Senate
12 September 1917

7th Parliament · 2nd Session



The President (Senator the Hon. T. Givens) took the chair at 3 p.m., and read prayers.

page 1865

QUESTION

RECRUITING

Senator GARDINER:
NEW SOUTH WALES

– Has the Minister for Defence had his attention directed to the following report in the Sydney Daily Telegraph, on the 31st August, under the heading, ‘* Without His Velvet Shoes”- “ I didn’t put on my velvet shoes,” said Mr.

John Provost, a representative dairy farmer from the Nambucca River. “ I have blazed the track, and carved out a line in the blue bush of Australia. I am one of the pioneers up there. We have got our team together, and we are not going to allow this crowd of irresponsibles to deprive us of the fruits of our hard toil. We are here to stand up for law and order - here for a month or a year, if necessary. Three of my boys are coming down tomorrow, and they are 6 feet high. The rest of the boys (there are eight children in the family) will remain to help milk the cows.”

I wish to direct the attention of the Minister to the latter part of the report and to ask if he will take steps to get the recruiting officers to inform these lads 6 feet in height that trade unionists are away fighting, and that they can serve their country by joining them ?

Senator PEARCE:
Minister for Defence · WESTERN AUSTRALIA · NAT

– I am sure that the people of this country will be obliged to the honorable senator for bringing under their notice a case which indicates the great mistake which was made on the 28th October in not giving to the Government the power to conscript men.

page 1865

QUESTION

DR. HIRSCHFELD

Senator FOLL:
QUEENSLAND

– I ask the Minister for Defence whether it is a fact that Dr. Hirschfeld, who was at one time German consul in Queensland, and who was interned from eighteen months to two years ago, is at present at liberty in Brisbane, and, if so, what is the reason for his being released from the internment camp?

Senator PEARCE:
NAT

– It is a fact. On the strong recommendation of the Military Medical Officer, that the medical condition of this patient was such that his release was absolutely essential, he has been released on bond, which provides proper safeguards for his conduct.

page 1865

QUESTION

DEFENCE DEPARTMENT

Dismissal of Married Men

Senator NEEDHAM:
WESTERN AUSTRALIA

– Has the Minister for Defence any further information regarding the following questions I asked last week, in connexion with the alleged dismissal of married men from the Defence Department? -

  1. Is he aware whether the Defence Department, Francis-street, Perth, is putting off married men .with families to make room for returned soldiers?
  2. Does the policy of preference to returned soldiers mean the dismissal of married men with families?
  3. Is he aware whether some of the men dismissed have sons fighting at the front?
  4. Will the Minister inquire into this matter?
Senator PEARCE:
NAT

– I have been furnished with the following answers: -

  1. The Military Commandant reports that the places of three married men, who were temporary employees, have been filled by returned soldiers.
  2. Not necessarily. Temporary employees axe engaged for a limited period, on expiration of which, if returned soldiers are available and suitable, they are given the positions, in accordance with the policy of the Government. It has recently been decided, however, that the services of temporary employees over military age are not to be dispensed with to make way for returned soldiers; but, should it become necessary to reduce the staff, the appointments of men who are not returned soldiers are to be first terminated.
  3. The Military Commandant reports that one of the temporary employees whose period of service had expired, and whose position has been filled by a returned soldier, has a son at the front.
  4. The Commandant is being advised of the recent ruling alluded to in the answer to 2.

page 1865

QUESTION

MAILS TO ENGLAND

Senator THOMAS:
NEW SOUTH WALES · NAT

– I ask the Minister representing the Postmaster-General whether, if a mail is going to England through America, and the letters are not indorsed “ Vid America,” such letters are detained at the post-office until a mail goes to England by some other route ?

Senator RUSSELL:
Honorary Minister · VICTORIA · NAT

– The answer to the question is -

Such letters are not necessarily detained at the Post Office; the circumstances decide the action to be taken on each occasion.

page 1865

QUESTION

HOLDING UP OF TRANSPORTS

Senator MCDOUGALL:
NEW SOUTH WALES

– Has the attention of the Minister for Defence been drawn to a statement by. Judge Edmunds in Brisbane in reference to a number of transports being held up in Australia, and, if so, is that statement official or correct ?

Senator PEARCE:
NAT

– I have not seen the statement in question. I will inquire into it..

page 1866

QUESTION

AUSTRALIAN IMPERIAL FORCE

Enlistment of Unfit Men :

Withdrawal from Fighting Line.

Senator GUY:
TASMANIA

– Has the attention of the Minister for Defence been drawn to an article which appeared in yesterday’s issue of the Age headed, “ Unfit men enlisted,” and in which it was stated that many men had been enlisted and sent abroad who were totally unfit, that in one batch of men over 80 per cent, had never been near the firing line? If these statements are true, can the Minister say what has been done to prevent a recurrence of this kind of thing?

Senator PEARCE:
NAT

– I did notice the paragraph in question. I was glad to see that this particular journal had at last come round to the view which I have been putting in combating statements made by it and other journals that the medical examination in Australia was too stiff, and should be relaxed. The facts axe that a numberof men who got past the medical examination have returned to Australia at various times without having been to the Front. That, occurring in the early stages of the war, was the cause of tightening up the medical examination. The medical examination to-day, if faithfully carried out, would prevent any such cases from occurring. But, of course, ‘ the human element comes in, and we can only say that the medical examination to-day is sufficiently stringent if it is faithfully carried out.

Senator Guy:

– But would it be 80 per cent. ?

Senator PEARCE:

– It could be 80 per cent, on a shipment returning, but not 80 per cent, on a shipment going away. The men who are returning are the men who are unfit. Practically all the shipments that are returning to-day are medically unfit. In the case of a particular shipment, I am not prepared to say that 80 per cent. have not been to the Front. That is the assertion ofthe newspaper.

Senator GARDINER:

asked the Minister for Defence, upon notice -

  1. For what period of time were the Aus tralian Forces withdrawn from the western Front?
  2. Was insufficient reinforcement the cause of the withdrawal?
  3. What steps, if any, have been taken by the present Government to obtain sufficient reinforcement ?
  4. Was the withdrawal so skilfully conducted that Australian soldiers in France have not yet heard of the withdrawal?
Senator PEARCE:

– The answers are - 1 and 2. The Australian Divisionshave been withdrawn on more than one occasion for the purpose of refitting and resting for varying periods extending over some weeks.

  1. A general recruiting scheme, the main principles of which have already been announced to Parliament, has been put into operation.
  2. See reply to 1 and 2.

page 1866

QUESTION

KALGOORLIE TO PORT AUGUSTA RAILWAY,

Senator NEEDHAM:

asked the Minister representing the Minister for Works and Railways, upon notice -

  1. Has the industrial trouble on the eastern end of the trans-Australian railway been settled?
  2. Have all the men who were engaged on construction resumed work?
  3. If not, from what source are the men obtained who are carrying on the constructional work?
Senator RUSSELL:
NAT

– The answers are-

  1. Partially.
  2. No.
  3. From labour offering at Port Augusta.

page 1866

WAR LOAN/ BILL (No. 2)

Bill received from the House of Representatives.

Senator MILLEN:
Vice-President of the Executive Council · New South Wales · NAT

.- I move-

That so much of the Standing and Sessional Orders be suspended as would prevent the Bill being passed through all its stages without delay.

The only purpose I have in view in submitting this motion is that, should the course of business to-day permit it to be done, I would like to move the second reading of this Bill, when the debate could be adjourned.

Senator Grant:

– It is not intended to proceed further with the Bill than the second-reading speech of the Minister?

Senator MILLEN:

– And then only if the state of business permits it.

Question resolved in the affirmative.

Bill read a first time.

page 1867

DAYLIGHT SAVING REPEAL BILL

Bill returned from the House of Representatives without amendment.

page 1867

PAPERS

The following papers were presented : -

British Trade Corporation : Petition of Promoters, Deed of Settlement, and Royal Charter of Incorporation. (Paper presented to British Parliament.)

Northern Territory. - Ordinance No. 8 of 1917 - Liquor.

Papua Act 1905. - Infirm and Destitute Natives Account - Statement of the Transactions of the Trustees, 1916-17.

Public Service Act 1902-1916-

Promotion of C. L. Westbrook, Department of the Treasury.

Regulations amended - Statutory Rules 1917, No. 214.

page 1867

WAR-TIME PROFITS TAX ASSESSMENT BILL

Debate resumed from 6th September (vide page 1744) on motion by Senator Millen -

That this Bill be now read a second time.

Senator GARDINER:
New South Wales

– I do not intend to unduly curtail my remarks in addressing myself to this Bill, but on the other hand I do not consider it necessary to prolong the debate upon the measure either on the second reading or during the Committee stage of the Bill. I take it that this is the chief financial measure of the Win-the-War Government. This is a Government fresh from the people, pledged to do their utmost to win the war, and I take it that this financial measure is the best effort that the combined intelligence of the Government and the party supporting them can produce in that direction. I accept it as their best. If they have anything better to put forward I shall be pleased and happy to support it. The name of the Bill, a Wartime Profits Tax Bill,” is sufficiently attractive to make any measure popular. I take it that its introduction arises from the clamour for legislation of this kind, because in the Old Land companies commanding huge wealth and well organized took advantage of the conditions due to the war to make huge profits. This gave rise to a demand on the part of the general public that those making profits out of the war should contribute a percentage of those profits to the cost of the war. This demand may be said tohave found an echo in this country. Profiteering, to use a new word of which I do not very much approve, has not been as extensive in this country as in the Old Country, but there is no question that huge profits have been made in Australia out of the war.

We have before us a War-time Profits Tax Bill, but a War Profits Tax Bill would more nearly have given effect to what was desired, at all events in the OldCountry. Although this is called a War-time Profits Bill, its name is the only shred of resemblance that it bears to the Bill introduced some twelve months ago in another place by Mr. Higgs, on behalf of the Labour Government. The substance of that measure is gone, and only the name is left. This measure would be better described as an Excess War-time Profits Tax Bill, with exemptions toany one who, with a voice in the National party, put in a claim for exemption. Exemptions appear to have been granted in such a way that all that was necessary to secure an exemptionwas that one should be a representative of the National party, with’ the right to ask for exemption. To bear out my statement that this Bill resembles that introduced by Mr. Higgs only in name, I may mention that it was estimated that the revenue that would be derived from the Bill introduced by Mr. Higgs was over . £3,000,000 a year. When this Bill was introduced in another place, Sir John Forrest estimated that the result of two years operation of it would give a revenue of £900,000, or thereabouts.

Senator Pearce:

– Would the honorable senator mind telling us where the estimate of £3,000,000 to which he has referred was made?

Senator GARDINER:

– It was made by Mr. Higgs, in submitting the measure he introduced in another place.

Senator Pearce:

– I never heard of it.

Senator GARDINER:

– It was made, and £10,000,000 was estimated as the revenue from the measure for three years. My one-time colleague, Senator Russell, will bear me out in that.

Senator Millen:

– Is the honorable senator not confusing that estimate with the estimate given of the revenue from the wealth tax?

Senator GARDINER:

– No, I am giving facts and figures.

Senator Millen:

– The honorable senator will allow me to say that I think he is confusing the two matters.

Senator GARDINER:

– In another place the estimated cost of collecting the tax under this Bill was given as ?35,000; a supporter of the Government raised that estimate to more than ?50,000, and I venture to say that it will cost the public of this country another ?50,000 to make up their returns under the measure, so that, in the circumstances, it was scarcely worth while to introduce it.

Senator Ferricks:

– The whole thing is a farce.

Senator GARDINER:

– It was originally estimated that this Bill would produce about ?450,000 a year, but during the passage of the measure through Committee in another place exemptions were granted right and left, and to such an extent that all professions are exempt .under it. What the proceeds from it will now amount to is difficult to say, but I do not think it is worth while for Parliament to bother with a measure which will cause so much interference with trade and business, for such a very poor result.

A little time ago, when speaking upon another measure, Senator Millen twitted me with continually delivering the same speech. I do not intend to twit Senator Millen with delivering the same speech twice, but I do propose to make some comparison between speeches which have been made on this Bill. Sir John Forrest said -

The war-times .profit tax was first imposed by the British Government by Finance Act No. 2 of 1015.

Speaking on the same measure, Senator Millen said -

The war-times profit tax was first imposed by the British Government by Finance Act No. 2 of 1915.

Sir John Forrest said ;

Canada was the next part of the Empire to impose a war-times profit tax. -In 1916 the Canadian -Parliament passed a Business Profits War Tax Act.

Senator Millen said ;

Canada was the next part of the Empire to impose a war-times profit tax. In 1916 the Canadian Parliament passed what they termed a Business Profits War Tax Act.

Sir John Forrest said ;

Whilst the Canadian scheme attains simple and economic administration and a large revenue, it acts unjustly on those businesses which have not made greater profits during the war-time year, or whose profits have actually diminished owing to the war, but are still in excess of 7 per cent, on capital.

Senator Millen said ;

Whilst the Canadian scheme attains simple and economical administration and a large revenue, it acts unjustly on those businesses which have not made greater profits during the war-time year, or the profits of which have diminished owing to the war, but are still in excess of 7 per cent, on capital.

Sir John Forrest said ;

The Dominion of New Zealand followed with its tax, but imposed it- by way of an additional income tax. The tax is 45 per cent, of the amount by which the income assessable to income-tax in the war-time accounting period exceeds the average yearly assessable income of the last three pre-war trade years, or the average yearly assessable income of any shorter pre-war business period, or 7 per cent, on the capital employed in the business, which ever is the greater.

Senator Millen said ;

The Dominion of New Zealand followed with its tax, and imposed it by way of additional income tax. The tax is 45 per cent, of the amount by which the income assessable to income-tax in the war-time accounting period exceeds the average yearly assessable income of any shorter pre-war business period or 7 per cent, of the capital employed in the business, which ever is the greater.

Sir John Forrest said ;

The French Parliament has lately passed a war-time profits tax.

Senator Millen said ;

The French Parliament has lately passed a war-time profits tax.

Sir John Forrest said ;

The Bill is modelled upon the English law, but it contains many additional provisions designed to render the incidence of the tax more equitable.

Senator Millen said ;

The Bill is modelled on the English Act, but various modifications have been introduced with a view to rendering the incidence of the tax more equitable.

Sir John Forrest said ;

Ten per cent, is considered a fair, percentage standard for investment in Australia.

Senator Millen said ;

The percentage standard is 10 per cent, on the amount of the capital employed in the business at the end of the last pre-war trade year.

Senator Millen:

– There appears to be a great deal of unanimity in those statements.

Senator GARDINER:

– Yes, and I intend to show that there is still more unanimity. Sir John Forrest said -

In the case of new companies the Bill limits the remuneration of directors to ?1,000. It is a very necessary provision to prevent the absorption of profits of new companies by way of directors’ fees.

Senator Millen said

In the case of new companies the Bill limits the deduction for remuneration of directors to ?1,000. This is a necessary provision to prevent the absorption of profits of these companies by way of directors’ fees.

I do not think I need go any further.

Senator de Largie:

– You are doing so well that you might go right through.

Senator GARDINER:

– Very well, if the honorable senator desires it I shall continue. Sir J ohn Forrest said -

Capital is dealt with in Clause 16. The amount of the capital of a business is the capital paid up by the owner, whether in money or in kind, together with all accumulated profits invested in the business with the addition or subtraction of balances brought forward from previous years to the credit or debit respectively of profit and loss account. Assets acquired otherwise than for cash or credit, or acquired without purchase,’ are to be valued at the time of acquisition, and that value is to be treated as part of the capital of the business. Patents and secret processes are deemed to be material assets to be valued in the manner mentioned.

Senator Millen said

Clause 10 deals with this question. The amount of capital of a business is the capital paid up by the owner in money or in kind, together with all accumulated trading profits invested in the business, with the addition or subtraction of balances brought forward from previous years, to the credit or debit of profit and loss account Where an asset has been acquired otherwise than for cash, it is to be valued as at the time of acquisition and treated as part of the capital. Patents and secret processes are deemed to be material assets, and are to be valued as before mentioned.

I have quoted extracts delivered by Sir John Forrest in the other House, and by Senator Millen in the Senate, because 1 want to draw attention to the fact that while members on the other side frequently taunt members’ of the Labour party with taking their instructions from the Trades Hall, it may be suggested that these finance measures are the property of the moneyed class in Australia, and that their representatives are so bound to that class that their speeches read word for word. I congratulate them upon their consistency. There can be no question about that.

Senator Senior:

– Where is the point?

Senator GARDINER:

– I have no doubt that the honorable senator will fail to see the point. ‘

Having shown how closely representatives of the Government have followed each other in their speeches, I now desire to give a list of war-time profits as contained in the statement made by Sir Alexander Peacock in the State Parliament.

Senator Senior:

– That is the statement made by Dr. Maloney in another House.

Senator GARDINER:

– I shall not $ive Dr. Maloney’ s interesting though lengthy statement, but, for the sake of brevity, shall give the figures as presented by Mr. Tudor.

Senator Millen:

– If you do that there will be unanimity between your speech and that delivered by Mr. Tudor.

Senator GARDINER:

– I will quote the figures as I received them and as recorded in Hansard by Mr. Tudor. This statement shows the net profits earned by businesses in Victoria as well as the amounts set apart on reserve account during the respective years referred to : -

Senator Ferricks:

– And then they want to know why the workers are discontented !

Senator GARDINER:

– Yet, as Senator Ferricks remarks people want to know why there is discontent in this country.

The Minister for Defence (Senator Pearce), replying to a question earlier, referred to the fact that the Government failed to get conscription passed on 28th October last. One of the chief causes that led to the rejection of the conscription of manhood in Australia was the fact that there has not only been no attempt to conscript the wealth of this country, but there has been no reasonable, attempt, commensurate with the importance of the undertaking we have in hand, to make wealth pay its fair share of what the war is costing us.

Senator Senior:

– Who is paying it?

Senator GARDINER:

– The soldiers who are fighting will pay most of it when they come back. We are borrowing money to finance the war, and the interest and principal will be paid in the long run by the soldiers and their dependants. I can quite understand the Leader of the Senate (Senator Millen), who so frequently attacks me as a member of a Government which had an opportunity of making wealth pay from the very beginning, using that argument to-day. I want to answer him once and for all by saying that when the war started the chief concern of the Government was to keep business, trade and employment in this country upon an even keel. We did that successfully, knowing that in the first few months of the war ‘to interfere to any serious degree with the business of Australia was a most serious thing for any Government to do. So successfully were the affairs of this country conducted during the two years that the Labour Government managed them that business was, we might say, “ as usual.”

Senator Guthrie:

– But you complained that Mr. Hughes took it all out of your hands and ran it. That is why you left the Government.

Senator GARDINER:

– I made no such complaint. Of the twelve months we held office, Mr. Hughes was out of the country for nine, so that he did not interfere much with our conduct of the business, except to the extent to which we had to wait untilhe came back.

The proposals put forward by the Treasurer of the Labour Government more than twelve months ago would have entailed a reasonable share of the cost of the war being placed on the shoulders of those best able to bear it. A glance at the profits made not only during the war but in times of peace is very interesting. When we have a Government in office whose chief business, according to their mandate from the people, is to “ win the war,” they ought to be spurred on to use the opportunities in their possession to do something effective in that direction. I venture to say that the most effective means of assisting to win the war is by organizing the finances of this country, and by the Government proving to those who have not volunteered for service abroad that the wealthy classes must contribute their fair share of taxation. The profits made by these classes should be levied upon to meet the exigencies of the war. If that were done there would be no lack of volunteers for service overseas. Already the manhood of this country has responded nobly to the call of duty. In too many instances it has. made the supreme sacrifice. Yet we witness a reluctance on the part of men who are making huge profits out of the war to pay their fair share of the cost of prosecuting it to a successful issue.

Senator Barnes:

– But they wish to impose the Taylor card system on the workers.

Senator GARDINER:

– I do not wish to touch upon that matter, because if I did so I should be promptly ruled out of order. But in view of the fact that we are living in times when labour has to be speeded up so that the last ounce may be got out of it -

Senator Crawford:

– Where is that being done?

Senator GARDINER:

– It was at tempted to be done in the railway workshops of New South Wales. Surely those who desire that the workers of this country shall be subjected to a “ speedingup “ process, ought, in all fairness to insist that the financial concerns of Australia shall be made to contribute their fair share of taxation.

Senator de Largie:

– What about the Shearers Union ? Why does not it fight to do away with the card system in the Worker office?

Senator GARDINER:

– The fact that the shearers of Australia have sent 30,000 men to fight in this war, ought to -save them from such remarks from Senator do Largie.

Senator de Largie:

– Why do they nob do away with the card system in the Worker office ?

Senator GARDINER:

– I can quite understand that any other subject save the one that is immediately under consideration is the subject to which the brilliant intellect of the honorable senator naturally flies. I repeat that Australia is an enormously rich country, in which huge profits are made each year. If we are prepared to confiscate a fair percentage of those profits the problem of how to finance the war will be solved. But whenever an attempt is made to tax the profit-producing interests of this country the party opposite appear to imagine that the war can be won without a reasonable effort being made to exert our full strength.

I have here a very interesting return by the Commonwealth Statistician, Mr. Knibbs, in regard to incomes of persons resident in Australia. The return deals with incomes ranging from under £50 to over £5,000,

And covers the twelve months ended 30th June, 1915. During that year the incomes in excess of £200, and under £500, aggregated £95,136,368. Incomes of £500 and over totalled £46,418,000; incomes of £1,000 and over, £28,818,000; and incomes of £5,000 and over, £7,956,0.00. We ought to conduct this war from the financial stand-point with the same energy that a section of the people wished us to display in regard to the manhood of this country. If we were to exhibit as much earnestness in the direction of compelling capital to do its duty as my honorable friends opposite exhibited in regard to compelling eligibles to do their duty, what would be the result? We could commence by declaring that .all incomes in excess of £200 a year should find their way into the common pool. If we did that, we would collect no less a sum than £178,000,000 annually.

Senator Senior:

– Is the number of taxpayers given in the list from which the honorable senator has quoted ?

Senator GARDINER:

– It is given in the table, which the honorable senator is fib liberty to peruse.

Senator Millen:

– I understand that Senator Gardiner advocates that being done?

Senator GARDINER:

– Yes, emphatically I do.

Senator Millen:

– Take every person’s income in excess of £200 a year ?

Senator GARDINER:

– It is no new theory with me. In time of war, when men are volunteering to serve their country on the battlefields of Europe, and are leaving behind them wives and children who are dependent upon their military wage, the remainder of us can surely do our bit by living on £4 per week ! There is nothing wrong with that proposal. If once this Parliament did what I have suggested, such ja thrill of enthusiasm would be sent throughout Australia that not a fit man would dare to shirk his responsibility. But because men of wealth are allowed to evade their obvious obligations, we find that discontent is growing in our midst. Some honorable senators m#y possibly urge that I am illogical, because I insist upon the conscription of wealth while I oppose the conscription of life. But I have never placed life and wealth in the same category. I repeat that if, for the purpose of conducting this war, we were to take all incomes in excess of £200 a year, we should collect no less a sum than £178,329,576 a “year. At the present moment our expenditure upon the war amounts to £70,000,000 annually. I know that it is sufficiently near to base an argument upon. Here is double the amount at the disposal of the nation if it has the courage to use the money. Do honorable senators know what double the amount would do? It would enable the country to double the. allowance to the men at the Front, to double the allowance to their wives and children, and to give them an opportunity of living under reasonable conditions. But wealth shirks its responsibilities. The Win-the-war Government, elected on tha sole issue of winning the war, instead of introducing measures which would effectively deal with the wealth and resources of the country to enable the war to be properly prosecuted, are consuming the time of this Parliament with a measure which, when it was introduced by the Treasurer, provided for a revenue of £450,000. This is .the finest effort of the Win-the-war Government in the way of finance. Surely when men are volunteering to go across the water and take unknown risks, and fight for us, the free people of Australia can say that at any rate a man with an income of over £10 per week shall be compelled to live on £10 a week, and the rest shall go into the fighting fund. At £500 a year and over this tax would yield £46,418,070; at £1,000 a year and over it would yield £28,818,894; and at £5,000 a year and over it would yield £7,956,244. In this way £83,193,208 would be at the service of the Win-the-war Government if they only had the courage to take the money from the people who are getting more than £500 a year ab the present time. Is it a fair thing to make this demand)

Senator de Largie:

– Why did you not make this proposal when you were in the last Government?

Senator GARDINER:

– My honorable friends on this side know that I did make the proposal in the last party, I will not say in the last Government.

Senator de Largie:

– What! Senator GARDINER. - The honorable senator was at the time enjoying the trip which added so much to his dignity and personal appearance..

Senator Millen:

– Did you make the proposal here?

Senator GARDINER:

– No. Were I in the Government to-morrow the policy I would advocate would be the policy of the Government. I do not feel at all inconsistent in making that statement. To the men who twit me with not wanting to do these things, from the Prime Minister downwards, I reply that I was prepared to do it. The point I wish to make is that, without inconveniencing any wealthy man or woman, here is an ample income at the disposal of the Government if they have the courage to take it. I know that it is a drastic measure. Some honorable senators may say that I am advocating the proposal because I am certain that it will not be given effect to, but I venture to say that if the war is continued things will have to be given effect to in the way of financing the war which even, probably, the widest vision scarcely realizes. Therefore, it would be an act of wisdom for the Government to lead the way before there arises a feeling of discontent from the whole of the community that the balance is not being held evenly. It would be an act of wisdom for the Government to pioneer the track in the way of making the wealth of this country contribute its fair share towards the cost of the war. There is nothing unreasonable in my proposal. There was an attempt to send the manhood of this country to fight whether the men wished to go or not.

Yet there is no attempt, to say that the wealth of this community shall be compelled to go into the pool to” assist to win the war.

Senator Crawford:

– It is in the pool now. It is being taxed from year to year as may be needed.

Senator GARDINER:

– I have just stated that in 1915 the incomes of £200 a year and over amounted to £178,329,576. Will the honorable senator say that that money is in the pool now ?

What is the policy of the /Government for financing the war ? They are going to borrow the money. It will be borrowed at the old standard of 4^ per’ cent.

Senator Millen:

– At what standard did’ you borrow?

Senator GARDINER:

– At per cent.; and if the honorable senator can get any satisfaction from that inconsistency he is welcome to it. I said at the outset of the war that I was anxious that nothing should be done to disturb the business of this country. But the war has kept us living in a state of anxiety, for three years, and we fully realize now what the position is. I recognise, therefore, that the whole forces of the nation must be organized to carry the war to a successful conclusion.

Senator Millen:

– Do you mean the whole of the forces?

Senator GARDINER:

– The whole of the forces of the nation should be organized.

Senator de Largie:

– A convert to con- scription !

Senator GARDINER:

– I am no convert to conscription. From the first day I answered a question on the subject I have not altered my view about conscription. I am perfectly satisfied that the whole of the forces of this country can be organized without any of the absurd methods of those who wished to force conscription upon the people. If the war were conducted on the principle that those who could best afford to pay should pay, there would be no slackers and shirkers. The Government are simply giving a promissory note to posterity. Who will pay the wages of the” 360,000 men who enlisted to fight for us?

Senator Crawford:

– Not the supporters of the honorable senator.

Senator GARDINER:

– Unfortunately, my supporters are in the position of Sena-, tor Crawford’s supporters. Whatever the taxation of the country may be, my supporters will pay equally with his supporters. “We have already borrowed over £100,000,000 to carry on the war, and the interest is due half-yearly. When the men who are fighting for us come back and participate in the industrial warfare, does not the honorable senator see that by this measure we are loading them with the responsibility of raising the very money which was borrowed to clothe, feed, and equip them?

Senator Senior:

– And to defend the places they come back to.

Senator GARDINER:

– Tes ; but do not honorable senators see an injustice in -that provision? The men not only offered their lives, as Senator O’Keefe interjects, but those who return will have to pay afterwards.

We hear the shirkers pf’ financial responsibility saying to people, “ Go to the Front and fight for us, otherwise you will be everything that is vile.” That is the attitude of some honorable senators on the other side.

Senator Foll:

– -You never heard that from me.

Senator GARDINER:

– I am glad if the honorable senator has never used that sort of language. I think he will agree with me that it has been heard too frequently from the recruiting platforms.

Senator Crawford:

– The well-to-do eligibles are going just as willingly as others.

Senator GARDINER:

– Does the honorable senator believe that?

Senator Crawford:

– I know it.

Senator GARDINER:

– I have no desire to discriminate between what has been done by different classes of people who have given their all, whether rich or poor. If the rich have done well, I say more power to them. That the poor have done well I know. Apart altogether from the question of rich and poor, here is a simple proposition to be considered. The war is costing us £70,000,000 a year. What are the financial efforts which the Government have made? They have put before us a measure by which at the outset they were going to raise £450,000 a year for a period of two years. I venture to say that when the exemptions which have been carried in the other House have been dealt with - and there, by the way, any Nationalist could get an exemption for his friends-

Senator Pratten:

– You are wrong.

Senator GARDINER:

– The exemptions fell so thick and often in the other House that one could almost see them. I have a vivid recollection of the occasion on which Sir William Irvine was fighting to have the professional men of this country exempted. Surely if the barristers and doctors have made increased profits during war time it would not be a hardship to let the excess money go into a common fund to pay for the war.

Senator Fairbairn:

– The hardship was that it was not pointed out to the men ‘in time.

Senator GARDINER:

– I agree with the honorable senator-, and, although I do not like .pledging myself to vote for an amendment which would embarrass the Government on their masterpiece of financial legislation, yet in war matters I shall always be considerate.

I take it from the interjection that the retrospective aspect of this Bill is objectionable.

Senator Fairbairn:

– That is right.

Senator GARDINER:

– I say so, too. If the Government are prepared to take off last year’s war-time profits and extend the duration of the measure for a year longer I am prepared to support it. There is a fair proposition.

Senator Millen:

– Do you mean that we should collect the tax on the first year, miss the next year, and extend the period ?

Senator GARDINER:

– No. My suggestion is that the Government should exempt the first year in which they propose to raise the tax, because it would be extremely difficult to collect the money, and make the Bill operate for a year later.

Senator Millen:

– That would be a handsome proposition for the man who made the biggest profit in the year the honorable senator proposes to exempt.

Senator GARDINER:

– It might be, but no one will deny that retrospective taxation is a very dangerous principle to embody in our legislation. According to the Bill as it stands its operation will expire in the June following the termination of the war, and if we continue its operation for a further twelve months I venture to say that the difference between the amount collected during that twelve months and the amount collected under the measure as iti stands in respect of last year would not be very great. The difference might be in favour of the operations during the twelve months following the war. Who knows that we may not have a boom time immediately after the war is at an end? The Government, in carrying out the mandate of the people to win the war, have produced this as their chief financial measure for the purpose. I do not bind myself not to support amendments if I consider them reasonable, but I shall be very reluctant to submit any amendment which would embarrass the Government in connexion with this win-the-war measure. However, if they are prepared, in the words of the very distinguished gentleman at the head of the Government when speaking with reference to industrial troubles, to “let bygones be bygones,” and adopt a sounder financial system, they might leave the events of the year before last out of consideration, and make this measure apply for this year and during a period twelve months later than the duration of the war. That would remove the injustice which will otherwise be imposed upon a section of the community that will find it most difficult to meet its obligations should the Bill be passed as it stands. There can be no doubt that a very’ large section of the people will find it most difficult to meet their obligations under this Bill. If the operation of the measure is advanced for a year after the termination of the war, I believe it will be found that in time of peace we shall be able to do more in the direction of finance, and at less risk than we can hope to do in time of war.

Senator Senior:

– If the honorable senator is correct in saying that a section will find it difficult to meet their obligations under this Bill, what becomes of the £75,000,000 or the £175,000,000 which he was talking about just now?

Senator GARDINER:

– I was putting a suggestion before the Government, but I do not propose to move a,nv amendment to give effect to it.

Senator Senior:

– That is a very lame get out.

Senator GARDINER:

– I can assure the honorable senator that all the time I have been in the public life of the country, I have felt too clumsy to get out of anything.

Senator Millen:

– Not even out of a Ministry

Senator GARDINER:

- Senator Millen may say that if he pleases, but it is on the records of this country that I did getout of the Ministry, and on my own volition. It appears to me that Senator Millen would like to discuss all these matters from a personal point of view.

So far as Senator Senior’s interjection is concerned, I may be allowed to say that every member of this Parliament elected at the last general election has a responsibility to do his best to win the war. In connexion with the financial measures that come before us, we are bound to make the best proposals that we can put forward. My view of the situation is that, the nation will never be properly organized for the winning of the war until the finances for the purpose are properlyorganized. Every shilling that can be used effectively by the Government for carrying on the war should be controlled by them. If we fix a fair margin for the maintenance of even the wealthiest in the community, to what extent will it injure a man whose income is £100,000 a year, if for two years he is asked to live on £4 a week ? He may feel his financial losses keenly, but his position cannot be compared with that of the widow whose son, or all of whose sons have given their lives for the conduct of the war. The arrogant possessors of wealth, by their statements in Parliament and through the press, have tried in vain to compel every eligible man in this country to go to the Front whether he wishes to do so or not. The same arrogant possessors of wealth who are controlling the Win-the-war Government, shirk the responsibility of paying their fair share of the cost of the war. I say that their fair share of the cost of the war should be the bulk of the expenditure on the war. I contend that the least we can ask the wealthy classes in the country to do is to clothe and keep the men who are fighting for them at the Front out of their annual earnings, not out of their dead wealth, but out of the live incomes they draw from the country each year. That is not too much to ask of them. What we are doing, on the contrary, is that we are borrowing money to conduct the war. We are borrowing money to pay allowances to wives and children of our soldiers, to pay the wages of the soldiers, and to pay for their transport. They represent the bulk of the manhood of the Commonwealth between the years of eighteen and fortyfive, and when they come back, the responsibility will be upon them to pay the bulk of the interest on the money we have borrowed, and it will be upon them and their descendants to pay the principal of the moneys borrowed to maintain them while fightingfor us. That position is repugnant to me, because I believe that we should organize the whole of our resources for the conduct of the war, and our financial resources are the first that should be organized. Instead of this flimsy pretence of financial legislation to win the war, I favour a drastic, far-reaching, and allembracing financial proposal which will call upon those who are receiving huge incomes during the war to help to defend Australia, and do Australia’s share in the maintenance of the British Empire.

Senator PRATTEN:
New South Wales

– I have been unable to follow the figures quoted by Senator Gardiner in his opening remarks. I remind him that such figures are quite useless unless the amount of capital is ascertained and compared, and also the peculiar circumstances of each individual case. I remind him, further, that in some circumstances the profit on a £5-note can be mathematically made to run into hundreds of thousands per cent. We have to-day a War-time Profits Bill before us, and some of the later remarks made by Senator Gardiner can be said to apply to that measure. 1 was pleased to hear what he had to say concerning the retrospective character of the Bill; but I would remind him that he was a member of a party that last year had the fullest opportunity to take some practical steps towards imposing the cost of the war upon the wealthiest taxpayers in the community. One suggestion that was made by that party in the direction of a wealth levy was jettisoned by the party at the last elections.

Senator Millen:

– And by Senator Gardiner.

Senator PRATTEN:

– Yes, and by Senator Gardiner. There was no attempt on the part of Parliament last year to proceed with war-profits taxation of any sort. It has been left to the National Government to attempt something. At all events, whatever the nature of this Bill may be, there will be something attempted, and, I believe, something done.

Senator Gardiner:

– I hope the honorable senator is satisfied with it.

Senator PRATTEN:

– I am not satisfied with the Bill. In addressing myself to it, I do so in my capacity as a repre sentative of that State in the Commonwealth which pays the largest amount of taxation, and which has the biggest city in Australia.

Though the remarks which I have to make will be made more in sorrow than in anger, I intend themto be helpful to the Government in connexion with the imposition of taxation that will have to be proposed in the not distant future. Senator Millen introduced this Bill with a second-reading speech, during which my brilliant friend did not seem to be particularly enthusiastic with regard to its merits. It seemed to me that he was faced during the whole of his speech with the spectre of the Daylight Saving Bill.

I should like to make some preliminary remarks regarding some of the financial events that have led up to the introduction of this Bill, Broadly speaking, I think it can be said that when the war first began many of the world’s financial leaders did not think it possible, owing to the ramifications of international finance, that a war such as we have had could last for more than a few months. Many others in a position to express an opinion thought that, owing to the conditions of modern trade, the war could not go on for very long. Others prognosticated extreme financial and commercial depression. In the wildest dreams of most of us, we could hardly realize that the war would not really interfere very much with the prosperity of the industrial workers of the nations engaged in it. Generally speaking,I think it can be said that in the case of manufacturing and producing interests, not engaged directly in the fighting, the war time has brought about in many cases a state of unexampled prosperity. It certainly has done soto the rank and file in England. There are no longer there 13,’000,000 of people living on less than £1 per week. I think that it may broadly be said, as honorable senators who have been there recentlywill bear out, that in England to-day there are no poor people left-

Senator de Largie:

– Hear, hear ! They are all engaged in work.

Senator PRATTEN:

– Canada and the United States have hugely increased their industrial activities as a direct result of the war. Australia and New Zealand have also experienced a good deal of prosperity, and in no conceivable circumstance can it be said that even we out here, so far as our production and manufactures are concerned, have received a set-back owing to the war.

When the present National Government went to “the people, there was included in their programme a promise to introduce a War-time Profits Bill. Whether the promise was that of the War-time Profits Bill that was before the last Parliament, I cannot say. At all events, a promise was made. We all agree that, if they can be discovered, profits made out of the war should be heavily taxed. It is a good principle, too, that additional prosperity should be heavily taxed, irrespective of any pre-war standard. I entirely agree, as I believe all honorable senators agree, with every argument that has been advanced in Australia or elsewhere in favour of taxation on large profits made in war time.

About two years ago a war profits tax was mooted in England, but the Minister in charge found it would be impossible to impose an exclusively war profits tax, so an excess profits tax was evolved - that is, a tax on excess profits made during war time, and consequently it was necessary to have a pre-war standard of profits. At first this tax was 50 per cent.; later it was increased to 60 per cent. , and this year to 80 per cent., and all along the Governmentcontrolled munition factories have been working under an agreement whereby four-fifths of the excess war profit made by them, is paid back to the Government. This tax was not retrospective in England, because the Bill was passed through the House of Commons at a comparatively early stage in the history of the war. As Sir John Forrest and Senator Millen have said, New Zealand followed with a measure imposing a tax of 45 per cent, on excess war profits. Canada adopted- a different scheme altogether from the tax imposed in England or New Zealand. The Dominion struck out on a line of its own by imposing a graduated tax on all business profits made during the war, and recently the United States of America followed on the lines adopted by the Canadian Government, the English and New Zealand principle not being recognised.

As far back as 18th May of last year war-time taxation proposals were intro- duced by the Government of the day, but they were not proceeded with. I would remind .Senator Gardiner that in -Wie Bill introduced by his own Government the principle of a pre-war standard was accepted, the only difference between that Bill and the measure now before the Senate being the interest to be allowed upon new businesses. It seemed to me that last year the Government of the day shirked their duty, because they had ample opportunity, and there was ample need for proceeding with the Bill.

Senator O’Keefe:

– I - I suppose you know why it was not proceeded with ?

Senator PRATTEN:

– No.

Senator O’Keefe:

– Y - You know the Prime Minister was absent at that time on Commonwealth business in London.

Senator PRATTEN:

– But surely an important matter, such as taxation to find money to carry on the Avar, need , not have been delayed for six months owing to the absence of the Prime Minister. Whatever reasons there may have been for delay the Bill was not proceeded with. The same measure came before the Treasurer of the succeeding Government, and he forecasted certain amendments in the direction of making it more workable, but the same principles were retained.

The Bill now before the Senate has created the keenest interest throughout the country, and has provoked a great deal of criticism. As far as its principle is concerned, it has been presented to the Federal Parliament in five or six different forms since its introduction in May of last year; even in this session it has been twice withdrawn for amendment.

Senator Millen:

– Not withdrawn.

Senator PRATTEN:

– Well, it has been suspended for amendment. I thank the Minister for the correction. The Bill consists of twenty-eight pages of closely-typed matter, and may I say with regard to ita complexity that, in the not distant future, if the man in the street wishes to illustrate a complicated problem, he will very likely say, “ Oh, it is very much like the War-time Profits Tax Bill.” The measure has been considerably improved by the amendments made in another place. I am not saying anything about the exemptions. I am speaking only with regard to the machinery clauses put in by the Government or suggested by private members with the object of improving the Bill. I submit, however, that this

Bill can never be fair and equitable to all classes. It will always be complicated, and the tax always costly to collect, for the Bill does not lay down the fundamental rule of taxation that nobody shall be exempted, and that the more a man makes the more he should have to pay.

Senator Grant:

– That, is a very unsound principle, anyway.

Senator PRATTEN:

– In a democratic country such as this the Senate, as the House of review, should endeavour to make all taxation fair, just, and equitable, striking everybody alike. Much to my regret, this Bill does not do that. I say so with all respect to the Treasurer (Sir John Forrest) or the Treasury officials who may have been responsible for its principles, that they have lifted the principles of the British Act in toto and are trying to apply them to the conditions of the Commonwealth irrespective of climatic, industrial, or any other complications. It is out of harmony with the industrial policy of the Government. In England the Government are spending millions of money every day amongst munition workers and Army and Navy contractors, who, by virtue of their callings, are making very large profits indeed. Canada, too, has participated to some extent in this huge expenditure ; but in New Zealand and Australia, on the” other hand, there has been no manufacture of munitions and no possibility of these large profits as a result of this daily expenditure by the Government upon the war. Therefore, we have no illustration like that of the British ship-owners’ profits, which jumped from 20 to 250 millions sterling. Those responsible for this Bill have not taken into consideration the very great difference there is in Australia compared with those countries of the northern hemisphere which are really at war and are engaged almost solely with the manufacture of munitions.

I think we have to ask ourselves, with regard to all taxation, whether it is necessary, whether it is fair, whether it is simple, and whether it is expedient or just. Personally, I think this Bill is expedient, but it could go a long way further, and I very much regret that it will not cover all profits made in war time. Long before this measure was introduced, the Associated Chambers of Manufactures of Australia carefully considered the principle of the Bill which was then before the last Parliament, and stated, I think, in a business-like and fair way what they thought would be its incidence upon secondary industry. Representations were made to the Treasury to this effect -

At the outset it should be stated that the members of the Chamber have not approached the matter with any spirit of antagonism to necessary increased taxation. It is fully recognised that the heavy expenditure incurred in regard to the war must be met in as cheerful a manner as circumstances will permit, and taxation for. that purpose must be accepted as inevitable.

The principal objections to the Bill as now drawn are, firstly, that in its incidence the tax does not fall equitably on the community as a whole, nor even upon those whom it is supposed to reach, and secondly, that if it is intended as a substantial revenue producer, it will probably fail in its objective.

It is understood that the original object in bringing in this measure was to secure from those who profited by the existence of the war a substantial share of the profits so made towards defraying the cost of the war.

While this, no doubt, applies to a large extent in Great Britain, through conditions arising out of the war, especially in regard to shipowners, colliery owners, armament, munition, and equipment makers, and other suppliers of war material, who undoubtedly were making huge profits as a direct result of the war, it can with safety be stated that this applies only to a most limited extent in Australia. It is believed that manufacturers in Australia generally have not benefited in respect to profits out of the existence of the war, indeed in many cases, quite the reverse. Having this in view, taxation to meet the requirements of the times should fall equally upon those of the community best able to carry the burden, irrespective of profession, trade or occupation. The proposed Bill does not, in any sense, meet this condition, as it is directed against the profit derived from the use of capital without any consideration to the risk entailed, or allowance for the element of personal exertion involved in making capital highly productive.

The proposals then made were to abandon the War-Eime Profits Tax Assessment Bill altogether, and in its stead to increase the rate of Federal income tax, which could be done quickly and effectively by a short amending Bill raising the, income ‘tax rate to the amount’ required. The great complexity and cost of collection of this tax was pointed out, as was also the fact that no taxation, if it was just, and reached everybody alike, could be objected to by the manufacturers of Australia. Thi9 was sent three months ago to the Treasurer for consideration. Some of the suggestions which I have not troubled the Senate to read have been accepted by the Government, but the main principle of the Bill still remains, that it will impose this war profits taxation upon some, and omit altogether others who possibly are better able to pay. It seems to me that the Bill as it will now operate hits out blindly, and oftener than not hits the most active man. It will fall almost entirely on the commercial trading and manufacturing community, and even in this section of the community all old established and remunerative businesses that do not make a bigger profit in war time than they made before will get off scot.free. Nobody has ever given any valid reason why the man who, during the last two or three years, has improved and increased his business should “be sub ject to a tax from which another, whose business, although it may not have been increased during the war, is still larger than his, is completely exempted. If the increased profits were made out of the war, there would be something to be said for it, but this taxation does not reach that far. The Bill imposes taxation unfairly upon those active members of the community whether they have made anything out of the war or not, whilst persons making £10,000, or -even £100,000 per year are not taxed if they enjoyed those incomes before the war. Accumulated wealth in many directions is allowed to escape, and there is no equality of sacrifice under’ the Bill.

The object of taxation should be >not only to raise revenue, but to raise it in the fairest possible man:ner. An examination of the incipience of this tax shows that there will be ‘many cases of the rich man escaping , anti the comparatively poor man having to pay. We are granting favours to some. *we are making victims of others, and I personally have no sympathy with a measure which shelters some wealthy people and concerns. The Government! have -said, “ We adhere to the policy that we laid down at the last election, that no man is entitled to make more profits during war time than he did before.” My answer to that is: What about the exemptions proposed in the Bill? The Government say further that they will tax no one who has nob done better during the war than he did before. My answer is that the Bill will not tax every one who has done better during the war than before. Let me draw the attention of the Senate to the incidence of some of the taxation under the Bill. We, the Senate of Australia, can remember on most occasions, and I hope will remember on all, that we are a House of review. I believe the Constitution intended that the Senate should be a House of review, a Chamber to amend, shape, and improve the hasty legislation sometimes sent to us. We can remember also that we have no sectional constituents. We have not a preponderating number of farmers, miners, pastoralists, or industrialists among our constituents, but come here representing the States and the greater interests of Australia. Our function as a House of review is to endeavour to perfect whatever is sent to us. It is in that spirit that I am addressing my remarks to the Bill. It exempts gold mining. I have no objection to that, because the arguments advanced for that exemption are sound, and we want all the gold that we can get. But the mining industries of Victoria and Western Australia are very largely gold mining, and very little else, whereas the mining industries of Queensland, New South Wales, and Tasmania are largely in the general metals. I do not think the exemption of gold-mining will be a breach of the Constitution as making a distinction between States, but I submit that the exemption of one kind of mining and the inclusion of others may work out so, and that the mining interests of Queensland, New South Wales and Tasmania will be hard hit, especially the small men, under this Bill, while the mining industries of Victoria and Western Australia will get off practically scotfree.

The Bill also allows in this direction a number of wealthy companies to escape. I was very much interested the other week in reading some figures from a correspondent in one of the Melbourne daily newspapers about the incidence of the Bill on the Broken Hill mining companies. The writer said that, from the statistics given in th’e last directors’ report of the Broken Hill Proprietary Company, he took the following figures with regard to the mean price* - that is, half way between the highest and lowest - of certain metals in the pre-war years and since. He showed that silver averaged in .the pre-war years of 1911, 1912, and 1913, 2s. 2d. ll-16ths per oz., while the mean price in 1916 was 2s. 7d. 7-16ths ; lead jumped from £16 19s. 7d. to £31 12s. 6d., copper advanced from £65 15s. to £113 14s., and spelter, or zinc, advanced from £24 17s. 6d. to £72 5s. He went on to say that in view of those marked increases the men in the street might be forgiven for thinking that the companies interested in those metals had made excess profits during war time. But what are the figures? The nine principal companies at Broken Hill - Amalgamated Zinc, British Broken Hill, Broken Hill Proprietary, Block 10, Block 14, Broken Hill South, North Broken Hill, Sulphide Corporation, and Zinc Corporation - declared profits totalling as follows.: - 1911, £1,181,000; 1912, £1,927,000; 1913, £1,651,000. He went on to say, “ When due allowance is made for the increase in the profits of the Proprietary Company in consequence of the introduction of new capital for the Newcastle works, none of the companies mentioned will pay any tax at all in the first year, and only three out of the nine will pay in the second, because in 1915 their published aggregate profits amounted -to £1,554,000, and in 1916 to £1,844,000, the pre-war average of profits being £1,843,000.” Seeing that the metals they handle have almost doubled in value, this will show honorable senators something about the incidence of this tax. Personally I must confess to having been very greatly disappointed when these figures were published. They have not yet been refuted or denied, and it seems to me that if the statement is true so far as the Broken Hill companies are concerned, they may be entitled to be called “industrial shirkers.”

Let me consider the incidence of the Bill from another angle. I have here the estimated value of Australian production in 1915, according to Knibbs. I am sorry the figures for 1916 ‘are not available, as they might have been illuminating in many- directions. The following figures for 1915 have been culled from the statistical tables : - We produced in that year from agriculture a value of £73,769,000; from the pastoral industry, £65,000,000; from dairying, poultry keeping and beekeeping, £21,000,000; from mining, £22,397,000; while from manufacture the added value given to the raw materials was £62.,888!,000, nr a total ;of Australian production under those headings of £251,500,000. In all the above, I have given only round figures. In addition to the figures given for manufacture, the factories of Australia during 1915 consumed over £100,000,000 worth of raw material, and employed 312,000 hands. The exemptions under the Bill include all fruit-growers, agriculturists, dairymen, and presumably forestry and fisheries, while under certain clauses the pastoral and mining industries will be partially exempt. Practically, therefore, the whole of this taxation will fall upon the secondary industries of the Commonwealth, but even among them all oldestablished and wealthy industries will be exempted. Let me give an illustrationof the incidence of this taxation. The Silverton Tramway Company in 1911, 1912 and 1913 made an average profit of 58 per cent, on its capital of £250,000. That capital of - £250,000 included £187,000 worth of watered stock,- and thisconcern will entirely escape the incidence of the tax. The other day there was published in the Sydney Daily Telegraph a list of forty representative companies - not the representative’ companies that were quoted by Senator Gardiner, but old-established companies which have been trading for a long period - consisting of a miscellaneous collection of banks, gas companies, breweries, and mercantile and industrial “concerns. For 1917, the aggregate profit of these forty companies was £929,000. Their aggregate profit for the year 1914 was £1,051,000. Their pre-war standard of profit being in excess of the profit which they make now - no matter how handsome the latter may be - they will be exempt from taxation under this Bill. Then the measure provides that all reserves of capital - that is to say, capital built up out of profits - shall be regarded as capital. One of the incidences of this is shown by the accounts recently published by a trustee company. It has been trading for ten years, and has a capital of £50,000. It has paid regularly and consistently a dividend of 10 per cent, upon that capital, and it has also put away an average sum of £5,000 per annum since its establishment. In other words, it is making 20 per cent, profit upon its capital, and as that 20 per cent, will be its pre-war standard, it will escape taxation under this Bill unless it happens to make more than that standard of profit during the war years. But a man with a new business, which is perhaps paying for the first time owing to his enterprise and activities, will, under similar circumstances, have to pay £2,500 to the Government for the year 1915-16, aud £3,750 for this year. The other firm, owing to the accident of its birth, will entirely escape taxation. »

I have worked out some further illustrations of how the Bill will operate in the case of new concerns. I will assume that there is an individual who is trading with a capital of £10,000, and who has consistently made during the past few years a profit of £5,000 annually. He will have to pay the Federal and State income taxes of approximately £1,00Q, and consequently he will pay 20 per cent, of his profit to the Government, and 80 per cent, into his own pocket. He will not be touched by this Bill unless he makes a profit in excess of £5,000 a year. But a new business under exactly similar conditions of capital and profit will be called upon to pay 65 per cent, of its profit to the Government, and the taxpayer will be able to retain only 35 per cent, of it. Take another case - that of a company with £40,000 capital, which has the luck to be an old-established company, and to have a pre-war standard of £10,000 profit per annum. If it does not make more than that amount yearly it will be able to retain 70 per cent, of its profit, and will pay to the Government only 30 per cent, of that profit. But if a new company comes along with a capital of £40,000 and makes a profit of £10,000 a year, it will be required to pay 52£ per cent, of its profit to the Government, and will be able to pay into its own pocket only 47^ per cent, of that profit. I will give another illustration of how the Bill will operate, and of its bearing on an amendment which. I intend to move in Committee, with a view to limiting the total taxation to 66 2-3rds per cent, of the total earnings of the individual. Let us suppose that a man has a capital of £20,000, upon which he makes the very handsome profit of £12,000 a year. If he has been making that £12,000 annually for three years, he will have a pre-war standard of profit, and will thus escape taxation under this Bill. He will pay State and Federal income tax, and will be able to put 70 per cent, of his profit into his pocket, whilst handing over to the Government only 30 per cent, of that profit. But if a new man comes along who is making £12,000 profit annually on a capital of £20,000, under this measure he will be obliged to pay 70 per cent, of his total income to the Government, and will be able to retain only 30 per cent, of it.

There is another incidence of the Bill which has not been commented upon very largely. I allude to the provision in it which permits old-established businesses to deduct Federal and State taxation from their schedule of profits before this war-time profits tax will apply to them. That will enable a man who has been making £10,000 a year profit on a capital of £40,000, to make an additional profit to the extent that is represented by the State and Federal income taxes. I hold that such a provision will inflict a further injustice upon new businesses. The illustrations which I have given may be multiplied indefinitely. The amendment that was made in the Bill elsewhere in the direction of exempting all profits up to £1,000 a year was certainly an improvement in the direction of simplicity. But in reality it does not amount to very much. Senator Gardiner has quoted some figures concerning the aggregate incomes of the rich individuals of Australia. Summarizing these., I find that there are 12,374 taxpayers who have incomes aggregating £28,815,000, which, I think, were the figures mentioned by the honorable senator as representing the total amount of incomes earned in Australia by all taxpayers in receipt of £1,000 a year and over. In other words, 5.7 per cent, of the taxpayers pay 84 per cent, of the income taxes of the Commonwealth. If the Bill, without the exemption of £1,000, was estimated to yield a revenue of only £900,000 in two years, I ask the Vice-President of the Executive Council how many persons it will affect in its present form? Either there are no war-time profits being made, or tha great majority of persons are going to be exempted from the operation of the Bill.

Senator Millen:

– There is a mighty big squeal if there are so few persons going to be hurt.

Senator PRATTEN:

– I am complaining of the incidence of the Bill. I say that the tax will be largely levied on new industries, and new developments in Australia. In fact, I have heard it said outside that this Bill is a baby-killer. ^1 would like now to direct attention to the statements made by Sir Joseph Ward in his recent Budget speech in New Zealand regarding the incidence of war-time profits legislation there. He said -

With reference to the excess profits duty, it will be remembered that last year I asked the House, in response to a generally expressed wish, to levy special taxation on the extra pro fits that had accrued to taxpayers owing to the war. On investigation it was found here, as it had been found in England, and was afterwards found in Canada, France, and the United States, that the difficulties of ascertaining exactly the actual profits resulting from the war were almost insuperable. The machinery needed for the purpose was too elaborate to enable the revenue to be collected when it was required. The method adopted here was substantially on the lines of the English Excess Profits Tax, but as. the amount realized did not reach my estimate, I propose this year to readjust this form of taxation. I may say that if the profits tax were, to be retained, and doubled in rate, so as to make it 90 per cent., it would not provide the amount required. I must, therefore, ask the House to authorize such a change of taxation as will make it certain that larger sums will be contributed by those who have not paid their just share under the profits tax. ‘ The adjustment 1 propose will not only provide the amount of revenue I require, but will ensure that everyone shall contribute in proportion to his means. Experience of the excess profits tax has also shown that it is inequitable. The concessions necessary to avoid hardship in some cases resulted in the escape of many other taxpayers who were in a position to pay, and in my opinion should have paid. The main reason for this is that the conditions here are different from those in the older countries. In this young country there is a larger proportion of concerns’ in the process of development than is the case in the older countries, and the tax unduly presses on them.

Evidently New Zealand has reaped the bitter experience that invariably follows the passing of hasty, unfair, and unscientific legislation. I exceedingly regret that the present Nationalist Government has not seen its way clear to introduce into this country the Canadian system.

Senator Needham:

– Does the honorable senator call this hasty legislation?

Senator PRATTEN:

– I exceedingly regret that the present Government has copied the methods of a former Government - the methods of an ex-Treasurer in the person of Mr. Higgs, who incorporated in the Bill which he introduced principles lifted from the Imperial Act which are not fairly applicable here.

This Canadian system has been described by the Canadian Treasurer as very satisfactory. He said that the Act has proved quite successful, and that not the least of its merits is the small cost of collection and administration, namely, a cost not exceeding half of 1 per cent. The revenue from the tax in Canada last year was about £2,500,000. The estimated revenue in Australia is £450,000 per year, even with the £1,000 exemption which was allowed after that estimate was made. The Treasurer estimates that the cost of collection under the Bill will be at least £35,000 per year. He says that it may reach £50,000. But I submit that the cost of professional assistance, time, and railway fares, and things directly concerned with the taxpayer will be at least equal to the amount of the cost to the Government. I do not think that there will be very much left out of £100,000 to the community when the cost of the tax is known. That is 20 per cent, of the amount of the tax that is estimated by the Treasurer to come in during the years in which it will be imposed as against the fact that the Canadian business profits tax only costs half of 1 per cent, to collect, that is, onefortieth of the amount it will cost in Australia to collect a war-time profits tax.

Senator Guy:

– They have no income tax there?

Senator PRATTEN:

– In Canada there is an income tax both municipal and provincial, and during the last month or two a measure was before the House of Commons, at Ottawa, to impose an income tax for the Dominion. The Canadian Act, which taxes business profits, gives an exemption to all companies whose capital is £10,000 or less. It imposes a tax of 25 per cent, on all profits over 7 and under 15 per cent., a tax of 50 per cent, on all profits over 15 v and under 20 per cent., and a tax of 75 per cent, on all profits over 20 per cent. A company, therefore, with a capital of £100,000, irrespective of the accident of birth’ or any pre-war standard, would be taxed, if it made 10 per cent., £750 per year, and the graduations would run up to £4,500 if it made 20 per cent., to £27,000 if it made 50 per cent, on its capital, or 55 per cent, of its” total profits. There is no doubt that the Canadian system has been considered by the present Government, because two or three months ago we got a pronouncement from the Treasury. Whether it came from the Treasurer or from Treasury officials I am unable to say, but we did get a pronouncement that great consideration had been given to the principles of the English and Canadian systems, and it was thought that the former would be the fairest to apply to Australia ; consequently the Treasury started away again on this Bill, which is fundamentally wrong.

I should like to put another phase before the Senate, and that is in connexion with how the Bill will operate in regard to new industries.- All honorable senators know that in England the policy of the Government, particularly during the last two years, has been that there shall be no new industries established. The attitude of Australia is the direct antithesis of that policy. We not only set out to obey the injunction of Mr. Lloyd George, the Prime Minister, to make all we possibly could within our own borders and, during war-time at all events, be as self-supporting and selfcontained as possible, but throughout the length and breadth of the community we had the battle cry of “ Root out German trade, start new industries, and the Government will offer you every encouragement.”

Senator de Largie:

– What new industries have been started?

Senator PRATTEN:

– Gladly the commercial community did start these new industries ; they waded right in with their coats off. I submit that very many important industries have been started as a result of this action.

Senator de Largie:

– What are they?

Senator Keating:

– Those connected with the baser metals.

Senator PRATTEN:

– I refer to industries connected with the baser metals and chemicals. The honorable senator can ran through the gamut of industries and find that in scores of cases new industries have been started and are being built up. .

Senator de Largie:

– There is no new industry in the case of the baser metals.

Senator PRATTEN:

– If the honorable senator has not had sufficient experience to know that in the great centres of population many new industries have been started as a result of the war, directly and indirectly, I would refer him to the Secretary of the Chamber of Manufactures in Melbourne and Sydney. I am sure he would find that there have been literally scores of new industries started which had never before been attempted in Australia.

Senator de Largie:

– Honorable senators who make assertions ought to give some proof of them.

Senator PRATTEN:

– The chemical industry has been started in five or six different directions. But I am discussing now the main principles of this Bill, and in Committee, I understand, honorable senators will have an opportunity to go into details.

In New South Wales, the representatives of trade and commerce and manufactures have been up in arms against the inequity in this measure. The other week, this resolution was passed by the New South Wales Chamber of Manufactures -

  1. That, in view of the financial position of the Commonwealth, and the necessity that exists for additional taxation to carry on the war, this chamber protests against the many inequalities, exemptions, and complications in the War Profits Bill now before Parliament.

I should like my honorable friends on the other side to take notice of this paragraph -

  1. That, in the opinion of this association, war-time profits taxation should contain no exemption, and be applicable to all classes of the community alike, whilst simplification of collection should be assured.

Not even my honorable friends opposite can object to a number of manufacturers coming together and deliberately asking the Government to impose taxation on all alike, and making the man who has the most income pay the most taxation ,

Senator Millen:

– Would not the effect of that resolution have been the abolition of the excess-profits tax and the institution of an additional income tax?

Senator PRATTEN:

– There has been a movement, as the Minister knows, to substitute the Canadian principle for the principle contained in this Bill, which is not only a legacy from ex-Treasurer Poynton and ex-Treasurer Higgs, but also a legacy from the special taxation imposed in England under exceptional circumstances. I personally regret extremely that the incidence of this measure will put some wealthy people in the privileged class and make victims of others.

Theincidence of this Bill, if it is keenly looked into, will be in the direction of a blow at progressive manufactures and new industries, while old established businesses will avoid its effects. It is very complicated in its incidence; it is unnecessarily harassing, and it makes the Commissioner of Taxation an actual dictator with regard to very much that goes on in connexion with our trade and commerces The revenue expected to be derived from the tax is hardly worth the upheaval it will cause in commercial circles. It is scarcely worth the cost of collection, which cannot reasonably be put at a lesser sum than £100,000! And it is hardly worth the commercial turmoil which is going to be evolved, and which will reflect itself in the future upon all honorable senators here. The Bill is inequitable and affects principally new secondary industries. It has been tried and found wanting, where a super income tax has been imposed in lieu of an excess war-time profits tax.

I shall not take the responsibility of voting against the Bill.

Senator Gardiner:

– After what you have said ?

Senator PRATTEN:

– I shall take the responsibility of voting against the Bill if the Government will bring down a measure to impose a war-time profits tax on everybody and one which will be fairer in its incidence. If it is not yet too late the Canadian system might be considered. I feel sure that if that measure were substituted nobody would grumble, and it would bring in almost millions of pounds where this Bill will bring in only hundreds of thousands. I, however, will not take any responsibility in connexion with the commercial turmoil which the Bill is going to bring about. I shall not take any responsibility with regard to the inequalities which are going to arise in connexion with the taxation. If the Bill is to go through Committee I should like to place before the Senate some suggestions for its improvement and smoother working.

The tendency of Taxation Commissioners in every State and clime, good and able men as they all are, is to get money first and settle details afterwards. In the administration of ‘a measure, which will collect 50 per cent, and 75 per cent, in one year and inflict a good many hardships, the complications will be so great that I do not think any great arbitrary action under this heading should be taken. I shall give one illustration of the arbitrary action of the Taxation Department.. For months, almost for years, representatives of the commercial and manufacturing community have been stressing upon the Federal Commissioner of Taxation the fact that a 5 per cent, reduction for depreciation of material which will only last from seven to ten years is unfair. Nothing remedial has yet been done, and the commercial community is suffering under the injustice. 1 give this as an illustration that any arbitrary action on the part of the Commissioner in connexion with a tax like this- will impose very great hardships indeed on the community.

I have a suggestion to make, and it is that the immediate collection, even within thirty days, of two years’ taxes will be very difficult indeed to carry- out. Most businesses, even when making handsome profits, do not keep money in the bank. So far as I know, they are run on overdrafts, and I do not desire to see every business man who requires an -extension of time to pay two taxes together being compelled to ask for that extension of time in forma pauperis. I think that provision to meet the matter should be in-‘ eluded in the Bill, and that some reasonable time should be given a man to pay up. We might charge him interest if we please, but we should not drag every man who has not the money immediately at his disposal to pay two years’ taxes within thirty days, before” the Commissioner of Taxes, and make him go before that official, cap in hand, in forma pauperis, to ask for favours.

In connexion with the Board of Referees, it is clear that under this Bill there will be an increasing accumulation of Commonwealth business in Melbourne if we are not very careful. Already, not only as the result of the temporary Capital being situated here, but, further, as a result of the war, business is . being more and more concentrated in this centre, and very little can be done in any other State of the Commonwealth with regard to finality of decision in most matters affecting trade and commerce now without reference to Melbourne. I should like to draw the attention of the Senate to the position of New South Wales as a taxpayer. In 1915-16 New South Wales paid 47.2 per cent, of the total Customs and Excise taxation paid throughout the Commonwealth. She paid 45.3 per cent, of the total land tax collections, 43 per cent, of the total income tax collections, and 41.5 per cent, of the total probate and succession duties. Honorable senators are aware, as are the members of the Government, that we have a city in New South Wales containing nearly 750,000 people, and I believe they are also aware that a fair proportion of the number of travellers by the InterState expresses now consists of business men who are being dragged to Melbourne in order to reach finality in their various business concerns. I submit that under this Bill it will be necessary to create, not only a Board of Referees, but Boards of Referees, so that this obnoxious taxation may, at all events, be got through fairly and quickly, and that business men of Sydney and elsewhere will not have to be dragged to Melbourne to wait about here for days and, perhaps, weeks while their cases are being decided.

Senator Millen:

– Does the honorable senator suggest a Board of Referees for each State?

Senator PRATTEN:

– My suggestion will be that, instead of a Board of Referees, provision should be made for Boards of Referees. I quite understand there are bound to be difficulties with regard to uniformity of decisions if there are even only two Boards. But if the Senate decides that there shall be Boards of Referees it may be left to the Treasury officials and the Taxation Commissioners to decide details as to what shall be done. One other defect of this Bill is that it leaves fax too much power in the hands of the Commissioner of Taxes. In thirtyseven different cases in this Bill problems have to be dealt with and decided at the discretion of the Commissioner. I forecast an amendment of clauses under which the taxpayer is given a right of appeal to the Board of Referees and providing for the widest possible appeal in connexion with, the administration of this measure.

I have not very much more to say about the Bill. Columns could be written concerning the incidence of the proposed taxation, and much more could be said in detail regarding the inequality and oppression it is going to breed. I prophesy, with all the responsibility attaching to my position as a member of the Senate, that the first year’s administration of this measure will create unparalleled turmoil amongst the business community, and will show the Government that the measure is not worth while. I am hopeful that if it be passed we shall have a repeti tion of what has occurred in connexion with the passing of the Daylight Saving Act, and that we shall be asked in due course to abolish this measure, and put in its place an Act which will tax everybody fairly and make the man who has most pay most. This Bill can never be satisfactory. Its fundamental principles are wrong. I ask honorable senators to carefully review, as I believe they will, the many ramifications of its incidence, in order to secure that it shall inflict the least hardship and complexity possible upon the business community. I have to confess that many of the clauses are obscure to me. It may be because I am a layman, and have not the trained intelligence of the legal mind ; but, in my opinion, there is much obscurity in the Bill which should be made plain, and I believe that by the time it emerges from Committee some of that obscurity will be cleared away.

I have had a few plain words to say with regard to this proposed tax. I do not consider that I should be fulfilling my duty to those who sent me here did I ‘ not express a plain and frank opinion upon all measures which, from time to time, are submitted to the Senate. I have said what I have to say by way of criticism without any desire on the part of any one or promptings by anybody to avoid taxation. On the contrary, I have told honorable senators that various associations do not care what taxes are imposed or paid so long as they are equitable and just, and the other fellow has to pay the same. I believe the Senate will fulfil the functions for which it was created under the Constitution, and will carefully review this Bill. If we cannot alter its fundamental principles - and at this late stage I do not believe we can do so - we can, at all events, make it work very much more smoothly than it is likely to work in its present form. Perhaps, as a result of our discussion of the measure, though nothing may immediately come out of it, any future taxation brought down by the Government - and I hold that future taxation must be heavy and must be introduced at a comparatively early hour - will be very much more carefully considered so far as Australian conditions are concerned, and will be more equitable than the tax proposed under this Bill.

Senator GRANT:
New South Wales

– The whole of the taxation imposed by the National Government, with the exception of £2,000,000 derived from the Federal land tax, has been imposed on an entirely wrong basis. This proposal is only another effort in the same direction. It will, therefore, receive the unanimous support of honorable senators opposite, and it is also likely to receive fairly good support from honorable senators on this side. The public of Australia, rightly or wrongly, believe that very large and very unreasonable and unfair profits have been made by certain sections of the community since August, 1914, and that a very large portion of those unreasonable and unfair profits should be swept into the Commonwealth Treasury. However, it is very doubtful if the Government will be able, under this measure, to give effect to that idea. I intend to vote for the second reading of the Bill in the hope that in Committee we shall be able to cut out a considerable number of the most objectionable clauses in it.

Perhaps more harm has been done in the matter of taxation by Adam Smith, in his Wealth of Nations, and by John Stuart Mill than any other two citizens the British Empire has produced. John Stuart Mill, probably at the dictation of the owners of Great Britain many years ago, laid down, amongst others, the following formula of taxation. He says, at page 365 of his Principles of Political Economy: -

The subjects of every State ought to contribute to the support of the Government as nearly as possible in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the State.

Had he left. out the explanatory- sentence the principle he. laid down would not have been so bad. But under this mischievous so-called canon of taxation - which, as honorable senators are aware, was blown sky-high by the late Henry George - the British Government have ignored, or almost ignored, as the Commonwealth Government did as long as they could, the Henry George method of raising national revenue. In Great Britain revenue was raised mainly through the Customs, partly by the taxation of light in the windows tax, the taxation of decorations upon carriages, an income tax, and a number of other equally objection able forms of taxation. It was only during the currency of the present war that an effort was made by the British Government to annex for national purposes an infinitesimal portion of the value which the people of England had given to the lands of that country.

The main source of revenue in Australia for a number of years has been taxation upon foreign goods made by sweated labour in Protectionist countries.

Senator Crawford:

– Do you object to that?

Senator GRANT:

– No doubt, it accords with the views of the honorable senator that foreign-made goods should still come into this country, as they do, to the value of about £80,000,000 per year.

Senator Crawford:

– No, it does not.

Senator GRANT:

– No doubt it is in accord also with the policy of the whole of the honorable senators opposite.

Senator Crawford:

– It is in complete accord with the views of Henry George.

Senator GRANT:

– I do not want to pursue this subject further. If I did, I could show that we derive a large amount of our revenue from the Customs; and that it is quite apparent that goods made in low-wage Protectionist countries will still be coming here, with the result that the workers of Australia will be prevented from manufacturing such articles. We have been assured by the Treasurer (Sir John Forrest)) that during the current financial year he expects to receive in Customs revenue between £13,000,000 and £14,000,000; and it should be perfectly clear to those who give the matter a few moments’ consideration that this policy of allowing foreignmade goods to be introduced into this country meets with the approval of the present Nationalist Government.

The PRESIDENT (Senator the Hon T Givens:
QUEENSLAND

– I have allowed considerable latitude. I must ask the honorable senator to confine his remarks to the Bill before the Senate.

Senator GRANT:

– I thought I would be strictly in order in referring generally to the question of taxation. I have not the slightest intention- at present to refer to the very important matter of land-value taxation ; but I shall probably take an opportunity at some future date, and perhaps will then discuss that question at considerable length.

Everybody will agree that any unreasonable profits made out of material required to carry on the war should be swept into the public Treasury ; but a measure like this will throw an extra burden upon the manufacturing interests of the country. The aim of the Government ought to be to levy taxation in such a way that it falls equitably upon the whole community, and, moreover, to levy it in such a way that it may be easy of collection; but, under this Bill, those who may be called upon to pay taxation will be obliged to engage expert assistance in the preparation of their returns. This course would not be necessary if the Government levied a flat rate of 3d. or 4d. on the land values of the Commonwealth, which have been ascertained by the Commonwealth- Statistician to total £445,000,000; and, if it were desired to increase or diminish * revenue, this could easily be done by increasing or diminishing the amount of the tax. All taxpayers would then know exactly what they would have to pay. This will not be so in regard -to the proposed new taxation scheme. As & matter of fact, a dispute is now in progress between one learned mathematician of New South “Wales and the Government Statist as to whether the formula laid down for the collection of the income tax is mathematically correct or not. How, then, could an ordinary citizen be expected to understand a measure of this sort? The Vice-President of the Executive Council (Senator Millen«) submitted the Bill in his usual light and airy manner, and intimated that we would all easily comprehend the curve under which the tax would be collected. I venture to say, however, that not one honorable senator could, unassisted, calculate the tax to be levied upon any citizen under our present income tax law. If the war-time profits tax is to be imposed under the same instrument and by using the same curves, it is probable that not a single member of the Commonwealth Parliament would be capable of correctly estimating the amount of taxation to be paid by any citizen ; but there is one good, thing about the Bill - its duration is limited ito a fixed period - and this proposal, I think, could with advantage be incorporated in a considerable number of other measures introduced in this Parliament. The date of the termination of this tax is fixed for the 30th day of June next after the declaration of peace. That is about the only good thing I can see in the measure.

It is proposed to exempt from taxation all profits earned between August, 1914, and June, 1915, notwithstanding that during that period substantial profits were alleged to have been made. If the Government can collect profits made since June, 1915, why not also collect profits made between August, 1914, and June, 1915? If it is right to enact retrospective legislation, surely it is right to make it retrospective for the whole of the war period. It must be remembered that this is not a “War Profits Bill, but a “War-time Profits Bill. As ^ rule, I do not agree with retrospective legislation, but if the Bill is to justify its title, it certainly should be made retrospective for the whole of the war period, though I am not prepared, at present, to support a proposal of that kind, because I am opposed to all forms of retrospective legislation which are not based upon proper principles.

A decidedly objectionable feature appears to have been incorporated in the Bill in regard to companies carrying on more than one business, for it is provided that profits made in one section of the business may be set against losses made in another ; so we shall probably have the spectacle of some large companies engaged in the multiplicity of businesses, and paying their shareholders substantial profits on the business as a whole, being called upon ‘to pay only a very small proportion of excess profits tax. There is no provision in the Bill, so far as I can see - nor do I think it will be possible to include such a provision - to collect a tax on excess profits in cases where they have been distributed. No doubt many who have .been making excess profits have been anticipating a measure of this kind and it may have been due to their influence that it has been so’ long delayed, and that no provision exists to compel payment of tax in regard to profits already distributed.

There is another phase of the Bill to which I invite attention. It is assertedand, T think, with a very great degree of truthfulness- -that excess profits have been made by manufacturers and others, who secured large quantities of commodi- ties just prior to, or shortly after, the war broke out. It must be remembered, however, that, in the event of the war suddenly ceasing, they would be left with large stocks of high-priced goods on hand, and would have to face the probability of serious losses. I think that, in Committee, provision should be made for the protection of manufacturers who may come under that category.

Personally, I agree with the idea that any tax paid in respect of Commonwealth and State land taxation should be deducted in returns under the war-time profits tax, because such items could hardly be regarded as income, seeing that they have been paid away in taxation. It is absolutely wrong for the Government to be continuously ignoring the proper source of revenue. We shall be confronted, as time goes on, with the necessity of raising more and more revenue, and it is impossible to say into what other highways and byways the Government will go to raise money. They have the necessary majority to carry their proposals, but they ought to realize that nothing can be done in the way of the effective repatriation of our soldiers, or the permanent settlement of the people upon the lands of this country, unless the Government go for their revenue to that source from which Henry George affirms all revenue should be raised, in- proportion to the value of the country which a person monopolizes.

Senator FOLL:
Queensland

– I have listened with a great deal of interest to the speeches on the Bill, and especially to that made by Senator Pratten. After studying the Bill in all its phases to the best of my ability, I fail to see anything in it that could not have been very well included in the income-tax schedule. I fail to see how it is going to secure to the Treasury the profits made as the direct result of the war. I regard it simply as an honest attempt on the part of the Government to carry out one of the promises made to the people from practically every platform during the recent Federal elections. Honestly, I cannot regard it in any more serious light. The Vice-President of the Executive Council (Senator Millen), in introducing the Bill, said that it had been previously realized that it was very difficult to ascertain exactly what a war profit is. I regard that as an admission on his part that there are not being made in Australia, as the result of the war, those huge profits which many people suppose, or would like others to believe. . On the question of what a war profit is, a well-known financial authority in New South Wales, Sir William McMillan, states : -

The original idea, as elaborated in England, arose out of the presumably extravagant profits made by contractors, middlemen, &c, who always amass fortunes during war time, at the expense of careless Governments with inadequate organization. The essentially war industries in Australia are very few, and bear no comparison to the vast and complicated operations of the Mother Country. A large amount of our expenditure will be used in repaying the British Government for expenses in the ifield, all of which must practically be sent from this country if the loans are raised here.

The Vice-President of the Executive Council led ‘me to believe by his speech that in many cases it would not be possible to ascertain whether firms had made their profits as the direct result of the war, or war contracts, or not. But clause 51 of the Bill provides -

The Commissioner, or any officer authorized by him iri that behalf, shall, at all times, have full and free access to all buildings, places, books, documents, and other papers for the purpose of ascertaining the taxable profits of any person, and, for that purpose, may make extracts from, or copies of, any such documents, books, or papers.

In view of the fact that such large powers are being given to the Commissioner of Taxation, surely he could have been authorized to inquire into the business of various firms and individuals throughout Australia, to ascertain whether they were actually making huge profits as the direct result of war contracts or not. If he can be empowered to investigate the inner secrets and working of businesses, I fail to see why it should be so difficult to ascertain whether excess profits have been made as the result of the war. This Bill will not touch, as Senator Pratten pointed out, the man who has made profits out of the war, but will cause great injustice, in many cases, to men who have made no direct war profits.

I am fully in accord with Senator Gardiner’s sentiment that it is deplorable* that any firm or individual should make excess profits as the direct result of the war. We must remember always the position of the men who are actually bearing the brunt of the fighting. They have had no opportunity to make excess profits. When the call of duty came to them, they did not consider what the financial value of the thing was going to be; they knew their country needed them, and they left their wives and little ones, giving up everything for their country. Many of them will never return, and it is indeed deplorable that there should be in our midst men who are to-day making huge profits out of the war. But I fail to see how the Bill will get at them in any way. Later on, I shall quote an example to prove that the measure will not hit home in the direction that I should like to see it take.

Clause 5 makes the Bill applicable to Papua. A few days ago, in answer to a question, the Honorary Minister (Senator Russell) stated that Papuan products imported into Australia were not exempt from the operation of the Customs Tariff. If the people of Papua are to be called upon to pay excess profits taxation under this Bill, why should they be treated as outsiders so far as the Tariff is concerned ? They are entitled to at least the same treatment as the people in all the States, because Papua is. now regarded as part of Australia, seeing that Australia has undertaken the responsibility of its governmnent. Either our Customs Tariff should not operate against Papua, or Papua should be exempted from taxation under this Bill.

Paragraph d of clause 8 exempts professional men from taxation, but the Minister (Senator Millen) gave no reason why that important exemption was made. Frankly, I am opposed to any exemptions. I want to see every section’ of the community called upon to pay its legitimate share of taxation to meet the cost of the war.- I object strongly to the exemption of professional men. I may be told that the reason is that large sums of money have had to be spent on their education to fit them to follow their professions. That’ may be so, but many business men, who will have to pay this taxation, have spent equally large sums in acquiring their business education and abilities. They will be in a very unfavorable position in comparison with doctors, lawyers, and others. Take as an example, a small township where there are two doctors, two lawyers, or two dentists. If one of the two enlists, the whole trade of the township goes to the other who is left, and he makes double the amount of profit that he would have made if the war had not occurred.

Senator Crawford:

– Two lawyers will always do better than one in a township.

Senator FOLL:

– Then I will take the case of doctors or dentists. I fail to see why in a case of that sort, where the profit is essentially a war profit, an exemption should be given, while many other men, who have made nothing as a direct result of the war, are going to be victimized, bled .to death, and, in many cases, driven out of business altogether.

Take the case of a man who has started in business during , the last eighteen months or two years. He probably earned about £500 a year while in the employ of a* private firm. As the result of starting business on his own account, his profits may increase to £2,000 per annum. Of course, it is conceivable that he would have made exactly the same profits in the absence of the war. Yet he will be taxed heavily, and if the next year should prove to be a bad one for him the chances are that he will be driven out of business altogether. Thus he will have sacrificed, not merely his business, but his position. Then let me point to a drapery establishment the ordinary profits of which are £15,000 per annum. But, on account of the war, and because of the lack of shipping facilities and other considerations, let us assume that its profits decrease to £10,000 per annum. Because it is able to secure large contracts with the Defence Department - contracts for the manufacture, possibly, of uniforms or blankets - its profits again rise to normal. As those profits do not exceed the pre-war standard of profits, they will be exempt from taxation. There is no reason why such a firm should be so exempt. ‘ No valid argument can be adduced in support of it being able to use war contracts for the purpose of sup- plementing its ordinary trading profits. If, as the result of the war, its profits’ decline from £15,000 to £10,000 annually, I am unable to perceive why it should be afforded an opportunity of supplementing its income by means of war contracts. In a great number of cases huge profits have been made out of the war, but the persons

The introduction of this measure was unwise, and all the matters with which it deals could have been better dealt with in an Income Tax Bill. I quite agree with Senator Pratten when he says that the cost of administering it will be extremely heavy. Seeing that the manhood of this country is prepared to make the supreme sacrifice on the battlefields of Europe, the least that the mercantile classes Can do. is to place their resources at the disposal of the Commonwealth. If the Bill were intended to get at the profiteers of the community I would heartily support it. But I cannot see how it will hit the man who deliberately uses the war for the purpose of exploiting the public. I ‘am extremely disappointed with the measure. There are many ways of ascertaining exactly what is a war profit, and if a Bill had been introduced to tax war profits only, I believe that it would have proved a great success. If the matters dealt with in this Bill had been dealt with in an Income Tax Bill, every section of the community would have been obliged to contribute in proportion to its means towards the cost of prosecuting the war. Let me point to the wharf labourers by way of illustration. As the result of many of these men having enlisted, those who have remained behind are able to earn considerably more money than they would otherwise have done. Had the provisions of this measure been incorporated in an Income Tax Bill, some of this additional income would have found its way into the Treasury as war profits. Then there are public servants who, because of officers who have made the supreme sacrifice, have received increases in salary, and also promotion.

Senator BOLTON:
VICTORIA · NAT

-Colonel Bolton. - They have not.

SenatorFOLL. - I can point to cases in which public servants had received increases and promotions consequent upon other public servants having enlisted, or, in some cases, been killed at the Front. ‘ These increases are essentially ‘war profits, and should find their way into the Treasury. Seeing that Australia’s very existence is at stake in this struggle, I would not exempt anybody from taxation. This Bill, however, is full of exemptions.

I notice that the Bill is intended to operate till the 30th June following the declaration of peace. ‘ The period over which it will extend is, consequently, a sort of gamble. It may operate for two months after peace has been declared, or it may operate for ten or eleven months. It would be very much better if a definite period were fixed. I should like to see it continue in force for twelve months after the declaration of peace. We should then know exactly where we stood. It is a well-known fact that a trade boom usually follows the cessation of hostilities. When shipping is released, and when fresh markets are opened, there will probably be a great boom experienced in trade throughout Australia. It is then that abnormal profits will be made which ought to be taxed.

In conclusion, I should like to say a word or two in regard to objections to and appeals against the decision of the Commissioner of Taxation. The Bill provides that the fact that an appeal is pending against that officer’s decision shall not exempt the taxpayer from the payment of the tax until the appeal has been determined. Such a provision will inflict grave injustice upon firms which require the full use of their capital from week to week. It would be more equitable if, when an appeal was lodged, some arrangement could be made under which it would be decided as quickly as possible, and the payment of the tax withheld until the determination of the Board of Referees was forthcoming.

Senator Millen:

– The honorable senator must recognise that there would be an almost universal appeal then.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– I recognise that difficulties will arise in any circumstances, but I am anxious to see justice done as far as possible.

The exemption to co-operative firms will cause a great deal of injustice to many firms which, whilst not co-operative, are working in competition with cooperative companies. Only to-day I received a letter containing what I think is a very fair request from J.C. Hutton Proprietary Limited, who are well known as large bacon curers. The letter reads as follows: -

We notice that an amendment has been submitted by the Honorable L. Groom to the Wartime Profits Tax Assessment Bill, by which all co-operative companies engaged for the main part in the manufacture and distribution of such articles as bacon, cheese, and butter are exempted from the operations of the tax.

We desire to draw your attention to the fact that butter, cheese, and bacon manufacturing and distributing are businesses carried on by private individuals and companies, as well as by co-operative companies, and we may add that the largest bacon manufacturing and distributing businesses are controlled by what are known as proprietary interests.

In our opinion, the principle whereby one business is rendered liable to taxation and another of exactly similar nature and character is exempted is most unfair, unjust, and unBritish.

We have, for forty-five years, in the same way as others in the trade, given our time and enterprise to the establishment of the baconcuring industry in Australia, and can safely say that we have brought the industry to as high a point of efficiency as exists in any part of the world.

We would regret exceedingly to think that the National Parliament, elected by the free and intelligent people of Australia, should propose such discriminating legislation, and feel that, in order to have same removed, it is only necessary to place the facts before members.

We realize the strenuousness, in a financial sense, of the Government’s position, and need for taxation such as proposed, and do not raise any objection to the incidence of the, tax, but merely appeal to you to use your influence in the matter of having removed from the Bill a clause which, to our minds, shows gross discrimination.

It is very rarely that I pay a great deal of attention to circular letters, because I realize that in many cases the circular is sent round for the purpose of endeavouring to influence honorable senators one way or another.

Senator O’Keefe:

– T - This letter puts a very clear and patent fact before the reader.

SenatorFOLL. - I agree with the honorable senator that the letter lays down a clear and simple principle. This letter, and the examples I have cited during my speech, bear out the statement I made at the beginning, and that was that every proposal contained in this measure could very well be included in an income-tax schedule. In that case it would hit every section of the community, and no injustice would be done, as must be done under the operation of this Bill.

I agree with Senator Pratten that the Senate should be principally a House of review, and that every clause, every word, and practically every letter in a Bill of this kind should be carefully perused by honorable senators. We have now an opportunity of seeing that a great injustice is not done to a very large section of the community. I do not make that statement for the purpose of defending any section which will be hit by the measure. I wish to see justice done to every section. Those who have the wealth should pay the taxes. Firms and individuals who have made excess profits out of the war should pay all those profits, or a very large percentage of them indeed, into the Treasury. For that reason’ alone I cannot admit that I am pleased with the Bill in any way. I cannot say that I welcome it. For the purpose of raising money for the prosecution of the war I would have liked to see a very substantial increase made in the income tax in the case of all incomes over a certain amount.

Senator Crawford:

– You will get that in a year or two.

Senator FOLL:

– I believe that we shall. I have not the least doubt that if this Bill is enacted it will not be very long before it will become necessary to repeal the Act and pass a saner measure, and one which will tax everybody equally, and not exempt one particular class. I had not intended to take up so much time, but I felt very keenly on this matter. If there are people in this country who are profiteering out of the war at the expense of the men at the Front, I wish to see these people, if I may be allowed to use the phrase, “hit to leg,” and “hit to leg ‘ ‘ very severely too. But I cannot find in the Bill one clause which is going to bring about a decided effect. AsI said before,I would have welcomed these proposals in the form of an addition to the income tax or as a war-profits measure.

Senator O’KEEFE:
Tasmania

– - When the Vice-President of the Executive Council (Senator Millen) was introducing this measure, he admitted that it was of an exceedingly complex character; so complex that, in reply to sundry interjections, he virtually admitted that he did not understand all its ramifications. It is quite easy for any of us to realize how hard it must be for anybody to understand the measure. I venture to say that every honorable senator who has gonethrough it- it may be a dozen times - and carefully studied every line of it, will admit, if he is honest with himself, that it is almost impossible for him to determine how it will affect the various persons, companies, or industries it purports to tax; what will be the effect of the tax on industries; and what revenue will be derivable from the tax. I do not for a moment profess to be an expert in dissecting financial measures. I think it would take a greater expert than probably we have in the Senate or the other House to give a fair and intelligent criticism of this measure.

Sitting suspended from 6.30 to 8 p.m.

Senator O’KEEFE:

– I - In common with speakers who have preceded me, I have no desire to unduly delay the passage of any of the Government’s financial measures, but I feel free to exercise to the fullest my right to criticise this or any other measure. In introducing the Bill, Senator Millen virtually admitted that he knew nothing about it. He could not say what revenue it would produce, or what would be its effects upon those upon whom this taxation is to be imposed. He gave figures which were previously quoted by the Treasurer (Sir John Forrest), but comparing the speech with the second-reading speeches he usually makes, one is compelled to the conclusion that, in common with other members of the Ministry, he is ashamed of this bantling.

For a long time past we have been hearing of war-profits taxation. I remember that a very vigorous speech was delivered by one of the members of the present Government in contesting a seat immediately after the war broke out. I suppose I should regard it as an honour that I was on the same platform with this Minister in a city in Tasmania. I refer to the Minister for Trade and Customs (Mr. Jensen). He was so vigorous in his advocacy of the fairness of making the wealth of Australia pay for the conduct of the war that he tucked up his sleeves, and, walking up and down the platform, said that if the Government - and at this time the Cook Government was in power - asked men to go out of this country to fight for it, the least that wealth might be asked to do was to pay for those men. The honorable gentleman appears to have forgotten that speech. Later on, I heard him strongly denounce the profiteers. As a matter of fact, every member of the present Government has strongly denounced the profiteers.

Senator Senior:

– Was the honorable member ever in the same mood himself ?

Senator O’KEEFE:

– The The difference between Senator Senior and myself is that I am always after the profiteers, and am after them still, whilst he is not. He is now supporting a Government who are not after the profiteers. He is going to say, “Yes, Mr. Hughes,” to anything which Mr. Hughes may bring forward in the shape of financial legislation.

Senator Senior:

– How does the honorable senator know that ?

Senator O’KEEFE:

– I h I have heard the Prime Minister, in Parliament and outside of it, say that those who battened on the necessities of their fellow Australians because the war gave them anextraordinary opportunity to do so should be made to disgorge their profits.

Senator Millen:

Senator Gardiner wants to let them off for the year ending 30th June, 1916.

Senator O’KEEFE:

– No; No; the honorable senator is putting words into the mouth of Senator Gardiner which he never uttered. I am sure that if he were present Senator Gardiner would take exception to that interpretation of his remarks.

Senator Millen:

– He proposed to exempt the year ending 30th June, 1916.

Senator O’KEEFE:

– H - He proposed to add another year to the taxation period.

Senator Millen:

– Letting them off the richest year of the lot.

Senator O’KEEFE:

– Tha That is purely a matter of opinion, and Senator Gardiner, in replying to a similar interjection, said that he believed that as much revenue would be derived from the tax during the year he proposed to add to the taxing period as would be derived from the year he proposed to omit from the taxing period.

I fully sympathize with the Government in regard to the difficulties of determining exactly what are war profits, and of devising the best means to tax them. But honorable senators opposite will agree that since the beginning of the war, and at the present time, immense profits are being made by business people throughout Australia in excess of what they are justified in making, in this time of national stress, to give them a fair return on their business. One has only to compare present prices, and the prices of six months ago, with pre-war prices to be compelled to the conclusion that the increase in many lines is in excess of the increase which those engaged in business are justified in charging. Tens of thousands of the poorer people of Australia know to their bitter cost to-day, from the prices which they have to pay to tradesmen for the necessaries of life, that the profits made are in many cases larger than they ought to be. I remember that the Prime Minister, in agreeing to a proposal that I brought forward at a conference - and in mentioning this I am nob divulging anything which ought to be kept secret, because he has said the same thing in many conversations - said that all excess war profits should be taxed after allowing a fair percentage of profit on the capital invested in the business. He agreed that all excess profits should be taxed, and not a portion of them. He agreed with the contention I have always advanced that if we are going to tax war profits there is not much use in taxing 50 per cent, of them, because the profiteer will only pass that on.

Senator Crawford:

– The proposal is to tax 75 per cent, after the first year.

Senator O’KEEFE:

– I - I am aware of that. I am not blaming the present Government any more than the Government that preceded them for the method adopted, but I have always been in favour of taking the whole of the excess profits if they could be ascertained.

Senator Millen:

– If a man taxed to the extent of 50 per cent, will immediately proceed to pass the tax on, will he not pass it on if you tax him to the extent of 100 per cent, f

Senator O’KEEFE:

– He He could not do that without being found out, and he would, therefore, not have the same inducement to do it. If he attempted to do so, the Government could deal with him by the method of price fixing.

We must all appreciate the grave difficulties in the way of adequately assessing what are really war profits. According to the’ statement made by Sir John Forrest, the Government came to the conclusion that they could not find out what really are war profits. A leading supporter of the Ministry, Sir William Irvine, ridiculed the idea that they would be able to determine what are really war profits. Hence, I suppose, the reason for the change in the proposed legislation from a war profits tax to a war-time profits tax. If, with the assistance of their financial experts in the Treasury and that of the Commonwealth Statistician, the Government could not arrive at what really are wartime profits, it would have been better if they had not brought forward such a financial miscarriage as this Bill, but had proposed some other method of dealing with the matter.

Senator Needham:

– Does the honorable senator say that this Bill is an abortion 1

Senator O’KEEFE:

– It It is so poor a thing that none can be found to do it honour. So far we have had two speeches from supporters of the Government in the Senate, and both have been adverse in their criticism of the Bill. I think we are all indebted to Senator Pratten for the very great pains he has taken in working up his case. We had from him a most trenchant criticism. Indeed, while he was speaking, Senator Millen might have been asking that he should be saved from political supporters who criticise Government measures in the way Senator Pratten criticised this Bill. I do not profess to be able to criticise the measure in detail. I do not think that many members of either House of this Parliament can pretend to understand, it. We know that it is absolutely different from the Bill as it was first introduced. Sheaves of amendments were made in it while the Bill was passing through Committee in another place, lt seemed that all that any supporter of the Government had to. do to secure an exemption waa to say to Sir John Forrest, “ Give us an exemption here, otherwise the Bill will hit up my supporters very badly.” Then when Mr. Groom was in charge for a time somebody else would whisper in his ear, “ We must have an exemption,- because this proposal is not fair,” and lo ! there would be another exemption.

I- repeat that if the Government, after having given full consideration to this measure, and having had at their disposal the advice of financial experts, came to the conclusion that, they could not properly assess war profits, they should have left this scheme alone and come down with some other form of taxation to raise the miserable, paltry amount estimated to be received under the present Bill. This year the amount of revenue estimated from direct taxation for war purposes is £10,650,000; and the amount from indirect taxation is £13,630,000, or a total of £24,000,000 for all purposes, so the £450,000 estimated to be received under the war-time profits tax represents only one forty-eighth part of the total amount to be raised by taxation.

Will any one dare to tell me that we could not fairly and justifiably ask those people who are called profiteers, and who have made undue profits out of the people in their time of national stress, to pay more than one forty-eighth part of the proposed taxation for the financial year ending 30th June next? The amount is so paltry that it is palpably absurd to call this proposal a war-time profits tax.

Senator SENIOR:

– It would be equivalent to 10 per cent, on £9,000,000.

Senator O’KEEFE:

– The The thing is so absurd that it carries condemnation on the face of it. We are all willing to confess, I think, that it is not possible to say exactly what amount of war profits - I mean profits in excess of pre-war profits - have been squeezed out of the people by unfair traders during the last three years. We are pretty well all agreed, however, that enormous profits have been made. This fact was disclosed by Senator Gardiner this afternoon when he read the statement made by the Premier of Victoria recently as to the amount of war profits made in Victoria. In view of the war profits made in this State it is obvious that the total of war profits throughout Australia is out of all proportion to the amount estimated to be received under this measure. Senator Pratten, in his illuminating speech this afternoon, estimated that it would COSt £45,000 to collect the tax, and as he is a supporter of the Government I am going to accept his estimate and ask the Minister if he thinks it worth while to put the people of Australia, or at all events those who will pay taxation under this scheme, to all the trouble involved in making out returns for the very email result expected, because it will take a Philadelphia lawyer to overcome some of the intricacies of the scheme. ‘

Senator Millen:

– What is wrong with an Australian lawyer ?

Senator O’KEEFE:

– I - I used the term “ Philadelphia lawyer “ because it is so well understood in its application, and I understand the term originated from the fact that at one time there was a particularly clever but unscrupulous lawyer practising in Philadelphia. There are, of course, clever lawyers in Australia, . and I have no doubt that they will reap a rich harvest from this scheme.

Senator Foll:

– And they will have to pay war profits tax on their incomes.

Senator Crawford:

– No, because they will be exempt.

Senator O’KEEFE:

– I - I understand that it was originally proposed that they should be included, but that afterwards they were exempted.

On the details of the Bill I will not have very much to say. It is certainly a measure for Committee work more than for extended remarks at the second reading stage. It is interesting, in view of all that has been said about the necessity for making those pay who can pay, after all that has been said about asking the wealth-owners of this country to give of their wealth - seeing that those who have only bone and sinew and flesh and blood to offer have been asked to do service for their country - to inquire how much of the burden the holders of the wealth are willing to bear and how much they are willing to place upon those who also do the real fighting. The total received from land taxation in 1915-16 was £2,040,436, and in 1916-17 it was £2,121,847. From income tax in 1915-16 the amount received was £3,932,775, and in 1916-17 it was £5,622,026. From succession duties the revenue in 1915-16 was £626,215, and in VL916-17 £1,062,013. The total of direct taxation in 1915-16 was £6,599,426, in 1916-17 it was £8,916,572, while the estimate for the current financial year is £10,650,000, towards the total expenditure for this war. In view of this fact we are justified in going to every appreciable source of revenue for more money with which to carry on this war. In 1914-15 our war expenditure out of revenue was £540,217. in 1915-16 it was £3,778,378, in 1916-17 £8,406,970, and the estimate for the financial year ending 30th June, ,1918, is £13,109,351. It seems, therefore, that while we have heard a great deal of talk about the last man and the last shilling from Australia, from those who are getting war-time profits out of the people, and who are loudest. in their advocacy of the “last man,” we heard very little about the last shilling. Mr. Fisher’s famous remark was a good deal quoted during the conscription campaign, but when the impression got about that business men were to be asked to disgorge a fair proportion oi the profits they had squeezed out of the people, they began tq squeal, and those who had been loudest in advocating the sending of the last man under conscription were loudest* in their squeals against any such proposal.)

Senator Pratten:

– The business people are only squealing about the inequity of the tax.

Senator O’KEEFE:

– Qui Quite so; but many of them are remaining very silent, because they are not being touched at all.

Senator Fairbairn:

– Give us only one instance of any profiteer not being touched under this Bill.’

Senator O’KEEFE:

– The There are any number of them. I cannot go into details.

Senator FAIRBAIRN:

– I only want you to give one detail.

Senator O’KEEFE:

– The The honorable senator can give details if he wishes. He knows perfectly well that enormous profits have been squeezed out of the people. I am taking the general opinions of those who know more than I do about it. Many outside Parliament, who are greater financial experts than I am, are unanimous in their opinion that business people who have made war profits are being let off. I have no doubt that if Senator Fairbairn had asked Senator Pratten this afternoon, when- he was giving the mass of detailed information that he has been at such trouble to get out, Senator Pratten would have been able to give him nob one instance, but a dozen. I am not going into details at all, but am giving my opinion on the general principles of the Bill.

Senator Millen:

– You are very safe to leave details alone.

Senator O’KEEFE:

– The The honorable senator did not give many details himself. He was glad to brush lightly over them.

Senator Millen:

– But I did not make any reckless assertions either.

Senator O’KEEFE:

– M - My statements are not reckless. A number of the profiteers say, “Hands off our profits,” and the Government apparently came to the conclusion that they must handle those gentlemen very tenderly, seeing that the neb result of this taxation of war-time profits is to be less than £500,000 a year.

By bringing down a War-time Profits instead of a War Profits Tax Bill, the Government practically confess that they could not get at the war profits. I am not absolutely certain that they can be got at, but an attempt might have been made to get at them. The Government should not have been so ready to forego their original intention to bring down a real War Profits Tax Bill. With all the “financial experts they have at their disposal, they could have made a reasonable attempt to tax war profits as they should have been taxed.

Senator Millen:

– Do you mean war profits in contradistinction to war-time profits ?

Senator O’KEEFE:

– Y - Yes. There is one detail which I shall give as a very fair illustration - mining for base metals. There is no proposal to exempt that, but there is a proposal to exempt gold-mining. As a representative of a State which has no gold-mining, but a considerable section of whose wage-earners depend upon mining for the baser metals, particularly copper, tin, zinc, and lead: I should be quite prepared to see what might reasonably be called “ war profits “ called upon to pay under this taxation. The base metals have increased in price owing entirely to the war, and it would be quite fair to ask the companies or individuals who produce them to pay under this tax.

Senator Millen:

– So they are asked.

Senator O’KEEFE:

– But But so far as I can understand, their profits will not be assessed in a fair way under the Bill. The proper way would be to ascertain the average pre-war price over a number of years and the price since the war, and tax them on that increase. I understand, however, that that is not the method which is to be followed.

Senator Crawford:

– Many mines are being worked now that would not be worked at pre-war prices.

Senator O’KEEFE:

– Qui Quite so. But the biggest ‘mine we have in Tasmania made profits before the war, and has made very big profits since, owing to the increase in the price of copper. Some of our bigger tin mines were also working for many years before the war. After all, I am rather doubtful as to the fairness or wisdom of imp”osing a- war-time profits or a war profits tax on mining at all, seeing that it is so spasmodic an occupation. If increased profits from mining are to be taxed, I do not know why gold should be exempt.

Senator Millen:

– But you said you were in favour of taxing the other metals.

Senator O’KEEFE:

– I s I said I would not grumble at the base metals paying a fair share if they were taxed in a fair way. I do not know that there is any great justification for making thi3 discrimination between gold and other forms of mining.

Senator Senior:

– The price of gold is a fixed standard.

Senator O’KEEFE:

– O - Of course, gold has not gone up in price owing to the war, but if gold mining companies which made big profits before the war continue to make them during the war, they would probably not be averse to pay. After all, I am very doubtful from the economical and industrial stand-point about the wisdom of imposing this tax on any form of mining, because mining is such a precarious thing, as plenty of us know to our cost.

Senator Fairbairn:

– Hear, hear ! Nearly as bad as squatting.

Senator O’KEEFE:

– I - If a mining proposition and a squatting proposition, each showing a prospective profit of £10,000, were put before Senator Fairbairn, I know which he would choose. He would put his money into squatting. Fortunes are often lost on mining fields before a dividend is paid, and for every dividend that is paid out of a legal manager’s office in any city, dozens of calls are made every month. The experience of most people who speculate in mining is not very happy. Some goody-goody folk think gambling on the stock exchange is as bad as gambling on the race-course, but gambling seems inseparable from mining, and if we want to encourage people to speculate in mining, the policy of imposing an extra tax on it is of doubtful wisdom. It has been difficult enough within the last few years to get capitalists in Australia to put their money into mining ventures, without telling them that if they do get a profit out of it they will have to pay 50 per cent, the first year, and 75 per cent, the second to the Government. Mining is not on the same level as other forms of business; but having been associated with the mining industry for many years, I am quite prepared, as I believe most others in the industry are, to put up at this time of financial stress with what may not be quite fair or quite wise, and pay the tax. Probably it will be found, when the matter is gone into carefully, that the method of assessing the profits of companies or individuals mining for the baser metals in Australia is not the fair est that could have been devised.

Those who appeared to be so anxious to send “the last man,” and to prevent themselves and their friends having to find the money, now say to the Government, “ Send ‘the last man. We will lend you the money to send him, at a good rate of interest. He will offer his life, and we will lend you the money to equip him, and provide him with munitions. We will expect you to pay us 4£ per cent., and exempt our interest from taxation, and when he comes back, if he ever does, he will pay us back through you,” and he will also have to pay into the Sinking Fund.

Senator Crawford:

– That is not a fair statement.

Senator O’KEEFE:

– I - It is. The greater portion of this taxation for the purpose of paying interest and providing a sinking fund will be extracted from the class of men who to-day are fighting for Australia. They are offering their lives in defence of the Empire, and after they have returned to our shores they and their children’s children will be taxed to pay the interest upon the enormous debts that are now being incurred.

Senator Pratten:

– I cannot accept that statement as a fair one.

Senator O’KEEFE:

– I - I am sorry that Senator Pratten cannot do so, but I am not surprised. He represents a line of political thought rather different from that which is entertained by those who sent me here. The people who returned Senator Pratten are those who have their hands upon the money that is in Australia.

Senator Pratten:

– I represent 400,000 electors in New South Wales.

Senator O’KEEFE:

– T - They are the people who have the money, and who ought to pay more than they have been called upon to pay during this war. But evidently they are content to say, “We will lend you the money that you require, and when the boys return they will pay us back.”

Senator de Largie:

– It was a Labour Government which initiated that policy.

Senator O’KEEFE:

– S - Senator de Largie was a supporter of that Government, and is still a supporter of its head, who was the present Prime Minister. The honorable senator believes that Mr. Hughes can do no wrong.

Senator de Largie:

– I do not blow hot and cold.

Senator O’KEEFE:

– F - For war purposes this year we are going to spend £84,000,000 from loans and £13,000,000 from revenue. Our war expenditure at the end of June next year will total £212,000,000, of which sum only £25,000,000 will have been appropriated from revenue. less than one-eighth of our war expenditure will have been raised from’ the taxpayers. The remainder will have been borrowed, and the interest bill will be passed on to our children and children’s children. I repeat that we have not exacted from the people who have the money the taxation that we should have exacted from them. In the past very many of us have had to support particular Governments because in respect of general matters we were in agreement with them. But we have not agreed with them upon the details of their financial schemes, just as honorable senators opposite do not agree with the details of this financial scheme. Consequently, we have not raised our voices in Parliament in opposition to those schemes, although we have done so in our party meetings. Seven-eighths of the interest upon the money which will have been expended by the 30th June next on the prosecution of the war is to be passed on to posterity.

Senator de Largie:

– Why should we not pass some of the debt on to posterity?

Senator Millen:

– For every £1 which has been thus spent; Senator O’Keefe is responsible for 15s. Three-fourths of that expenditure was approved by him.

Senator O’KEEFE:

– A - At. any rate, I have the satisfaction of knowing that if the Government which I supported did not raise more money by the taxation of those who are best able to bear it, if Senator Millen and his political associates had been in power, still less would have been so raised.

In view of all that has been said in regard to the necessity which exists for the taxation of war profits, the Bill is a pitiable farce - a wretched imitation of what a War-time Profits Tax Bill should be. It proposes to raise less than £500,000 a year from the taxation of war-time profits out of a total of £24,000,000 which we intend to collect from direct taxation,. The Government would have acted wisely if they had laid this, measure aside and brought forward another measure of taxation which would have yielded a much greater revenue.

Senator de Largie:

– What does the honorable senator suggest ?

Senator O’KEEFE:

– It It is nob for me to suggest anything. As a supporter of the Government, the suggestions should come from Senator de Largie. The Bill is a pitiable imitation of the measure which the public expected. However, the Government must accept responsibility for it. Small and miserable though it be, I shall vote for its second reading, because I suppose I must be thankful for even the smallest of mercies. This Bill is, indeed, a very small mercy regarded from the stand-point of a measure for the taxation of war-time profits. I do not know whether the Government intend to introduce any supplementary measures with a view to getting at the war-time profiteers. I hope that the financial Bills which will follow will recommend themselves to the public of Australia to a far greater degree than does this one. If we except the Ministers, who have been sponsors for it, nobody has been found in either branch of the Legislature who was poor enough to do it honour. In another place the Bill was torn to shreds, so that today its form is absolutely different from its original form. In this Chamber, too,, it has been subjected to such vigorous criticism by one of the Government supporters that the Vice-President of the Executive Council must have inwardly exclaimed, “ Oh, Lord, preserve me from my political friends.”

Senator FAIRBAIRN:
Victoria

– Before . proceeding to criticise the Bill I should like to say a word or two in reply to Senator Gardiner. He condemned the Government for its failure to conscript wealth to a greater extent than it has done, especially in view of its effort to conscript life. It seems to me that in submitting the issue of conscription to the people on the 28th October last, the Government was actuated by the idea that Australia was in a position that was very precarious - so precarious, indeed, that life itself required to be conscripted. The Government on that occasion asked the people . to give it the power over human life that it already possessed over wealth. We all know that this Parliament has the power to take every shilling that a man possesses. The Government believed that the position of Australia was so serious that it ought to have the same power in respect of human life that it already possessed in respect of wealth. Another point worth remembering is that at the present time the Federal tax on incomes of £7,000 and over amounts to 6s. 3d. in the £1.

Senator CRAWFORD:

– Then there is the State tax on top of that.

Senator FAIRBAIRN:

– Exactly. That means that one-third of the wealth of Australia has already been conscripted by the Commonwealth.

Senator Needham:

– But the Government wanted to conscript the whole of the manhood of Australia.

Senator FAIRBAIRN:

– It wanted the power to conscript 16,000 troops per month.

Senator O’Keefe:

– T - That meant that practically all the eligibles would have been gone ere this.-

Senator FAIRBAIRN:

– I do not think so.

Senator Pearce:

– Less than one-third of the manhood of Australia.

Senator FAIRBAIRN:

– The Minister for Defence puts the conscription of life exactly on a par with the conscription of wealth. As a matter of fact, they are not on a par at all. All the wealth in the community cannot buy a single life. But the Ministry naturally thought - the country being in such grave danger - that it ought to possess the same power in respect of human life that it already possessed in respect’ of the wealth of the community. The Government, I repeat, has already conscripted one-third of the big incomes in Australia.- Then the State of Queensland imposes a tax of 2s. in the £1 on all such incomes, thus making a total of 8s. 3d. in the £1. Now a great portion of our finances is in the hands of banks, - insurance companies, and English investors. If we calculate what these institutions and persons pay in the Old Country and here, it will be found, I think, that 19s. in the £1 is about the sum that is extracted from them. Yet my honorable friends opposite say that there is no conscription of wealth.

Senator Grant:

– The honorable senator can never get over the fact that there is £256,000,000 worth of land in the Commonwealth which is not touched.-

Senator FAIRBAIRN:

– The President will not permit me to discuss that ‘ question now, though Senator Grant managed to introduce into his speech a reference to it to-night. By means of direct taxation we have, to a very large extent, paid all the interest upon the money that’ we have borrowed for war purposes. As the present generation has paid a heavy price in blood to preserve our liberties during this war, it is not unreasonable that we should pass our financial indebtedness on to future generations. It is not unreasonable to say that as we hope this great world conflict is going to save future generations from war altogether, they should pay a little in money towards the terrible cost iti has involved. That is, I think, a fair way to look at. the matter.

There has already been a considerable conscription of wealth, and as money is wanted for the conduct of the war, there must be a further conscription of wealth. I am one of those who regard it as very likely that the last shilling will be reached before the war is over. Senator O’Keefe complained that it is very difficult to geE capital for mining ventures. If we conscript all wealth, as Senator Gardiner suggested, leaving everybody only. £200 a year to live on, I give Senator O’Keefe a hint that it will be absolutely impossible to get any capital for mining ventures.’ These points are worthy of consideration. I think that 1 will notoccupy the time of the Senate in vain if T again state, clearly and definitely, that there has been a considerable conscription of wealth up to the present; at any rate, there has been as much as- has been, required to pay the interest on the borrowed money.

I remind honorable senators on the other side that it was their party who first brought in Loan Bills, called us patriots if we would subscribe, and exempted the subscriptions from income tax. They are undoubtedly to blame for introducing that! method. As a man who has had something to do with finance, I have always held that it is absolutely wrong to exempt any part of the country’s wealth from taxation. That has caused immense inconvenience in France. Everybody there rushes in to acquire rentes and that class of property so as tlo get outside the reach of taxation. It embarrasses the Government in every direction. I am afraid, however, that we have gone so far on that track that it would be very difficult, without a great financial disturbance, to make a change at the present time.

The PRESIDENT (Senator the Hon T Givens:

– I remind the honorable senator that these remarks would be much more appropriate on the second reading of the Loan Bill, which is on the business paper.

Senator FAIRBAIRN:

– I accept the ruling, sir. I was only replying to a certain remark which had been made.

With regard to the Bill itself, I think that almost every honorable senator on this side, and nearly all the honorable senators on the Opposition side, pledged themselves up to the hilt to support a war-time profits tax. No sentiment I gave utterance to on the platforms from which I addressed the free and independent electors was more cheered than the statement that if a man had made more money during the war than he had made before, he ought to be prepared to part with, at any rate, a great portion of it. Everybody said that he would be perfectly willing, if he had made more money during the war, to part with it. Then the Government brought forward this Bill. It has caused a tremendous outcry, and there have been many cases of hardship pointed out; but I think it is the best alternative that we have. It is going to produce in two years about £1,000,000. I asked Senator O’Keefe if he could point to anybody making wartime profits who was exempted,’ and he was not able to do so. He made a reference, then, to Senator Pratten, who has shown that he has gone most thoroughly and carefully into “this legislation. I have great pleasure in congratulating him on the very able address he gave. Senator O’Keefe said that Senator Pratten had stated that several classes of people would escape the tax, but I did not take* that to be Senator Pratten’s remark. What I understood him to say was that many people who were making large incomes before the war would not have to pay this war-time profits tax. I did not hear him say, and I do not think that he did say, that there was anybody who was making in excess of what he made before the war who had not been brought under this tax.

Senator Pratten:

– That is so.

Senator FAIRBAIRN:

– I think, therefore, that the National party is actually keeping its election pledge in bringing forward this measure.

The only alternative would be, as Senator Pratten pointed out, the Canadian system, which is practically an increase of the income tax. My objection to the adoption of that system is that, first of alL it would not fulfil our election pledge, that a man was to be taxed on the money he had made during wartime in excess of what he had made before the war. If we were simply to increase the income tax we would tax the man who had not made more, but probably less, during the war than he had made before. Take the case of two companies which were making £10,000 each before the war. Suppose that the war has increased the income of one company to £15,000, and decreased the income of the other company to £5,000. Is it fair not to put a war-time profits tax on a successful company, but to put an income tax on both companies? My objection to increasing the income tax is that it would tax the man who has not been successful, who has had some disaster during the war, and let escape the man who has made a considerably increased profit. That, I think, is a complete answer to the alternative proposal, which would be simply to increase the income tax.

We, therefore, have to do the very best we can with this measure. I think that the Treasurer (Sir John Forrest) has given immense attention to it. In this Chamber, which Senator Pratten has referred to as a House of review, we ought to see if we cannot ameliorate every condition of hardship. It is becoming a very common thing for persons to say, “ Oh, there must be some exceptions ; there must be some hardships when we pass a Bill.” That is all very fine, but these particular hardships are very oppressive to the individuals upon whom they fall. It is our duty as a House of review to try to make this measure as perfect as possible.

Another objection to the Bill - and it is to some extent a tangible one - is the cost of collection. As a friend remarked, “It is much cry and little wool, as the devil said when he shore the sow.” I do not suppose that he got much wool off the old sow. I am afraid that the cost of collecting this tax will be considerable. But I am one of those who think that we are going to get far more than £1,000,000 for two years. I have heard it estimated by people in business, who really ought to know something about the matter, that the yield will be more like £2,000,000. I do not like to venture a criticism on a departmental estimate, but I for one would not be at all surprised to hear of the Treasury getting something like that amount out of this measure.

Senator Pratten:

– The estimate seems to be extraordinarily low.

Senator FAIRBAIRN:

– Yes ; I cannot understand it. At any rate, it completely refutes the arguments of the Opposition that there is a considerable lot of profits being made because we cannot point to any exemption of people who are likely to escape. If the departmental estimate is right, there has only been £1,000,000 of war-time profits made in the first year. That seems an amazing thing to say.

Senator Guy:

– How did they make up that estimate?

Senator FAIRBAIRN:

– I make it up in this way. I think that the Treasurer has increased his estimate from £900,000 to £1,000,000. They say that there will be about £1,000,000 made in two years. Take half of that sum as having been made in the first year; that is £500,000 of tax that will be collected. The ‘Treasury will take 50 per cent, of the profits. That means that there has been only £1,000,000 of war-time profits made. That is to say, the incomes for the period have only exceeded the incomes of the prewar years by £1,000,000.

Senator Guy:

– What I meant was: How did the Treasury arrive at that estimate ?

Senator FAIRBAIRN:

– I do not know.

Senator Pratten:

– They ought to be in the best position to know.

Senator FAIRBAIRN:

– They ought, as they have the figures at the Treasury. I find that their estimates are generally pretty near the mark. I have heard of other companies which expect to have to pay enormous sums under this Bill, and that makes me think that possibly we may te agreeably surprised by the amount of revenue collected.

Senator Guy:

– I am inclined to agree with you.

Senator FAIRBAIRN:

– I hope so in every way. I want, therefore, to make the procedure as simple as possible, so as not to increase the cost of collection.

We must very soon try to amalgamate the Taxation Departments. It ought to be done as soon as possible. Here we have another Taxation Department. Merchants and traders of all sorts are being overwhelmed by the returns which they have to make out. I hope that the Taxation Departments will very soon get these various returns put together so that the public shall not be so harassed as they are now. If we are to have an early adjournment of the Houses, as has been hinted at in the press, the Government will have time to go thoroughly into these matters, and to see that all the income tax work is done in one Department.

Senator Needham:

– Have you not plenty of win-the-war measures to bring up? You are not going to adjourn the Houses so early, are you?

Senator FAIRBAIRN:

– I think that winning the war depends more upon administration than it does upon legislation at the present time. We want Ministers to be free for administration, because it is the practical work that is going to win the war. All the talk in the world will not. win the war.

Senator Needham:

– We had better adjourn Parliament till the war is over, then.

Senator FAIRBAIRN:

– I do not think it would be a bad thing.

When we come to the Committee stage of this measure, a great many things will have to be attended to if we want, te make it by any means complete.

I was very sorry tlo find that the people engaged in developing our vast interior are not exempted from this tax. There are very few of them now. At one time it was decided that these pioneers should be exempted, but the exemption was cut out. I intend to move in Committee that they be exempted from the tax.

Senator Millen:

– Do you mean the grazing industry?

Senator FAIRBAIRN:

– Yes ; I mean the country which was not used for grazing prior to the war. I think it is only fair that it should again be exempted from the operation of the Bill. There are very few of these people left, and they certainly deserve all they get. They do the pioneering work of Australia - and it is very difficult work indeed - and, as a rule, they get very little reward. I think it would be only reasonable to exempt them again.

The exemption of professional men, doctors, and lawyers, has been much discussed. Senator Gardiner said that we should not make legislation of this kind retrospective. An attempt has been made to contend that the inclusion of the first year of the taxation period amounts to retrospective taxation, but it should not be forgotten that the intention to introduce legislation of this kind has been before the people for a considerable time, and having had notice that it was coming along, it is scarcely right to describe it as retrospective. In the case, however, of doctors and lawyers, it has always been understood that- they would be exempt from the operation of a Bill of this kind, and it is therefore absolutely retrospective taxation to include them in the operation of the measure, and make their incomes taxable under it. I believe that it would be a fair thing to exempt doctors and lawyers. It has been said that where there are two doctors in a township, and one has gone to the war, the other has reaped the benefit of the whole of the first man’s practice. But I know, as a matter of fact, that in a great many cases a doctor remaining in Australia actually shares his excess income with the doctor who has gone to the Front.

Senator Foll:

– Will the Bill apply in such a case, where the incomes are pooled?

Senator FAIRBAIRN:

– I think that as the doctor remaining in Australia receives the whole of the income, the Bill will apply to him. The main objection to including doctors and lawyers amongst those to be taxed is that they were given to understand all along that their incomes would be exempt from this taxation.

Senator Guy:

– They were included in one of these Bills.

Senator FAIRBAIRN:

– That is so, but” they were struck out again, and I think they should be exempt, otherwise we shall be breaking faith with them. When men have been told that their incomes would not be subject to this taxation, they may have otherwise disposed of their money, and if they are now to be called upon to pay this tax, they may be unable to command the money for the purpose.

I like very much the suggestion made by Senator Foll that we should exempt the Territory of Papua. It seems to me an extraordinary .thing that we should impose customs duties on imports from Papua, and at the same time, make the people of that Territory pay the proposed tax on war-time profits. I really believe that no wrong ever inflicted upon Ireland came UP to that. We should treat the settlers in Papua in every respect in the same way as we treat the people of Australia, or else we should exempt them from this kind of taxation. If we impose customs duties on their products, we should leave them out of this measure. I do not know what the revenue from this tax in Papua will amount to. The chief industry there is the rubber industry, and there has been no increase in the price of rubber since -the war commenced.- On the contrary, there has actually been a fall in the price of rubber. The rubber plantations are new, and the men who invested their capital in them have had to wait for six years before the trees came into bearing. They have been expending money upon their plantations during the last six years, and in the first year in which they could expect to reap a harvest, they will discover under this measure that they will only be allowed to get 10 per cent. Ten per cent, spread over seven years is a very meagre return for money invested. As the rubber industry is the chief industry of Papua, and as we charge customs duties on the products of the Territory imported into the Commonwealth, a strong case can be made out for the exemption of Papua from the operation of this Bill-

This is certainly a most difficult measure, and I think we can congratulate the Government, and particularly the Treasurer, upon having made a good attempt to secure that the taxation will fall as lightly- as possible, and as fairly as possible, upon the people. I hope that by the time the Bill gets through Committee we may find a means of tempering the wind to the few shorn lambs, whose case has not been considered,, perhaps, as it ought to be.

Senator Millen:

– The honorable senator is aware that wool has been fetching a good price lately.

Senator FAIRBAIRN:

– Not what it ought to fetch. . Speaking seriously, we ought to do our best to prevent hardship under the operation of this measure. By failing to’ consider carefully some of its provisions, we may easily bring about the ruin of some men altogether. No one can doubt that, as Senator Pratten has pointed out, new industries will be very hard hit by this taxation. Some attempt has been made to meet the case of those engaged in new industries. They are to be allowed to make up to £1,000 a year, and 10 per cent, over and. above that.

Senator PRATTEN:

– No, 10 per cent, including that.

Senator FAIRBAIRN:

– I thought it was 10 per cent, in excess of the £1,000 a year. At any rate, an exemption of £1,000 a year is provided for. That may not be important compared with the amount of capital invested, but it is an attempt to make this system’ of taxation fall as lightly as possible upon people just starting in business. The great defect of the measure is the way in which the proposed tax will fall upon new businesses. Still this is a time of war, when none of us can expect to escape lightly, and I believe that if we do what we can, in dealing with the Bill in’ Committee, to make it as perfect as possible, we shall have fulfilled our election pledge.

Senator GUY:
Tasmania

– I suppose that there was never a Bill presented to this Parliament that has bad such a rough passage as that now under consideration. It has .been severely criticised by supporters of the Government, as well as by the Opposition. One follower of the Government called it a wicked and immoral Bill. Sir John Forrest himself, less than twelve months ago, condemned a similar measure absolutely. He said -

It ought to he entitled a Bill to destroy enterprise in the development of the primary industries of Australia….. I have made these observations with a view to showing the Government how far I disapprove of certain of their proposals. I appeal to them and to the Treasurer not to proceed in such a suicidal course.

Senator O’Keefe:

– S - Sir John Forrest was not Treasurer at that time.

Senator GUY:

– That is so. The Bill has had a very rough passage. It has been turned inside out, and upside down. It has been keelhauled and shattered from stem to stern. It has been amended, reamended, and further amended, until, I suppose, there is not now a great deal of the original measure left. After the second reading of the Bill as at first introduced into the House of Representatives, and before it was considered in Committee there, seven pages of amendments were circulated. Amendments were made in the Bill, and were taken OUt- again. Evidently the Government, in the first place, did not know what they wanted, and to-day they are in such a position that almost every one seems to be ashamed of the Bill. Their last position is much worse than their first, and I believe everybody would be glad to see the measure out of the road.

Senator Millen:

– Is .the honorable senator going to vote to put it out of the road ?

Senator GUY:

– I am going to vote for the Bill, and I will tell Senator Millen why. The Bill pleases practically nobody.

Senator Millen:

– And the honorable senator is going to vote for it?

Senator GUY:

– Perhaps it would be just as well if I told Senator Millen now why I intend to vote for it. The reason is that I believe that during the last two years the commercial community of Australia have been, to some extent, plundering the public. I shall give some figures in support of that statement directly, but, without inside knowledge, no one is in a position to say exactly what has been done. I believe, from the evidence I have, and from what I have heard, that a number of members of the commercial community in Australia have been plundering, the public; and, if we do not pass this Bill now, we shall be unable to secure any of the excess profits which those people have made by unduly harassing the public by .the charging of high prices.

If we were starting de novo to deal with this matter two years ago, with the knowledge which we possess today, I should oppose such a measure as this, because I believe we should do infinitely better, and would avoid the anomalies which cannot be avoided under a measure such as this, by increasing the income tax and protecting the people by a system of price fixing. No one will question that some measure is necessary for the protection of the public against imposition. Unfortunately, there are some persons who care nothing for the sufferings of others, and who are prepared to impose high prices upon the masses of the community, if by so doing they can make large profits. I have heard even legislators contend that commercial men are perfectly entitled to make as much profit as they can, war time or no war time. There is no good reason why the commercial community should make greater profits now than they made in pre-war time. Mr. Hughes has himself said over and over again that people in business, and, indeed, in every walk of life, ought to be very well satisfied if, in a time of stress like the present, when every one has to make sacrifices, they are doing as well as they did in pre-war times.

I am against many of the exemptions provided for in this Bill. I am against letting persons take a proportion of excess profits. I would restrict all to the profits made in pre-war times, unless in some very exceptional instances. I have heard legislators say that it is a right and proper thing for people to take advantage of war time to make as much profit as they oan. It is said that commerce has no conscience, and while I repeat that statement I do not want to be misunderstood. I do not for a moment believe that everybody engaged in commerce has no conscience; but, unfortunately, a few unscrupulous people in every walk of life set the pace or the price.

Senator Needham:

– They set both.

Senator GUY:

– It is probable they do set both, but even though commerce may have no conscience, and while there may be a strong desire to make profits out of the war, that is no warrant for members of this Parliament to encourage them by allowing them to reap extortionate profits for the ordinary commodities of life.

Senator Russell:

– What ordinary commodities ?

Senator GUY:

– Softgoods, for instance, as well as galvanized iron and many other lines.

Senator Russell:

– The price for galvanized iron is fixed by authority.

Senator GUY:

– That has been so only recently, because I know of a case in which a man had stocks from the commencement of the war. He bought at £18 a ton, and was selling at over £100 per ton.

Senator Crawford:

– Was not that before the present Government took office?

Senator GUY:

– No; that price was charged since the present Government came into office. The manager of one of the biggest establishments in Launceston told me the price recently was over £100 per ton.

Senator Senior:

– Could that man replace his stock to-day? ,

Senator GUY:

– I do not know; but the point is that a number of traders bought this iron at £18 a ton. A gentleman in the softgoods line in Melbourne told me recently that some of the merchants in Flinders-lane were making millions out of this war.

Senator Crawford:

– This Bill will hit them, then.

Senator GUY:

– Yes, and I am supporting it. The gentleman to whom I refer told me that every time you go down to those warehouses in Flinderslane you find that there is an increase in ‘price of, possibly, 1/8d. per yard, notwithstanding that the stock in some cases has been held since the war started. If these people are out to tear down the moral code, and if they have no regard whatever for the dependants of the men who have gone to the Front to fight for our protection, it is the duty of this Legislature to see that they do not escape taxation. The Bill must be made as effective as possible in order to . secure as much as practicable of this plunder - I hope I may ‘be pardoned for using the term - from those who adopt a reprehensible course by taking advantage of the war, . even though women and children have to suffer thereby. As the Honorary Minister has intimated, prices have been fixed for certain lines, but this pricefixing does not affect a great number of articles in every-day use.

Senator Russell:

– I think prices have been fixed in over 100 lines. We took over the existing prices from State authorities, and since then about fifty additional lines have been included.

Senator GUY:

– I am glad to hear that, because it shows that some effort is being made to protect our people, but if this policy were extended, and pricefixing became more general, there would be no necessity for this Bill so far as the future is concerned.

Senator Grant:

– Would you fix prices at the present level ?

Senator GUY:

– I do not propose to fix prices at all, but I desire equitable prices to be established, because any person who, at a time like the present, “wants to make excessive profits at the expense of the people, is not a man that we can commend at all. I have always made my position clear on this matter. When the Bill was introduced I did not hesitate to say that I would take 100 per cent, of excess profits. I would not want to see any return from the scheme so far as the future is concerned if we could get price-fixing on a fair level, but I do want the Government to get a share of profits made since the war began.

I think Senator Pratten advanced the idea that the Bill would not last long. I stand corrected if he did not say that; but, at all events, I inferred from his remarks that, in his opinion, the Bill would not last long, and I hold that view very strongly.

Senator Needham:

– He hoped it would not last long.

Senator GUY:

– My impression is that he said that when the difficulties surrounding the measure were demonstrated to the Government, and when all its defects and anomalies were disclosed to the people, there would be such an outcry- that the Ministry and Parliament would be glad - to repeal it.

Senator Pratten:

– Like the Daylight Saving Act.

Senator GUY:

– I mentioned a little while ago that I intended to produce some evidence concerning excess profits.

It is not my desire to repeat the statement submitted by Senator Gardiner, and based on figures prepared at the instance of Sir Alexander Peacock, so I will simply repeat that the excess profits earned by 265 companies in Victoria in 1915 over the profits of 1914 amounted to £412,888, and that in 1916 the profits in excess of 1914 profits totalled £1,521,010.

Senator Pratten:

– Tell us if the capital of those companies was largely increased.

Senator GUY:

– Evidence on that point has not been disclosed, so I could not say, but for anybody to hazard the statement that it was increased would be to make a leap in the dark. I merely set forth as evidence the fact that excessive profits were earned in Victoria. I know that the English shipping companies, in 1916, made a profit of £250,000,000 on a capital of £200,000,000, and it seems to me that if the British and the Commonwealth Governments had taken over all shipping at the outbreak pf the war, and paid the companies 10 per. cent, on the capital value of their shares, we would have had freight to Australia at half the present rates.

Senator Pratten:

– Hear, hear .

Senator GUY:

– If, as I have said, the Government of the Commonwealth had taken time by the forelock, so to speak, and had taken over all shipping, they “would have been able to save the people of Australia an enormous amount in freight, and to market our products for half the present charges, thereby helping the farmers and producers of Australia.

I intend now to give further evidence in regard to profit-making, and will quote from page 14 of the latest summary of Mr. Knibbs* statistics. I may remark that the latest figures are for 1915. In 1913 - I am referring now to the products of manufacturers in Australia - there were 337,101 hands employed in our factories, and in 1915 there were 321,071, or 16,030 less than in 1913. The wages paid in 1913 totalled £33,566,087, and in 1915 £33,210,654, or a reduction in the wagesheet of £355,433, while the output in 1913 totalled £161,564,763, and in 1915 £169,086,700, or an increase in value of £7,521,937 as compared with 1913.

Senator Millen:

– But what was the. added cost of material taken in ?

Senator GUY:

– That information may be obtained from the statistics. I have not worked it out, and I could not do so on the spur of the moment. It is shown on page 75 that, in 1914, there was £163,854,555 to the credit of depositors in cheque-paying banks. That sum is generally looked upon as the measure of the financial stability of the commercial community as distinct from the working class community. In March, 1917. that amount had increased to £199,076,714, or an increase of £35,222,159.

Senator Pratten:

– They might, have bad fewer debtors in the second period than in the first.

Senator GUY:

– It is easy for the honorable senator to ^suggest a reason, but will he say it was so ? I am simply submitting this as evidence, which I do not say is conclusive or absolute.

Senator Pratten:

– There is no evidence in that, without a full knowledge of the surrounding circumstances.

Senator GUY:

– It is evident that’ these people have been making increased profits, seeing that, in a time of stress, they can have over £35,000.000 more to their credit within two and a quarter years. The savings banks, on the other hand, are supposed to represent the working class community. It is shown on page 46 that, in March, 1917, there was lis. per head less standing to the credit of depositors in tb»savings banks’ than in June, 1916, and 17s. 9d. per head less than in June, 1915.

Senator Millen:

– Is the honorable senator aware that, of the increased deposits he mentioned in the chequepaying banks, £20,000,000 was’ represented by Government deposits, leaving an increase of only £15,000,000?

Senator GUY:

– It struck me that1 I had to advance these figures, as evidence that the commercial community have made very definite profits during war time.

I have evidence also that people engaged in various businesses have been making enormous profits.

Senator Senior:

– Then this Bill will catch them.

Senator GUY:

– I hop© it will, but, unfortunately, it takes only half of the excess profits. It is as if a man said tto a burglar, “ Take as much loot as you can so long as you give me half.” I have no sympathy with a Government that will entourage the plundering of the public simply because it gets half the proceeds.

Senator Crawford:

– Seventy-five per >ent. in the second year.

Senator GUY:

– That is not in the Bill.

Senator Crawford:

– Nor is the 50 per lent.

Senator GUY:

– I hope some permanent means will be adopted to protect the public against impositions such as we have had in the past. I admit that only a portion of the business people are guilty of the absolutely wicked practice of preying on the public, but they set the pace, and others often have to follow. The argument is advanced that if we do not allow these men a certain proportion of the excess profits above pre-war rates, there will be no “ incentive “ for them

U> continue their businesses. That is rather extraordinary. “ We ask the man who volunteers to fight for his country to take 6s. per day, where, in many cases, he has been receiving 10s., 12s., or 15s. In addition, he risks his life, and we should say to a man in business, “ You ought to be satisfied, not to make a sacrifice, but to do as well . as you do in normal times.” But honorable senators opposite plead that we ought to leave him some “ incentive.” Is that the depth of their patriotism ? Cannot they continue their businesses on ordinary lines unless they are allowed to make excess profits, while thousands pf Australians are away fighting for them? Must they be allowed to exploit the wives, children, and other dependants of those who have gone to the Front ? Must they have that ‘ ‘ incentive “ ? Do they intend to “go slow “ ? Are they going to strike unless they are allowed to make increased profits? Apparently, our fighting men can make all the sacrifices, even to the extent of their lives, while those near and dear to them, who are left behind here, must submit to all kinds of indignities. I can tell a few stories about that sort of thing. I have a case in my mind now where a man went to the Front and left his wife here. For six weeks she had not a penny, and had to give up her home and go and live with her father. I am not blaming the Department altogether, because that was an irregularity which, I believe, has been adjusted since, and which arose, as many things will arise, from a mistake. At the same time, these people meet with these injustices-

Senator Millen:

– And you publish them abroad.

Senator GUY:

– After all, I do not know that it is undesirable to let the public know. I have not rushed into print with them, nor have I spoken in this Chamber of many things which I could have mentioned.

Senator Crawford:

– It is a pity so much political capital is made out of them.

Senator GUY:

– I am not attempting to do so. I could multiply that case by twenty if I chose. While these people have to submit to sacrifices and all kinds of injustices, and their sons and husbands have to go to the Front and take less remuneration than they got at home, we are told that unless these business people are given some “ incentive “ they will not continue. If we took 100 per cent, of the excess profits, probably they would not attempt to exploit the public, as they have been doing in the past, for they would rather let the money go to the people than to the Government. I am astounded to find that “there are people who say that we must give these folk an incentive to make greater profits in a time of war than they would in times of peace. Every trader takes risks, and this is a time when we are all asked to make sacrifices. The measure to some extent plays into the hands of people of that kind, and Senator O’Keefe showed that if an unscrupulous man in business can ‘get others to work with him he can practically get out of paying the tax by putting on extra profits, thus passing it on. If we took the lot, he could not so easily pass on the 100 per cent, tax, as Senator Millen suggests.

Senator Crawford:

– The excess profits are liable to ordinary income tax as well, which means that he will pay about 18s. or 19 s. in the £1 on them.

Senator GUY:

– The Bill allows him to deduct the amount he pays in income tax, so that to that exent he will get relief. I am reminded by the arguments of honorable senators opposite of the old Eastern practice, mentioned in the Bible, of farming out the taxes to the tfx gatherers, who went round and extorted fifty times as much as they gave for the right to collect the taxes.

When Senator O’Keefe was speaking about mining for metals, it occurred to me that metal mining was somewhat different from other occupations. While I would tax it, I have some sympathy for those engaged in it. It is a hazardous speculation, and very much of a lottery, and, on the whole, if you take the failures with the successes, mining generally is unremunerative. Very often, when a company strikes a rich patch, it only compensates for the many failures, so that if any department of profit should have consideration, metal mining ought to have it. Honorable senators have all had a circular from Senator Bakhap. It cites instances in which serious injustice has been done to mining. The trouble is that this Bill is neither a War Profits Tax Bill nor a War-time Profits Tax Bill in its entirety. It is somewhat, of a hybrid. I think that Senator Bakhap cites the case of two mines, with exactly the same capital, one of which made a big profit in prewar times, whereas the other made a profit, subsequently. Under this Bill the first of these mines will escape taxation altogether, while the other will be called upon to pay a tax of £6,000 or £7,000. These are the kind of anomalies which will make the measure very objectionable to the public.

I should like to congratulate Senator Pratten upon his very excellent address to-day. The only portion of it from which I dissent was that- which had reference to the Canadian system. In that system I venture to say there are anomalies, just as there will be anomalies under this Bill.

Senator Pratten:

– It takes in everybody.

Senator GUY:

– But the tax basis of it is a percentage. There are some businesses in which a 10 per cent, profit is a very handsome return, and other businesses in which a 50 per cent, profit would mean ruin.

Senator Pratten:

– Not under the Canadian system.

Senator GUY:

– I know of any number of businesses in which a profit of 10 per cent, is an ample reward. But I was in a business myself in which there was stock which would remain there for ten or twenty years. In one business the stock will be turned over twenty times a year, whereas in another business it will not be turned over once in five years.

Senator Pratten:

– The honorable senator is talking of a percentage of profits on sales, and not upon net profits.

Senator GUY:

– Is the honorable senator assured that the Canadian system is based on sales?

Senator Pratten:

– No. But the honorable senator’s illustration is one of profits on sales.

Senator GUY:

– Anyway, the percentage in one case would not provide the same profit that it would in another case. The manager of a tin mine in Tasmania told me only the other day that it cost him £170 to produce a ton of tin, whereas in another mine the cost would not be onethird of that amount. A percentage basis would, therefore, operate very inequitably. I mention this matter for the purpose of showing that Senator Pratten ‘s suggestion, if adopted, would be certain to create an anomaly. The solution which suggests itself to me is a combination of the two systems. That would be more equitable in its incidence. The tax to be levied under this Bill will certainly be inequitable in its incidence. It is not a tax on abnormal and unfair profits, but a tex on the excess profits of one period as against another period. Illustrations have been given here with a view to showing that a business which in pre-war times has been making a profit of 100 per cent, will entirely escape taxation if its profits during the war period do not exceed that amount, while another business which has made only a 10 per cent, profit in pre-war times, but which makes a profit of 100 per cent, while the war is in progress, will have to pay a heavy tax. 1

Senator Pratten:

– Under the Canadian system both would pay equally.

Senator GUY:

– But it may cost four times as much to raise metal in one mine as it does in another mine.

There is one provision in the Bill which does not seem to be a fair one. Sub-clause 3 of clause 8 seeks to exempt soldiers from this tax. Now, it appears to me that 999 men out of every 1,000 who have gone to the Front will never make any excess profits in Australia during the continuance of the war. Consequently, the Bill proposes a very serious differentiation between the one individual and the 999. The former will be exempt from the operation of the measure, whereas the 999 men will derive no benefit whatever from this legislation. The chances are that if the one individual makes excess profits through an agent here during1 war time it will be at the expense of the 999 who have gone to the Front. ‘I entertain too good an opinion of our soldiers who are fighting overseas to believe that they desire anything in the nature of an exemption of this character, if they make excess profits in time of war. The clause does not appeal to me at all.

Senator Pratten mentioned during the course of his remarks that the appeal to the Board of Referees will operate unjustly in some cases. If, for example, a man is in Western Australia, and the Appeal Board sits in Melbourne, he will have no opportunity of getting Eis appeal heard here.

Senator Pratten:

– Not unless he comes here.

Senator GUY:

– In nine cases out of ten it would not pay him to do so. It would probably pay him to submit to the impost rather than to take his case before the Board of Referees, and run the risk of losing it. It has been suggested that in Committee an attempt will be made to mitigate this objectionable feature, and if so I will support that attempt.

In conclusion, I am absolutely convinced that excessive profits are made in Australia, and that these profits are made at the expense of the people; It is our duty to protect the people from being plundered. For that reason I shall support the second reading of the Bill. But I make bold to say that when this measure becomes an Act, it will prove so objectionable to the people that there will be a cry for its repeal from one end of Australia to the other, and that before a year has passed it will be relegated to the wastepaper basket. In the meantime, I hope that it will exact from the profiteers of the community some of the profits which they have unfairly extracted from the people.

Motion (by Senator Needham) - That the debate be now adjourned - negatived.

Senator NEEDHAM:
Western Australia

.- When I moved the adjournment of the debate, I did so because my request appeared to be a reasonable one. We have before us a measure which it took five weeks to pass through another branch of the Legislature, and yet we are asked to dispose of the motion for its second reading in a single afternoon. It was with a view to eliciting an expression of opinion from honorable senators as to whether we should be called upon to swallow in five minutes a Bill which it took another place five weeks to swallow, that I moved the adjournment of the debate. I do not think it is fair to ask us to dispose of the measure in such a limited period. But seeing that it is the determination of the Government to proceed with the Bill, I intend to give them all the assistance I can to dispose of it as rapidly as possible.

We have heard many excellent speeches on the Bill to-day, and I venture to say that the criticism which has been levelled against it was worthy of the time that has been devoted to’ its consideration. I am wondering what the present Treasurer (Sir John Forrest) thinks of the Bill to tax profits made during the war. I am wondering what he thinks of this measure as it is now,’ and of the measure which he originally submitted to the House of Representatives. I shall take the right! honorable gentleman as the father of the measure. I am sure that he does not know it now. It has been greatly altered from its original shape. It has been mutilated to such an extent that I venture to say that its own father does not recognise it. Why has all this mutilation taken place ? We have heard a great deal about the Caucus system of the Labour party.

Senator Crawford:

– Where this Bill originated.

Senator NEEDHAM:

– It did not originate with the Labour party.

Senator Millen:

– No; theirs was a modest proposal starting at 50 per cent., and going to 60 per cent.

Senator NEEDHAM:

– My honorable friends opposite have a happy knack of saying that all evil things originate in our party. Sir John Forrest has never been a member of the party I belong to. Perhaps some day he may see the error of his ways and belong to us. Let me continue my reference to the Caucus system.

When this financial baby was presented by Sir John Forrest to the other House it created a political turmoil, and immediately a Caucus was called.

Senator Gardiner:

– Of which party ?

Senator NEEDHAM:

– Of the present Hugheselier party.

Senator Crawford:

– What is that?

Senator NEEDHAM:

– The honorable senator is a member of the Hugheselier party just now.

Senator Crawford:

– I did not know it by that name; I have heard of the Fusiliers.

Senator NEEDHAM:

– This Bill had to run the gauntlet of the Hugheselier party. Many provisions were taken out of the measure, and Sir John Forrest had to do certain things he was told, until latterly the patience of not only the right honorable gentleman but of the Government was so exhausted that they had to say to their followers, “You must either take the Bill in its present shape or leave it alone.” And in order that the face of the Government might be saved in connexion with their election pledges the party, after an exhaustive inquiry into all the conditions of the measure, agreed to accept what they now call a war-time profits tax.

It is not my intention to-night to analyze in all its stages this alleged tax on war profits. I listened very attentively to the speech of Senator Pratten. He mentioned that it would cost about £100,000 per annum to collect the tax, and I interjected that the Bill itself is not worth the cost of the paper on which it is printed go far as an effective war measure is concerned. This Government has been in. power for about four months.

It is numerically the strongest Government that has ever occupied the Treasury bench in this National Parliament. It attained power on the one cry, “ Win the war.”

Senator Senior:

– That is your opinion.

Senator NEEDHAM:

– The honorable senator is notable so far for making interjections; he has not yet got on to his feet to give his opinion about anything.

Senator Millen:

– I wish that I could say that about some other honorable senators.

Senator NEEDHAM:

– I can sympathize with the Leader of the Senate. He is very anxious to get this Bill put through as quickly as he can, but when he was on this side he took good care that no Bill should go through without receiving from him a careful scrutiny and analysis; he consulted no one’s convenience but his own.

This Government, I repeat, attained power with the one cry, “ Win the war,” and after an occupancy of the Treasury bench for four months with the largest majority in both Houses that has ever been commanded by a Government, this is their effort - a war-time profits tax - which is supposed to yield about £900,000 to the revenue. The Treasurer has told us that . this year it will require £9,000.000 to square the ledger, and this “ Win-the-war “ Government is trying to square the ledger by getting £900,000 in two years. Any one who has carefully studied the measure, and noticed the exemptions it contains, will be very optimistic, indeed, if he thinks that even in the first year of its operation the revenue will be enhanced by even £450,000. I will take Senator Pratten’s figures, which have been fairly accurate. If it costs £100,000 a year to collect the tax, the Treasurer will have £300,000 left.

Senator Pratten:

– That was the total cost for boththe Government and the taxpayers.

Senator NEEDHAM:

– Suppose that the Treasurer gets in every penny of the estimated revenue, what will it be, after all, in this huge effort to win the war ?

I think that the standard of pre-war profits is too generous; any person with a sense of consistency will admit that. Again, the exemptions are too many. I cannot understand why the professional man, whose income depends upon the exercise of his ability, whether he be a lawyer, a doctor, or a chemist, should be exempt. If the income of a man who is eminent in the profession of the law, or of medicine, has been increased during the war as the result of another professional man having gone to the scene of activities, why should he escape taxation ?

Senator Foll:

– It is all a matter of trade.

Senator NEEDHAM:

– It is. I understand that when the Bill was first introduced in another place, a professional man was exempted. After a series of Caucus meetings, and an expression 01 public opinion in other directions, the professional man was included in the Bill; and after another Caucus meeting he was taken out of it. Why all this backing and filling? Was it because of the eloquence and the power of Sir William Irvine that his brethren in the legal profession were exempted? But, apart from that consideration, it is the equitable side of the question I want to deal with. I read the debates on the measure in another place, but no honorable member adduced any solid reason why any professional man should be exempted from the operation of this tax. I have heard nothing said in this Chamber tonight to justify such an exemption. It is wrong; it is not equitable.

As regards new industries, we have to be very careful indeed as to how we tax them, whether it be in time of war or in time of peace. In the consideration of this measure, I shall give every encouragement to a new industry if it has been created since the 4th August, 1914, or even if it is created after peace is declared. We must be very wary if we desire to foster and develop our industries. In time of war, I admit, it is much more difficult to create and develop these indus-‘ tries than it is in time of peace. For instance, the raw material, which we cannot produce just now, is more difficult to obtain from overseas than it used to be. In that regard the protection of new industries is warranted.

In connexion with the pastoral industry, I have .always recognised the difficulties - flood, fire, and drought - which the farmer has to cope with, but I do not see any just reason why the primary industries should be altogether exempted from the operation of this measure. I think that during the war those engaged on the land have been specially favoured. The produce- -wheat and wool - has been pooled, stored, marketed and transported across thousands of miles of sea. At whose expense? Not at the expense of the primary producer, but at the expense of the Australian taxpayer. The prices obtained for wheat and wool have been greater than those realized in prewar times. t

Senator Pearce:

– You are under a misapprehension there. The freight on wheat is charged against the Wheat Pool.

Senator NEEDHAM:

– It has been marketed and transported.

Senator Pearce:

– The honorable sena-1 tor said at the expense of the taxpayers, but it was at the expense of the Pool.

Senator NEEDHAM:

– I accept the correction, but Senator Pearce will admit that the primary producers are getting better prices for wheat and wool than they were receiving in pre-war times. I do not see why, in the circumstances, these primary producers should be exempted from the operation of this Bill.

Senator Fairbairn:

– The producer of wool is not exempt.

Senator NEEDHAM:

– The producer of wheat is exempt, and I know of no justification for his exemption. I can see an attempt to make the secondary industries bear practically the whole of the burden of this taxation.

In my view, the whole of this matter may be stated in the form of a question: Should any man or woman in the Commonwealth derive excessive profits as the result of the shedding of human blood? Let us remove from our minds all other considerations, forget the mining, pastoral, and all other primary and secondary industries, and put to ourselves that one question. The answer to it can only be “ No.”

Senator Foll:

– They should not have an opportunity to do so.

Senator NEEDHAM:

– The opportunity is there, it has been availed of, and is being availed of to-day, and this Bill is not going to prevent it. After the figures which have been quoted to-day as to .the excessive profits made since 1914, and which are being made at the present time, do honorable senators mean to tell me that this measure is a genuine attempt to put an end to those excessive profits? It is not. Senator Gardiner this afternoon made a suggestion that we should drop the first year, 1915-16, of the taxation period, and continue the operation of the measure for a year longer than is at present proposed. I do not approve of that suggestion. Personally, I would go back to the 4th day of August, 1914, and take the lot of excess profits from that day until the present time.

Senator Senior:

– That is if the honorable senator could find them.

Senator NEEDHAM:

– Where there is a will there is always a way. It. is very hard to find anything if you do not want to find it. The objection which Senator Senior has urged was levelled against legislation in connexion with the imposition of Customs duties submittedto this Chamber. When we were proposing to give the Commissioner of Customs power to inspect the books of business firms in connexion with the New Protection legislation which we passed, and which was afterwards decided by the High Court to be ultra vires, a similar objection that it would be hard to find what the profits of a business were, was urged againstthat legislation. The profits of a business can be found if there is a will to find them.

Senator Fairbairn talked about the conscription of wealth. He told usthat wealth could be conscripted by this Parliament as we require it. Some little time ago, an attempt was made to conscript, not a bit at a time, butthe whole of every man in Australia. An attempt was made to place the manhood of Australia in a pool to be directed at the will of the National Government. When I opposed that method of conscription, when the referendum was before the people on the 28th October last year, I said that if the wealth of Australia were put into a pool to be directed by the National Government, as well as the manhood of Australia, I would1 be prepared to support the proposal. There was no attempt to do that, and there is no attempt to do it to-day. I agree with Senator Fairbairn and other honorable senators who have spoken,that no comparison can be made between human life and wealth.

Senator Senior:

– That knocks the stuffing out of the honorable senator’s argument.

Senator NEEDHAM:

– No argument that I could adduce, whether right or wrong, would convince Senator Senior,because he is not open to conviction.

Senator Crawford complained about having to pay the Federal income tax, and a State tax, as well as a. certain amount of war-profits taxation.

Senator Crawford:

– It was not a complaint, but a statement.

Senator NEEDHAM:

– The honorable senator evidently complained about having to do this.

Senator Crawford:

– I will not have to do it.

Senator NEEDHAM:

– The honorable senator complained about this having to be done, but I ask him what about the citizen in Australia who has no excess war profits, but simply his weekly wages earned by his own personal exertion?

Senator Crawford:

– That is the professional man ?

Senator NEEDHAM:

– No; the working man. He is paying his Federal and State income taxation to-day.

Senator Crawford:

– Is he? Not many, I think.

Senator NEEDHAM:

– He has no excess war profits, and why, then, should men growl who, in addition to their ordinary incomes, are receiving excessive profits arising from the war?

Senator Foll:

– Some working men are deriving war profits as the result of other men having gone to the Front - the wharf labourers, for instance.

Senator NEEDHAM:

– I have previously heard a statement about wharf labourers making exorbitant wages. It is true that in one week a wharf labourer may make £5, £6, or £7, but it is also true that for the four or five weeks following he may not make £2 per week. If Senator Foll knew a little about the industry to which he has referred he would not have made the remark he has made. Even in times of peace a wharf lumper may in some weeks make £4 or £5, but he may walk the streets for weeks without making a penny.

Senator Foll:

– If they did make war profits, would the honorable senator agree that they should be taken from them?

Senator NEEDHAM:

– Let me tell Senator Foll my idea of the way in which wo should obtain money to finance the war. I can put it so simply that those who run may read : Every man and woman in Australia should contribute to the cost of the war in proportion to his or her income. Every one of us, no matter what our wages; salary, or profits may be, should pay for the cost of the war in proportion to our income.

I promised the Leader of the Government that I would assist him in putting this Bill through as rapidly as possible, and I intend to keep that promise. There is nothing in the Bill to commend it, and to take up time in criticising it is simply to fight a shadow. The Bill is a sham, p. delusion, and a snare. Its title is a “ War-time Profits Tax Assessment Bill,” but I think that the proper name for it is a Bill to encourage profiteers in Australia who to-day are exploiting the people of the Commonwealth by making huge profits out of the shedding of human blood on the battlefields of France.

Debate (on motion by Senator Senior) adjourned.

page 1910

WAR LOAN (UNITED KINGDOM) BILL

Bill received from the House of Representatives, and (on motion by Senator Millen) read a first time.

Senate adjourned Bt 10.44 p.m.

Cite as: Australia, Senate, Debates, 12 September 1917, viewed 22 October 2017, <http://historichansard.net/senate/1917/19170912_senate_7_83/>.