10th Parliament · 1st Session
The President (Senator the Hon. T. Givens) took the chair at 3 p.m., and read prayers.
The following papers were pre sented . -
Audit Act - Transfers of Amounts approved by the Governor-General in Council - Financial Year 1926-26 - Dated9th June, 1926.
Commonwealth Bank Act -Regulations amended - Statutory Rules 1926, No. 71.
DefenceAct- Regulations amended - Statutory Rules 1926, Nos. 67, 68, 69.
Report from the Joint House Committee, dated 3rd June, 1926, on thesubject of Accommodation for Members of Parliament at Canberra, and the retention of the Bar in connexion with the Refreshment Rooms.
Territory for the Seat of Government - Ordinance No. 6 of 1926- City Area Leases. ‘
Bill received from the House of Representatives, and (on motion by SenatorPearce) read a first time.
The following bills were read a third time:-
Excise Tariff Bill, on motion by Senator Crawford.
Science and Industry Research Bill, on motion by SenatorPearce.
Science and Industry Endowment Bill, on motion by SenatorPearce.
Senator PEARCE. (Western Australia-
Minister for Home and Territories)
That the billbe now read a second time.
This bill deals, with the provisions of section 51 of the Constitution Act relating to industry and commerce, which it proposes to amend as follows: -
By omitting from paragraph (xx.) the words “ Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth “, and inserting in their stead the words “ Corporations, including -
the creation, regulation, control and dissolution of corporations;
the regulation, control and dissolution of corporations formed under the law of a State; and
the regulation and control of foreign corporations; but not including municipal or governmental corporations, or any corporation formed solely for religious, charitable, scientific or artistic purposes, or any corporation not formed for the acquisition of gain by the corporation or its memtiers >’ ;
by omitting from paragraph (xxxv.) the wordB “extending beyond the limits of any one State “ ; and
by inserting after paragraph(xxxix.) the following paragraphs; - “ (xl.) Establishing authorities with such powers ob the Parliament confers on them with respect to the regulation and determination of terms and conditions of industrial employment and of rights and duties of employers and employees with respect to industrial matters and things; (xli.) Investing State authorities ‘ with any powers which the Parliament, by virtue of paragraph (xxxv.) or paragraph (xl.) of this section, has vested or has power to vest in any authority established by the Commonwealth ; (xlii.) Trusts and combinations (whether composed of individuals or corporations or both) in restraint of trade, trade unions, and associations of employers or of employees for industrial purposes, including the formation, regulation, control, and dissolution thereof.”.
Affecting, as they do, the whole of Australia, these cannot be said to be in any sense party questions.Obviously, any enlarged powers provided for by an amendment of the Constitution are given, not to any particular party, but to the Par liament itself . The object of the powers
Bought in relation to industrial employment is to bring about material progress in industry and commerce, better relations between employers and employees, and consequently more contentment in the community generally. Industrial peace is the concomitant ofindustrial progress, and is essential to the progress and development of both our primary and secondary industries. We have to remember that competition in the world’s markets is becoming keener than ever, and it is into these markets that Australians are being forced more and more to dispose of not only their great staple products such as woo] and’ wheat, but also many other products both primary and secondary. Industrial stability must be secured if industry is to be carried on successfully. Our standard of living, the maintenance of the White Australia policy, the defence of the Commonwealth, and the liberty of the people are all involved in industrial peace, the maintenance of which is threatened by many conflicting conditions within the. body politic. The Commonwealth and State Parliaments have evolved certain systems for the settlement of industrial disputes and for the regulation of wages and conditions of employment; but it is said by some critics that compulsory arbitrationis a failure. Let us examine the conditions under which it has had to function for many years. The Commonwealth and State systems to which I have referred overlap they are duplicated and confusing, and cause a great deal of industrial trouble and uncertainty. Federal and State awards may not only be in operation in the same area, but may. also affect the same industry. We have seven different industrial systems operating in the Commonwealth, which indicates that questions of vital importance to the community are being determined upon different principles in different States. The machinery created by one State varies from that in another State, and there is a variation between the whole of the machinery of the States and that of. the Commonwealth. The duplication, overlapping, confusion, and conflicting principles that occur are due to this want of uniformity in our. industrial laws, regulations, and industrial administration, and are in fact largely because of the limitation imposed by the Constitution upon the Commonwealth’s industrial powers. Paragraph xxxv. of section 51 of the Constitution provides that the Parliament shall have power to make laws with respect to “ conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State.” At present that is our only industrial power. It will be seen that an industrial dispute must extend beyond the limits of any one State before the Commonwealth court can intervene. First of all, there must be a dispute, and, secondly, that dispute must be of an interstate character. Under an interpretation by the High Court, only a person or company actually cited before the Commonwealth Arbitration Court is bound by its awards.
– There has been a slight variation of that decision in connexion with a dispute relating to theatrical employees, but taken as a whole it still prevails. This has led to a singular state of affairs. In one instance there are no less than 4,000 respondents. The court cannot lay down a general rule applying to other than the actual parties cited. The practice has grown up of creating artificial disputes embracing more than one State, and the serving of a log is sufficient proof of the existence of a dispute. That is notoriously artificial. It is possible for the employers or the employees to approach the Commonwealth Arbitration Court and a State Arbitration Court, and to adopt the award that best suits them. The 44-hour week question is the result of a New South Wales act. and is a striking illustration of the confusion that is developing. Conflicting views are held as to where the Commonwealth court’s jurisdiction and that of a State court begins and ends, and the surprising thing is that with all these drawbacks and hindrances our arbitration system has functioned at all, let alone that it has not been so successful as some would desire. A point that we have to bear in mind , and one that critics have lost sight of, is the fact that conciliation and arbitration as a part of the Federal system has come to stay. Those who are now expressing surprise at what is being done are surely overlooking past history. The necessityfor an alteration of the Constitution in the direction pro posed has long been foreseen. So far back as the 28th June, 1901,Mr. (now Mr. Justice) Higgins moved in the House ofRepresentatives the following motion : -
That in the opinion of this House it is expedient for the Parliament of the Commonwealth to acquire (if the State Parliaments see fit to grant it undersection 51. sub-section xxvii. of the Constitution Act) full power to make laws for Australia as to wages and hours and conditions of labour.
The late Sir Edmund Barton, who was then Prime Minister, suggested that the motion be amended by substituting the word “ accept “ for the word “ acquire,” which was agreed to, and the motion in its amended form was carried withouta single dissentient. That was in the first session of the first Commonwealth Parliament. At that very early stage in the life of the Commonwealth it was realized that the idea of a distinct line of demarcation between the Commonwealth and States authority in regard to the control of industry would have to be abandoned. Since the inception of federation these questions have been submitted to the people by way of referendum on three different occasions. It is true that in each case the people decided against an alteration of the Constitution, but with a lessening degree of opposition. The figures are very informative. In 1911 they were 483,000 for and 742,000 against, the- majority being 259,000 against the proposals. In 1913 the figures were 961,000 for and 987,000 against, . the adverse majority being 26,000. In 1919, when the last referendum was taken, the figures were 911,000 for and 92.4,000 against, or a narrow adverse majority of only 13,000. In a vote of that magnitude the majority was narrow indeed. The defeat of these proposals for an alteration of the Constitution was doubtless due to the fact that a number of other questions were submitted to the people at the same time, but it may also be attributed in a degree to the innate conservatism of the people, irrespective of their political views. It shows clearly that the referendum is one of the most conservative instruments of government. There is always a powerful negative vote available on any question submitted to a referendum. The only satisfactory solution of the problem is to equip the Commonwealth with greater power to bring about a system with re gard to both the regulation of wages and conditions of labour, and the settlement of disputes. By clause 2 of the bill it is proposed to delete the words, “extending beyond the limits of any one State “ from paragraph xxxv. of section 51 of the Constitution. This will remove many of the objections to the present system of conciliation and arbitration. It will give the Commonwealth authority over intra-state as well as interstate disputes, and remove the necessity for artificially extending a dispute over two or more States in order to bring a matter within the jurisdiction of the Commonwealth Arbitration Court. Paragraph c of clause 2 of the bill deals with establishing authorities with such powers as the Parliament confers on them with respect to the regulation and determination of terms and conditions of industrial employment, and of rights and duties of employers and employees with respect’ to industrial matters and things. That will give power to the Commonwealth Parliament, not to determine all questions relating to industrial employment, but to create the authority to determine them. The States retain concurrent powers. That is a matter to which I think public attention should be directed, because critics of the bill are arguing that it is proposed that the Commonwealth shall take exclusive power. We do not propose that. One prominent State Minister in Victoria has urged that this proposed amendment of the Constitution will mean the abolition of. the wages board system in Victoria. It does not mean anything of the kind.
– It might if the Commonwealth chose to go so far.
– If the Commonwealth Parliament so legislated it might, but that is not contemplated. Obviously, the Commonwealth Parliament would not be so foolish as to legislate to abolish a system that was working satisfactorily. Whilst the States have concurrent powers, necessarily the Commonwealth authority where it conflicts with that of a State must be paramount. There are sound reasons why Parliament should have power to create the authorities provided for in the bill, and should not itself attempt to deal with industrial questions.
– Any delegation of that power must necessarily be by act of Parliament, I presume?
– Two things could be clone. The Commonwealth could, by statute, vest a State tribunal or State authority with the power; or the Commonwealth could create an authority.
– But will it be possible for the Government to withdraw that power from the authority to which it has been delegated ?
– The Commonwealth will set up an authority which will function on such terms and conditions as the Parliament may decide.
– But can that power be withdrawn?
– Yes. Any power given to auy authority by act of Parliament may, by means of another act of Parliament, be withdrawn. I was proceeding to say that there are sound reasons for proposing that Parliament shall have this power to create authorities to decide industrial questions, but not the power to itself decide them. There is much confusion of thought on the part of critics of the proposal who argue that Parliament should not of itself exercise this industrial power. I am pointing out that it is not proposed to do this, but that, as in the case of the Conciliation and Arbitration Court, Parliament will exercise this power through properly constituted authorities.
– The New South Wales Parliament does not always follow that practice.
– Criticism has been directed at this measure on the ground that it provides for a departure from the regular procedure, but I am pointing out, in reply, that what is now proposed is not a departure at all. As a matter of fact, we merely follow the practice established since the inauguration of federation. If full power to determine industrial questions were given to the Parliament itself, it would have to deal with many complicated problems in an atmosphere of political contention. It would be required, for example, to legislate with regard to hours of employment, the basic wage, and other vital industrial questions, the determination of which by the contending parties in the political arena would be most undesirable. Further, the Parliament wonld have to spend almost the whole of its time in dealing with industrial questions. Let me give honorable senators an analogy. Parliament itself does not deal with civil disputes. It establishes judicial and magisterial authorities to do so. That is the principle underlying this bill. Its purpose is to bring industrial questions within the region of law just as, for many centuries, in British communities civil disputes have been brought within the region of the law for settlement. Ho one would contend that disputants in civil cases should thrash out the relative merits of their claims before Parliament, and that Parliament itself should decide between them. Neither do we lay down fundamental principles affecting those disputes, except in the framing of legislation under which we establish, in respect of all citizens, certain rights. In the case of a dispute between one citizen and another,we have an established authority to which they may appeal, and which determines the rights of all citizens under the law.
– But in this case the Government is going further.
– And so with the ordinary civil courts. What is the whole system of British common law but legislation by judges - by established authorities?
-Brookman. - The whole system of British common law is in effect legislation by judges.
– Exactly. British common law establishes principles upon which there has been no legislation whatsoever. It imatters not from what angle we view this subject, the’ principle is the same.
– In the event of this measure being passed, would it be competent for Parliament to instruct the authority to whom it delegated this power to determine, for instance, that a working week should not exceed 44 hours?
– Certainly, in the terms and conditions under which the authority was constituted; but it would be extremely foolish to do so. The objective of all legislation of this sort should not be, and I contendis not, political, but social and economic. It is deemed inadvisable to deal in a political atmosphere with questions so vital to Australia. How could Parliament determine whether men in this country should adopt 48 hours. 44 hours, or 40 hours as a standard working week without the fullest possible investigation and examination of the whole of the economic and industrial results that would flow from such a determination? Does any one suggest that Parliament is competent to settle such questions as the basic wage, child endowment, &c, without a thorough investigation of their economic effect upon the community? The question of the hours of labour was once argued before Mr. Justice Higgins in the Arbitration Court for twenty days. The Court heard a tremendous amount of evidence from representatives of the workers and the employers, who had obviously spent many months in its preparation. The case was properly placed before that tribunal, but owing to a decision that such an issue could only be dealt with by three judges, the whole of the proceedings were abortive. That shows how ineffective the parliamentary machinery would be for the just settlement of such issues.
– Was that a High Court decision?
-No, it was a decision of the Government, which decision was confirmed by act of Parliament. To enable the presentation of such data, an amendment is proposed giving power to the Attorney-General to intervene in a case in which the question of hours is being considered. There are two contending parties - employers and employees - but there is a third party that has to be considered, and that is the general public.
– Is it not the duty of the court to look after the interests of the general public?
– The court’s duty is to hear the evidence presented to it, not to prepare or present evidence.
– Or to become partisan.
– Quite so. It is essential, therefore, that if the whole matter is to be considered, in its economic aspect - and every decision has an important effect upon the economic life of the community - not only the cases of the employers and employees, but the whole of the data as to the effect of any proposed alteration, should be put before the court, and the Attorney-General should have the power to intervene to present such data.
– In regard to> a question of hours?
– Hours or wages. That is provided for,. not in this bill, but in one shortly to be introduced. One weakness in the present position is that, after the fullest investigation and hearing, the court has no power to give full effect to its decisions ; in other words, the court can only give a judgment affecting the particular dispute before it. Yet that decision may have an important bearing upon a number of other industries that are affected by the particular industry in which the dispute has arisen. One has only to think of the shipping or coal industries to realize that. The proposed amendment of the Constitution will allow that power to be given to the court. In addition it is necessary, in order to insure industrial peace, that there should be complementary power regarding trusts and combines. If a great trust or combine is acting directly in restraint of trade, or an association of employers or employees is taking action that is detrimental to tie whole community, some authority must have legislative and administrative power to intervene. There is no objection to combinations that are functioning reasonably, but society must protect itself against combinations which obtain a stranglehold upon the community, and proceed to exploit it for their own benefit. There is need, also, for statutory power to deal with the trade unions and associations of employers. Trade unionism has gradually developed into one of the most powerful forces in the community; but, for some reason, possibly the opposition and dislike of many reactionary employers, it has never received complete legislative recognition. As I pointed out a short time ago, it is interesting te, look back over British history, and to compare the treatment meted out to those two great organizations - the trade unions and friendly societies. Both, sprang from the working classes, and might almost be said to have had a common origin. Every student of history knows that both those great organizations have- conferred important benefits on, not only the working classes, but society at large. Nevertheless we find that, in their early stages, each was declared to be an illegal association, and its meetings had to be held in secret. To that fact may be attributed the use of the password and the grip that obtains in many friendly societies, even to the pre, sent day; they are a relic of the days when these were forbidden- organizations and had to. meet in secret.. When society bacame more enlightened, and recognized that both were benefiting the community, pressure of public opinion compelled their recognition by law.. As time went on, that recognition, in the case of the friendly societies, became full and “ complete, but, in the case of the trade unions, it was always limited. To the friendly societies, largely, I think, because of the class interests of the employing seetion of the community that then held control of the British Parliament, full recognition and protection were afforded; but the only recognition that waa given to the trade unions was the mere legal right to exist. It was admitted that the friendly societies were beneficent, institutions, and, therefore, it was decided, not only to recognize them by law, but also to protect their members. It was decided to see that they were established on a proper financial basis, that their funds were properly used, and that their rules were such as to secure justice to all their members. Thus the Friendly Societies Act of every British community takes power to the community, through its Parliament, to regulate and control the use of the funds of those bodies, requiring proper actuarial investigation of their accounts and a proper system of bookkeeping. In every British community to-day there is a Registrar of Friendly Societies, whose duty it is to keep, a close watch aud check on these organizations. As a member of one of those- societies, I have known a. registrar to call upon a certain society to increase the amount of the contributions from its members, because he found on investigation that its financial condition was actuarially unsound. He found that whereas it purported to give certain benefits to its members, the contributions were too small to enable those benefits to be conferred. In many ways the community, through its Parliament, vf has clothed these societies with protective powers that are essential to the interests of their members. Trade unions, however, have simply been made legal in the eyes of the law. Why should there be that differentiation? If we grant that trade unions are beneficent bodies, is there any reason why we should treat them differently from friendly societies in the matter of seeing that the funds contributed by their members are used for the purposes for which they are given ; that thora is a proper audit of their accounts, and that they are financially and actuarially sound.
- -Who are the best judges of that?
– The community.
– The members of the organizations themselves are the best judges.
– It was not the members of the friendly societies that passed the laws to which I have referred, but the genera] community through its legislature, in order that they should be conducted on proper lines. Coming to the test as to whether this would be in any way detrimental to the trade unions, I ask honorable senators if there is any friendly society to-day that would advocate the repeal of the laws that regulate those societies. Of course not. It is generally recognized that they are calculated to safeguard the interests of the members.
– Would this proposal apply to the Employers’ Federation as well?
– To both employers and employees.
– Would there be an audit of the books of the Employers’ Federation showing the source from which it obtained its political funds ?
– The same set of laws will apply both to employers and employees. The amendment in paragraph a of clause 2 of the bill proposes to repeal the existing power contained in paragraph xx. of section 51 of the Constitution - “ Foreign corporations and trading or financial, corporations formed within the limits of the Commonwealth.” Originally this provision was believed to confer full power to make a company law for the whole of Australia, but the High Court judges have held otherwise. The readings of the judges are long and complicated. Honorable senators will find them in the judgment of the High Court in the case of Huddart Parker and Company Proprietary Limited v. Moorehead (C.L.E., vol. VIII., p. 3307.) Briefly, the interpretation of the decision is that the ordinary provisions of company law, as contained in the companies acts of the various States, were beyond the powers of enactment of the Commonwealth Parliament.
– There might be a different decision to-day.
– There might be; but, as things are, unless the Constitution is altered, there can be no uniform company law for Australia. A uniform company law is much needed, not only to facilitate trade and commerce generally, but also to protect the public. A uniform Bankruptcy Act has been passed for Australia; the idea of a uniform company law had to be abandoned in view of the interpretation of the provisions relating to companies in the Constitution. The proposed alteration was one of the subjects of a previous referendum bill, but the voting on the question was complicated by other issues. The wording of the paragraphs is clear, and it will be seen that the exceptions are of such a character as to exclude any unnecessary encroachments on State governmental and municipal functions and corporations formed for religious, charitable, scientific, or artistic purposes. I feel sure that the Senate will consider this bill quite impartially, undeterred by the loose statements that are being made outside Parliament to the effect that it is a step in the direction of unification, that it is a nullification of the power of the States. We must take things as we find them. Any one who studies industrial conditions in Australia cannot but be intensely dissatisfied with them. There is need for great improvement. I am one of those who have always believed in arbitration. Arbitration brings industrial disputes within the region of the law; they are dealt with as civil disputes are dealt with. The fact that there is reserved to the individual to-day power to have recourse to the civil courts to settle a dispute with another individual does not deter some people from endeavouring to trench on the civil rights of others. There are- some people who, not being prepared to accept the judgment of the court, try to take the law into their own hands. Because, notwithstanding the arbitration system, there are still strikes and lockouts, some people condemn the arbitration system; but they have no more right to condemn that system because some people will not conform to arbitration laws than they have to condemn the system by which civil disputes are settled, merely because a few people will try to take the law into their own hands.
– Awards cannot be enforced against organized labour.
– Oh, yes they can! I do not subscribe to the view held by the honorable senator. I admit that under our limited powers to-day we cannot do so. Those powers are too circumscribed.
– This bill will not help.
– It will; it will help tremendously. Under the powers to be conferred by this bill it will be possible to enforce awards. It is said that employers cannot be compelled to keep their factories open, nor can men be made to go to work. Neither can the ordinary civilian who will not obey the law be made to obey it; but you can send him to jail, or fine him.
– We cannot send a thousand men to gaol.
– A man who is released from jail may immediately again break the law, the breach of which caused him to be imprisoned; but there is power to punish those who break the law. If we had full industrial powers, it would be possible to punish either the employer or employee who broke the industrial laws.”
– A man cannot be compelled to run his business at a loss.
– No. But those who break the law, can be punished, whether they be employers or employees. I suggest that one way to deal with such cases is by requiring a bond to be entered into for the observance of the law. Then, if the law were not complied with, the bond could be estreated. No one can say that, because our industrial laws have not in the past achieved what we have desired, it is not possible for them to do so in the future.
– Does the Minister suggest a collective or an individual bond?
– In the case of large aggregations of employers or employees it could be a collective bond.
– Does the Government contemplate compelling a man to carry on a business that does not pay.
– How could we? In such circumstances a man would simply file his schedule in the insolvency court. I believe now, as I have always believed, that an overwhelming majority of both employers and employees desire industrial peace. I have never seen a time - even during periods of industrial turmoil - when there was not a majority on either side who desired to do the fair thing. Unfortunately, there are always a number of extremists on both sides.
– How is it proposed to get over that difficulty?
– If the Constitution is amended as we desire, we shall have the power to pass laws to regulate the formation of associations of employers and unions of employees. We can ensure to the majority the opportunity to express their will in relation to these disputes. In most cases that opportunity is not given to-day.
– Has the Minister in mind the taking of a ballot to determine whether a strike should take place?
– Yes. I speak for myself individually.
– In the case of the Australian Workers’ Union it would take six months to conduct a ballot. How would you manage it in that case ?
– There are means of accomplishing it. The Australian Workers’ Union, like other organizations, can conduct a ballot when it desires to do so. It is not past human ingenuity to do what the Australian Workers’ Union can do when it suits that organization. I believe that the present officers of the Australian Workers’ Union desire industrial peace. The Australian Workers’ Union has a distinguished record in respect of obedience to arbitration awards. I take this opportunity of saying that publicly, despite what some people say to the contrary.
– It was the fault of the court that we had to fight at all.
– Parliament cannot change human nature; but if the people will give us a Constitution under which we can make efficient industrial laws - and it is competent for us to do that - I am content to leave the rest to the common sense and good will of the great majority of the people of Australia.
I believe that both employers and employees have sufficient common sense to realize that the continued interruptions which have occurred in the industrial field are of no benefit to any one. All that both sides need is justice. They have no right to ask for more than that. Throughout the British Empire it is recognized that our judicial tribunals are fair and just. Both sides to disputes have many times paid their tribute to the justice of our courts. If honorable senators want an illustration of the benefit of having a judiciary appointed, preferably for life, as compared with elective tribunals, whether parliamentary or otherwise - they will find it in the United States of America. In respect of its interpretations of the American Constitution, and its judicial decisions generally, the High Court of the United States of America is the equal in prestige and standing of any other court in the world, but there are courts in America the judges of which are elected by the people, and they are the subject of contempt even in the States in which they are elected. They are, in some cases, venal, they are capable of being swayed by public opinion or passion, and in many instances they are notoriously corrupt. This illustration alone is, in my judgment, a strong argument why the deter mination of those industrial matters which lie at the base of our national fabric should be left to a judicial tribunal that is not swayed by passing gusts of public opinion, but comes to its decisions on the merits of the evidence before it. I hope the Senate will approach the consideration of this bill in that spirit, and that the measure will be passed by the Senate and accepted by the people, so that this Parliament may be clothed with the power that will enable it to deal with these very important questions.
Debate (on motion by Senator Needham) adjourned.
– I move-
That the bill be now read a second time.
The bill is designed to provide for the following points which were not covered by the War-time Profits Tax Assessment Act 1924:-
The War-time Profits Tax Assessment Act 1924 had provided that in any case where an assessment had been made by bringing live stock to account, the person assessed could elect to have the assessment altered so that the live stock not disposed of at the beginning or end of the accounting periods upon which the assessment was based should be brought to account at a value selected by the taxpayer within the limits of the minimum and maximum values then recently prescribed for income tax purposes. The 1924 Act did not contemplate the possibility of original assessments being made after the date of its commencement, and no provision was made in the act to meet such a possibility. The possibility arose, and, in the absence of any specific provision, the department was obliged to make the new assessments by bringing live stock to account at market values. This course was compulsory, because section 10 of the War-time Profits Tax Assessment Act provides that the profits shall be ascertained according to the same principles as are applied in ascertaining the profits for income tax purposes. The department had therefore to refer to the provisions of the income tax law operating in 1914-15 to 1918-19, both inclusive, That law, through the amendments made by the Income Tax Assessment (Live Stock) Act 1924, provides that live stock shall be brought to account at the value thereof, namely, the market values. Thus the department had to adopt market values in its new war-time profits tax assessments, which were issued for the first time after the 1924 act was passed. This basis had been avoided in existing assessments, by the War-time Profits Tax Assessment Act 1924, as I have already explained, and it was accordingly decided to amend the law so that the new assessments mentioned might also avoid it if the taxpayer so desired. This bill, therefore, gives him a choice between market values and values selected by himself from the limits prescribed for income tax purposes. In regard to the right to select values from the income tax limits, these later taxpayers are placed in exactly the same position as those who had been assessed before the passing of the 1924 act. In order to overcome the effect of insufficient time in some cases having been allowed by the 1924 act for making a choice between the existing assessments and assessments based on values selected by the owner from the income tax limits, certain provision is made in this bill. First of all it covers the case of those who were assessed before the ‘passing of the 1924 act, but who did not choose between existing assessments and new assessments based on values selected by themselves. Some taxpayers who failed to select values in time under the principal act would have done so if they had known the exact range within which they could select live stock values. As a matter of fact, the department itself was not sure of the position until more than four months’ time after the principal act was passed, and, accordingly, the taxpayers concerned were given a further three months within which to elect. Clauses 2 (a) and ‘5 of the bill will validate this action of the department. Some taxpayers failed to make” an election of values under the principal act because, through living in remote parts of the Commonwealth, they were not aware of the position rinder the act. Clause 2 (b) will rectify this by giving a new right of election of values to all who did not elect under the principal act. Failure to make an election under this bill in any case within the time stated therein will require the Commissioner of Taxation to amend the existing assessments so that the live stock shall be taken into account at market values. Persons who were assessed after the passing of the 1924 act, and failed to select their values, will be required to state whether they desire to bring their live stock to account at their own selected values taken from the income tax limits, or to- have their live stock taken into account at market values. Failure to make a choice will compel the Commissioner of Taxation to bring the live stock to account in the assessment at market values. The bill will entitle certain persons, who had been on active service, to have their assessments re-opened, in order that the tax assessed may be reduced to the amount that would have been payable by. them if they had not gone on active service. The present anomaly in this connexion is due to the fact that in the existing assessments no deduction on account of Federal income tax could be made, because no such tax was actually payable on account of the active service of the person concerned, and, in the case of a Victorian owner of a business, there was no- Victorian State income tax payable for the same reason, and, therefore, no State income tax was deductible. In the case of a South Australian owner of a business, there was a lesser amount of State income tax payable because of active service outside Australia, so that the deduction in the war-time profits tax assessment in respect of South Australian income tax was less than it would have been if the taxpayer had not ‘gone on active service. The lack of deduction on account of Federal and State income taxes meant that the excess profits were greater than they would have been if a deduction of the income taxes had been possible. Thus the war-time profits tax was actually increased through the absence of a provision to meet the position. Partnerships, with one of more partners on active service, were similarly penalized. The remedy is provided by clause 4 of the bill. A suggestion was made in another place that it is desirable to amend the bill, to provide that in certain cases the purchase price of live stock bought by a new business should not be altered to any lower selected value, on the ground that the live stock were on hand at the commencement of the first accounting period of the business. There is no necessity for any amendment so far as regards businesses which must be treated under the law as new businesses. However, the case which has been put forward is not of this class, so far as can be gathered from the meagre particulars supplied during the debate in another place. The impression gained from those particulars is that thesons who purchased their father’s business desired to debit their accounts with the purchase price of stock in the sale, and at the same time they desired that they should be granted the pre-war standard of profits which their father would have had if he had not sold the business. Not only does the law not permit these two claims to be granted together, but it would be grossly unfair if it did. The whole scheme of the act is to tax a business either as a continuing business by comparing the wartime profits with the pre-war profits, or as an entirely new one without any reference whatever to pre-war profits which may have been derived by a previous owner of the business. The amendment is, it is thought, desired by certain persons in South Australia expressly to meet a particular case in which they have failed to gain their ends by representations tothe department, but if it were made, it would probably involve the department in many re-assessments of cases that have been long finally settled. It is impossible to say how the particular assessment mentioned would be affected, but if the proposed amendment were granted it would discriminate in favour of that particular business against many hundreds of others which have been similarly affected by the existing law. It has also been urged that for the purposes of section 15 (13) of the War-time Profits Tax Assessment Act 1917-18, the losses mentioned in the section should be ascertained according to the same rules as are applicable to the profits. The department has been advised by the Crown Law Department that the contention is unsound, and should not be allowed, and it has not been allowed. The sole object of the proposal in this connexion is to reduce the liability to war-time profits tax of those pastoralists who may have selected values from the income tax limits. It is claimed that the application of those particular values in the wartime profits tax assessment would produce in one year a fictitious reduction of profits, and in the next year a corresponding fictitious increase of profits, but that over the two years the true position would be disclosed by the accounts. This position could not exist if the proposed amendment were made, because it would be necessary to deduct the fictitious loss from the fictitious profits before making an assessment. The taxpayer would thus escape tax in the first year through the fictitious loss, and again escape tax on the same amount through its deduction from the fictitious profit of the following year. Reason and equity both require that a loss that should be deducted should be a bona fide loss, and, therefore, as advised by the Crown Law Department, the proper way to ascertain that loss in any case is in accordance with the exact facts, and in the light of the true value or market value of any trading stock which may be involved in the consideration. The following proposals have been made for the exemption of persons on active service: - .
The first of these suggestions was considered when the provisions of the original War-time Profits Tax Assessment Act were considered by the Government of the day, and it was found to be impossible to express the exemption from war-time , profits tax in similar terms to those used in the Income Tax Assessment Act. It was necessary, in the case of a partnership, to bo express the exemption that it would be limited to the particular partner or partners who went on active service, and so that the partner or partners who did not go on active service should pay some tax. It was found that the only way to accomplish this end was to provide for a refund to the active service partners of their share of the partnership tax. If the law had merely expressed an exemption in favour of the partner or partners on active service, it would have been still necessary to assess the business as a business for war-time profits tax, and under the law relating to partnerships the stay-at-home partners would have demanded from the active service partners contributions by them towards the tax assessed on the business. Again, in the case of a shareholder of a company, no exemption would have operated if the terms of the Income Tax Assessment Act had been employed, because that exemption was limited to income from personal exertion and did not apply, therefore, to dividends from companies. There are many small private companies managed by the shareholders which are frequently regarded as being small partnerships. It was necessary to provide that when any of these shareholders went on active service they should receive similar treatment to individual owners or members of partnerships who went on active service. ‘ The exemption, as it is expressed in the War-‘ time Profits Tax Assessment Act 1917- 18, is the only way by which all classes of cases may be met, provided it is desired to limit the exemption - to persons who, before they went on active service, were residents of Australia and devoted the whole or the greater part of their time in connexion with the management of the business. This leads me to the second suggestion which was made because of a case in which a member of a partnership who was on active service in the danger zone failed to obtain exemption because he had not previously been connected with the management of the business. It is understood that this person enlisted for active service before he was a partner in the business, and that he became a partner while on active service in terms of his father’s will upon the death of his father (luring that active service. The reason for. the condition precedent to exemption of participation in the management of a business was that the Government of the day considered that the exemption should be limited to persons who had given up something to go to the war. If the existing conditions mentioned were removed, then a sleeping partner in a business could, on the score of active service, secure individual relief from the tax, notwithstanding the fact that the business was not in any way prejudiced by his active service. Fundamentally, the sleeping partner and the other person who had not previously bien a part- ner are identical in principle since neither of them gave up anything in connexion with the business upon going to the war. Furthermore, it may be pointed out that if relief were extended to these people they would receive the benefit without any sacrifice on their part in respect of the business, whereas those who remained in Australia to conduct the business for them would pay tax. Generally speaking, it may be said that the bill seeks to remedy the most glaring of the anomalies that have been discovered, To have attempted more would have involved a complete revision of the whole structure of the War-time Profits Tax Assessment Act, although it has ceased to apply to profits earned since 30th June, 1919. That the Government is not prepared to do.
– So many taxation measures have been passed by this Parliament that we naturally find ourselves in an absolute maze of taxation legislation. I do not think the speech delivered by the Honorary Minister (Senator Crawford) will help us to thoroughly grasp the purport of this bill. The Minister said that on one occasion the officers of the department took fully three months to ascertain the exact position in a particular case, and, with due respect to the taxation officials, I think they are in a somewhat difficult position to-day. When we realize that there are a number of people outside making handsome incomes in preparing the returns of taxpayers, we can realize the complex nature of our taxation legislation, and particularly the measure now under discussion. Even those who are thoroughly experienced in the preparation of taxation returns find difficulty in carrying out their work successfully, owing to the confused state of the legislation. The number of taxation measures already passed by this Parliament are as follow: -
This makes the 44th taxation measure brought before this Parliament, and, consequently, I approach a discussion of its provisions with a certain amount of trepidation. I understand that the bill has been introduced because some taxpayers are endeavouring to escape their obligations under the War-time Profits Tax Act, and that this measure will compel them to contribute the taxation they owe to the Commonwealth. To that extent I welcome its introduction. Those who made excessive profits during the war, and particularly as a result of the war, should not escape their obligations. This measure was also framed with the object of arriving at a basis of valuation of live stock in order to assess pastoralists for war-time profits tax. One of the difficulties experienced in arriving at a valuation basis is the fact that only the war period is covered. The intricate nature of the measure is the responsibility, I dare say, of those who drafted it, and, although we have had four war-time profits bills, it is still considered necessary to intro.duce further legislation in order to provide a means of collecting taxation actually due and also to arrive at a basis of valuation. It is not creditable to our officials to find that after a lapse of eight years they should be in doubt. Prior to 1924 there was an Income Tax Assessment Act with which a War-time Profits Tax Assessment Act was closely allied. The system adopted in valuing live stock under the Income Tax Assessment Act was also followed in the War-time Profits Tax Act, which was a very reasonable provision. After all, the war-time profits tax was only an additional tax upon excess profits made during the war, and it was only reasonable that the valuation of live stock under the Income Tax Assessment Act should apply in the case of the War-time Profits Tax Act. The regulations, however, framed under the act in force prior to 1924 provided for a standard valua tion of live stock in the respective States. That was palpably unconstitutional, as laws in regard to taxation cannot discriminate between States or parts of States. In view of the provisions in the Constitution, it is difficult to understand why such regulations should have been framed. Under these regulations the department fixed various prices for live stock in the respective States as a basis of valuation for assessment purposes. There was the famous Cameron case, to which the Minister did not refer. The HighCourt, in that case, declared that they were invalid.
– That was under the Income Tax Assessment Act.
– As the result of that decision in 1924, the Treasurer introduced and passed the War-time Profits Tax Assessment Bill, and the Income Tax Assessment (Live Stock) Bill, to overcome the invalidity indicated by the’ decision of the High Court! The War-time Profits Tax Assessment Act, however, gave pastoralists an option to choose between the old standard of values which, as I have pointed out, was declared by the High Court to be invalid, and a new standard of minimum and maximum values, whilst the Income Tax Assessment (Live Stock) Bill gave them an option between the old standard values and market values. In this respect the two measures appear to be inconsistent. They are still on the statute-book, and I am afraid that this bill will make confusion worse confounded. My point is that both acts contain the old invalid standards of value, and that under the Income Tax Assessment (Live Stock) Bill pastoralists have an option of market values, which is denied to them under the War-time Profits Tax Assessment Act. It is interesting to note the discrepancy of values in the two schedules, which are as under: -
Even if the old standards of values be regarded as reasonable, they operated very harshly in cases where pastoralists were living on the borders of different States. For example, horses at Albury were worth, for assessment purposes, £8 each, whereas at Wodonga the standard of value was £15 - a remarkable discrepancy. I should like to know how the department has arrived at the minimum and maximum values under the new standard.
– If the values are constant, it makes no difference.
– Perhaps not, but it would be well if the Minister explained why, under the old standard, the minimum value for cattle was 35s. as against 10s. under the new; why, in the case of horses, was £4 the minimum value under the old standard as against 15s. under the new; or why, in the case* of pigs, 15s. was the minimum under the old while 5s. is the minimum under the new. The maximum values disclose the same surprising discrepancies; the maximum under the new schedule being lower than any maximum value under the old standard, especially in the case of horses, namely, £20 compared with £3. I have already said that the main purpose of the bill is to assess people who are escaping taxation. It is very interesting, however, to note the form in which it was introduced in another place. The Treasurer explained that the option for pastoralists who were found to be escaping war-time profits tax was to choose between the minimum and maximum new standard of values known as “ prescribed values.” On this point, I should like the Minister to say what is meant by “prescribed,” “elected,” or “selected” values. I heard honorable senators during the Minister’s second-reading speech raise this issue, and I think it is advisable that we should have some definite information upon it. With regard to old assessments, that is, assessments of persons who had already been assessed, the option as regards valuation was between the old standard values - which as I have shown, were declared by the High Court to be invalid - and a new prescribed standard of minimum and maximum values. When the bill was in another place, Mr. Scullin, who took a prominent part in the discussion, pointed out that where the taxpayer failed to make an election in connexion with an old assessment, his assessment would automatically fall back on the old departmental standard of values, and consequently he would not be forced to pay, as that basis of value had been declared to be unconstitutional. As a result of representations made by both Mr. Scullin and Mr. Makin, the bill was amended to give the taxpayer an opportunity to choose between prescribed, or minimum and maximum values, and market values. In the case of old assessments, however; it is still open for the taxpayer to accept the old invalid valuation; but he does that of his own accord, notwithstanding that the basis is invalid. There is another phase in clause 4, which deals with exemption on account of war services, to which I direct attention. I believe that an amendment was moved in another place, either by Mr. Scullin or Mr. Makin, with the object of placing men who had been on war service on a more equitable footing. I followed the Minister very closely when he was dealing with this provision, and I am not satisfied that it is in exactly the form asked for in another place. The Treasurer, when the matter was mentioned, said he would endeavour to put it right when the bill was being dealt with in the Senate. I notice that Senator Elliott has circulated an amendment dealing with this matter. I should like the Minister to explain the position of returned soldiers, otherwise I shall be compelled to submit an amendment when the bill is in committee. I realize that the bill is an intricate one ; but I hope that, in committee, we shall be able to mould it so that it will achieve its purpose.
.- I shall refer briefly to the amendment of which I have given notice. Amendments were suggested in the other branch of the legislature, and the Treasurer (Dr. Earle Page) intimated that- he would consider the bringing down of amendments in the Senate to deal with the objections raised. Apparently, however, that has not been done. It will be noticed in Hansard, of 2nd June, 1926, page 2535, that the Treasurer, in addressing himself to this bill, said : -
The position of ex-soldierswhobecame partners in undertakings after they went away is more difficult. Now that the war is over, and we are looking retrospectively on the position, the difficulty is to find a form of words to express what is intended without including some who are not entitled to the reliefproposed, and excluding others who are just as much entitled to it as are those mentioned.
Again, at pages 2548 and 2549, the Treasurer stated -
In regard to the cases mentioned …. the commissioner, while recognizing that an anomaly exists, cannot suggest any form of words that would meet such cases.
That is a clear recognition that distinct anomalies exist, and surely the Government should brief some one who could come to its assistance in the matter. I have drafted an amendment, and the Honorary Minister (Senator Crawford), while admitting that it may meet the case, makes various comments upon it, without denying that anomalies exist and should be rectified. It was clearly the wish of the Government and the Parliament to remove the hardships inflicted by the discriminating provisions of section 8 (3), of the 1917-18 act; to find a form of words that would provide complete and unconditional exemption for every genuine owner or partner who served in the danger zone; and, at the same time, to obviate the possibility of extending that exemption to persons not entitled to it. I submit that the incorporation of the provisions that I have circulated will achieve the desired result.The Minister stated that there should be a separate clause dealing with the matter. I do not object to incorporate the necessary provision in that form, if it will meet with the Minister’s wishes. It could be moved as a separate clause after clause 4; but, as a matter of fact, clause 4 deals with exemptions, and I think that there could be no serious exception taken to making the provision a sub-clause of that clause. The enactment of the clause, as amended by my suggested provisos, would result in individuals or partners who served abroad, but not in the danger zone, having their income tax reduced to what it would have been had they remained at home. Individuals or partners who served in the danger zone, but who, on account of the anomalies acknowledged by the Treasurer, have been deprived of the exemption that they were always intended to receive, would now be definitely exempted from tax on their profits, or share of the profits, as the case may be. If the provisos are not incorporated in the clause’, these particular returned soldiers will, notwithstanding their service in the danger zone, receive no further relief than the reduction of their tax to what it would have been had they remained in Australia as non-soldiers. The first proviso has been framed so as to prevent remissions of tax to persons other than those intended to receive them. The second proviso has been inserted to make doubly sure on this point. The amendment makes the commissioner of taxation the final court of appeal, and he can be relied upon to refuse to sanction any remission in cases surrounded by the slightest evidence of doubt.
– Would there not be some difficulty in deciding who had served in the danger zone ?
– We should be able to surmount that obstacle by means of draftsmanship. The Treasurer having admitted the anomaly, and the great difficulty of dealing with it, I now put forward my suggestion as a basis on which the Government can work in order ho afford the relief intended.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 agreed to.
Clause 4 - (1.) Where the profits derived during any financial year or accounting period by any individual or partnership were, or are liable to be assessed under the War-time Profits Tax Assessment Act 1917, or under that act as subsequently amended, and that individual or any member of that partnership was, under any law of the Commonwealth or of a State relating to the imposition of income tax, entitled, by reason of being on active service during the war which commenced on the 4th day of August, 1914, to an exemption from or a reduction of the income tax he would otherwise have been liable to pay in respect of income derived in that year or period, the assessment shall be altered or made so that there shall bc deducted from those profits the amount of income tax which would have been payable, under that law of the Commonwealth or of a State, if -
in the case of an individual - those profits; or
in the case of a partnership - the share of that . member in those profits, had been the only income derived from sources within Australia by that individual or member during that year or period, and he had not, under that law of the Commonwealth or of a State, been entitled to an exemption from or reduction of income tax on account of such active service.
– I move -
That at the end of sub-clause ( 1 ) . the following provisos be added: - “Provided that where any such individual or member satisfies the Commissioner, Assistant Commissioner, or a Deputy Commissioner, that his military or naval duties required him to be in any” part of the field of operations in connexion with the war where there was danger to life as a result of the operations of enemy forces, and that he was, before the commencement of the said war, the owner of, or partner in, the business from which the aforesaid profits were derived, then notwithstanding anything contained in the War-time Profits Tax Assessment Act 1917- 1918, such person shall, and is hereby declared to be -
When the sole owner of the business exempt from liability to pay the war-time profits tax; and
When a partner in the business, entitled to a refund from the Commissioner of the part of the tax payable by the partnership which bears the same proportion to the tax payable by (the partnership as his interest in the profit bears to the total profits. “Provided further that where any such individual or member was not the owner of, or partner in, the saidbusiness before the commencement of the said war, it shall be necessary for such person to satisfy the Commissioner, Assistant Commissioner, or a Deputy Commissioner, that he did not become the owner of, or a partner in, that business with the direct or indirect object of reducing its liability to war-time profits tax.”
I need not enlarge upon what I said on the second reading of the bill. The amendment is an attempt to remove anomalies that the Government admits exist, and, at the same time, to- introduce safeguards in order that persons not intended to benefit will not derive benefit from the exemptions.
– The original War-time Profits Tax Assessment Act was passed in 1917. after very careful consideration, no doubt, on the part of the Government and members of both branches of the legislature. Now, nine years later, it is proposed to alter, in a very substantial manner, an important provision of that measure. I feel sure that Senator Elliott is under a misapprehension regarding the real meaning of the Treasurer’s reference to anomalies. The Minister did not include as an anomaly the non-exemption of a person who took no part in the mnaagement of a business prior to his enlistment, but he referred to the fact that the provision operated somewhat harshly in one or two cases. Honorable senators will recognize that it would be very difficult, if not impossible, to rectify the anomaly with regard to these odd cases without altering the basic principle of the act. so far as exemptions are concerned. The object of the amendment, apparently, is to remove the condition imposed by seotion 8 (3) of the act of 1917-18, under which a person on active service was not entitled to exemption.; or refund, unless he had, before going on active service, devoted the whole, or the greater part, of his time to the management of the business from which war-time profits were obtained. Senator Elliott has not shown that, under the principal act, or the Government’s present proposals, any injustice is done to any person who served with the Australian Imperial Force. Section 8 of the principal act exempted from taxation every member of that force who took part in the management of a business.
– Prior to the war.
– Yes. If he had been simply a shareholder in a big company, or a sleeping partner in a business, I ask how could his interests have been prejudiced by reason of his absence at thewar? Senator Elliott’s amendment, if agreed to, would increase the number of men eligible for exemption under the act, and would, moreover, lead to a general revision of the assessments made under the war-time profits tax. It would mean going back for a number of years, and re-assessing a large number of taxpayers. The acceptance of the amendment would mean overhauling the whole of the returns.
– That would be necessary under the Government’s proposals.
– The effect of the honorable senator’s amendment would be to grant exemption to. people who suffered no financial loss because of their war service.
– Then what did the Treasurer mean when he spoke of anomalies?
– The Treasurer certainly saidthat at there were anomalies ; but he was referring to only a few individual instances.
.- I have been trying to decide what attitude I should adopt towards Senator Elliott’s amendment. To that end, I have endeavoured to understand the meaning of the Treasurer’s words when dealing with this bill in another place. Regarding the particular class of claimant to which Senator Elliott’s amendment applies, the Treasurer, as reported in Hansard, page 2535, said -
The position of ex-soldiers who became partners in undertakings after they went away is more difficult.
That seems to indicate that the Treasurer had in view the inclusion of this particular class of individual, the soldier who, while engaged in war operations, became a partner in an undertaking in Australia. I do not know how many persons are concerned; but it is safe to assume that many men became partners in various businesses during the period of their absence from Australia with the Australian Imperial Force.
– If there were many such cases, we should know of some of them, and the honorable senator should be able to quote specific instances.
– If there are any such cases, this bill should apply to them. The fact that the Treasurer made a distinct reference to this class of individual impels me to believe that he intended to give relief to them. I do not think that the mere fact that a partner in a business during the war was not. a partner before his enlistment should prevent him from obtaining the relief from taxation Avhich it was intended to give to those who served in the danger zone. Whether that relief is limited, I do not know, but I feel inclined to support Senator Elliott’s amendment.
– If some consideration is not given to the class of individual to whom Senator Elliott’s amendment applies, an anomaly will be created. Let us suppose that two persons, equally fit for active service during the great war, are concerned, and that one of them offered his services to his country, while the other did not. Unless Senator Elliott’s amendment is agreed to, the man who was prepared to take risks will receive no greater consideration than the man who stayed at home.
– The man who enlisted was exempted from the payment of ordinary income tax.
– I am referring to the war-time profits tax. Some greater consideration should be given to the man who was prepared to accept the risk associated with active service than that given to the man who preferred to stay at home. I, too, feel inclined to support Senator Elliott’s amendment. The only difficulty I see is that of determining whether a person was in the danger zone. Would it apply to men who enlisted in the naval service?
– They were in the danger zone.
– I take it that the amendment applies to service on land, not to service at sea/
-No; it applies to both.
– Then there is no difficulty in that respect. I rose to point out what I considered to be an anomaly in the treatment meted out to the two classes of individuals which I have mentioned.
– Senator Lynch was under a misapprehension when he said that the existing legislation makes no distinction between men who took part in the war and those who stayed at home. It makes a very great difference between them. In the first place, the men who served with the Australian Imperial Force were exempted from the payment of ordinary income tax. In certain circumstances they are also exempted from the payment of taxation under the War-time Profits Tax Act. The principal act, which was passed in 1917. was clear as to the persons to be exempted under its provisions. There could be no doubt that the members of both Houses of Parliament at that time understood clearly the provisions of the legislation which Senator Elliott now seeks to amend. Sub-section 3 of section 8 of the act of 1917 reads -
When any resident of Australia, who is on active service outside Australia with the naval or military forces of any of the allied powers in connexion with the. present war, is the owner of, or is a partner in a business to which this act applies, and who, before he went on active service, devoted the whole or the greater part of his time in connexion with the management of the business, and whose military or naval duties require him to be in any part of the field of operations in connexion with the war, where there is danger to. life as a result of the operations of enemy forces, such person shall -
when the sole owner of a business be exempt from liability to pay the war-time profits tax;
when a partner in a business be entitled to a refund from the Commissioner of the part of the tax payable by the partnership which bears the same proportion to the tax payable by the partnership as his interest in the profits of the partnership bears to the total profits.
– I point out to the Minister that his observations, as well as those of the previous speaker, while applicable to clause 4, are irrelevant to the amendment now before the committee.
– As I am now replying to speeches that were irrelevant, I suppose my remarks are likewise irrelevant.
The TEMPORARY CHAIRMAN.I referred to the irrelevancy so that it might now cease with the statement and the explanation.
– The intention of Parliament is so clearly expressed in section 8 that there could be no possible doubt as to the full benefits which Parliament wished to confer upon those who enlisted in the Australian Imperial Force. I should like to inform Senator Elliott that in its present form his amendment will not attain the object he has in view. It will need to be submitted in a different form.
.- The Minister (Senator Crawford) is, so to speak, beating the air, because in another place the Treasurer admitted that anomalies existed which ought to be removed. I shall quote one or two cases of anomalies. A man conducted a business for some considerable time prior to the war, but about 1909, because of ill-health, he appointed a manager, and was absent from the Commonwealth until just before the outbreak of war. His trip abroad so restored him to health that when war broke out immediately after his return, he decided to enlist, and did so. It has been held by the Commissioner for Taxation that the exemption provision of the act did not; apply to him because he was not taking part in the actual management of his business immediately prior to the war. Another case is that of a young man who was not. in business with his father as a partner, but during his absence at the frontsucceeded to the. control of the property under his father’s will. The business must have suffered during his absence to a greater extent than it would have done if the father had not died, yet the son is held not to be entitled to benefit under the exemption provided in the original act. The instances of hardship cited in another place were so clear that the Government had to admit the existence of these anomalies, and its only excuse for not rectifying them waa the difficulty of framing an amendment to cover them.
– The Government claims that the honorable senator has not framed a proper amendment.
– That is quite possible. The matter only came under my notice yesterday. It is difficult to suddenly switch from your professional undertakings to a matter with which one is not very familiar. The amendment I have suggested has been put forward because of the admitted helplessness of the Government to frame one, and in any case, it is merely a suggestion to be put into shape to cover the cases referred to in another place. I urge the Minister, if necessary, to postpone the further consideration of the clause so that my amendment may be fully considered by the Parliamentary Draftsman. I should welcome the assistance of Senator McLachlan, because one of the principal anomalies has occurred in South Australia, which fact probably accounts for the lateness of the hour at which I was approached in regard to the matter.
– I think Senator Elliott’s request for the postponement of the clause might be acceded to by the Government. There is a lot in the honorable senator’s amendment.
– It deals with a highly technical subject.
– I admit that. I am inclined to go a long way in supporting the honorable senator’s proposal, but I would suggest an amendment on the following lines : -
That the following sub-section be added: - “1a. Where the naval ormilitary duties of any individual or member referred to in the last preceding subsection required him to be in any part of the field of operations in connexion with the war where there was danger to life as a result of the operations of enemy forces,the Commissioner may further alterormike the said assessments, so thatthere shall be deducted fromthe said pro- fits so much of those profits as were entitled to an exemption from income tax by virtue of section 13 of the Income Tax Assessment Act 1915-21, and which would but for this sub-section be liable to war-time profits tax.”
If that sub-section were added it’ would place the returned soldier in the same position in relation to war-time profits tax as he occupies in relation to income tax. The Minister (Senator Crawford) in his reply to Senator Elliott said that thereturned soldier was exempted under the Income Tax Assessment Act, but I am afraid that if clause 4 of this bill is agreed to as it is printed that will hot be the case. The desire of Parliament was to exempt soldiers from income taxation, and as far as possible from war-time profits tax also. In order to overcome any improper evasion by the transfer of businesses to returned soldiers, it excluded any member of theforces who had not gone into the danger zone. Senator Elliott’s amendment has provided for that, but if the committee is not prepared to accept thatamendment, it may adopt the one I have suggested. The act also excludes any member of the forces who, although he went into . the danger zone, did notdevote the greater portion ofhis time to the management of his business prior to going to the wax. That risk no longer exists, as there can be no longer evasions by the transfer of businesses.
– Although Senator Elliott’s amendment was only circulated to-day, the points raised in it had previously been carefully considered by the taxation officials and the Treasurer, and had already been debated at some length in another place. With every desire to bo fair and just to those whom it was intended to exempt from assessments under the war-time profits tax, the Government feels that iu the bill now before the Senate it has gone as far as it possibly can without departing completely from the basio principles of the original act. It. is true that there are some anomalies under the act, as there are bound to be. in the operation of all taxation measures, but the bill under consideration will remove most of them. I cannot agree with the honorable senator’s suggestion that the further consideration of the clause should be postponed.The points raised in the amendmenthave had careful and deliberate consideration, and furthermore in its present form it would not be effective even ifit were embodied in the bill.
– It. occurred to me, in listening to the remarks of Senator Elliott and the Minister (Senator Crawford), that when war broke outno oneanticipated that it would last for four or five years. Many things happened during that time. Life even among civilians is precarious. I do not think that Parliament intended that a man must be a partner in or the owner of a business before going to the war in order to participate in the exemption from thepayment of war-time profits tax.
– The act specifically says so. You could not have more precise words than those used.
– I do not think that it does Bay so. I want to supplement my interpretation of the speech made by the Treasurer by reading a little more. The Treasurer said -
The amendment that has been introduced now is designed to meet these cases.
He was referring to certain cases not in this category. He continued -
The position ofex-soldiers who became partners in undertakings after they went away is more difficult. Now that the war is over, and we arelooking retrospectively on the position, the difficulty is to find a form of wordB to express what is intended without including some who arc not entitled to the relief proposed, and excluding others who are just as much entitled to it as are those mentioned.
If it was the intention to exclude soldiers who were partners in businesses after the war began, the Treasurer would not have made that statement.
– If an attempt is made to meet an individual case, others who are not entitled to consideration might also be admitted.
– Yes; but in endeavouring to surmount a difficulty, we should not close the door ‘to those who are entitled to consideration. I can easily -visualize the case of a young man who, when he enlisted, may have been actively engaged in business with his father. The father may have died soon after the son’s enlistment, in which case he would succeed to bis father’s position. Is it suggested that such a person should not obtain that relief under the act which would be extended to him if he had actually been a partner when he enlisted.
SenatorMcLachlan. - Will the amendment moved by Senator Elliott cover such a case?
– I cannot say that it will.
SenatorMcLachlan. - I do notthink it does.
– Perhaps not. I therefore suggest that the consideration of the clause be postponed, as it is impossible to deal effectively with it this afternoon. I was surprised to hear Senator Elliott say that a man whom he knows was refused the consideration provided under the act on the grounds that, immediately before the outbreak of war, he was not actually engaged in thecontrol of a business. Before the outbreak of hostilities he had been incapacitated, and had handed over his business to the control of a manager; but when he recovered, he immediately enlisted. There is nothinginthe act which provides that a person must have been engaged in the conduct of his business immediately prior to the outbreak of war, and I do not think it was the intention of Parliament to handicap ex-soldiers in such a way. The person in question was apparently the life of the business until his health became impaired, and instead of again undertaking the active management of the concern on his recovery, he took up arms inthe defence of his country. Yet he cannot claim exemption under the act in its present form.
Question - That the amendment (Senator Elliott’s) be agreed to - put. The committee divided.
Majority . . 7
Question so resolved in the affirmative.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 5 agreed to.
Title agreed to.
Bill reported with an amendment.
Senate adjourned at 6.34 p.m.
Cite as: Australia, Senate, Debates, 16 June 1926, viewed 22 October 2017, <http://historichansard.net/senate/1926/19260616_senate_10_113/>.