7th Parliament · 2nd Session
The President (Senator the Hon. T. Givens) took the chair at 11 a.m., and read prayers.
Invitation to Visit London
– I ask the Minister representing the Prime Minister whether it is a fact, as reported in the newspapers, that a number of press men are going to England? I want to know if their expenses are to be borne by the Commonwealth or by the Imperial Government?
– I remind the honorable senator that, in replying to a question submitted yesterday, I think by Senator Needham, the answer given included an intimation that a full statement on the subject would be made shortly.
Age of Enlistment and Parental Consent - Badges for Female Relatives of Soldiers
– I ask the Minister for Defence whether, in view of the alterations made in the regulation concerning youths under nineteen years of age joining the colours, he will take steps to release from service all youths now in camp between the ages of eighteen and nineteen years, irrespective of whether their parents ask for their release or otherwise?
– I am glad that the honorable senator has asked this question, because it gives me an early opportunity to correct what’ seems to be a misapprehension on his part, and, also, on the part of others. The age of enlistment has not been raised to nineteen years, but continues as before at eighteen years, but young men cannot be enlisted under the age of nineteen years without the consent of their parents. If they have their parents consent, they can be enlisted at eighteen years, although they are not allowed to go into camp untilthey are eighteen and a half years of age.With respect to those who have gone into camp under the regulation permitting enlistment without the parents’ consent, the answer to the honorable senator’s question is that the parents of such young men as he refers to will have the right to withdraw them if they come under any one of the three heads of the amended regulation to which I referred yesterday. That is to say, the amended regulation is made retrospective.
– Can they be withdrawn absolutely, or only until they have reached the age of nineteen years?
– The amended regulation is made retrospective. It will be read as if the three clauses which I mentioned yesterday were a part of the regulation from the time it was originally issued.
asked the. Minister for Defence, upon notice -
Has the issue of badges to next-of-kin of soldiers who have fallenin this war yet been commenced?
– It is assumed that the badges alluded to are those for issue to nearest female relatives of members of the Australian Imperial Force. If so, the position is that considerable delay has occurred in obtaining delivery of the badges from the contractor, who has been hindered through inability to obtain adequate supplies of suitable enamel. I have referred the matter to the recentlyappointed Board of Business Administration with a view to the manufacture of the medals being expedited and early issue commenced.
asked the Minister representing the Minister in charge ‘ of Price Fixing, upon notice-
– The answers are -
Bill read a third time.
Bill read a third time.
– I move -
That this Bill be now read a second time.
This is a short measure, the usefulness of which will be recognised by honorable senators. Under section 19 of the Acts Interpretation Act provision is made that references in any Act to “ the Minister “ includes a Minister acting for “ the Minister.” Considerable inconvenience has arisen in cases where a Minister has been compelled to leave his Department and has had to leave an Assistant Minister in charge. It has sometimes happened that although the Assistant Minister has decided upon a certain course of action, he has been unable to give statutory effect to his decision without first obtaining the signature of a Minister of State to the document embodying it. It is proposed by this Bill to amend the existing Acts Interpretation Act by providing that any reference ‘in an Act to “ the Minister” shall include not only the Minister acting for “ the Minister,” but also any member of the Executive Council so acting. Honorable senators having a knowledge of what takes place in parliamentary life will see that in a few words this really enables an Assistant Minister to sign documents which at (present can only be signed by Ministers of State. The decided convenience of the course proposed in this Bill will commend itself to the approval of honorable senators.
– I do not know where we shall stand if this Bill is passed. If we look back to not very ancient history we shall find that on one occasion the Prime Minister, the Minister for the Navy, and another Minister had a conference in Sydney, at which they passed certain regulations to meet a condition of things which they anticipated would arise. As a result Senator Gardiner, the Leader of the Opposition in the Senate, Mr. Higgs, who was at the time Treasurer of the Commonwealth, and another Minister, I think Mr. King O’Malley, objecting to the regulations agreed to at that conference, tendered their resignations. This Bill will validate such action as these former Ministers of State of the Commonwealth absolutely repudiated.
– What the honorable senator means is that the Bill will make an Assistant Minister a member of the Executive Council, and he is not a member of it.
– He is already a member of the Executive Council.
– Yes ; that is what it means. It will give an Assistant Minister full power to do anything he pleases iu connexion with the office which he is for the time administering. I object to that, but I need not labour the question.
– It gives an Assistant Minister the power -of a Minister with a salary.
– The salary does not worry me at all. The question I wish to raise on this Bill is that it will vest in a Minister, who has no cognisance of the matter in question, the power to sign a document which will then have legal effect. I shall not labour the question any further, but will leave it to the Senate.
– We have had only a few words of explanation of the Bill from the Minister for Repatriation (Senator Millen) and Senator Guthrie’s protest. In the necessarily hurried consideration of the matter one may not have been able to grasp all that is covered by this measure. Even after listening to Senator Guthrie, I believe that ,the Bill cannot do very much harm. I take it that, if passed, it will place a man who enjoys the title of Assistant Minister in the same position, and clothe him with the same full powers, as a salaried Minister of State at Cabinet and Executive Council meetings.
– He has that power.
– That is a direct contradiction of the statement made by Senator Guthrie in his references to a certain incident.
– What is the position of an Assistant Minister at an Executive Council meeting now?
– The Minister for Defence (Senator Pearce) is a little premature. He need not assume that I air. discussing this measure in a spirit of opposition. It is for the honorable senator or some other member of the Government to contradict the assertion made by Senator Guthrie. The honorable senator’s statement is practically that, owing to the action taken by an Assistant Minister at the time of the incident to which he referred, certain Ministers of State of the then Government tendered their resignation.
– This Bill is to validate such action as that then taken.
– This cross-firing across the chamber has quite justified me in speaking on the second reading of the Bill, because Senator Guthrie is an old parliamentarian. He has been a member of this Parliament for a great number of years, and he is just as much in the dark as some of the newer members of Parliament. I take it that any man who occupies the position of Assistant Minister is entitled to go to an Executive Council meeting.
– I take it, also, that he is clothed with’ powers as full as those invested in the Prime Minister himself.
– And I assume that his signature on any document relating to such crucial matters as has been mentioned by Senator Guthrie would be just as effective as that of the Prime Minister himself.
– If, then, the Assistant Minister has these powers, what harm can there be in passing this Bill, though. I do not know there is any necessity for it. The Minister did not make the matter quite clear. I understand that at present it is competent for the Government or the Prime Minister to delegate to an Assistant Minister any power which he himself exercises in the temporary administration of any Department, the only difference being that the Assistant Minister does not hold a portfolio and His Excellency’s commission.
– He does hold His Excellency’s commission as an Executive Councillor.
– We are now eliciting information from an honorable senator who is in the happy position of having been a Minister.
– An Assistant Minister is an Executive Councillor.
– If we have reached that stage in the administration of our public affairs that it is necessary to appoint extra Ministers, the Government, I think, ought to be prepared to shoulder the responsibility of asking that additional Ministers be appointed.
– Have they not done so ?
– No ; they have appointed Assistant Ministers. I believe it would be better to divide up the whole of the administrative work, and, if necessary, to establish two or three other administrative Departments, in order to lessen the work which now falls on the shoulders of the present Ministers. Of course, the responsibility of bringing forward such a measure rests with the Government. I think they should appoint real Ministers, and not Assistant Ministers; and I think, also, that Assistant Ministers should be clothedwith exactly the same powers as any Minister holding a portfolio. Until we get further information from the Minister in contradiction -of Senator Guthrie’s assertion, I-
– The honorable senator’s remarks show thathe does not need any explanation, because he has correctly summed up the position.
– Then I intend to support the Bill. But I think it would be far better if, instead of continuing the practice of appointing Assistant or Honorary Ministers, the Government would ask for authority to appoint additional Ministers with portfolios. It would be better if the Government tackled this job in a proper way, even in spite of criticism from the press, because we know the newspapers are always howling if the slightest attempt is made to establish another Department. We know how the newspapers howled when the Repatriation Department was created and the. Minister for Repatriation appointed. In spite of all this, I think it would be better if the Government shouldered the full responsibility, and, if necessary, took steps to create extra portfolios.
– With all the present Ministers and Committees they ought to be able to properly distribute the work.
– That is all very well ; but we have been informed that Ministers want to get into recess within a fortnight, not because there is no work for Parliament to do, but because they want the extra time for the administration of their different Departments.
– What about the temporary appointment of Ministers to act in the absence of a Minister, as in the present instance, with regard to the Prime Minister and the Minister for the Navy ?
– It may be necessary to have, say, one Honorary Minister in each House to take up Ministerial work if a Minister falls ill. The Bill raises a big question, but, apparently, Ministers are not prepared to shoulder the responsibility of creating new portfolios, and intend to continue under the present system. I cannot see that any harm can be done by passing the Bill.
– I listened carefully to the Minister for Repatriation (Senator Millen) when moving the second reading, and I hardly think he went far enough in justification of the measure. I feel sure also that Senator Guthrie has misread the Bill.
– I thought it was so simple that I would not be justified in detaining the Senate for very long upon it.
– I think the reasons advanced by Senator Millen, in justification of the Bill, were the least important. His argument, summed up, appeared to be that it was necessary sometimes for Assistant Ministers to sign documents. But at present, and. since about 1913, it has been the practice for Assistant, or Honorary, Ministers to attach their signatures to many documents.
– They may sign some, but not others.
– Yes, I am aware of that. But I would point out that we frequently see the signatures of Honorary Ministers attached to notices appearing in the Gazette on behalf of some particular Minister of State. I have taken a copy of the Gazette at random, and I observe that two notices on behalf of the Defence Department are signed, one “ E. J. Russell, for Minister of State for Defence,” and the other by “ E. D. Millen, for Min ister of State for Defence.” This evidently was during the absence of the Minister for Defence (Senator Pearce) in Western Australia in January last.
– In those cases it was one Minister of State signing for another Minister of State.
– I could not sign a War Precautions Act Regulation.
– Perhaps not. But I think I have seen the signature of the Vice-President of the Executive Council, in conjunction with that of the GovernorGeneral, attached to Statutory Rules issued under that Act.
– Senator Pearce has no power to delegate authority to any Honorary Minister to sign an order under the War Precautions Act.
– I am aware of that. ‘
In 1901 we passed an Acts Interpretation Act, which provided that a “ Minister of State “ shall mean “ one of the King’s Ministers of State for the Commonwealth.”
– Does “ Minister “ include “ Assistant Minister”?
– No. When the words “ Minister of State “ or “ Minister “ appear in any Act they mean one of the King’s Ministers of State for the Commonwealth. That is quite clear. Under the Constitution it is provided in section 65 -
Until the Parliament otherwise provides, the Ministers of State shall not exceed seven in number, and shall hold such offices as the Parliament prescribes, or, in the absence of provision, as the Governor-General directs.
The preceding section states -
The Governor-General may appoint officers to administer such Departments of State of the Commonwealth as the Governor-General in Council may establish.
Such officers shall hold office during the pleasure of the Governor-General. They shall be members of the Federal Executive Council, and shall be the Queen’s Ministers of State for the Commonwealth.
By the combined operation of these provisions in the Constitution and the original Acts Interpretation Act, we arrived at the position that when the word “ Minister “ was mentioned in any Act of Parliament it could only refer to one of seven men. But recently we exercised power given to us under section 65 of the Constitution, and extended the Ministry, so that when the word “ Minister “ now appears in any Act of Parliament, it applies only to one of nine men. It has been the practice for some years, however, to’ appoint Assistant, or Honorary, Ministers, who have been members of the Executive Council, because the Executive Council is really larger and comprehends the Ministers or Cabinet. But I emphasize that, at present, wherever the word “Minister” appears in an Act, it can only apply to one of the King’s Ministers of State. It is obviously desirable and necessary that it should refer, not merely to one of the nine “ King’s Ministers of State,” but to any one of the honorable gentlemen who are included in the Cabinet, whether holding portfolios or not. That is the whole purport and scope of the Bill. I do not think there is . anything more than a mare’s nest in the objection raised by Senator Guthrie that the Bill has been introduced to validate retrospectively something done by a previous Ministry. It simply provides that the word “Minister” shall include every one who at present is regarded by us all as a Minister, whether he holds portfolio or not.
By reason of the existence of the Constitution, and the provision therein that there shall be seven King’s Ministers of State, i and because that number has been extended to nine under the power given in the Constitution, the use of the word “ Minister,” appearing in any Statute, can now only apply to one of those nine. The Government are now asking that the word “Minister” appearing in any Act shall mean’ what we all mean when we use that word, and that the public shall so understand it, and that the various Departments shall be administered upon that understanding.
.- In the absence of the Leader of the Opposition in this Chamber (Senator Gardiner) it had been my intention to ask for an adjournment of the debate, in order that honorable senators might have a better opportunity to look into the whole subject ; but, after the lucid explanation of the Bill by the brightest constitutional intellect in the Senate, and some others, I now see no reason for making that request. . As a matter of fact, I do . not think it matters very much whether the Bill is carried or not; but I do view with alarm the increase in the number of constitutional authorities whom we have at present governing Parliament. When the whole of the Ministers get together, with their Assistant Ministers and their publicity agents, and others, they really constitute quite a parliament in themselves. And, then, when we come to the under secretaries, we have still another parliament. I saw a document the other clay relating to the proceedings of a certain number of under secretaries, sitting together in conclave, who were discussing the reduction of the privileges of members of Parliament, in order to bring about further economies in the various Government Departments. It was rather amusing ; and, perhaps, we may have the pleasure of reviewing some of those .under secretaries’ salaries, with a view to making certain additional savings in the administration of public Departments. Probably, too, we could well save money by doing without some of those officials altogether.
As for the measure before the Senate, I am now satisfied, after having littered to the explanations of various honorable senators, that there will be no harm in passing the Bill, nor can it do any good.
– My reading of the original Act leads me to the conclusion that the purpose of the Bill is simply to make an Acting Minister virtually the Minister administering a particular measure. As the original Act practically provides for the same thing, but not in such definite and clear language, the Bill is simply an extension of that portion of the Statute which reads -
Where in any Act any Minister ia referred to, such reference shall, unless the contrary intention appears, be deemed to include any Minister for the time being acting for or on behalf of such Minister.
Here the extension by the use of the words, “ or any member of the Executive Council,” means, I take it, that none but a Minister or Acting Minister can be in the Executive Council; so that if does not extend it beyond the present limit, but validates it.
– You refer to one Minister administering the Department of another Minister temporarily.
– In the event of the illness or absence of a Minister in charge of a particular Department, the action of a Minister temporarily administering should be as valid as though the procedure were in the hands of the original Minister.
– But take the position of Mr. Higgs.
– This will not be retrospective at all.
– The Prime Minister can override the whole of the members of his Executive.
– I think Senator Guthrie has unintentionally misread the purpose of the Bill.
– No, I have not.
– Then the addition of the words to the original Act could not of itself validate a Statute which was invalid.
– I did not say that it does.
– Well, that can be the only intention or purport of Senator Guthrie’s remarks. If, for the time being, Senator Pearce or Senator Russell were administering the Repatriation Department, then the actions of that Minister would be as valid as if they were performed by the Minister for Repatriation himself.- The Kil goes no further.
– It does. He could get two Ministers to agree ‘with him and have all the rest of the Ministers against him.
– No, it is limited, because it simply adds to the section in the Act the words, “ or member of the Executive Council”; and that member of the Executive Council must be the Minister administering for the time being. There is no power to go beyond the limits of the section, even by the addition of these words. I cannot understand, therefore, how Senator Guthrie can have arrived at the conclusion that’ the Bill is to validate something which, up to the present, has been invalid.
– I did not say so; but I said that these things had occurred and might occur again.
– What may occur again is only that a Minister who has the right to administer a Department shall be so administering it. Surely, Senator Guthrie does not want to say that if the Minister for Repatriation is away, and he, Senator Guthrie, is appointed as an Acting Minister to administer that Department in the absence of Senator Millen, the acts of Senator Guthrie shall not be valid?
– And five members of the Executive Council may be against him.
– If it has to come before the Executive Council, then what the Council decides would be the action that is valid. The reasoning of Senator Guthrie would seem to be that the Minister for the time being in charge of a’ Department has power to do whatsoever he will, and that it thus becomes law. If it is a question which comes before the Executive Council, then its counsel prevails over that of the one Minister. If an act of a Minister for the time being is not one which must be referred to the Executive Council, however, then .his action is supreme. I can see no possibility of the extension beyond the meaning which was not specifically stated in the Act but is now set out in the amending Bill.
– I feel somewhat in sympathy with the arguments of Senator O’Keefe. So far as I can see, the Bill is practically a validating measure, and one which will place the status of Assistant Ministers upon a more substantial basis. I have no sympathy with what I consider a false cry of economy to prevent any addition to the personnel of the Ministry at this stage. I have previously, in this chamber, expressed regret that with the creation of two additional places for Assistant Ministers the Ministry did not at the same time present a Bill for the provision of salaries for those new Ministers. I do not think it is realized sufficiently what are the responsibilities carried by the Ministry, nor what are the responsibilities even of Parliament. We are dealing with matters that, are abnormal. The Ministry have the responsibility of the collection of a record revenue. They have the control of nearly £200,000,000 j per annum, which is more than the value of the output of the whole of the 15,000 factories of Australia. That fact gives one an appreciation of the responsibilities resting on the shoulders of the Ministry to-day. I view the talk of economy and efficiency somewhat in this way: There can be no economy without efficiency. We should seek efficiency first, because if we secure economy by the sacrifice of efficiency it becomes extravagance. It is the duty of the Ministry to seek efficiency throughout the whole of the operations of the Commonwealth.
We have a Minister for Price Fixing, and rightly, too. The subject affects every man and woman in Australia, and if it is not a job for a grown man, no other position in the Commonwealth is. We have a Minister in charge of the Wheat Pool. That body has the control of a sum, belonging to the primary producers, of, approximately, £30,000,000 per annum. The Commonwealth is controlling wool, metals, butter, rabbits, hides, skins, and many other commodities; and these responsibilities have all been thrown upon the same Ministers as the result of the war. Nothing should be said against the enlargement and extension of the Ministry in view of the enormous amount of work they have to face. It is common knowledge with every member of the Senate that Ministers have very little time to devote to the administration of their Departments when Parliament is sitting, or to give consideration to the many important subjects that come before us through those Ministers. Owing to the pressure of work, some of the Ministers, I know, toil throughout week days, holidays, and Sundays as well, to keep up with the duties of administration.
This is a Bill which we should hail as right and proper. It does not go far enough, however, since it does not provide for further help in carrying the great responsibility of administration.
– I apologize to the Senate if it is considered that I introduced the measure in too perfunctory a manner. I thought, however, that honorable senators were so familiar with the position that I would have been deemed to be labouring the matter if I had stressed the purposes of the Bill more fully. The measure does not involve any constitutional problems.’
It does not require deep research into the law to say whether we should adopt the proposal. The main fact is that there is a difficulty of which honorable senators are aware, and which I cannot illustrate better than by pointing out one or two facts. The Minister for the Navy (Mr. Cook) is absent from Australia. His Department is being administered by Mr. Poyaton, an Assistant Minister. Every one knows that he is in control of that Department; but he cannot sign his own papers. When he has documents to be signed, he must send them to a Minister for State, who must sign them for him.
– And who knows nothing about the matter.
– Neither does the Minister himself, generally.
– The effect of this amending Bill would be that Mr. Poynton, being actually in charge of a Department, would become possessed of the authority to sign his own papers. I am sure everybody recognises the necessity of that, particularly in the case of two gentlemen who are acting as locum tenens for Australian delegates who are absent upon public business. There is something to be said in favour of the argument advanced by Senator O’Keefe and Senator Pratten as to whether the better course might not have been to have created additional portfolios. I do not find fault with that view at all.
– If a comparison be instituted with Canada - and probably Australia has quite as much to do as has the Dominion - will it not be found that there are more portfolios there than here ?
– I cannot speak definitely upon that subject, but my own impression is that Canada has more Ministers than we have.
SenatorO’Keefe. - And is controlling less public activities.
– I mentioned the other day in this Chamber that in following the example set by Australia the Canadian Government had placed repatriation in the hands of a separate Department, and had appointed two Ministers, both salaried, to deal with it. However, that is perhaps a little by the way.
There is just one other matter with which I desire to deal. Senator Guthrie seems to be under a misapprehension in thinking that this Bill will in some way affect honorable members as members of the Executive Council. As a member of the Executive Council, the measure will not affect an Honorary, Minister at all. But where an Honorary Minister is called upon to act as a Minister of State the position at present is that he cannot sign any documents for that Minister.
– The Bill will enable Honorary Ministers to do something which is perhaps against the wish of the rest of the Cabinet.
– Honorary Ministers have the same powers now in a Cabinet and Executive Council meeting as have other Ministers. The passing of this Bill will neither enlarge nor diminish their powers in that connexion. Here is the curious position which obtains to-day: Three Assistant Ministers, who are Honorary Ministers, may form an Executive Council, and at a meeting of that body may pass or reject papers, but not one of them can sign them.
– It is an absurd position.
– Of course it is.
– This Bill will give three Honorary Ministers the power to override the Prime Minister.
SenatorO’Keefe. - Why should it not?
– Senator Guthrie is confusing things which are not at all related. The Prime Minister always has a right to control his Government. He holds in Ms hands a power which is possessed by no other Minister, in that he can terminate, if he so chooses, the exist- ence of his Government. But when Ministers meet at an Executive Council every Minister has a vote equal to that of any other Minister.
– And he should have. We have had too much one-man Government in Australia.
– The Bill provides a practical expedient to enable those gentlemen who, as Assistant Ministers, are administering Departments to-day, to do it effectively and in a business-like way.
Question resolved in the affirmative.
Bill read a second time, and reported from Committee without amendment; report adopted.
In Committee (Consideration resumed from 23rd May, vide page 5001) :
Clause 2 -
Section 3 of the principal Act is amended -
– I notice that in this clause it is proposed to regard as income -
In the case of aco-operative company or society, all sums received from members in payment for commodities supplied or animals or land sold to them or received in respect of commodities, animals, or land sold by the company or society, whether on its own account or on account of its members.
I was under the impression that for many years efforts had bean made in Australia to encourage the formation of co-operative societies as a means whereby industrial disputes might be prevented. Whether the extensive establishment of cooperative companies would have that result is, of course, a debatable matter. But the proposal of the Government to raid the funds of co-operative societies certainly does not meet with my approval. Many of these organizations were established for the express purpose of enabling their members to avoid the payment of what they regarded as unfair extortions on the part of private traders. Up to date the incomes of societies of this description have been excluded from the operation of the Federal income tax. The Government can surely find a more legitimate means of securing revenue than this attack upon the resources of co-operative societies. I know of a considerable number of these institutions which had a very prolonged struggle before they . got into working order. This was chiefly due to the fact that the people primarily concerned in them lacked the necessary business training and qualifications for their task. But they have now got them into proper working order, and the Government to discourage these co-operative societies -
– To obtain revenue.
– To discourage the operations of co-operative societies, the Government propose to fine them in proportion to their activities.
– It is only their profits which will be taxed.
– Whether it is their profits only which will be taxed or “ all sums “ received from members is immaterial to me. I have no faith in the Government dealing justly with questions of taxation. This is only a preliminary on their part to discourage co-operation and to make quite sure that those persons who in the past have frequently raised the prices of their goods beyond all reason should be allowed sole possession of the distributive field. It is common knowledge to-day that in many cases store- keepers - and especially soft-goods storekeepers - are able to charge the public just what they choose for the commodities which they ‘have for sale. Now, in my judgment, a co-operative society enables its members to purchase their commodities at a reasonable price. Consequently I am opposed to this effort on the part of the Government, who seem to be nothing better than a collection of “crooks.”-
– Of course, Senator Grant, with a frugal frankness which is somewhat characteristic of him, has stated that he has no faith ‘in the Government, which he has referred to as a collection of “crooks,” and, therefore, there is no hope that anything which I may say will bring him into a reasonable frame of mind. I regard him as being quite beyond the pale of reason, at any rate of the reason which - can be supplied by those on this side of the chamber. But the remaining members of the Committee will, I am quite sure, recognise that what is proposed to be done here is quite fair and legitimate.. That proposal is that any institution carrying on business shall pay taxation upon its profits. Co-operative companies and other companies are to be treated in exactly the same way. If cooperative companies choose, they need ‘not make any profits, and in that case will not pay any tax. They can handle the producers’ goods at such low prices that it will be impossible for them to make a profit. But if they do not do that, there is no reason why they should not be subject to the same taxation as other members of the community.
– There is a good deal in the contention of the Minister that no cooperative company need make a profit. At the same time I agree with Senator Grant that we should hesitate to attempt, by means of an income tax, or in any other way, to discourage co-operation throughout Australia.
– This Bill will not do that.
– No, I do not think it will discourage co-operation, but it will prevent co-operative societies showing very big profits and returning those profits to their members. Probably it will necessitate co-operative companies working on a different basis in the future from that of the past. I agree with Senator Grant that co-operation should not be discouraged; but, in view of the probability and advisability of co-operative companies being so able to work their businesses in the future, even if this clause is passed, as not to pay excessive income tax where the imposition of excessive income tax is not intended, I. must support the clause.
– The last part of the clause - “ Value “ in relation to live stock means the value as prescribed, is open to an objection that I have often brought forward in this Chamber. Instead of clearly stating in the definition clause what “ value “ means, we are leaving it to be defined by regulation to be passed by the Governor-General in Council. We are here to legislate, and not to create a machine that will do the legislation in our absence. In the very next clause power is given to the GovernorGeneral to make regulations for carrying into effect arrangements with the Governor of a State, and at the end of the Bill there is the usual definition clause giving power to the Governor-General in Council to make regulations not inconsistent with the measure.
– That is administration.
– This practice is not only leaving administration to the Governor-General in Council, but legislation also. We are depreciating ourselves as legislators. In a Bill which affects so many persons, and especially in a clause so far-reaching as this, we should be clear and definite. It is no more impossible for us to state what “ value “ means than it is for the officials to do so. Members cannot keep pace with the statutory rules issued under various Acts nowadays unless they sit up all night and work all day Sunday. While the Bill is before us, I beg the Minister to give us some idea of what “ value “ means.
– The value of stock is always varying.
– That is all the more reason why we should not shirk our duty. If it is left to a regulation to define, the value of this year’s assessment will differ from that of next year’s assessment.
– It is the market that always fixes the prices of stock.
– Still, there is a value, although it may not be possible to name the exact sum of money that a bullock is worth. Surely we can arrive at some definition of what is to be taken as value?
– It is the selling price in the market.
– The Bill does not say so. If it means the price to be realized in open market, why not put it in the Bill? The Governor-General in Council may prescribe one meaning for “ value “ one week, and another meaning for it next week, so that we shall be leav ing the matter at the mercy of changing opinions, instead of having a fixed legislative determination.
– Does not “ value “ mean the value of the live stock on hand at the end of the year?
– The honorable senator shows that we can define the value of live stock.
– You will give the man in the back-blocks of Queensland the right to value his stock at the station, while the man who controls the market in Melbourne will value it here, and there will be a tremendous discrepancy.
– The definitiongiven by the seller in Melbourne can be no better than a definition decided on by members of Parliament when passing the law, because the man in Melbourne cannot ‘properly value stock in the north of Queensland that he has never seen. However difficult it may be, it is better for us to face the difficulty manfully.
– Does the honorable senator see any possibility of our defining “value”?
– Is it any more possible for the Governor-General in Council to do it?
– Yes, they can do it from time to time.
– Those who are to make the regulations are not the people who have the sale of the stock.
– We could fix the price for to-day, but not for two or three months hence.
– If we say we cannot define “value,” we confess that we cannot do our work, and that is a confession of weakness on our part. Cannot we say “ ‘ value ‘ shall mean the value as realized by sales in the neighbourhood of where the assessment is made”? The value of land in Queensland would not be what an agent in Melbourne might de- cide.
– The value of land is more or less a fixed quantity.
– It is no more fixed than the value of stock. For instance, the thermometer in winter varies less than the barometer does.
– It would be difficult for the Commissioner to fix the value of stock in every district of the Commonwealth.
– It would be difficult to fix it in pounds, shillings and pence, but it ought not to be difficult to define the method by which the value shall be estimated. It is no more difficult for us to define “ value “ than to define the difference between a person and a company, which we have just undertaken to do.
– It would be fixed finally by the amount the stock actually raises. This only refers to the stock on hand at the end of the taxing period.
– I shall give honorable senators an illustration of what I mean. A merchant taking stock which changes in value according to scarcity or the season of the year, in making up his stock-sheets, estimates the value of his goods at what they could be bought and sold for at that time. I do not see why we should not prescribe that the value of stock shall be estimated on similar lines.
– Suppose there were no sales of stock in the district for six months?
– If a man has not sold sugar for six months, he will still know, when taking his stock, what the price of sugar is at that time.
– But we are dealing here with sheep and cattle.
– If a man sold no clothes last week, that would not prevent him, in making up his stock-sheets to-day, from estimating their value now. It seems to me that it should be possible for the income tax gatherer to know what stock is worth in a certain neighbourhood. We should in this measure lay down a definite basis of valuation, and not leave it to regulations and statutory rules. I raise the question because we are persistently adopting this system of government by regulation, and so losing sight of our proper duty as legislators.
.- I appreciate the difficulty of the Taxation Department in coping with persons who may improperly take advantage of the law to evade taxation upon the profits of joint stock companies, but I am very loath indeed to do anything which woulddiscourage bona fide co-operative societies established on theRochdale system. Throughout the history of theRochdale system, the practice of thrift has been encouraged in the working class com munity. In Australia, during the last three or four years, the newspapers have continually set before the working classes the practice of thrift as the panacea for all the evils from which they suffer. I have had some little connexion with cooperative societies, and have read a great deal about them. Those who invest their money in the shares of a co-operative society do not do so with the object of getting interest upon their investments. Under the Rochdale system, co-operators are encouraged to trade with their own society, and the profits arising from the trade are distributed, not as interest upon the money invested in the shares of the society, but as bonuses corresponding to the measure of trade each co-operator has carried on with the society. In one part of the North of England - I think it is West Shields - practically every member of a co-operative society established there has been enabled to purchase his own home out of the bonuses upon his trading with the society.
– He has eaten himself into a home.
– Yes; and a very good job for him. He would not have been able to get one otherwise. We should do well to encourage that kind ‘of thing, and I would not willingly put any obstacle in the way of men who are prepared to help one another in this manner. The profits of these societies are sometimes derived from prices as high as are charged elsewhere. The experience in Australia has been that, immediately a co-operative society is started, merchants in the neighbourhood are encouraged by some one to cut prices. A man in business in. New Zealand told me that a co-operative society was started alongside his place of business, and he set himself out to lose £1,000 by undercutting the co-operative society’s prices. He told me that other merchants in the neighbourhood were prepared to give him another £1,000 if he could destroy the co-operative society. The result was that that society was destroyed. The experience of the cooperative movement in Australia is that, if a . co-operative society continues to charge ordinary prices, it very often fails; but if it is in a position to cut down prices to meet competition, it may live for a time and overcome its initial difficulties.
– The experience of the co-operative system in South Australia proves the honorable senator’s argument to be fallacious.
– I read the history of the South Australian Co-operative Society years ago, and I know it had some very grave difficulties to overcome in the past.
– It never had.
– There is a cp-operative society in Ballarat, and. the manager of that society told me that for years he was afraid to tell the directors the amount of their liabilities. He met the liabilities with his own cheque over and over again until the society had overcome its initial difficulties, had fought the merchants and combines ranged against it, and had got on to a sound footing. It is in the initiatory stages that these societies experience the greatest difficulty.
SenatorReid. - That is the experience of the majority of people who start in business privately.
– The Co-operative Society of Adelaide started with 15s. capital, and is doing a business of £100,000 per annum to-day.
– I have read the history of that society, and I say that for the first five or six years it was in serious difficulties. That may be said of every society of the kind that has been started in Australia. I hope that the Government will postpone and re-draft this clause in order to give due consideration to genuine co-operative societies. I do not believe that it is their desire to tax such societies, and their object is only to prevent advantage being taken of a provision of the kind by joint stock companies to escape taxation. The genuine co-operative society should be given every encouragement, because its object is to helpthose who most need assistance.
– I am disposed to move the omission of paragraph b of the proposed new definition of “ Income.” In common with Senator Guy, I believe that it is the intention of the Government to meet the difficulty that arises from the action of those who try to escape taxation by trading under the guise of co-operative societies. I believe that they are prepared to give every consideration to bona fide trade societies of the working classes. Like Senator Guy, I have had some little experience of co-operative societies. I was induced at one time to put my hardearned cash into the shares of such a society, and to give my lime for a year to the keeping of its books, and as the result of my experience, if a man asked me to join a co-operative society now I would ask him “ to put up his dukes.” After giving my time and money to the society I found that the shareholders accused the directors of stealing the goods. The wives of some of the members went to the big emporiums to obtain cheap goods, and they came to the co-operative stores for sixpenny-worth, and there was generally a deficiency in the stock when they left. I know that there are some bond fide cooperative societies in the coal-mining districts of New South Wales and other places who do good service to the community by enabling their members to procure a good article at a fair price. The difficulty about thisclause is that the contributions to such societies are to be treated as income. I do not think that that is a fair thing. The Government should be able to cope with the evils which may arise through advantage being taken by joint stock companies carrying on business under the guise of cooperative societies, without penalizing genuine co-operative societies of working men. I hope the Minister will take the advice of Senator Guy and have this clause redrafted, so that these co-operative institutions may not be penalized in order to enable the Government to raise revenue. There are plenty of legitimate sources of taxation, and it should not be necessary to impose it upon these co-operative societies of working men, banded together for the purpose of relieving them of some of the hardships of their too often hard life. The man who works in the mines should receive every consideration from the Government. If he gives his time, his money, and his energy to perfect such an institution as a co-operative society in order to secure for himself and his fellow workers and their families a little more comfort in life, the Government ought not to penalize such institutions. They will be penalized under this clause as it stands in the effort which the Government are making to tax those who ought not to escape taxation. If the Minister will not agree to postpone and amend the clause in order to protect the interests of genuine co-operative societies, I shall have to move and I do so now -
That sub-paragraph & of paragraph e be left out.
– I indorse the remarks made by Senator Guy and Senator McDougall, and think the Government would be well advised if they reconsidered the position with regard to co-operative societies. All my life I have been a staunch supporter of the co-operative movement, because I believe there is nothing finer than the establishment of such institutions for the benefit of the working men. Many years ago, a number of men - I am a member of their society - joined together in this way, and by their industry and thrift established a fine business and accumulated property essential to the carrying on of that business, but under the proposal now before the Committee some of those wage-earners may be liable to a double tax, which I regard as very unfair..
– Taxing a man’s income.
– Yes. In my opinion, the establishment of cooperative societies is one of the best features of our social and industrial life. They are not created to make large profits, but simply for the purpose of enabling members, by co-operation, to live a little cheaper than would be possible by purchasing from businesses established by private enterprise. I am satisfied, from my own experience, that their success is undoubted.
– And the honorable member has vast experience.
– Yes; I have been connected with the movement for a great number of years. I organized in New South Wales the Weenoona Co-operative Society, which,no doubt, is well known to many honorable senators. It is a very fine institution. I had the honour of organizing that society, and for four years acted gratuitously as its secretary.
– The houses occupied by the miners at Scarborough are no credit to the district.
– I did the same in the Collie district, where I de livered a course of lectures on cooperation, with the result that the local society, subsequently established and carried on by the miners themselves, is nowone of the soundest businesses in the district. I could cite many other cases of success in the co-operative movement established by the working people.
– The same success has been met with right throughout England and Scotland.
– Exactly; and I think the Government would be well advised to reconsider their decision. There is no earthly reason why cooperative societies should be interfered with unfairly, and taxed in the manner proposed. They should not be called upon to pay any taxation other than municipal liabilities, which they necessarily incur. The position is really serious for the societies concerned, because, apparently, the Government intend to levy on their capital.
– Not as capital, of course; but the proposal is to tax the members twice.
– No. The only tax, in the case of companies, will be upon profits which have riot been distributed.
– Let me point out to the Minister that in a cooperative society there are no subterfuges like that. The undivided profits of a co-operative society is money reserved and carried forward for the extension of the business.
– And that is exactly what may be said of big private concerns.
– No ; the difference is very great indeed. Every six months a genuine co-operative society distributes the whole of its profits per capita upon the poundage of purchases made by each member. That is the dividend.
– And this proposal will be a tax on their savings.
– It will be a tax on thrift.
– Yes ; nothing more nor less than a tax on thrift. If working men combine, for the good and useful purpose of cheapening the cost of living for themselves, why should we, by taxing them on their thrift, make them pay for their industry? I have already explained that at the end of each halfyear the profits of a co-operative society are distributed amongst its members.
– Then they are not taxed.
– What does the Bill mean, then?
– It means exactly what has been going on for two years - that where profits are distributed they will not be taxed, but where they are not distributed they will be taxed.
– Let me put this position to the Minister: Suppose that, at a general meeting of a cooperative society, when the distribution of profits is agreed upon, the management decides to buy a new cart, and for that purpose reserves a percentage of the profits from each member. Will the society be taxed upon the value of that cart?
– No; that society will be taxed upon its undistributed profits.
– This purchase of a cart may be necessary, simply to keep the working plant going.
– And extending the business.
– No ; it may be a renewal of the society’s property.
– If it is merely a renewal, the item should appear in the ordinary working expenses of the society. It should not come out of profits.
– I really think the Minister should reconsider the position, because, in my judgment, it is very unfair to impose anything in the shape of taxation upon co-operative societies other than that which they must legitimately contribute to the municipal rates.
– I quite share in the sympathy which honorable senators opposite evince foT the cooperative movement, and in this case I am exactly in line with Senators Henderson and McDougall in my belief concerning the possibilities of certain forms of co-operation; but I must ask honorable senators not to allow their sympathies to override their judgment. Let us look at the facts which should be considered. First of all, I want to assure Senator Henderson that, where a co-operative company, or any other company, distributes its profits, the company, under this measure, will not be taxed. Profits only will be taxed if they pass into the hands of a person whose income brings him within the taxable area. Senator Henderson has pointed out that in the case of some co-operative societies - but not all - it is the practice to distribute profits every six months in the shape of a return to members on a poundage basis, according to purchases made; and I again remind him that these will not be taxed. The well-known Civil Service Stores in Sydney, though not truly a co-operative society, adopts the practice mentioned, and every six months a purchaser may, upon presentation of a ticket covering his purchases for the period, get a discount of 2s. in the £1. No companies which distribute profits in that way will be taxed; but we are providing that if companies or societies, cooperative or otherwise, do not distribute their profits, they shall be taxable. The reason, I think, must be obvious to honorable senators ifthey will follow my line of reasoning a little further. Suppose a genuine co-operative company of dairymen deliberately set to work to defraud the revenue. Unless there was some provision making the company liable for taxation on the undistributed profits, it could be done in this way: Its members could, by an arrangement amongst themselves, carry on business at charges so high that no farmer would get any income at all from his operations as a dairy farmer; but he would get his return in the form of profits made by the company, and thus would escape taxation.
– In the illustration you give, a farmer would not get enough to live upon.
– Not from his business as a dairyman, perhaps, but in the company in which he has invested a small amount he would, by the practice I have suggested, have a splendid saleable asset, worth, perhaps, thousands of pounds. It seems to me quite clear, therefore, that it is within the power of every co-operative society toavoid profits altogether by carrying on business at so low a rate that no profit would be shown, or just sufficient to cover the exigencies of business.
– You mean that no profits might be shown to the company, but there would be a profit to the individual shareholder.
– Yes; it could be done in that way. Honorable senators who are objecting to the. clause seem to think that < we are proposing some innovation but I point out that we are simply following the practice that has been adopted ever since the law has been brought into operation. I think Senator Henderson mentioned this matter when the War-time Profits Bill was under consideration, and referred then to the excellent company with which I believe he has been connected. Honorable senators must, I think, see that if we are going to exempt societies of men who, as Senator Henderson has shown, join together, and by their thrift and industry create a business, the same argument might equally apply to a firm like Anthony Hordern.
– No; you know that has no connexion whatever with my remarks.
– I can say that the origin of a concern was in a number of men joining together and finding the capital. That would, apply to the Sugar Company, or to any bie joint-stock con-‘ cern. And, undoubtedly, those men would have got that money by thrift and industry, somewhere, somehow.
– You are stretching things a long way now.
– No; I want to show how difficult it is to discriminate between such a company and one which may- be said to be more social and philanthropic than is a purely commercial institution. It will be recognised how difficult it is to devise a definition to exclude such companies as Senator Henderson speaks of, without at the same time opening the door of exclusion for other concerns not entitled to be exempted.
I emphasize that even if the Committee strikes out sub-paragraph b, that will make no difference, seeing that the practice has been in operation since the Income Tax Act was introduced, and will continue to be carried on. But this amending clause makes it a little clearer, in view of the outcome of a recent Court ‘action which exempted members’ fees, subscription fees, or donations from income taxation. If the provision is ^deleted the main Statute still provides exactly what the clause says shall be done. In the circum stances, I hope the Committee will permit sub-paragraph b to stand.
Senator. Senior raised another point which has vexed the minds of pastoralists and others for a considerable time. That is, as to whether the value of live -stock should be taken as what is called the market value, or the owner’s value, or should be an arbitrary value. I do not know, and it is not clear from Senator Senior’s remarks, whether he is aware that that .arbitrarily-fixed value -applies only to natural increase, and not to stock purchased. Limiting it to natural increase, it will be clear that it makes very little difference providing the arbitrary rate is not more than the natural or true rate. It makes little difference whether, within that limit, the value is high or low. In the case of sheep, let us assume that the natural ‘increase is fixed at 10s. - that a lamb at some stage is assumed to be worth 10s. It is entered as an additional asset in the owner’s balance-sheet, and he would, pay tax upon the income under which that 10s. is setdown. Next year the lamb is sold for 20s. The. owner would be taxed on his profit of 10s. Supposing the value had been put down at 5s. It makes no difference. In the first year of the natural increase, the owner would pay on the 5s. ; and, next year, .when the lamb is- sold for 20s., there would be shown a profit of 15s. He would pay income tax upon that 15s. for that year. I am confident that no one with any knowledge of stock values would say that the official figures are above the market value. Long before this system was adopted in connexion with income taxation, I might remind the honorable senator pastoralists followed this same method of keeping their accounts. Really, after the first year, so long as a settled figure is adhered to, and is not in excess of the market value, no injustice is done to anybody.
– But that is not so defined in the clause.
– If it can be assumed - and I think it can, with safety - that the Commissioner is not likely to place the figure on a higher scale than he would be justified in doing, the advantage of leaving it as it is now would enable h m - if there developed a sudden drop in the market - to reduce that figure. But, ° if it were fixed, there would be necessary an amendment of the Act before the figure could be varied. I hope I have made clear what are the reasons why the clause should be permitted to pass in its present form.
.- The Minister in explaining what it was intended to tax in connexion with co-operative societies stated that this clause also has some reference to the much-debated taxation of clubs and societies that are not working for profit. I understand that this phase was fully debated in another place, and that an alteration in the Bill was made. In looking through the documents at my disposal, however, I do not see any amendment marked which has been incorporated in another place. I ask, therefore, whether this clause under discussion is the amended clause introduced elsewhere.
– No; another place struck out the provision .to which the honorable senator refers.
– The Minister states that under this clause societies or organizations not carried on for profit would be exempted. It seems to me to refer especially to a co-operative company or society. I ask the Minister specifically whether this or another clause in the Bill refers to that matter.
– A club is a nonprofit seeking institution. The provision by which it was sought to make membership fees, entrance fees, and annual donations taxable has been dropped.
– Then it does not appear.
– No; and the honorable senator can be assured that there is now no provision by which income from such sources can be taxed.
– The Minister connected this clause with the matter of clubs. Is there anything in the original Bill, or in the amended Bill now before us, that will show what provision was dropped in another place?
– I cannot show what has been dropped, but can only state that since- it has been dropped it is not here. There has been sent here only those clauses which have been passed.
– But suppose that the Senate agreed with the original proposals of the Ministry, and desired to incorporate those clauses which have been amended- or rejected elsewhere?
– Then any honorable senator can move an amendment to reintroduce what another place has struck out, or what was not considered elsewhere. As a matter of fax;t, we are not supposed to know the other place.
– I understand that an amendment has been proposed by an honorable senator, and has not been withdrawn since, and that the discussion,, therefore, is upon that amendment, which is to exclude co-operative societies, from, the provisions of the Bill. There is another portion of this clause to which I desire to direct some attention at the proper time.
– Obviously if the system of co-operation was very extensively employed it might be right to include it within the general ambit of national taxation. But many philosophical economists believe that a carefully thought-out system of co-operation may be the best solution of many of the ills of modern society. That being so, we should deal with the principle very leniently. There is little in the clause under discussion to which exception can be taken, if we admit the principle of taxing co-operative societies; but, considering how disturbed the industrial world is to-day, it would be wise as a legislative enactment to extend the greatest countenance to the system or principle of co-operation. I would like to ascertain from the Minister whether there is any material distinction between a co-operative company and a cooperative society. In the clause a company is bracketed with a society. _ Is the use of the two words legally necessary, or is it merely unnecessary phraseology of draftsmanship ?
– I understand that there are co-operative societies which are not legal companies.
– It seems, then, that there may be a definition with a very material practical difference arising out of it. A co-operative society is an institution which has grown, probably, from small beginnings, and which has had its genesis in the desire of the modern workman to escape from the charges of the middleman. That is the view which I have held with respect to what is known as a purely co-operative society. Organizations of that description should receive the greatest countenance from modern legislation, as a matter of broad principle; but, if a company is registered to secure under the co-operative principle an avenue of escape from taxation such as is levied upon ordinary trading companies, then it may well be that such a company does not deserve particular consideration from a Legislature. Co-operative societies, such as those that had their genesis in the Old Country nearly three-quarters of a century ago, and are operating with considerable success to-day, should be encouraged to extend their acope in every direction.
Sitting suspended from 1 to 2.30 p.m.
– When the sitting was suspended I was dealing with the cooperative principle, which is affected by sub-paragraph b of paragraph e of this clause, and in what I intended to be the most friendly way, I was suggesting to the Minister in charge of the Bill (Senator Millen) the advisableness of considering how closely the details of that provision affect a matter of very desirable policy, namely, the encouragement of the cooperative principle. I think that I had remarked upon the possible legal differentiation between a co-operative company and a co-operative society. Honorable senators opposite who have spoken upon this question have exhibited considerable concern for co-operative societies, and I do think it is desirable that the Minister should take this matter of policy into his consideration, even in connexion with this machinery measure. It has not escaped the attention of other honorable senators, as well as myself, that the Minister - who is acknowledged to be one of the most fluent and ready debaters to be found in any deliberative assembly of which we have any knowledge - in moving the second reading of this Bill, was very careful to read his speech. I am glad to note that there is a very proper and growing sense of responsibility on the part of honorable senators in connexion with the necessary review of financial measures. The financial exigencies of the Commonwealth are very great, and it is beginning to be felt that this chamber must, as deliberately as possible, exercise its functions as a House of review in regard to financial measures.
– I should be the last to combat that idea.
– The Minister will understand that I am not making these remarks with the slightest feeling of hostility. But, as he is aware, honorable senators are, to a large extent, merely correspondence hacks. Our time is largely encroached upon in replying to correspondence which is addressed to us. As a result, many of us have been somewhat negligent in the past, by failing to give to ‘ financial measures that close attention which they deserve, and which will indeed be imperative in dealing with the financial position of the Commonwealth in future. I do ask the Minister to allow the progress of this Bill to be no more rapid than is absolutely necessary. Honorable senators feel that, as the Minister was under the necessity of carefully reading his speech upon this important measure - not because of any lack of fluency on his part - we, who are less gifted by nature, should be given plenty of time to enable us to “chew over” - if I may be allowed to use the expression - this financial Bill, and all other financial measures, clause by clause and line by line. Taxation, to be fruitful in the future, will have to be very largely considered in “conjunction with a policy for stimulating production. Like the Minister himself, I am very favorably disposed to the enlargement of the co-operative principle in its practical application, and I ask him to consider whether the co-operative principle is so largely employed at present as to make it, in its practical exposition, a legitimate field for taxation. The honorable gentleman instanced the case of a dairying company, the directorateof which might manipulate its operations in such a way as to create a tremendous reserve fund which would escape taxation. Now, we all know how closely the Minister is in touch with the responsible officers of the Taxation Department, whom I greatly respect, and whom it is not my intention to attempt to discredit in any way. I would like him to tell us if they have discovered any cases of magnitude in which the co-operative principle is being used to cover what I may call the ordinary operations of a joint stock company?
– That is to say, whether, under cover of the co-operative principle, really proprietary concerns are acting?
– Yes, and whether they have acted in such a way as to substantially reduce the yield of taxation to the Commonwealth Treasury.
– There would be no advantage to them in doing that to-day, because proprietary companies are taxed on their distributed profits.
– And the Minister wishes to tax them upon their undistributed profits?
– I think that the Minister’s illustration was that these companies might go on piling up their profits, and thus create a monster reserve fund.
– If the contention of those who were then speaking was recognised.
– But I ask the Minister whether cases of that sort are likely to occur. In the present condition of the dairying industry, is it likely that farmers will permit profits, which they require for their needs, to be withheld from them?
– I readily admit that the illustration is a far-fetched one, but it does illustrate a possible tendency.
– As there is in the Minister’s breast, and in the breast of every other honorable senator, a disposition to exhibit tenderness towards the principle of co-operation, I would suggest to the honorable gentleman a very close consideration of this provision, with a view to seeing if it cannot be so remodelled as to prevent anything in the nature of a brake being imposed upon that principle.
– Senator McDougall has a very tender feeling for co-operation.
– If the industrial troubles of our time can be sensibly mitigated by co-operation, there is no honorable senator who will care to oppose the principle. Personally, I hope to see that principle largely supersede the wage system.Whether that will happen to any substantial extent in our time, I cannot say. But in order to give co-operation the countenance and sup port of the Government, I ask the Minister to very closely consider the language of sub-paragraphb, with a view to recasting it so as to place beyond doubt the fact that the Government are not after profits earned by a legitimate application of the co-operative principle.
– I have listened to two very interesting speeches to-day upon the clause which we are now considering. I heard the utterance of the Minister himself (Senator Millen), and I also listened to Senator Henderson. Now, if there be any man in this Parliament who knows anything about co-operation, it is Senator Henderson. During all the years of my acquaintance with him, I know that he has made the subject of co-operation a special study. I have heard him upon many platforms throughout Australia advocating the principle, and I do not know of any man in this Parliament who has a better knowledge of it. I am sure that the Minister, too, is sympathetic towards the principle of co-operation, but in his own mind I think there is just a doubt as to how this provision will operate. His speech conveyed to my mind the impression that he was not sure about the phraseology employed in it, and was in doubt as to whether working miners, for example, who band themselves together to protect themselves might not be penalized by the clause.
– I expressed no doubt on that point.
– I did not say that the Minister did. But his speech conveyed the impression that he was in doubt as to how the working of the clause will affect co-operative societies. ‘ But irrespective of whether or not there is a doubt in his mind, I venture to say that there is a doubt in the minds of many other honorable senators as to whether or not the provision expresses all that is wanted. I listened very attentively to the remarks of Senator Henderson, and I am sure that he is in doubt about it. Senator Bakhap is also in doubt. Now, so far, the only request which has been preferred by honorable senators is that the clause should be postponed for further consideration. I do not desire to see any citizen escape his legal obligations so - far as taxation is concerned. But I do think that co-operative societies will be penalized if the clause be passed in its present form, and therefore I ask the Minister to consent to its postponement.
– In connexion with this clause, there is a difficulty which, I think, we all desire to obviate. In Victoria, as well as in the neighbouring States, we know that there is a considerable quantity of butter and cheese manufactured on the co-operative principle.. The shareholders in these co-operative companies supply them with the articles from which those commodities are made, and are paid a certain price, which is regarded as an average for the year, at the end of which they receive, in addition, any profits which may have been earned by the companies. Now, the Minister (Senator Millen) stated that if such a company reserved any portion of its profits for the purpose of development, those profits should be considered as income. Let us see whether his suggestion is a just one. These companies were originally started as cheese factories. Then followed a glut in that article,, and they were counselled to install machinery to enable them to undertake, the manufacture of butter. They accepted his- advice, and spent a considerable sum of money in installing the necessary plant. Now, if these companies” are to be taxed upon the capital which it was necessary for them to employ for the maintenance of their business, I submit that they will be taxed upon capital itself. I do not think that is the intention, but it was evidently in the mind of the Minister when describing the effect of the clause. Owing to the spread of these societies competition has been sufficiently keen to reduce the distributed capital considerably, and many of them have gone into the hog-curing business. That is a development which has been rendered necessary by the change in circumstances, but which may still ‘be regarded as covered by the original intention Of the founders. If they are to be taxed on the money which they are expending to save themselves from extinction, the Taxation Department is going to get. money with one hand, and lose it with the other, because it will cut short the career of institu tions which are serving a useful function in society, and constituting a means by which the taxpayer pays a certain amount of taxation. I am sure that nothing could be further from the intention of the Minister or the Department than to cripple real co-operative societies, because they are so developing their businesses as to help in the true development of trade in Australia. We ought to consider the clause most carefully to see that we are not legislatively doing a future evil where we are seeking to do a present good.
– Senator Bakhap rightly said a Bill of this sort should not be hurried, and that a measure with so many ramifications is exceedingly difficult to understand. It is almost a lifetime’s work to become an expert on income tax and similar legislation in the world just now.
– I am afraid we could not afford the Senate a lifetime to consider this Bill.
– That is all the more reason why I should make a suggestion to the Minister. I have noticed that, in connexion with the extremely intricate Bills that we get here from time to time, a leading officer in the Depart- . ment concerned is in attendance. Is it not possible to get those officers in some way at the Bar of the Senate, or to ask them questions through the Minister in charge of the Bill ? I indorse all Senator Bakhap’s remarks about the parliamentary capacity of the Leader of the Senate (Senator Millen). I do not think that in that regard he is excelled by any member of any Parliament in Australia, but it is physically impossible for any man to be a Philadelphia lawyer, and understand everything about everything. When a measure such as this comes before us, it would be helpful if senators could, clause by clause, as ideas struck them, get explanations or answers to questions in the way I have suggested.
– It is mot competent for the Committee to make any such arrangement. ‘ The honorable senator should bring that matter before the Senate. He could’ do soby moving a motion.
– We are here as’ representatives >of the States .’and of the people, sent in to do our best in the interests , of the people. I do not profess to understand all the Bills that come before the Senate, nor, I think, does any other senator. The Bills are drafted by a Parliamentary Draftsman, and largely fathered by the officers concerned. Then they have to be submitted to Cabinet, and made a question of Cabinet decision. Afterwards they come to Parliament to be reviewed and perfected as far as lies in our ability. In order that we may discharge our duty in that regard, I feel strongly that a course such as I have suggested should be adopted.
– Order! The honorable senator must not debate that matter now.
– Could it not be done now through the Minister in charge of the Bill?
– Only if the Committee reported progress, and the matter was brought under the notice of the Senate in the proper way.
– On the question of co-operative societies-
– Surely the honorable senator is not out to waste time ?
– No, but I am out to perfect the Bill to the best of my ability.
– Vote against the clause if you like.
– I am not prepared to vote for or against it until it has been exhaustively discussed. It involves the question whether people can get together and trade with themselves, saving money thereby, and reducing the cost of living. I was going to suggest the amendment of the existing section of the principal Act to read in this way -
This section shall not apply to a co-operative mutual society trading exclusively with, and returning its profits to, its members.
The Minister has rightly raised the point that profits not distributed should be liable to taxation, but possibly profits accumulated in one year are distributed next year. The Bill does not provide for that contingency in any way.
– I hope the Minister (Senator Millen) will give us time for a little more reflection upon this matter. I believe the amendment outlined by Senator Pratten would meet my contention. The Minister showed in very plain words how co-operative societies might evade the payment of tax. I thought one of the main objects of the Bill was to catch those who had been evading the tax up to the present. I am not speaking so much for huge cooperative societies, of which we have some to-day, with not a working man among their members, though these well-to-do always desire to get their goods at the cheapest rate. I am putting in a plea for young societies just starting, especially in labouring districts, where a number of men, congregated in poor dwellings, in mining camps and towns, try to co-operate to improve their conditions. I have vivid recollections, both financially and otherwise, of the early struggles of one of these societies.
– If it was struggling with financial difficulties it could not have been a taxpayer.
– Men will not start the struggle if they know the difficulties they have to meet. We ought to assist the development of these muchneeded co-operative bodies. Now that we have heard the views of legal and financial members on both sides of the ‘Committee, the Minister might very well agree to postpone the clause, and report progress, so that we may try to devise a means of exempting bond fide cooperative societies that are struggling to get better conditions in a small way for the working-class community. At present I am not satisfied with sub-paragraph b of paragraph e of the clause, and will oppose it as long as I can, and get the last kick in if possible, although my opposition may be useless. Every rightthinking senator must admit that in this matter we are putting in a plea for institutions that are deserving of all our sympathy. I am sure that neither the Minister nor the Government wishes to inflict hardship on young and struggling societies. If the Minister will agree to postpone the clause, I shall be satisfied to withdraw my amendment, so that Senator Pratten may move his.
– I am not clear whether, or not this provision introduces a new principle, or widens the area of Commonwealth taxation. It is being debated as if it was doing the latter. I have been for a number of years a shareholder and a director of a co-operative company in Queensland. Ever since the Commonwealth income tax was passed, the company has been paying taxation under it in exactly the same way as any joint stock company.
– But perhaps its operations are very much like those of a joint stock company.
– No. It either distributes the whole of its profits amongst its suppliers of raw material, or applies them to the improvement of its plant.
– Does it get supplies of raw material from non-members ?
– A few suppliers are non-members, but they are treated in exactly the same way as members. There is not a co-operative butter factory in Australia which does not obtain supplies of cream from a few dairymen who are not shareholders. I do not know of any co-operative grocery business that refuses to supply other than its own members. If we are to define a co-operative society as one which deals exclusively with its own members, that definition will not apply to a single cooperative society in existence in Australia to-day.
Senator HENDERSON (Western Australia [3.1]. - No one will accuse me of a desire to allow any one to evade taxation who ought to pay it. If the Minister forRepatriation (Senator Millen) could see some way to give effect to Senator Pratten’s suggestion, that would, I think, meet all that is desired. In the case of co-operative societies, the profits derived from the trading of their members are returned to them periodically. Co-operative societies are established in order to reduce the cost of living to a minimum.
– They are organized to encourage thrift.
– Exactly, and not by running in opposition to private enterprise. They never do that. Their motto is never to force competition and never to fear to meet it.That is the motto upon which they have acted from their initiation. Wherever the cooperative system is in operation the cooperative society sells at the same prices as are charged by ordinary private dealers. The only difference between them and private dealers is that their accumulated profits are divided amongst their members at given periods.
– Then they will not
– If I could be assured of that I should be quite satis fied. That is all I am asking for. I desire merely that the shareholders in cooperative societies should be exempt from a penalty in the form of taxation, because they have organized for their benefit and to add to their comfort in life.
– Senator Bakhap put forward a request that ample time should be afforded to honorable senators to consider what is admittedly a complex and intricate measure. I should be willing at all times,, when honorable senators manifest a desire to have a clause postponed, to fall in with that desire, or alternatively to agree to recommit the clause if there is still a desire to reconsider it. But I point out that we should make no progress at all if it were possible to do that with every clause in this measure.
– We ask that only . one clause should be postponed at a time.
– I may be pardoned if I am unable to see that there would be any difficulty in putting up a similar request in connexion with every other clause in the Bill.
– I suggested in the beginning that the Minister should differentiate and should supply the Committee with some concrete instances of the evasion of legitimate taxation by cooperative organizations.
– The honorable senator did say that, but I am now dealing with the general question of giving further time to the consideration of the measure. Where there is doubt in the minds of honorable senators as to the effect of the clause, I am willing to postpone it or alternatively to give an undertaking to recommit it if that should be desired, but I ask honorable senators to agree that it is unreasonable that such an undertaking should be applied to every clause upon which an amendment may be proposed. If that course were followed, we might as well adjourn the consideration of the Bill for months to come.
– We desire to be just to ourselves, and not to lay ourselves open to a charge of having made a hasty decision.
– I quite recognise that. With regard to this particular clause, if it is still the desire of honorable senators to have a further opportunity to consider it, I am prepared to meet them. But it seems to me that the issue involved here is so simple that the Committee should be able to make up its mind at once. First of, all, let me say that no new principle is being introduced by this clause. The principle for which it provides is already operative, and that is that where a co-operative or other company makes profits and distributes those profits to its shareholders or members, no tax is levied on the company. Wherever profits are made and are not handed back to the shareholders or members of the company or society in the way of bonuses or dividends, but are retained by the company, then they are taxable.
– That is what is being done now.
– I say that that is the principle now in operation. The only reason for this clause is that recently some cases came before the Court in connexion with which the point was raised as to whether members’ entrance fees and annual subscriptions should be regarded as income. The Court decided that receipts from those sources were not to be treated as income. Some doubts were raised whether, in view of that decision, the present law makes it quite clear that the practice hitherto followed by the Department is the correct one. This clause is introduced merely to put that beyond doubt. No additional company will be taxed if this clause is passed, and no company will be let off if it is not passed. It merely sets beyond doubt that the practice hitherto followed is absolutely legal and valid.
– Do I understand the Minister to say that the practice of the Taxation Department at present is tantamount to withholding from any cooperative company permission to establish a reserve fund without having it taxed?
– It applies in the’ same way to all companies.
– I venture to say that if we indorse the principle of cooperation, co-operative companies should be allowed the privilege of establishing a reserve fund.
– They have that privilege in the same way as any other company. In my view, the question to be decided is so simple that the clause does not require to be postponed for further consideration. The question is whether a company that makes profits which it does not distribute to its shareholders should be taxed on those profits. That is what the Committee is asked to decide. If honorable senators believe that companies making profits which they do not distribute should escape taxation upon those profits, I suggest that they should knock out this clause. We have to consider whether it is fair and right that a company which makes profits and does not hand them back to its shareholders should escape this taxation.
– Such a company may purposely withhold some of its profits for such purposes as I have named.
– To extend its operations ?
– To meet emergencies.
– That applies to all companies. Honorable senators can scarcely mention a single joint-stock concern carrying on a successful business that does not put something to a reserve fund. That is a profit that might have been distributed to the shareholders. If it were, it would be added to their separate incomes, and would possibly be the subject of taxation; but held by the company, it goes to form an asset. “
– It may be used possibly to save the company from insolvency.
– If the company is so near insolvency as that, it will have no profits to put to a reserve fund. This brings me to the question of the struggling companies referred to by Senator McDougall. My definition of a struggling company is one that does not know where to look to secure a £5 overdraft. Surely Senator McDougall cannot in this way refer to the companies on the north coast that are handling a business of about £2,000,000 a year.
– I did not refer to companies at all, but to co-operative societies.
– A co-operative company is exactly the same as a cooperative society.
– Then why is the word ‘ ‘ society ‘ ‘ used ?
– Because it is used in State laws. Co-operative societies are recognised in the Friendly Society laws of the States, and that is why the word “ society “ is used here. It is not with a view to shutting any out, but with a view to covering all these companies . There will not,under this clause, be a penny of taxation imposed upon struggling companies, because such companies will not be making profits which they can put to a reserve fund. I repeat that the issue is whether companies, co-operative or otherwise, making profits which they do not distribute should be taxed on those undistributed profits. Under this provision, if they do distribute the profits in bonuses or dividends, they will not be taxed. If they go on amassing wealth, for that is really what it means, they will be building up assets which later on may realize a very considerable amount, and it is therefore fair that they should pay taxation. I can give an instance of what happened in the case of a cooperative society in Sydney. The shares were originally £1 shares. The company each year put by some portion of its profits in building up its reserves and expanding its business, with the result that the shares are now worth very much more than £1. If my honorable friends had their way, no tax whatever would have been imposed upon the undistributed profits of that company. And each shareholder, though he may not have received any of the profits, has a better asset in his shares because of their higher selling value, and derives profit in that way.
– Is that society conducted on theRochdale system? I do not think it is.
– Of course it is not. Co-operative societies conducted on theRochdale system will not have to pay any taxation under this clause.
– We desire that they should be specifically exempted.
– We cannot by name specify the societies that are to be exempt, but we can say, as we do here, that where a society distributes its pro fits it will not be taxed on those profits.. Senator Pratten made a suggestion which, if adopted, would not help the societies referred to by my honorable friends opposite. His suggestion was that the exemption should be limited to cooperative societies dealing solely with their own members. It has already been pointed out that there are very few cooperative companies who turn away a customer because he does not happen to be a member or a shareholder.
– Then they would be taxed.
– Senator Pratten knows the Civil Service Co-operative Stores in Sydney, and I venture to say that they receive 20s. from nonshareholders for every 10s. that they receive from shareholders.
– But they run a “ pub.”
– I was not aware of the fact, but am prepared to take Senator McDougall’s experience in this matter as my guide. I am sure that the society to which Senator Henderson referred will serve any man who comes into their stores. If we limited the exemption to societies trading only with their members we should shut out a very large number of those that have been referred to in the course of this debate.
– Then why object to my proposal?
– Does the honorable senator not see that it would shut out a number of the co-operative societies that have been referred to?
– It would stimulate genuine co-operation.
– I do not know that it would. I come back again to the point that the real question is whether the Committee believes that co-operative societies or any other companies which do not distribute their profits should be relieved of taxation upon those profits. On the other hand, where the profits are distributed, no tax shall be imposed. The issue is there, and I ask honorable senators to help me to come to a decision.
Amendment, by leave, withdrawn..
Senator PRATTEN (New South
Wales) [3.16].- I move-
That the following words be added to sub-paragraph 6 of paragraph e: - “This section shall not apply to any co-operative mutual society trading exclusively with, and returning its profits to, its members.”
In my experience in Australia, the word “ co-operation “ has been greatly abused. Practically any man can start a so-called co-operative store, society, or association. I do not think that any illustration referring to co-operative societies, associations, or companies of this sort is worth very much when we are considering the real spirit of co-operation. It seems to me that legitimate co-operation, as we understand it to have emanated from Rochdale, is co-operation of persons one with the other for the purpose of cutting out middle profits and bringing about a saving to members in the cost of commodities and necessaries purchased by the society. We have heard from Senator Crawford and other honorable senators that there are not many co-operative societies, companies, or associations in Australia strictly of this character. I believe many of them started out with this principle, but gradually they have widened the scope of their trading activities until now they are rightly taxable under this Bill. I have no objection to taxing so-called co-operative societies, such as the Minister (Senator Millen) has referred to, but I do think that, in view of the fact that co-operation is in the air, and is likely to be very important in connexion with the future development of Australia, there should be a clause in this Bill speciefically exempting legitimate co-operative societies. If there are any such societies in the Commonwealth, they ought not to be taxed. In any case, I think the amendment I have submitted will help legitimate co-operation in the future.
– I followed the Minister for Repatriation (Senator Millen) very carefully, and think he took up the stand that if a co-operative society formed a reserve fund - as any society observing the basic principles of trading might naturally do - that fund should be liable to taxation. I venture to say, however, that if the principle of co-operation is being observed by a society, and if it is not assuming the functions of an outside trade institution, it should not be liable to taxation. On the other hand, if such a society does enter into competition with outside traders, it must necessarily assume the same responsibilities; but if a society is purely co-operative, I am going to defend the principle of its being permitted, to create a reserve fund free from taxation at this juncture in the history of the Commonwealth, and in the infancy, so to speak, of the operation of that principle, which some of us hope will eventually attain a giant growth. We have heard a great deal about profiteering, which, of course, is not an ideal state of affairs, and I can quite conceive that advocates of the co-operative movement might see, in the extension of this principle, the means of practically squelching this alleged practice of profiteering. I have some recollection of a former debate on this identical principle of co-operation and its relation to trading societies, and, as Senator Crawford has informed me that co-operative societies are exempt from the operation of the war-time profits tax, it is probable that the debate to which I refer took place when that measure was under consideration. My memory with regard to this matter is freshening every moment, and I say that if co-operative societies had this concession made to them in connexion with the war-time profits tax, it is a further illustration, of the inclination and intention of this branch of the Legislature to deal leniently with the principle of cooperation as applied by genuinely co-operative societies. I am inclined, also, to think that there must be some absence of definition up to the present as to what really constitutes a co-operative society.
– That is the position entirely.
– The Minister has said that the practice has been to tax reserve funds of societies, and that the clause is to make the practice, beyond all doubt, legal and regular.
– To put it beyond a doubt.
– The whole of paragraph e follows upon a partial definition of the word “ Income,” which says that “ Income includes,” and, therefore, it has some relation to income, and the purpose of the provision, apparently, is to make the practice regular and beyond all doubt. I am also going to put it beyond all doubt that, ki my judgment, the reserve fund of a purely co-operative society should “ be exempt from taxation under this measure, because I believe it is a plank of our national policy to encourage the principle of co-operation, in the hope that some day it may be a remedy for those economic and industrial asperities which we from time to time so much deplore. While I think that the Minister is acting fairly enough, and while I am prepared to accept his offer for postponement of the clause, in order that we may give the matter further consideration, I believe it will be incumbent upon honorable senators who believe in the principle to support the amendment moved by Senator Pratten. If the Minister thinks that we would be better seized with the intention of the clause, and that we would realize in fact how’ innocuous it would be in relation to the general principle of cooperation, I would be willing to accept a postponement; but I want to assure him that I am not one who, during debate in Committee, asks for the postponement of any clause in the spirit of obstruction. It may be that, in a measure like this, we shall ask for the postponement or reconsideration of certain clauses or subclauses, but I can assure him that, so far as I am concerned, I shall do nothing in the spirit of obstruction. I will be satisfied for the present to accept the postponement of the clause, or, perhaps, if it can be sectionalized, a postponement of the sub-clause.
– Does not the honorable senator think that, having had it debated this morning and this afternoon, we should be able to come to a decision now?
– My decision is that a purely co-operative society should be exempt, and if the Minister is prepared to take the vote now I am quite agreeable.
– I hope that the Minister will agree to the postponement of the clause.
– Not after an all-day debate on it.
– There is a good deal more involved in the clause than appears on the surface. We have been told by the Minister that it does not matter if sub-paragraph b of paragraph e goes into the Bill or not, as departmental practice will proceed as it has proceeded since the law has been in operation. While I do not doubt the Minister’s word, I think he is very much mistaken. One never knows what these gentlemen mean who draft measures for our consideration. It is only after they have been submitted to the Court that we find out the true and hidden meaning of certain sections in our Acts; and it appears to me that we would be doing the right thing if we rejected the proposal altogether as unnecessary and mischievous. The amendment submitted by Senator Pratten will not apply to any cooperative society, for no society of which I have any knowledge deals exclusively with its members. Where is the cooperative society that will not trade with casual customers?
– Then the society will be taxable.
– If it becomes an ordinary trader it must accept the same responsibilities as an ordinary trader.
– I ask Senator Pratten or Senator Bakhap if they can name one single co-operative society to which the amendment will apply?
– I think I can.
– All co-operative societies of which I have any knowledge are prepared to dispose of their commodities to any person who cares to purchase them. I know many of the societies that have been established in and around the northern coal-fields, as well as the Woonoona and Balmain societies. They are all ready enough to trade with outside customers.
– It would be manifestly unfair to apply the principle of exemption to societies that are in active competition with ordinary traders.
– The proposal before the Committee, so far as I understand it, is of no value whatever. It would not, for instance, apply to the Woonoona or the Balmain Co-operative Societies, or, indeed, to any similar society of which I have any knowledge.
– They do not sell 2 per cent. of their goods to other than their members. ‘
– But this addendum of Senator Pratten would exclude organizations like the society at Woonoona from the operations of this provision.
– Unless they come into line with it.
– It is unthinkable that any society would refuse to supply goods to the public.
– Then they become ordinary traders.
– The amendment, although it may look all right, is not of the slightest possible value. It will not apply, so far as I know, to one single co-operative concern, mutual or otherwise, in the whole of the Commonwealth. What is the use of trying to incorporate such a provision into the Bill. Is it not far better to err on the right side?
– Your arguments are in favour of societies using the cooperative principle only in a “shandy-gaff” sort of way. They are not co-operative societies, according to you.
– Then, apparently, there are no co-operative societies at all.
– We want to see a few.
– What I desire to see passed is the addition of the following words to sub-paragraph b of paragraph e:- v
This section shall not apply to co-operative mutual societies that return their profits to members or customers.
– Why not add, “ And to their employees “ ?
– They would be customers.
– No; employees are not customers.
– The question is, are we prepared to encourage co-operation, which means the more effective distribution, and at a lower cost, of commodities, thereby enabling the various Members of such societies to pay a higher rent to the landlords ?
– Hear, hear! You have got it iti at last !
– Is it not a fact that honorable senators on the other side are prepared to support and advocate cooperation? Do we not hear, time and again, representatives of the employer class urging on their employees the desirability of co-operation, profit sharing, and the like, so that industrial disputes may be minimized, if not entirely swept away ? The proposal to establish a co-operative store generally has its genesis in a desire to cut out what are deemed unnecessarily high profits on the part of the distributing middleman, or to leave those so-called profits in the possession of members of the society. If Senator Pratten will be prepared to withdraw his perfectly innocuous amendment, which does not apply to anything or anybody, and will allow me to move my amendment, honorable senators will see where they stand. I give notice of my intention to move the insertion, after the word “members,” in subparagraph b of paragraph e, of the words -
This section shall not apply to co-operative mutual societies that return their profits to their members and customers.
– Will not the honorable senator’s intention be covered by moving to add to the amendment of Senator Pratten the words “ and customers “ ?
– Yes. I desire that the addendum by Senator Pratten shall be a real live one, and it will not be unless it is spread out so as to be operative in cases where profits are distributed, not only among members and shareholders, but among customers who are neither one nor the other.
– Would you add also the words, “ limited liability companies that divide their profits among their shareholders “ ?
– I am dealing now with co-operative societies only. I move, in accordance with the Chairman’s suggestion
That the amendment be amended by adding the words “ or customers.”
– I wish to try and modify the views of Senator Grant. I do not know whether he has had any connexion with co-operative societies.
– I am sorry to say I have.
– Then it has been the honorable senator’s mistakes, or some one else’s foolishness, because it almost always ought to be a success.
– There is another word that covers my experience.
– Co-operative societies, of which we are speaking, namely, distributing co-operative societies, do not anywhere in Australia deal outside their members for 2 per cent, of their business. Therefore, Senator Pratten’s amendment would affect the very best purpose we could hope to bring about.
– It cuts them out.
– It will at once relieve the possibility of members dealing in their own society being hit by this taxation.
– I am surprised that Senator Henderson has been able to bring his mind to give expression to such ideas. The amendment of Senator Pratten is correctly worded. It is clear, definite, and distinct, and it deliberately excludes from its purview any society where even1/4 per cent. of its trade is done outside its own membership. I have had something to do at various times with co-operative societies, mainly because I was of the opinion that the cost of distribution was greater than it should be, and that the profits, if any, should be distributed among the shareholders. But owing to inefficient management, or, perhaps I could use some stronger word, a number of these co-operative societies have not been huge financial successes.
– There is never any distribution of profits.
– I do not look upon co-operation as the panacea that some honorable senators seem to regard it. Its purpose is merely to limit the profits of distributors. I shall oppose Senator Pratten’s amendment, because, so far as
I can see, it does not apply at all. His addendum confines itself exclusively to the members of a society. Yet Senator Henderson, who has spent a fair portion of his life discussing co-operative questions, informs us that, in a typical cooperative society at Woonoona, at least 2 per cent. of its business is done with outsiders. Senator Pratten, however., would deliberately exclude that society from his amendment. If we want to do anything for co-operative societies, let us add the words “ or customers.”
– And “ employees.’’
– And “ suppliers of raw material.”
– I regret that I cannot accede to the suggestion of Senator Grant, because his proposal opens up an endless vista of injustice. When once a cooperative society of a mutual character broadens its operations, and commences to trade with the general community, it comes into competition with private traders. Consequently, if we wish to hold the scales of justice evenly, we must put both organizations on the same footing, so far as taxation is concerned. I have already said that the true principle of co-operation is that every person buying from a co-operative society should be a member of that society. The amendment which I have submitted seems to be clear, and to meet the views of those who are not interested in scotching the cooperative movement in Australia. It will constitute an improvement to the Bill, and will be an indication of the course which this Parliament proposes to follow in the future with regard to bond fide co-operation.
– I ask Senator Pratten if he is prepared to strike out the words “ trading exclusively with “ from his amendment ?
– Why ? The Woonwoona Society is a typical distributive society, and Senator Henderson has assured us that lessthan 2 per cent. of the business with that organization is done by outsiders. The amendment proposed by Senator Pratten would exclude from its scope a co-operative society like that. It affirms that the provision shall apply only to co-operative societies trading exclusively with its members.
– If the amendment were adopted, we should require an army of policemen outside the shop door to see that only shareholders went inside.
– If Senator Pratten will consent to delete the words “ trading exclusively with “-
– I am not prepared to do an injustice to all traders by doing what the honorable senator suggests.
– Can Senator Henderson point to a single co-operative society in the Commonwealth which will escape taxation, even if this amendment be carried?
– They will have to re-organize their trading operations.
– It will be necessary, before any of them can escape the tax-gatherers, to re-organize their operations. So that, no matter how Senator Pratten may advocate co-operation, it is evident that he is prepared to tax them just as if they were limited liability companies.
– But I give them the option.
– The position now is quite clear. The Government propose to bring under their purview the profits from co-operative societies. Senator Pratten comes along and submits an amendment which will have the effect of excluding the profits of certain cooperative societies from this taxation scheme; but when he has to tell the truth, without any frills upon it, he is compelled to admit that, before these societies can take advantage of his amendment, they will have to re-organize their business. As Senator Millen has interjected, it would require an army of policemen to give effect to such proposal. Although we know that there is a great desire on the part of the Government to appoint Boards and Commissions - and a number of other parasitical institutions - so as to mop up the proceeds of the honest worker, surely we are not going to create an army of policemen to give effect to this proposal. The whole Bill is wrong from end to end, and this provision is particularly objectionable. I hope that the. Committee will agree to this amendment.
Amendment of the amendment nega- tived.
– I do think that this discussion has been of very great benefit to honorable senators. I do not regret that the amendment by Senator Grant was rejected, because, in my opinion–
– The honorable senator cannot discuss that amendment now, because it is out of the way.
– I specifically excluded from my own amendment words such as Senator Grant proposed to insert, in order that I might be perfectly fair to the trading community. It is clear that unless we do exclude from the scope of my amendment co-operative societies which do private trading we shall inflict very great hardship upon them.
– Does the honorable senator want to carry his amendment? If he does, he will allow a vote to be taken.
– Then I shall content myself with saying that the amendment seems to be perfectly equitableand righteous.
– If this amendment be carried, I do not think very many co-operative companies will take advantage of it; but it is quite possible that some will, and that they will take advantage of it to the injury of a class of people whom we should do all that we can to encourage. We have,in all the States, quite a number of co-operative butter and cheese factories, and in Queensland we have a large number of co-operative sugar mills. These mills represent a capital, approximately, of £2,000,000. I am afraid that the effect of the amendment, if it be adopted, will be that some of the co-operative butter and cheese factories, and possibly some of the co-operative sugar mills, will be tempted to refuse to buy cheese and milk and cane from non-shareholders, with the result that these men, who ‘have no other market for their products, will be ruined.
– Cannot they become shareholders?
– I do not know that they can in every instance.
– That is the solution of their difficulty.
– If it had been open to them to become shareholders in these concerns, we may dependupon it that they would have been already shareholders. But in connexion with all these organizations it is well known that there are suppliers who are not shareholders.
– Why should they have the benefits of co-operation without becoming shareholders?
– Because the way is not open to them to become shareholders. I repeat that if we amend the clause in the direction desired by Senator Pratten, we shall be doing an injustice to a class of people whom we should do all that we can to encourage.
– When the War-time Profits Bill was. under consideration here, certain honorable senators drew attention to the fact that a great injustice would be done to many private concerns with a number of small shareholders, if an exemption were granted to co-operative stores. Already many of these co-operative concerns differ very little from ordinary joint-stock companies. I have no desire to champion the cause of private trading concerns ; but I believe that we, as the representatives of the people, ought to consider all aspects of the case. There is no doubt that many firms have to face unfair competition on account of the concessions which have been granted to so-called cooperative institutions. I ask leave to continue my remarks on a future day.
– Order! It being 4 o’clock, I must, according to the sessional order, report progress.
– The question is-
That the Senate do now adjourn.
– Mr. President-
– Order !
– May I not ask a question ?
– The honorable senator is not permitted to ask even a question. Under the sessional order on which we are now proceeding the question must be put without debate.
Question resolved in the affirmative.
Senate adjourned at 4.2 p.m.
Cite as: Australia, Senate, Debates, 24 May 1918, viewed 22 October 2017, <http://historichansard.net/senate/1918/19180524_senate_7_85/>.