for the benefit of the House.
-Order ! The honorable gentlemans time has expired.
.- I do not propose to reply at the outset to the remarks of the honorable member for Melbourne (Mr. Calwell) beyond saying simply that of course centralization is the principle espoused by the Labour movement. The honorable gentleman has taken his instruction from that movement, and has used this occasion to gather unto himself some political kudos. I propose to deal with this matter dispassionately. For a considerable time the Government has affirmed its belief in the principle that taxing rights - I would rather describe them as “ taxing duties “ - should be restored to the States. It would be idle, however, to suppose that all honorable members on the Government side of the House believe in that principle. The Opposition is, of course, entirely opposed to the restoration of those taxing responsibilities to their proper place.
I shall make some comments, seriatim, on the subject of the return of taxingpowers to the States. First, a great deal has been said, and perhaps thought, by people who have read the report of the officers of the Commonwealth and State Treasuries, about the complications and difficulties associated with a return to the States of their taxing responsibilities. I believe those difficulties have been greatly exaggerated and that they simply melt away under close examination. I refer honorable members to a statement made in Appendix 8 of the report, in which the Commissioner of Taxation, Mr. McGovern, points out that there is no real technical difficulty, on departmental grounds, associated with the return of taxing powers to the States. That is an important and remarkable statement by a man who presumably knows more about the technicalities of taxation than anybody else in Australia knows. Secondly, I wish to point out that there has been a very large area of agreement between the Commonwealth and the States on all important matters involved in this issue. According to a statement that the Prime Minister (Mr. Menzies) made on this matter, the Premiers agreed on the principle that only one tax return should be made by the taxpayer, who should receive only one assessment, which would distinguish the amount of tax payable to the Commonwealth and the amount payable to the State concerned. They also agreed that there should be one collecting authority. Those are fairly simple matters, but they are important to the taxpayer. The Premiers went further than that, because they agreed on the principle that there should be uniformity in the various tax assessment acts. That is to say, there should he uniformity in respect of such matters, which are important to the taxpayer, as what is to be deemed to be assessable income, what the allowable deductions are to be, and so forth. Agreement on that principle was a tremendous step forward. It is true that there was some disagreement over the division of the fields of income tax as between the .Commonwealth and the States. On the one hand the Commonwealth suggested that it should confine itself to company taxation, and should leave individual taxpayers to the States. On the other hand the Premier of Now South Wales, Mr. Cahill, suggested that there should be a division upon a different principle, namely, that the Commonwealth should tax people in the lower income range and that the States should tax only the “ tall poppies “. I suggest that neither proposal was intended at any time to he taken seriously, and obviously neither of them was, or could be, acceptable to the other party concerned. But that is a minor matter, because it is clear that the Commonwealth and the individual States would each impose their rates of tax on the same incomes, whether they were incomes of com panies or individuals, and that there would ,be no considerable technical difficulties in their imposing their rates on a graduated scale, as each of them did in the past.
It has been suggested that tremendous difficulties and complications would arise because some taxpayers, particularly companies, derive their income from different States. One problem would be that of determining the proportion of income derived in one State and the proportion derived in another, and what the tax payable in the respective’ States should be. I direct attention to some very remarkable figures in this regard. The officers in their report say that only 1 2$ per cent, of the companies in Australia do, in fact, derive their income from more than one State. Less than 1 per cent, of individual taxpayers derive their income from more than one State.
– Is that the percentage of the number of companies?
– Yes, it is the percentage of the number of companies. I do not know whether the income of interstate companies is only 12£ per cent, of the total income. It might be double that percentage. However, we are dealing with the administrative difficulties that would fall on companies in relation to the preparation of their returns. Such difficulties would fall on only 12-J per cent, of the companies in Australia. The number of companies which derive their income from more than one State is, therefore, more relevant to a consideration of this matter than is the amount of income derived from more than one State. It can be seen that the alleged great complications and difficulties completely melt away when examined. In 1936 the States, despite all the disagreements there might have been between them, agreed upon a common basis on which income should be taxed, if derived from more than one State. They agreed, in principle, that companies should be taxed on the basis of the origin of their incomes, and that individuals should be taxed on the basis of their residence. It is true that, by 1939, Labour governments having come into office in some States, there was some departure from this principle.
Now I come to perhaps one of the greatest difficulties concerning the matter. Reference has been made to it by the honorable member for Melbourne. I refer to the varying taxable capacity, as it has been called, of the different States. It has been pointed out that if the States wish to obtain only the same amount of revenue from income tax as in previous years they have obtained in tax reimbursements from the Commonwealth, in some instances it may be possible for them to reduce rates of taxation. The honorable member for Melbourne has pointed out that it may be possible for Victoria to reduce its rates, although other States might find it necessary to increase their rates of taxation. I confess that this is a difficult political problem. During the transitional period it may be necessary for the Commonwealth to provide diminishing grants to States that will be disadvantaged by the return of their taxing powers.
Why is it that there is a different taxable capacity in different States? I remind honorable members that the fiscal policy pursued by the various State governments reacts upon the taxable capacity of those States. If a governin en t imposes one burden after another on industry, ultimately industry will wilt and fail and not produce a tax revenue. Has, then, the rest of Australia to carry the burden ? Are those States which are well governed, whose fiscal policy results in a high level of production and income, to carry the burden of others which prefer to pursue a policy which results in low taxable capacity? We are considering a matter of justice, particularly justice to those who are industrious, thrifty and sensible.
– Is the honorable member forgetting that we all are Australians ?
– I shall reply to the honorable member’s interjection in a moment. I contend that we should not devote to the difference in taxable capacity as much regard as has been given to it by previous speakers and which no doubt will be paid to it by subsequent speakers. We should restore to the States an incentive for them to pursue, individually, wise fiscal policies in order to increase the level of production with a consequent increase of taxable capacity. Under the present system there is no such incentive for the States. The honorable member for Melbourne stated that all that needs to be done is to alter the formula, because some States are not getting as much revenue by tax reimbursement as they should receive. The honorable member instanced Victoria, probably because he is a Victorian representative. However, he stated that if uniform taxation were abolished Victoria would be able to reduce its taxation rates. Herein the honorable member revealed a« inconsistency. Again, he stated that none of the Premiers really want back- their taxing powers. That is true. That they do not want back their taxing responsibility is a very good reason why they should have it. Again, the honorable member for Melbourne deplored a suggestion that the States should be compelled to accept those responsibilities. I point, out that the Commonwealth has not. tried to thrust back these power? without making a few preparations, and it has tried to extend the area of agreement. By his interjection a moment ago the honorable member for Port. Adelaide (Mr. Thompson) implied that I had forgotten that we all are Australians, and that we’ should retain the uniform system of taxation so that all taxpayers would realize that they were citizens of a great Commonwealth, not merely parochial folk. I remind the honorable member that the United State? of America, the greatest nation on the earth to-day, is a federation. The citizens of that country have a high regard for their nationhood, and a loyalty of spirit that we might well emulate. Even those who have emigrated to the United States of America within recent years have rapidly become identified with the country of their adoption.
– Why should a woolgrower in New South Wales be taxed al a different rate than the wool-grower in South Australia?
– Why not? The plain fact is that there must be a balance between the provision of desirable public services on the one hand, and on the other hand the revenue available to provide them. It is sound and proper thai if a government is to provide schools and hospitals it should bear the responsibility of obtaining the necessary money by taxation. It should be .the constant responsibility of governments to decide whether services should be increased or taxation reduced. Under thu present, system citizens throughout Australia are compelled to vote for the election of the Australian Government, which controls the finance of this country. I However, they cannot, as federal electors, choose whether they want more schools and hospitals or less taxation. If, by their votes, they directly controlled local governing authorities which provide roads and gutters, State governments which provide such facilities as schools and hospitals, and the Australian Government, which controls the country’s finance, they would have a control that they do not possess under the present system. There is no doubt that taxing responsiblity should be handed hack to the States.
I have made it clear to honorable mem.1,ers that all the difficulties and complexities that have been conjured up have arisen largely out of the report of the treasury officials and are of relatively little significance. The area of agreement is vast and the remainder is not really important. I asked a visiting American professor about the position in the United States of America in relation to the taxation rights as between the central government and the State governments. Me merely laughed and replied that it was possible for the individual States to levy income taxation and company taxation, and that it was equally competent for the central government to do so. Nor was there any attempt at co-ordination between them. We have gone vastly further than has the United States of America in this respect.
Mr. CREAN (Melbourne Ports) 1 4.59]. - The honorable member for Bradfield (Mr. Turner) has unduly simplified the position that has been revealed by the report of the Commonwealth and State treasury officials, which when it is analysed, contains strong arguments against an attempt to return income tax collection to the Staes.
The report would seem to be the strongest indication that the uniform system of taxation is the system best suited to Australian conditions. I agree with the honorable member for Melbourne (Mr. Calwell) that there may be considerable difference of opinion about the size of the reimbursements to the States; indeed, it is the central problem of our federal system at the moment, and it must be solved. It has been intimated during this debate, that if certain things can be done in the United States of America they can also be done iri Australia. In reply to that, I suggest that the circumstances in Australia are very different from those in America. There are fundamental differences between the two countries in their approach to taxation, particularly in relation to property tax and corporation tax, and there is also a difference between the wealth of the United States of America and that of Australia. We should devote our attention to the problem as it exists in this country.
In Australia great reliance is placed by the Commonwealth on income tax as a principal source of revenue. In the last, budget presented to this House, of the total estimated revenue collections of £850,000,000, about £550,000,000 was to be derived from income tax. Three hundred and eighty million pounds of that latter sum was to come from the taxation of individuals, and the remaining £170,000,000 was to he derived from companies. An examination of income distribution will reveal that, although 12-J per cent, of our companies, as has previously been said, derive incomes from more than one State those companies pay more than 50 per cent, of the income tax collected from companies. To say that the administrative problems connected with the taxation of 12£ per cent, of our companies are not great, is to overlook the important economic aspect that those companies pay the major part of company taxation. In other words, the companies that operate in more than one State are the principal sources of revenue in this country. About 3,000,000 people in Australia contribute to the revenue through income taxation, but only about 68,000 of them, or between 2 per cent, and 3 per cent., receive incomes of more than £2,000 a year. The persons in this group pay more than half of the total of £380,000,000 which is paid in income tax by individuals. I believe that of about 20,000 companies in Australia, about 500 pay more than half of the total income tax collected. When the problem of uniform taxation is approached in the light of what I have just put to the House, it will be appreciated that the distribution of taxation between the States is not so much a geographical problem as an economic problem with respect to personal and company incomes which have Australiawide ramifications instead of merely local application.
The reimbursements which will be made to the States this year will amount to £140,000,000, or about one-quarter of the receipts from the income tax. Threequarters of the total income tax will be retained by the Commonwealth for its own purposes. . Therefore, it is rather hypothetical to talk of drawing an imaginary line somewhere in the tax field and giving all on one side of that line to the States and all on the other side to the Commonwealth, and still have a single collecting authority. The report that we are considering indicates the great difficulty, both administrative and economic, that would attach to the return of taxing powers to the States. The meaning of “ taxable capacity “ can be argued by economists until the cows come home, but if we consider Appendix C on page 32 of the report, we will see that a division has. been made between individuals and corporations so far as taxable capacity is concerned. There- are considerable variations in taxable capacity when individuals alone are used as a basis, and there are also variations when corporations are considered.
It is sometimes glibly claimed that the States should be given back a tax field equivalent to their tax reimbursements for last year. According to this report, for the financial year 1951-52 the reimbursement to the States amounted to £135,9001,000. Moreover, a very interesting table is included in the report at page 28 which again indicates the difficulties attendant upon such a solution. If that method were adopted, a State like Victoria, with a high taxable capacity, would get more than it gets at present, and a State like Queensland would get a great deal less. If Queensland were to get as much as it gets now, the reimbursement would have to be in the vicinity of £200,000,000, but then New South Wales would get £24,000,000 more than it received during 1951-52 and Victoria would get £28,000,000 more. I suggest that if the Government is really genuine in its express wish to return taxing powers to the States it should not leave unanswered a number of very important questions. Until these questions are answered it is hypocrisy on the part of the Government to ask the States to make up their minds on the subject of uniform taxation.
The Government has placed all the possible solutions of the problem before the States but it should have produced a concrete proposition for their consideration. Until the Government announces what it proposes to do the States cannot furnish it with an answer. Collections from income tax now constitute a much greater part of the national income than they constituted in pre-war years. I suggest that income tax is a most just method of collecting revenue because it is garnered from people according to their capacity to pay and redistributed to individuals according to their needs. The basic principle is that the greater the income the greater is the ability to pay. At present nearly £560,000,000 is collected in income tax throughout Australia, which represents about 16 per cent, of the national income. In pre-war days total collections from Federal and State income tax aggregated only about 4£ per cent, of the national income. So it can be realized that much greater reliance is now placed on income tax as a source of revenue.
Prior to the days of uniform taxation the States were allowed to have the first bite at income taxation. The amount of State income tax paid by the individual was allowed as a deduction before computing the federal tax for which he was liable. I think that income tax was then paid at the rate of from 2s. to 4s. in the £1. Now, some persons in receipt of incomes of over £2,000 a year, who contribute the major part of income tax, pay up to 15s. in the £1. If the States and the Commonwealth are to be separate taxing authorities it is very important to know who is to have the prior right of collection. If the Commonwealth is to have the prior right and if it takes 15s. in the £1 from big incomes the imposition of any additional tax would bring a great deal of unpopularity to a State government. This is the kind of problem which the Government has not faced. It has thrown the States into confusion, lt has not presented them with an answer to the central question. It has made no definite statement of its views on the matter. The Commonwealth still retains three pounds out of every four collected from income tax and no State is in a position to make a proposition on this matter until it knows what the Commonwealth will do. It has been suggested that certain fields of taxation could be vacated by the Commonwealth. The bulk of taxation is collected from companies with a net profit of over £100,000 a year and from individuals who receive over £2,000 a year. To divide the field of taxation according to the level of income distribution or of company profits would be difficult. If the ‘Commonwealth were to take the “ tall poppies “ and leave the bulk of the community to the States as their source of revenue, that would be an easy solution of the problem for the Commonwealth, but it would be filled with difficulties in its practical application for the States. Until the Commonwealth explains its intentions fully the States can do nothing in regard to this matter.
The report fully indicated the difficulties involved for the individual taxpayer in any reversion from the single taxing system. No matter in what part of Australia an individual may live, he pays the same amount of tax as every one else on the same income and in the same circumstances. That state of affairs is based on an Australian point of view to which the report does not subscribe. The Australian Labour party contends that in the interest of the future economic welfare of Australia and in the interests of most Australian citizens uniform taxation should be retained but that there should be a better method of distributing its proceeds. At present the States are unable to plan their financial commitments in advance because they do not know to what extent the Australian Government will reimburse them from the proceeds of uniform taxation. They have not the luxurious opportunity of paying for capital works out of revenue as the Commonwealth has done to the extent of £108,000,000. That opportunity should he available to the States just a3 it is available to the Commonwealth. It is just as important to the States to know how many schools they will be able to build as it is to the Commonwealth to know how many telephone exchanges it will bc able to build. At present the Commonwealth is in a better position to plan than are the States because it knows what its revenue will be.
I am chairman of the Council of Adult Education in Victoria, a body which is doing valuable work by spreading education to the farthermost parts of the State. “We have had to cut our budget because the State has not had as much money to give us as we needed. A million pounds is of much more significance to a State government than it is to the Australian Government.
– Order ! The honorable member’s time has expired.
.- I rise in order .to take the honorable member for Melbourne (Mr. Calwell) and the honorable member for Melbourne Ports (Mr. Crean) to task on some of the points that they have put forward. The debate on the motion for the printing of this paper has been directed to the technical difficulties associated with the return of taxing powers to the States rather than to the general issues involved. The House would have been better advised to have examined the background of the problem. Several aspects of it are not reflected in the paper because they were left out of the terms of reference for the treasury officers concerned. The paper has been presented to us because it is apparent that some people are discontented with the present system of uniform taxation. We have it on the authority of the honorable member for Melbourne that none of the socialist State Premiers wants the return of State taxing powers. That is an interesting statement from an honorable member who is the deputy leader of the Australian Labour party. It casts doubt upon the integrity of the leaders of that party in the State sphere. Such a statement is tantamount to saying that the socialist State Premiers hare been guilty of gross misrepresentation and prevarication. It was with great pleasure that I heard the honorable member so directly and freely make such an admission.
We must ask ourselves why this paper has been presented to us, why there is discontent about the uniform taxation system, and why the original system of taxation in Australia was altered. Honorable members will recall that in the early years of the war the Commonwealth commitment was becoming so vast that it became necessary for the Commonwealth to approach the States and say to them, “ You must abandon your right to acquire some portion of the assets of the Australian people because a vast transformation is taking place in this country and we are threatened with an enormous growth of the Commonwealth commitment “. The representatives .of the States and of the Commonwealth met in a- series of conferences and the representatives of the States, quite justifiably, said to the Commonwealth Treasurer, “Your commitments are greater than ours which, by virtue of their domestic nature, have remained more or less stable over the years of the war and accordingly we agree to adopt a uniform income tax scheme “.
– Your leaders also agreed to do so,
– I concede that at that time the leaders of the Liberal party and of the Australian Country party agreed to the proposal as also did the leaders of State political parties which represented the right wing in the Australian political scene. The uniform income tax scheme was agreed to purely as a war-time measure for reasons which were quite apparent. At that time there was no thought that such a scheme would create a weapon that could be used to destroy completely the federal system in Australia. At no time was it agreed that Australia should be governed by a centralized unitarian government. After the old system had been altered the Commonwealth commitment continued to grow enormously and as a result the Commonwealth obtained the lion’s share of the taxes levied on the people.
The Commonwealth has been eager to hold on to its acquisition and to justify it6 right to possess the largest share of the taxation cake. Side by side with this greed on the part of the Commonwealth a shocking sense of irresponsibility has developed on the State level. Now we have the rather embarrassing spectacle of responsible State leaders making the sort of statements which have been properly described in this place by the honorable member for Melbourne as Deputy Leader of the Australian Labour party as absolute falsehoods. That is an interesting state of affairs. Their sense of irresponsibility appears to have grown in direct ratio to the effect on Commonwealth-State relations of the uniform income tax scheme. The real complaint against the scheme is that it tends to reduce the moral fibre of the six vital components of the federal system. It tends to convince those who have the responsibility for government in the States that they may be irresponsible because there is in existence a central government to whom they can attribute, with every likelihood of success, the characteristic of meanness or greed, which has denied to them what they regard to be their proper entitlement of revenue and loan moneys.
Earlier this afternoon the honorable member for Petrie (Mr. Hulme) very clearly and concisely put the case of the people of Queensland in respect of this matter. The honorable member for Melbourne has told the House that it would be too difficult to return to the States their taxing powers and that the contents of this document bears out such a contention. The House should be cognizant of the fact that the inherent message in this document is that it would be too difficult or unfair either for the States or for the Commonwealth to arrive at a rational, sensible, agreement in which a balanced taxing power would be exercised in direct, ratio to the sovereign authority of the several governments concerned. Surely the test should be whether the people should be taxed by the Commonwealth or by the States. If the States are sovereign authorities they should have considerable powers to impose taxes on the people. If the Commonwealth, within certain fields, has sovereign rights, then in those fields, as opposed to the State fields, the ‘Commonwealth should have power to impose taxes.
The first point that emerges from our consideration of this document is that the uniform income tax system is immoral insofar as it strikes at the basic roots of the federal system. The second point is that the Commonwealth wants to get the States into a position in which they will have the smallest section of the tax field in which to operate, and that, on the other hand, the States wish to jockey the Commonwealth into a position in which that situation would be reversed. Both the Commonwealth and the States have tackled this problem with a degree of questionable integrity. However, that is only one half of the story. Opposition members, including the honorable member for Melbourne Ports (Mr. Crean), should not attempt to involve the House in a technical discussion of the relevant merits of the matters contained in this paper so that they lose sight of the real problem that confronts them. The honorable member for Melbourne Ports said that it is hypocrisy for the Australian Government to say that it will back out of the taxing field and make the States take back their taxing powers. He said that that hypocrisy stems from the fact that the Commonwealth, by virtue of the 1943 decision of the High Court of Australia, is in the position of knowing that at all times it will have a prior call upon the revenue from taxation and that that knowledge will largely colour its attitude and that of the State governments to this problem. Tt seems to me that behind the arguments of the honorable member for Melbourne Ports and the honorable member for Melbourne was the attitude of all advocates of a unitarian form of Government, that whatever happens we must never get to the stage where we are retreating from the attack on the federal system.
There is a tendency to make a great deal of this matter of the return of taxing powers to the States and to say, “ It would be absolutely ghastly to compel citizens to make two returns each year. That would entail such a mental strain that we should go to any limits to avoid doing so “. In other words, so scant is our confidence in the capacity and ability of the average Australian that we must go to any lengths to avoid requiring him to fill in more than one form. That is a remarkable point of view, particularly when it is held by the members of the Opposition. It was my experience in wartime that their propensity for waging paper wars was astounding. I, of course, agree that it is desirable that the average Australian should be required to fill in only one form, if the filling in of two can be avoided.
Taxation is the yardstick by which the average voter tends to measure the efficiency and capacity of a government. Therefore, it would be rather remarkable if governments were to be completely honest and say, “ “We should do nothing to confuse the issue. We should make the matter perfectly clear, so that when the taxpayer is looking at it he will know exactly what he is paying. When he sends in his return of income and receives his taxation assessment, he will know the Government that is responsible for grabbing the tax that is being taken from him. That will make him appreciate that unless he thinks about his government he is liable to get a standard of government, that will become lower and lower as time goes on and governments which will become more and more lustful for power “.
I believe that the variation in taxation since the end of the war has been remarkably small. I also believe that the gross economic product of the community has to be related to taxation, if the incidence of taxation is to be properly assessed. Between 1946 and 1952, from 25.1 per cent, to 25.3 per cent, has been taken out of the pockets of thu people by way of taxes. Last year, taxation took 25.2 per cent, of the gross economic product, which is arrived at by taking the national income and having regard to fiduciary issues and other factors. Approximately the same percentage of taxation was taken in 1946. “It is not, then, the level of taxation that has varied to such a great degree; it is expenditure which has varied. To what degree since 1946 have governments sought more and more to increase their capacity to build bridges, dams and schools and to undertake public works generally, and to what degree have they in fact undertaken such works? That is the vital point for us to grasp if we are to know whether the general scheme of development has been1 overdone. In a time of inflation would it not be more prudent to watch the costing problem more closely? After all, that problem is vital in this country. At the moment we have succeeded in costing ourselves out of almost every available overseas market for Australian industrial products.
During the last eight years expenditure in the States has increased greatly. In New South Wales, particularly, there has been an enormous increase. Whilst the building of schools and hospitals in that State has a priority which is not very high, it is remarkable that the Government was able to find millions of pounds with which to purchase an electric light and power supply company in Balmain. If any one can explain to me why a government which was desperately short of money for essential purposes should consider it necessary to expend millions of pounds in order to take over an organization which was making a profit and paying its percentage of . taxes to the Federal Treasurer, I should like to hear from him. Perhaps the truth is that, there again, the socialist attitude was showing itself in the desire to acquire and socialize industry.
– They acquired the company because it was paying its way.
– That may be so. As honorable members are no doubt aware, the commitments of the Australian Government have changed enormously. For instance, expenditure on social services and repatriation last year was approximately £340.000,000. I suggest that if there is to be a proper review of the problem of handing back taxing powers tq the States, there should also be a review of the relative commitments of the Commonwealth and States. What are the commitments of the States and what are those of the Commonwealth? Surely, if we can do something to eliminate overlapping commitments and also to eliminate employees who are in fact redundant, we shall do something about reducing the total need for revenue, which is the vital thing.
-Order ! The honorable member’s time has expired.
.- The honorable member for St. George (Mr. Graham) referred to only two matters about which I need comment. The first was his. reference to the old bogy that members of the Australian Labour party seek to retain uniform taxation because they desire to see a uniform system of government in Australia. Of course, the honorable gentleman is fairly new to the Parliament. I suggest that if he had taken the trouble to read the debates of this Parliament for the period when uniform taxation was introduced, he would have found that the new system was stoutly supported by the present VicePresident of the Executive Council (Mr. Eric J. Harrison). The right honorable gentleman said at that time that uniform taxation, which had been introduced as a temporary war-time measure, had come to stay. He ventured the opinion that no government, irrespective of its political beliefs, would dare to remove the uniform income tax legislation from the statute-book. He said definitely and unequivocally that unification was inevitable, and that the uniform income tax legislation was only one more step in that direction. The right honorable gentleman expressed the view that the legislation was resisted only by those members of Parliament and the public who feared the march to unification.
– Are the right honorable gentleman’s remarks on this matter reported in Hansard^
– Yes. When the present Prime Minister ventured to question him on the result of a certain referendum, the Vice-President of the Executive Council replied, in effect, “ If the people of New South Wales were asked the simple question whether they were in favour of unification or the retention of the federal system of government, .a great majority of them would vote for unification “. I emphasize that the Vice-President of the Executive Council, who is the deputy leader of the Liberal party, expressed that view a few years ago. The Australian Ambassador to Washington, Sir Percy Spender, who was formerly the honorable member for
Warringah, stated that if the uniform tax system were only one step in the march to unification, he would support it on that ground alone as a majestic step to nationhood. I mention those matters to show that leading members of the Liberal party supported the introduction of the uniform taxation system as a necessary measure in Australia’s system of government. Some of them went even further, and expressed their abiding faith in unification as the system of government best suited to the requirements of this nation.
Wot only members of the Labour party but also many serious-minded people throughout the community have heard the creakings of the federal system in operation. They have recognized the shortcomings of the dual system of administration, which produces overlapping in administration, and the evasion of responsibilities: Those wise people consider that the unified system of government will ultimately prevail. Taxation alone will not bring about that situation. But the taxing powers of the Commonwealth and the States, and the separate administrative spheres of the several governments, have been discussed at length since federation. On one occasion, the Commonwealth offered to retire from the income tax field. The States were not willing to accept the offer. Subsequently the Commonwealth offered to become the sole authority to impose taxes. Once again, the States could not come to an agreement.
Before the outbreak of World War II., the Menzies Government, through the Treasurer of the day, Sir Arthur Fadden, endeavoured to introduce a uniform system of taxation. This was necessary, not exactly for the reason suggested by the right honorable gentleman, which was the increasing commitments of the Government, but because the introduction of a uniform system, with reasonable rates of tax, was imperative if some taxpayers in Queensland were not to be taxed at rates in excess of 20s. in the fi, and some taxpayers in Victoria were not to be taxed at the rate of 15s. in the £1. After protracted conferences, the States were unwilling to agree to the proposal. Finally, in an effort to resolve the dilemma, the right honorable gentleman submitted to the Parliament his ill-fated post-war credits scheme. I consider that his proposal, in principle, was an attempt to abolish the differing rates of tax applicable in the several States. What happened to tho right honorable gentleman’s proposal is now a matter of history. The antiLabour government was defeated, and was replaced by the Curtin Government.
The new Prime Minister, Mr. Curtin, and the incoming Treasurer, Mr. Chifley, then submitted to the States a plan for the introduction of the uniform income tax system. The proposal was rejected by the States. However, the Curtin Government was not daunted, and introduced the necessary legislation for the establishment of the uniform income tax system. The validity of that legislation was upheld subsequently by the High Court of Australia. That judgment has been referred to by my colleague, the honorable member for Melbourne, and is a crucial factor in the determination of whether taxing powers should be restored to the States, even if such a move were practicable and desirable. The High Court ruled that the Commonwealth had constitutional power to introduce the uniform income tax system, and prior right over the States in the collection of income tax. That judgment means that the Commonwealth is able to collect every penny of tax that it imposes before the States may collect one penny of the taxes that they impose.
– That judgment still holds good.
– Of course it does. That is why the States cannot resume their taxing powers, even if they were prepared to do so. The Commonwealth may impose any rates of tax that it pleases, or vary the rates of tax at any time and, according to the judgment of the highest judicial tribunal in the land, has prior right over the States in the collection of taxes.
I believe that this Government is completely dishonest politically in its approach to the problem. This Government does not intend that the uniform income tax system should be abolished. The leaders of the Government still hold the view expressed by the Vice-President of the Executive Council, to which I referred earlier in my speech. The Government’s assertion that it wishes the States to resume their taxing powers is merely a miserable bargaining weapon with which the Government seeks to defeat the claims of the States for their fair share of the swollen Consolidated Revenue Fund. Each year since 1949, the States have asked the Menzies Government for a certain amount of money, and the Prime Minister and the Treasurer have suggested a lower figure. The representatives of the Commonwealth have not said, in effect, “ We have suggested a substantially lower sum as a bargaining point. In reality, we are prepared to grant a larger amount to the States, though not so much as they have sought “. The periodical pronouncements of the Prime Minister about the restoration of the States’ taxing powers have been made in an attempt to prevent a legitimate discussion of the taxing rights of the States, State disabilities, and State needs. I believe that the Government, by its actions in this respect, has dealt the heaviest blow that has ever been delivered against the federal system. The Government has not even made an endeavour to investigate the problems of the States, or to examine their plans for development, and their physical resources.
This Government, in its dealings with the States, has been completely adamant. The leaders of the Government have been hostile to Premiers, not only before, but also during their conferences with them. Individual members of the present Government, and its supporters on the back benches in this chamber, have gone out of their way at every opportunity to deride the activities of the State governments and to endeavour, by whatever pressure they can bring to bear, to prevent them from giving effect to the policies to which they are committed and which have been endorsed by the parliaments and people of the respective States.
– That is complete nonsense.
– I am speaking the truth. I recall the continuous stream of propaganda against the Queensland Labour Government by members of the
Liberal party who represent constituencies in that State. 1 also recall the demands of members of the Liberal party who represent electorates in New South Wales that the Minister for the Interior (Mr. Kent Hughes) should apply coercion to Labour Ministers in New South Wales in respect of the operation of the land settlement scheme for ex-servicemen. Honorable gentlemen opposite do not. want the States to retain their sovereign powers. Supporters of the Government have sought, by every means in their power, to coerce State Labour governments and Liberal governments alike. Honorable gentlemen opposite have derided the activities of the State governments and have endeavoured to minimize their difficulties. In general, the Government and its supporters have tried to render more difficult the functioning of the federal system of government during one of the most difficult periods of our history.
– But the Australian Government has given the Sta tec record sums of money every year.
– I expected that comment from the Vice-President of the Executive Council, but I remind the right honorable gentleman that rising costs have kept pace with the grants to the States with every quarterly adjustment of the basic wage. The claims of the States have been based upon current costs. A. few weeks after they receive their grants from the Australian Government, they are involved in additional costs amounting to millions of pounds.
The States have been treated casually by this Government. It has shown lack of financial responsibility towards them while they have been forced to handle problems for which the Australian Government should be responsible. An example of this casual approach to the problems of the States was provided at the last conference of Commonwealth and State Ministers. When the Acting Premier of Victoria was told the sum that would be available to that State, he said, in effect, “ What about making it a round figure ? “ I understand that a sum of £150,000 was involved in the remark. After a hurried consultation with the Treasurer, the Prime Minister replied in this fashion, “ Yes, all right, we will do that “. That is the casual way that this Government tackles the problem of State finance.
– Is the honor.able member objecting to the provision of additional amounts to the States’?
– The VicePresident of the Executive Council is as futile in his interjections as he is in his speeches in this House, and it would be a waste of time to reply to him. A sum of £150,000 was handed out in the casual way that I have described. If the problem had received the attention that it merited earlier, the maximum help would have been given to the States in a proper way.
As other honorable members on the Opposition side have stated, many complex administrative problems are associated with the handing back to the States of their taxation powers. There must be variations between the rates of taxation that would be imposed by the different States and in the deductions that would be provided. Many other problems would be associated with the different taxation machinery that would operate in the States. The result would be a reversion immediately to the impossible situation that existed in the pre-war years. Further, no matter what the States may do, they will have to wait for their taxation collections until after the Australian Government has satisfied all its demands on the taxpayers. The Premiers want a reasonable deal. They want the Australian Government to give serious consideration to the problems that they face, but it is not doing so. The States are being treated in a casual and flippant manner by the leaders of this Government and its supporters. The Premiers of the States want the government of the day to have some regard for its responsibilities. They demand that the Australian Government shall not use the swollen revenues that accrue to it to bolster the prestige of its Ministers by increasing staffs and duplicating activities. They want the Government to study seriously the problems and responsibilities of the State governments and then give to the States, from the available revenue, the money required for the essential services and commitments that they have to undertake.
Those matters are apart altogether from those nf the Australian Loan Coun cil and the allocation of loan moneys. The speech of the honorable member for Petrie (Mr. Hulme) shows clearly that he has confused the reimbursement of taxes with loan moneys obtained through the Australian Loan Council. That is in line with the unrealistic approach of this Government to the problem. Its attitude has been the worst of any government in the history of federation. Sums greater than ever before are awaiting investment throughout Australia. The States need help to provide the manpower and material for the production of power, for housing schemes and the development or rehabilitation of their railways. But the Australian Government, which has failed to give them justice in tax reimbursement, has treated them similarly in its handling of the Australian Loan Council and the raising and allocation of loan moneys.
I do not blame the States for their attacks upon this Government. Obviously, nothing but a complete and continuous attack upon the Government in the political field by State governments of every political colour will make it face its responsibilities. It should practise faithfully the federal system of government and regard the State governments, as partners in the system, not as weaker sisters to be dominated and blackmailed politically.
The Government does not want to hand back to the States their taxation powers. The State governments do not want uniform taxation to be abolished if they can get a reasonable deal while it remains in force. Expressions of opinion from every section of the community show clearly that the people do not want uniform taxation to be abolished. The Opposition wants this Government to face its responsibilities fully and to cease making political capital of every financial situation affecting the States.
Debate (on motion by Mr. Drummond) adjourned.
Sitting suspended from 5.59 to 8 p.m.
– I desire to inform the House that the Right Honorable Duncan Sandys, Minister for Supply in
Her Majesty’s United Kingdom Government,, is within the precincts of the chamber. With the concurrence of honorable members, I shall invite him to take a seat on the floor of the House besides the Speaker’s chair.
Honorable Members. - Hear, hear !
Mr. Sandys thereupon entered the chamber, and was seated accordingly.
Messages from the Governor-General reported transmitting Estimates of Revenue and Expenditure and Estimates of Expenditure for Additions, New Works and Other Services involving Capital Expenditure for the year ending the 30th June, 1954, and recommending appropriations accordingly.
Ordered to be printed, and referred to the Committee of Supply forthwith.
In Committee of Supply:
– It is my privilege to place before the House to-night estimates of revenue and expenditure for the financial year 1953-54 and I desire at the same time to explain the financial proposals which accompany those estimates.
Main Features of the Budget. ‘
In this budget the Government proposes to make tax reductions having an estimated annual value to taxpayers of £118,400,000.
Rates of income tax on individuals will be reduced on the average by 121/2 per cent, and a number of other concessions of great value to individual taxpayers will be introduced.
The allowance for a dependent wife will be increased by £26 to £130.
The exemption from income tax for aged persons will be. increased from £254 to £375 for a single person, and from £507 to £750 for a married couple.
The maximum allowance for medical expenses will be increased from £100 to £150 for each person and, within this allowance, the maximum deduction for dental expenses will be increased from £20 to £30 for each person.
The maximum amount allowed for education expenses will be raised from £50 to £75 and the scope of the concession liberalized.
Differential rates of tax on income from property will be abolished.
A concessional method of calculating tax will be applied to abnormal income from artistic, musical and literary works, and inventions.
Rates of taxation on public companies will be consolidated and reduced so that the tax levied on income above £5,000 will be reduced from 9s. in the £1 to 7s. and tax on income under £5,000 willbe reduced from 7s. in the £1 to 6s.
Rates of taxation on private companies will be reduced by1s. in the £1.
A retention allowance of 10 per cent, will be extended to property income received by private companies.
The pay-roll tax exemption will be raised from £1,040 per year to £4,160.
Entertainments tax will be abolished.
Rates of sales tax now standing at 50 per cent., 331/3 per cent, and 20 per cent, will be abolished and goods at present subject to these rates of tax will in future be taxed at 162/3 per cent, or less. Some will be reduced to the general rate of 121/2 per cent. A number of goods, including household matches, will be exempted from sales tax altogether.
The exemption from estate duty will be raised from £2,000 to £5,000 where the estate passes to the widow, children or grandchildren, and from £1,000 to £2,500 where the estate passes to other beneficiaries.
Rates of customs and excise on spirits will be reduced by 21s. per gallon.
Primage will be removed from a wide range of minor items.
Besides these tax reductions, of which I shall give further details later, the Government proposes to increase war pensions and other repatriation benefits. It will also increase age, invalid and widows’ pensions and modify the means test by raising the permissible income and property limits.
With the added cost of these benefits, total expenditure on social services in 1953-54 will be £184,000,000, which is £18,600,000 greater than expenditure in 1952-53.
We are providing £200,000,000 for defence and £189,000,000 for payments to the States, the latter figure being £6,000,000 greater than expenditure last year.
Yet, notwithstanding these heavy commitments and the cost to revenue of the tax reductions I have announced, the Government is presenting a balanced budget for the financial year 1953-54.
Financial and Economic Policy
In framing this budget the Government has sought as its primary aim to give the utmost possible encouragement to individual effort, to business enterprise and to individual and collective saving. Our economy has come through a difficult phase in which some basic clements were seriously out of balance. Equilibrium has now been restored, but in our judgment a positive stimulus is needed to promote higher levels of all-round productivity. So far as it is in the power of the Government to give that stimulus, this budget should provide it.
May I recall briefly the history of economic developments during the past two years. At this time two years ago the Australian economy was approaching the’ peak of a violent inflationary boom which had been gathering strength during- the preceding years. Retail prices had risen during 1950-51 by 20 per cent, and wholesale prices by 24 per cent. All around a frenzied struggle for resources was going on, a struggle which nevertheless was defeating itself by intensifying shortages of labour and key materials. On the financial side, defence expenditures were soaring and so were works programmes. Worse still, even greater commitments were banked up ahead. Meanwhile the market for public loans had collapsed and n great flood of imports from abroad was moving towards our shores.
In the budget of that year the Government faced the need to impose heavy additional taxation to reduce excessive monetary demand for goods and resources. “By so doing it was able to achieve a budget surplus which was subsequently used to finance essential State works.
But for that action it would have been necessary to issue treasury-bills on a huge scale, a step which, under the inflationary conditions of the time, would have ledcertainly and quickly to the most appalling disaster. Besides increasing taxation, the Government tightened capital issues and credit controls, as important elements in a comprehensive campaign to stem the threatening tide of inflation.
These measures were drastic and they proved to be unpopular; but they have also proved to be wise. Twelve months later the boom had spent itself. The rise in costs had slowed down. ‘ Bottleneck? had vanished and practically all kinds of supplies had become plentiful. In the re-adjustment which inevitably followed the boom some unemployment appeared,, though, at no stage did it reach seriousproportions. Heavy demands were madeupon the banking system, and business, faced with difficult problems of adaptation, found- itself uncertain of the future.
The Government progressively adjusted its measures to meet the changing situa-tion. Credit policy was eased and capital issues control was relaxed. In the budget last year the Government made very substantial tax reductions.
The action thus taken proved both timely and adequate. Employment turned upwards again and- thereafter continued to increase steadily month by month. Excessive stocks held by traders were reduced. Expansion of credit and the effects of a good export season combined to remove the last traces of monetary stringency.
During 1952-53 retail prices rose by less than 4 per cent, compared with approximately 20 per cent, in each of the two preceding years. Wholesale prices actually fell slightly whereas in the year before they rose by 16 per cent, and in the year before that by 24 per cent. The average wage level rose by 5.7 per cent, compared with 17.4 per cent, in 1951-52. There were notable improvements in the output of many basic materials whilst, on the primary production side, it was one of the most remarkable years on record. This was partly due to a good season but there can be- no doubt that it was also partly due to- a permanent gain in productivity.
Clearly. therefore, we have now practically attained that stability we set out to achieve in the strenuous days of 1950 and 1951. It has not been easy either for the Government or for the community and yet, if we look back to earlier periods, it is remarkable that the transition from violent boom to comparative stability has been accomplished with relatively so little unemployment, dislocation and loss. It used to be axiomatic that every boom had to be followed by a slump and, usually, the worse the boom the worse the slump. Yet the recent boom, one of the sharpest in our history, was brought under control without incurring anything that, by any stretch of imagination, could be called a slump. That, I venture to claim, was a quite unprecedented achievement.
Now that we have ‘attained this first great goal of economic stability, what is to be the next stage? Stability is important, something which, having won, we must do our utmost to maintain. But it is not by itself a sufficient goal. Stability cannot and ought not to be allowed to mean stagnation. In this country we must always be seeking progress; we can never afford to stand still and wait for progress to happen, nor can we pause for long to dwell on past achievements. Inflation, by dissipating energies and resources, was an enemy in the path of progress. “We have arrested the inflation. We must now press on with the great tasks of developing our resources, expanding our industries, increasing our population, and building up our national standards of life.
In most respects, conditions in Australia to-day are highly favorable to economic expansion. Employment is high and yet there are no significant labour shortages. Neither are there the shortages of coal or steel or building materials such as kept industry and construction throttled back in the years before 1951-52. Our export earnings are relatively high and our overseas reserves have been built up again so that we can obtain all the essential things we require from abroad. We have had an extraordinarily fortunate run of seasons which for the time being look like continuing.
We would, however, be deluding ourselves to suppose that the road ahead will or can be easy. At this moment there are problems with us which could thwart, our efforts to expand just as effectively as inflation did. One is the problem of costs which, during the inflation period, mounted to excessive levels, especially in some industries. Another is the problem of savings which are still too low to sustain an adequate rate of national expansion. A third is the ever-present problem of increasing productivity, an element of our national economy which we must always be striving to improve.
On this view of the future, with it? great possibilities on’ the one hand and some stubborn obstacles on the other, our economic and financial course for the year must be determined. The job is not wholly, or evenly mainly, one for the Government ; it never is and never should be in an economy such as ours. But the Government can give a lead in this matter and make a contribution.
From its study of the general problem the Government is convinced that the right course at this juncture, and the best contribution it can make to the solution of the current problems of our economy, is a bold policy of reducing taxes - particularly those taxes which are levied directly upon individuals and upon business. We believe that this is the best form, of assistance we can give in the attack on costs. Essentially, the cost, problem is one to be solved by greater efforts and greater efficiency on the part, of both labour and management. By reducing taxes and so making wages and profits more worth earning the Government can provide an inducement to greater effort and efficiency. Furthermore, reduced taxation should give greater scope and encouragement to saving from which the funds for industrial expansion and national development are derived. Finally, a combination of harder work, greater efficiency and a higher level of savings undoubtedly holds the key to the third main problem, the promotion of greater national productivity. As the Government sees the position, this is the best possible moment, both psychologically and from an economic stand-point, to give a strong impetus to effort and enterprise. With the economy in balance and resources available, effort, and enterprise are not likely to be f rustrated as they were so often in the long years when our economy was dominated and distorted by inflation.
Expenditure Estimates, 1953-54
In order that the maximum possible amount should be available in the budget for tax reductions, the Government has rigorously pruned back the estimates of expenditure for which Parliament will be asked to provide. The result is that, despite the additional provision being made for such items as war and repatriation benefits, social services and payments to the States, total estimated expenditure this year is only slightly above expenditure in 1952-53. The significance of this will be appreciated when I recall that, over the past six years, total expenditure has on the average increased by approximately £90,000,000 a year. In this connexion, too, one should not overlook the rapid growth of our population in recent years, the rise in costs and the ever-increasing demands for new services and facilities.
Details of actual revenue and expenditure last year are given in Statement No. 1 attached to this speech while details of the expenditure estimates for 1953-54 are given in Statement No. 3. I shall therefore confine myself here to some of the major items.
An amount of £200,000,000 is being provided for defence services this year, compared with expenditure of £215,300,000 in 1952-53. Although an armistice has been signed in Korea it will, as already announced, be necessary to keep our forces there at least until a peace settlement has been negotiated. Provision must, therefore, be made for their upkeep as well as for our forces in other areas abroad, whilst liabilities incurred prior to the armistice for stores and supplies for Korea must be met during the current financial year. In the meantime, our basic programme of defence preparations is going forward and although considerable re-adjustments have been made in the light of the changing international situation, the Government is not prepared at this stage to slow down further the planned programme.
The Government proposes to make increases in war and service pensions and in certain other repatriation benefits.
The special rate war pension for cases of total and permanent incapacity will be increased by 10s. a week, making the pension £9 5s. a week; the 100 per cent, general rate war pension by 2s. 6d. to £4 2s. 6d. a week; and the service pension by 2s. 6d. a week.
War widows’ pensions will be increased by 2s. 6d. to £3 12s. 6d. a week and the domestic allowances payable to war widows who have children, or are 50 or more years of age, or are permanently unemployable, will also be raised by 2s. 6d. a week, making the allowance £1 14s. 6d. a week.
The new rates .will be paid from the first pension pay-day after the necessary amending legislation has been passed.
It is estimated that these and certain minor proposals will involve an additional expenditure of £1,211,000 in a full year and £909,000 in 1953-54.
The Government proposes further to increase and liberalize social service benefits during the present year.
Age and invalid pensions will be increased by 2s. 6d. a week from the present rate of £3 7s. 6d. while the income which pensioners are permitted to receive without reduction of pension will be increased by 10s. to £2 a week.
Thus the maximum permissible weekly income, inclusive of pension, for a single pensioner will be raised from £4 17s. 6d. to £5 10s. and for a married couple from £9 15s. to £11. For a married couple where only the husband or the wife is a pensioner, the amount of other income allowed without reduction of pension will be increased from £3 to £5 a week.
The Government also proposes to increase from £100 to £150 the amount of property which a pensioner may have without reduction of pension; and the limit of property beyond which no pension may be paid will be raised by £250 to £1,250 for a single person. For a married couple the limit will rise from £2,000 to £2,500. The value of a pensioner’s home, furniture and personal effects and other exempt property are not, of course, to be included in these figures.
It is also proposed to pay child allowance to non-means-test blind pensioners, to classify reversionary interests as exempt property for means-test purposes and, in determining eligibility for funeral benefits, to accord funeral benefit payments from trade union funds the same exemption as now given to such payments from friendly societies. These proposals will be fully explained by my colleague, the Minister for Social Services, when the necessary amending legislation is brought down.
The additional cost of the proposals just described is estimated at £4,114,000 in a full year and £3,080,000 in 1953-54.
Widows’ pensions will be increased by 2s. 6d. a week and widows will be granted the income and property liberalizations proposed for age and invalid pensions.
The estimated increase in cost is £417,000 in a full year and £313,000 in this financial year.
All new rates will be paid from the first pension pay-day after the necessary amending legislation has been passed.
Allowances payable to single and married sufferers from tuberculosis will be increased by 2s. 6d. to £5 12s. 6d. and £9 2s. 6d. a week respectively. The additional cost is estimated at £38,000 for a full year and £29,000 for the current financial year.
The cost of all the proposals just stated taken together’ is estimated to be £4,570,000 in a full year and £3,420,000 in 1953-54.
On the 1st July last the medical benefits scheme came into operation. Under the scheme a Commonwealth subsidy is paid for each medical service covered by the scheme to members of registered medical insurance organizations and their dependants. The cost of the scheme is estimated at £3,500,000 in 1953-54, and between £8,000,000 and £10,000,000 a year when fully established.
Taking into account the new proposals that have been described, expenditure from the National Welfare Fund in 1953-54 is estimated to be £184,000,000, which represents an increase of £18,500,000 on expenditure in 1952-53.
Details of the National Welfare Fund, estimates are contained in Statement No. 6.
Payments to the States.
Total payments to the States this year are estimated at £189,000,000 or £6,000,000 more than last year. This increase is due primarily to increased tax reimbursement grants. As already announced, the Commonwealth proposes to supplement the grant of approximately £120,500,000 payable to the States under the tax reimbursement formula by the payment of a special financial assistance grant sufficient to bring the total tax reimbursement payments in 1953-54 to nearly £142,500,000 or just over £6,500,000 more than the corresponding payments last year. Legislation will be introduced shortly to authorize the payment of the special financial assistance grant. In arriving at the figure of nearly £142,500,000, allowance was made by the Commonwealth for the fact that it is not proposed in 1953-54 to make a separate grant to the States to reimburse them for the cost of administering their controls over prices and rents. Last year, the grant for that purpose amounted to slightly over £1,000,000.
Total estimated expenditure of business undertakings shows an increase of £3,750,000 over expenditure in 1952-53. Of this increase, £3,170,000 is on account of the Post Office, £407,000 on account of Commonwealth railways, and £173,000 for broadcasting services. The increases are due partly to wage increases which occurred at intervals during 1952-53 and of which the full year effect is now being reflected in the budget. In the case of the Post Office, some increased provision is necessary for handling an increased volume of business and for the operation and maintenance of new telephone facilities.
Capital Works and Services
The estimates for capital works and services have been further reduced this year and show a total of £101,500,000 compared with actual expenditure of £103,600,000 last year and £110,600,000 in 1951-52.
The estimate of £48,700,000 for departmental expenditure represents an increase of £2,300,000 on expenditure in 1952-53. This increase, again, is mainly due to effects of earlier increases in wages, salaries and other costs.
Other Items of Expenditure
The provision for other items of expenditure in 1953-54 is less than last year. Expenditure on territories is expected to increase by £1,600,000 but a saving of £2,500,000 is expected in respect of bounties and subsidies whilst* the estimate for miscellaneous services, mainly immigration, is £3,100,000 less than last year and other statutory payments £300,000 less than last year.
In total, expenditure for 1953-54 is estimated at £982,000,000, which is only about £7,000,000 greater than total expenditure in 1952-53. As I pointed out earlier, this demonstrates how the steep rise in governmental expenditure, which has been going on for years past, has now been successfully restrained.
Revenue Estimates, 1953-54
On the basis of present rates of taxation it is estimated that total revenue in 1953-54 would reach nearly £1,064,000,000. This includes revenue from taxation, £956,000,000, and other revenue, £108,000,000, and is approximately £76,000,000 higher than total revenue in 1952-53. The revenue estimates are set out and explained in Statement No. 2 attached to this speech.
If revenue were allowed to stand at about £1,064,000,000 and expenditure at about £982,000,000 there would be a budget surplus of nearly £82,000,000. As I have already stated, however, the Government proposes to make tax reductions worth £118,400,000 a year to taxpayers and it is estimated that the cost of these tax reductions to revenue in 1953-54 will be £81,560,000.
In framing its tax proposals the Government considered at length the general form which tax reductions should take and, as I have said earlier, it reached the conclusion that the greatest weight should be given to reductions in those taxes which are levied directly upon individuals and upon business. Such reductions will benefit the greatest number of people; in fact they will benefit practically everybody, and if the object is to encourage effort, enterprise and saving that, obviously, is what the Government should try to do.
We did not, however, by any means ignore the very widespread representations that indirect taxes, which add to costs and prices, should be reduced and, as I shall explain presently, we are proposing some very substantial concessions of that nature. We examined with particular care the numerous requests that pay-roll tax should be abolished, but we were confronted with a number of considerations which precluded that step. Most decisive was the fact that abolition of pay-roll tax would have limited very drastically the scope for reducing direct taxes. I may amplify that point by saying that to abolish pay-roll tax would have involved a cost to revenue of some £42,000,000 per annum, an amount which is equivalent to an average 10 per cent, reduction in rates of income tax on individuals. We are, however, proposing to adjust the incidence of pay-roll tax in a way which will give a very valuable measure of relief.
I now propose to give the main details of our tax proposals.
Income Tax and Social Services Contribution - Individuals
Reduction of the rates of individual income tax and social services contribution will operate from the 1st July, 1953. Rates of tax will be reduced throughout all income ranges, but the percentage reductions will be greatest in the lower and middle income ranges and diminish as the income increases. The maximum rate of tax, at present 15s. on the excess of income over £10,000, will he reduced to 14s. and apply only to income in excess of £16,000.
The reductions will be incorporated in a new schedule, expressed in the now familiar form of a stepped rate, so that taxpayers will still be able readily to calculate their own tax liabilities.
Owing to the time required to prepare und distribute new tax instalment scales, the reduced rates of instalment deductions will not apply until the 1st November, 1953. Provisional tax in respect of 1053-54 incomes will be adjusted to reflect the reduced rates.
These proposals represent an overall eduction of about 12-J per cent, on existing rates of tax and will cost revenue £51,250,000 in a full year and £32,900,000 in the current year.
It is proposed to abolish, as from the 1st- July, 1953, the differential tax on property income such as rent, interest and dividends from companies.
Up to the present, property tax, at rates ranging from 4d. to 16d. in the £1, has been superimposed on the basic tax which is payable on income both from personal exertion and from property.
The additional tax on property has not applied, however, to incomes of £400 or tass or to the excess of incomes over £10,000. It has therefore been borne mainly by people in the middle income groups, most of the tax being payable, in fact, on incomes between £1.000 and 4000 “Whatever justification there may have been for the property tax in earlier years cannot be regarded as applying now. The tax has indeed been an added burden in recent years on many people whose incomes tended to lag behind the rise in prices during the inflationary period.
The removal of the tax which, incidentally, will simplify assessments, will cost £3,500.000 in a full year and £2,000,000 in 1953-54.
Allowance for Wife
It is proposed to increase the allowance for a dependent wife from £104 to £130.
This increased concession will apply also -to taxpayers maintaining a parent, husband, daughter-housekeeper or a housekeeper having the care of children under the age of sixteen years.
Sir Arthur Fadden
The increase in the concession will cost revenue £5,550,000 in a full year and £3,600,000 in 1953-54.
Associated with the increase from £104 to £130 in the wife allowance, it is proposed, as from the 1st July, 1953, to increase from £52 to £65 the separate net income which may be derived by the wife before the concessional deduction on her account is diminished.
This further concession will cost £450,000 in a full year and £100,000 in 1953-54.
The tables contained in Statement No. 7 illustrate, in respect of various incomes, the effects of the proposed reductions in rates and of the proposed increase in the concession for a dependent wife. It will be observed that the changes I have outlined will confer reductions ranging from 100 per cent, for the family man on a small income to something less than 10 per cent, for taxpayers with incomes over £10,000. In the tables set out in Statement No. S the amount of income tax payable in respect of various incomes in Australia at the rates now proposed are compared with the amounts payable in the United .Kingdom and New Zealand. It will be seen that the amounts of income tax at the. rates proposed in Australia at all ranges of income are substantially lower than the amounts payable in the United Kingdom or New Zealand.
The total cost to revenue of the foregoing income tax concessions for individual taxpayers will reach £60,750,000 in a full year and £3S,600.000 in the current year.
Last year the Government introduced for the first time in the history of Commonwealth income tax, a deduction for expenditure incurred by a. taxpayer in the education of his children. Because the allowance was novel and, to some extent, experimental, it was considered necessary to confine the deduction to expenditure actually paid to schools and to place a. limit of £50 upon the deduction in respect of each child under 21 years of age.
This concession was very warmly received and, in accordance with the promises then made that it would be extended if necessary, it gives me very great pleasure to announce the Government’s intention to liberalize the conditions and to increase the maximum deduction to £75. Under the conditions now proposed, all kinds of necessary expenditure in connexion with the child’s full-time education will, subject to the maximum of £75, be deductible. The concession will thus extend to such payments as boarding charges at hostels, the cost of text-hooks and fares to and from school.
The increased concessions will apply a.« from the 1st July, 1953, at an additional cost to revenue of £1,950,000 per annum. There will, however, be no additional cost to revenue in 1953-54.
Consideration has been given to those cases where taxpayers have been obliged t,o incur medical expenses in excess of the present maximum deduction of £100 allowed for each member of the family.
Although the introduction of the Commonwealth hospital and medical benefits scheme will substantially reduce the number of these cases in the future, nevertheless there will be some cases which merit a more liberal allowance.
It is accordingly proposed to raise the maximum deduction from £100 to £150. At the same time, the maximum amount of dental expenses subject to the concession within the total of £150 is being raised from £20 to £30 for each person.
These increased concessions also will apply as from the 1st July, 1953. There will be no cost to revenue in 1953-54, but in subsequent years the annual cost will be about £100,000.
Concessions for Aged Persons
It is proposed to raise still further the concession for aged persons. At present, men over 65 years and women over 60 years may receive incomes of £254 without being subject to tax. A married couple both qualified by age and in receipt of combined incomes of £507 are also exempt.
These exemptions are being raised to £375 in the case of qualified single per sons and to £750 in the case of qualified married couples.
This increase in the concession will advance the present exemption levels by £121 and £243 respectively and will cost revenue £1,500,000 in a full year and £920,000 in 1953-54.
In recognition of the special occasion of Her Majesty’s Coronation, it is proposed that contributions of £1 or more to the Queen Elizabeth the Second Coronation Trust Fund for Mothers and Children shall be allowable deductions for income tax purposes. This allowance may cost revenue about £100,000 in 1954-55 but there will be no cost to revenue this year.
Abnormal Income Receipts
Consideration has been given to the hardship which occurs through the operation of the graduated rates of income tax when authors, artists, composers and inventors receive in a lump sum, or its equivalent, abnormal income which may be the fruits of years of effort.
It is a common experience for these people to exist for years on modest incomes and, if successful, to receive in one year an amount which represents the accumulated monetary reward for several years’ work. By reason of the system of graduated rates, an abnormal income receipt of this nature bears tax at a very high rate.
To remove this disability and also to encourage cultural and inventive activities, it is proposed to apply a concessional rate of tax to income which include5 such abnormal receipts. In these cases, the taxable income (including the abnormal receipt) will be taxed at the rate appropriate to the normal income plus one-third of the abnormal receipt.
This concession will apply as from the 1st July, 1953, and will cost revenue about £50,000 in a full assessment year. There will be no loss of revenue, however, in 1953-54.
In June last, I announced the Government’s decision to extend for a period of seven years from the 1st July, 1953, a concession previously granted in respect of profits earned from certain base metals and rare minerals. Concurrently, it is proposed to enlarge slightly the list of metals and minerals to which the concussion applies. Legislation to give effect to these decisions will be introduced during the current session.
Shortly stated, it is proposed, as an encouragement to the exploration and development of our mineral resources, to continue the arrangement under which ono-fifth of profits earned from mining operations for the prescribed metals and minerals between the 1st July, 1953, and the 30th June, 1960, shall be free from’ income tax. The exemption will extend to dividends paid by companies wholly out of the exempt mining profits.
The, exemption which has obtained since .1942 is costing revenue about £500.000 a year and the extension ‘proposed by the Government will not. add significantly to that annual post.
Company Taxation . it is proposed that the rates of tax payable by public companies on incomes of’ the year ended the 30th June, 1953. will be 6s. in the £1 on the first £5,000 of taxable income and ‘7s. ii the £1 on the lui lance of taxable income. As it is not proposed to re-enact the additional levy of 2s. in the £1 imposed in 1951-52 and 1952-53, the proposed rates represent, in the generality of cases, a reduction in tax of ls. in the £1 on the first £5,000 of taxable income and 2s. in the £1 on the balance of taxable income.
In the case of private companies, an overall reduction of ls. in the £1 is proposed, so that the rates for the financial year 1953-54 will be 4s. in the £1 on the first £5,000 of taxable income and 6s. in the £1 on the balance.
It will be recalled that in the budget of last year the rate of tax on the first £5,000 of the taxable income of public companies was reduced by 2s. It is also relevant to point out that private companies were not at any time subject to the special levy of 2s. in the £1 which was imposed on all public company taxable income in the 1951-52 budget.
The cost to revenue of these changes will be £28,750,000 in a full year and £23,300,000 in 1953-54.
Private Companies - -Retention Allowance
Under the amendments made last year to the private company provisions of the income tax legislation, investment income could not be included for the purpose of calculating retention allowances. At that time there was not considered to be the same need for the allowance in the case of investment income as there was in regard to ordinary business income.
Since that amendment was made, evidence placed before the Government demonstrates that although there is not the same need for retention allowances for property income as for other income, there is at least some need. Accordingly, it is now proposed that private companies should be allowed to retain 10 per cent, of distributable income from property, except dividends from other private companies. This retention will be allowed on income for the year 1952-53 and future years.
The cost to revenue will be £350,000 in a full year and £100,000 in the current financial, year.
In last year’s legislation a period of five years to 31st December, 19.57, wasallowed for the distribution of tax-free dividends to shareholders of private companies. These dividends are distributed out of accumulated funds on which tax at shareholders’ individual rates has been paid by the private companies. Theperiod of five years is to be extended for a further period of five years to 31st December, 1962. However, no cost tr> revenue will be involved in this extension.
It is proposed to remove those rates of sales tax which now stand at §0 per cent., 33?j per cent, and 20 per cent. The majority of goods now subject to sales tax at those rates will be subject to a rate of 16$ per cent. Some goods, however, mainly sporting goods and equipment, which are now taxed at 20 per cent., will be transferred to the general rate of 12& per cent.
A number of goods now subject to sales tax will be exempted. These include -
Fruit juice cordials consisting of 25 per cent, or more of pure juice ;
Buttons, buckles, hooks, eyes and slide fasteners;
Aeroplanes used for certain purposes ;
Water softeners ; and
These proposals, of which further details will be given in legislation to be introduced later, involve an estimated cost to revenue of £11,700,000 in a full year, and of £8,760,000 in the current financial year. The new rates of tax will comeinto force as from the commencement of business to-morrow, 10th September, 1953.
The Government proposes to raise the annual exemption from payroll tax from £1,040 to £4,160 on wages and salaries payable on and after 1st October, 1953; that is, from the equivalent of £20 a week to £80 a week. This concession will mean that more than 50,000 employers of the 90,000 employers who now pay the ‘tax will no longer be liable to do so and the remainder will, of course, benefit from the higher exemption. The cost to revenue will be £5,000,000 in a full year and £3,900,000 in 1953-54.
The Government proposes to abolish entertainments tax and the abolition will become effective in regard to entertainments held on and after 1st October, 1953. This tax has largely been levied upon those popular entertainments which, in modern times, people have come to value as part of the normal enjoyments of life. Its removal must therefore be regarded as an aid to both family and individual budgets.
The cost to revenue will be £7,000,000 in a full year and £5,300,000 in the current year.
It is proposed to raise the statu tory exemptions from estate duty. The pre sent exemption, where the estate passes to the widow, children or grandchildren of the deceased, is £2,000. This exemption is decreased on a graduated scale and ceases to apply where the net value of the estate is £12,400 or more.
It is proposed to raise the £2,000 exemption to £5,000 which also will be decreased according to a graduated scale and will cease to apply when the net, value of the estate reaches £20,000.
Where the estate passes to beneficiaries other than the widow, children or grandchildren of the deceased, the present exemption is £1,000 decreased on a graduated scale so that no exemption is allowed on estates of a net value of £10,000 or more.
It is proposed to raise this exemption to £2,500, to be decreased so that it becomes exhausted where the net value of the estate is £10,000, that is, the same value at, which the present statutory exemption of £1,000 ceases to apply.
The increased exemptions will apply to the estates of persons dying on or after the date on which the amending legislation receives the Royal Assent.
The cost to revenue in a full year will be £430.000 and in the current year £80,000. ‘
It, is also proposed that estate duty shall not be payable on the first £5,000 of an estate of a member of the Defence Forces dying on active service or as a result of injuries received or disease contracted on active service in Korea or Malaya.
The deduction, which will continue for three years after return from active service, is in consonance with the deduction allowed to the estates of personnel who served in the 1939-45 War.
Customs, Excise and Primage
It is proposed to reduce customs and excise on spirits by 21s. a gallon. Primage will be reduced on a number of items of which details will be given by the Minister representing the Minister for Trade and Customs. The cost to revenue involved is estimated at £750;000 in a full year and £600,000 in 1953-54.
Summary of Taxation Concessions
The estimated cost to revenue of the taxation concessions I have just outlined may he summarized as follows: -
In terms of the cost to revenue, these reductions are by far the largest which any government in Australia has ever made in any one year. Expressed as a percentage of total taxation revenue, they are also greater than any government has made in any one year since World War IT. commenced.
The reduction in taxation announced in last year’s budget involved a cost to revenue in 1952-53 of £50,000,000 and in a full year of nearly £SO,000,000. With the reduction in taxation of just over £118,000,000 now proposed, the Government will therefore have reduced taxation within the last two years to the extent of approximately £200jo00,000 a year.
Bringing together the revenue and expenditure proposals I have outlined, the budget for 1953-54 may be summarized as follows : -
Loan Finance and State Loan Programmes
Outside the budget proper, finance will lie required for war service land settlement, estimated at £7,000,000, and for redemption of war savings certificates, also estimated at £7,000,000. It is proposed to charge these items to loan fund. They are approximately offset by the amount of the budget surplus of £.13,400,000 realized in 1952-53, the investment of which in the special internal loans raised to help finance State programmes relieved loan fund to an equivalent amount.
Although the prospects for public loan raisings are somewhat better this year - they should be assisted by the tax proposals I have announced - it will be necessary for the Commonwealth again to provide assistance for State borrowing programmes, though on a. smaller scale than in the past two years. It will bc recalled that in 1952-53 the Commonwealth made special subscriptions to loans floated to finance State works programmes to an amount of £131,470,000 and in 1951-52 to an amount of £152,865,000.
At the Loan Council meeting last May, the Commonwealth offered to assist State borrowing programmes for 1953-54 up to a limit of £95,000,000. Advances are being made by the Commonwealth to the States on the basis of a total loan programme of £200,000,000 (including funds made available under the Commonwealth and State Housing Agreement). To the extent that funds available from public loans and domestic borrowings may exceed £105,000,000 the amount of assistance to be provided by the Commonwealth will be reduced.
To provide finance for State programmes, and for advances under the Commonwealth and State Housing Agreement, in the past two years the Commonwealth invested Commonwealth trust fund balances in internal loans. To the extent that the balances so invested had previously been used temporarily to redeem outstanding treasury-bills, it was necessary to re-issue treasury-bills to make available the funds required. Similar arrangements will probably be necessary this year, although the amounts will be smaller and the amount of bank credit required is expected to be less than in 1952-53.
Details of loan transactions and public debt 1952-53 and loan fund transactions in 1953-54 are contained in Statements Nos. 4 and 5 respectively.
The Balance of Payments
Just as our internal economic situation has improved during the past year, enabling taxation to be reduced, so has there been a great strengthening of our trade and financial’ position overseas, making possible a progressive relaxation of import controls.
During 1952-53 our international reserves rose from £362,000,000 to £548,000,000, an increase of no less than £1S6,000,000.
Apart from the control maintained upon imports, the main reason for this splendid recovery was a record volume of exports which sold generally at good prices. There was a remarkable increase in the output of wool, meat and dairy products, whilst the average yield of wheat per acre was by far the highest ever recorded. In part, as I have said earlier, this was due to a good season. There can be no doubt, however, that it also showed the benefit our primary industries have had from better supplies of equipment and materials (in which respect the imports obtained under our International Bank loans have made a notable contribution) and also from the valuable tax concessions given to the primary industries in recent years. Total export income last year was £871,000,000 which is the second highest figure ever reached.
Imports were of course restrained by the controls first imposed in March last year to meet the great fall in our overseas reserves. But because very large imported .stocks were held in the country and because the import restrictions were gradually relaxed during the year, no serious shortage of imported goods has been experienced. It is certainly true to say that no essential industry has been handicapped by a lack of raw materials.
The Government has of course aimed to build up our overseas reserves from the low point to which they had fallen by the middle of 1952. At the same time, however, we have balanced that consideration against the need to keep up an adequate supply of imported equipment and materials, and we have also regarded it as a prime obligation to relax and remove restrictions as rapidly as the balance of payments position made it possible. We undertook to do that when the controls were first applied and we have lived up to our undertaking.
First of all we issued import licences valued at about £20,000,000 to meet hardship cases and, as from the 1st January last, we cancelled initial debits against future import quotas. The standards of severity previously applied in considering import applications were gradually relaxed and then, by stages, general relaxations of import controls were made. The latest of these general relaxations took effect from the 1st July this year.
The result of this action has been that, although total imports in 1952-53 were only £514,000,000, the present annual rate at which licences are being issued provides for a level of imports much higher than that.
The subject of future policy on imports and other trade matters will be dealt with by the Prime Minister in a separate statement he is to make shortly.
When the Government first took office it had the strongest desire and determination to ease the burdens of the community in the matter of taxation and to remove restraints upon freedom of economic life and enterprise. Through events beyond our control we were forced to put those aims aside for a time, and, raider circumstances of emergency, take measures which added temporarily to the burdens and restraints upon the immunity. We did those things in good faith and according to our best judgment, though greatly against our political interests. No government worthy of the name could have done otherwise.
There is everything to show now that we acted in the best interests of the people who to-day have something they have lacked for many years - the advantages of a stable and abundant economy. I may be permitted to recall here that when introducing certain drastic measures in this House two years ago I foretold that they would in the end prove far less hurtful than the results of unchecked inflation. I may fairly claim that events have amply borne out that prediction.
Through the success of these measures, the Government has been able to take up again its original aim and purposes. Last year we substantially reduced tax burdens. This year we will do far more. When the budget is passed the level of taxation in Australia will have been lowered very greatly indeed, and a strong and genuine incentive given to the community. Meanwhile we have ‘ slackened off all controls upon our internal economy and, as I have said, we have been rapidly lifting controls upon our external trade. It is a matter of great pride for me to lay before the House to-night these fulfilments of our undertaking. I do so with a profound faith that, given the co-operation of the community, they will yield rich fruits for Australia and its people.
– Does the Treasurer desire the inclusion of any other statements ?
– Permission was given for the inclusion of those statements.
– Order ! Permission was given for the inclusion of certain statements mentioned by the Treasurer. Does the right honorable gentleman desire the inclusion of the remaining statements ?
– Yes, I ask for leave to include all the statements referred to in my .speech.
Notes on Revenue and Expenditure 1952-53.
In the 1952-53 budget, revenue (excluding self -balancing items) was estimated at £959,890,000 and expenditure at £959,430,000, thus leaving an estimated budget surplus of £460,000. Actual revenue for the year of £988,199,000 exceeded the budget estimate by £28,309,000, while actual expenditure of £974,799,000 was £15,369,000 greater than the budget estimate. The excess of revenue over expenditure therefore amounted to £13,400,000. This amount was transferred to the War Pensions Trust Account. The Consolidated Revenue Fund was therefore balanced in 1952-63.
The main items of revenue which exceeded the budget estimates were customs, excise, income tax on individuals and miscellaneous revenue.-
The increased collections from customs (£8,720,000) and excise (£9,104,000) were due to greater clearances of tobacco and cigarettes from bond, the effect of more extensive relaxations in import controls and higher clearances of locally produced beer and tobacco than were envisaged when the budget was prepared.
Collections from Income Tax on individuals exceeded the budget estimate by £3,596,000 or by less than 1 per cent.
Miscellaneous Revenue was £5,936,000 higher tItan the budget estimate mainly because of certain receipts which had not been anticipated when the budget was prepared. These included £2,702,000 from the sale of Commonwealth Oil Refinery shares, £500,000 from repayments by the Joint Coal Board, and £717,000 by way of final adjustment of dairy subsidy for 1951-52.
The main increases compared with the 1952-53 estimates were defence services, war and repatriation services and payments to or for the States. These increases were partly offset by the savings which were effected in a number of major items which are referred to below.
Expenditure on defence services exceeded the estimate by £15,292,000. The increase was wholly in respect of operations in Korea. Under arrangements made with other Commonwealth countries with land forces engaged in Korea, expenditure on supplies and services is debited to the Korean Operations Pool Account and an allocation of expenditure wade on an agreed basis. Australia’s share of -settlements on the pool was £8,700,000 greater than expected. Provision was made for a further £10,000,000 to be transferred to the Korean Pool Operations Trust Account to cover outstanding liabilities on account of Korean operations.
Expenditure on war and repatriation services was £0,452,000 higher than estimated. This increase was largely due to the fact that redemptions of war savings certificates amounting to £6,208,000 were met from revenue instead of from loan fund, other demands 11 nOI the latter fund being particularly heavy. War pensions also exceeded the estimate bv £098,000. Items of expenditure which fell short of the estimates included interest and sinking fund (£1.064,000), repatriation ( £181.000) and reconstruction and rehabilitation (£762,000). Miscellaneous credits arising nui inly from inter-governmental transactions in Korea were £1,158,000 less than estimated.
Payments to the States exceeded the estimate by £5,052,000 principally because the special grants recommended by the Commonwealth Grants Commission proved to be £5,412,000 higher than in 1951-52. As the report of the Grants Commission for 1952-53 had not been received when the budget was prepared, the amounts included in the budget estimates were the same as the actual payments in 1951-52.
The main savings compared with the 1952-53 estimates were in departmental, bounties and subsidies, post office and capital works and services expenditure. These savings were due partly to a levelling out of costs but they also reflect the rigorous scrutiny of expenditures throughout the year.
Departmental expenditure fell short of the estimate by £2,067,000 mainly because substantial economies were effected through a decline in departmental employment and a reduction in other expenses.
Expenditure on bounties and subsidies was £3,088,000 les* than estimated. Expenditure on the wheat bounty was £1,641,000 below the estimate owing to a fall in consumption of wheat sold for stock feed purposes in the poultry, pig and dairying industries. The dairy subsidy vote was underspent by £1.081,000 owing to a decline in the consumption of butter and cheese. Other savings included £117.000 on the tea subsidy and fail. 000 on the nitrogenous fertilizer subsidy.
Post Office expenditure was £4,113.000 less than estimated. Salaries and payments in the nature of salary fell short of the estimate by £3.396.000 and expenditure on stores and materials by £332,000.
Expenditure on capital works and services was £3,031,000 below the estimate. The main savings . related to territories (£1,101,000). purchase of ships overseas (£614,000), Aluminium Commission (£420.0001 and immigration works (£491.000), while the provision, of £1.300.000 for Commonwealth Oil Refineries share capital was not required. On the other hand, expenditure increases included coal industry (£776.000), standardization of railway gauges (£494,000) and ship construction (^.00.000).
Notes onrevenue Estimates.
Details of the taxation proposals are given in the budget speech whilst the effects of these proposals on the revenue estimates for 1953-54 are shown in the table above. Set out below are explanatory notes on the various revenue estimates before allowing for the effects of the taxation proposals.
Customs (Item 1). - The estimated increase of £12,280,000 is based on a greater volume of imports likely to result this year from successive relaxations of import controls. The main items from which increased customs revenue is expected include tobacco and cigarettes, metals and machinery, textiles, vehicles, and petroleum products.
Excise (Item 2). - Revenue is estimated to increase by £7,896,000 over last year’s collections, mainly because of increased local production of beer, tobacco and cigarettes.
Sales Tax (Item3). - The estimated increase of £7,433,000 over collections received in 1952- 53 allows for some increase in the volume and value of sales of most of the goods subject to sales tax.
Income Tax and Social Services Contribution (Items 4 &6). - At existing rates of taxation, it is estimated that collections of income tax on individuals would increase by £50,704,000 in 1953- 54. Some increase is expected in total wage and salary earnings in 1953-54 and this would result in some increase in instalment collections. Collections in 1953-54 should also be assisted by the fact that incomes in 1952-53 (on which income tax will be assessed this year) were, on average, higher than in the previous year. Moreover, in 1952-53 the amounts collected in respect of assessments based on the year 1951-52 were reduced con siderably because large provisional tax debits based on abnormally high incomes in 1950-51 were brought into account as credits in the 1952- 53 assessments. This factor will not operate in 1953-54. On the other hand, collections in 1953-54 will be affected by reductions in rates and by other income tax concession.introduced during 1952-53 whilst collection of arrears will fall below the abnormally high level reached in 1952-53.
Income Tax - Companies (Item 6). - The estimate assumes a small decline on the average in company incomes in 1952-53 as compared with 1951-52. The estimate also reflects the full-year effect of the tax reductions made in the 1952-53 budget. A further factor is that collections of arrears are expected to be less than last year, although credits will not have to be allowed to the same extent as in 1952-53 for advancepayments made by companies in 1951- 52.
WoolDeductions (Item 7). - Net refund payments in respect of wool deductions are estimated at £500,000 in 1953-54.
Payroll Tax (Item 8). - At existing rates, collections are estimated at £42,300,000 in 1953- 54 or £2,129,000 more than in 1952-53. Some increase is assumed in total wage and salary payments in 1953-54.
Land Tax (Item 9). - The Commonwealth vacated the field of land tax as from 1st July. 1952. Collections from arrears of tax in 1952- 53 amounted to £1,250.000, whilst in 1 953- 54 the arrears are expected to taper off to a figure of £350,000.
Other Taxes (Items 10 to 12). - At existing rates, revenue from other taxes is expected to show some increase in 1953-54 as compared with 1952-53.
Miscellaneous Revenue (Item 13). - The main items are as follows: -
Railways (Item 14). - Revenue in 1953-54 is estimated to be £301,000 higher than in 1952-53, when revenue was affected by the Western Austral inn metal trades strike.
Post Office (Item 15). - Revenue in 1953-54 is estimated to increase by £2,602,000 as a result of expansion of telephone services and increased demand for postal facilities.
Broadcasting (Item 16). - The estimated increase of £145,000 in revenue for 1953-54 assumes some increase in the number of wireless licences issued.
Territories (Item 17). - The estimated increase of £181,000 in revenue for 1953-54 is mainly due to increased collections from electricity services in the Australian Capital Territory as a result of increased charges and an increase in the number of consumers.
Cite as: Australia, House of Representatives, Debates, 9 September 1953, viewed 22 October 2017, <http://historichansard.net/hofreps/1953/19530909_reps_20_hor1/>.