Senate
8 June 1933

13th Parliament · 1st Session



The President (Senator the Hon P. J. Lynch) took the chair at 3 p.m., and read prayers.

page 2165

INTERNATIONAL DEBTS

Senator DUNN:
NEW SOUTH WALES

– Is the Minister representing the Prime Minister prepared to make a statement with regard to the following report which appeared in the Canberra Times of to-day’s date: -

DEBT INTEREST.

Britain Awaits United Status Message.

Five European Countries to Default.

London, Monday.

Ministers are expecting a communication respecting the war debts from the United States within 48 hours. The Cabinet may be summoned on Friday.

At least five nations, Hungary, Rumania, Yugoslavia, Austria and Greece have already decided against the paying to America.

The others are almost curtain to take the cue from Britain andFrance.

Senator Sir GEORGE PEARCE:

– No. The Government’s proposals will be announced when the budget is presented.

page 2166

QUESTION

SIR KEITH MURDOCH

Senator DUNN:

– Has the Leader of the Senate any statement to make with reference to the honour of knighthood conferred recently on Sir Keith Murdoch of the Melbourne Herald newspaper? Can he indicate the services rendered to Australia and the Empire by the gentleman mentioned? Also will the right honorable gentleman tell the Senate when similar honours will be conferred on the executive heads of the Sydney Morning Herald, in view of their free press services in “ booming “ and “ boosting “ this Government, which has lost the confidence of the Country party and its supporters throughout Australia?

The PRESIDENT (Senator the Hon. P. J. Lynch). - Order! The honorable senator must know that the latter part of his question is out of order.

Question not answered.

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QUESTION

MINISTERIAL PARTIES

Senator MacDONALD:
QUEENSLAND

– I ask Che Leader of the Senate whether, in view of the fact that, in Queensland, members of the Nationalistand Country parties are united, and the Labour party wishes to see them so, and in view, also, of the statement attributed to Senator Foll in the Canberra Times of to-day’s date, that the only people who were rejoicing over this trouble between the Nationalist and Country party members were members of the Labour party, will he inquire whether there was any undue celebration in this chamber or outside?

Senator Sir GEORGE PEARCE:

– I do not know that I can offer any reply to the honorable senator except to suggest that it is unwise to interfere in domestic quarrels.

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WESTERN AUSTRALIAN REFERENDUM

Secession Vote

Senator E B JOHNSTON:
Western Australia

by leave - I wish to refer to the attack made yesterday by Senator Brennan on those people who voted in favour of secession at the recent referendum in Western Australia, and particularly to his charge against me.

On Tuesday last, referring to the referendum vote, Senator Brennan said -

I find it hard to draw a distinction between those who would break this indissoluble Commonwealth into which we have entered, and straight out rebels.

Last night, prior to the adjournment of the Senate, the honorable gentleman made it quite clear that, because of the part which I had taken in connection with the referendum, his reference to rebels applied particularly to me. I resent that charge, and throw it back in the honorable senator’s face. According to Webstar, rebellion is defined in law as “ disobedience to a legal command or summons, formerly resulting in actual outlawry, and, later, in certain penalties.” Wharton’s Law Lexicon defines rebellion as “ The taking up of arms traitorously against the Crown . . .; disobedience to the process of the courts “.

May I say that the people of Western Australia were invited by His Majesty the King of that sovereign State to express their opinion on the question of secession.

Senator Brennan:

– It is not a sovereign State.

Senator E B JOHNSTON:

– The State Parliament passed an act entitled -

An act to submit to a referendum, questions in relation to the State of Western Australia and the Federal Commonwealth established under the Commonwealth of Australia Constitution Act (Imperial).

It was assented to on the 30th December, 1932, and reads in the preamble -

Be it enacted -by the King’s Most Excellent Majesty, by and with the advice and consent of the Legislative Council and Legislative Assembly of Western Australia, in this present Parliament assembled, and by the authority of the same -

That a referendum of the people shall be taken. Thatact provides in section 5 -

  1. The Governor shall issue a writ, directed to the Chief Electoral Officer, for the taking of a vote by ballot on the. prescribed questions.
  2. It shall be the duty of every elector to record his vote at the taking of the said ballot.

I am an elector of Western Australia, and if I had failed in my duty to vote at the referendum, I should have been guilty of an act of rebellion.

Senator Brennan:

– No. On the contrary, no one could have touched the hon.orable senator.

Senator E B JOHNSTON:

– The penalty provided for failing to vote was a fine of £2. The act was an invitation in the name of the King to the electors of Western Australia to express their opinion on the subject of seceding from the Commonwealth. Evidently, Senator Brennan believes that those electors who voted against secession acted constitutionally, while those who voted for secession were guilty of an act of rebellion.

The PRESIDENT:

– I must ask the honorable senator to confine his remarks to a personal explanation.

Senator E B JOHNSTON:

– I am endeavouring to do so. I resent the suggestion that, in doing our duty, we were guilty of an act of rebellion. To whom could the electors of Western Australia look for guidance but to those who represent them in this chamber? Senator Brennan endeavoured to make it appear that I alone, of all honorable senators, had been guilty of this act of rebellion.

The PRESIDENT:

– Was it imputed that the honorable senator was a rebel?

Senator E B JOHNSTON:

– A direct statement to that effect was made. The campaign in Western Australia was opened by ex-Senator Sir Hal Colebatch, and the honorable member for Swan (Mr. Gregory) and the honorable member for Forrest (Mr. Prowse), all of whom took as active a part, as I did, at the beginning of the campaign, and until the House of Representatives met. I am a member of the Dominion League of Western Australia, which is one of the most loyal bodies within the Empire. Instead of that league consisting of rebels, the National Anthem is always sung either at the beginning or at the close of its proceedings. The badge of the Dominion League of Western Australia bears the Union Jack of Great Britain, and also the Black Swan - the emblem of the State of Western Australia. Its efforts to obtain self-government for Western Australia are conducted entirely by constitutional methods, and its activities are not controlled by rebels. Its members include those whom the King himself has honoured. They include Sir James

Mitchell, Sir Walter James, the Honorable Norbert Keenan, K.C., and the Honorable J. T. Franklin, C.M.G., the Lord Mayor of Perth, and many others whose patriotic service to the King and Empire have been rewarded by His Majesty. Senator Brennan said yesterday that these gentlemen, including myself, who assisted in obtaining an affirmative vote on the referendum in Western Australia, should remember that the man who led them was relegated to obscurity after representing the State in the Western Australian Parliament for 25 years, and that a new Ministry had since been returned to power.

Senator Dunn:

– What is his name?

Senator E B JOHNSTON:

– I am referring to Sir James Mitchell. Instead of being a rebel, Sir James Mitchell is one of the builders of the Empire. The effective system of land settlement which he had been prominent in controlling for over a quarter of a century, is a monument to his ability. We have in power in Western Australia a new Government, which will soon appoint a State Governor, and I shall be surprised when the appointment is made if Sir James Mitchell, who yesterday was referred to as a rebel, is not selected for that important post. I suggest that the name of Sir James Mitchell will live in the history of the Commonwealth when those of his detractors have been forgotten.

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FEDERAL LAND TAX

Formal Motion for Adjournment

The PRESIDENT (Senator the Hon. P. J. Lynch). - I have received from Senator Guthrie an intimation that he desires to move the adjournment of the Senate for the purpose of discussing a matter of urgent public importance, namely, “ the advisability of the Government tak- ing steps to immediately abolish the federal land tax “.

Four honorable senators having risen in support of the motion,

Senator GUTHRIE:
Victoria

– I move -

That the Senate, at its rising, adjourn till to-morrow at 10 a.m.

In submitting this motion it will be necessary for me to give a brief history of the imposition of the federal land tax, which was proposed by the Fisher Government in 1910. In introducing the bill, the then Prime Minister said, “It is not a taxing measure, but one to give executive power to do a certain thing. The object of the tax is to burst up large estates “. The late Mr. Alfred Deakin and several very prominent men at the time reiterated and emphasized the statement of the then Prime Minister that the federal land tax was not to be a taxing measure, and that its main object was to burst up large estates. In view of these statements it is extraordinary that the tax has been levied on per foot valuations in city areas. As a matter of fact, the object of the tax was camouflaged, and successive governments have used this iniquitous imposition as a taxing measure. When enforced in 1910-11, the average rate of the tax was 3id. in the £1; in 1914, it was increased to 5d. in the £1, and in 1918-19 there wa3 a further increase of 20 per cent. In 1927-28, there was a supposed reduction of 10 per cent. I say a supposed reduction, because, while there was a reduction of 10 per cent, in the rate of tax, the valuations of the properties upon which the tax was assessed were enormously increased. In some instances, the unimproved value of the land was increased by as much as 300 per cent.., so I fail to see that there was any reduction in the tax, although, no doubt, that was the intention of the Government.

According to a statement issued by the Prime Minister’s Department in’ 1932, the tax now ranges as high as Sd. in the £1, and, for absentees, 9d. in the £1. I am a believer in heavy taxation being imposed on absentees - persons who have made their money in this country, and do not like it sufficiently to live in. it. I do not care how high the absentee tax may be on property or income. Put this Government, realizing that the land tax is undemocratic and uneconomic, has very wisely taken a step in the right direction by reducing the tax by 33-J per cent. In reply to one of the largest and most representative deputations which waited upon the Prime Minister last year, requesting the Government to abolish the tax immediately, the right honorable gentleman said -

The Government realized that the tax was not a desirable one - you could not tax pro- perty into productivity but you can tax it out of productivity. The desire and intention of the Government is to remove the burden of the graduated federal land tax at the first possible opportunity - as soon as the financial position of the Commonwealth permitted.

Mr. Lyons repeated that statement several times during the election campaign in Victoria and elsewhere, and I think other Ministers have expressed themselves similarly regarding the desirability of abolishing the tax. As the Government is likely to have a substantial surplus this year, I maintain that this is the time for steps to be taken to give effect to the opinion of the right honorable the Prime Minister and other Ministers; particularly as the primary producers, on whom this tax bears so heavily, are passing through what is probably the most difficult period in the history of Australia. This is the fourth year in succession in which most, if not all, of the primary products on which Australia depends are saleable only at prices much below the cost of production. In addition, seasonal conditions over the greater part of Australia are worse than usual. The season has been fair to good in certain districts of the various States; but, speaking of Australia generally, the season is much below normal. There is going to be a heavy shrinkage in the volume of primary production, particularly of wool, of which it is anticipated there will be a shortage of 300,000 to 400.000 bales.

The federal land tax, during the last four years, has given the following returns : -

For 1932-33, it is hoped that £1,200,000 will be collected. The people on the land are not in a position to pay this tax. In 1925-28, after a period of good seasons and high prices, only £19,000 remained outstanding, whereas on the 30th June, 1932, no less than £714,000 remained unpaid. The position of the primary producers is even worse at the moment because of bacl seasons, low -prices, and reduced land values. Nobody objects to fair taxation; the Government needs money for development purposes, for defence, and for other services; hut I object to the federal land tax, which is an annual class tax on capital. If it is necessary to raise the extra money, I should prefer it to he done by means of a heavier income tax. In that way, people pay in proportion to their income, but landholders are called on to pay the federal landtax even when they are making losses year after year. The federal land tax is superimposed on all other forms of taxation which those on the land pay in common with other sections of the community. They have to pay income tax and unemployment tax, as have professional men, manufacturers, and others; but, in addition to this, a small group, numbering only about 25,000, is singled out for special taxation. It is they who produce practically all of our exportable wealth, yet this is the treatment they receive in return.

Moreover, the imposition of this tax is sin invasion of State rights. Land taxation is essentially a matter for the States. The present method of collection results in duplication and overlapping of State and Federal departments. In Victoria, there is a flat rate land tax of½d. in the£1, plus 5 per cent. If it is really necessary for the Commonwealth Government to superimpose a land tax of its own on State land taxes, the tax should be collected through the State departments, instead of there being, as now, a separate Commonwealthbrauch, with collectors, valuators, etc., in addition to the State organizations. I do not agree that the tax is necessary at all; but if the Government is determined to go on collecting it, let it at least do the job as economically as possible.

The Government of New Zealand was the first in the British Empire, and, I think, in the world, to impose a graduated land tax, but in the dominion the tax never reached the magnitude it has in Australia. After years of trial, the New Zealand Government found it to be an uneconomic and stupid tax that had outlived any usefulness it might ever have had. That, I remind honorable senators, was the experience in a country which is much more suitable for closer settlement than is the greater part of Australia, and the promotion of closer settlementwas the avowed object of the tax. I am strongly in favour of closer settlement, and always have been. I maintain that it is a public duty to make land available for the people for closer settlement and intense culture. Whenever a property is suitable for subdivision it should be cut up. As a matter of fact, that is generally done, and much more successfully by private enterprise than by governments, which have muddled most of their closer settlement schemes. Usually, when a man owns a property which is suitable for closer settlement, he is only too glad to cut it up and sell it to those willing to work it.

The New Zealand Government has abolished the graduated land tax, and imposed one tax - a flat rate of1d., in the £1 with an exemption of up to £7,500, and a reduction for mortgages. The unfair, stupid, federal land tax does not make any allowance for mortgages at all. and is, moreover, from 300 per cent. to 400 per cent. higher than that in New Zealand. In 1910, 14,920 persons were assessed for federal land tax, and in 1927, 26,734 persons were assessed, so that only one elector of 128 is directly affected by the tax, though every one in Australia, particularly every land-owner, is indirectly affected.However, because the majority is only indirectly affected, the abolition of this tax is not a popular political cry. It is generally found more popular to declare that those on the land are beef-barons or millionaires, whereas, in sober fact, the opposite is the truth. This is a tax on capital, not on income. For the average primary producer the value of his land represents five-sixths of his capital. The effects of the tax are not so drastic in the case of owners of city land, but even as it applies to the city the tax is bad and uneconomic.

Senator Collings:

– Who pays most of the tax - the city land-owner or the country man?

Senator GUTHRIE:

– When the tax was first imposed, three-fifths of it was paid by the primary producer, hut to-day, owing to the fact that most of the properties which could be subdivided have already been cut up, the greater part of the tax is paid by city land-holders. Even yet, however, about two-fifths of the tax is paid by primary producers.

The federal land tax is a first charge on property, taking precedence over everything else. It actually attacks the freehold title. When people bought land in this country from the Crown, they expected to get a clear title. However, the federal land tax is equal to a first mortgage; the title is attacked with the result that in most places which are heavily mortgaged, the holder’s equity in the property has disappeared. Federal land tax is confiscatory in its incidence, and it is a serious blot upon our intelligence that we continue a tax that is doing so much harm to the nation, and causing unemployment.

It is a fallacy to think that because there is a statutory exemption of £5,000 on the unimproved land value, this tax does not affect the assets of small landowners. Suppose, for the sake of argument, that a person is a stud merino breeder - for which purpose a large area of land is required- and owns 20,000 acres on the Riverina, on which he pays the heavy land tax of £2,000 per annum. That charge greatly depreciates the value of his land, and, consequently, it depreciates the borrowing value of every farm in the district, including the asset of the smallest land-owner in the area.

The iniquity of the tax ia shown by the report of the Federal Land Tax Commission, which states -

No deduction from the unimproved value of any land shall be allowed in respect of any mortgage to which the land is subject, or in respect of any unpaid purchase money, and the mortgagor shall be assessed and liable for land tax as if he were the owner of an unencumbered estate.

That is totally different from the system which prevails in New Zealand. Nowadays, most land-owners are heavily mortgaged, yet they are called upon to pay thousands of pounds in land tax. In all sincerity, I ask where is that money to come from? It is not strange that the Land Tax Department is £714,000 behind in its collections. The unfortunate landowners have used up all their available credit with the banks, other financial institutions, and even with local storekeepers. Incidentally, wholesale merchants in the cities, and local storekeepers, have dene their utmost to assist settlers, and are carrying a great burden as a result.

Regarding the stupidity of land tax assessment, everybody knows that since 1927, there has been a collapse in commodity prices and land values. The productive or saleable value of land has fallen by from 40 per cent, to 50 per cent., yet assessments for land tax which, in 1927, amounted to £2,586,952, actually totalled £3,291,681 in 1931, notwithstanding the collapse in land prices!

Senator Barnes:

– There has not been much of a collapse in the value of land in Collins-street.

Senator GUTHRIE:

– Even in Collinsstreet there has been a tremendous depression of land values. However, I specially wish to deal with the application of the tax to our great primaryproducing industries, which it is strangling. Particularly is that remark applicable to the sheep and wool industry which, for over twenty years, has been responsible for 50 per cent. . of our exports. It is well that the people should realize that this is our greatest industry. This tax means a burden of 10s. 3d. a bale of wool on a small property carrying 3,000 sheep, and it actually reached as high as £6 4s. 9d. a bale on a stud sheep property in Riverina, or 60 per cent, of what was the gross income of the property for the year.

Senator Collings:

– Do we look so silly 83 to make the honorable senator think we are likely to believe that?

Senator GUTHRIE:

– It is true. I do not care very much whether the honorable senator believes it or not, because I do not think that he wants to know the truth.

Senator Hardy:

– The tax is criminal in its application.

Senator GUTHRIE:

– Of course it is. I know that there are appeal boards, but they are constituted of departmental officers, who have already made the assessments, and are not likely to back down in their valuations. I recall the case of an appeal that was recently made in Victoria, where, when the head valuer was asked what experience he had had in that line, he said that he had put in a lot of time erecting telegraph poles throughout the State. Apparently, from the vantage point of a telegraph pole, he had observed the value of the country.

It might be asked why a vigorous protest was not made against the tax years ago. During the war years, most of the land-owners were too busy with a bigger job, and then there occurred the post-war boom in commodity prices ; also, the land tax was not a great burden at the time. Since then, there has been a collapse in values, and the federal land tax has now a terrible strangle-hold upon the primary producers.

Regarding the private settlement of land, honorable senators know that a private vendor picks his men, and nurses them, so that there have not been many failures when land has been subdivided by private enterprise. But the result has been tragic when governments have interfered, and seized estates for subdivision. One has only to look at the balance-sheets of the Closer Settlement Board, the Soldier Settlement Board, and the “Water Trust Commissioners, to realize that millions of pounds are owing by the unfortunate individuals who have been placed on land so subdivided. Particularly is that so with the Soldier Settlement Board. The reason is that sometimes unsuitable estates were selected, and, in many cases, the areas allotted to settlers were insufficient to enable them to make a- fair living, with the result that most of these schemes have been a tragedy to the individual concerned, as well as to the Government. There have been a few exceptions where suitable properties have been bought and satisfactorily settled, but these are insufficient in number to disprove the general rule that such ventures have been a tragedy.

Senator Rae:

– What has that to do with the tax?

Senator GUTHRIE:

– The honorable senator would say, “ Why should not large land-owners be selected for penalization”? I know that some people would like to cut their throats. For the raising of merino stud sheep, a large area of suitable land is essential in Australia. Australia is divided into three areas. There are approximately 1,000,000 square miles in the coastal belt, which has a rainfall of 20 inches or over per annum. There is another 1,000,000 square miles inside this belt, which has a rainfall of from 10 to 20 inches, which is the most suitable for the breed ing of merino stud sheep. Inside this area, again, there is what is known as the “ dead heart of Australia,” where the rainfall is below 10 inches. I am not a merino breeder; my areas are not. sufficiently large. But, as a sheep and wool expert with 40 years’ experience in Australia and elsewhere, I know that a large area of land is absolutely essential for the breeding of merino stud sheep. A stud could be damaged in a few years, and ruined in five. Once damaged, or dissipated, the total quantity of wool produced in the country is lowered and the general quality of the Australian clip will deteriorate. That is, perhaps, the most serious aspect of this matter. These great merino studs have taken from 50 to 100 years of brains, energy, capital, and personal attention to build up to the wonderfully high standard of to-day. They far eclipse in value and usefulness the sheep of the rest of the world. Proof of that is furnished by the fact that Australia has 16 per cent, of the sheep of the world, but is responsible for 32 per cent, of the total value of the wool produced. Thus Australian sheep have been bred to such a high standard that, on the average, the value of the wool that they produce is twice as great as that of any other country. What folly it has been to increase valuations within recent years, with the industry in such a difficult position! The low state that it has reached is shown by the average price of the Australian wool clip. During the. 10- year period, 1906-16, the price was 9-Jd. per lb. gross, ex seaboard warehouse, and for the 10-year period, 1920-30, it was 17¼d. per lb. gross. Over a 30-year period, omitting four abnormal years, the price was 12£d. per lb. gross. Within recent years it has been as follows : -

The figures given in the press do not accurately state the average for the Australian clip. If the scoured wool were reduced to its natural greasy state, the all-over average price would be at least id. per lb. lower than the published figure. To arrive at the price that is available to the producer at country railway stations,1d. per lb. must be deducted for rail freight and selling charges. Consequently, our great wool clip is to-day being sold at 7¼d. per lb. at country railway stations. In the Commonwealth Arbitration Court, Chief Judge Dethridge found that wool cost 11d. per lb. to produce. That figure has been reduced lately as the result of the lowering of wages and other costs. The Wool Committee appointed by the Federal Government found that the cost of productionwas 9½d. per lb., but made no allowance for interest on the capital invested in the industry, nor for managerial expenses. We have to sell our wool clip, and most of our other primary products, in the unsheltered markets of the world, in competition with countries like South Africa and South America, where labour is much cheaper, and the working hours longer. I am not advocating cheaper labour or longer hours. I point out, however, that there is not a land tax in either of those countries ; yet we are expected to compete against them. South Africa has increased her clip to 1,000,000 hales of merino wool. Her freights to the markets of the world are less than half of what Australia is paying at the present time. In New Zealand, another competing dominion, there is only one land tax, and it is a flat rate of1d. in the £1, with exemptions for mortgages, &c.

So much for the strangling effect of the tax on rural lands. In the cities, the effect is to increase all rents, and in turn, the prices that shopkeepers have to charge their customers. Thus the cost of living is higher because of the tax than it would be without it. Recently, the Taxpayers Association of Melbourne took sworn evidence from a gentleman who owns a large city building, that if the land tax were abolished he would guarantee the immediate reduction of the rental of each room in it by 5s. a week.

There are a hundred and one reasons why this undemocratic, unjust, uneconomic, unBritish, and stupid tax should be abolished. Every newspaper of note in Australia approves of its abolition. Those who are prepared to consider the matter without bias, and to recognize the effect on the nation rather than on the individual would, I feel sure, prefer another tax, if necessary.

The PRESIDENT:

– The honorable senator has exhausted his time.

Senator Sir GEORGE PEARCE:
Minister for Defence · Western Australia · UAP

[3.46]. - That the Government has considerable sympathy with much of what the honorable senator has said this afternoon, is shown by its actions during the last year. It has been siaid that two things are certain in any civilized community, and that they are equally unpleasant - death, and taxation. I have never met the taxpayer who could see any virtue in the particular tax that he paid. But we ought not to exaggerate this case; and I am afraid that, in some of his statements, Senator Guthrie has rather done that.

Senator Guthrie:

– I have based my statements on official figures.

Senator Sir GEORGE PEARCE:

– If the honorable senator will permit me to say so without offence, I do not believe that he has. He said that the land tax is imposed at the rate of8d. in the £1.

Senator Guthrie:

– I said that it went up to 8d. in the £1.

Senator Sir GEORGE PEARCE:

– Even that is not correct, because, in some cases, it goes beyond. If the honorable senator will study the official report of the Taxation Commissioner, he will find at page 9 the following explanation of the rate of tax in 1914-15: -

The rate of tax was altered in its incidence by making the tax on £1,1/18,750 d. increasing per additional £1 by1/18,750d., reaching an increment of tax of 9d. at £75,000, with an average over the whole of such field of 5d. per £1. The increment of tax applied to the excess over £75,000. The rate for an absentee correspondingly became1d. more than the rate for a resident.

Senator Guthrie:

– That is exactly what I said.

Senator Sir GEORGE PEARCE.The honorable senator also said that this tax may have to be paid - that, in fact, it is paid in many cases - where the property is returning no income, and that in that respect it is singular. I point out to him, however, that the same thing applies also to the income tax. In many cases, since the depression, persons have had to pay income tax in a year when they had no income.

Senator Guthrie:

– But in respect of a year in which they had income.

Senator Sir GEORGE PEARCE.That is so.

Senator Sir Walter Kingsmill:

– This tax may be levied on land that has never returned income.

Senator Sir GEORGE PEARCE:

– That would be the case if it had an unimproved value. But it is hard to see what unimproved value land would possess that had never returned any income. I suggest that the honorable senator examine a little more closely the figures he has given in regard to the tax on a bale of wool. I have not had an opportunity to check them, but they are certainly startling.

Senator Guthrie:

– It has been proved up to the hilt, and has been given in sworn testimony.

Senator Sir GEORGE PEARCE:

– I am always suspicious when it is said that things have been proved. I like to examine the facts for myself, though I have hardly had sufficient time to test the figures given by the honorable senator. That the average tax of 5d. in the £1 on the unimproved value of land should amount to £6 a bale, a bale of wool being worth £10 is unlikely.

Senator Guthrie:

– The tax runs up to 9d. in the £1.

Senator Sir GEORGE PEARCE.In that case, the land would be capable of carrying only one sheep to 4 acres, and its unimproved valuation would be not less than £2 an acre. I venture to say, however, that the unimproved value of land capable of carrying only one sheep to 4 acres is seldom assessed at £2 an acre. I mention these points because, although I think that a strong case can be made out against the land tax as it is operating to-day, there is no need to exaggerate the position. We should confine ourselves to the facts.

There has been some recognition in the past of the severity of the land tax. According to the report of the Commissioner of Taxation, the revenue collected by way of land tax decreased from £2,988,885 in 1928-29, to £2,156,765 in 1931-32. It is significant, as the honorable senator has pointed out, that in 1931- 32, land tax to the amount of £714,593 remained unpaid. As, on the average, the amount of outstanding tax for some years before was about £20,000 a year, there must be a good reason for this great increase; it must be due to the sheer inability of many land-holders to pay. In the present financial year, this Government showed that it was prepared to take the operation of the land tax into consideration, and the amount of the tax was reduced by one-third, and it should be remembered that, concurrently with that reduction, other taxes, such as the sales tax, the primage duties, and surcharges on goods used by those engaged in primary production, were reduced to the extent of about £2,000,000. If it is taken into consideration that the land tax reduction amounted to between £700,000 and £800,000, and that there were these other reductions of taxation of special kinds imposed by the last Government, it is seen that the interests of the people who live in the rural areas have not been overlooked by the present Administration. Those facts taken together are an earnest of the recognition by the Government of the hardships imposed on this class of taxpayer, and of its desire to help him. The following reductions have been made in pastyears: - 1922-23 - Super tax of 20 per cent. repealed. 1927-28 - Reduction of 10 per cent. 1932-33 - Reduction of 331/3 per cent.

But a further measure of relief was given last year, and this is now operating. The Government believes that the indications are that this will give substantial help to those to whom Senator Guthrie specially referred.

Under the Financial Emergency Act which was passed last year, the provisions relating to the Hardship Board were altered to make them extend to that class of case in which, owing to the fall in the prices of primary products, hardship was involved in the payment of land tax. The board has received a large number of appeals based on that ground. Previous to this alteration of the law at the instance of this Government, hardship could not be advanced as an excuse for the non-payment of land tax. I have been informed this morning by the officer whose duty it is to supervise the operation of this new provision, that it is being largely availed of, and that it will, it is believed, result in a considerable reduction of the amount of tax that will be received in future. That is one of the instances in which this Government sought the approval of the Parliament so that relief might be given to the many genuine cases where special hardship was inflicted by reason of the fact that the taxpayers had not received payable prices for the products raised by them on the land on which land tax is imposed.

The Prime Minister (Mr. Lyons) has already announced that, in the preparation of the forthcoming budget, the reduction of taxation will be fully and seriously considered, and that the whole field of taxation will be reviewed, to see in what manner the greatest economic relief possible can be afforded. There is no doubt that nothing could help the country at this juncture more than relief from taxation, but the Government wishes to give that relief in such a way as to obtain the best economic results. I can assure Senator Guthrie, and honorable senators generally, that the case presented this afternoon, and the case that can be presented in regard to the necessity for relief from other forms of taxation that are being imposed, will be fully considered by the Government, when deciding what alterations it will ask the Parliament to make in connexion with the forthcoming budget.

Senator COLLINGS:
Queensland

– I am grateful to Senator Guthrie for having introduced this mat’ter. It is just as well that this Senate, and the people generally, should be made aware of the lengths to which vested interests are prepared to go in order to escape anything like their just share of the burden of nationhood. We have been told by Senator Guthrie - and this cry is becoming a continuous anthem of misery in this chamber - that the primary producers of all kinds, including those who breed stud stock, are in an awful plight. But it is always left to somebody on this side of the chamber - the faithful ten who compose the Opposition - to protest on behalf of those whose whole lifetime is spent in the condition which Senator Guthrie seemed to suggest was the particular lot of his friends on the land. Some time ago, wo read in the press that a most influential deputation had waited on the Prime Minister, and had stressed the need for a reduction of taxation, particularly land taxation. That deputation represented the Taxpayers Association, which is composed of people most of whom are able to employ taxation experts in order to defraud the nation of the contribution which they should justly make for the privilege of belonging to it. We heard yesterday that, notwithstanding the severity of the depression in Australia, this country is in a better position than other countries, and that we are, indeed, fortunate to live in Australia. I believe that to be true; and, therefore, I ask the reason for this continuous appeal on behalf of those people who are best able to bear the burden of taxation.

Senator HARDY:

– Does the honorable senator say that the graziers are best able to pay taxation?

Senator COLLINGS:

– During the war and the succeeding years the graziers of Australia piled up wealth. Many of them spent large sums of money in visiting other countries, which the ordinary people see only on the picture screen. In those days they did not say that, because they were making big profits, they were prepared to pay additional taxation. Now, however, as soon as they have to take their share of the sufferings of a depression, caused by them and the class to which they belong, they come squealing for relief. I remind the Senate that it was not the working class which caused the depression. Give that class the money to spend, and there would be an end to the depression.

I am somewhat singular among honorable senators in that I like Canberra. Most of the people whose work brings them to the National Capital - and among them I include a majority of the members of this chamber - manage to “ escape “ from it every week-end. They go mainly to Sydney and Melbourne where they enjoy “ the advantages of living in a big city.” But, when they are asked to pay for those advantages, they object. Apparently they fail to realize that the advantages of the big cities have been provided by communal action, either by governments or municipalities, and have had to be paid for. All the activities of the departments which make Australia a land worth living in must be paid for, if they are to be continued. Whether we like it or not, taxes have to be paid; and surely, in that case, they should be paid by those best able to pay them. I do not say that all taxation is just in its incidence; there are good grounds for easing the burden here and there, and also for increasing it in other directions. Who is getting the wealth of this country ? We are told by honorable senators opposite that it is not the pastoralists, or the landowners, or the business men, or the professional men. On the contrary, they are all supposed to be having a hard time. I am forced to the conclusion that those who are getting the wealth of this country must be the invalid and old-age pensioners, and the unemployed men and women, whose standard of living is being slashed in every direction ! Yet the Leader of the Senate (Senator Pearce) says that the Government will lend a willing ear to any request for the improvement of the financial position of its friends. If honorable senators would read the loth report of the Commissioner of Taxation, they would find that after all, only 24,943 persons pay federal land tax. I suggest that before the Government remits one penny of taxation to any section of the community, it should restore invalid and old-age pensions to their former higher rates. So callous has been the treatment of some of these pensioners, that were I to recite the facts outside this chamber, Senator Brennan, who says that “ to plant the acorn is to intend the oak “, would probably describe me as a rebel. We, on this side, do not believe in revolution, but we do believe in change; and that change will come sooner than some honorable senators think. As soon as we have been released from our duties in this chamber, it is our intention to tell the people of Australia the true story of the persecution of the invalid and oldage pensioners, and that story will result in a complete change-over in this chamber. Senator Brennan need not be concerned for the people who are liable to pay federal land tax, because he well knows that vested interests and exploiters always have their advocates. We on this side are not so ignorant as not to know who represents this and that interest in this Parliament. We know who are the puppets who dance when the Baillieu in terests pull the strings. We are under no misapprehension as to the forces we are up against. We know why Senator Guthrie made his appeal this afternoon, because we know the interests that he represents in this chamber. We know also whom we ourselves represent. We have been sent here by that section of the people which, in all ages, from the cradle to the grave, has never had a chance to enjoy the life to which all men are entitled. This federal land tax is not levied on any person the unimproved value of whose property is less .than £5,000. Any man whose property, unfenced, unstocked, and without improvements, is valued at £5,000, ought to pay land tax. Senator Guthrie said that all the newspapers of Australia favour the abolition of the land tax. That is not correct, because a number of Labour newspapers will strenuously oppose any reduction of the tax. It is just as well for honorable senators to be accurate when telling the Senate their bed-time stories. The great newspaper companies in the cities object to this tax because they themselves have to pay it. Most of the revenue derived from this source comes from landowners in the cities whose property is valued at so much per foot; they and their representatives are doing all the squealing. The representatives of these interests, who plead on their behalf, appear to forget that 300,000 unemployed persons in this country are suffering misery and degradation.

Senator Duncan-Hughes:

– There are buildings other than those owned by newspaper proprietors.

Senator COLLINGS:

– There are buildings owned by people of the class represented by the honorable senator, which have attached to the front of them brass plates displaying the names of commission, estate, and other agents, and legal exploiters. Those people are all in the joke, and are all joining in the ad misericordiam chorus of appeal for relief. Senator Guthrie has said that the land tax was introduced in 1910 for the purpose of breaking up large estates, and in that respect it has been wonderfully successful. In Queensland, the State with which I am most familiar, there are prosperous villages and townships supporting, in happiness and comfort, hundreds of people, who, strange to say, pay no land tax at all, and their homes are established on land which was previously owned by a squatter and his family, -with perhaps a governess aud a manager, and a few hands. For the greater portion of the year, those squatters were out of the country wasting their substance in riotous living.

Senator Badman:

– Has not the depression reached those prosperous villages?

Senator COLLINGS:

– We have to go to the cities to see the cruel aud criminal results of the depression. Those engaged in the primary industries, particularly in Queensland, know little of the depression except that they are receiving lower prices for their products. But there is no starvation there, and no fear as to where the next meal is coming from, and no uncertainty as to the future, such as there is in the big cities where most of the people whom we represent are congregated.

Senator Sampson:

– The primary producer needs assistance just as badly as any other section of the community.

Senator COLLINGS:

– The honorable senator belongs to a class which is always appealing for relief, yet, he, like many of his supporters, always has a wellgroomed and opulent appearance.

Senator Sampson:

– The honorable senator himself is not by any means ill groomed.

Senator COLLINGS:

– There is a difference between myself and other honorable senators who take such a delight in baiting me in this chamber.

The PRESIDENT:

– The honorable senator’s time has expired.

Senator Sir WALTER KINGSMILL (Western Australia) [4.12]. - My principal objection to this tax - which goes a little further back than the period touched upon by other honorable senators - is that it is constitutionally and morally, if not legally, a large invasion of the State rights of the citizens of Australia. I think that most honorable senators will agree Avith me that , the administration, care, aud, incidentally, the taxation of the land, should be part of the domestic rights of the States, and that therefore the Commonwealth land tax is a direct infringement of those rights. With regard to the success which it is alleged has been achieved by this tax in breaking up large estates, let me say that that process was already undertaken and largely under way before this tax was ever thought of. That, of course, may not be known to Senator Collings, the speed of whose speech reminded me of Niagara Falls and an eruption of Vesuvius. If this tax were imposed for the purpose of breaking up large estates, how did it come to be applied to the cities? How could a large estate - aud admittedly a large estate - of 30 feet of land in Collins-street be broken up? That would be an impossibility. By imposing this tax upon that 30 feet of land we take away much of the rights of municipalities and local governing authorities, and it is a wonder to me that those bodies have not made a more vigorous protest against it. Senator Collings referred to the owners of largo city buildings such as banks, and other institutions with brass plates; but let me inform him that the imposition of this tax has so impoverished those owners, as to deprive the municipal authorities of an opportunity to gain considerable revenue for useful expenditure in the cities and suburbs. I assure the honorable senator that I am not holding a brief for any one, because I object to this tax from a constitutional as well as a commonsense point of view. The department, in levying this tax, does not take into account the fact that the landowner may not be able to’ pay it. But, if he is deriving income from his property, he pays income tax upon it. There is no need for a tax on land at all, because land is only a tool of trade. The income tax ensures that the person who is taxed on income earned either at the moment or a year or two previously, has sufficient money with which to pay it. It is a reasonable tax, and should be the only one levied by the Commonwealth, although I admit that it is necessary to levy a tax on land which is not being put to any use. Another matter which is connected with the land tax, and has caused a great deal of trouble and misery, is the optimism of the valuators. It is quite an old dodge for those in authority to increase valuations so soon as the rate of tax is decreased. And that practice has, to a large extent, been followed ever since the beginning of the Christian era. At all events I am glad that steps aTe being taken by this

Government to alleviate the incidence of this tax, though the progress is slow, so as to assist the people on the land. Despite what Senator Collings has said, it is possible for a man to be on the land and still be honest and a good citizen; the primary producers are not all rogues. A man does not become vile just because he owns a little land, to which he has as good a right as anybody else. We all know that among the people whom the honorable senator represents, are persons of considerable opulence, as has been disclosed at trials and various inquiries, and, I presume, that they are entitled to share the opprobrium winch the honorable senator cast at certain persons in the community who are supposed, in many instances, quite erroneously, to possess wealth, and to think of nothing but increasing their wealth and evading taxation. The sooner this tax is abolished, the sooner will this Government stand on ground constitutionally more sound. Land tax should be collected, not by the Commonwealth, but by the States. For those reasons, I associate myself with Senator Guthrie in his protest against a federal land tax.

Senator DUNN:
New South Wales

– I associate myself with the remarks of Senator Collings regarding the poverty story told by Senator Guthrie in pleading for relief from taxation for the wealthy squatting and grazing interests of this country. Senator Guthrie, as one of the elected representatives of this class of people in Victoria, is entitled to submit matters from his point of view, but so also is Senator Collings entitled to speak for the people he represents. We, on this side of the chamber, represent the large majority of salaried people and wage-earners of Australia. I have never seen the police of Sydney keeping in order a queue of squatters and graziers outside labour exchanges or benevolent . institutions. The squatters and graziers cannot expect to have it coming and going. There was a time when they were making money rapidly. They are not making it so rapidly to-day. They have, to use the vernacular “ come a gutzer.” In the past, they have invested their surplus wealth in shares of one kind and another in every country where capitalism is in control. I read the other day in the press the story of a Victorian grazier who, in his prosperous years, dabbled in shares to the extent of £135,000. If these people choose in good times to buy “ gold bricks “ or anything of that kind, they must suffer for it. The 3LO children’s bedtime story, which Senator Guthrie has told about the squatters and graziers, will not find acceptance with me. There are in this country, the exploited and the exploiters. The exploited may be found in every old men’s home in Australia. Senator Guthrie’s Hollywood sob story of the exploiters - a kind of MaryPickfordintrousers story - may be pleasing to the mechanized press of this country, but it will not be agreeable to the workers. . We see too many press reports of deceased squatters and graziers leaving estates varying from £15,000 up to well over £100,000, for us” to believe that these people, as a class, are on the breadline. Nothing was said this afternoon by Senator Guthrie about the £7,000,000 which the squatters received in gold from Soviet Russia for their wool, nor about the hundreds of thousands of pounds that they have donated at different times to the funds of the political parties whichthey support. We have not been told, either, about the large sums they have invested in the shares of the capitalistic press of the various States in order that they may have available an effective weapon to fight the Labour party. They have any amount of money for these purposes. As Senator Collings has pointed out, the squatters and graziers can go travelling to the pleasure resorts and playgrounds of the Old World as frequently as their fancy pleases; and they invariably return to Australia with their luggage plastered with so many labels that it looks like a Chinese pakapu ticket. The life of these people in the luxury of the flats at King’s Cross, Sydney, is very different from the life lived by the workers in the sordid industrial suburbs of that city. The Government has already afforded substantial relief from taxation to the squatters and graziers, and I hope that the dirge which we have heard this afternoon will not cause it to do anything in the direction of further tax relief for the wealthy land-, owners. It is high time that relief was given to the old-age and invalid pensioners, and the 500,000 men and women of Australia who are below the breadline. The squatters are a lot better off than the dairy-farmers on the north and south coast of New South “Wales, who have liens on their butter production, on their crops, their herds, and, in fact, on all their possessions. The wealthy interests of Australia which have been greatly strengthened by the surplus wealth of the squatters and graziers, have a firm grip on these unfortunate people. I trust, therefore, that when the Leader of the Government is sitting in that mysterious chamber “known as the cabinet-room, he will not suggest the granting of further benefits to the squatters and graziers, and forget the claims of the poor people of this country. The time of the Senate should not be taken up in discussing this matter, because other sections of the community, including our small manufacturers, our huge army of unemployed, and our invalid and old-age pensioners, are expected to balance their individual budgets without special assistance. I understand quite well why Senator Guthrie has raised this subject for discussion this afternoon. He was not unmindful of the fact that the arguments which he has advanced will have wide circulation among that section of primary producers in which he is specially interested. Honorable senators on this side will also utilize Mansard for the purpose of advocating the claims of those who are on or below the breadline before assistance is given to the wealthy grazing interests of this country.

Senator O’HALLORAN:
South Australia

– The proposal made by Senator Guthrie is open to many objections ; but, in the limited time at my disposal, I shall be obliged to confine my remarks to those aspects of it which, in my judgment, are the most important. The honorable gentleman has made a special appeal to the Federal Government to vacate the field of land taxation. I understand that, after allowing for the remission of taxation which may be recommended hy the Hardships Board appointed under the amending act of last year, and for a reduction of the rates hy one-third, the Government anticipates obtaining a revenue of £1,400,000 out of the proceeds of land taxation for this year, and I presume that a similar amount will be received for the next few years. To make good the loss of revenue due to the abolition of the land tax, Senator Guthrie suggests an increase of income taxation. That is a monstrous proposal. In South Australia, taxation presses on the people with probably twice the severity experienced in any other State. So serious is the position there that the people are looking to this Government to relieve the State of some portion, at least, of its disabilities. Therefore, I am surprised that Senator Guthrie should calmly suggest that, instead of this Parliament approving of measures to lighten the burden on South Australia, it should, by abolishing the federal land tax, increase it. The iniquity of the proposal will be apparent, not only in South Australia, but in other States also, notably Queensland, where there is a limited area of freehold taxable land.

Let us see who would benefit from the abolition of the federal land tax. The last annual return of the Federal Taxation Commissioner, dealing -with the unimproved value of town and country lands, makes interesting reading. It shows that the unimproved value of town lands last year was £162,896,086, upon which taxation had been levied to an amount of £1,920,966, while upon country lands of an unimproved value of £154,635,522, the taxation collected was only £945,857, or nearly £1,000,000 less. These figures, 1 suggest, indicate the source of this agitation for the abolition of the tax. Obviously, it comes from the great financial institutions, and from the big chain stores which are gradually eliminating the competition of small retailers in suburban and country areas, and are wielding a monopolistic control in the business of supplying the needs of the people. “When they have complete mastery of all the social services nominally provided by private enterprise, the consumer will suffer considerably at their hands. It is to enable these people to extend their monopolistic influences, and further to centralize trade and commerce, and to attract population from the country districts to the towns, that this appeal is now being made. The movement should be resisted. In its incidence the tax is just. It is difficult for the person paying it to pass it on. Were it not for the effect of this tax upon the institutions which I have mentioned, we should not have heard of this agitation for its removal. Originally, it was imposed for the purpose of ensuring the subdivision of the larger estates in our country areas, and it was not altogether ineffective. Admitting that owners of country lands liable to pay federal land taxation are entitled to special consideration, the ratio of benefit, assuming that the tax were abolished, would be as one is to three for country lands as against city lands. Those most entitled to relief at the moment are our invalid and old-age pensioners, the working classes and small primary producers, who are not really affected by the federal land tax law, because the unimproved value of their properties is below the stipulated amount.

Let us consider another aspect of this question. Senator Guthrie has told us that many pastoralists are in financial difficulties, and that they are being forced off their holdings. I venture to say that their financial troubles are due, not so much to the operation of the federal land tax, as to other levies, including interest on bank overdrafts, commission on the 3ale of their products, and many other charges.

I am wondering if this is not another “ get-in-early “ movement, similar in many respects to an agitation in South Australia many years ago, when that State was suffering severely from drought conditions. So serious was the outlook at that time that the State Government provided a generous measure of drought relief to land-owners in a large area of country which had recently been thrown open for closer settlement. The farmers occupying that new country had incurred considerable debts, and, because of drought conditions and other misfortunes over a number of years, a considerable number of them were forced to vacate their properties. In two or three years the agricultural population of that particular area was diminished by approximately two-thirds. The land reverted either to large holders, or came into the possession ‘of the hanks and financial institutions, which immediately began an agitation for remission of drought relief payments, which were a first charge on the land. The government of the day acceded to the request, but, unfortunately, the major portion of the benefit was given, not to the farmers, but to the banks and financial institutions. I am wondering if this is not a similar movement on the part of the financial institutions, in order that they may reap the full benefit of the abolition of the tax. Senator Guthrie said that he wa3 not opposed to the tax if its purpose was merely to ensure the subdivision of large estates. Well, the occasion for subdivision of country lands is by no means exhausted. The return to which 1 have referred shows that the highest aggregate value of subdivided land passing from taxpayers to nontaxpayers in any one year - this denotes that the land has been subdivided - was in 1910, £11,237,706, and in 1911, £11,977,115. For the next six years the amount varied from approximately £5,000,000 to £8,000,000 a year. There was also an increase in the post-war years of 1918, 1919, and 1920. I endorse all that has been said by Senator Guthrie with respect to the tragedies associated with soldier land settlement. The honorable senator rightly said that those failures were largely the result of landholders, acting in collusion with sympathetic governments, unloading their properties at exorbitant prices. In the last year for which figures are available, land valued at £5,878,000 passed from taxpayers to non-taxpayers, clearly showing that the field of subdivision has not yet been exhausted. Even had the field been exhausted, a tax of this description is needed to prevent the re-aggregation of large estates. That is an important aspect of the question which has not yet been mentioned by those honorable senators who have spoken on the subject. The knowledge that as the area of a holding increases, the amount of land tax will also increase has the effect of discouraging those who seem to be anxious to own the earth. My experience of land-holders is that the control of unnecessarily large areas is their main desire. There appears to be ‘no limit to the ambitions of landholders in this respect. One would think from Senator Guthrie’s remarks that the federal land tax bore harshly upon small land-holders. He mentioned the case of a man owning 3,000 sheep who, as a result of the imposition of the federal land tax, was compelled to contribute 10s. 3d. for each bale of wool he produced. If that is the case, the land held must have been heavily over-capitalized.

The DEPUTY PRESIDENT (Senator the Hon. Herbert Hays). - The honorable senator has exhausted his time.

Senator MacDONALD:
Queensland

– This is a somewhat romantic subject to me, as it brings back to my mind an incident which occurred when Mr. Fisher, the first Labour Prime Minister of the Commonwealth, visited Great Britain in 1911. This federal tax on the unimproved value of land had just been imposed, and during Mr. Fisher’s, stay in London, he was waited upon by a deputation of representatives of certain land and investment companies, who strongly opposed the imposition of the tax, and practically demanded its abolition. As the representative of the Australian Press Association, I attended the deputation, which was led by Mr. Andrew Williamson, and as an Australian, I was annoyed to hear that gentleman speak to the Prime Minister of Australia as if he were an overseer working on one of his stations. It was proof to me of the power that these absentee owners thought they possessed. I was glad to note that Senator Guthrie in his speech to-day did not attack the rate of tax applying to absentees. I cannot agree with those who contend that this tax has not been beneficial to Australia. Some figures contained in the 15th annual report of the Commissioner of Taxation show that it has been the means of raising a large amount of revenue. On 30th June, 1910, there were 14,920 taxpayers, whereas on 30th June, 1928, there were 27,994. Despite the alleged persecution of the poor land-holder, the number of taxpayers has practically doubled. On 30th June, 1910, the assessed unimproved value of the land subject to the tax, was £184,4461,698, and on 30th June, 1928, it had increased to £317,531,608. A portion of that increase would, .of course, be due to the increased value of the land. The justice of the imposition of such a tax for bringing about the subdivision of large estates, is admitted by every one who is not a large land-holder. The effect of the tax in this direction can be determined from the following paragraph in the fifteenth report of the Commissioner of Taxation: -

Up to the completion of the assessment of land held as at 30th June, 1928, an aggregate unimproved value of £144,337,176 had passed out of the taxable field owing to subdivision of estates.

It is unlikely that city properties such as those owned by insurance or financial companies, or those controlling newspapers, such as the Brisbane Courier or Daily Telegraph, with frontages of 66 feet, 33 feet, or less, will be subdivided. But it is clear that the £144,337,176 mentioned by the Commissioner of Taxation as having passed out of the taxable field, represents the value of large estates which have been subdivided. The report continues -

If these sales had not taken place, and assuming the value of sold lands to have remained stationary, the original taxable field would have been assessed as at the 30th June, 1928, at approximately £461,808,784.

That amount should be compared with the £317,531,608 previously mentioned. The imposition of the federal land tax has resulted in the subdivision of large estates to the extent of not less than 40 per cent. In case it may be thought that this tax bears very heavily upon the poor man, I may remind honorable senators that those owning land, the unimproved value of which does not exceed £5,000, are exempt. I know of persons who have been able to make a good living and rear a family of twelve children on a holding the unimproved value of which is less than £5,000. Those who own land valued in excess of that amount should contribute to the revenue of the Commonwealth. In Queensland, persons owning land valued at £200 or more have to pay State land tax. Just think of the enormous difference between a mere £200 worth of land and £5,000 worth. There is, therefore, a marked difference between the unimproved value of land for State and Federal taxation purposes. Some time ago, I purchased two sections of land in Queensland, on one of which I erected a house, and it suddenly occurred to me that I was a land-owner, and liable for land tax. I visited the land taxation department, and said that I had not submitted a return for two years, and although the land was valued at only £200 T had to pay a tax of £7 to cover the period during which taxation had not been paid. Senator Guthrie is speaking on behalf of the squatters and those who have invested their money in financial and similar companies, many of whom reside overseas, but there are others to consider. There should be no reduction of federal land tax until invalid and oldage pensions have been restored to 20s. a week. Those who obtain the inadequate amount now paid, have to submit to an inquisitorial investigation with respect to the earnings of their relatives. A federal land tax was imposed in 1910, and although anti-Labour governments have been in power for sixteen years since, it has never been removed. From 1916, there have been many changes in the government of this country, but the federal land tax has remained as a monument to the splendid work of the Fisher Government. I think it was Senator Kingsmill who said that the tax does not take into account the capacity of the land-owner to pay. My capacity to pay was not taken into consideration when I was assessed by the Queensland Taxation Department, although at that time I had not much with which to bless myself, nor has capacity to pay been taken into consideration elsewhere. As the number of taxpayers has increased it cannot be said that the tax has been a burden upon the land-owners. Even in normal years, the number of taxpayers has increased. We all know that, during the war, enormous fortunes were made out of wool and wheat, and this continued right up to 1929.

Senator Guthrie:

– Those who made fortunes paid income tax on them.

Senator MacDONALD:

– Admittedly, but they were taxed very lightly in comparison with the fortunes they made. Now that the depression has come, we find the land-owners trying to get from under the common . burden. Any honorable senator who has been a wage-earner will know how the burden of this depression is felt by those who have to live on wages. That being so, how much harder must it be for the hundreds of thousands who have lost their jobs. Any man who owns £5,000 worth of land is wealthy.

Senator Guthrie:

– He may not have a penny.

Senator MacDONALD:

– Then he must have mortgaged his land to Dalgety and Company, or some other finance company, and has had the benefit of their assistance. We have been told by the National Travel Association, that, during the prosperous years, no less than £40,000,000 a year was, on an average, taken out of Australia for tours abroad. That would be enough to pay the interest on the debt we owe overseas. I know that Senator Guthrie is supported by a number of wealthy and powerful interests; he is merely their spokesman. These interests have already had the benefit , of a substantial remission of taxation, yet now, in spite of their having made millions of pounds profit during the good years, they seek to evade their share of the country’s responsibilities.

Senator BROWN:
Queensland

– I listened to Senator Guthrie’s speech yesterday with a good deal of interest. His language and method of utterance were admirable, though we may not agree with all he said. To-day I was somewhat disappointed in his speech. His arguments were not so reasonable, and, to put it mildly, he handled his figures carelessly. I am a representative of Queensland as a whole, but, at the same time, I am supported more particularly by that section of the population which possesses either very little property in land, or none at all; who, indeed, may possess no property whatever, except the labour they have to sell. Naturally, they view things somewhat differently from Senator Guthrie, who is a large land-owner.

Senator Guthrie:

– I am not, as a matter of fact.

Senator BROWN:

– At any rate, his supporters are large land-owners. I gained the impression from Senator Guthrie’s speech that, not only the large land-holders, but indeed, all sections of primary producers were affected by this tax.

Senator Guthrie:

– I said that the tax was paid by only 24,000 people.

Senator BROWN:

– That is so, but so constant was the honorable senator’s reference to the primary producers as a whole, that any one who did not study his speech carefully might be pardoned for gaining the impression that the primary producers as a whole were paying the tax. We know, as a matter of fact, that only a very few of them pay the tax.

Senator Guthrie:

– Directly, perhaps.

Senator BROWN:

– I do not condemn that section of the primary producers who pay the tax for protesting against it; indeed, I should like to see the rank and file of the community protest as vigorously against their own grievances as do these taxpayers. For my part, 1 should be prepared to abolish every tax except a tax on income. If every one in the community had to pay direct taxation, he would take a keener interest in the government and development of his country.

Senator Brennan:

– Would the honorable senator abolish customs duties?

Senator BROWN:

– I would not abolish them immediately, because I am in favour of developing this country to the fullest extent, I believe, however, that if all sections of the community devoted the same energy to the development of their country that they do to attempting to reduce or evade taxation, it would be better for every one. The pastoralists, as individuals, are as good as any one else, no doubt, but in times of prosperity they are strangely careless of the interests of the nation as a whole. When things become bad, however, they come quickly enough to the Government for relief from taxation. In Queensland, the pastoralists have done very well in the past. Even Senator Guthrie, I think, will not deny that; yet, when efforts were made to provide for the future hy building railways which would enable stock to be moved quickly from droughtstricken areas, very little support was forthcoming from those whom the proposal was designed to benefit. It must be conceded that the pastoralists, as a whole, have not shown any marked disposition to provide for the future. When they have had a good season or two, and paid off their debts, they seem to think that everything is going to be all right for ever afterwards. We have heard much from the pastoralists recently regarding the low price of wool, but have they ever made any serious attempt to organize their industry in such a way as to secure a better market for their product? I understand that Senator Guthrie is opposed to any form of government control.

Senator Guthrie:

– I have never said that.

Senator BROWN:

– I understood the honorable senator to say it in a speech delivered last year. At any rate, most, of the pastoralists are opposed to Government control, and especially when the price of wool is high. Nevertheless, when prices are low, they approach the Government for various kinds of assistance, including tax remission.

There are about 108,000,000 sheep in Australia, more or less, and fewer than 45,000,000 of them are pastured on the lands subject to this tax. In Australia, there are 50,000 wool-growers with flocks of fewer than 500 sheep, and they, of course, do not pay this tax at all. Strangely enough, however, so persuasive has been the propaganda on this subject, that many of these smaller graziers actually seem to believe that they pay the tax themselves. I was speaking to one the other day who vehemently denounced the federal land tax, and when I asked him how much he paid, he admitted that, lie did not pay any at all.

Senator McLACHLAN:
SOUTH AUSTRALIA · UAP

– He was disinterested, at any rate, and should, therefore, be in a position to express a sound opinion.

Senator BROWN:

– Then the honorable senator admits that I, too, am qualified to express an opinion on this matter, because I pay no federal land tax either. The Labour party believes in the land tax. After all, the area of land is limited, mid, because of that, those who occupy’ it should pay for the privilege. It is only because prices are low at the present time that we have this agitation against the land tax. The owners of city property are also squealing against the tax: but is it not right that they should pay? Those who own land in the main shopping centres of our big cities, pOssesS property of great value; but its value has been created by the community, and rests on the fact that hundreds of thousands of people pass backwards and forwards in front, of it every day. Senator Guthrie has not shown any reason why the owners of such land should not pay some contribution to the community for the value which the community has bestowed on their property. The owners of rural lands have, perhaps, more reason for a grouch, or, at any rate, their objection is more understandable. We know that they are suffering, and we do not blame them for fighting for the abolition of the tax. We, on this side of the House, know that many primary producers are suffering hardship at the present time, and we believe that governments, State and Commonwealth, should give what relief is called for. But as a party, we cannot agree to the abrogation of the principle of land taxation, because we believe it to be fair and just.

Senator BRENNAN:
Victoria

– One remark made try the honorable senator who has just resumed his seat calls for some comment. He stated that those engaged in the pastoral industry had never organized themselves properly. I have always thought that the pastoral industry stood out above all others as one that had pursued a self-reliant course. lt has never asked for assistance; it is not now asking for assistance in this matter. It is a totally different thing to ask for assistance from the Government, and to ask for a remission of taxation which any section of the community may consider unfair. Whenever a tax is imposed, the onus is on the. government which imposes it to show that it is fair in its incidence, because no section of the community should be taxed more than is necessary to carry on the just services of a country.

Senator Brown also said that he a.nd his party are believers in land taxation. There is a large, and by no means negligible, body of opinion throughout the world which, not only holds that land taxation is just, but also that it should be the only form of taxation; but the honorable senator will not find anywhere in the world any section of people which has a high land tax in conjunction with high customs taxes. In every part of the world, except among the Labour party of Australia, it will be found that the land-taxers are also freetraders. The two things go together; never will they be found as the Labour party would have them, for it supports high customs duties, and also believes in heavy taxation for taxation’s sake.

Senator Rae:

– That is not so.

Senator BRENNAN:

– The Labour party believes in heavy taxation upon certain classes merely because of the hostility it has towards them. Another fallacy on the part of honorable senators opposite is the comparison that they make between the relief that is given to old-age pensioners and that which is sought for those engaged in primary industries. There is no proper comparison between the two sections. There is no person in this chamber, or elsewhere, who does not believe that all that can possibly be done for the old-age pensioners should be done for them, but it is quite a different thing for one section in the community to say “ you should not take this taxation from me. It is my money primarily and originally “, and for another to say “You should give me more money which is raised from other persons “. I am not now entering into the question of how the old-age pensioners have been treated, hut am merely calling attention to the fact that it is wrong to compare the treatment meted out to these two classes of people. In point of fact, no government has taken away any money from the old-age pensioners, or has given any money to the land-owners; for to remit taxation is not to give money.

Senator Collings:

– Has that not been done by reducing railway freights on fodder for starving stock?

Senator BRENNAN:

– 1 do not know whether honorable senators opposite would prefer that the stock should starve rather than the railway freights should be reduced. They must adopt either of the two positions and indicate which they object to. The pastoralists cannot build railways to convey their starving stock to agistment areas. They carry on an industry which is of great benefit to the community as a whole, and the Government, in the interest of that community, rightly helps them over periods of crisis when these arise, just as it does something which is not the strict function; of government when it helps the many unfortunates who are out of work to tide over the troubles with which they are faced.

My objection to this tax is that which was expressed by Senator Kingsmill in his short speech. In its origin the tax, as the first Chief Justice of the High Court described another matter, was a fraud upon the Constitution. It was instituted under a power which was never intended to be used in this way. The Government is given a power of taxation; it is of the very essence of government that it should have that power.

Senator Rae:

– An unlimited power?

Senator BRENNAN:

– Yes, unlimited, but not to be used beyond the limits of what are necessary for proper government. But there was reserved to the States the right to .deal with the settlement of land, and, although the exclusive power of taxation was not expressly reserved to the States, still the understanding was that taxation should not be used for an ulterior purpose. “When the federal land tax was imposed it was used for an ulterior purpose, not to raise revenue genuinely required, not in pursuance of what, in the United States of America, is termed the power to lay and collect taxes, but avowedly for the purpose of bursting up large estates. However desirable that might be, and I shall not here enter into a discussion of that subject, that is not the purpose for which taxation was designed. A good deal earlier than the time when the tax was imposed, the High Court disallowed the harvester excise duties, by which the Government sought to regulate the conditions under which harvesters should be made in the country, although that was done under the guise of excise duty, and the Commonwealth Government had power over excise duties. I object then, in the first place, to the way in which this principle of taxation was originally introduced.

Of course, things have happened since which, had there been no such tax, might have made it necessary for the Commonwealth Government to raise money by land taxation. Still, it is an unfortunate habit of governments, when taxation is once collected and the revenue from it enjoyed, not to relinquish it even under strong pressure. The tendency is always to retain revenues and to find means of spending them.

As a member of this Parliament I do not desire to say anything derogatory of it. But this chamber is especially charged with the preservation of the rights of States, and I venture to assert that it is the digression of the Commonwealth into fields of taxation, the multiplication of its activities in arenas which have been competently attended to by the States, the ever increasing expenses of government, which have been the principal causes of the disaffection that exists among the States, and has brought the Commonwealth into a serious position.

Senator Collings, or one of his colleagues, referred to the number of men who are on the breadline. Nobody doubts that there is great distress among what are termed the working classes, but any one who would deny that there is great distress among those who have land interests would be closing his eyes to facts that are patent to all. The remission of land taxation does not merely confer benefits on those directly interested, but, by relieving the burdens of those engaged in primary production, it does something to secure the general welfare of the people. It has been admitted on many occasions in this chamber recently that the country owes most to the primary producers. If the depression has done no other good, it has at least impressed that fact on the minds of the people. One of the first ways by which the restoration of prosperity can be brought about is to do what we can to make the primary producing industries profitable. The remission of land taxation is only a little contribution towards it, but anything that will contribute towards that end has my support.

Senator BARNES:
Victoria

.- I think that Senator Guthrie should be congratulated upon having submitted this motion, though for a different reason from that upon which honorable senators opposite have congratulated him. The people of Australia should be awakened occasionally to a realization whence the taxation of the country is derived. Senator Guthrie represents an articulate portion of the population of Australia, and has open to him avenues of publicity that are not available to many in this Parliament.

The federal land tax originally had two objects, the first of which was to burst up large estates, a purpose that it has served admirably. The other was to make some people who previously were escaping their obligations, to contribute a fair share to the taxation of the country. One is amazed that there should be an outcry from what may be considered to be the most prosperous section of the land-owning classes, having regard to the size and value of their holdings. Federal land tax is not applicable to any person who owns land of an unimproved value of less than £5,000, to which may be added £3,000 for improvements. So that anybody who has to pay federal land tax owns land to the value of at least £S,000. Last year it was thought that tens of thousands of small land-owners would obtain an advantage from the remissions of taxation that were then effected, but to their great disappointment, that has not been so. The relief that was then given was enjoyed only by large land-owners with holdings valued at not less than £8,000. It is just as well that the public should know the facts. A person who has a holding worth £75,000 contributes only £1,875 in land tax. Just imagine such a man grumbling about having to pay that amount for all the conveniences and comforts that are supplied to him.

Senator Guthrie:

– He may be so heavily mortgaged that he owns scarcely a yard of that land.

Senator BARNES:

– Quite a number of these people are squealing because they are being caught in the same way that they exploited the community previously. If the people of Australia take the trouble to read this debate they will be startled by the relevations that have been made in it. I have here the Commonwealth Year-Booh for 1932, which shows that the proportion of federal land tax receipts since 1926-27 has been as follows : -

While the percentage of taxation raised from customs duty was -

The amount collected from customs revenue is spread over, not only the landowners, but the whole of the people of Australia, including those who live in the hovels to which so much publicity has been given lately in the Victorian press. The collections from excise represented 19.9 per cent., 20.5 per cent., 20.5 per cent., 20 per cent., and 20 per cent., respectively, while, in the case of the income tax, the figures were IS. 9, 18, 17.5, 19.1, and 27 per cent. Some of the persons who pay those taxes are squealing, but none to anything like the extent’ of those who own £75,000 worth of land, and pay a tax that represents only 4.4 per cent, of the total amount, collected in Australia.

Senator Brennan ‘regards as peculiar the fact that those who occupy seats on this side of the chamber support both the land tax and customs duties. He made the remarkable statement that usually the advocate of the land tax does not favour the imposition of customs duties, but prefers the whole of the taxation to be drawn from the land. From what source, then, does the freetrader consider that taxation should be drawn?

Senator Brennan:

– The land.

Senator BARNES:

– Senators Brennan and Guthrie, and others who have spoken in support of relief being given from this taxation, admit that they are freetraders; therefore, they would have the whole of the taxation drawn from the lands of this country.

Senator Brennan:

– I have not admitted anything of the sort.

Senator BARNES:

– -In 1918, a nonLabour Government’ increased the land tax by 20 per cent. The higher rate operated for two years, when it was withdrawn. Then, in 1927-2S, there was a further remission of 10 per cent., the new rate operating until last year, when the present Government granted remissions involving £250,000. That action was made possible by reducing the payments to old-age pensioners and public servants. The Leader of the Senate (Senator Pearce) announced this afternoon that the Government has under consideration a proposal to make a further remission at the earliest possible moment. We, on this side, may rest assured that those whom we represent will receive very little consideration from the compilers of the budget, and that only those who are best able to bear the burden will have their taxation remitted.

Senator RAE:
New South Wales

– I have known of cases in which persons who had appealed against sentences imposed upon them, had the unpleasant experience of having those sentences increased instead of reduced. I trust that this debate will prove sufficiently enlightening to those who read it, to induce them to favour an increase rather than the abolition of the land tax. I certainly have no regard or respect for the big land-owning class of our community. For a number of years, I came into contact with that class, while I was an organizer for an important but a badly-paid and badly-treated section of the people. There are, of course, honorable exceptions; but, generally speaking, any person who attempted to benefit his fellow workers was treated by the largo land-owners as worse than a leper, and as being in the same category as the convicts of old. As every one knows, this tax does not affect the small landowners. The large owners have received innumerable benefits from different governments. The ancestors of the majority of them stole the land in the first place, and, subsequently, having sole legislative power, indemnified themselves, and made it legal for them to hold what they had taken. The early history of New South Wales shows that the term “ squatter “ originated in the practice of men settling on land without any title to it, and subsequently, by means of legislative councils composed entirely of themselves and their friends, who were not elected by the people, obtaining a title to it.

Senator E B Johnston:

– They earned it by their pioneering efforts.

Senator RAE:

– If that is to be taken literally, it means that any one has a right to hold what he can seize. That is the creed and the morality of the bandit and the pirate.

I wish to refer briefly to the question of constitutionality raised by Senator Kingsmill. Had this tax been imposed unconstitutionally in the first place, there were many men who possessed the necessary means to test it, and it would have been wiped off the statute-book.

Senator Sir Walter Kingsmill:

– Its constitutionality, like the Scotchman’s change, is only just right.

Senator RAE:

Senator Brennan has admitted that the power of the Commonwealth to impose taxation is unlimited. That being so, why this talk of unconstitutionality? The honorable senator then proceeded to argue that it is unconstitutional in spirit; that, although the Commonwealth Parliament was legally entitled to levy it, it should not have thought of doing so because it was an invasion of the taxation fields of the States. The honorable senator did not show much respect or regard for the rights of the States in connexion with the legislative and administrative acts that took place during the controversy between Mr. Lang, on behalf of the State of New South Wales, and the Commonwealth; he then considered it legitimate to take any action that would overwhelm and defeat an opponent.

Senator Guthrie cut the ground from under his feet by strongly condemning the laud tax because it adversely affects primary producers, and then admitting that three-fifths of it is paid by city landowners who, he objected, cannot subdivide the land that they hold. Surely those people can be left to fight their own battles. The fact is, that the tax does not affect the primary producers to the extent that it does the town dwellers, and. consequently, the agitation against it is falsely based. It is somewhat singular that I should have been a member of the Senate when this tax was first imposed, and that the present Leader of the Senate took part in its impositionConsidering the reasons advanced by the honorable senator in support of this tax, I should like to know what has happened to make him change his opinion. He complained that this was a tax on capital, and diminished the value of land. Well, so far as taxation diminishes the speculative value of laud, it is to the good of the community. Land is frequently held out of use in anticipation of a rise in values, and a tax on land to some extent makes it unprofitable to hold land for purely speculative purposes. I have owned a small block on the Blue Mountains for about twenty years. I intended originally to build a week-end residence upon it, but I have not been able to do so. If I and others had not bought small blocks of that kind, and held them out of use, others who needed the land for residential purposes would have been able to purchase land at lower prices than they have to pay to-day. Everybody who holds land out of use is, in reality, robbing his fellow-man by trading on his necessities.

Senator Kingsmill sought to place honorable senators on this side in an unfair light, when he contended that, because a man becomes wealthy, he is not necessarily vile. None of us on this side of the chamber has ever argued to the contrary. We were referring, not to the character of individuals, but to the effect of a system. If we consider that a system is operating to the disadvantage of the community, we are acting logically in pointing out its evils.

Senator Sir Walter Kingsmill:

– Honorable senators opposite are attacking a class.

Senator RAE:

– I maintain that our attack is upon conditions which create a class.

Senator McLachlan:

– The honorable senator ought to defend the land tax.

Senator RAE:

– On the whole, it has had the desired effect; but no other tax operates in quite the same way. Since the area of useful land is necessarily limited, it should not be occupied under freehold conditions; the right to use it should be regarded as belonging to the people. In so far as the land tax tends to destroy monopolies, it is of benefit to the community as a whole. A person owning an estate that has an unimproved valuation of £5,000, in reality receives an exemption of about £8,000 or more, because the improvements sometimes are three or four times as valuable as the land alone, and they enable the owner to earn a considerable income. There is no justification for squealing about the hardships imposed on land-owners. When they are in real difficulties, the hardship provisions, to which the Leader of the Senate (Senator Pearce) has referred, operate to their advantage. It is not more objectionable for a land-owner who is in financial difficulties to have to seek relief under the hardship provisions, than for an individual who is unemployed to have to ask for the dole. All applications for relief are humiliating to some extent; but it is infinitely worse to have to struggle for abare existence, and accept charitable relief, than to obtain temporary relief because of financial difficulties.

The PRESIDENT:

– The honorable senator has exhausted his time.

Senator HOARE:
South Australia

– While listening to Senator Guthrie’s appeal for a reduction of the land tax, I was reminded of some remarks made many years ago by John Howard Angas, one of the most wealthy landowners in South Australia. On one occasion, somebody said to him, “ You are a very wealthy man, are you not?” He replied, “ Yes, all the land that I can see about here belongs to me, and all that I cannot see belongs to my son John “. The land tax was introduced for the purpose of breaking up large estates such as that owned by Mr. Angas, and, in my opinion, a measure of success has been achieved in that direction. The tax has resulted in the subdivision of huge estates, and, to a great extent, it has prevented many estates from being made larger. Senator Brennan remarked that the tax might well be abolished, or at least reduced, because countries with high tariffs usually do not impose a heavy land tax. If the imperial economic conferences that are being held overseas resulted in uniform wages and working conditions throughout the world, I should say, “ Have one tax, and let that be a land tax”. Senator Guthrie observed that the influential newspapers throughout Australia supported him in his appeal.

Senator Guthrie:

– I think that I said that all the newspapers were in favour of the abolition of the tax.

Senator HOARE:

– The newspapers are not fighting for the small landowners, but for the wealthy owners of city properties, and Senator Guthrie should know that. He must realize that the land tax does not injure the wealthy folk in the cities. It is only necessary to walk down Bourke-street, Melbourne, where old buildings are being demolished and huge new edifices are being erected in their place, to obtain support of my contention. Similar reconstructions have been in progress for some years.

Senator Guthrie:

– I have tried to make an appeal for the development of i he merino studs of Australia, which are of great importance to the nation.

Senator HOARE:

– The honorable senator must recognize that most of the wealth is centred in the capital cities.

Senator Guthrie:

– But the cities produce no wealth.

Senator HOARE:

– No doubt, the honorable senator is anxious to help the primary producer whose land has an unimproved valuation of less than £5,000; but his proposal would assist the wealthy city property owner to a much greater extent than the small man on the land who is down ‘and out. I am not anxious to help the man who can buy out farmer after farmer, and thus increase the area of his landed estate.

Senator Brennan stated that the Government had not given any money to the land-owners; but he has a peculiar way of reasoning, for surely a reduction of taxation is equivalent to a donation of money. If the Government provided free transport of stock by rail, would that not be as good as financial assistance to the producers? That assistance has been granted on various occasions, and I hope that it will be done again, if the necessity for it should arise.

Senator Rae:

– If the wealthy farmers properly looked after their holdings, that assistance would not be necessary.

Senator HOARE:

– Of course not; but land-owners, like all others in the community, are apt to live up to their incomes. They probably imagined some years ago that good times would last for ever. Before the Government made any reduction of taxation, it should have thought of those who are endeavouring to provide homes for themselves. I refer to the workers on the basic wage, who have paid deposits on their homes, but whose wages have been reduced by from 22 per cent, to 30 per cent., and many of whom have been thrown out of work. Not a single step has been taken by the Government to assist these men in retaining their homes. Yet the Government has gone out of its way to reduce the taxation of a section that is well able to bear it. In the event of there being a surplus at the end of the year, the Government should restore the invalid and old-age pensions to what they were before the reduction took place. Next, it should restore to the wage-earners in the Public Service the salaries they received before the financial emergency legislation was passed. If these things were done, no one would then object to a reduction of taxation. In restoring wages and salaries the Government should begin with the men on the lower rungs of the ladder - those, whom the blizzard of depression has injured most. I do not blame the Government for giving effect to the policy which it wa3 elected to carry out. Its mission is to legislate in the interests of the wealthy section of the community, and, therefore, I do not expect it to help the wage-earners, the men on the bottom rungs of the ladder, or the small landowners. Had the Government intended to do anything for those sections of the community, it would have given some evidence of its intention before this. The big land-owners, the insurance companies, and the newspaper proprietors, are endeavouring to force the Government to reduce the taxation which they have to pay. Senator Guthrie should not listen to them, because they are not out to assist the man on the land.

I could continue along these lines, but since another honorable senator wishes to speak before the time for this debate expires, I willingly give way to him.

Senator CARROLL:
Western Australia

– I thank Senator Hoare for his courtesy in making way for me. As briefly as possible, I shall support the view put forward by Senator Kingsmill, and supported by Senator Brennan. I urge the Government to vacate the whole field of land taxation as speedily as possible, and leave it to the States. The

Commonwealth Government is in the fortunate position of having a surplus of revenue over expenditure, whereas every State Government is faced with a deficit. Last week we dealt with the States Grants Commission Bill, the object of which was to appoint a royal commission to inquire into the financial assistance due to the States by the Commonwealth. Were the Commonwealth to vacate those fields of taxation which’ rightly belong to the States, there would be no occasion for such grants, and, consequently, no necessity to incur the expense connected with the setting up of a commission. However economically that body may work, it will cost the country a considerable amount. I am strongly of the opinion that the framers of the Constitution never intended that the Commonwealth should enter the field of land taxation, although a strict interpretation of the Constitution permits it to do so. The States are charged with the development of their territory; aud they should enjoy what revenue is obtainable from land taxation. I urge the Government to vacate this field, and so bring to an end one of the chief causes of friction between the Commonwealth and the States.

Senator GUTHRIE:
Victoria

.- I am sorry that the Leader of the Senate (Senator Pearce), for whom I have the greatest admiration and respect, should have insinuated that I exaggerated my case, for I was careful to give figures which had been checked. I quoted from official documents, including the latest report of the Commissioner of Taxation, from court findings, and from the findings of a committee of inquiry appointed hy this Government. I pointed out that, whereas in 1910-11 the average tax was 3½d. in the fi, working up to a maximum of 8d. in the £1, or 9d. in the case of absentee owners, the average rate was 5d. in the £1 in 1914.

A deputation which waited on the Prime Minister last year was wrongly described as a deputation from the Taxpayers Association. It was probably the largest and most representative deputation which has ever waited on’ a Prime Minister; about S9 organizations, including all branches of primary production, as well as chambers of commerce, and chambers of manufactures, were repre sented on it. Those sections of the community were unanimous that the federal land tax was an annual class tax upon capital, uneconomic, and’, therefore harmful to Australia. It is a first charge on property, yet many persons liable to pay it are not able to do so.

Senator Barnes said that the maximum tax of 8d. in the £1 was paid only by people who owned property valued at £75,000. There would be no less objection to that .tax if the people liable to pay it really owned the taxable property; but the stupidity of the tax is revealed when we reflect that, in many instances, the land so liable is heavily mortgaged. No other country levies land taxation in that way; even Soviet Russia would nol treat its land-owners as Australia does.

Opposition senators should know that this tax is one of the principal causes of unemployment in country districts. Landowners have been compelled to reduce their staffs in order to meet this form of taxation. They have no money to destroy noxious animals and weeds, or to maintain their buildings and other improvements in good condition, with the result that Australia’s best assets arc deteriorating. Fencing, dams, wells, windmills, buildings and other improvements are being neglected ; noxious weeds are spreading; the rabbit plague is not checked. Land-owners have no money to employ men to fight these pests, to maintain their properties in good order, or to buy stud stock, by which means alone they can maintain the high standard for which Australian flocks are renowned.

Reference has been made to the need for closer settlement. I am not a large land-owner, a’s some honorable senators seem to think. Every acre of my property, except the track to the cottage which is called the homestead, has been cleared, ploughed, manured and sown on the share system, which gives men without capital an opportunity to make a living. Unfortunately, because of the fall in the values of most primary products, many share farmers have failed in recent years. Senator Barnes, for whom I have a great respect, said that the federal land tax represented only 5 per cent, or 6 per cent, of the total taxation levied in Australia. He . may have been right; but he overlooked the fact that that tax is superimposed upon all the other taxes. He evidently does not realize that the primary producers pay, proportionately, a Digger share of customs taxation than any other section of the community.

Senator Collings:

– No.

Senator GUTHRIE:

– I ask the honorable senator to reflect upon the price the primary producers, whether large or small, pay for the wire, galvanized iron, and other materials which they require for the development and improvement of their holdings. The majority of these men have no equity in their land. I appeal to the Government in the interests of the primary producers as a whole, rather than on behalf of individuals. At the last election I polled over 500,000 votes, so it will be seen that I do not represent any one section of electors, as some honorable senators appear to think. That on three occasions my return to Parliament has been largely due to the votes of the workers is a source of pride to me. I do not claim to represent the land-owners more than other sections of the community.

Senator Collings:

– But the honorable senator does not move the adjournment of the Senate on behalf of the workers. We on this side will use the forms of the Senate to present their case.

Senator GUTHRIE:

– The workers in the cities are better off than the men on the land.

Senator Collings:

– What about the old-age pensioners?

Senator GUTHRIE:

– They are better off than before, because qf the fall in the cost of living. I do not say that the aged and infirm should not be granted a pension, hut as one who for 40 years has been connected with the wool industry, I say that Australia’s stud merino flocks - in not one of which I am financially interested, either directly or indirectly - are the backbone of this country. If we tax the producers of stud sheep to such an extent that we cause their flocks to be dispersed, we shall strike a serious blow at Australia’s greatest industry. I am not here to plead on behalf of the big pastoralists. They have not placed me in Parliament, and, moreover, they are generally able to look after themselves. I am putting forward a plea on behalf of the small sheep-farmers, who will be unable to obtain good sires for the perpetuation of flocks of a high standard if we tax out of existence the men who breed the best stud sheep. My plea is in the interest of the nation, not of individuals. I am glad that the Prime Minister and his colleagues in the Ministry have promised to abolish the federal land tax at the first opportunity.

Senator MacDonald:

– If it is abolished it will be re-imposed later.

Senator GUTHRIE:

– I doubt that. And even if another Government were to re-impose it, I think that the tax would be confined to city lands and to lands of which proper use was not being made. If legislation to that effect were introduced, so that a differentiation were made between land properly utilized and other land, I might feel disposed to support it. But I cannot support the imposition of a tax which places a heavy burden upon men who are doing their best for Australia.

This matter having been brought prominently under the notice of the Government, I feel that no good purpose would be served by pressing it further, and therefore I ask leave to withdraw my motion.

Motion - by leave - withdrawn.

Sitting suspended from 6.15 to 8 p.m.

page 2190

QUESTION

NATIONAL INSURANCE

Senator DUNN:

asked the Leader of the Government in the Senate, upon notice -

  1. Is the Government prepared to proceed immediately with a scheme of national insurance against unemployment, such scheme to be controlled by a council composed of representatives of employers, employees and tlie Government?
  2. If so, will the Government provide for the creation of a special fund for the purpose, to be maintained out of Consolidated Revenue; and will it lay down that all work performed under the scheme shall be subject to full award rates and hours of labour!

Senator Sir GEORGE PEARCE.The answers to the honorable senator’s questions are as follow : - 1 and 2. The honorable senator’s question involves a matter of policy. It is the practice not to deal with such matters in answer to questions.

page 2191

QUESTION

WAR SERVICE HOMES

Evictions

Senator DUNN:

asked the Minister representing the Minister administering war service homes, upon notice -

  1. Is it a fact, as reported in the leading Tasmanian newspapers, that unemployed Tasmanian returned soldiers are being evicted from war service homes?
  2. If so, will the Minister administering war service homes have this practice stopped, in view of the declared policy of the Government that returned soldiers will not be evicted owing to unemployment!
Senator McLACHLAN:
UAP

– The Minister administering war service homes has supplied the following answers: - 1 and 2. The policy of the Government is to retain purchasers in their homes where they have a reasonable prospect of meeting the obligations which they have entered into. There are several cases, however, where the purchasers are so hopelessly involved that it is impossible for them to complete the purchase of their homes. In their own interests these purchasers, of whom there are several in Tasmania, have been invited to vacate the property and obtain cheaper accommodation elsewhere. Where this proposal is not accepted, the War Service Homes Commission is reluctantly compelled to institute final action.

So far as the Tasmanian case reported in the press is concerned, the arrears total £176 13s.1d., representing instalments due overa period of three years and three months. In addition, rates and charges to the extent of £212 16s. 7d. are outstanding, making the total debt £388 9s. 8d. The purchaser has a total income of £1 17s. per week.

page 2191

QUESTION

ANGLO-JAPANESE ALLIANCE

Senator RAE:

asked the Minister representing the Prime Minister, upon notice -

Has his attention been called to a cable published in the Hong Kong Telegraph on the 5th May of this year, to the effect that posters conspicuously printed in black, white and red denouncing Britain for its allegedly perfidious treatment of its old’ ally Japan, have recently appeared pasted on wooden hoardings, fences and telegraph poles throughout the city of Tokyo; the cable further stated that bold characters in white on a black background credit a hitherto unknown organization, styling itself the “ Asiatic Anti-British League “, with the authorship, and after charging Britain with ingratitude towards Japan despite Japan’s fidelity to the AngloJapanese Alliance during the Great War, these posters accuse Britain of having compelled Japan to accept an inadequate naval ratio at the Washington Conference, and of fostering anti-Japanese sentiment at Geneva; the cable concluding by saying that the posters demand the emancipation of India fromBritish rule, and call on the 400,000,000 people of China and the 300,000,000 people of India to drive British influence west of Suez?

Senator Sir GEORGE PEARCE.The press cablegram referred to by the honorable senator had not previously come to the notice of the Government.

page 2191

PAPER

The following paper was presented: -

Customs Act and Commerce (Trade Descriptions) Act - Regulations amended - Statutory Rules 1933, No. 66.

page 2191

CUSTOMS TARIFF 1933

Second Reading

Senator McLACHLAN:
Vice-President of the Executive Council · South Australia · UAP

– I move -

That the bill be now read a second time.

I wish to express my own personal regret, which, I am sure, is shared by every honorable senator, that the Minister who usually represents the Minister for Trade and Customs in this chamber is not in charge of this measure. Because of his wide commercial experience, I feel that he could have piloted this measure - which, after all, is one of the most contentious that we have been called upon to debate - through the Senate much more wisely and expeditiously than I can hope to do. But as Senator Greene has other duties to perform, I have been given the task of piloting this measure through the Senate, and I can only pray that there will -

  1. . be no moanings at the bar,

When I put out to sea.

So far, we have been in shallows, but what our experience will be when we reach stormy waters we have yet to learn. I claim the indulgence of honorable senators for my lack of tariff experience, but I shall endeavour to compensate for that when we reach the discussion of the schedule by giving honorable senators the fullest information on every item.

The schedule to the bill which is now before the Senate covers the whole Customs Tariff, and is the first complete tariff schedule introduced into Parliament since 1920. The schedule introduced in 1920 became the Customs Tariff of 1921. That has been amended from time to time, and with these amendments, and various tariff resolutions introduced into the other chamber, the tariff has become so involved that it is difficult for interested parties to ascertain what rate of duty is payable on a particular article.

In order to refresh the minds of honorable senators, I propose briefly to review the tariff measures introduced since the tariff amendment of 1928. In August, 1929, a revenue tariff proposal was introduced by the Bruce-Page Government; but, owing to the defeat of that Government, and the subsequent election, it became necessary to validate collections under that proposal. Upon the election of the Scullin Government, the tariff proposal of August, 1929, became merged with the first instalment of the Scullin tariff introduced in November, 1929. Further instalments followed during that Government’s two years of office, until there were nine separate instalments. These were consolidated, and passed by the House of Representatives. and the Senate was engaged in the task of amending the tariff when the last Administration was defeated. This necessitated the validation of the collection of duties under these proposals; but, apart from that, they were not passed into law. Upon election to office the present Government introduced, in February, 1932, a tariff schedule which gave effect to its pre-election promise. Summarized, its tariff policy was -

  1. Efficient industry as an essential qualification for tariff shelter.
  2. A competitive, as distinct from a prohibitive, tariff level.
  3. Tariff-making through the Tariff Board, and not by arbitrary ministerial action.

The last undertaking prevented the Government from making any arbitrary amendment of the high tariff rates of the previous Administration, without inquiry and recommendation by the Tariff Board. The tariff proposal of February, 1.932, was followed by a short amending schedule relating to cotton yarns, which was introduced in March of that year. In May, 1932, those proposals were divided into two for the purpose of facilitating the debate. The items which had been amended by the present Government were placed in one proposal, and i Senator McLachlan. the debate ‘ was limited to those items. Later in the month, a revenue schedule was introduced. In September, 1932, a proposal incorporating a number of recommendations made by the Tariff Board was tabled. Next came the complete tariff proposal of October, 1932, which embodied all the adjustments to the tariff necessitated by the Ottawa agreement. That new tariff, together with the amendments made during the debate in the House of Representatives is embodied in the schedule to the bill now before the Senate.

A comparison of the tariff amendments of the Bruce-Page Government with those of the present Government discloses some interesting facts. In respect of protective items, the Bruce-Page Government increased the British preferential tariff on 113 items, while the present Government has increased it on 25 items. The Bruce-Page Government reduced the British preferential tariff on five protective items, while the present Government has reduced it on 153 such items. The total reductions of duty made by the present Government under both the British preferential and general tariffs are 196. On the other hand, it has increased the rates under 473 items, and 440 of those increases in the general tariff were necessitated by the application of the formula margin of British preference agreed to under the Ottawa agreement. Of those 440 increases, 420 were at the rate of 10 per cent, or less. Apart from the increased rates arising out of the Ottawa agreement, the Government has increased the duties on only 33 items, mid those increases would have been made by it in the normal course of events. Of these, 24 relate to protected items, and nine to revenue-items. The schedule which we are about to discuss will remedy the present unsatisfactory position by placing on the statute-book a complete instrument, which will supersede the tariff of 1921-30, and the various resolutions which have been in operation foi’ some time past.

During the last two or three years, we have witnessed a desperate effort on the part of nations, governments, banks, industries and individuals, to keep their balance, and to maintain their solvency amid the economic earthquake. Each unit has, perforce, had to take such steps as seemed necessary to help it to stand upright regardless of the effect on all other units. A process of universal liquidation has followed with disastrous results. Each debtor nation, in order merely to meet its obligations, so far as it could, and to save its currency from collapse, has had to limit its imports, knowing full well that those imports were its neighbours’ exports. Its neighbours have followed suit. Since one cannot both have one’s cake and eat it, the exports of great creditor nations, like the United States of America and France, have necessarily been cut to pieces;no one could pay for them. But it may perhaps he said that the foundations are now being laid upon which, ultimately, some now superstructure may be erected by the forcible and even temporarily disastrous process of levelling the too great inequalities between debtor and creditor nations. The surpluses of the creditor nations are being destroyed; the debtors are, by default, by accommodation with their creditors, or by a reduction of imports, striving tobridge the gap in their debit balances. It has been argued that a fundamental cause of the crisis has been this too great inequality between nations, which arose from the war, and has been greatly accentuated by post-war policy. However painful, therefore, the process may be, it appears to be inevitable. There is no way of escape by lending more money to nations already too deeply in debt - like individuals, they must live within their means - but in the urgent necessity for finding this new equilibrium, all nations have been forced to accept a lower standard. There is no specific remedy for the coufusion into which the world has been thrown, yet the direction in which relief must be sought is clearly apparent. It is by a movement towards the liberation of private enterprise, industry and commerce. That, indeed, is not the direction in which the world has been travelling sincethe war, nor in which democracies have recently looked for a solution. Democracies like short cuts and simple remedies. It is comforting to them tobelieve that the disasters that have overtaken the world are the inevitable outcome of private enterprise, rather than of war and its aftermath, and that the path to recovery is through a wider and wider extension of governmental and other bureaucratic activities.

We come then to such considerations as the diminution of tariffs, the abolition of exchange control, the raising of moratoriums, and so forth. There is no doubt that in those directions the governments can do much; but it has tobe home in mind that these impediments, in so far as they have been interposed recently, are the direct result of the disequilibrium produced by the fall of prices, and the consequent extra burden of indebtedness. The true escape lies in an increase of prices, in a solution of the short-term debt problem, and in the adjustment, where necessary, of the long term indebtedness. When nations see their way clear to make both ends meet in regard to their external obligations, and to release exchange control without the collapse of the currency, most of these barriers will disappear. The dilemma is the usual vicious circle. Exchange control cannot he withdrawn before the return of confidence, and confidence waits on the withdrawal of exchange control.

Senator Rae:

– I rise to a point of order. Is the honorable senator in order in reading his speech ?

The PRESIDENT (Senator the Hon. P. J. Lynch). - It has been the practice in the Senate for many years in connexion with important speeches of this description, budget statements and the like, not to adhere strictly to the standing order relating to the reading of speeches. The Minister in charge of business of the kind mentioned has always been permitted by usage and custom to consult extensive notes. I do not propose to depart from that practice on this occasion.

Senator McLACHLAN:

– I should be much happier and, indeed, have greater freedom if it were not necessary for me to consult my notes to the extent that I am consulting them;but, owing to the importance and the difficulties of the subject of tariff -making, I feel that I should give accurate expression to my views. I have, therefore, personally committed them to very extensive notes.

The disparity between the prices of manufactured goods and raw materials is symptomatic of all depressions; but it has been greatly accentuated in this depression. It is generally conceded by students of economics that one of the principal causes of the continued deadlock in the world depression is the discrepancies between costs and selling prices. Opinions differ as to the best means of breaking this deadlock. Two alternative lines of policy, in particular, arc being widely discussed.

The first alternative is to seek an adjustment of the low prices now prevailing for raw materials. Adherents to this theory contend that the prices of the products of secondary industry are sustained at such high levels that the producers of primary products cannot purchase even the essential machinery for continued production. Until the cost of production in secondary industries is scaled down io its pre-crises relationship with the price of raw materials, there can be no real improvement. It is further claimed that capital has resisted liquidation, that is, the cutting out of the dead wood of inflated costs and high interest charges, and that labour has successfully resisted reductions of wages commensurate with the fall in prices of raw materials. The proponents of this theory contend that, even though wages in manufacturing industries be lowered, the wage-earning class as a whole would benefit by the lowered cost of living and by the increased employment which would result from the greater ability of primary producers to buy manufactured goods.

The advocates of the second alternative urge that measures should be adopted to raise prices levels. It is urged that, if an equilibrium between the prices of raw materials and of manufactured goods is sought by a scaling down of production costs, the reduction would need to be so great as to be practically inconceivable. An elastic capital structure such as the proponents of cost reduction wished for, and often assume, would no doubt be desirable; but, unfortunately, it does not exist, and so the brunt of the burden of reduction would have to be borne by labour cost. Thus adherents to the second alternative urge that the price deadlock should be broken by a levelling upwards of the prices of primary products rather than by a levelling downwards of the prices of manufactured goods. By this means the necessity for a painful adjustment of income would be minimized, and the burden of debt, public and private, which has been so greatly increased by the fall in prices, would again be lessened. The rise in the prices of primary products would increase the buying power of the classes affected, enable manufacturing industry to work at greater capacity, and thus reduce its unit costs and permit the general emergence of profits.

The conflict which exists between these alternative theories is reflected in the sharply-defined policies adopted by the governments of various countries.

At the moment there is little sign of any agreement upon a single heroic effort either to raise the average price level or to scale down costs. It is impossible to foresee either the duration of the period of re-adjustment or the particular combination of methods by which the readjustment will finally be attained. But the probability becomes clearer that there will be no single panacea. There is no easy way of escape from the confusion and complexities of the situation.

It is most remarkable that we should be considering a tariff schedule at the present stage, and, particularly, on the eve of the World Economic Conference, at which the tariff policy of each government will be submitted to the most searching scrutiny. It is to be hoped that at this conference the futility of adopting prohibitory tariffs and trade restrictions will be fully appreciated, and that future world policy will be in the direction of freeing the channels of trade from the obstructions designedly, but in good faith, placed upon them.

According to cabled reports, several countries, including the United Kingdom have agreed to a tariff truce until the end of the conference. The burden is on governments.

I propose now to quote at some length from the “ draft annotated agenda “ of the World Economic Conference which is to assemble on the 12th June, and which, I believe, will be one of the most momentous in the world’s history. This agenda has been prepared by “ the Preparatory Commission of Experts a committee of very distinguished men, and headed by one of the greatest financiers and economists of Europe.

Senator BARNES:

– Have copies of the agenda been circulated among honorable senators?

Senator McLACHLAN:

– No. I have been fortunate enough to secure an advance copy from the Prime Minister’s Department. Other copies should be available shortly, for this one has been in my possession about a week.

The first quotation reads as follows : -

Three years of world-wide dislocation have generated a vast network of restraints upon the normal conduct of business. In the field of international trade, prohibitions, _ quotas, clearing agreements, exchange restrictions - to mention only some of the most widely employed forms of regulation - throttle business enterprise and individual initiative. Defensively intended, and in many instances forced by unavoidable monetary and financial emergencies, these measures have developed into a state of virtual economic warfare. It is not only in the field of trade that this tension exists. In the difficult sphere of international monetary and currency relations, and in the world capital markets, free international cooperation has given place to complex and harassing regulations designed to safeguard national interests. If a full and durable recovery is to be effected, this prevailing conflict of national economies must be resolved.

The measures to be adopted to this end constitute the problem which the Governments must shortly face in London. In essence, the necessary programme is one of economic disarmament. In the movement towards economic reconciliation, the armistice was signed at Lausanne; the London Conference must draft the Treaty of Peace. Failure in this critical undertaking threatens a world-wide adoption of ideals of national self-sufficiency which cut unmistakably athwart the lines of economic development. Such a choice would shake the whole system of international finance to its foundations, standards of living would bc lowered, and the social system as wo know it could hardly survive. These developments, if they occur, will be the result, not of any inevitable natural law, but of the failure of human will and intelligence to devise the necessary guarantees of political and economic international order. The responsibility of governments is clear and inescapable.

On page 9 of the agenda reference is made to the general programme that the committee recommends the conference to follow. I refer honorable senators to paragraph 4 on that page. I am quoting these observations at length, because L believe that the subject with which we are dealing transcends in importance any other business that we could consider. The extract reads -

Finally, there must be greater freedom of international trade. It has already been pointed out that one of the most significant features of the present crisis is the fall which has taken place, not only in the value, but in the quantum of world trade. This fall has been partly caused, and has certainly been intensified, by the growing network of restrictions which have been imposed on trade during recent years. Every country seeks to defend its economy by imposing restrictions on imports, which in the end involve a contraction in its exports. All seek to sell, but not to buy. Such a policy must inevitably lead to an increasing paralysis of international trade. Governments should set themselves to reestablish the normal interchange of commodities.

In the first instance, every effort should be made to secure a general agreement for the progressive relaxation, and the complete abrogation at the earliest possible date, of tlie emergency measures - prohibitions, quotas, &c. - imposed as a result of the crisis. At the same time, it will be necessary for the Governments to reconsider recent economic tendencies in so far as these are reflected in excessive tariffs, and to arrive at understandings for the moderation and stabilizing of tariff policies in the future. Action in this direction has an intimate bearing upon the stabilization of currencies, as it is impossible to maintain an international monetary system except on the basis of an international econo-mie system. The great creditor nations have a special responsibility in this respect.

On page 26 of the agenda the committee states -

The “tariff policy which has been followed by many countries in the past has been greatly aggravated in recent years. This tendency has contributed largely to the disorganization of world conditions. In respect of tariff policy and treaty policy, as in the case of import restrictions, the conference must seek to modify, existing practices, and to secure the adoption of more liberal methods.

Positive action in this direction is assured of important support. Countries compelled to dispose of a large proportion of their products, whether agricultural or industrial, on the world markets are most deeply interested in checking the increase of tariff barriers, and in securing their reduction. An improvement in the world economic situation would be facilitated if the debtor countries were enabled to pay their debts by the export of goods and services, and if the creditor countries framed their economic policy in such a way as to maintain the capacity of debtor countries to pay by these means. These creditor countries can expect to collect interest and principal only if they so adjust their financial and commercial policies as to makepayment by the debtors possible.

Doubtless, there will bo reluctance on the part of some countries to lower existing customs barriers owing to the uncertainty of present industrial conditions, the difficulty of making foreign payments, and the possibility of such excessive importations as to imperil the existing internal order. Any lowering of tariffs must, doubtless, be effected in successive stages, and should, so far as possible, be simultaneous; no country can afford to adopt or maintain a really liberal tariff policy if other countries persist in the opposite policy. But a general lowering of the existing barriers to trade by all countries is unmistakably desirable if conditions of world prosperity are to be restored.

Tariff policy can obviously not be dealt with in isolation. An effective and lasting return to greater freedom of trade cannot be looked for unless it is accompanied by a general and durable improvement in financial and monetary conditions, any more than a permanent improvement of the financial and monetary situation can be looked for so long as international trade is not freed from its chief obstacles.

The object of the conference as far as tariff policy is concerned must therefore be to reach a general agreement for the reduction of tariffs, and to maintain a more moderate tariff policy in the future.

I commend these observations to the consideration of all honorable senators, because we must bear in mind the fact that the world economic conference might fail for a variety of reasons, as indicated by those who were responsible for the observations which I have just read. If, however, it should fail, we should not be without hope; because I am firmly convinced that the various self-governing units of the British Empire could come together and arrive at an understanding, as was done at Ottawa last year, the result of which would be to restore a certain amount of sanity to world affairs. I say this because there is no commodity needed by any portion of the British Empire which is not being produced by one of its units.

It is of no use to blink the fact that the world is passing through the greatest crisis recorded in its history. In Australia, we may flatter ourselves that we have surmounted our worst difficulties. I hope that we have. I believe that there is a measure of prosperity here, but we should not forget that Australia is in a fortunate position, and should take the larger view. We should ask ourselves how the position is likely to affect, not only civilization, but also the future of the British race. Are we to fall to the level of other nations who, to-day, by means of depreciated currencies, economic practices of which we do not approve, and the adoption of standards of living which we could never adopt, are gaining markets from us and may eventually place us on the “ outer “ from the economic view-point.

Senator Sir Walter Kingsmill:

– Would it’ not be better to have an understanding before the World Economic Conference?

Senator McLACHLAN:

– We have already approved an agreement, the one made at Ottawa, which, I suggest, may be regarded as a precedent for further proposals, which will need the ratification of this Parliament.

Senator Sir Walter Kingsmill:

– I am afraid that the Ottawa agreement has left many things in a condition of flux.

Senator McLACHLAN:

– Australia has already abolished practically all fiscal prohibitions and surcharges on ordinary duties.

The policy of this Government, as expressed at the last elections and endorsed by the people, may be briefly summarized as being “ Protection for efficient and economic industries on a competitive, as distinct from a prohibitive, level,” and “ The Government will be guided largely by the recommendations of the Tariff Board, and will not, generally speaking, engage in tariff-making by arbitrary ministerial action.”

It is necessary, in view of the Ottawa agreement, that the protective items of the tariff be reviewed. This obligation is being carried out with all expedition possible. It is claimed by certain political opponents that the progress made is too slow, but I would remind honorable senators that there is no short route in tariff revision. This is clearly proven by the action of the previous Government in arbitrarily increasing duties without full inquiry amongst all interested parties. This led to a most unsatisfactory tariff position, which this Government is endeavouring to rectify. It is the desire of the present’ Government to place the tariff upon a plane -whereby efficient Australian manufacturers will have adequate protection, without such protection being of a prohibitory nature.

The schedule now before the Senate embodies, as far as practicable, the undertakings given by Australia to the United Kingdom, at Ottawa. The process of reviewing the tariff is a slow one, and this is recognized by the British Government. It is hoped, however, that a further large instalment of the revision of the tariff will be completed by the end of this year, so that before the end of the life of this Parliament it is confidently expected that the terms of the Ottawa agreement, in so far as Australia’s obligations are concerned, will be completed in their entirety.

I am submitting to the Senate a proposal that the tariff be dealt with in groups, which will better inform honorable senators of the position of the various items than if the tariff were taken item by item, lt will readily enable them to see those items which are of manifest importance, and which they may desire to debate. This course is not suggested with the idea of limiting the debate on. any individual item, but for convenience in discussion. There will be seven groups as follows : -

Group 1 contains items under which the rates arc the same as those operating under the 1921.-30 tariff, that is to say, the tariff as it stood when the BrucePage Government was defeated. Items in this group are not affected either by the Ottawa agreement formula or by the Scullin Government’s Customs Tariff as presented to the Senate in 1931. For the most part, they relate to low-rated goods, and have not yet been considered by the Tariff Board in relation to the Ottawa Conference formula.

Group 2 deals with items which have been amended in accordance with the Ottawa agreement, but not otherwise amended. Items in this group are in the same category as those in group 1, except for the necessary alteration to give effect to the Ottawa agreement.

Group 3 relates to revenue items not included under any other heading. The items in this group are purely revenue items. Any alterations must be subject to budgetary considerations.

Group 4 contains items amended by the Scullin Government and supported by Tariff Board reports. As these items were dealt with in accordance with the policy of the present Government, no alterations therein are contemplated.

Group 5 deals with amendments made by the present Government which are supported by Tariff Board reports. These amendments have been made in accordance with the Government’s expressed tariff policy.

Group 6 contains items that were amended by the Scullin Government, but which are not supported by Tariff Board reports. During the passage of the bill in another place, alterations were made to a number of items appearing in this group consequent upon receipt of Tariff Board reports. The fact that the Government has presented the items contained in this group to Parliament for ratification does not necessarily mean that the Government supports the rates. On the contrary, it undertook not to reduce duties by arbitrary ministerial action. Consequently, upon receipt of reports and recommendations from the Tariff Board on these items, it will consider what action is to be taken upon them, and effect will be given to approved reports at the earliest possible moment. At the present time reports of the board relating to ten items are under consideration by the Government. If we are able to agree upon the rates of duty to be applied, or if wo accept the Tariff Board’s recommendations, they will bc dealt with when in committee honorable senators are considering the items in group 6.

We are bound, under the Ottawa agreement, to proceed with this tariff revision. I say this because some honorable senators appear to think that it is not being carried out with sufficient expedition. I can, however, assure them that we shall lose no time in presenting to the Senate items in respect of which the board may make reports. It is essential that we should have a complete tariff as early as possible for more reasons than one. For some considerable time our tariff position has been in a state of chaos. Until the schedule is ratified by Parliament, duties are being collected in accordance with the proposed rates, or the rates under the 1921-30 tariff, whichever are the higher. For example, if the 1921-30 tariff imposes a duty of 40 per cent, in respect of an item which is free in this schedule, the customs authorities must collect revenue at the higher rate until this schedule is ratified.

Group 7 of the schedule deals with items not included in any of the other groups.

The experience of this system of dealing with the tariff, gained in another place, proved that the innovation simplified the tariff in such a way that debate was considerably curtailed, and the arrangement earned the commendation of all parties in the other branch of the legislature. This subject is of such transcendent importance that it should be debated on a high level. We should have some regard to the factors to which Senator Millen referred in his speech on the first reading. We cannot isolate ourselves any longer from world affairs. Whether the policy I favour, or that favoured by other honorable senators, is right, may be a matter for debate, but we should consider it in the light of world events, as well as local ones.

Senator Hardy:

– Will the Minister give us his opinion, or that of the Government, on the incidence of exchange?

Senator McLACHLAN:

– Personally, I have never regarded exchange as something which should be considered in connexion with the tariff policy. It should be dissociated from the tariff; but I recognize, as all honorable senators do, that to-day the exchange is being used as a weapon of destruction by certain countries in relation to others. There are countries which are debasing their currency to such an extent as to get an advantage over their trade rivals, though there is no real justification for their doing so. The other day, when I was writing to a distinguished friend of mine, whose opinion I value highly, I stated that the war of tariffs was rapidly giving way to a war of depreciated currencies - an extraordinary position for nations to be driven into.

Senator MILLEN:
TASMANIA · NAT; UAP from 1931

-en. - The French started it.

Senator MCLACHLAN:

– Admittedly the French started the ball rolling.

Senator Crawford:

– What currencies have been debased?

Senator McLACHLAN:

– We know how, within the last few weeks, our northern neighbour, a powerful Asiatic nation, has depreciated its currency to such an extent that it is underselling the goods of Great’ Britain in the Australian market.

Senator Brown:

– Is the Australian currency debased?

Senator McLACHLAN:

– Of course it is depreciated; nearly all currencies are now depreciated in varying degrees. The question is whether there is to be an international race for high tariffs, or for depreciated currencies; but that is a mutter which may be considered in another connexion. The matter was referred to the Tariff Board, which has presented a report’ to the Government. For the last ten days I have had a copy of that report, and it is now under consideration by a sub-committee of the Cabinet, appointed by the Prime Minister (Mr. Lyons) to deal with this, one of the most complex problems of modern times. If we do not proceed with circumspection, we may bring upon ourselves tremendous difficulties. Certain action can be taken, apart altogether from the measure we are now discussing. I commend the bill to honorable senators, and trust that it will have a more pleasant passage through the Senate in its remaining stages than it had at the first reading stage.

Senator BARNES:
Victoria

.- The tariff is a matter which affects every section of the community, and one upon which opinions must necessarily differ widely. The Scullin tariff was imposed in circumstances which I hope will never recur. The Government was faced with a situation in which it found itself desperately short of money, and all the ordinary sources of revenue had dried up.

The Government of the day believed that this situation has been brought about largely through the lack of foresight of previous governments. It was forced to adopt methods which were, perhaps, unique, but desperate remedies were needed to cure desperate ills. The Scullin Government has been widely censured for having amended the tariff without reference to the Tariff Board, a body specially created for the purpose of giving advice in regard to tariff matters. I have no objection to the Tariff Board as such; i t can, conceivably, be a very useful body, composed as it is of men equipped by their knowledge and experience for the work they have to do. No government, however, is justified in surrendering its executive power to any such body. The Government, alone, has power to determine matters of policy, and it may accept or reject the advice of the Tariff Board. When that board is inquiring into a specific industry, it is well enough qualified to learn the cost of manufacture in this country, but it has not the same facilities for discovering the cost of manufacture in those countries that are competing against our local manufacturers. It was never intended to be part of the Tariff Board’s job to see that the protection of local industries was kept to a level which would enable overseas manufacturers to compete in our market. Our policy in Australia should be to foster our local industries, even if we have to sacrifice something until they are established. Children, are very helpless beings when they first come into the world,, and it is the duty of their parents to care for them, and feed them until they grow up, and are able to take their places as citizens of the country. The Government owes a similar duty to infant industries. It may be necessary, at first, to give them the same care as a parent gives its child, the help in the case of the industry taking the form of a ‘bounty, or tariff protection. If it is our policy to fix a duty that will really protect our industries, is not the Government justified in ignoring any report of the Tariff Board which recommends a duty not sufficiently high for this purpose? The Government, perhaps, would he right in being guided by the report of the board if it were merely a question of deciding whether a duty should he im posed or not; but when an industry is seen to be languishing as a result of overseas competition, and the policy of the country is to protect local industries, then the Government is justified in imposing a duty sufficiently high to effect this purpose. Since tho making of the Ottawa agreement, the tariff policy of Australia is being directed, not by the Government, whose policy it should be to foster the industries of the country, but by the Tariff Board, which, admittedly, is being guided by the principle that there is no room in Australia for industries unable to compete against rivals in countries overseas where the standard of living is lower than ours. No doubt a most important work was accomplished at Ottawa, and no one wishes to decry the efforts of those who represented Australia there. But when the result of their work is analysed, and it is found that little benefit has resulted to our industries or to our youths by way of providing employment for them, one must conelude that the Ottawa agreement has not been in the best interests of this country. It is evident that the agreement is not really understood by those most interested in it. The Government claims that it has conferred a wonderful blessing on us. As a contrast, let me quote from a speech that was delivered by Mr. F. W. Kitchen, President of the Victorian Chamber of Manufactures. Addressing that influential body of business men, Mr. Kitchen is reported in the Ago of the 16th May as having said -

The shadow of the Ottawa Conference, for example, hung depressingly over the secondary industries of Australia. Doubtless, entered into with the best of intentions by Australia’s Parliamentary delegates, the trade agreement brought back from Ottawa was unquestionably n serious obstacle to Australia’s rehabilitation. It immediately checked much of the revived spirit of enterprise and optimism then becoming apparent throughout the factory life of the Commonwealth. As it now stood, however, the clauses dealing with our protective policy constituted a fiscal affront to those with a practical knowledge of what our industrial possibilities might become if left untrammelled. It was not pleasant to contemplate tho endless difficulties and tlie potential increase In local unemployment which must arise if the Tariff Board interpreted literally the controversial “ policy “ clauses in the agreement, and endeavoured to define what was “ reasonable competition “ inside Australia as between local industries and those of Great Britain.

It is generally admitted that, whatever might have been its faults, the Scullin tariff gave a fillip to Australian industry, and induced concerns overseas to establish branches in Australia, so providing a good deal of additional employment. One can understand the disadvantages under which the Scullin Administration laboured. Government after government bad altered the tariff radically, and investors were reluctant to place their money into new industries in Australia, as they did not know when there might be another change of government, with a complete revision of tariff.

Senator Brennan:

– Which government first began to interfere with the tariff?

Senator BARNES:

– The tariff has been interfered with time and again by different governments. In any case, it is not expected that any tariff should he, like the laws of the Medes and Persians, unalterable.

Senator Brennan:

– The honorable senator’s idea is that his Government may alter the tariff, but no other government has the right to do so.

Senator BARNES:

– I do not for a moment adopt that attitude. It is readily understandable that a parliament composed of men with divergent views cannot think with one mind about a tariff policy. For i nstance, I may be classed as a bigoted protectionist, and my tariff views are, naturally, totally at variance with those entertained by Senator Brennan and those who think with him. It would be a miracle if any government evolved a tariff which was acceptable to all. I repeat that, as a result of the tariff policy of the Scullin Government, there was a great improvement in industrial activity in Australia, with consequent additional employment. The total success of that policy was prevented only by the uncertainty which existed in the minds of investors, because the country appeared to be in a state of flux. A certain period had necessarily to elapse before, by an adherence to a fixed policy, stability could have been regained.

The opinions expressed by Mr. Kitchen are supported by those of well-known gentlemen in England, Mr. Malcolm MacDonald, Parliamentary UnderSecretary of State for Dominion Affairs, to whose remarks the Age of the 15th April refers as follows: -

The latest striking instance is Mr. Malcolm MacDonald, Parliamentary Under-Secretary of State for Dominion Affairs. He attended the Ottawa Conference in an official capacity, and, in addressing the Royal Empire Society recently he stressed the fact that under Article Nine protection by tariff is to be afforded only to those Australian industries which are reasonably sure of success. He proceeded to ask - What does this article mean? He answered his own question thus : “ It means that if a country in the Empire can produce something economically, well and good, let it go ahead with that production, but if it cannot produce a certain commodity efficiently and economically, then it is not to try to do so by means of a tariff.”

On those utterances the manufacturers of Australia must regard the Ottawa agreement as not being in the interests of the country. Mr. MacDonald says that it is good for Great Britain, because an industry cannot be established in Australia - or for that matter in any part of the Empire outside Great Britain itself - unless it can be carried on efficiently under the terms of the Ottawa agreement.

Senator McLachlan:

– Either that gentleman is misreported, or he has not read the Ottawa agreement.

Senator BARNES:

– Article 9 of the agreement reads -

His Majesty’s Government in the Commonwealth of Australia undertake that protection by tariffs shall be afforded only to those industries which are reasonably assured of sound opportunities for success.

The Tariff Board has those articles placed before it, and is told by the Government

Senator McLachlan:

– By this Parliament.

Senator BARNES:

– Parliament was not at all unanimous on the subject. There was a great divergence of opinion upon it. The agreement was put before the Tariff Board by this Government, and not by Parliament. I do not blame the Tariff Board in the matter. It has to be guided by the clauses contained in the document placed before it. The Tariff Board does not take into consideration the policy of the Government. It is not empowered to make recommendations to the Government that certain industries need more or less paternal guidance and assistance in order to become established, but must confine itself to reports conforming with the terms of the Ottawa agreement. How is it possible for a young country like Australia to manufacture in competition with the older countries of the world and supply our requirements unless its industries are assisted by .tariff protection? There is nothing wrong with the young men and women of Australia. They are capable of producing articles just as well as are the men and women of any other country. But they cannot pit their skill against that of people in other countries unless they are given a chance to train themselves in industries, and that can only be done by establishing those industries here. We must, as it were, form a ring for them to train in ; otherwise we shall be everlastingly tillers of the soil and tenders of sheep, having to send to the other side of the world for every requirement, even a bicycle. Our young men and women do not expect this Parliament to keep them everlastingly marching our roads seeking work. They look to it to provide them with opportunities to labour in factories and build the machines required for the manufacture of the needs of Australia.

Senator Brennan:

– What does the honorable senator make of the last two lines of article 10?

Senator BARNES:

– They say “ Provided that, in the application of such principle, special consideration may be given to cases of industries not fully established “.

Senator Brennan:

– That is what the honorable senator is asking for.

Senator BARNES:

– I should have no fault to find if the Government would give effect to that principle; but all the evidence so far has been in the opposite direction; and that it is not disposed to give favorable consideration to Australian industries is borne out by the tariff that we now have before us. The customs duties collected in 1929-30 represented 51.8 per cent, of the total taxation raised, but in 1930-31, under the Scullin tariff, the ratio fell to 36.1 per cent., and Australia went within an ace of balancing its budget. The Scullin tariff has since been altered, and I venture to prophesy that this year the customs duties collected will represent double the 36.1 per cent, to which they were reduced by the Scullin tariff. This additional revenue is being obtained from the importation of goods from other countries, while our own people are out of work.

Senator Sir Walter Kingsmill:

– What does the honorable senator consider a fair period for the establishment of an industry ?

Senator BARNES:

– An industry may take twenty years to establish. Hugh Victor McKay commenced his enterprise in a tinpot way in Ballarat, and employed only a few hands. Eventually, however, that industry was developed to such an extent that employment was given to thousands of men, and the farming community of Australia were supplied with practically the whole of their requirements. Is it not much better for Australians to produce in an Australian factory what we need, even though it takes twenty years to reach that stage, than to provide employment for the workers of other countries? Is it desired that we should revert to the conditions that existed when the blacks held this country, and be content with the primitive methods that they employed to make a living? It would appear that we are moving in that direction. If we are to make any progress, the industries of this country must be fostered. Every true Australian is proud of his country, and of the fact that in the short period that white men have inhabited it they have made it one of the best places on God’s earth, and one that has earned the commendation of the world. We have a higher standard of education and of living than any other country. Why should we not be content to remain where we are? There is no limit to what may be achieved by the ambitious youth of the Commonwealth, provided that he is given decent opportunities. In the fourth quarter of 1931, under the Scullin tariff, the percentage of unemployment was 28. In the middle of 1932, under the present Government, it reached 30. It then again dropped to 28, and in the first quarter of the present year it was 26. Thus this Government, which promised to put all the people in employment, has taken, roughly, eighteen months to reduce unemploymentby only 2 per cent. A tariff that facilitates imports to the extent that is now being experienced cannot possibly be in the interests of this country. How shall we be able to pay for these goods with so many of our people out of work? How shall wo find employment for those people if we spend the little that we have in purchasing what the workers of other countries make? That is the position which Australia has reached, and it is a serious one. It is all very well for the Government to say that it agrees with what was done at Ottawa. The other day a Minister of the British Crown stated in the House of Commons that the first consideration of that chamber was to look after the welfare of its own people, and to keep trade within the borders of its own country. As an Australian, I endorse those sentiments to the fullest extent, but apply them to Australia. I would keep in this country every shilling’s worth of work that may be done in it, and every shilling, also.

Senator Brennan:

– That is exactly what the blackfellows did.

Senator BARNES:

– Had my honorable and learned friend been raised among the blackfellows, I am afraid that he would not have been made a chief. The general tariff will come under review more particularly when we are considering the individual items, but there are one or two things that I would specially mention, merely in order to illustrate what may be done. We are importing annually£2,000,000 or £3,000,000 worth of tobacco, although it is possible to produce in this country all that the world could smoke. At the prices obtained under the tariff imposed by the last Government, there was a strong inducement to engage in tobacco-growing, and large numbers of persons rushed into the industry. There are some who say that locally-grown tobacco is not much good. I probably smoke as much as any one, and it suits me; while, in addition, I have the gratification of knowing that in doing so I am keeping in work my own countrymen. A large amount of capital was not needed to engage in tobacco growing, and wonderful strides were made in a short period. Young people were able to make a living on small blocks, and thousands of them did so. Immediately this Government came into power, some of the tobacco-growing areas were visited by frosts, but the damage done was no greater than has been done by the Government. In Mareeba, I am told, 1,000 acres would be needed to feed a bullock; yet hundreds of families are being maintained in that district by the tobacco-growing industry.A gentleman from Mareeba has informed me that, unless the present tariff is altered, the whole of the growers there will be on the tramp within the next twelve months. The possibilities of developing industries under a tariff could be mentioned by the score. I cannot see the logic of importing what can be produced in this country. I admit that we have to sell a lot of our produce abroad; but I also know that there is not much sentiment in those transactions. The overseas purchasers of our goods do not trade with us because of an overwhelming regard for us, but because the article that we supply is a good one, obtainable at a suitable price. It is wholly and solely a business proposition. We may talk of the “ crimson thread “, and the “ indissoluble bonds of Empire “, but it has been my experience that the people of Great Britain drive as hard a. bargain with Australians as with Yankees, or any one else. So the first concern of Australians should be for their own fellow citizens. Those of other countries we can leave to look after themselves. It is all very well to be good friends with them, but we must always be on the alert to see that they do not sell us what was referred to recently - a quadruped called a pup.

I congratulate the Minister on the clarity, of his exposition of this measure, and the temperate and persuasive manner in which he endeavoured to “ put one over “ those who sit on this side. I promise that we shall give him all the trouble that our numbers enable us to give.

Debate (on motion by Senator Hardy) adjourned.

Senate adjourned at 9.31 p.m.

Cite as: Australia, Senate, Debates, 8 June 1933, viewed 22 October 2017, <http://historichansard.net/senate/1933/19330608_senate_13_140/>.