25th Parliament · 1st Session
Mr. SPEAKER (Hon. Sir John McLeay) took the chair at 9.30 a.m., and read prayers.
– I direct a question to the Minister for Health. Is he aware that certain tablets or drugs are prescribed for people suffering from mental depression and nervous disorders? Are tablets known as Nardil, Maralid or Maneilin, and Pastellin prescribed for people suffering from acute depression? Are these tablets given to patients by medical practitioners without knowledge of the effect the tablets might have on patients - in other words, on a trial and error basis? Is the Minister aware that patients who have used these tablets or drugs have suffered a complete change of character, quiet law-abiding citizens becoming violent and degraded? Is the use of drugs such as those I have mentioned replacing the normal methods, such as shock treatment, of dealing with mental sickness? If the Minister is not aware of these things will he arrange for a complete and thorough investigation of the use of these drugs to see whether they may be safely used for the treatment of the conditions I have described?
– The Commonwealth’s powers relating to the investigation and control of drugs such as those mentioned by the honorable member are limited. Much depends on whether the drugs in question are available as pharmaceutical benefits, and I am afraid that, offhand, I cannot tell the honorable member whether those drugs he mentioned are so available. He can rest assured that if they were available as pharmaceutical benefits their use would have been thoroughly considered by a most expert committee known as the Pharmaceutical Benefits Advisory Committee. Some of the most eminent physicians and pharmacologists in Australia are members of that committee. If the drugs were on the list prepared by that Committee and there were any dangers associated with their use certain restrictions would be placed on the use of them. All I can say to the honorable member is that I will carefully study the text of his question, see whether there is any substance in the points he makes and whether anything can be done about the matter.
– Has the attention of the Attorney-General been directed to Press reports of a flag-burning incident involving certain students in the Australian Capital Territory? If so, has any action against these students been proposed? Is it an offence to defile the Australian flag? If it is not, will the Attorney-General consider introducing legislation in line with that of many other countries, providing penalties for defacing or defiling the national flag?
– I did read of this extraordinary performance by a group of individuals, and I must say that it quite shocked me. My recollection was that the Flags Act had no provision for making it an offence to deal contemptuously with the Australian national flag. I looked at that Act and ascertained that that was the case. Upon reflecting on it, I came to the conclusion that the framers of the Act had never thought it would be necessary in this country to make provision for an offence of dealing contemptuously with our national flag. I hope that this performance was an isolated event and that it will not make it necessary for any action, such as the honorable member has suggested, to be taken in this country.
– Has the Prime Minister noted the reports of a speech made by the Minister for External Affairs in which he “ warned against forcing an end to the fighting (in Vietnam) before its purpose had been achieved “ and in which he stated that “ the fighting (in Vietnam) was necessary “? Will the right honorable gentleman say whether the Minister made those statements and whether they correctly state the Government’s position; and, if so, what the purpose of the fighting in Vietnam is; whether, if it is necessary to warn against bringing an end to it, the Government has now decided to oppose negotiations; and finally, if these statements express the Government’s position, what the purpose of the Manila conference is?
– The honorable gentleman is familiar enough with the statements made from this side of the House by me, the Deputy Prime Minister, the Minister for External Affairs and others to know what the purposes of the Government are and to know the views of my colleague, the Minister for External Affairs. In those circumstances I find it difficult to understand why he asks a question in a form which would tend to distort the views of my colleague and .certainly to misrepresent him not only in the eyes of the Parliament but also, through “ Hansard “, in the eyes of other people.
– Did he say those things and, if he did, does the Prime Minister agree with him?
– I know his views and I agree with his views. In fact, we consult-
– Just leave it at that.
– Do not try to manufacture something where, in fact, there is nothing to manufacture. The right honorable gentleman’s views have been stated consistently. I will not be bound to any newspaper report coming from outside this country. I have no need to study the full text of what he said because I am closely familiar with the views that he puts and I am in almost daily communication with him by cable. If the honorable member for Yarra puts on the views of my colleague the kind of interpretation that he has put, then he is seriously mistaken.
– I direct a question to the Treasurer. In view of the fact that the American economy is by far the most powerful in the world, is there a tendency in international monetary circles to measure its stability by power alone? Has any assessment been made in financial circles to measure the inability of the United States of America to balance its payments and the effect that this lack of balancing may have on the solvency of many countries, including Australia, in the years ahead?
– Let me take the last two parts of the honorable gentleman’s question first. We must not judge the state of the American economy and its ability to help in both defence and foreign aid on its balance of payments position. It is true that the United States has a deficit in its total balance of payments. But if we look at the ingredients we will see that it has a very big balance of payments surplus on trading and current account and that that is overcome to a considerable extent by the fact that it has large defence commitments overseas to defend the free world; that it is involved in very large capital development; and that its aid commitments are substantial. So we must not judge the American economy on its balance of payments deficit alone.
I want to make it clear that, whilst the United States and, for that matter, most other countries, would like to see the deficit removed, there is an obligation on the surplus countries to play their part as well. But we do not want to have such a radical and quick change that it would mean that the United States would be compelled to alter its defence commitments or would be under some obligation to change the commitments that it makes for foreign aid. We want a change but we want it to be gradual and we want it to be without disruption on the social, economic or military planes.
– I ask the Prime Minister a question. In view of the doubt he has just cast on the accuracy of newspaper reports of speeches by his colleague the Minister for External Affairs, will he make available to me, and of course to every honorable member who desires them, copies of speeches made by the Minister for External Affairs at the United Nations, at the American-Australian Association dinner in New York, and on the occasion to which the honorable member for Yarra has just referred in order that we can make up our own minds whether the Minister was accurately reported or not?
– I will examine the practicability of meeting the honorable member’s request. I do not see any serious difficulty about it because even if the Minister may not have spoken from full notes on all these occasions, tape recordings were probably made. If I can secure the information I shall supply it. Indeed, I would be glad to give it the widest possible circulation because if the views expressed by my colleague could be carefully studied, this might make some impact upon the lack of realism shown by honorable members opposite.
– My question is addressed to the Minister for Primary Industry. Will he investigate the reason for the Fruit Industry Sugar Concession Committee fixing the figure of S48 a ton as the Australian capital city price for oranges for processing when the industry had requested $54 a ton? The Minister will realise that as $48 a ton is well below the cost of production it can be readily understood how sales at this figure would affect the industry. Any information that the Minister can give on this subject will be greatly appreciated.
– The Fruit Industry Sugar Concession Committee is constituted under the Sugar Agreement between the Commonwealth and Queensland Governments and as such it is autonomous in its operations. Of course it has representatives of the various industries on it to look after their interests. In effect, what it does is to declare a reasonable price “ not less than the price for the time being so declared “, which must be paid for the fruit or other commodity before the sugar can be obtained at a concessional price. This is merely a minimum price and does not pretend to be a commercial price in the full sense of the term. The fruit growers have a full right to negotiate for the best possible sale price.
– I ask the Prime Minister a question. Will he inquire into reports current in the Public Service in Canberra that some departments are failing to heed instructions or directions that they must protect the rights of public servants called up for national service? In particular, will he inquire whether some national servicemen now serving in Vietnam have been disadvantaged because their departments have failed to safeguard their promotions and have, in fact, promoted other officers to fill the positions to which the servicemen would have been entitled? In addition, will the right honorable gentleman now undertake that civil servants called up for national service will not suffer financial loss? Can he say whether the matters to which I have referred are adequately covered in the amending provisions of the Public Service Bill recently introduced in the other place?
– No complaints of this sort have come to my attention. I shall make inquiries to see what basis there is for the complaints within the knowledge of my Department or the Public Service Board. To the best of my knowledge, the provisions which have been made to cover members of the Public Service engaged in national service might reasonably be considered adequate. However, I shall study the situation more closely in the light of the honorable gentleman’s question and give him a more detailed reply when I have the information.
– I direct a question to the Minister for the Army with reference to the provision of civil aid in South Vietnam and the Opposition’s criticism of the extent of that aid. Can the Minister inform the House whether the scheme of the Returned Services League known as Operation New Life is having any effect and whether any other interests in Australia are participating in civil aid in South Vietnam?
– About two weeks ago, the R.S.L. programme, Operation New Life, was opened by the GovernorGeneral and collections are beginning now throughout Australia, based on the nationwide organisation of the R.S.L. The indications are that a great many items which are particularly required in Vietnam will be collected. They will be shipped to a central point in Sydney and distributed by the Army in Vietnam. This is not the only programme involved. Many other organisations or groups of people have come forward to offer civil aid of one kind or another. Some of them are collecting the same kind of things as is the R.S.L. In those cases, the League is acting as the main co-ordinating body and the other groups are acting through its branches or sub-branches.
In particular, I would mention an organisation in Brisbane which is going to collect funds to provide scholarships for children from Vietnam. This is a particularly worthwhile project. In addition, the Defend Australia Committee has set a collections target of $30,000, in addition to many items of equipment, for the Junior Academy, a school at Vung Tail which contains up to 1,500 children in the 12 to 16 years age group. Only this morning 1 was handed a cheque for $1,250 as the first instalment on i his programme. All this help is welcome and is very much needed: I believe that our forces in Vietnam recognise the need for this kind of aid, which is additional to the official or Army aid, much better than do some people in Australia and some honorable members opposite who have criticised the basis of the aid. Members of our forces in Vietnam see the circumstances that are prevailing there. They see what happens in an area which has been dominated by the Vietcong over a considerable number of years. They see the lack of attention and facilities. Therefore they Understand the need for all that is being done by the Government on an official basis, and on an unofficial basis by private people. All this aid is very welcome.
– I direct a question to the Minister for Primary Industry. Has the Government or the Australian Wheat Board, which is directly responsible to the Minister, been approached by Russian or Chinese interests seeking agreement for the forward sale and delivery of Australian wheat to either country during the next one, two or three years? Has agreement already been reached at a fixed price or otherwise for the purchase by Russia and/or China of large quantities of wheat from other than Australian sources over the next two or three years? Will the Minister give details of any known transactions? Finally, has the wheat reserve in the United Slates of America be:n described as being at a dangerously low level, and what effect will the American position and the reputedly unprecedented forward buying at fixed prices have on world sales and prices?
– I know of no forward commitments for one, two or three years entered into by the Australian Wheat Board with either of the countries mentioned. T understand that there were discussions recently between Russia and a representative of the Wheat Board concerning possible sales, but no commitments have been entered into.
The honorable member asked about the possible effect on the market price in view of the lower reserves held by the United States. The effect is already evident in a firming of prices generally. The present price in the United Kingdom, which really reflects the world price and prices paid by nations such as Japan and others as a consequence, has reached about £28 sterling a ton. This is a considerable improvement. I think that less than 12 months ago the price had dropped to as low as £25 7s. 6d. sterling a ton. So there has been a considerable firming of prices.
– I ask the Prime Minister whether he is aware that the honorable member for Yarra stated in this House on 22nd March this year that if it were satisfactorily proved that what is happening in Vietnam is aggression from the North then the Australian people could be expected to say that intervention in South Vietnam would be justified, ls the right honorable gentleman further aware that, when speaking in this House on 30th August last, the honorable member for Yarra said, apparently for the first time, that during 1964 the war in South Vietnam was stepped up by Hanoi? T ask the right honorable gentleman further whether, in view of those statements, he will consider giving an opportunity, before this House is dissolved, to the honorable member for Yarra to state to the Parliament why. in view of his changed opinion as to the part played by Hanoi in this war, he still persists in opposing any military assistance to South Vietnam?
– The honorable member for Yarra has not been reluctant to make his views known to the Parliament. T have found that, generally speaking, they have been critical, for some reason or other, of the Government in South Vietnam.
– Naturally enough.
– The Leader of the Opposition says: “ Naturally enough “. Apparently he, too, is critical of people who have been subjected to terrorism, subversion and Communist infiltration. Are they not deserving of sympathy? Are they not deserving of support if we genuinely wish to prevent the spread of Communist aggression throughout South East Asia? That is at the base of this Government’s policy. Regardless of who is in charge of the Government of South Vietnam, if the Government there is seeking to resist terrorism, subversion and Communist aggression then it has a strong claim upon the sympathies of the Government of this country. I do not think there can be any intelligent person who has carefully studied the facts who could be under the delusion these days that the aggression is not coming from the North and that it is not inspired by the administration in North Vietnam which is largely influenced by the policies of China.
– Can the right honorable gentleman tell me how many troops are there?
– From the North?
– The last time 1 saw a figure on it, about 13 regiments, from what 1 recall.
– The Prime Minister has not a clue.
– Is that not enough for the honorable member?
– Most of them were absent without leave.
– Yes. The Prime Minister knows that the Army is predominantly South.
– I know that there are very substantial North Vietnamese regular forces in South Vietnam.
– How many?
– That is a matter of military classification, but I can tell the honorable gentleman that it runs into regiments of more than double figures, so let us just leave it at that for the time being. What is more, there has been a steady continuance of that infiltration, despite the strenuous efforts of the forces of South Vietnam, of the United States and of the other friendly forces associated with them. There has been no lack of reinforcement.
It has been steadily proceeding, despite bombing, and the military resistance that the forces in the South are putting up. The International Control Commission on which Canada, India and Poland were represented, came to the conclusion - on the part, anyhow, of Canada and India - that this infiltration had been clearly established. Since that time, I do not think that anyone prepared to study the situation objectively has been under any doubt that this was certainly so.
– Is the Prime Minister aware that the United States Ambassador to the United Nations, Mr. Goldberg, has stated that the Vietcong’s presence at the conference table would be no bar to peace negotiations on Vietnam? Is he also aware that the Chairman of the National Liberation Front has dropped the pre-condition to peace talks that the United States forces withdraw from Vietnam before peace talks commence? Is it a fact that Air ViceMarshal Ky has stated in reply to these proposals that he would not sit down at the conference table with the Vietcong representatives? Is the Australian Government prepared to accept the Vietcong as one of the negotiating parties at the conference table and, if it is, has it expressed its view to Air Vice-Marshal Ky?
– The views of the Government have been made known to other governments with which we arc associated. The various statements which the honorable gentleman has quoted are brief extracts from very lengthy statements made by the people concerned and I, Sir, am not going to frame a reply here on the basis of those three extracts.
– I want to know the basis. What is your view?
– Can’t you behave yourself?
– I take a point of order. Is it in order for the Prime Minister to refuse to disclose questions of this nature to the Parliament?
– Order! The honorable member has been here long enough to know that a certain standard of conduct is necessary. Interjections and disorderly behaviour are not a good example to set.
The Prime Minister exercises his own choice as to the way in which he answers questions.
– I take a point of order. 1 appreciate what you have said. Sir, but are not the honorable members of the Opposition entitled to barrack for their side, the Communist side?
– There is no substance in the point of order.
– I ask for a withdrawal of the statement by the honorable member for Mackellar.
– The honorable member for Mackellar was out of order. The comment he made was unfair and therefore I ask him to withdraw it.
– Indeed, in deference to you, Sir.
– Does the honorable member withdraw it?
– I think that the House will at least agree that there is some justification for the comment of the honorable member for Mackellar.
– You are a bigger rat than he is.
– On this side of the House it is extremely difficult to discover what the policy of the Opposition is. They speak with about six different voices.
– You are a dirty low guttersnipe.
– Order! The honorable member will withdraw that remark.
– I am not prepared to withdraw it. Mr. Speaker. I say it is true. He is a dirty low mug.
– Order! I name the honorable member for Newcastle.
Motion (by Mr. Harold Holt) put -
That the honorable member for Newcastle be suspended from the service of the House.
The House divided. (Mr. Speaker - Hon. Sir John McLeay.)
Question so resolved in the affirmative.
– I ask the Minister for the Interior a question. Is it true that a member of the Victorian Public Service wishing to nominate as a candidate for election to
Parliament must resign his position before nominating and cannot be reappointed to his position until the poll is declared or the return of the writs? If so, will the Minister consider taking action to rectify this provision of the legislation which I believe to be unfair to this section of the community?
– The Constitution firmly lays down that a person holding a position of profit under the Crown is incapable of sitting as a member of Parliament. In other words, a Commonwealth or State Public servant is ineligible to contest an election unless he first resigns from his posiion. His resignation must be complete when he consents to the nomination. However, a Commonwealth public servant, having resigned and having been unsuccessful at an election, may seek to be reappointed providing he does so within the provisions of the Public Service Act. I am not quite sure, but I think that in Victoria he must seek to be reappointed within two months of the declaration of the poll.
– I ask the Minister for Health a question. I recall to him that the Australian Apple and Pear Growers Association two years ago complained that the plant quarantine facilities of his Department did not permit new overseas varieties of fruit to be tested in sufficient numbers or with sufficient speed and that the facilities were totally inadequate for the industry’s needs. I assure him that members of the State Fruit Board of Tasmania and the Australian Apple and Pear Board and great numbers of growers in Tasmania expressed the strong view to me a week ago that the industry’s prospects are greatly handicapped by quarantine shortcomings. I ask: What steps have been taken in the last two years to augment the plant quarantine facilities and when will they be adequate to test without delay all varieties which growers seek to import, not only of apples and pears but also of citrus, stone fruit, strawberries and vine fruits?
– The particular case mentioned by the honorable gentleman has not been brought to my notice, but I have found in the case that I have investigated in relation to plant quarantine a readiness on the part of the officers of the Department to do everything, consistent with ensuring that plant diseases are not introduced into the country, to meet the legitimate needs of people who want to import plants. However, in the last resort the protection of Australia from the introduction of diseases must be the decisive factor. All I can say, Sir, is that I will look most carefully at this question, see whether there is any substance in the allegation the honorable gentleman has made and, if there is, see whether something can be done to correct it.
– Will the Minister let me have a letter then?
– I ask the Prime Minister a question supplementary to that asked by the Deputy Leader of the Opposition yesterday. I want to state clearly at the outset that I do not favour the policy of apartheid, but I think in justice to the people concerned these questions should be asked. Is the International Director of the African National Congress, whose headquarters are in Dar es Salaam, at present visiting Australia? Did he admit, when speaking in Melbourne recently, that he had attended the tricontinental Communist conference in Cuba earlier this year in his official capacity and had joined with the chief Soviet and Chinese Communist representatives in their support of people’s wars in Vietnam and elsewhere? Will the Prime Minister make available to honorable members a brief summary of the recent history of he African National Congress and the considerable infiltration of it by well known and self-confessed Communists? As the Deputy Leader of the Opposition is interested in the African National Conference, and to help him avoid the accusation that be supports Communist infiltrated organisations, will the Prime Minister inform him of the names and authors of books in the Library from which information about the Congress, its members and activities can be obtained by anyone who is interested, without any reference to either Australian or South African security sources?
– I understand that a gentleman occupying the position to which the honorable member has referred is in Australia at present. I have no personal knowledge of the speech to which the honorable member for Chisolm referred. As to the making available of a short history of the particular organisation, I shall examine the practicability of that. It should not be a matter of any great difficulty. As to the titles and authors of books in the Library on this subject, I shall see that if possible, this information is obtained. If I included the details in “Hansard” they would be available not only to the Deputy Leader of the Opposition but also to other members of the House who might be interested.
– I present the following paper -
Commonwealth Grants Commission Act - Commonwealth Grants Commission - Thirty-third report (1966).
– On what date was the report signed by the Commissioners? Frequently questions are asked about delays in presenting such reports.
– The date is 28th September.
Bill presented by Mr. McMahon, and read a first time.
– I move -
That the Bill be now read a second time.
The main purpose of this Bill is to authorise the payment in 1966-67 of special grants totalling $40,072,000 to the States of Western Australia and Tasmania. The pay ment of these amounts has been recommended by the Commonwealth Grants Commission in its Thirty-third Report which has already been tabled. The Bill also authorises the payment of advances to Western Australia and Tasmania in the early months of 1967-68 pending the receipt of the Commission’s recommendations for that year and the enactment of new legislation. This provision is similar to that included in previous years in the legislation authorising the payment of special grants to the claimant States.
In arriving at its recommendations for 1966-67 the Commission has continued to apply the principle of “ financial need “ under which special grants are designed to enable the claimant States to provide government services at a standard not appreciably below that of the standard States, provided they make comparable efforts in raising revenue and controlling expenditure. As in recent years, the Commission has again taken New South Wales and Victoria as the standard States for the purpose of these comparisons. The Commission has also adhered to the method of recommending grants composed of two parts. One part represents an advance payment based on the Commission’s assessment of a claimant State’s financial needs in1966-67 and is subject to final adjustment two years later when the Commission has completed its examination of the audited budget results of the States for that year. The other part of the grant represents a final adjustment of the advance payment made two years earlier - in this case in 1964-65 - and is now known as the completion payment.
The special grants recommended for payment in 1966-67 are compared with the grants paid in1964-65 and 1965-66 in a table which, with the concurrence of the House, I incorporate in “ Hansard “.
The total amount of special grants recommended for payment in 1966-67 is $1,698,000 less than the grants recommended and paid in 1965-66. The reason for the decline in the total special grants this year is a fairly large reduction in the recommended grant for Western Australia. On the other hand, the special grant recommended for Tasmania for 1966-67 is larger than that for 1965-66. To explain these variations in total grants, it is necessary to look at the composite parts of the grants.
The recommended completion payments for 1964-65 are, in aggregate, $1,502,000 higher than those for 1963-64. When recommending the amount of the advance payments for 1964-65 the Commission worked on the assumption that the two standard States would have sizeable budget deficits in that year and the advance payments recommended were therefore designed to leave the claimant States with comparable deficits. In fact, the budget results of the standard States were better than expected and the deficit budget standard finally adopted for 1964-65 was only 30 cents per head. Accordingly, the advance payments for 1964-65 were less than was subsequently found to be justified, and the completion payments now recommended are correspondingly greater. In addition, the Commission’s investigations revealed that Western Australia’s relative revenue and expenditure efforts were above those of the standard States, and it has therefore recommended a final completion payment which is sufficient to offset the deficit budget standard and leave Western Australia with a small budget surplus for 1964-65. On the other hand, Tasmania’s relative efforts were judged by the Commission to have been slightly below standard and, consequently, the final completion payment now recommended leaves that State with a final budget deficit of about $450,000 in respect of 1964-65.
The effect of adopting the Commission’s recommendations relating to the completion payments for 1964-65 would be to give Western Australia a total final special grant for that year of $20,506,000 - an increase of $5,668,000 or 38 per cent, on the total special grant paid in respect of 1963-64. Tasmania would receive a total final special grant for 1964-65 of $14,784,000- an increase of $3,252,000, or 28 per cent, on the total special grant paid in respect of the preceding year. In each case, the rate of increase in the special grants is considerably faster than that of the financial assistance grants paid to these States under the formula laid down in the States Grants Act 1959.
In the case of the advance payment for 1966-67, honorable members will observe that the total amount recommended for payment is $3,200,000 less than in 1965-66. One reason for this reduction is that the Commission took the view that, unless the standard States increased taxes and other charges or restrained the rate of increase in their expenditures, they would have larger budget deficits than in 1965-66.
Accordingly, the Commission decided to adopt a considerably larger deficit budget standard than it used for purposes of framing last year’s recommendations. The effect of this is that the advance payments are framed on the basis that, in 1966-67, the claimant States may have to make a greater effort than in 1965-66 to finance their expenditures from their own resources. Of course, the advance payments now recommended are subject to adjustment by the Commission in 1968-69 when the actual budget results of the claimant and standard States for 1966-67 have been reviewed.
Mention should also be made of the reduction of $6,300,000 in the advance payment recommended for Western Australia. This decline is partly due to the larger deficit standard adopted for 1966-67 and to the Commission’s assessment of Western Australia’s relative efforts, but it also appears to reflect a decline in Western Australia’s need for special grants. The favourable seasonal conditions in Western Australia, combined with a general buoyancy in economic activity there, have had a beneficial effect on the State’s revenue, particularly from railway operations. The Western Australian Budget is also beginning to benefit from the large mineral developments which are presently under way in that State. Although it is too early to be sure of this, a continuation of the rapid growth in Western Australia’s economy could lead to a further reduction in that State’s dependence on special grants.
The advance payment recommended for Tasmania is $3,100,000 greater than that recommended for 1965-66. This is a somewhat larger increase than occurred in the previous year and it appears to indicate continued growth in Tasmania’s dependence on special grants.
In conclusion, I would like to take the opportunity to pay a tribute to Mr. P. D. Phillips, C.M.G., Q.C., whose retirement as Chairman of the Commission was announced recently. Mr. Phillips served as the Commission’s Chairman for a period of six years. During his term as Chairman Mr. Phillips upheld the high standard of his predecessors in this office and made a considerable contribution to the continuing work of the Commission. Mr. Phillips has been succeeded as Chairman by Sir Leslie Melville, K.B.E., who is already a member of the Commission.
The Grants Commission’s recommendations have been adopted by Parliament without amendment in each year since the Commission’s establishment, and the Government considers that they should again be adopted this year. I therefore commend the Bill to honorable members.
Debate (on motion by Mr. Crean) adjourned.
Bill presented by Mr. Snedden, and read a first time.
.- I moveThat the Bill be now read a second time. I present to the House the first of two Bills dealing with extradition. The two Bills represent the first move by the Commonwealth Parliament to legislate comprehensively on this subject. As matters stand, the law that is still in force in Australia is that contained in Imperial legislation of the 19th century. Excepting for a short Act of a machinery nature, first enacted in 1903, the Commonwealth Parliament has not hitherto legislated in this field.
The Bill now before the House is concerned with extradition between Commonwealth countries. Its introduction follows two conferences between Commonwealth Law Ministers. The first discussions took place in Canberra in September 1965 when Commonwealth Law Ministers were here at the invitation of the Australian Government following the Commonwealth and Empire Law Conference in Sydney. Law Ministers then recommended to their Governments that a special conference should be convened in 1966 to complete a scheme of extradition arrangements between Commonwealth countries. The second conference, which I attended, was held in London in April of this year. The Bill is designed to give effect to the scheme worked out in detail in London.
The Bill takes the place of the Imperial Act known as the Fugitive Offenders Act, 1881. That Act is no longer adequate for two main reasons. In the first place, the operation of the Fugitive Offenders Act is confined to countries that are parts of Her Majesty’s dominions. The Act has therefore ceased to be applicable to countries which, although forming part of the Commonwealth, have the status of republics. The case of the kidnapper and murderer Bradley provides an illustration of the problem. As it happened, Bradley was apprehended at Colombo and, Ceylon being part of Her Majesty’s dominions, he was extraditable to Australia under the Fugitive Offenders Act. If he had managed to get as far as India the Fugitive Offenders Act would not have been available.
But simply to amend the Act so as to make it applicable to republics would at best have been only a stop-gap solution - and this leads me to the further reason for new legislation. The Fugitive Offenders Act was suitable for the days in which it was passed when all the present countries of the Commonwealth were British possessions, when they owed allegiance to the one sovereign and were therefore all part of Her Majesty’s dominions and when they had virtually the one system of law and justice. The old Act therefore, unlike the legislation applying to extradition with foreign countries, did not have to make any special provision in respect of political offences. As I shall shortly describe, the London scheme does make provision in this regard.
A proper scheme of extradition must, as honorable members will perceive, satisfy two interests. There is first the interest that the peoples of all countries have in ensuring that acts that are universally considered as crimes should not go unpunished. On the other hand, it is necessary to ensure that there are adequate safeguards to protect the interests of the person whose surrender is sought. A request for surrender, for example, that is made for ulterior reasons clearly ought not to be acceded to. The scheme worked out in London a few months ago takes due account of both interests. For the convenience of honorable members I have had the scheme reprinted as it was agreed upon in London and I have arranged for copies to be distributed to all members. I shall now proceed to describe the main features of the scheme and in so doing shall refer as well to the key provisions of the Bill itself.
Honorable members will observe that the London scheme is not in the form of a treaty or other international agreement. The scheme differs in this respect from the system of extradition operating between Australia and foreign countries, which is based on the existence of formal treaties with the countries concerned. It was at first contemplated that a multilateral extradition convention would be concluded at London, but this idea was abandoned in favour of the less formal method embodied in the scheme. It seemed unnecessary for Commonwealth countries to impose formal legal obligations on each other. It seemed also that some countries might be ready to proceed before others and that this course would be facilitated if the arrangements did not take the form of a formal agreement. The expectation of course is that all Commonwealth countries will give effect to the scheme. Australia, with the legislation that I am now introducing, is, I believe, first in the field.
I think I should at this stage refer briefly to the procedures for the surrender of fugitive offenders as between Commonwealth countries. These will be essentially the same as those that apply with foreign countries and they are substantially the same as the procedures that have been in operation for nearly a century under the Imperial Extradition and Fugitive Offenders Acts. The procedure provisions are to be found in Part II of the Bill.
Where a requisition by a country is made for the surrender of a fugitive in Australia, the Attorney-General will give a notice to a magistrate informing him of the requisition and authorising him to issue a warrant of arrest. The fugitive on arrest will be brought before a magistrate. The magistrate may, if sufficient evidence is produced as would, if the offence had been committed in the particular Australian State or Territory, justify the committal of the fugitive to prison, commit him to prison to await his surrender to the overseas country. A warrant may then, after the expiration of fifteen days, be issued for the return of the fugitive to the overseas country. The right of a fugitive to apply for a writ of habeas corpus is preserved by providing a statutory delay of fifteen days.
The changes introduced by this Bill are not changes in procedure, but relate to qualifications on surrender. There are three main changes, dealing, respectively, with surrender for political reasons, with what is known as “ speciality “, and with double criminality. I shall deal with each of these in turn.
It is a fundamental principle of extradition law that a person shall not be surrendered for a political offence. There was no provision in the Fugitive Offenders Act restricting rendition on that ground because when this Imperial Act was drafted it was considered that all offences throughout the Queen’s dominions were offences against the Queen’s peace. This view is no longer appropriate, as was clearly demonstrated in the case of Chief Enahoro of Nigeria. Chief Enahoro, having taken refuge in the United Kingdom, was charged by the Nigerian authorities with treason and the Nigerian Government sought his return for trial. There was no provision in the Act whereby the United Kingdom Government could reasonably decline to return the fugitive to stand his trial. The postscript is, as I read in the Press, that Chief Enahoro was recently released in Nigeria.
– Had he not been convicted, he would have been murdered.
– That is possible. The London conference quickly agreed that it was desirable that there should be some restriction on the surrender of fugitives, even to Commonwealth countries. This was put in the scheme and is expressed in clause 10(1.) of the Bill, which provides that a person is not liable to be surrendered to a declared Commonwealth country if the offence concerned is, or is by reason of the circumstances in which it is alleged to have been committed, an offence of a political character.
Clause 10 contains two further restrictions on the surrender of persons. One is that a person who is in custody or on bail in Australia in respect of an offence that is alleged to have been committed in Australia or is serving a sentence for a conviction in Australia, is not liable to be surrendered until he has been discharged from custody or gaol. The other is that a person is not liable to be surrendered in respect of an offence if he has already been acquitted, pardoned or punished for that offence.
I did not think it sufficient that the restriction on surrender of a fugitive should be confined merely to the case of a political offence so defined, for example, treason or sedition. It should also encompass a situation where the offence alleged is of an ordinary character, for example, stealing, when the true reason for the rendition is not the offence alleged but is in reality an attempt to try the person for a political offence. This latter situation is not sufficiently met toy the absence of treason and the like political offences from the listed offences or by the so-called speciality rule. At the London conference, with the authority of the Australian Government, I argued for the adoption of provisions which would enable a requested country to look behind the offence charged to ensure that no political motive led to the request. I pointed to Article 3.2 of the European Convention on Extradition, 1957, which expressly gives protection from surrender to a person who would suffer because of his race, religion, nationality or political opinions. This was a developing idea, but at the time of the London conference it had not gained any appreciable degree of acceptance outside Europe. I was particularly anxious to secure its inclusion in the Commonwealth Scheme, not only because of the very proper safeguards it contains, but also because of the powerful support that Commonwealth acceptance of it would give for negotiating its inclusion in treaties between Australia and foreign countries.
The conference accepted my view and, in addition, retained a provision along the lines of section 10 of the Fugitive Offenders Act which gives protection on the grounds of triviality, passage of time, or the charge not being made in good faith in the interests of justice. These provisions, which are contained in clause 11, together with clause 10, provide such powerful safeguards that they remove any apprehension that might otherwise bp felt about the return of Australian citizens to a requesting country.
The scheme contains in annex 2 a provision that would enable a country to refuse to return citizens and permanent residents. This was a proposal put forward by me at the outset. However, when the provision contained in clause 11 was accepted I indicated it was no longer necessary. The conference proceeded to adopt the clause but in such a way that, if any Commonwealth country legislatively adopted it, any other Commonwealth country would be at liberty to modify or deny extradition to a country adopting the provision. It would really mean that a country wishing to adopt the provision would have to engage in a series of bilateral negotiations to achieve complete extradition cover. In the circumstances the Government has concluded that we should not run the risk of securing less than full extradition of criminals who flee from Australia to other Commonwealth countries. As I have said, our protection is sufficient from the political and good faith clauses.
Whilst it has been thought necessary to include in the Bill limitations on the surrender of fugitives for political offences, it is recognised that there are some countries such as the United Kingdom itself whose attitudes to offences such as treason and sedition are so like our own that we would not wish to restrict the surrender of a fugitive to one of those countries for one of those offences. Part IV. of the Bill accordingly enables regulations to be made giving power to surrender for political offences to a Commonwealth country that is named in the regulation. The restrictions on surrender for political offences do not apply at all to New Zealand and the neighbouring British posessions referred to in Part HI of the Bill which I shall deal with in a moment.
I shall refer now to the speciality rule which is the subject of sub-clause (3) of clause 11 and of clause 21. The rule hitherto in foreign extradition, but not in the Fugitive Offenders Act, has been that the requesting country must bind itself by treaty or by legislation that a person extradited will not be dealt with for offences other than the extradition offence charged. Because of the clear interest that the States have in the subject of extradition, I had a number of discussions with my State colleagues in the Standing Committee of Commonwealth and State Attorneys-General. In those discussions, the States expressed their concern about the adoption of the speciality rule in this form. They do not want to be in the position that a man returned to Australia for manslaughter, for example, cannot be convicted of dangerous driving, which is not an extradition offence, if the jury fails to agree on the major charge. To meet the States’ position, I felt that our legislation, both for foreign and Commonwealth extradition, should permit trial on any charge proved by the facts on which the extradition was grounded, but that in order to provide a safeguard, prima facie case should have to be made out on the extradition offence before there could be any extradition at all. The London conference adopted this view, but it went further and authorized trial for a different extradition offence, provided the offence is of the same nature as the extradition offence originally charged and provided that the requested country consents.
The delegates thought it proper to try a man for a non-extraditable offence if it was proved by the facts on which his return was grounded but, if one went beyond those facts, then the trial must be only for an extradition offence. For example, offences against the Companies Acts fall into a class. Return might be sought for offence A but further evidence might be obtained after long investigation pointing to a more serious or, at any rate, a different offence, B. The law Ministers believed that the requested country, if it had known the position in the first place, would have granted return for offence B, and that it would be wrong to require fresh extradition proceedings so long as provision was made for obtaining the consent of the surrendering country. This protection is in fact contained in the scheme and in the Bill.
The third innovation introduced is the principle of double criminality. The rule is that not only must the offence concerned be an offence against the law of the declared
Commonwealth country seeking extradition, but also the act or omission constituting that offence must be such that it would constitute an offence against the law of the part of Australia where the fugitive is found. This is stipulated in the definition of “ extradition crime “.
I wish to mention now the question of the death penalty, which is also dealt with ia annex 2 to the scheme. This subject caused much discussion at the London conference. The European Convention on Extradition and the United Kingdom’s postwar treaties give discretion to a requested country to withhold extradition for a capital offence to a country which has the death penalty. The United Kingdom delegates argued for the adoption in the scheme of this discretion pointing to their postwar treaties and to their legislation abolishing the death penalty. Other countries strongly took the contrary attitude arguing that penalty was a matter solely for the country in which the offender is tried. In Australia, while the death penalty is retained in some States and in the Territories, we would not want extradition to be refused to us on this account. On Australia’s initiative, a compromise was secured. This is set out in annex 2 to the scheme. Instead of having an absolute right to refuse extradition, the requested country must first consider the likelihood of the death penalty being suffered in the particular case, and must balance against that the circumstances of the case and the likelihood that the offender, if not returned, would be immune from punishment. Our own legislation does not refer to the death penalty at all, because we will not be seeking to refuse extradition on that ground.
I shall now refer specifically to the other more important features of the Bill. For the purposes of this Bill, “ Australia “ includes all its external Territories and Nauru. The main operative part of the Bill is Part II, which deals with extradition to and from Commonwealth countries that are declared by the regulations to be Commonwealth countries to which that Part applies. A colony or territory of a Commonwealth country will be capable of being included automatically or separately, for example, Hong Kong. The general procedure for extradition referred to shortly ‘before, and which I shall now describe in greater detail, will apply to these countries.
Clause 9 lays down the general principle that every fugitive from a declared Commonwealth country is liable to be apprehended and returned to that country, subject to the qualifications in Part II of the Bill and to any particular limitations, conditions, exceptions or qualifications which might be made in the regulations appying that Part to that particular country. The scheme recognises that the question whether a fugitive offender should be precluded from being returned on the ground that the offence is an offence of a political character could be decided by either a competent judicial authority or an executive authority. The Bill places this responsibility upon the executive authority because to require proof before a court of this matter would in most cases be almost impossible for an alleged fugitive. He would not have access to witnesses within the requesting country. Important information may be available to the Executive of a nature not provable in court.
Clause 12 is the provision that sets an extradition in motion. It provides that, where a requisition for the surrender of a fugitive is made to the Attorney-General, he is to give a notice in writing to a magistrate informing him that the requisition has been made and authorising him to issue a warrant for the arrest of the fugitive. There is an alternative procedure in cases of urgency, whereby a request for the issue of a warrant for the arrest of a fugitive may be made direct to a magistrate, who may issue a provisional warrant for his arrest, but in such case he is required by clause 14 (3.) to send immediately to the Attorney-General a report informing him of the issue of the warrant and of the evidence produced to him on the application for the warrant. Sub-clause (5.) of clause 14 gives the Attorney-General a discretion to direct that the provisional warrant be cancelled. This provision is necessary because facts may be made known to the Attorney-General which would have justified him in not issuing a notice in the first place, had the requisition been made to him instead of an application for a provisional warrant being made.
Clause 15 requires a person arrested under a warrant to be brought as soon as practicable before a magistrate. Where the person has been arrested under a provisional warrant, the magistrate must remand the person until he receives a notice from the Attorney-General informing him of the requisition for the surrender of a person. Where the magistrate receives a notice from the Attorney-General under either of the procedures referred to above, and there is produced to him a duly authenticated overseas warrant for the surrender of the person, he may proceed to hear evidence. In the case of a person who is accused of an extradition crime, if the evidence is such that the magistrate considers it would justify the committal for trial of the person if the crime had been committed within the particular State or Territory, and the magistrate is satisfied that the person is liable to be extradited, he must commit him to prison to await the warrant of the Attorney-General for his extradition.
Clause 16 allows the prisoner a minimum period of 15 days in which to apply for a writ of habeas corpus. After the period of 15 days or, where the prisoner has applied for a writ of habeas corpus, after 15 days after the proceedings have finally been disposed of, the Attorney-General, if he is satisfied that the prisoner is liable to be surrendered, shall issue a warrant for the prisoner’s surrender. Thereafter the authorities of the country requesting the surrender are notified; a police escort is sent and the prisoner is taken out of Australia. The above procedure applies to extradition to Commonwealth countries. I turn now to extradition from declared Commonwealth countries, the provisions as to which are necessarily brief. Clause 19 provides that the Attorney-General may make a requisition for the surrender of a person who is accused or convicted of an extraditable crime - being an offence against the law of Australia, wherever committed - who is suspected of ‘being in or on his way to a declared Commonwealth country.
Special provision is made in Part III to preserve our existing extradition procedures with Commonwealth countries neighbouring Australia and its Territories. Part II of the Fugitive Offenders Act provided a simplified form of return of offenders as between groups of British possessions. Australia, Norfolk Island, Papua, New Guinea, Nauru, New Zealand, Western Samoa, Fiji, Gilbert and Ellice Islands and the
British Solomon Islands were a group of British possessions to which Part II applied. Part III of this Bill applies specifically to these same places, with the exception of Western Samoa which is now an independent member of the Commonwealth.
The most important country is, of course, New Zealand. PartIII provides a simple procedure, known as “backing the warrant”, based on provisions of the Service and Execution of Process Act, for the interstate return of offenders within Australia. It will work this way. Where a warrant of arrest is sent to Australia from, say, New Zealand, an Australian magistrate may endorse the warrant, which can then be executed anywhere in Australia. On his arrest, the fugitive would be brought before a magistrate who, if certain specified conditions are satisfied, must order the surrender of the fugitive to New Zealand. There is a right of appeal, to the Supreme Court of the State or Territory in which the person is apprehended, against the order of the magistrate, and also a right for the fugitive to apply for release from custody, on reasonable notice of the application, if he is not conveyed out of Australia within one month of the date of the order or, if there has been an unsuccessful appeal, within one month of the decision of the court.
– This is the first legislative step towards union between Australia and New Zealand.
– In a way that is so, but of course the provision has existed in the Fugitive Offenders Act since 1881. The position is no different in that respect. The Fugitive Offenders Act does not contain a list of extradition crimes, but this Bill does so, in the First Schedule to the Bill. The Bill uses a distinction in terms, referring to “ extradition crime “ in relation to offences against the law of declared Commonwealth countries and to “extraditable crime” in the case of offences against the laws of Australia and its States and Territories. For a crime to be an “ extradition crime “ or an “ extraditable crime “ it must have a maximum penalty of death or imprisonment for not less than 1 2 months. The list of offences is a list of descriptions of offences rather than offences themselves because of the difference in nomenclature of offences in the various Australian States and Territories.
Rather than have an extremely long list of specific offences using the names by which the offences are called in the various States and Territories, the offences have been described in general terms. The list is extended by clause 31 to treason, sedition, etc., for those countries which are excepted from the restrictions on surrender for political purposes.
The Bill I have just described and the Bill I am about to introduce deal with a subject of very real importance in the administration of the criminal law. The Bills will bring Australian extradition law up to date in respect of both Commonwealth and foreign states. I commend the Bill to the House.
Debate (on motion by Mr. Whitlam) adjourned.
Bill presented by Mr. Snedden, and read a first time.
– I move -
That the Bill be now read a second time.
I present to the House the second of the two Bills dealing with extradition, the Extradition (Foreign States) Bill. At present, foreign extradition flows from the Imperial acts known as the Extradition Acts, 1 870 to 1935, which apply to all the Queen’s dominions, including Australia. In pursuance of these Acts, treaties were entered into by the United Kingdom with a large number of foreign countries and these treaties were made applicable to Australia. The Extradition Act 1903 was a short act passed by the Commonwealth Parliament to vest the powers exercisable under the Imperial acts in appropriate persons in Australia.
It is now clearly inappropriate for Britain to negotiate further extradition treaties on behalf of Australia. Australia, as a sovereign nation, can negotiate its own treaties. What is now needed is comprehensive legislation to give effect to new extradition treaties that are entered into by Australia. This is the principal reason for this Bill. Its contents are similar to the provisions of the Extradition (Commonwealth Countries) Bill, which I have just introduced, but there are some essential differences that make it necessary to have separate Bills. Perhaps I could refer here briefly to the main differences.
The context of the Extradition (Foreign States) Bill is a treaty context, whereas the Extradition (Commonwealth Countries) Bill depends upon what will, in effect, be reciprocal legislation. In the case of foreign countries, there will be a treaty obligation to extradite, but the legislation leaves an ultimate statutory discretion in the Executive, whereas under the Extradition (Commonwealth Countries) Bill there is a statutory obligation to extradite if all conditions are fulfilled. The speciality rule is in both Bills, but in the Extradition (Commonwealth Countries) Bill it is modified to the extent that the surrendering country may consent to a fugitive being tried for another offence.
The offence lists are not completely identical. Apart from the lists, however, extradition offences for Commonwealth countries will have to be offences punishable by at least twelve months’ imprisonment, whereas - because of the terms of existing treaties - there is no such requirement in the Extradition (Foreign States) Bill.
Australia has extradition arrangements at present with 40 foreign countries but there are over 50 countries with which we have no such arrangements. It is not proposed that at present Australia would want to have extradition arrangements with every country, but there is a number of countries with which at present we have no arrangements and to which a fugitive from Australia might well flee. It is not my intention to state the names of these countries, as I do not wish to give aid to those who might be interested in fleeing the country. Treaty negotiations have already been commenced with a number of countries.
Under Part II of this Bill, all existing treaty arrangements with foreign countries will continue in operation, and the Act will apply in relation to those countries. Power is taken to apply the Act, by means of regulations, to new treaties made in conformity with the Act, including supplementary treaties with countries with which we already have treaties. The regulations may also provide that where a treaty is entered into with a foreign country, the Act applies subject to such limitations, conditions, exceptions or qualifications as are necessary and desirable to give effect to a treaty.
Consideration was being given to the preparation of a new Extradition Bill at the time when the first Law Ministers’ Conference was held. One of the problems then was the question of the introduction of a provision that would require that surrender should be made only where the Australian Government was satisfied that the request for extradition had been made in good faith. The problem had been exposed by the Rancic case in 1956. Yugoslavia had sought Rancic’s extradition from Australia for the ordinary non-political offence of embezzlement of public funds. Rancic alleged, however, that the real purpose of the extradition was to attempt to extract from him information about some associates of his at a time when he was a political agent of a former regime. It was established that he had been naturalised in Australia, and his extradition could therefore be refused under the clause in the treaty with Yugoslavia which provides that extradition by either country of its own nationals is discretionary.
To cover similar cases in the future, however, in which the person concerned might not have become naturalised it is most desirable that we should endeavour in future treaties to secure the inclusion of the provision along the lines of Article 3.2 of the European Convention on Extradition. I have referred to this provision in my speech on the earlier Bill and to the fact that Australia was able to secure its inclusion in the Commonwealth scheme. It was, in fact, a most important thing to achieve in London, to have this clause accepted by the 23 Commonwealth countries and included in the scheme, because it inestimably increases the strength of the negotiating position of Australia with other countries. The procedure for surrendering a fugitive to a foreign country is exactly similar to that for surrender to a Commonwealth country and there is no purpose in my repeating it. I commend this Bill to the House.
Debate (on motion by Mr. Whitlam) adjourned.
Debate resumed from 22nd September (vide page 1171), on motion by Mr. Swartz -
That the Bill be now read a second time.
.- Mr. Deputy Speaker, the Opposition supports the Bill. 1 shall be the only person on the Opposition side to speak to it. Previously, similar bills have also been supported on behalf of the Opposition by the honorable member for Newcastle (Mr. Jones). On this occasion, as a result of a vote earlier in the day, 1 shall be the only speaker.
As a result of the 1961 Airlines Agreement Act, air navigation charges cannot be increased by more than 10 per cent, in any one year. This limitation means that it will be many years indeed before there is full recovery of the costs of providing air navigation facilities. This year air navigation charges will recover only 14i per cent, of the total cost of providing the facilities. Last year the charges recovered just under 1 3 per cent.; the previous year they provided 10.7 per cent.; and the year before that they provided 8.9 per cent. How slowly we proceed in this field. We must continue to proceed slowly as long as the Airlines Agreement Act continues.
The returns from airlines and rent of facilities do not nearly cover the cost of providing air navigation services. Last year these services cost $46.4 million. Revenue to meet them was as follows: Air Navigation charges, $6.8 million; air transport source revenue, such as rental of buildings, sites and the like, $3.4 million; airport commercial revenue, $1.3 million; and miscellaneous revenue, $400,000 - the total revenue thus being $12,900,000. The taxpayers pay most of the costs of air navigation because the Commonwealth has to pay this balance from revenue - the difference being $331 million.
I draw attention to the extent to which air navigation costs are subsidised by this Commonwealth subsidy of $334- million. The total number of passengers carried last year was 4,600,000. Accordingly, the total subsidy per passenger was $7$ per flight. There has been criticism on one occasion recently - I can think of no other occasion - that this subsidy figure is rather high because it includes capital costs. It is suggested that one should look only at current costs in working out the extent to which the Commonwealth is required to subsidise air tickets. This might be a legitimate contention in standard accounting practice. When, however, civil aviation is considered alongside other forms of transport, such as the railways, it is clear that air travellers enjoy a subsidy of S7£ per head. This is not enjoyed, to any comparable extent, by persons who use other forms of transport.
Attention is frequently drawn to the deficits which the States incur on the railway passenger services, metropolitan bus services, metropolitan ferry services, or, where they still survive, metropolitan tram services. But if one adds together the deficits which the States incur on other forms of transport services, the total is less than the subsidy which the Commonwealth pays for air travellers alone. The irony is that the persons who travel by air are those who need assistance in meeting their costs least of all. Most persons who travel by air do so on expense accounts or Government warrants.
Between December 1955 and September this year - just to take this decade - air fares have been increased by 62 per cent, for tourist class passengers and 48 per cent, for first class passengers. Answers which have been given to questions placed on the notice paper detail these steady increases. It is interesting to compare the increases in internal air fares in Australia over the last decade with the variations - decreases as often as increases - in air fares between Australia and other countries. One might well ask why it is that air fares within Australia have increased so much more than air fares between Australia and other countries. Again, why Ls it that the Government, and thus the taxpayers, must so heavily subsidise air travellers within Australia while the Government provides no such subsidy for air travellers between Australia and other countries. When one takes into account the profit that Qantas Empire Airways Limited makes, there is no subsidy at all. One can be certain that under its new chairman Qantas will continue to be as profitable an organisation as it has been under his very distinguished predecessor. It will continue to give splendid service to Australians and other nationals and it will do as much as any other Australian instrumentality to make this country known and appreciated overseas.
The simple reason why there is a subsidy for internal air fares as against external air fares, the simple reason why there is a subsidy for the affluent air traveller in excess of all other travellers in Australia, is that the Government has entered into an obligation under the Act which I have already mentioned to ensure that Ansett Transport Industries Limited will always be able to achieve a 10 per cent, dividend over all its activities during the currency of the agreement. I quote the words of the late Senator Paltridge in September 1961 - ]n order to meet reasonable private enterprise standards Ansett Transport Industries must have a target of the order of 10 per cent, after tax and a reasonable allocation to reserve.
The increases, therefore, which are made each year by means’ of this Bill and those which have preceded it raise the whole question of A.T.I, finances. Air fares have to be raised to provide the 10 per cent, dividend for A.T.I, over all its activities, even if the other activities lose money, as is notably so in the case of the principal subsidiaries apart from the airline subsidiaries, namely the television companies. Even the newspapers, which have over the years given such a great amount of free publicity to Mr. Ansett and his companies, have at last been disillusioned because they are all interested in television, and the latest competitors they have in this field are subsidiaries of A.T.I. These competitors have been able, to establish at great cost and operate at a loss under Government guarantee. The only television stations in Australia which are guaranteed against loss are those run by subsidiaries of Ansett Transport Industries Limited, which is guaranteed a net clear 10 per cent, profit every year.
The financial accounts of Australian National Airways Pty. Ltd., the airline subsidiary of A.T.I., are not presented to the Parliament. The financial accounts of A.T.I. , the holding company, the one which is guaranteed under legislation of this Parliament, are not presented to the Parliament but are available to the public. Only 60 per cent. of A.T.I, activities are airline activities, these being the activities of Australian National Airways Pty. Ltd. and of the intrastate and Territory airlines which have been acquired as other subsidiaries by A.T.I, since the 1961 Act.
The complaint is often made that air navigation charges are responsible for fare increases. The Commonwealth decides what airline companies will operate, where they will operate and on what terms they will operate. Let me be more specific. The matters which can be determined in respect of interstate airlines in Australia, and which are determined for the benefit of Australian National Airways Pty, Ltd., the A.T.I, subsidiary, by Government direction are such matters as the types of aircraft which may be purchased or imported, the dates when orders may be placed and purchases made, the timetables, frequencies and stopping places, the aircraft types and capacity used on specific routes, the levels of freight charges and fares on those routes, the passenger load factor and the freight load factor, the air routes flown, the quality or the amplitude of the service that can be provided, the ratio of first class seats to tourist seats or the permissibility of tourist class seats at all. All these matters are determined in such a way as to provide A.T.I, with a clear 10 per cent, profit. All these matters concerning its airlines subsidiaries are determined so as to provide this clear return taking into account any other activity that A.T.I, may undertake, the latest of which, and the losing one being television broadcasting.
Air navigation charges under this Bill this year will involve an increased cost to the airways of $700,000. The fare increases which were announced last month, after these air navigation increases were announced in the Budget, will yield about $3 million. Air navigation charges, as increased by this Bill, cannot account for more than one-quarter of the increases in fares which Ansett.A.N.A. and its associate companies have been permitted to make and which TransAustralia Airlines has been required to make.
It will be clear from the instances, methods and figures which I have given that air transport in Australia is controlled by the Commonwealth Government to an extraordinary degree. The two industries in which Mr. Ansett is principally engaged - airlines and television - cannot be carried on in this country without the positive permission of the Commonwealth Government. This is so because of the equipment imported by airlines, the Commonwealth facilities and properties used by them and the medium in which airlines and television stations must operate. In these circumstances it is diverting how often the slogan “ private enterptise “ is invoked by Mr. Ansett. The two operations in which he is principally engaged - airlines and television - are regulated by the Commonwealth Government more than the Commonwealth Government does, or in fact constitutionally could, regulate any other activity in Australia. Every year we have before us this legislation to reinforce the guarantee which the Menzies Government committed the Australian people to give to every activity in which Mr. Ansett chooses to engage.
One would hope that next year the incoming Government will give T.A.A. the right to compete equally for passengers and freight between all Australian capitals and will accede to the requests made by governments of both political complexions in South Australia and Western Australia that T.A.A. be permitted to operate services within the boundaries of those two States. One would hope that next year there will be a parity of competition between the chosen internal operators.
We all must be worried, however, by the fact that in Australia airlines are so disproportionately controlled, regulated and benefited by the Commonwealth. There is no such co-ordination in any other field of transport in Australia. Even the InterState Commission, for which the Constitution provides, is in abeyance. In the Constitution it is given specific transport coordination functions. Clearly it could, by statute, be given much greater functions in that field. The Commonwealth now provides more money than all State Governments and local authorities combined for the construction of roads. Insofar as our ports are ever to be modernised or coordinated and insofar as we are ever to have ports as well equipped and managed as the ports in the countries with which we trade, the Commonwealth must provide the funds and the co-ordination. insofar as we have co-ordinated our railways, stnadardised railway gauges and even purchased some new rolling stock, it has been done with Commonwealth funds. In the case of the Townsville-Mount Isa railway, Queensland had to repay the whole of the money it received; it was a 100 per cent, loan. But in the case of the other four mainland States, the Commonwealth has made outright grants of 70 per cent, of the cost of standardising gauges and reequipping railways. The States have had to repay only 30 per cent, of the money advanced by the Commonwealth. That has been the pattern for more than 40 years.
Our coastal shipping transport has been transformed because the Commonwealth now operates half of the ships engaged in this trade. Those ships were built in Australia; they are managed by Australians; and they are manned by Australians. The Australian National Line is a very successful enterprise indeed. It is equal in size to all other Australian coastal shipping lines combined, lt is more modern, more efficient and more profitable than any of those companies. Our hopes for participating in overseas trade or controlling our freight costs depend on similar Commonwealth Government enterprise, and marginally on the extension of the operations and fleet of the Broken Hill Pty. Co. Ltd. Whatever form of transport one contemplates, Commonwealth initiative is necessary if we are to have modern facilities and if there is to be any co-ordination of facilities between the States or with other nations.
The present Government has clearly avoided its responsibilities in these matters; or, when a strong case has been made out by various investigating bodies or commissions, it has postponed action. In airlines alone does the Commonwealth take a consistent interest. Our airports are modernised much more promptly than any other transport facilities. The equipment required is imported much more promptly. Every year the Australian public is asked to continue the subsidy to Ansett Transport Industries Ltd. for all its activities in order to guarantee the continuance of its airlines. About an extra 1 per cent, of the cost of providing air facilities is made available by each of these annual bills increasing the charges by 10 per cent. At this rate it will be the better part of a century before air navigation charges will meet the cost of providing air navigation facilities. In fact, every year, whilst the percentage of government, and therefore taxpayer, subsidy decreases by about 1 per cent., the overall amount that the public has to find increases. This year the subsidy will increase by more than $4 million.
We do not oppose this Bill, as far as.it goes. But we do point out the gross disproportion between the concern that the Commonwealth shows for internal civil aviation and its concern for all the other forms of transport, internal and external, for which its initiative is required. Once again we point out the extent to which the paladin of private enterprise, Mr. Ansett, depends on the bounty of the Australian people for every enterprise which he chooses to undertake or absorb.
.- I rise to support this Bill proposing the increase of air navigation charges. Whilst I share the concern of the Deputy Leader of the Opposition (Mr. Whitlam) about the finances of the Department of Civil Aviation, 1 do not necessarily support him in the premises ‘on which he bases his argument. First, let us consider his observation that the Department of Civil Aviation is the only department in which the present Government takes a personal or real interest. For a start, air transport is significantly different from the other forms of transport to which he referred - shipping and, in particular, railways. The Department of Civil Aviation, and airline traffic, had no State basis initially. This is a department that has come up over the last two or three decades. Air transport did not precede Federation. But clearly and distinctly in the railways field there are State authorities which have been established for over a century. Clearly the rights of the States are involved in this field. Even allowing for that, the Department of Shipping and Transport and the Minister for Shipping and Transport have shown initiative in promoting rail gauge standardisation.
This Government has again followed its general policy of giving a lead where necessary and not interfering unduly in the powers of the States or the rights of the individual. The same applies to the Commonwealth’s shipping line. The Deputy Leader of the Opposition said that the
Australian National Line had played a significant part in improving shipping services, particularly in the coastal trade. The record shows that this Government again is making moves to give the necessary lead in stimulating more activity by Australian ownership in this field. I know that Opposition members promote the idea of an overall transport system, particularly so far as railways are concerned, but, significantly, in this field it does not pay any great respect to the rights of the States - rights which the Opposition propagates and promotes in many other fields.
Setting that matter aside, let us consider Ansett Transport Industries Ltd., to which the Deputy Leader of the Opposition referred earlier. He made the accusation that the Government develops its policies to suit Ansett Transport Industries. In a long rigmarole he came up with the surprising appraisal that the television activities of Ansett are subsidised or guaranteed by the Government, per medium of the Air Navigation Act. How does the honorable member reconcile his argument about Ansett Transport Industries with the trading results achieved by Trans-Australia Airlines , and Qantas? He said that Qantas is a virile active unit. He also said, in passing, that in the overseas airlines field there was no subsidy but that the Government did subsidise in the domestic field. I would be interested to hear the argument of the Minister for Civil Aviation (Mr. Swartz) on this point.
I Have not gone into it in detail, but on the figures available to me I do not see where there is favoritism to the internal airlines system as opposed to the overseas system. Let us look at the income flowing to the Department of Civil Aviation from Qantas and T.A.A. The figures in the annual report of the Department for this year show that the income received from Qantas for the year ended June 1964 was at a rate of 51 per cent, dividend on capital. This amounted to SI, 906,000. In 1965 the return went up to $1,948,000, still at a rate of 5i per cent. But in the year ended June 1966 the rate went up to 6i per cent, and the income received by the Department was $2,301,000. The Australian National Airlines Commission paid 7 per cent, from Qantas operations in the first two years to which I referred but in the last year mentioned paid Ik per cent., which brought in income of $1,125,000. Here is a clear case that Qantas is contributing to the Department’s revenue and is operating as an efficient organisation. There is little difference between its present dividend and what the Airlines Commission - or Trans-Australia Airlines - is contributing in this field. How does the Deputy Leader of the Opposition put together his argument that Ansett operates with preference of access to routes? This is claimed by the Deputy Leader of the Opposition, but it has not necessarily been proved. He claims this preference has been given under a rationalisation system; but clearly, particularly since the mid 1950’s, this system has been beneficial to the overall development of civil aviation in Australia.
– What about the denial to T.A.A. of the routes between Darwin and Perth?
– We could deal with individual cases involving not only that area, but also Albury and other centres where T.A.A. has an advantage. The honorable member looks at the subject only in the light of apparent advantages to Ansett. Look at it in the terms of the honorable member’s claim that Ansett got beneficial access to airline routes and traffic. The honorable member also got on to the question of aircraft deliveries. The case put forward by the Department of Civil Aviation concerning the year of delivery of the DC9 aircraft - I expect that the honorable member was referring to this in particular, plus other suggestions made in the past - was clearly supported by the figures relating to traffic moves over the last six months. There is no doubt that in the two years previous to the past six months the traffic increases amounted to approximately 17 per per cent, for T.A.A. The increase percentage of traffic for 1963-64 over the previous year was 16 per cent., whilst the increase for 1964-65 was 17 per cent. These figures are based on a year ending 3 1 st December. For a special period of one year concluding at 30th June 1966 the increase was only 2.6 per cent.
A similar graphic change in the figures shows up in the case of Ansett-A.N.A., for which figures in those years were 19.4 per cent., 18.5 per cent, and, the increase in the 12 months to the end of June was only 3.3 per cent. These figures show that the decision of the Department to defer the delivery of the last two DC9’s was the right one in accordance with the policy pursued by the Department to rationalise and keep an even balance in the airlines system within Australia. The results coming forward from the companies themselves show that this policy has been right from the point of view of the overall development of civil aviation in Australia and in the maintenance of Qantas, in particular, as a viable, strong unit in the torrid world of international airline operations.
Putting aside the arguments of the Deputy Leader of the Opposition. I must say that the system of financing the Department concerns me somewhat. I am concerned also about what is proposed in the future development of this Department. I am not so concerned with what has happened in the past for the reasons that I put forward earlier. This is a pretty torrid field of activity and competition in civil aviation has demanded a strong hand and some good business organisation to maintain viable units in the field, whether they be in the domestic or the international field.
I believe the rationalisation policy of the Government has been on a sound basis. Even if we were to concede - and 1 do not do so - that Ansett Transport Industries Ltd. has received a measure of benefit, the fact is that competition has been kept in the field. If we compare our aviation record with that of many other countries which have gone for the one airline system, their figures show clearly that the standard of operation has laboured somewhat in comparison with the services wc enjoy in Australia. What labours particularly is operating cost, as the comparative figures show. There are not many countries in the world which have so profitable an airline system as we have on both a domestic and an international basis and there is no more graphic illustration of this than Qantas itself which up to three years ago was only one of three airlines in the world operating at a profit. The Minister for Civil Aviation might confirm my remarks in that regard.
I revert to the question of financing the Department of Civil Aviation in the future. While the Deputy Leader of the Opposition has given some figures indicating that there is an increase in the percentage return forthcoming each year, in fact I query the point he submitted because I can see only an ever widening gap in what is actually coming in in the way of returns, not only from air navigation fees but also from the income of the Department of Civil Aviation.
It may be worth noting that the income that does come into the Department comes in three particular categories. These are air navigation charges, dividends and revenue which is shown Under the heading of “ other income”. Underneath this comes revenue from air transport facilities, commercial operations and miscellaneous. Over the period of 1964, 1965 and 1966 there is no question that income from these sources has lifted quite significantly. The total in 1964 was $10,800,000. It slipped a little in 1965 to $9,946,000 but this had a particular significance as the income for 1964 included the sale of our interest in Tasman Empire Airways Limited. But from 1965 to 1966 the figure of $9,946,000 jumped 30 per cent, to $12,945,000. Again, the estimated income for this year,, including everything, is $15,053,000 or an increase pf 16.2 per cent.
But if we were to come down to the particular income associated with air navigation charges, the figures reveal that the increase in revenue this year will be $2,108,000. That is the increase in revenue to the Department of Civil Aviation. I do not want to confuse the House with figures but this is the central point I wish to emphasise: This increase is $2,108,000: The increase in expenditure as shown in the Estimates is $4,300,000. This expenditure is shown in Appropriation Bill (No. 1) and the figure jumped from last year’s actual expenditure of $38,656,949 to $42,948,000. That is the estimate for this year and it shows an increase of approximately $4,300,000. This is not a field where there is any capital expenditure. It covers purely administrative costs unless under Division No. 140 there are some items of expenditure which might rightly be termed capital expenditure. But it completely eliminates Appropriation Bill (No. 2) or the works field and deals only with actual overhead expenses of the Department of Civil Avia-tion.
So there is an ever increasing widening of the gap between what is coming into the Department in this particular field and what is going out of Consolidated Revenue in its expenditure. As I said earlier it is a problem or a policy which I believe the Government has to look at - and I interpolate here that it might already have done so - but at least it should give an indication of its policy in the field of the Department of Civil Aviation. I have emphasised the income that is coming in. I am not bypassing the fact that there is other income coming into the Treasury by way of duty on aviation fuel and other facets of revenue such as import duties, excise and sales tax. Here again, the Minister might be able to assist the House in giving some indication of the actual revenue the airlines system brings into Consolidated Revenue or into the Treasury as a whole.
It occurs to me that we have to make up our minds whether we are endeavouring actually to bridge this gap. We have to face the reality that even if overhead expenses are to be covered every year - and here again I agree with the Deputy Leader of the Opposition - it will be a long time at the present rate of increase in income before we will ever bridge this gap. If it is the intention of the Government to try to do that, 1 would be interested to know the facts.
If we consider overhead further, wehave to look at the works estimates and appropriations even just for this year. There is a tremendous increase in work expenditure. Again, 1 hasten to say that the expenditure on works is necessary and includes capital expenditure on airports which are needed in Australia. This is a big country of three million square miles. Frankly, I would be interested to hear from the Minister now or early in the new Parliament some outline of our broad policy in relation to financing the Department of Civil Aviation and airline activities within the country itself. The works estimates show an estimated rise of $15 million to $25 million, an increase of 60 per cent, on expenditure and 40 per cent, on estimates. Still dealing with capital expenditure, in the terms of Appropriation Bill (No. 2) it is an increase of 17.5 per cent, of expenditure this year at an estimate of $6,250,000. Again, if I am not confusing the House too much, I would point out that this brings the total expenditure this year to $74,562,000. From that we have to deduct the estimated income of the Department of $15,053,000 which means that broadly we are spending $60 million on the Department of Civil Aviation this year.
Adverting to the particular type of revenue we are proposing to increase through this Bill, it might be of interest to the House to have an appreciation of how this money is raised. First the weights of aircraft are divided into four distinct categories. These are up to 25,000 lb., up to 50,000 lb., up to 100,000 lb. and aircraft in excess of 100,000 lb. For each of these categories there is a specific charge which is being increased on this occasion. I was hoping to be able to give detailed figures, but the averages are about 6c for aircraft in the lower bracket and about 14c for aircraft in the higher bracket, the higher bracket being the one covering aircraft in excess of 100,000 lb. In the first category would be included such aircraft as the Fokker Friendships. The second would include planes of the sb.e of the Viscount. As the DC9 is about 100,000 lb., it would come in category 3 and the Boeing 727 would fall in the category of those in excess of 100,000 lb. I did make a calculation of the cost of lifting each of these types of planes by dividing the all up weight by the cents figure. That gave me the basic cost of lifting the plane off the ground, taking a zero point of approach. Perhaps hare I am using a technical term that would be more appropriately used in D.C.A. calculations.
In addition to the figure arrived at after multiplying the all up weight by the rate provided in the Bill, a special rate is applicable to each air route. I take it that this was calculated by the Department of Civil Aviation on the basis of the revenue expected from the route. I take as an example a Boeing 727 flying from Sydney to Melbourne. Its all up weight is 160,000 lb. and it would therefore fall into category 4, for which the rate is 14.09c for every 1,000 lb. or part thereof. This gives the first figure of $22.54 as the basic figure. When we multiply that by the factor applicable to the Sydney-Melbourne route for an aircraft in category 4, we find that it costs $90.76 to fly a Boeing 727 from Sydney to Melbourne. When we divide this by the number of passengers on the plane, we arrive at a cost of .25 cents per mile for each passenger flying from Sydney to Melbourne. This again, appears to me to be a very reasonable and economical approach. Although the increase provided of 10 per cent, each year may appear substantial when the total figure is taken, it is but modest in actual fact. I would like to have seen a greater percentage of increase. Although I am reluctant to advocate increases in taxation, I do think that the field of civil aviation is one in which there is a genuine need for an increase.
Other ways of increasing income could be suggested but I surmise that the Department is inhibited to some degree by the provisions of section 92 of the Commonwealth Constitution in relation to the restriction of interstate trade. Also wrapped up in this matter is the application of the Air Navigation Act. In all events, I think the surcharge levied on the passenger who uses the civil aviation system of Australia is modest in the extreme and that there is plenty of room for greater participation by the passenger in this field.
Earlier, the Deputy Leader of the Opposition submitted figures with relation to the amount by which we are subsidising each passenger lifted off any airport in Australia whether for travel within this country or overseas. I note from the figures that in the year 1965, the number of passengers embarked at airports in Australia was 4,516,807. On my calculations, the cost for each passenger would be $12.55. I hasten again to indicate to the House that this includes the capital factor or proposed expenditure, which amounts to approximately $61 million to the end of 1966. It docs not take in all the proposed expenditure for the year 1966-67. In order to be fair in this calculation, it is necessary to deduct a pro rata portion of the income. On my working, this is $2.86 which reveals a net subsidy of $9.69 for every paying passenger embarked on aircraft in Australia. There may be other means by which the Government can bridge the gap between expenditure and revenue. However, some indication of the Government’s policy of approach to matters relating to civil aviation is required before any thorough soundings can be made either by myself or any other member of the House in relation to what the income might be.
At all events, my thinking at this stage is clearly to support the Bill before the House, at the same time expressing to the
Minister the wish that he adopt the suggestion I have made to him this morning that, either at this point of time or perhaps early in the new year when he resumes his position as Minister for Civil Aviation in the newly elected Government, he eludicate the financial policy or financial aims with respect to the Department of Civil Aviation. At all events, it is my pleasure to support the Bill before the House.
– in reply - There is little heed for me to add comment to the debate because of the .very adequate way in which the matter was covered, by the honorable member for St. George (Mr. Bosman) who, as the House knows, is secretary of the Government members civil aviation committee and who is really quite an authority on aviation matters. I do appreciate the way in which he answered the points raised by the Deputy Leader of the Opposition (Mr. Whitlam). I do not feel that any further answer is necessary to the Deputy Leader of the Opposition because of the satisfactory way in which the honorable member for St. George dealt with the points that were raised.
As to the financial structure of the Department and the projections for the future, the policy has been broadly outlined in the annual report which I submitted to Parliament. But as the honorable member knows, we are at present undertaking a review of the two airline policy which continues to operate under the legislation until 1977. Because of changes in systems, requirements and so forth, we feel that perhaps some degree of flexibility is required. A review is being undertaken at the moment and early next year I hope to be in a position to submit some information regarding it. In addition, a committee has been set up to investigate other matters regarding timetables and we expect that early in the new year we shall also have a report from that particular committee.
At the same time, I am in the process of working out some projections regarding airport and other navigational aid requirements in Australia over a period from next year. As honorable members know, a survey has been undertaken which terminates next year, and the present projections will carry on beyond that date. That will include an assessment of the income situation as well as future airport requirements to meet the new developments which are taking place in aviation at the present time. I do thank the honorable member for his very penetrating contribution to the debate.
There were one or two points raised by the Deputy Leader of the Opposition to. which I want to refer very briefly. He spoke about the slowness of the return resulting from this 10 per cent, maximum increase, each year under the Air Navigation Charges Act. He is correct. Ten per cent, is the maximum laid down and it is a relatively slow return, but I think that in discussing it we must compare it with the situation in other countries. In fact, the return on charges which we assess and collect here is higher than in most other countries in the world. Indeed, we receive the reverse argument from many international operators operating in and out of Australia who complain that the charges in most other countries are lower. Although it does appear to be a slight increment in relation to the actual return, it is higher than that pertaining in most other countries today. The honorable member also referred to the high subsidy paid on aviation by the Commonwealth, but T think we must make a comparison with other industries. When we do so, we find that a very substantial subsidy is paid by all governments to other transport systems, in the form of roads, harbour facilities and other facilities for transport purposes. But it seems to me. as the honorable member for St. George (Mr. Bosman) mentioned, that we must also take into consideration the return from the industry itself in the form of General taxation, fuel tax and import duty in relation to which a substantial contribution is made by the industry over the years.
The final point that T want to touch on is the comparison of domestic fares with international fares. As stated by the Deputy Leader of the Opposition, there have been some variations over *he years. and reductions - announced recently for consideration - in certain ranges of international fares, compared with increases in domestic fares. This situation is quite an understandable one if we examine the overall economics of the situation. Quite obviously,
International aircraft over long distances operate far more economically than varying types of domestic aircraft on short hauls. That is one of the basic reasons for the varying economics. Unfortunately, I have not the actual figures with me at the moment, but if we make a comparison of similar types of aircraft on a mile/rate basis we will find there is not such a great deal of difference actually. The other point in relation to this is that Australian domestic fares are about the lowest in the world and compare very favorably with those in most competing countries. I thank the House for its support of this measure, which will assist in the returns which have been referred to so eloquently by the honorable member for St. George.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Swartz) read a third time.
Debate resumed from 22nd September (vide page . 1 1 74), on motion by Mr. Howson -
That the Bill be now read a second time.
– I should like to say one or two things about this measure which, of course, is part of the financial arrangements of the Government. The title of the Bill seems to be simple enough. It is “ To Authorise the Raising and Expending of a sum not exceeding $300 million for Defence Purposes “. It sounds precise enough in itself until one comes to relate it to the remarks made by the Minister assisting the Treasurer (Mr. Howson) when delivering his second reading speech on this measure. He said -
Authority is being sought to borrow an amount of up to$300 million. This does not mean that we expect that we will have to borrow right up to that limit. However, because the figure of$270 million . . .
Not $300 million -
It is about this round figuring that goes on in the Budget that I want to say a little. Sometimes it seems that members of the Government like to nail with precision any suggestion that comes from another side. All that this does indicate is how precise or how imprecise in aggregate the transactions of a government in the course of a year may be. I should just like to refer back to the previous Budget, because after all the current Budget is only a projection from August 1966 of what might happen to 30th June 1967. When the 1965-66 Budget was brought down more than 12 months ago, it was estimated that total taxation would yield $4,270 million. In fact, the yield from taxation was$4,420 million, which was $150 million more than the Budget anticipated. It was also projected in August1 965 that the net loan proceeds would be$1 50 million. They turned out to be $252 million, again an error of more than $100 million.
– Can the honorable member forecast what loan moneys will be raised?
– This is to be the theme of my speech, if the honorable member does not mind letting me develop it. All that I am suggesting is that these figures are cited as though they are precise, as though they are estimates. If I may use the term again, they are not estimates but guesstimates. They are the result of guessing and the guessing often is a long way out.
– Forecasts is much nicer.
– Forecasts? I am not worrying about the nicety of the particular word. What I am trying to suggest is that it certainly is not precision that we are talking about. It is imprecision - estimates, if you like; forecasts, if you like; guesses, if you like. It is certainly not precision. I am simply citing three fields at least in the Budget in which forecasting is done. The Budget as a document is supposed to be a dovetailing of the various conjunctions. In essence, it is anything but that. At least on 30th June 1966 the Government did wash up the dishes, as it were, in relation to the financial transactions of the previous 12 months. The outcome finally- I repeat it because the point does not seem to have been quite observed where I want it to be observed - is that the estimate of tax collections was Si 50 million out. There was a greater yield from taxation than had been thought. There was a higher yield from loan proceeds than has been thought - more than $100 million.
The third element - again, this is one about which honorable gentlemen sometimes go to town, and which they do not like to use at all - is what is called credit expansion or credit contraction, that is, movement up or down in access to Reserve Bank finance. The 1965-66 Budget estimated that there would have been a withdrawal or a credit contraction of $40 million. In the final analysis it was only $1 million. In other words, the Budget in terms of capital and income transactions, apart from credit expansion or contraction, almost balanced. I am glad that the Minister assisting the Treasurer has come into the chamber. I have indicated that this year at least the Minister has been frank enough to suggest that this is only an estimate. We are being asked to sanction loan raisings up to $300 million when at this stage, all that we seem to want is $270 million. To be on the safe side the Minister suggests that it ought to be $300 million.
Another point is that this borrowing has been tied to what are called defence purposes. I do not think anybody seriously argues in relation to government transactions totalling about $6,000 million - that is the approximate total for the current financial year of taxes, loans and credit expansion - any defence contractor very much cares whether the dollar that he receives has come from taxes, from loans or from credit expansion. What is being done represents another convenient fiction. The main reason why the Commonwealth ties its loan raising to defence purposes is to be found in the Financial Agreement entered into between the Commonwealth and the States in 1927. In Part I, under the heading “ Australian Loan Council “, subclause (9.) of clause 3, reads -
If the Lean Council decides that the total amount of the loan programme for the year cannot be borrowed at reasonable rates and conditions it shall decide the amount to be borrowed during the year, and may by unanimous decision allocate such amount between the Commonwealth and the States.
There is one important exception to that provision. It is to be found in sub-clause (8.), the relevant part of which reads -
Any revenue deficit to be funded shall be included in such loan programme, and the amount of such deficit shall be set out.
These are the significant words -
Loans for Defence purposes approved by the Parliament of the Commonweallh shall not be included in the Commonwealth’s loan programme or be otherwise subject to this Agreement.
In other words, though the Commonwealth, in essence, can use the power of the purse as it were to limit what the States can get, no such limit applies to the Commonwealth provided that it ties its loan raisings to what are called defence purposes. As I have said, I merely note this as being another convenient fiction. I hope that when we discuss the National Debt Sinking Fund legislation next week, more honorable members will be present than are in the chamber now and that we shall then look further into the ramifications of this subject. The loan provided for in the measure that we are now discussing is treated as a loan for defence purposes merely to bring it within the ambit of the Financial Agreement so that it will not be subject to any limitation.
– Does the honorable member object to that principle?
– I do not object to the principle. All I am suggesting is that this, like a lot of other things, ought to be recognised for what it is. I am one who thinks that if a thing is done in a certain way with a particular object in mind, that object ought to be explained. This Government conveniently pays subsidies sometimes. I do not object to the principle of the payment of subsidy, provided that what is being done is fully recognised.
What 1 am trying to do here is to outline exactly what we are doing. We should know exactly what we are doing now and we should occasionally look at what we make the States do. I have here an interesting document entitled “ Australian National Accounts, National Income and Expenditure, 1948-49 to 1964-65”, published by the Commonwealth Bureau of Census and Statistics, which is part of the Department of the Treasury. This publication sets out for the period from 1948-49 to 1964-65 inclusive the financial transactions of the States and local government authorities. I wish to direct attention to the item “Interest paid”. In 1948-49.. State and local government authorities paid interest amounting to $86 million. The figure rose to $469 million in 1964-65, increasing about fivefold. I look now at what perhaps may be described as the obverse side of the coin. In 1948-49, the Commonwealth Government paid interest totalling $95 million - $9 million more than was paid by the States. In 1964-65, the interest component in the Commonwealth’s payments fell to $41 million.
– The honorable member must not forget that at the same time as he looks at these figures he should look also at the National Debt Sinking Fund payments.
– That is the same thing. I am trying to link the story together, as it were. The fact that I emphasise is that the interest component of the payments made by the States and local government authorities rose from $86 million in 1948-49 to $469 million in 1964-65. I am prepared to concede, if the Minister for Air likes, that in respect of what may be described as the internal bookkeeping that takes place between the Commonwealth and the States through the medium of the National Debt Sinking Fund, it could be argued that if the States had an interest component of a different magnitude, the component represented by the reimbursements made by the Commonwealth to the States would probably be different. At least, these matters are arguable.
I believe that what the Government tends to overlook in all this is the financial dominance of the Commonwealth. I do not deny that in reality it is probably a good thing that the Commonwealth does exercise some degree of financial dominance. But if it has financial dominance, it must also display some administrative tolerance towards the problems of the States. I suggest that this kind of administrative tolerance is at present severely lacking in the working out of relations between the Commonwealth and the States. The borrowing of $300 million for which this Bill provides represents part of the overall Budget transactions of the Commonwealth. Whatever stimulus the recent Budget is supposed to provide apparently depends on this loan component. The Commonwealth Government is expected to expend on all accounts in the current financial year $533 million more than it will raise. At this stage, it is estimated that that sum will be made up in a certain way. Net loan proceeds, representing the difference between borrowings from the public and redemptions, are expected to be $150 million. Here, I point out that the Government’s estimates at the same stage last financial year were about $100 million wrong. A similar figure of $150 million was projected, but the net loan proceeds in fact were $252 million. But at this stage the Commonwealth is anticipating net loan proceeds of $150 million and resort to Treasury bills in the sum of $270 million. It is relying also on $114 million available on defence account in the United States.
The significant part of the Budget as I see it - I think the Treasurer (Mr. McMahon) made this point - is that this Treasury bill component is said to be an expansionary one. The Treasurer said that he was looking at it in terms of the financial picture of the Commonwealth. But no sooner is the Commonwealth Budget brought down on this basis than there is a series of budgets brought down by the States. Each of those State budgets operates so as to move in the reverse direction to that in which the Commonwealth claims it is moving, because the States, not having access to loan money or to Reserve Bank credit, as has the Commonwealth, and not having the same flexibility of tax returns as has the Commonwealth, are perforce turning to raising the prices of gas, electricity and public transport. The more the people pay for their gas, their electricity and their public transport - remember that their incomes are already limited - the less is left to spend on other things. As I see it, while the Commonwealth Budget is inflationary or expansionary, the budgets of the States are regressive because the taxes fall on those in the community least able to bear them. The State budgets are deflationary in their impact.
This epitomises what I have tried to suggest, namely, that although the Commonwealth has the financial dominance, it certainly has not displayed administrative tolerance or much political wisdom. I think the Australian economy is in need of a stimulus. As I said in the Budget debate, nobody can claim at this stage that we have an economy happily surging forward to the best Christmas we have ever had. 1 have not found any business man who maintains that view. I was very disturbed to find that, in terms of total employment in Australia, in July 1966 there were 4,®00 fewer people employed than in June 1966. All of the decrease in employment in Australia took place among male employees in private industry. Surely in our community the male breadwinner - the basis of the family - is the most significant economic spending unit. Any improvement that occurred in the employment situation in this period occurred solely in the field of public employment. Between July 1965 and July 1966 employment figures rose by about 95,000, but more than 40,000 of that increase occurred in public employment, despite the fact that public employment amounts to only 25 per cent, of private employment. One might say, as I have said before: In this so-called private enterprise economy, thank God for public expansion.
– Does the honorable member feel that the Government should have planned for a bigger deficit?
– All I say is that the Government planned for a deficit of a certain order, but its plans will be upset to some extent by the transactions of the States.
– Only marginally.
– But when it suits the Government it turns the margin into something which it calls a multiplier. Quite a number of documents circulated from the Treasury purport to show that £1 put here will have the effect of injecting £2 or £3 of expansion. I would think that sometimes the reverse applies.
– These are transfer payments.
– I would not suggest that it is a transfer payment from a gas bill to the Government. I doubt whether it is a transfer payment.
– It does not affect the general basis of credit.
– Well, it affects the basis of total expenditure, which surely is the significant thing. When we get down to essentials, what makes the economy tick over faster is adequate purchasing power in the hands of the majority of the community. All I suggest is that the policies being pursued by the States are reducing the amount of purchasing power in the hands of the community. What ever may go into the coffers of the States to be used for capital expansion - that seems to be the rather obscure logic behind the Victorian proposals - the two things do not match in time or in application so far as the indivi-dual is concerned. My view, rightly or wrongly, is that the State policies are deflationary whereas the Commonwealth’s policy is expansionary or inflationary. The Government does not claim that the State, policies are deflationary; it says that they are only marginally deflationary. I would be interested to hear what is the extent of this marginal deflation, because in my view the State policies are more significantly deflationary than this Government is prepared to admit. However, let us get back to the real matter before us, namely, the resort to loan money- .
– Would the honorable member say that because the States are budgeting for deficits their policies are inflationary rather than deflationary?
– Let us see how the States have to meet these deficits. The States have, to bear not only their own interest component but also their own sinking fund component. Whereas the net charge for deficits is without cost to the Commonwealth, which has resort to the Reserve Bank, the cost to the States is about 9 per cent. In addition, the extent of a State deficit this year will reduce the State’s loan allocation next year.
– But the fact is that the State budgets this year are inflationary, not deflationary.
– Well, inflationary or deflationary, according to the point of time at which you look at them. In the aggregate, the transactions of the States over a period of 12 months will not be expansionary because the States do not have the same access to funding their deficits as has the Commonwealth. If you look at how a State deficit is financed, you will find that anything but the same process applies to the Commonwealth. A State budget may appear to be expansionary at a particular time, but a budget is an annual transaction. The deficit will apply for 12 months, not at a particular point of time. What I am arguing about is the total circulation in the economy at this time. As I see it, the Commonwealth’s purport is to be expansionary. The effect of the State budgets will be in the opposite direction.
It may be that occasionally expansionary Commonwealth policies and deflationary State policies must run together, but I do not accept the soothing comment of the Minister for Air (Mr. Howson) that the State budgets are only marginally deflationary. The Commonwealth has anticipated only a marginal effect from many of the things it has done, but the effect has been heavier in many cases than it allowed for. As long ago as March this year, when we were discussing an economic statement, I said that employment levels were unsatisfactory. An honorable member opposite took me to task because I said that employment was stagnant. He asked me what I meant. I would have thought the meaning was clear from the figures. Apparently employment is stagnant to some people only when the figures actually fall. In Australia, if 2 per cent, more people are on the labour market every year, we should have a constant rise of employment. It is no good saying that employment has not really dropped or has dropped marginally. I would say that it is not picking up significantly. That surely is the problem we face.
We have had again the rather soothing suggestion from the Treasurer that the Government is constantly watching the situation. 1 know that a situation can be constantly watched, but what, in terms of Government activity, can be done? I would suggest, with all respect, that the ability with which the Government can apply remedies to an unsatisfactory situation is often much too slow a process to cure thi disease. 1 would like to hear the Treasurer at some later stage explain the constant watches that he is keeping on the economy. If the Government thinks it is collecting too many taxes, how can it suddenly reduce taxes? lt can reduce some, of course, but reduction of others would not have any impact for six, eight or even 12 months ahead. What kinds of remedies can be applied? I would suggest that one of the few fairly rapid remedies that can be applied is the device of credit extension in certain circumstances. One place where this could be applied most quickly is by tolerantly using some of the financial dominance towards the States.
I thought one of the most absurd public decisions I had ever seen in the Press was one recently that announced that the Royal Melbourne Institute of Technology, which ought to be built as quickly as possible, will take two or three years longer to build because the State has not sufficient moneys to devote to it. I do not suggest necessarily that the Institute is the No. 1 project in Victorian education. It is for the Victorian education authorities to determine its priority. But surely in a country like Australia, which is calling out for the training of skilled personnel, it is absurd to say that, because of the need of $1 million or $2 million, projects such as this will take a further two or three years to build. This shows the height of absurdity we have reached in the financial relations between the Commonwealth and the States. Again, we are told that the great natural g.is resources of Victoria, which should be developed as quickly as possible, must wait until 1969 because the Commonwealth will not come in and underwrite the financial transactions.
The States do not have the financial mobility necessary to raise sums of money, but the Commonwealth has. In the rather lethargic frame in which the economy is shown by statistics to be moving at the moment, if it had not been for expansion in the public domain by increased public expenditure - confidence seems to be lacking in the private sector - the economy would have been much worse than it is. I am quite pleased to be able to point to the fact that public expenditure and not private enterprise seems to be the dynamo in our rate of activity. To those honorable members who like to look at these matters in greater depth I commend the reading of a recent Pelican book that is available in all the book shops, lt is written by a Swiss Professor Oulés, who comes from Lausanne and belongs to the Lausanne School of Economics. He speaks about democracy and economic planning and suggests that the economies that have the best growth performance in the world are either those that deliberately plan, such as the Soviet Union, or those that plan by stealth, such as Western Germany and his own country to some extent. France is more openly a planning country. The countries that have the worst performance in economic planning, in terms of growth and in terms of the device we call stop and go, are countries such as the United States and the United Kingdom. He was speaking of the time prior to the Wilson Government taking office.
– It has not changed since.
– Of course it has not changed. Mr. Wilson inherited the bungles, just as we will inherit the bungles here in a few weeks time. I am . only trying to forewarn the people that the mess the Government is in takes a certain amount of time to clear away; but we will never clear it away if we do nothing about it. One of the quickest ways for the Government to get itself out of the economic slump is to engage in more public expenditure, and surely this should not be done without some planning. I do not think that the Government can really assert that a sophisticated economy can be run without some degree of planning, any more than my friend from Angas (Mr. Giles) can run his farm without some degree of planning. He would not last for very long if he did not think in 1966 of 1968. If he thought only of next month he would not get very far.
The Government has the keys at its disposal. But the problems in Australia are more difficult to solve. We have a Federal system here whereas in most of the European countries the one level of government can decide upon expansion. Here we are bogged down in constitutional argument. The States still have significant constitutional powers and, as I see it, are very reluctant to forgo any of them. It may be that many of their powers cannot function satisfactorily because of the financial block. But the Commonwealth, as custodian of the national finances, is to my mind the one that is reprehensible, because it has failed to be sympathetic to the real needs of the States. It could help. For instance, the Government takes great pride to itself for having increased annual defence expenditure until it has reached §1,000 million. The Bill we are debating now relates to defence expenditure, or purports to do so. The Government has no problem whatever in finding an extra $200 million But suppose the States in aggregate want to embark on some project that means, between the several of them, the expenditure of an additional $200 million. Are they able to do it? Of course they are not.
The other point that I think ought to be made about defence expenditure is that it is in these round numbers. The Government uses the term “round number” rather deliberately, and I think the defence expenditure is a round number. How is this evaluated, other than in the sense that it may be thought the expenditure of $10 instead of §9 will give better value? But how does the Government evaluate that defence expenditure of $700 million is better than $800 million? In this item, the Government is paying something like $100 million more at the end of the year for the same goods than it thought it would have to pay. It is not getting any more physical defence. It is paying another $100 million for the FI 1 1 aircraft, or whatever the piece of hardware is. Surely we in Australia are no safer because the Fill will cost $200 million instead of $100 million. The people from New South Wales make a great play about an institution called the Sydney Opera House. The point is made that its present cost is $23 million whereas previously it was supposed to be only S7 million. But the Government is spending an additional four opera houses on these same bombers and only a period of 1 2 months has elapsed. Which is the more slap happy financial arrangement? At least the Opera House has dawdled out over a period of time and the Government’s expenditure has taken only 12 months to rise by $100 million. Yet we are to be persuaded, apparently, that because the Government is spending so much more our defence is so much better and the state of our economy is so much better.
I suggest that the Government have a closer look at this. It is not the round number that is significant. In my view the factors that are significant in any economy are how best to utilise in the national interest the manpower, the physical resources and the technical skills at the nation’s disposal. If anybody makes that sort of evaluation of the Australian economy in 1966 he cannot be very satisfied about its performance. Our greatest shortage is skilled manpower. One of the difficulties is that even though we have a lack of business confidence we have still a certain amount of skilled manpower being wastefully employed. I do not believe we can go from one sort of economy to another or from one pattern to another, but surely we have to get out of the situation in Australia where if the motor car industry sneezes the economy gets pneumonia. 1 think that is rather the situation we have. Surely tha! cannot be called either sensible or balanced development. We have to plan 5 years to 10 years ahead in respect of likely patterns, if only to survive, because not only defence enables a country to survive but the fact that it has built up proper, friendly relations with those who otherwise might be its aggressors.
I believe trade and aid are the most sensible forms of defence, and 1 am not with Adam Smith who contends that defence is better than opulence. I believe a certain amount of opulence properly spread will in the end alleviate the problems of the poorer countries. We must use our technical resources sensibly, and we must assist those not as well placed as ourselves. The government with the financial dominance and with the ability to do this in Australia is the Commonwealth Government, but it has to develop what I have described as administrative tolerance. Otherwise we will have creeping into our system a paralysis of activity at the points where the activity ought to be taking place, namely in the fields, primarily of education and the development of natural resources - power, fuel and the like - where all the constitutional responsibility still is with the States but where the financial autonomy lies with the Commonwealth. It is in these fields that there must be more tolerance and understanding in order that this can become a great Commonwealth. It can be a Commonwealth only if this is done cooperatively.
Question resolved in the affirmative.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Howson) read a third time.
Sitting suspended from 12.40 to 2.15 p.m.
Debate resumed from 15th September (vide page 927), on motion by Mr. Howson -
That the Bill be now read a second time.
– There being no objection, I will allow that course to be followed.
.- I would think that if this legislation had been introduced last year instead of this year, we would have had only one of these rates bills at the moment. As honorable members are aware, the rates of income tax are incorporated in legislation referred to as “ money bills “. They belong to that class of bill that can originate only in the House of Representatives and which, when it has gone to another place, may only be rejected entirely as distinct from being amended by that place. When legislation of this nature was last introduced, the Government had included the rates as they apply to individuals and companies, and to certain superannuation funds, in the one measure. Because some honorable senators objected to part of the legislation, and some other honorable senators objected to another part of it, the Bill was in essence rejected. That caused some perturbation to the Government at the time because, after all, the income tax rates are used to collect more than half of the total revenue of the Government.
This Budget, for instance, provides that the yield from income tax on individuals in the pay as you earn group, by weekly deductions, will be $1,324,000,000. A further $570 million, making a total of almost $1,900 million will be collected from the group known as “other individuals”; that is, businesses and the like. In addition, a further $787 million will be collected from taxes on companies. In aggregate, income tax as it operates on individuals and companies, is estimated to yield about $2,700 million. One might say that is a not inconsiderable tax.
Because the Senate acted as it did, the Government took certain advice. I am one who will continue to assert in this place the pre-eminent right of the House of Representatives as to money bills. I think.it cannot be otherwise, but I would equally defend the rights of the Senate, as the Opposition did last week when debating a repatriation measure. In my view, that was a measure which should have been looked after by the Senate. However, the Government has on this occasion chosen to separate the legislation into two rating parts, one part applying to superannuation funds as distinct from the rates applying to individuals and companies. I do not want to say a great deal about the system of rating for individual assessments, but what is tax cannot be considered without considering to some extent what is not tax; that is, the items that are allowed as deductions before an assessment of tax is made.
As honorable members are aware, taxpayers include in their returns their actual incomes. They are entitled to make certain deductions according to the law. The residue is what is described as “taxable income “. The taxation statistics . for 1964-65, which were tabled in this House the day before yesterday, show that throughout the Commonwealth as a. whole there are about Ai . million individual income taxpayers. So that as well as being significant in aggregate, this tax is significant in impact, because there are only about 4,800,000 breadwinners in Australia. That expression is meant to cover people in receipt of incomes out of which they support themselves and, in many instances, families. Nearly 4,500,000 of that number were taxable for the assessment year 1964-65, or the income year 1963-64 which covers incomes derived for the period ended 30th June 1964. That number of almost 44 million taxpayers had taxable incomes that in round figures totalled $11,300 million. Deducted from that amount - the figures are contained on pages 29 and 30 of the report of the Commissioner of Taxation - was about $2,000 million because of allowable deductions of one kind or another claimed by individual taxpayers; for instance, for wives, children, medical expenses and so on. The report of the Commissioner is very interesting. It contains a great deal of information and I congratulate the people who are responsible for its compilation. The information it contains is assembled in a very good form. I repeat that the original incomes shown on returns totalled about $11,300 million, but by the time various deductions had been allowed, that amount was reduced to slightly over S9,000 million.
In essence, there does not seem ever to have been a great deal of logic as to what is included in the term “ deductions “, or as to the amounts that are allowed as deductions. I have said here before that 1 find it rather intriguing that a taxpayer is allowed what is called a “ deduction “ of $286 a year for his wife, which works out at approximately $5£ a week. I do not know, Sir, whether you are able to sustain your spouse, as she is called in the taxation law, on $5£ per week or, to be more precise, 5i times the rate of tax in the dollar that you pay. But it must be pointed out that these items have remained static for quite a number of years. The allowance for a spouse has stood since 1957-58 at S286 or,’ as it was formerly, £143.
The other, anomaly that exists, apart from the illogicality of the amount, is the inequity that the deduction means more in terms of tax abatement to the person on a higher income than to the person on a lower income. I suppose this kind of defect is implicit in this kind of allowance. Most people in this place would have an income of about $8,000 per annum. Let us look al our position as against that of other people whose income would be about $3,000 per annum. In the case of a person who is on the higher income the amount that is allowed for a wife means a greater real tax abatement than in the case of a person on the lower income. Various suggestions have been made as to what should be done about this kind of thing, but I do not intend to go into them in great detail today.
However, I do think that, whichever Government is in office in the next few years, it should seriously consider revising the whole of our taxation structure. The rate structure that we are contemplating now has remained virtually unchanged for about 12 years, lt is true that there have been some slight escalations and some slight reductions. In this year and last year there has been an upward movement of 2i per cent., and I think that on one or two other occasions there was a rebate of 5 per cent, of the amount assessed. As I said a moment ago, essentially the rate structure has remained the same for the last 12 years, despite the fact that in that period the value of money has changed. The value of money has not declined by as much as one half, but certainly S3 are now required to purchase goods and service that could have been obtained in the past for $2.
I believe in the adoption of a progressive rate structure for income tax purposes. I have always believed that the scale of progression that is in existence at any one time should bear some relation to the circumstances of that time. If it was equitable to have a certain scale of progression in 1954 with money values as they then were, it certainly would not be equitable to use the same structure in 1966. That is the picture in essence.
Another thing which happens - it distorts one’s ability to make any real assessment of the situation - is that the various deductions that are allowed are taken off the top echelons of income and not off the bottom. My colleague, the Deputy Leader of the Opposition (Mr. Whitlam) asked the Treasurer (Mr. McMahon) recently what loss in revenue was sustained because of the various deductions that were allowed. The position is that, if deductions were not allowed for medical expenses, dependent children and wives, the actual income and the taxable income would coincide. As I have already pointed out. a sum of S2.000 million was whittled off actual income in the income year 1963-64 to provide the amount of taxable income. The answer that was furnished to my colleague - it is to be found in the “ Hansard “ report of 30th August last - reveals that the loss in revenue for the income year 1963-64 was of the order of $557 million. In other words, if we had not allowed any deductions - I do not suggest that we ought not to allow deductions - the Government would have collected an additional sum of $557 million by way of taxation. 1 suppose that was equal to about 50 per cent, of the total amount collected. I think the yield from income tax in the year in question was about $1,300 million. This raises a question about the equity of this method of doing things. As I have indicated, if one’s income was high, one would get a larger part of that sum of $557 million than would a person on a lower income. This seems to me to run counter to the theory on which progressive taxation is based.
This Government has chosen not to alter child endowment rates for several years. In essence, many taxpayers in the higher income bracket are advantaged to a greater degree by concessions for children than are people on lower incomes. At the present time the tax concession for a first child is, I think, SI 82 and for other children $130. If you multiply $182 by the marginal tax rate that applies in many cases, you get a far higher sum than is represented by the 50 cents per week endowment that is allowed for the first child, $1 for the second child and $1.50 for the third child. Again it seems to me that the principles involved are running in opposite directions. The payment of child endowment is a recognition that people with families have a higher economic obligation than people who have not families. Surely that is the principle which underlies the payment of child endowment. What is the principle that underlies tax deductions for children? Is it suggested that because a person lives in Toorak as against Port Melbourne and because his income happens to be three times as much as that of the other person, the Commonwealth, by making provision for a tax rebate, should pay him an additional bonus? That person is socially advantaged by a higher income in the first instance, and in the second instance he is given an additional bonus by way of a higher tax concession. These things seem to be highly illogical. Surely the time has come when these matters should be looked at.
There is a lot of talk in the community at the present time about abolition of the means test. Some people can work up quite a. deal of enthusiasm about it. I suggest that the greatest economic barrier to the removal of the means test is the existing tax structure. Because of the effects of inflation on the one hand and failure to alter the rate of progression on the other hand, the lower and middle income groups in Australia - those groups contain the greatest number of formalities - are disadvantaged. Let us suggest, as a hypothetical exercise, that we abolish the means test at a cost of from $350 million to $500 million a year, depending upon the level at which we want to make the pension payable. One of the greatest barriers to its abolition is the fact that it is already costing the community $557 million for a hotch potch - that is the only term that can be applied - of concessions that have grown up haphazardly, illogically and unjustly over the last 15 yeaTS or so. That injustice and illogicality means that the yield of individual income tax is cut down by some 50 per cent.
When people talk about doing justice in one direction they should be careful that what appears to be justice to one section is not justice purchased at the price of injustice to other sections. That surely is the kind of thing in our tax structure that we should look at occasionally. A variety of things could be done. We could cut out certain deductions altogether. I will not go into that aspect again today but I have done this exercise before. If we exclude from that $2,000 million the amounts that are allotted for spouses and children - an approximate calculation is made, to some extent, in the answer given to the Deputy Leader of the Opposition - we find that of the $557 million lost, $94 million was attributable to the allowance for wives, $60 million to the allowance for first children, $50 million to the allowance for other children and $6 million to the allowance for student children. Those amounts represent a total loss to taxation of $210 million, directly attributable to family concessional allowances. Of the remainder of some $350 million, education concessions - deductions for fees, fares, books and uniforms - cost the revenue $48 million and medical expenses for individual taxpayers accounted for a further $68 million. Even taking that additional $116 million into account, there is still almost $250 million left for items which, if analysed, are found to represent deductions of the greatest advantage to those with the higher incomes.
Let me refer to the rebate for medical expenses. I hope some day the community will reach the stage where it has an adequate public health scheme and will not need to allow medical expenses as a taxation concession. Why should the taxpayer on $10,000 a year get a greater bonus in the form of tax deductions for medical expenses than the person whose income is $2,000 or $3,000, simply because the tax rate in the higher income bracket is greater than the tax rate in the lower income bracket?
The maximum tax rate is 66 per cent. This means that for taxpayers in this income bracket every $.1 of medical expense which is not covered by medical insurance and so allowed as a taxation deduction is subsidised to the extent of 66c by the Government. Yet the Government claims that it cannot afford to extend the rate of medical benefits. It imposes a 50c charge on national health service prescriptions, and this too reacts adversely on people in the lower income bracket.
These are the kinds of illogicalities and injustices that are inherent in the existing tax system and it is this historical, haphazard, hotch potch taxation structure which prevents the Government from doing on a community scale what it should do. The problems should be looked at systematically. Perhaps it is difficult to avoid allowing a concession for a wife because after all, as I have suggested, anyone who has a wife soon finds that the story that two can live as cheaply as one really is a myth. Undoubtedly expenditure is increased. But if there were an adequate system of child endowment there would not be any need for taxation deductions for children, particularly as the equity of the two schemes runs in opposite directions. If there is an effective system of medical and hospital insurance to which people contribute, why should the part of the expense that is not covered by insurance be allowed as a taxation concession, thus giving the greatest advantage to the persons on the higher incomes? AH these concessions mean a loss to revenue of more than $350 million a year - a sum approximately equal to the cost of abolishing the means test.
I am not arguing that we should take one charge off and put another on but I think those who advance propositions should look at the other side of the argument. If it is social justice to do this one thing, might it not also be social justice to alter something else?
– Does the honorable member not agree that the basic philosophy of allowing concessions is quite sound?
– Not if the concessions are weighted according to the rate of tax paid. I think that is an inequitable philosophy.
– What about the impingement on family life?
– 1 would suggest that the impingement of taxation on family life is only one aspect of the matter. 1 hope that some day we will reach the happy stage when basic exemptions will be so high that unless the salary is beyond a certain ceiling no income tax will be paid. Because the basic deductions have not been increased consonant with the fall in the value of money, and because the progression scale has been lifted with inflation, the effect is that the lower and middle income groups are most harshly serviced. The top income earners are able to look after themselves by stripping from their income deductions which, because of their economic circumstances, are not available to the rest of the community.
One such deduction which highlights this argument is the allowance of $800 per annum - $16 a week - for life insurance. What section of the Australian community is able to advantage itself to anywhere near the full extent of that concession? If a substantial body of the Australian community cannot advantage itself to the full extent why does the Commonwealth reimburse a privileged group to the extent of two-thirds of the expenditure involved? The taxpayer receives the deduction in the first place of $800 per annum - $16 a week. All honorable members are in this fortunate position because of their compulsory superannuation contributory scheme. I have worked this out in relation to my own tax and I have found that I am being subsidised by something like 50 per cent, of that payment. I, for one, do not regard that as equitable. It is available only to a very small section of the community, in the first place, and being only available in a narrow sphere it becomes even more valuable because of the tax concession which goes with it. That is not my basic philosophy of adequate tax deduction, whatever the Government’s may be. I doubt whether it is the basic philosophy of the Australian community either.
To my mind, the most disturbing thing is the infrequency with which we consider this aspect. Every time income tax legislation is presented and certain concessions are allowed - we will be considering some such legislation shortly - there is always someone who rises to ask: “ Why do you not allow this? Why do you not extend that?” All 1 am suggesting is that concessions are allowed at a price. The advantages of concessions are certainly not equitable in the way that they fall. As we scrape the barrel to find new concessions, we find that they are available only to certain favoured sections of the community. That is the position as I see it. If honorable members look at the table which appears at page 579 of “ Hansard “, draw a line at the $5,000 to $5,999 group, add up the number of taxpayers in the various income groups below that line and also the maximum amounts of the advantage, they will find that the concessions are what economists call regressive in their nature. The greatest advantage goes to those on the highest incomes. To my mind, that runs counter to the principle on which progressive taxation is levied.
All I am saying is that because these deductions have been increasingly extended, and because inflation has made rubbish of the scale of progression, the middle income groups - even those up to the $3,000 and $4,000 mark - have suffered, and certain other sections which do not deserve to do so have benefited. There have been all sorts of contrivances to turn what is in fact one income into a partnership income, and so on. Every time there is an attempt to close the door against these contrivances, honorable members opposite suggest that to do so would somehow be prejudicing private enterprise or business acumen. Every lawyer is entitled, if he wants to do so, to find ways to drive a coach and horses through the letter of the law, but any government is entitled to try to prevent that. I am all for the side which will block anti-social practices so far as the taxation law is concerned. 1 believe that for a long time to come the income tax levied on individuals and companies will be the main buttress of the taxation structure in Australia. I cannot see that in the foreseeable future we will become involved in fandangles such as expenditure tax. gross turnover tax and network tax. We may do so as an ancillary matter, but, by and large, we shall have to live for a long time with the progressive income tax on individuals and companies. All I am suggesting is . that we should examine the fundamentals, two of which are the rate at which tax is imposed and the residue of income upon which it is imposed. Over the last 15 years the tax structure in Australia has become regressive and it is time the matter was looked at.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Howson) read a third time.
Consideration resumed from 15th September (vide page 928), on motion by Mr. Howson - .
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second lime.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Howson) read a third time.
Debate resumed from 15th September (vide page 929), on motion by Mr. Howson -
That the Bill be now read a second time.
– Is it the wish of the House to debate the subject matter of the two measures together, as suggested by the Minister? There being no objection, this course will be followed.
.- I give solace to my few colleagues on the other side of the chamber by saying that I do not intend to speak for very long on this measure. I am sorry,’ but I cannot do so. I believe that the matters concerned are important enough, but there are certain physical limitations. There is the. effect on me of using my voice for long periods, and there is the effect of my voice on honorable members. I shall content myself by saying that the majority of the provisions in the Bills are technical. I refer to the averaging scheme as an example. I am sure that some of the gentlemen from the Australian Country Party will welcome the widening of this provision.
– Not only the Country Party.
– I am .not objecting to it. I recognise that there are certain sections, in the community whose incomes do fluctuate considerably and that it is inequitable in their cases to tax a high income ali. in one year and a low income all in -another year. The averaging provision is a wise one. Broadly, one of the main amendments proposed by the Bill extends that provision. Some of the other proposals deal with the sale of livestock and of farm properties, the erection of fences to combat soil erosion and variations in losses which are allowed from previous years. There is an amendment consequent upon the recent change to the bankruptcy law. We on this side of the chamber offer no objection to those provisions. When debating a later measure 1 shall speak on one provision which I think should be dealt with separately. I refer to the payroll tax rebate. That is not an income tax matter. I offer no objection to the passage of this measure.
.- 1 should like to say one or two words on this Bill. The honorable member for Melbourne Ports (Mr. Crean) said that the Australian Country Party was interested in the averaging of incomes. This is true. But the averaging scheme must be looked at very- closely before people decide to use it. If a person’s income is decreasing, and appears likely to continue to decrease, it will not pay him to have his income averaged under the system which has been introduced and which it is proposed to extend. On the other hand, if it appears that his income will rise, it will be a very good thing for him, especially if he is a primary producer, to enter into the averaging system.
The Country Party is always interested in any measure that will help primary industry. We know that there is not much hope of getting higher prices for primary products. For products sold in Australia we receive the Australian standard. For products sold in countries where there is a lower standard of living, we cannot expect to get the prices that people in Australia can pay. Therefore, anything that will relieve the cos’s of production of primary industries is an important factor in helping primary producers to extend their operations, not only for their own good but also for the good of the whole of Australia. I always like to refer to primary industry rather than to the primary producer. If primary industry is prosperous, the men engaged in it, the primary producers, also must be doing very well.
There is not much one can say on this measure. Either we go into the averaging system or we stay out of it. 1 am suggesting that primary producers should study the question very closely and get expert advice before making a move to enter or leave the averaging system.
I refer now to estate duty, a subject on which 1 have spoken on many occasions. Exactly the same thing applies here, with regard to primary producers being able to keep their costs down. As 1 said in this place not very many days ago, most farmers hold their land and pass it on to the next generation. Sometimes it remains in a family for three, four or five generations. I would say that a very small percentage of people - say 20 per cent. - sell their properties over certain periods. Other people keep their pro- per,es, which pass from generation to generation. Every time a senior member of the family dies a lot of money is taken out of his estate for estate duty, lt appears that we cannot interfere to any extent, or even get support for interfering, with the rate of the duty which is applied to the valuation. That is the matter on which 1 want to focus attention again today.
Before speaking on the subject a couple of years ago, I discussed it in Canberra with certain Commonwealth experts on taxation. I am repeating what I have said before, but we have to do this in this chamber because we cannot continually get new facts about the same subject. 1 ascertained from the experts that the Federal Government adopts the Victorian Government’s valuations in respect of anything but very large estates. I am told that in very large estates the Federal Government, for probate and estate duty purposes, appoints its own valuers, who co-operate with the State valuers. What 1 object to is that valuers take, as the basis pf their valuation, sales of land in the area concerned. When a man dies in a certain area the valuers go in and they find that land in that area has been sold at a certain price. That is the basis on which they work, lt appears to me that this does not give a true reflection of the value of the land.
I have indicated before, and very briefly 1 will do so again, the many reasons why land sells in certain areas at prices that are much higher than they should be. On many occasions I have drawn attention to the matter but no-one seems to take a lot of notice until they have paid or are about to pay estate duty. A farmer will buy an adjoining property and pay a lot more per acre for it than the vendor could get from anyone else, because the farmer can work the adjoining property with the same machinery as he has on his original holding. The farmer’s son goes on to the adjoining property and settles close to his father’s home. When a property is put on the market for private sale, every land salesman knows that the first person to approach is the adjoining neighbour, because he can give more money for it than another man can. To base values on a sale like that is a fictitious approach as far as the general run of farmers is concerned. I have objected as strongly as I can to that system of valuation.
Another case to which I have referred previously is that of the man who has a very large income and who buys a property that requires a great deal of work to clear and bring it into production. The farmer gets the full taxation benefit for the money that he spends in the year in which he prepares the seed bed, ploughs the fields or clears the property. On the other hand, there is the case of the man who has only sufficient money to pay a deposit on a property, to clear it and perhaps to work it for the first year or two. So the man with the big income can on some occasions, if it becomes necessary, pay twice the amount of money for a property than can be paid by a man who has a property but no spare money. As a result, two things can happen. The first is that you. have an absentee owner of the property, which is not a good thing in this country. The other is that you deny the opportunity to go on the land to men who want to do so but have not much money and cannot buy a property at a price which would allow them a chance of making a success of the venture.
To go into these matters in detail might take longer than one is allowed for a speech in this House. As this is a Friday and the House wishes to rise at a reasonably early hour I think everybody will be pleased if, having made my basic comment on the matter, Ileave other remarks on the subject until a later date.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Howson) read a third time.
Consideration resumed from 15th September (vide page 929), on motion by Mr. Howson -
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr. Howson) read a third time.
Debate resumed from 15th September (vide page 930), on motion by Mr. Howson -
That the Bill be now read a second time.
.- I regret to say that the title of this Bill has been rather closely drawn; otherwise I would have moved an amendment similar to the one I moved when this kind of Bill was introduced last year, to the effect that certain local governing authorities should be exempt from the payment of pay-roll tax. But I have taken consultation with the Clerk, who has pointed out to me that the Bill amends the Pay-Roll Tax Assessment Act in two specific directions. First, it exempts certain schools from the payment of the tax. Secondly, it has relation to rebates of tax by reference to exports. So the best I can do is to make fleeting reference to the fact that this legislation should have included an amendment to grant exemption to municipal and other local governing bodies. We feel that this would have been a sensible kind of amendment. It would not have cost the Government more than $6 million or $7 million, but it would have given a good deal of justice to certain local governing bodies whose finances are in a rather parlous condition. I will not trespass any further on your good nature in this connection, Mr. Speaker, because I like to conform to the forms of the House wherever possible, and you have always been very fair to me in giving me reasonable opportunity to range fairly widely over the matters that we talk about.
For the moment I shall confine my remarks to the part of the Bill which deals with rebates of tax by reference to exports. It seems to me that whatever the virtues of encouraging Australian exports - and I think they should be encouraged and expanded - the Government can do a great deal about that matter. It has been suggested that if Australia is to rid itself of the vice of relying upon foreign investment, and if it is to raise its living standards, then our exports must double within the next 10 years. While a great deal of the increase in exports will come from primary production, a large proportion of it should result from the expansion of Australian manufacturing industries and the sales of manufactured products overseas. It was with this in mind that the pay-roll rebate system was introduced. When it was introduced I offered criticism on two grounds. I thought that it gave the greatest likely advantage to large firms rather than to small firms and also that it had the disadvantage of giving the greatest likely advantage to industries that might be said to be labour intensive rather than to those that might be said to be capital intensive. The whole history of developing markets overseas for Australian manufacturers shows that the scale of operation should be extended and that would mean that capital intensive industries rather than labour intensive industries should be encouraged.
I have been gratified to find that those criticisms that I made some years ago have been pointed out in a document prepared by the Australian Manufacturers Export Council. At this point I pay a brief tribute to the work of the late Sir John Allison, who was consistently interested in this Council. He happened to be born in the constituency that I represent. He was a great and dignified Australian. I regret his untimely death not very long ago. The document to which I have referred is entitled “ A Report with Recommendations on the Australian Taxation Incentives for Manufacturing Exporters “. At page 1 .3 it states–
The survey illustrates the grave anomaly that the smaller manufacturers, who achieved the better export performance, received the lesser benefit from the payroll tax incentive.
Secondly, it states -
As well, it is clear that the present scheme gives greater encouragement to the labour intensive industries than to the capital intensive ones. . . .
I merely mark those passages as confirming the opinion that I expressed here a number of years ago.
The present system is rather like Dr. Johnson’s lady preacher: It is not that it is done badly, but that it should not be done in this way at all. One of the reasons why devices such as this have to be resorted to, I understand, is that there are certain limitations, by reason of our association with the General Agreement on Tariffs and Trade, on the taxation concessions or incentives that we can give to local industry as against external industry. I understand that we have the same sort of difficulty with regard to subsidising the gold mining industry. Because of our membership of the International Monetary Fund, there are certain limitations on the kind of assistance that we can give that industry.
It seems that payroll tax rebates suffer from a difficulty in that there is a limit on how much a progressive firm can receive in the form of a rebate. The limit is set by the amount of payroll tax that a firm pays. Once it reaches the point where the rebate is as great as the payroll tax, no further incentive can be offered, although the performance may improve. As has been pointed out, the other point seems to be that the smaller firms are penalised most. As the report from which I have quoted notes, the Vernon Committee, at some stage of its report, pointed out that in many instances the smaller companies had shown more initiative than the bigger companies in increasing exports. I suppose the reason for that is largely that the smaller the company is, the greater is its difficulty in surviving; and, whereas a large firm can survive on the home market, sometimes a small firm has to seek additional markets in order to survive. In a sense, I suppose, that is a reflection on established industries in Australia. I think it has been one of the difficulties experienced by a great many European countries which, in order to survive economically, have had to export. The difficulty is that the more prosperous the internal economy of a country is, the greater is the disposition of its own citizens to want to use the goods produced internally. Nobody who is engaged in business cares very much whether he sells, say, his motor cars internally or externally. What he is concerned about primarily is that he sells the car. Nobody exports unless he has to export, except the primary producers who cannot possibly sell in Australia all they produce internally. Just how one gets round this point is very difficult to say. I doubt whether this measure can be other than a palliative. As the statistics show, it amounts to a very small part of the costs.
I think it is suggested that the value of the rebate per dollar of exports - the table is given in this booklet on page 2 : 6 - is 2.86 cents to group A companies which employ over 1,000 people. In another group of companies employing from 201 to 1,000 people, the figure is 2.9 cents per dollar. For another group employing from 51 to 200 persons, it is 1.5 cents per dollar. In group D, comprising small companies employing fewer than 50 people, the incentive was only I cent:
The Minister Assisting the Treasurer (Mr. Howson) talks about things being marginal. I do not quite know how marginal they are. I do not know whether a sum as. narrow a I cent in the $1, or even as. high as 2.86 cents in the $1, is a very significant one. I think it is possible to shift on to the pay roll component the whole advantage of exports. I would think that, in terms of internal and marginal costs of firms, the margin was much more significant than the average, or at least what this figure would show on the surface.
– There was a different margin this morning.
– Yes; that was a different sort of a margin - a different marginal theory. At least I think it challenges us, surely, to find some other kinds of device to encourage exports. A government can do a certain amount by exhortation, I suppose, but often it is the bird in the hand, as it were, which is the significant thing in producing final results. I read the report because it confirmed what 1 said on a previous occasion and also because the Australian Manufacturers Export Council has made alternative recommendations to assist. in the debate on this Bill I do not want to examine the alternative scheme that the Council suggests. Of course, one of the ironies of the situation is that, in all these schemes, apparently the greatest advantage goes to the biggest concerns. 1 think sometimes that more patriotism should be shown by bigger firms. They should export more goods without the stimulus of incentives to do so. They should export because greater sales of Australian goods overseas aic necessary for our economic welfare. Even if bigger firms do make a smaller margin on what they sell externally they should be making a greater effort than they are to export. We are, belatedly, selling a few thousand motor cars overseas. I hope we will sell a few thousand more externally because it is becoming hard to sell them internally. The recourse to internal depression may encourage the bigger companies to be a little more enterprising than they have been. At least the observation made by the Vernon Committee on this aspect of the matter was interesting. In many respects it is the smaller concerns that have been the more patriotic and the more successful in venturing into new fields and they are to be commended for their efforts. Unfortunately measures such as this do little to assist them directly.
.- As there is exemption from payroll tax up to a wages bill of 520,800, not many of my constituents have to meet this tax and it really applies largely to the municipalities. They pay it indirectly and not directly. I have many letters from municipalities regarding payroll tax. At different times, I have referred this matter to the Commonwealth Treasurer and I have a letter signed by the Minister assisting the Treasurer (Mr. Howson). Referring to Commonwealth and State financial arrangements, he stated -
In this context it is relevant that the Commonwealth makes available to the State Governments considerable financial assistance which the States themselves are free to allocate for any purpose, including the provision of assistance to local authorities. The arrangements for payment of these grants for general revenue purposes - the current arrangements were agreed between the Commonwealth and the States at the June 1965 Premiers’ Conference and arc to operate to the end of 1969-70 - are based on the understanding that there will be no significant changes in the financial arrangements between the Commonwealth and the Slates.
– Order! The honorable member might look at the Bill again and restrict his comments to its clauses. This is a very restricted Bill and does not give an honorable member the opportunity to cover all aspects of the payroll tax.
– I can assure von, Sir, that this is a letter from the Minister on the payroll tax.
– Yes, but theBill is restricted to two particular aspects.
– This letter relates to the aspects we are dealing with in the Bill.
– I will hear the honorable member’s argument.
– I was discussing the Minister’s comment on this subject and I am sure I can link up my remarks with the Bill in a way with which you, Sir, will find no fault. The letter from the Minister continued -
This means that the Commonwealth grants are provided on the basis that State Governments continue to meet their existing responsibilities, including responsibility for local government finances, and that there be no change in the existing distribution of taxation powers. It is in fact a specific condition of the present financial assistance arrangements that the State Governments and their authorities continue to meet payroll tax.
That is the very basis of the question before the House at present regarding municipalities.
– Order! The honorable member is still going quite a lot further than the provisions of the Bill.
– Then I shall sit down.
.- There is an aspect of the Bill to which I direct the attention of the Minister for Air (Mr. Howson). I am completely in favour of the exemption from payroll tax of schools that are teaching up to secondary level, providing that they do not operate for a profit. However, I remind the Minister that there are very important institutions that should be exempt in the same way as the schools. I refer to local government authorities.
– The honorable member should be careful about that one.
– I believe local government authorities should come under the provisions of the Bill and be exempt as are schools because local government bodies are not operating for a profit. They operate to render a valuable service to the community. I could run through a list of the amenities and benefits they provide.
– The honorable member for Melbourne Ports was not allowed to speak on that aspect.
-I rise to order. If I cannot put the case for my constituents, how can anyone else do so?
– Order! There is no substance in the point raised by the honorable member. I would, however, draw the attention of the honorable member for Banks to the title of the Bill.
– I was going to make the point that other institutions should be excluded from liability to pay payroll tax. I have a statement from the Treasurer, indicating the very heavy debt that local government is bearing - due, in part, to the effect of this tax. The debt of local governing bodies in Australia is $4,973 million, while the Commonwealth debt is almost $1,000 million less than that. I see many reasons why further consideration should be given to organisations such as local government bodies-
– Order! For the benefit of honorable members, I point out that the title of the Bill is: “ A Bill for an act to amend the Pay-roll Tax Assessment Act 1941-1965 in relation to the Exemption of certain Schools from Tax and in relation to Rebates of Tax by reference to Exports “. Discussion is limited to those two matters.
– I ask for your ruling, Mr. Deputy Speaker. As this is a money Bill concerned with payroll tax, I ask you to rule whether, in dealing with such a bill, we can discuss the whole ambit of the tax.
– I have already ruled that the debate must be restricted to the title of the Bill. I have read the title. I shall read it again if the honorable member wishes to hear it.
-I have heard it.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Motion (by Mr. Howson) proposed -
That the Bill be now read a third time.
.- I should like to take advantage of the motion for the third reading to make one or two remarks. First let me quote from the letter from the Treasurer (Mr. McMahon), in which he says -
There is the additional consideration that, since its inception, pay-roll tax has been levied on a very broad base. It would hardly be possible to grant exemption to local government authorities-
– Order! The honorable member for Mallee has been a member of this House for long enough to know that the debate on a bill must be restricted to the subjects covered by the title of the bill.
– You are in the chair, Sir, and I must bow to your ruling.
Question resolved in the affirmative.
Bill read a third time.
Debate resumed from 29th September (vide page 1425), on motion by Mr. Hulme -
That the Bill be now read a second time.
.- The Opposition does not oppose this Bill, but when it is being discussed in Committee we intend to move an amendment to one of the clauses in order to provide that concessional broadcast listener’s and television viewer’s licences shall be granted to war widows. This Bill seeks to amend the Broadcasting and Television Act so that these concessional licences may be granted to people who are in receipt of or who become eligible for payment of pensions under the Tuberculosis Act. These concessional licences are now granted to only certain types of pensioners. For the benefit of honorable members,I point out that the ordinary rate for the broadcast listener’s licence in zone 1 is $5.50. The rate to a pensioner in that zone is $1. In zone 2 the ordinary rate is $2.80 and the pensioner rale is 70c. For a television viewers’ licence the ordinary rate is $12 and the pensioner rate is$3. For a combined receiving licence the ordinary rate is $17 and the pensioner rate is$4. A reduced rate licence may be granted to persons in receipt of an age, invalid or widow’s pension under the Social Services Act or a service pension or a pension in respect of total and permanent incapacity under
Repatriation Acts. The concession is confined, however, to those classes of pensioners who live alone, live with another such pensioner or live with another person or persons, if the income of each such other person does not exceed the maximum amount of income and pension allowed under the Social Services Act in relation to age, invalid and widow’s pensions. This amount at the moment is $20 weekly.
This Bill will now bring within the scope of the concession rates certain people who receive an allowance under the Tuberculosis Act. The Bill will enable people suffering from tuberculosis to enjoy the concession rates for these licences and encourage them to receive full treatmentfor the disease from which they are suffering. The Opposition has no objection to the Bill but, asI mentioned, we shall move an amendment in the Committee stage.
Question resolved in the affirmative.
Bill read a second time.
.- I refer to clause 3, which reads in part -
Section 128 of the Principal Act is amended -
by omitting sub-section (4.) and inserting in its stead the following sub-section: - “ (4.) In this section, ‘ pensioner ‘ means a person who -
is in receipt of a pension under Part III or Part IV of the Social Services Act 1947- 1966;
is in receipt of an allowance under section nine of the Tuberculosis Act 1948 and would, but for the receipt of that allowance, be eligible to receive a pension of a kind referred to in the last preceding paragraph;
is in receipt of a service pension, or a pension in respect of total and permanent incapacity, under the Repatriation Act 1920-1966; or
is in receipt of a pension in respect of total and permanent incapacity under the Repatriation (Far East Strategic Reserve) Act 1956- 1962 or under the Repatriation (Special Overseas Service) Act 1962-1965.”.
On behalf of the Opposition, I move - In paragraph (c) of proposed new sub-section (4.), after “ service pension “, insert “ a pension payable to the widow of a member of the Forces,”.
The amendment is proposed so that the concessional rates for television and broadcasting licences shall be made available to women in receipt of war widow’s pension. At the moment, these people are not covered. The income which may be received by a person who obtains this concession is now $20 a week. If my figures are correct - and I think they are although I have not had an opportunity to check them thoroughly - a war widow pensioner would be entitled to receive $13 a week in pension and $7 a week in domestic allowance. The domestic allowance is paid to a war widow who is over the age of 50 years, or is permanently unemployable, or has a dependent child under 16 years of age or a dependent child over 1.6 years of age who is undergoing education or training and is not receiving an adequate living wage. So the domestic allowance would be paid to quite a number of women in receipt of war widow’s pension. I understand that about 95 per cent, of the women in receipt of war widow’s pension are receiving the domestic allowance. In 1965-66, 41,655 war widows received the domestic allowance. So not a great number of women is involved in the proposal.
Certain anomalies are caused by not granting concessional rate broadcast and television receiver licences to war widows. For instance, an ex-serviceman who receives a total and permanent incapacity rate pension is entitled to a concessional rate licence. If he is married, on his death his widow becomes eligible for a war widow’s pension and is then precluded by the existing provisions of the Act, from continuing to receive the concession. This seems to me and to the Opposition generally to be a situation that needs remedying. Many war widows receive a total weekly income of $20 - the limit specified for the granting of the licence concession to age and invalid pensioners. I have already stated that a war widow would receive a weekly income of $20 if she had no dependent children and received only a war widow’s pension and the domestic allowance. Not a great number of war widows is involved. Probably only 43.000 or 44.000 women receive war widow’s pensions.
The concession on broadcast and television receiver licences is available to a pensioner regardless of whether he lives alone or with another pensioner. Many war widows live entirely alone. Their pension is not great. 1 and other Opposition members believe that they are entitled to a concession. Apparently, the main reason why this concession has not been granted to war widow pensioners is that they are not subject to the means test. A war widow may receive full pension and be employed in industry or commerce at full adult female wages. Therefore, apparently, the Postmaster-General says: “ As some war widows are in this situation, we shall deny the concession to all “. I believe that the majority of the few women involved have an income little, if any, above the base rate of pension plus the domestic allowance. There would be many more of these than there would be war widows with dependent children receiving additional income on that account or able to go to work and earn full wages in addition to the pension. I have pleasure in proposing the amendment on behalf of the Opposition. I trust that the Minister will appreciate the merit of the arguments that have been advanced on this occasion and on previous occasions and that he will sympathetically consider the amendment and grant the concession on broadcast and television receiver licences to women in receipt of war widow’s pensions.
– Mr. Chairman, there are good reasons why concessions of the nature sought have not been given over the years. Therefore, I intimate to the Committee at once that the proposal is not at present acceptable to me. Within the last year or two, there has been a complete review of concessions extended to various groups within the community, particularly pensioners, in relation to both telephone services and broadcast and television receiver licence fees. The honorable member for Lang (Mr. Stewart) put to th« Committee the proposition that since a person in receipt of a total and permanen incapacity rate pension is entitled to a licence at a concessional rate, such a person’s wife also was entitled to the benefit of the concession. He then went on to say that if the pensioner died, his widow, as a war widow, automatically lost the concession. The honorable member made the point that a war widow’s pension is not subject to means test. He pointed out also that a T. P.I. pension is not subject to means test. The honorable member having made these points, it should not be necessary for me to emphasise them. So a war widow or a T.P.I, pensioner could have additional private income of £50 or £60 a week. Notwithstanding this, the Opposition now asks that this further concession referred to in its amendment be extended to these categories of pensioners. There are many categories of persons in the community who are not necessarily as well offas are some war widows. I think it would be a dangerous precedent for the Parliament to apply a means test in an area where it has not hitherto applied. For this reason I feel it would be quite wrong, particularly at this stage, to accept the amendment.
It is not just a matter of cost. A question of principle is involved. Concessions could be granted to many sections of the community. We must be careful that in granting concessions to one section of the community we do not create injustices or a situation of inequality for other sections in the community.
– You have to start somewhere.
– I appreciate that. But the point at which we start, so far as this sessional period of the Parliament and the Bills dealt with in it are concerned, is the Budget. It all boils down to a question of what revenues you have and what expenditures you incur. The honorable member for Lang will be aware that the Budget provides this year for a deficit of $270 million odd. Our expenditure will exceed revenue by that amount. Throughout this sessional period the Opposition has claimed that we should spend more here and more there and make concessions of various kinds, including taxation concessions. If we did this we would increase the deficit from $270 million to $800 million or perhaps $1,000 million.
– The Government has found $1,000 million for war purposes.
– I do not think I need justify the Government’s expenditure on defence. The need to spend on defence should be as obvious to all honorable members as it is to the general public. So I do not think it is a valid argument to say that; because we are providing a large sum of money for defence we could set aside some- ; thing to provide concessions of the kind sought by the Opposition in its amendment. , I emphasise that ever since the Budget was brought down the Opposition has sought to increase expenditure on the one hand and to reduce revenue on the other. If the Opposition were successful we would have a situation of considerable inflation in the community.
The Bill is the outcome of the Budget proposals. We must accept it as part of the Budget. Having accepted this Bill as part of the Budget, we must accept that the con- . cessions granted in it represent the total amount of concessions that can be given this year. In the last three years I have often considered the matter of further concessions but I repeat that within the total Budget concept we believe that we cannot grant the concession sought by the Opposition. I repeat that to do so would create substantial differences in principle between different groups in the community. In my view, this would be a very undesirable precedent to establish. So the Government rejects the amendment.
Question put -
That the amendment (Mr. Stewart’s) be agreed to -
The Committee divided. (The Chairman - Mr. P. E. Lucock.)
Majority . . . . 28
Question so resolved in the negative.
Bill agreed to.
Bill reported without amendment; report adopted.
Bill (on motion by Mr. Hulme) - by leave - read a third time.
Statement taken as a whole, and agreed to.
Resolution reported; report adopted.
Debate resumed from 15th September (vide page 930), on motion by Mr. Howson -
That the Bill be now read a second time.
.- This is primarily a technical measure. Its purpose is to amend section 16 of the Commonwealth Banks Act 1959-65 to allow a member of the Board of the Commonwealth Banking Corporation to be appointed as a member of the Board of the Papua and New Guinea Development Bank. There is to be a formal connection between the Commonwealth Bank in Australia and the new development bank that is to be established in Papua and New Guinea. That seems to me to be a sensible enough arrangement in the circumstances.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for the third reading to be moved forthwith.
Bill (on motion by Mr. Howson) read a third time.
House adjourned at 3.56 p.m.
The following answers to questions upon notice were circulated -
Department of Social Services. (Question No. 2103.)
Mr.Hayden asked the Minister for
Social Services, upon notice -
In which cities and towns does his Department operate offices?
How many full-time social workers are appointed to each of those offices?
Are there any part-time social workers appointed to any offices of his Department; if so, how many are attached to each office, and what are their hours of duty per week?
Shipping. (Question No. 2097)
– The answers to the honorable member’s questions are as follows -
b asked the Minister for Labour and National Service, upon notice -
– The answers to the honorable member’s questions are as follows - 1 and 2. I am not aware of any requirement that employers should take any particular quota of apprentices. It is not uncommon for awards to fix maxima permissible ratios of apprentices to journeymen. It is, however, being increasingly recognised that the number of apprentices employed should be determined by the availability of facilities to enable effective training. In some cases, effective training of apprentices would not be possible if the permissible ratio were observed. In other cases the ratio could be improved on without any prejudice to the quality of apprentice training. All of this has been recognised in the national conferences on training which my department has convened.
It is of relevance to the honorable member’s question that although in some trades in some
States there may have been variations from the norm, for several years now overall there have been more vacancies for apprentices registered with the Commonwealth Employment Service than lads seeking apprenticeships.
n. - On 13th September, the honorable member for Maribyrnong (Mr. Stokes) asked how soon we may expect the issue of a $5 note. At that time, I indicated that I understood a decision had been made to issue a $5 note. I further indicated that my latest information was that the date of issue would be towards the end of next year, but that I would see whether anything could be done to hasten this.
I have now been informed by the Reserve Bank of Australia that, with the design work for the new $5 note practically completed, every effort is being made to avoid delay in the necessarily complex technical processes of production. It is now expected that S5 notes will be issued to the public about mid- 1967.
Cite as: Australia, House of Representatives, Debates, 14 October 1966, viewed 22 October 2017, <http://historichansard.net/hofreps/1966/19661014_reps_25_hor53/>.