14th Parliament · 1st Session
ThePresident (Senator the Hon. P. J. Lynch) tookthe chair at 3 p.m.. and read prayers.
[8.1]. - by leave - It is with very great regret, that I have to announce the death of the former Senator Thomas Glassey, who died at New Farm, Queensland, on Monday, the 28th inst., at the ripe age of 92 years. With his death, another member of the first Parliament of the Commonwealth has passed away. The deceased gentleman was elected to the Senate for Queensland at the first general election in 1901, and remained a member of this chamber until 1903. Prior to entering the Federal Parliament, he had been a member of the Legislative Assembly of Queensland on various occasions, commencing with his election for Bundamba in May, 1888. He was elected as member for Burke in the Legislative Assembly at a by-election in 1894, and at the general election in the same year, was elected for Bundaberg, which seat he retained until 1900. He had the distinction of being a memberof the Federal Council of Australasia in 1899. It is 33 years since the late gentleman was a member of this chamber,but I well remember him as a sturdy champion of the rights of the people, and an enthusiastic supporter of what is known as the White Australia principle. Having a sound knowledge of Queensland industries, he realized the effect on those industries of the employment of coloured labour, and I recall a most informative speech which he delivered in the Senate on the second reading of the bill introduced for the purpose of deporting Pacific island labourers who, for some years had been recruited for work in the cane-fields. His speech on that occasion was packed with valuable information, and strong arguments in favour of the bill, which was being very fiercely debated. Many people in these days are apt to think that the legislation implementing the White Australia principle was placed on the statute-book of the Commonwealth without serious opposition. That is not the case. The bill to which I allude was very strongly opposed, and Senator Glassey, as a supporter of the Barton Government, played an important part in its passage. To me even in those days, he seemed to be an old, but withal a very vigorous man, and possessing such a wealth of experience, he was a most useful member of this chamber. He was one of the first Labour members to be elected to the Queensland Parliament, and although he did not retain his association with Labour as a political entity, he was always a strong believer in the principles upon which he was first elected. We, who were associated with him in the first Common wealth Parliament, will always rememberhim as a breezy and forceful personality, who imparted much interest into the debates. He lived a long and useful life, and made his mark in both the State and Federal Parliaments. Until recent years, he took an active interest not only in political affairs, butalso in business matters. As one who had the privilege of personal association with the late esteemed gentleman, I am in a position to appraise at their true worth the services which he rendered to the Commonwealth. I move -
That this Senate expresses its deep regret at the death of theHonorable ThomasGlassey, a former member of the Commonwealth and Queensland Parliaments and the Federal Council of Australasia, places on recordis appreciation of his meritorious public services,and tenders to the members of his family its profound sympathy in their bereavement.
SenatorCOLLINGS (Queensland) [3.6]. - I second the motion, and support the remarks of the Leader of the Senate (Senator Pearce). I knew the deceased gentleman quite well during the whole of his political career. I had the pleasure of working for him, with him, and against him, so I can speak with certain knowledge regarding the value of the services which he rendered to this country. Although because of his great age, his death did not come as a shock to those who knew him, it is right that we should extend our sympathy to the members of his family. Being acquainted with all of thorn, 1 know what he meant to them, and how much they will miss him. The late honorable gentleman was possessed of remarkable vitality. As recently as two or three years ago he was present at the opening of the Queensland Parliament, and was still in possession of all his intellectual faculties. His cheerful personality and his snow white hair - he had an ample supply of it to the last - made him a striking figure. I second the motion and associate my comrades of the Opposition with the sentiments expressed by the Leader of the Senate.
. - In the absence of Senator Hardy, the Leader of the Country party in the Senate, I associate our party with the motion of condolence which has been moved by the Leader of theSenate. We extend our heartfelt sympathy to the family of the late Honorable Thomas Glassey in their bereavement.
SenatorFOLL (Queensland) [3.9].-As a senator from Queensland, I support the motion of condolence to the relatives of the late Thomas Glassey. I knew the late gentleman very well. During the war he rendered valuable service in connexion with various patriotic movements, and he was also one of the founders of the Nationalist party in Queensland. I endorse the sentiments expressed by previous speakers, and as a representative in this chamber of the northern State. I pay my tribute to the splendid work of this great Queenslander who has passed away.
Question resolved in the affirmative, honorable senators standing in their places.
The following papers were presented -
Copy of an Agreement between the Governments of the United Kingdom, Canada, the Commonwealth of Australia, New Zealand, the Unionof South Africa, and of India and the Government ofIraq regarding British War Cemeteries, &c, in Iraq, signed atBagdad on Kith March, 1935.
Censusand Statistics Act - Regulations amunded- Statutory Rules1936, No. 127.
Commonwealth Bank Act - Treasurer’s Statement of the Combined Accounts of the Commonwealth Bank of Australia and Commonwealth Savings Bank at30th June, 1936, certified to by the AuditorGeneral.
Defence Act - Regulations amended - Statutory Rules 1936, No. 130.
Lands Acquisition Act - Land acquired at Maylands, Western Australia - For Defence purposes.
Naval Defence Act - Regulations amended - StatutoryRules 1936, No. 131.
Petroleum Oil Search Act - Statement of Expenditure for Financial Year1935-36.
Seat of Government Acceptance Act and Scat of Government (Administration) Act - Ordinance, No. 37 of1936 - Land Valuation (No. 2).
Australian Soldiers’ Repatriation Act - Report of the Repatriation Commission for the year ended 30th June,1936.
War Service Homes Act - Report of the War Service Homes Commission, together with Statements and Balance-sheet, for the year ended 30th June, 1936.
High Court Procedure Act and Judiciary Act - Rules of Court amended - StatutoryRules 1936, No. 129.
[3.11].- by leave- On the 15th March, 1935, an agreement, a copy of which I have just tabled, was entered into between the Governments of the United Kingdom, the dominions, and India, and the Government of Iraq, respecting British war cemeteries, graves, and memorials in Iraqi territory. The agreement came into force on the 25th April, 1936, the date of the publication in the Official Tragi Gazelle, of an enabling law to give effect to it, The agreement, which was signed on behalf of the Commonwealth Government and other parts of the British Empire by Sir Francis Humphrys, British Ambassador at Bagdad, provides for the representation in Iraq of the Imperial War Graves Commission, on which the Commonwealth
Government lias a delegate, by a committee to be known as “Iraq Committee of the Imperial War Graves Commission “, composed of the chief representative of His Majesty for the time being in Iraq .and six such other persons as be may, from time to time, nominate in agreement with the commission. It also provides that the lands now occupied by the war cemeteries, graves and memorials shall become the property in perpetuity of the commission, that they shall be exempt from taxation, tb at the commission shall exercise full control over them, and that all facilities for exercising such control shall be afforded by the Government of Iraq. The necessity for concluding this agreement arose when Iraq ceased to be a British mandated territory, and attained full status as an independent State from the time of its admission to the League of Nations on the Srd October, 3932.
Reform of the Covenant.
[3.13].- &y have- With the constitutional development of the dominions and the rapid increase in recent years of their status in international affairs, the formulation of a common foreign policy, commanding the confidence and support, of all members of the British ‘Common wealth of Nations, becomes increasingly desirable. In this respect, the League of Nations and the principles embodied in the Covenant have provided a focal point for a joint British Commonwealth policy, and lately the declared policy of each individual member of the British Commonwealth has been based on League principles involving collective action, arbitration, conciliation and peace. These principles, world-wide in their scope, hare facilitated a consistent and uniform outlook for the British peoples.
Unfortunately, the events of the last twelve months, more particularly in relation to the Italo-Abyssinian dispute, have, it must be admitted, tended to weaken the prestige and authority of the’ League, and, in consequence an examination of the whole League system becomes imperative.
Honorable senators will remember tl.at on the 18th June., in declaring the Commonwealth policy in regard to the raising of sanctions, the Prime Minister (Mr. Lyons) also indicated the Government’s views on the need for this examination.
On the 4th July the League Assembly adopted a recommendation of the Council that the States Members of the League should put forward any proposals they might, wish to make to improve the application of the principles of the Covenant. The Commonwealth Government immediately began a careful examination of various suggestions for a reform of the Covenant in the light of recent experience. The matter was considered one of such great importance as to demand the most careful study and consideration ; moreover, the ‘Government felt that, in view of the widely conflicting opinions about League reform which had been expressed, not only at Geneva, but also within the individual States themselves, the meeting of the League Assembly at Geneva in the last week of September would be the earliest desirable time for announcing its proposals. The High Commissioner, Mr. Bruce, will accordingly state the views of the Commonwealth Government at to-day’s sitting of the Assembly.
Of the numerous conflicting opinions on League reform which we have examined. T first mention the two extremes. On the one hand are the views of those who urge a tightening-up of the obligations under the coercive articles of the Covenant, particularly in respect, of their automatic application, and including not only financial and economic, sanctions, such as were applied against Italy, but also military sanctions. At the other extreme are the opinions of those who would weaken the obligations by eliminating all coercive and repressive articles from the Covenant; in other words, those who would rely on the League as a consultative body and as a purely moral force. As I indicated in a recent statement, the Commonwealth Government has endeavoured to avoid both of these extremes, believing that the urging of either view might well bring about the end of the League.
After careful consideration the Government has decided to make the following suggestions for League reform, through the delegation at the preesnt meeting of the Assembly: -
The first proposal relates to Article XVI., which deals with sanctions. That article provides that in the event of a resort to war in violation of previous articles of the Covenant, States Members of the League are bound to apply immediately and automatically certain sanctions severing financial, economic and personal intercourse with the State which has been declared to have broken the Covenant. The effect of the article was, however, subsequently modified in practice by the adoption by the Assembly in October, 1921, of a long series of “Resolutions concerning the Economic Weapon.” These interpretative resolutions, as they become known, were to constitute rules for guidance, mainly procedural in character, as to how the obligations of States under Article XVI. were to be discharged. They were actually followed in the Italo-Abyssinian dispute. Article XVI. also provides for military sanctions, which, however, are permissive and not mandatory in character, as it is the duty of the Council only to recommend to States Members what effective armed forces shall be contributed to protect the Covenant. “With regard to financial and economic sanctions, the Government feels that, upon a declaration by the Council that a Member State is anaggressor, the following sanctions should be automatic : -
Prohibition of all exports to the aggressor State;
With the exception of the prohibition of oil exports, (a), (i), (c), and to a substantial extent (d), were the main sanctions, which were applied in the recent Abyssinian dispute, and according to the statistics collated by the Co-ordination Committee, had a constant and cumulative effect on Italian economic life. They were, however, not long enough in operation for their effect to be decisive. The Commonwealth Government feels that if a would-be aggressor knows beforehand that in the event of aggression, he will automatically become subject to these financial and economic sanctions, such knowledge will constitute a powerful deterrent in the interests of peaceful settlement of the dispute.
The Government fully realizes that in a democracy there will be objections by reason of the Government of the day having to carry out a national obligation if it has had no say in its acceptance. It therefore proposes to recommend the incorporation into the Covenant of No. 4 of the interpretative resolutions of 1921.
The resolution is as follows: -
It is the duty of each Member of the League to decide for itself whether a breach of the Covenant has been committed. The fulfilment of their duties under article16 is required from Members of the League by the express terms of the Covenant, and they cannot neglect them without breach of their Treaty obligations.
With regard to military sanctions, the Government feels that no amendment of the Covenant is necessary, as these are not automatic, but are subject to recommendation by the Council, and the adoption of any recommendation is left to the individual government’s decision.
The Commonwealth Government also believes that an effective contribution to the general principle of collective security contained in the League would be for States, in regions where their national interests are directly involved., to agree to some form of regional pact, subsidiary to the Covenant, by which they would be obliged to render military assistance, in circumstances laid down by the agreement, if one or more of them should be attacked by an aggressor.
Article XVI., it is believed, forms a reasonable basis for such agreements, which would be devised to strengthen general security, and would also be strictly within the framework of the League, and subject to the spirit and provisions of the Covenant. It cannot be emphasized too strongly that such agreements must be supplementary to, and not in substitution for, any of the vital provisions of the Covenant.
Furthermore, the Government’s view is that, so far as the Commonwealth is concerned, the Pacific is the area in which we are most vitally interested in the maintenance of peace. With the United States of America and Japan outside the League, provision for a regional agreement of the particular kind mentioned could hardly be applicable, but the promotion of a regional understanding and pact of non-aggression for Pacific countries, in the spirit of the League undertakings, should not be beyond the bounds of possibility.
The second Commonwealth proposal is with regard to Article XI., which declares that any war or threat of war between Members or non-Members is a matter of concern to the whole League, and lays down that “ the League shall take any action that may be deemed wise and effectual to safeguard the peace of nations “. As it stands at present, Article XI. is subject to theunanimity rule, and mediatory action by the Council can be blocked by the votes of States which are parties to the dispute, or by the vote of a State contemplating aggression. The Government feels that the Council should be enabled to make recommendations under Article XI. without the consent of the States who are parties to the dispute; this will involve consequential amendment of Article V.. which deals with questions of procedure.
The third proposal is with regard to Article XIX., which provides that the Assembly may, from time to time, advise the reconsideration by Members of the League of treaties which have become inapplicable, and the consideration of international conditions whose continuance might endanger the peace of the world. The Commonwealth Government’s view is that in a world with rapidly-changing conditions this article is too uncertain. It believes that Article XIX. should be regarded as a specific article for the remedying of grievances, and that provision should be made for periodical investigation of, and report on. alleged grievances.
Fourthly, the Commonwealth Government feels that support should be given to a proposal for the severance of the Covenant from the Peace Treaty of 1919. If the League is to become universal, and to act as an instrument for the preservation of peace, rather than be linked to a period of past history which directly concerned only a certain number of Member States, then the Covenant should be divorced from the Treaty of Versailles.
Finally, the Government is of opinion that before proceeding to deal at all with amendments to the Covenant, the League should consider inviting nonMember States to confer with it or any commission which it might set up to consider the proposed reform, as tothe nature and form of desirable amendments. The Government feels that the nonMember States, and in particular the United States of America, Germany, and Japan, should be fully consulted, with a view to having their representatives present to discuss the proposals with Members of the League. Such a course, it is felt, would give to non-Member States a full opportunity to state their views as to what ultimate form of Covenant would be acceptable. If unanimity on the proposal to hold such a consultation can be secured, we believe that there will be a reasonable chance of obtaining a Covenant of a kind which would bring about universal membership, without which the League cannot fulfil the functions which its framers originally contemplated, and which are so essential to the peace and security of a troubled world.
I lay the statement on the table of the Senate, and move -
Thatthe paper he printed.
Debate (on motion by Senator Collings) adjourned.
– I have to inform the Senate that I have received from Mr. A.C. M.Gould, a son of the late Sir Albert Gould, a letter thanking the Senate for its resolution of sympathy.
Assent to the following hills reported : -
Loan Appropriation Bill1936.
Appropriation (Works and Buildings) Bill 1936-37.
Sales Tax Bills (Nos.1 to 9) 1936.
asked the Minister representing the Minister for the I nterior, upon notice -
Senator Sir GEORGE PEARCE.The Minister for the Interior has supplied the following answers to the honorable senator’s questions : -
asked the Minister representing the Minister for Trade and Customs, upon notice -
Will he make available to the Senate a complete list of all books banned by the censorship during the year? 1930-1936inclusive?
Senator A. J. McL A CHL A N. -It is not the policy of the Government to furnish the information asked for in this question.
What is the amount of money applied for under the Farmers’ Debt Adjustment Act;
What is the amount disbursed?
I am now advised by the honorable the Minister for Commerce as follows: -
That the amount applied for by the States and paid to the States is £425,000.
The amount disbursedby theStates is £293,512,
Senator Sir GEORGE PEARCE.On the 25th September Senator E. B. Johnston asked the Minister representing the Minister for Defence the following questions, upon notice -
Has any decision been arrived at in regard to requests made for increasing the air service between Adelaide and Perth to two or three trips each way weekly?
If so. what extra service is proposed, and when will it operate?
I am now in a position to inform the honorable senator that representations have been made that the subsidized air service now operating between Adelaide and Perth be duplicated, that is, an increase of frequency from once to twice weekly in each direction. The matter has received some consideration, but a decision has been deferred pending finality being reached in the negotiations in regard to Commonwealth participation in the Empire air mail scheme.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Sir George Pearce) read & first time.
[3.37].- I move-
That the hill be now read a second time.
This bill is another of the measures introduced to implement the policy of the Government, a3 announced in the budget statement, to grant further exemptions from sales tax to the value of £1,000,000 annually. In announcing its decision to make further concessions, the Government stated that it proposed to follow its established policy of seeking, in the first place, to provide for the exemption of goods which are regarded as the prime necessaries of life, for that policy provides the greatest possible relief to those least able to bear the burden of the tax. Opportunity has also been taken to provide for exemptions which will remove certain anomalies, and simplify the administration of the law. Among the goods to be exempted are those generally referred to as “ consumable aids to manufacture” - goods which are used up or consumed in the process of manufacturing other goods. Among the items which may be regarded as necessaries are footwear, and tea, coffee, and cocoa. A few days ago the Leader of the Opposition (Senator Collings) expressed doubt as to whether remissions of sales tax will be passed on to consumers. Since then newspapers published in Victoria, and, it may be, in other States also, have contained announcements that, following the lowering of the rate of the tax, the prices of tea, coffee, and cocoa, will be reduced.
More than one-half of the relief proposed by this bill is represented by those items; out of concessions estimated at £1,000,000 annually £302,000 is in respect of footwear, and £200,000 in respect of tea, coffee, and cocoa. So intensive is the competition in the Australian footwear industry that there is not the slightest doubt that the benefit of any tax concession will eventually be felt by the purchasing public. When selecting items for exemption the Government has had closely in mind the items entering into the Arbitration Court’s regimen for the adjustment of the basic wage and in choosing footwear and tea for the principal individual items for exemption, it believes that it is giving relief where it is most needed. When the present list of exemptions becomes effective, the amount of sales tax payable by the average worker on the basic wage will be approximately Id. a day. I give this as an indication of the fact that the Government has been continuously concerned to ensure that the sales tax burden shall fall as lightly as possible upon the sections of the community least able to bear it.
Clothing i3 practically the only field left for the provision of further relief of a similar nature. The possibilities of that field have been explored, but not with very promising results. Apart from the fact that clothing includes articles of luxury as well as articles of necessity, it appears that any attempt to exempt clothing, other than footwear, would be productive of serious commercial and administrative difficulties. Nevertheless, the position of tailors has been specially investigated in response to the many requests made both in and out of Parliament that such persons should be excluded from the field of registered taxpayers. The investigation disclosed many reasons why such requests should not be acceded to. It became clear, for example, that many competitive anomalies would arise, and that there would be forced changes of business methods if all tailors were de-registered. The Government, however, feels that some concessional adjustment in favour of registered tailors is desirable in view of the fact that more than 40 per cent, of the tailors in Australia are unregistered, because their turnovers arc within the exemption limit of £1,000. It is hoped that the reduction of the taxable sale value from 66 per cent, to 50 per cent of the sale price of certain goods sold by registered tailors will materially improve the position, and will go far to remove the competitive inequalities which may at present exist between registered and unregistered tailors.
A most important feature of the bill is the proposed exemption of what may be briefly described as “ consumable aids to manufacture.” This will involve an annual loss of revenue amounting, at 4 per cent., to £156,000. The bill also contains provision involving £100,000 per annum for the exemption of” lubricating oils and greases, which in many of their uses fall within the category of consumable aids to manufacture. The consumable aids to manufacture dealt with in this bill represent only one of several classes of goods which may be broadly classified in that way. In this broad class, aids to manufacture may be divided roughly into three classes. Broadly, aids to manufacture may be said to be those things which are used in the production of goods, but which do not enter into the finished goods themselves. Factory buildings and the plant therein are, broadly speaking, in this category. Again, jigs, moulds, tools and dies are aids to manufacture - and, finally, there is a wide range of materials, largely chemicals, which are used up or consumed in the course of manufacture. It is to this latter class alone that this hill seeks to give exemption from sales tax. To the manufacturer concerned, these aids are just as much direct charges against his output as are the raw materials which become ingredients of his products. In many cases it is a matter of great difficulty to determine whether they are merely aids to manufacture or whether they are entitled to be treated as raw materials on the ground that they leave some essential element hi the finished product. This has been a constant source of trouble to the Taxation Department and the manufacturers concerned; and the fact that raw materials have been exempted and consumable aids taxable has naturally led to continuous pressure for the exemption of the latter class. In considering the matter of exempting these aids, the trouble has always been, first, the unknown, but necessarily large amount of revenue involved, and, secondly, the apparent impossibility of achieving a satisfactory definition of the classes of goods to be covered. Almost a year ago the Government caused a thorough investigation to be made by the Taxation Department into this complex problem. After the most painstaking inquiries, extending over many months, the department has now arrived at a definition which it is believed will enable a satisfactory exemp- tion to be provided. That definition appears on page 2 of the bill in clause 3 a. If necessary, I shall explain this definition in -detail in the committee stage, and supply information as to the principal items that will be exempted in typical industries, I desire, however, at this stage, to emphasize that the exemption will not apply to any goods which come within the category of machinery, tools, implements or other plant. This should, I think, be made perfectly clear, because I am aware that there are manufacturers who desire exemption of what might be described as “ disappearing “ tools or other mechanical aids which may, in certain circumstances, be used up with such rapidity that they are just as directly a charge upon output as are consumable aids in the nature of chemicals, &c. In this regard I can only say that the possibility of a practical exemption of “disappearing” tools was rejected only after the most careful and sympathetic consideration. It was found that tools which were rapidly used up in certain circumstances were usually capable of prolonged or indefinite use in other circumstances, and the conclusion was reached that, short of a complete exemption of all manufacturing plant and machinery, any attempt to exempt “ disappearing “ tools and like aids to manufacture would involve the impracticable task of laying down detailed rules for application to each industry and even for individual manufacturers, with varying methods of production, within a particular industry.
An attempt was made to undertake that task under the Canadian sales tax law, which, for a few years, contained an exemption of all aids to manufacture except permanent plant and equipment. Apparently the attempt failed, for the exemption was repealed in 1933, although an exemption of consumable aids, comparable to the exemption in this bill, was retained. One other important point to note is that the main provision for the exemption of consumable aids to manufacture will be contained in a regulation authorizing registered manufacturers to quote their certificates when purchasing or importing such goods. The established procedure in connexion with the quotation of certificates has been found to be far smoother and more satisfactory than the furnishing of certificates that the goods purchased or imported will be used for specified purposes. The definition in this bill of “ aids to manufacture “ will be adopted for the purposes of the proposed regulation which will be promulgated on the date of assent to the bill. The exemption in the bill is limited to unregistered manufacturers, and is necessary because such persons are unable to quote registration certificates.
In addition to the various provisions a.1 ready referred to, there will be an exemption of goods manufactured by any person and applied to his own use as aids to manufacture - so long as these aids to manufacture come within the definition in this bill.
Another matter dealt with in the bill concerns the conditions attached to the exemption of certain goods in the presentact. The past practice of granting exemptions that were conditional on the goods being used for some specific purpose, has caused a considerable amount, of trouble and inconvenience - and the opportunity afforded by this bill has been taken to extend the range of the most outstanding and vexatious of these exemptions by making them unconditional. Belief from sales tax to the amount of £104,000 a year will be provided to this end.
The Government proposes to follow the policy of removing the conditions of exemptions wherever that is practicable and whenever revenue requirements permit; and also to avoid as far as possible the provision of further exemptions to which troublesome conditions are attached. The bill contains an important instalment of provisions prepared in pursuance of this policy. The items now selected for the removal pf conditions of exemption constitute the whole of the items which, so far as investigations have gone, can be dealt with in that manner without the creation of new difficulties.
The items mainly affected cover certain classes of goods sold by wholesale hardware merchants who, because of the enormous variety of taxable, exempt and conditionally exempt goods in which they deal, are the worst sufferers from the troubles of conditional exemptions. The main hardware items are: - Piping, glass, copper, muntz metal and lead sheets. The bill provides for the exemptions of those items in all circumstances. Other features are designed to remove competitive anomalies in the various classes of exemptions.
The cases to be provided for have been selected in the course of the careful survey which is being continuously made of the incidence of the sales tax, and of the operation of the sales tax exemptions, and amongst the hundreds of items surveyed, they represent the most outstanding of the anomalies which are capable of correction by way of exemptions.
The following are a few illustrations of the exemptions proposed: -
In order to give full and prompt publicity in future to the effect of the sales tax law, an official publication entitled
The Sales Tax Law 1930-1935 was published at the beginning of the present month. This book, with a supplement which was published at the same time and a few supplementary rulings which have since been published, is a complete and up-to-date consolidation of official rulings on the sales tax law. It replaces the official sales tax hand-books already issued. The exemptions ,are contained in a separate section which not only sets out the exemptions and rulings thereon, according to the classifications of the schedule to the Sales Tax Exemptions Act, but also shows the progressive development of the exemptions from the 1st August, 1930, with rulings on the exemptions as in force at the various stages. All sales tax, and other associated acts .and regulations, as consolidated to date, are also included, in the book.
Arrangements to keep the book uptodate include the prompt and regular publication of supplementary rulings, free of charge to purchasers of the book; and the publication of an annual supplement’ at the beginning of each year, containing a consolidation of all rulings not contained in the main book as well aa a consolidation of the acts and regulations as they stand at the date of the supplement. These supplements will be sold at about cost price. It is hoped that taxpayers and other people interested will take advantage of these publicity arrangements. I believe that the proposals contained in this bill will be acceptable to Parliament, taxpayers, and the taxpaying community generally. They are the result of a great deal of close investigation over the last twelve months by the officers of the Taxation Department, in an effort to improve the sales tax legislation in the interests of all concerned.
Many hundreds of claims have been considered during the preparation of the bill, and honorable senators are assured that all proposals that have been put forward have received the most careful consideration. I would point out to honorable senators who may have in mind proposals for additional exemptions that experience has proved that it is against the interests of commerce and of the general community to provide for exemptions without the most careful investigation of their competitive, commercial, and administrative consequences, and without also the most careful preparation of their terms. In urging honorable senators to refrain from submitting amendments at this juncture, I give the assurance that any requests for further exemptions will be carefully noted for investigation and. future consideration. I commend the bill to the Senate.
– The Opposition does not intend to oppose the bill. We welcome every proposal for a reduction of this special form of indirect taxation, because the taxpayer does not know to what extent he is being penalized. I was interested in the attempt by the Leader of the Senate (Senator Pearce) to assure me that my fears, expressed when the nine sales tax bills were being passed last week, that a considerable proportion of the proposed reductions of taxation would not be passed on to the people .upon whom, finally, all taxation falls, were foundless. 1 am not now convinced by his statement, and I ask him if he can inform me what was the rate of sales tax on tea prior to the exemption proposed in this bill.
– It would be 5 per cent.
– Then the reduction of the tax on tea retailed at 2s. a lb. should be about 1¼d. ; and as the average working-class family - the only one in which I am particularly interested - does not consume 1 lb. of tea a week I doubt that retailers will pass on to consumers any appreciable amount of the reduction of price due to exemption from sales tax. Even if they do I do not intend to work myself into a state of excited approbation of the Government’s action, because I know that, in respect of tea, the reduction of price will not amount to very much in the course of a year. However, we on this side are pleased to know that the list of exemptions from sales tax is being extended. The Leader of the Senate warned us, wisely I think, not to submit hastily, further items for exemption. Even if we did the Government would not take heed of any suggestions made. I hope that honorable senators will not have the idea that in passing this bill they will be doing something to relieve very greatly the financial pressure which always 13 felt by that section of the community whose income is so meagre - the working classes. The Leader of the Senate urged that the passage of the measure should be expedited because the Government had decided that its provisions should operate from the 26th September. J do not approve of that procedure. No legislative proposal, whatever its nature, should become operative until the Senate has had an opportunity to express its views upon it. The ordinary course should have been followed in connexion with this bill. After having been passed by the House of Representatives, it should have been presented to this chamber for its concurrence or otherwise and, if approved, submitted for the Royal assent, before becoming law. I register my protest against the somewhat cavalier fashion in which these matters are settled by the Government without reference to the Senate.
Senator LECKIE (Victoria) [4.3 j. - I welcome the bill because I believe in giving relief from the sale3 tax by exemptions rather than by gradual reductions of the rate of tax. I also note with approval that at. last the Government has acceded to the wishes of manufacturers by exempting some of the “ aids to manufacture “, including oils, greases, &c, which represent a fairly substantial amount. I do not cavil at the Government’s proposals, but I do not think that they go far enough. In his secondreading speech this afternoon, the Leader ‘of the Senate (Senator Pearce) referred to the relief that is being given in respect of wasting tools, his reference being, I presume, to such articles as files, emery wheels and the like, which certainly are aids to manufacture, and by their nature, are wasting assets. They should have been included in the bill. Although the Government has included in the bill definitions which, to some extent, meet the wishes of manufacturers, it could have gone further, and included such items as patterns, dies, &c. I do not know why those goods are subject to sales tax. If the matter were not so serious to those who have to pay this form of impost, some of the anomalies of the sales tax would be laughable. For instance, a manufacturer in the course of his business makes dies in a machine shop which may be attached, to his premises; very often they are made in the same room as products intended for sale. The sales tax is imposed when the dies, which may cost from fi to £20, are moved from one portion of a shop to another. Apparently the department has given close attention to the list of exemptions embodied in the bill, but it should have included some of the goods I have mentioned. I have had only a casual glance at the bill, but it appears that if one is to understand the purport of such a complicated measure, constant reference to the principal act, the amending legislation, and some of the definitions is necessary. The Government should not be anxious to pass the bill to-day.
– It deals only with exemptions.
– Yes, but the list is not sufficiently comprehensive. All goods which are aids to manufacture, including cores, moulds, and dies which are essential in certain branches of manufacture, should be exempt. Some of the definitions in the bill appear to show what is intended, but others are ambiguous. For instance, is soda ash, which is used in the process of washing wool and is of vital importance to woolleu manufacturers, included in the list of exemptions? Additional exemptions are preferable io a. greater reduction of the precentage rate. I am sure that manufacturers who have been asking for relief from this form of taxation for a long time will welcome the measure of relief now being afforded.
.- The introduction of this measure indicates that progress is being made towards the abolition of the sales tax. It is gratifying to find that the Government has been able to provide so many additional exemptions, and this is due solely to the satisfactory position of the Commonwealth finances. I expected the Leader of the Opposition (Senator Collings) to pay a tribute to the Government for the satisfactory budget it has presented and to have congratulated it upon relieving the people of some of this impost. The honorable senator, who is under the impression that the general public will not benefit from the exemptions, referred to the small amount by which the price of tea would be reduced by the exemption of that commodity. The honorable senator always appears anxious to assist the masses, but when taxes are being removed he does not approve of what is being done. I am confident that when the retail price of any article can be reduced by Id. in consequence of a reduction of the sales tax rate or of exemptions, competition will be so keen that the public will benefit. The reduction on articles costing only a few pence will be so small that consumers will not benefit. I am disappointed to find that biscuits which are used extensively in almost every home, and particularly those used as infants’ food, are not included in the exemptions. Representations have been made to the Government from time to time on this subject, and as certain other foodstuffs are exempt biscuits should also be exempted. I trust that the Minister will bear in mind the representations made, that biscuits should be placed on the exempted list, and if relief cannot be afforded under this bill, I trust that biscuits will be embodied in the next, list of exemptions.
.- Although I am pleased to find that the Government has introduced this measure providing additional exemptions from sales tax it appears that a more determined effort should have been made to enable the schedule to be interpreted more readily. For instance, the bill provides that a new sub-section is to be added after section 5. The proposed new section relates to wireless valves incorporated in receiving sets, but owing to the form in which it is drafted it is difficult to ascertain exactly what is intended. Surely officers of the department could frame something less involved than that provision. Further, item 77 of the schedule is to be omitted and the following item is to be inserted: -
Goods foi- use (whether as goods or in some other form) by public transport authorities exclusively in, or exclusively in connexion with, the establishment, conduct or maintenance of transport services.
I suppose “ public transport authorities” relates to municipalities and local governing bodies generally and not to private companies which have contracts covering the transport of goods and passengers. Certain goods are exempted, but motor parts, some of which may be aids to manufacture and used in the manufacture of parts or in replacing parts of motor cars used by pu’blic transport authorities, would, I presume, also be exempt. Although I regret that the list of exemptions is not more extensive, this further instalment is welcome. I trust that it will not be long before the sales tax legislation, which has always been embarrassing to the trading community and manufacturers, will disappear from the statute-book. Will the Minister clear up some of the points I have raised? .
– I congratulate the Government upon having added extensively to the list of exemptions. The remissions this year amount to £3,000,000, of which £2,000,000 is due to reduction of the rate from 5 per cent, to 4 per cent., and £1,000,000 to the exemptions provided for in the bill now before the Senate. I do not agree with the method adopted in. making reductions, because I think itwould be preferable to retain the rate at 5 per cent., and increase the number of exemptions. In moving the second reading of the bill the Leader of the Senate (Senator Pearce) said that many articles which are an absolute necessity, including clothing and certain kinds of food, are still subject to the tax. It seems entirely wrong that, a lower rate of taxshould be charged on luxuries while necessaries will still be su’bject to the tax. When the Government is giving further consideration to sales tax legislation it should pay particular attention to this aspect of the matter. The average person would not mind paying a higher percentage of tax on luxuries if the necessaries of life were exempt.
Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [4.20]. - in reply - The Leader of the Opposition (Senator Collings) complained that the exemptions proposed are to become operative before the bill actually becomes law. It was hoped by the Government that the bill would have been passed and assented to last “week, but unexpected events prevented that, and in consequence business in some of the goods affected was at a standstill, particularly in respect of tea and footwear. In response to the very pressing requests of the merchants concerned the Government decided to advance the date of the commencement of the exemptions.
I assure Senator Leckie that the Government has carefully considered the representations made for the exemption from sales tax of patterns, dies, moulds, cores, &c. It is recognized that there is some merit in the claims made for the exemption of these good3. As a matter of fact they were seriously considered in connexion with the proposal in regard to consumable aids to manufacture. An extensive investigation showed, however, that exemptions in respect of those goods would not be capable of equitable application and would produce serious difficulties and competitive anomalies. It was found that, while in some cases goods of that sort were of .a consumable nature, in many others they formed part of the permanent plant. It was also found that they were comparable with, and were used for similar purposes as, other machinery, implements and tools which ,are subject to tax. Apart from revenue considerations, it. was found undesirable, on account of the difficulties involved, to accede to the claims for exemption.
Senator Payne referred to the desirability of including biscuits in the list of proposed exemptions. A great many of us have sympathy with that proposal. Quite a number of foodstuffs which many of us would like to see included in the list of exemptions are at present subject to tax. The honorable senator said that certain biscuits are recognized to be a food for infants. The first consideration is that if all biscuits were placed on the list of exemptions a loss of revenue amounting to £65,000 would be involved. When the Government was considering its budget proposals it set aside a certain amount for each particular tax remission, lt was faced with the fact that desirable though such a course might be, if biscuits were exempted some other item would have to be left out of the list. If the Government agreed to place biscuits on the list of exemptions what item would Senator Payne suggest should be left out? If biscuits were merely added to the list the budget balance for the year would be upset.
– The Government might consider omitting glass from the list of exemptions.
– That is arguable, but I doubt that the continuance of the tax on g’.ass would make good the loss of £65,000 in respect of biscuits. I am sympathetic with Senator Grant in his difficulty in interpreting the definitions contained in this bill. As a matter of fact I confess that I should not like to undertake the task of explaining them without the aid of the technical officers of the department. I have, however, quite a volume of explanations which I shall be glad to read in committee when we are dealing with the particular items concerned. Senator Grant has referred to item 77, “ goods for use . . by public transport authorities . . in connexion with the establishment, conduct or maintenance of transport services “. It is proposed to exempt from sales tax such goods, used by public transport authorities exclusively.
– But why restrict the exemption to public transport authorities?
Senator Sir GEORGE PEARCE.Because it is not intended to cover private transport.
– Why the distinction ?
Senator Sir GEORGE PEARCE.If the exemption were made to apply to private transport at what point would we stop ? A person owns a motor car for- the transport for himself and his family; the exemption would have to be applied to that car. It is necessary that there should be some clear line of demarcation, and the restriction to public transport provides it.
– Who will decide whether it is a private or public transport authority?
Senator Sir GEORGE PEARCE.The Commissioner, who would only require to examine the law of the State concerned to ascertain whether a tramway is a public or private concern.
– What about a motor car commercially used for transport?
Senator Sir GEORGE PEARCE.Unless it is used by a public authority it is not exempted from sales tax.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 and 2 agreed to.
Clause 3 (Wireless valves incorporated in sets).
SenatorGRANT (Tasmania) [4.29].- I should like the Leader of the Senate (Senator Pearce) to explain shortly exactly what this clause means. The wording is almost unintelligible to the ordinary man, and I defy any one, other than the drafting officer and the departmental officials, to understand its meaning.
Senator Sir GEORGE PEARCE (Western Australia. - Minister for External Affairs) [4.30]. - The clause is phrased in legal language, because it might possibly be the subject of litigation. It has been framed in such a way as to stand that test. Imported wireless valves have been exempt as from the 1st August, 1930. The benefit of the exemption is actually lost when valves are fitted into wireless sets and sold with them. In that case the tax is ascertained on the full sale value of the sets without reduction on account of the value of the valves. There has been serious difficulty in calculating the tax on that basis, and some taxpayers have in voiced valves, separately from sets, and claimed that the valves were sold separately. In those cases the purchasers have paid sales tax on the sale value of the set, less the cost of the valves. The Government has, therefore, decided to provide for the exemption of the valves even when incorporated in, and sold as part of, wireless sets, and to make the exemption apply as from the 1st August, 1930. Refunds of tax, amounting, I understand, to £3,000 will be made. This exemption is in a category entirely different from others in that it is in respect of only a part of the sale value of wireless sets. The exemptiou would be out of place in the schedule, as it does not fit in with the general terms of the exemption, and for that reason it has been inserted in this clause.
SenatorDUNCAN-HUGHES (South Australia) [4.33]. -I support the remarks of Senator Grant in connexion with this matter. Even the Minister himself admits that this clause is not one which the man who runs may read ; as a matter of fact, he may run if he reads it. The clause is very nearly unintelligible. The Leader of the Senate (Senator Pearce) said that it is drafted in legal language because it may be the subject of litigation, but that does not seem to be any reason why it should be couched in language which is almost incomprehensible. Legal language is not necessarily unintelligible.
SenatorCollings. - It is almost always so.
SenatorDUNCAN-HUGHES.-Some time ago, Mr. Ligertwood, K.C., delivered an address in Melbourne in which he referred to the existence, in the Commonwealth laws particularly, of language which he simply could not understand. Though this particular clause is unintelligible, I deny that it need be so for legal reasons. In saying this, I feel that I ought to have the support of Senator Brennan, because I remember that, some years ago, when the broadcasting bill was before the Senate, both he and I offered sturdy opposition to the drafting of a number of clauses which were couched in language which was not good English. I know that in technical matters it is difficult to make legislation both comprehensive and legally water-tight, but I put it to the Minister that this provision will not, be understood even by big business men, to say nothing of small storekeepers, or the man in the street. Only the officers of the department and, possibly, a few taxation experts and lawyers, will understand it. Would it not be possible for the wording of the clause to be improved ? Rather than have in the act the complicated legal phraseology now before us, I would prefer to have the Minister’s explanation, for then the man in the street could, perhaps, understand what Parliament intended.
– At times I have objected to the bewildering verbiage of the legislation placed before us for consideration, but on this occasion I cannot agree with Senator Duncan-Hughes. In my opinion, any person who understands the business of selling wireless sets and wireless valves will understand the meaning of this clause. In the circumstances explained by the Leader of the Senate (Senator Pearce), 1 do not think that we can do other than accept the clause as it stands.
– Does the honorable senator understand it?
-I think I do, or, at least that I could understand it if I had a knowledge of the business associated with the sale of these articles. As this legislation might easily be the subject of litigation, it is wise that in every detail it should be legally accurate.
– Surely it is a question of sale value rather than of the nature of the item.
– I cannot agree with Senator Duncan-Hughes that the Minister’s explanation should be incorporated in the measure. The draftsman has done his best with a difficult item.
– It is a poor best.
– I disagree with the honorable senator. I have found that parliamentary draftsmen usually have a good reason for the language they adopt in preparing legislation. I repeat that any person acquainted with the business to which this item relates would have no difficulty in understanding the clause.
Clause agreed to.
Clause 4 (Schedule).
.- Paragraph h of the definition relating to aids to manufacture refers, inter alia, to patterns, dies, moulds and cores, concerning which the Leader of the Senate (Senator Pearce) said that there was danger of inequitable treatment if an alteration were made. He did not say in what way it would be inequitable.
– In some cases these articles are practically part of a manufacturer’s plant. The plant of other manufacturers is not exempt.
– Dies for a complete motor body may cost as much as £4,000. Sales tax at 4 per cent, on that amount would represent about £160, which means a considerable addition to the price of motor cars, particularly as the models change fairly quickly. Some of the dies and moulds used in the manufacture of motor car bodies are exempt from sales tax, whereas dies and moulds used by other manufacturers are not exempt, notwithstanding that some of them are not again used after a certain quantity of goods has been made from them. Cores and moulds used in moulders’ shops are frequently broken up, after having been used only once, or at most, a few times. Why should they be subject to sales tax? Again, emerypaper and sand-paper, and emery-wheels and files used by engineers and furniture manufacturers are not exempt, whereas emery-paper and sand-paper used by brush manufacturers are exempt. What is the reason for this differentiation? Is the brush-making industry of more importance than the manufacture of furniture or machinery? An examination of the items referred to in this clause would reveal a number of anomalies. I notice that some cleansing materials, such as soda ash, which is used for scouring wool, are included in the schedule, and that peroxide of hydrogen is exempt for wool bleaching but not for other more familiar uses. I should ba better satisfied if the words “ dies, moulds and cores “ were struck out of paragraph h.
[4.48]. - As I explained earlier, this subject was fully investigated, and it was found impossible to do what the honorable senator asks. Certain aids to manufacture are exempt, because they are consumable aids, whereas the articles mentioned by the honorable senator - patterns, dies, moulds and cores - although, perhaps, consumable in some industries, are not consumable in others. Although somewhat alike, they are put to different uses, and for that reason it would be impossible to include them among aids to manufacture which have been exempted because they are consumable. I ask the honorable senator to allow the clause to pass as it stands. At a later date it is hoped that a further list of exemptions will be brought before Parliament, and it may then be possible to give effect to his wishes. Regarding abrasive papers, the honorable senator is apparently reading from a list of illustrations, but that is by no means exhaustive. I have been informed by officers of the Sales Tax Department that all types of abrasive papers used in any manufacturing process by any manufacturer are exempted.
.- I am still worried about cores and d.es. I have been told that some manufacturers get exemptions on some of these articles, whilst others do not. I do not object to exemptions, but I think that all manufacturers should receive equal treatment.
Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [4.52]. - I regret having overlooked explaining the exemption of certain jigs and dies. Motor-body builders are not competitive with any other manufacturer, and therefore, the exemption of the jigs and dies used by them does not give to them any unfair advantage since the exemption applies to all firms engaged in the industry. But their exemption in other cases might lead to unfair competition. They are consumable aids to manufacture in one industry whilst in .another industry they are not.
.- The Minister has stated that the Government has gone, as far as it can go in exempting articles of footwear, but why does this exemption apply only to boots, shoes and slippers and disregard BOX and stockings? Sox and stockings are footwear and just as essential as boots and shoes.
– That would take us into the whole range of textiles.
– No; it would only involve hosiery. The Government should go the whole hog.
– What about corn plasters?
– The health of the people should be conserved, and it is just as important to health that people should be able to obtain cheaply sox and stockings as it is for them to be able to obtain boots and shoes. Health depends largely on the proper care of the feet. I welcome the exemption on boots and shoes,’ but I think the Government should have gone further.
Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [4.55]. - The trade term “footwear “ does not include sox and stockings. Broadly and generally, it means boots, shoes and slippers. It does not include bed-socks, gaiters, leggings or spats, all of which are more or less distinctly related to footwear. A line had to be drawn somewhere and the Government drew it at boots and shoes.
.- L am not satisfied with the explanation of the Minister regarding the exemption of goods used by public transport authorities for the maintenance of transport services. A moment ago the Minister carefully stated that the principal purpose of this measure was avoidance of unfair competition, removal of anomalies and prevention of differentiation. Proposed new item 77 will apply to public transport authorities to the exclusion of private transport companies. This is a distinction between two competitive elements in the community, and as the purpose of this bill is to avoid anomalies it would have been better to omit this provision if the exemption cannot be made general.
– Will it not give some. measure of relief?
– I do not think that the taxpayer will be relieved; certainly the passenger in .a tram or a motor bus will not be charged less. This amendment makes for differentiation and unfair competition as between public and private transport authorities.
Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [4.58]. - Contrary to what the honorable senator stated this amendment does remove a most definite anomaly. Item 77 at present allows exemption of “ tram cars, trolley omnibuses and motor omnibuses (and parts therefor) for use by public transport authorities.” The authorities controlling tramway services in Sydney and Perth ai-e government departments which obtain all goods free of tax under the general exemption of all goods for Government departments. Other tramway authorities - these include the tramway authorities in Launceston and Hobart - merely have the benefit of the limited exemption expressed in Item 77. To remove this anomaly the Government in the first instance decided to exempt from the 1st April, 1936, goods for the construction of tramway tracks, overhead wiring and gear necessary for the effective working of tramway systems bv all public transport authorities, and this decision was publicly announced. To avoid adminstrative difficulties .and remove completely the anomaly the Government has now decided to exempt all goods for the exclusive use of public transport authorities. In view of the earlier public announcement and the uncertainty which has existed as to the scope of the intended exemption, it is proposed that the new item shall be deemed to have commenced on the 1st April, 1936.
– But that concession applies only to one form of transport.
– The honorable senator means that the goods concerned should also be exempted when used by any private transport company or individual.
– I am using the arguments which the Minister himself used. [ say that the proposed new item creates an anomaly. It differentiates between public and private transport systems.
Senator Sir GEORGE PEARCE.The Government is not prepared at this stage to extend this concession to forms of private transport. The object of this proposed item is to put governmental and semi-governmental transport authorities on an equal footing.
Clause agreed to.
Clause 5 agreed to.
Title agreed to.
Bi’.l reported without amendment; report adopted.
Bill read a third time.
Bill received from the House of Representatives and (on motion by Senator Brennan) read a first time.
Bil] received from the House of Representatives and (on motion by Senator Brennan) read a first time.
.- On behalf of Senator J. V. MacDonald, who at the moment, is out of the chamber, I move -
That a return be presented to the Senate showing the numbers, with classes, of employees of the Commonwealth who are working 40 hours a week or less.
My colleague had asked a series of questions on this subject and was advised by the Leader of the Senate that the better course would be to move for the preparation of a return. I understand that the motion will not be opposed.
[5.9]. - I may explain that I opposed the motion being regarded as formal because on other occasions motions of this nature have involved the Commonwealth in considerable expenditure. In some cases the expense has amounted to hundreds of. pounds. I therefore desired to ascertain whether the information asked for was readily obtainable, or whether its preparation would involve the Commonwealth in heavy expenditure. I have been advised that the figures are available and that little expense will be incurred.
– I thank the Leader of the Senate for facilitating the adoption of the motion. I understood, as he ha3 said, that there might be some objection on the score of expense; but I am gratified to know that the information will be supplied in the form requested.
Question resolved in the affirmative.
– I now lay on the table a return giving the information asked for in the motion.
Debate resumed from the 25th September (vide page 563) on motion by Senator Sir George Pearce -
That the papers be printed.
.- As I shall have another opportunity to discuss certain aspects of the budget, I intend this afternoon to confine my remarks to certain features which, in my opinion, call for immediate comment, namely,the Government’s proposals affecting the finances of Western Australia and the wheat-growing industry in that State. But before directing the attention of honorable senators to these subjects I invite attention to the budget provision for tax relief. From this point of view the budget is certainly the most notable that has been delivered by any Commonwealth Treasurer for several years. The substantial instalment of tax reduction is highly appreciated by those sections of the community who will benefit from it. I hope that the reductions of emergency taxes which were imposed during the depression years may be regarded as an indication of the Government’s intention, in accordance with its pledge, to give still further relief from year to year until the whole of the emergency imposts are abolished. When we remember that last year there was a surplus of over £3,500,000, the relief from taxation now afforded, though welcome, is not over generous. In view of the fact that the anticipated tax collections for the coming year, after allowing for the proposed remissions, will exceed £61,000,000, or £8,000,000 more than the average collections of the predepression decade, 1921-29, one is forced to the conclusion that the Government has not yet fully utilized its capacity to reduce the tax burden on the people without in any way interfering with the revenue required to carry on essential and social services. The emergency taxes still in operation are expected to produce this year £12,500,000 from two sources alone - £8,000,000 from sales tax, and £4,500,000 from primage.
– Is that the estimated revenue from those emergencytaxes after allowing for exemptions included in this year’s budget?
– Yes ; the figures are supplied by the Treasurer in the budget, so it will be seen that the burden of emergency taxes upon industry is still a heavy one. The enormous tax burden laid upon the people is clearly set out in the following table: -
taxes, whilst at the same time extracting an ever increasing total amount of revenue from the pockets of the Australian taxpayers. This would suggest that progressive reduction of taxes is good policy. The figures indicate that it is working satisfactorily - that the reductions of taxes are stimulating industry, and giving employment to large numbers of people.
The worst feature of the budget is contained in the Government’s attitude to States grants. Western Australia will receive this year £500,000 as against £800,000 last year, a reduction of £300,000, or 37½ per cent. The reduction, I contend, is altogether too drastic. The financial position of the State is such that there should be no reduction at all. Furthermore, it was made without prior notification to the State Government. The State Treasurer had actually framed his budget in anticipation that the Commonwealth grant this year would be not less than the amount received last year.
– If the amount of grant were fixed, there would be no need for the Commonwealth Grants Commission.
– One of the arguments used when the commission was appointed was that there should be stability in the amount of grants to the States in order that State Treasurers would know for some period of years how much revenue could be expected from this source. The Commonwealth Grants Commission has been functioning for some years at considerable expense to the taxpayers, and still the position, as regards States grants, is unsatisfactory. The basis upon which the Common wealth Grants Commission operates has been objected to by the Government and the people of Western Australia; that objection was urged even when the grant was increased. The grants recommended by the commission should be for a term of years, so that claimant States would know the amounts to be received annually. Although the BrucePage Government did not give the full amount of £450,000 recommended by the first Disabilities Commission, it fixed the grant for a period of five years. I protest vigorously, because the Governments of Western Australia and South Australia did not know until nearly three months of this financial year had passed the amount of the grants to be paid. The grant , to South Australia has been reduced from £1,500,000 to £1,330,000, whilst that to Tasmania has been increased from £450,000 to £600,000. The Western Australian Government and the leading Western Australian newspapers have objected to the policy of the commission, even when, following the secession referendum and the welcome Cabinet meeting in Perth, which were vital factors, the grant to my State was increased by £200,000. This year the policy has been even more unsatisfactory, and the amount is to be reduced to £500,000, which is less than Western Australia has received for several years, even before the Commonwealth Grants Commission was in existence. The reductions to Western Australia and South Australia are due to the policy adopted by the commission. Speaking on the Western Australia Grant Bill on the 23rd October, 1935, T said-
The Commonwealth Grants Commission has adopted a different policy which will react seriously against the three claimant States. Paragraph 73 of the commission’s second report reads -
Some States are certainly in serious financial difficulties. It must be made possible for them to function as States of the Commonwealth at some minimum standard of efficiency. It rests with the Commonwealth tomake that standard as low as it pleases, to impose a task on the States as severe as it. thinks proper.
That is the present policy of the commission, which provides that sovereign States, instead of receiving a generous measure of assistance from the Commonwealth for disabilities proved to exist as a result of federation, are placed in the position of suppliants for a charitable dole.
– Why was the grant increased last year?
– I cannot go into that matter fully at this juncture, but the secession referendum and the visit of the Commonwealth Ministers to Perth to attend a Cabinet meeting were substantial factors in the increase.
– Is that not a reflection on the commission?
– That view has been widely expressed in Western Australian newspapers, and has my support. The quotation from my previous speech continued -
Paragraph 69 of the commission’s report states -
The only ground for this assistance is the inability of the State to carry on without it. lt follows, then, that the adverse effects of federal policy - even the net effects- are not in themselves ground for assistance to the Government, any more than they are to the people of a State. If in spite of the effects of federation the State can continue to function at what has been decided on as the minimum standard, there is no ground for assistance.
That is the policy of the Commonwealth Grants Commission, but it was not the policy of the Prime Minister (Mr. Lyons), who introduced the bill providing for the appointment of the commission. The Government has a right to refuse to be guided by the recommendations of a commission which has shown so clearly that it is acting very harshly, and in a way which is wholly unjustifiable. I went on to say -
I contend that the policy laid down in those two paragraphs of the Commonwealth Grants Commission’s report is extremely important. lt is opposed entirely to the conceptions of those who advocated federation, and I feel sure that if prior to their acceptance of the Commonwealth Constitution the people had thought that such a policy would be adopted by the Federal Government federation would not have been accepted by the smaller States. I ob ect to this change of policy towards the smaller States; this Parliament and not a commission should decide whether such a change should be made.
Although the policy of the commission that year provided for a substantial increase of the grant. Western Australia is, under that policy - as I have cited it - compelled to receive assistance in the form of a charitable dole. The basis upon which grants are made has been altered without any authority from Parliament, and is contrary to the opinions expressed by the Prime Minister when introducing the bill under which the commission was appointed and when speaking on the public platform.
I do not agree with the Leader of the Opposition in the House of Representatives (Mr. Curtin) who said that this is a rich man’s budget. It is a rich State’s budget with remarkable geographical incidence in that the further the people are away from Canberra the less consideration they receive. Of course the budget is popular in Canberra, where there has been restoration of salaries. All parties in the Western Australian Parliament are protesting against the treatment extended to Western Australia, particularly in the matter of the grants to be paid.
– Only in respect of one item.
– Yes, that is the very important item of State grants, with which I have been dealing. I have referred briefly to the policy of tax reduction and have expressed my hearty approval of the remissions made. I am now dealing with the harsh treatment of the people and Government of Western Australia by an unsympathetic and biased commission, which has recommended a reduced, grant - a mere dole - which is supposed to compensate that State for some of the disabilities it suffers under the federal system. In Canberra we find that, amongst others, Ministers and members of Parliament are to receive substantial concessions in the matter of salaries and allowances, and that public servants’ salaries have now been fully restored. Every honorable senator is pleased to learn that the state of the Commonwealth finances permits a restoration of public, servants salaries, but the Government deserves nothing but censure for restoring a further portion of the salaries of Ministers and the allowances of members while, at the same time, it is effecting drastic economies at the expense of two of the less populous States which are dependent on primary production. Increases, including tlie restoration of ministerial salaries and the allowances of members, amounting to £470.000 a year, have been made at the direct expense of Western Australia and South Australia-
– The honorable senator is rather late in making his protest against the partial restoration of the allowances of members of Parliament.
– I have opposed such increases every time I have had an opportunity to do so.
– Why did not the honorable senator take advantage of the opportunity afforded to him recently?
– I have voted against every increase of parliamentary salaries, and I shall object so long as I can to the injustices imposed upon Western Australia and South Australia under this budget and in other ways. I know that the Government will say that the reductions were recommended by the Commonwealth Grants Commission. That is my complaint. I am opposed to the basis upon which the grants are made, as laid down by the commission.
– Did not the Western Australian Government expect a reduction?
– It did not. It had introduced its budget before it was advised by the Commonwealth Government that the grant was to be reduced. It expected that with a grant similar to that received last year it would show a surplus of £5,000, but the grant having been skittled its budget will show a deficit of £294,326.
– Why does not Western Australia keep itself as the other States do?
– Because it is bled white by the actions of the Commonwealth Government, and not the least by the enormous tribute which it pays through the sugar industry to the State so capably represented by the honorable senator. I know that the Leader of the Senate (Senator Pearce) will say that the reductions were recommended by the Commonwealth Grants Commission. It is true that they were, but that is no reason why the recommendations should have been accepted by the Government. It must take full responsibility for them. We have had a large number of recommendations lately from other royal commissions and other bodies which this and previous Federal Governments have been so fond of appointing, but many of them have not been accepted. For instance, the Royal Commission on the Wheat Industry recommended the adoption of a rural rehabilitation scheme which would provide for the financing of farmers to purchase new p’ ant, horses, machinery and stock. But that recommendation was not given effect, though it might well have been included among the Government’s proposals in this budget. It also recommended the establishment of a compulsory wheat pool, but that recommendation, too, was rejected. Two commissions have lately recommended alterations of the boundaries of federal electorates in Western Australia, and in both cases the recommendations were rejected by the House of Representatives without opposition by the Government. Why, in these circumstances, should the recommendations of the Commonwealth Grants Commission alone be regarded as sacrosanct?
If it thought as I do, that the recommendations of the Commonwealth Grants Commission were wrong, it was the duty of the Government to refer back the report, with a request that the commission should take into consideration, first, the real disabilities of Western Australia and South Australia under federation, and, secondly, the real needs of those States. The difficulties of Western Australia were accentuated in every direction by the wor3t drought in the history of its widespread pastoral areas, and by a drought last year in the north-eastern wheat belt. This year it is feared that even larger areas of the north-eastern and northern wheat areas will be subjected to drought conditions. This budget gives to Western Australia another bitter disappointment in regard to the federal dole policy of grants to States. The last report of the Commonwealth Grants Commission is amazing in its inconsistent arguments. The impression left on my mind after a careful perusal of that document was that the commission had first decided to cut to the bone the grant to Western Australia, and then had attempted to justify its action by a number of inconsistent and entirely conflicting arguments. The commission as it is now constituted certainly has proved itself a failure so far as Western Australia is concerned. The first commission to inquire into the disabilities of Western Australia under federation, which was presided over by Mr. W. Higgs, an ex-Treasurer of the Commonwealth, was, in my opinion, the only one which lived up to the federal ideal. That commission recognized the numerous disabilities under which Western Australia laboured, particularly in respect to tariff and the Navigation Act. The Commonwealth Grants Commission, however, refuses to make any allowance for disabilities imposed by federal policy, and does not recognize its obligation to compensate the smaller States for the loss of the important field of customs revenue. The commission condemned the policy of Western Australia in regard to land settlement, and attributed Western Australia’s inferior financial conditions “ to the losses arising from the reckless financing of wheat settlement, and the attempt at dairying settlement in the high rainfall areas of the extreme south-west of the group settlements “. I do not defend the administration of the groups, nor do I deny that mistakes wore made, but honorable senators should not forget that this settlement was part of the Empire, migration” agreement to which the Commonwealth and the Imperial Governments were signatories. It is most unjust that the Commonwealth should now not only fail to share the losses resultant from that scheme, but also penalize its weaker partner because those losses were incurred. But Western. Australia is penalized, not only for its failures, but also for its successes. That the goldmining industry is prosperous is urged as another reason for reducing the grant. Still another reason advanced for the reduction is. that for the first time in ten years the State Government has achieved a small surplus, though this was done by the imposition of a drastic financial emergency tax of 9d. in the £1, which yielded £850,000 last year, and by increases of taxation which -the commission itself admits brings the Western Australian rate up to the normal Australian basis. Western Australia, then, is penalized for widely differing reasons; on the one hand, for its alleged extravagance in regard to group settlement, and, on the other, because, having increased taxation to the normal Australian basis, it was successful in achieving what was the first surplus for ten years, and only the sixth surplus since the inception of federation. No consideration was given to the fact that Western Australia had suffered a severe drought in the northeastern wheat belt; or to the fact that the pastoral areas are to-day experiencing the worst drought in the history of the State. In passing, may I say that present seasonal indications give every reason to fear that the State may in the near future have to face much heavier demands for drought relief than were made last year. It is regrettable that while both South Australia and Tasmania have representation on the Commonwealth Grants Commission, no Western Australian has been appointed to it, nor was one appointed to the previous tribunal which inquired into the disabilities of Western Australia under federation. It is an unfortunate fact also that Mr.
Eggleston, to whose ability and versatility I pay tribute, had severely criticized and condemned the financial policy of Western Australia before his appointment to the chairmanship of the commission. In any case, that gentleman entirely misunderstood his position. The commission poses as a tribunal set up to inquire into the past activities of State governments rather than as a commission of inquiry into the disabilities suffered by claimant States as a result of federal policy. In my opinion it is quite outside the province of the commission to penalize the Government of Western Australia for losses arising out of its share in the Empire migration agreement. The Commonwealth Government itself was a partner in the scheme of group settlement, and though to-day it is escaping the losses incurred by the minor partner in that scheme it is imposing penalties on those who suffered most from it.
– Did the Commonwealth have any voice in the selection of the land to be settled?
– No ; hut the Commonwealth knew the part of the State in which settlement was to take place, and it assisted in paying over a term of years the interest on the money utilized in opening up that part of the State. Few people will suggest that that venture was not well worth while. It will ultimately be successful in providing homes for a large number of settlers in districts blessed with a good rainfall and an equable climate. In order to show that there is strong feeling in Western Australia against the drastic reduction of the grant, I. shall read a protest made to the Prime Minister “by the Deputy Premier of that State on the day that he received word of the reduction.
– Was a similar protest made last year?
– Last year the basis laid down by the commission for the making of grants was strongly objected to. In his communication to the Prime Minister, Mr. Troy said -
Received your telegram advising the amount oi Grants Commission’s recommendation and aru astounded at the amount recommended. If no more than the reduced grant is paid by your Government, it will be impossible to finance our minimum revenue requirements without recourse to loan funds. In view of the stringency of the loan market, such a course would seriously curtail the already reduced amount available for unemployment relief work. On account of the drought last year we are still committed to heavy relief expenditure on settlers in the affected areas. Water supplies have not been supplemented this winter and the greater portion of the wheatbelt is involved. In the pastoral areas great loss of stock has occurred and the position is very acute. The present seasonal outlook in the wheat areas is unfavorable, but even if late rains bring partial relief we will still have to provide water to many districts for the coming summer. It will be necessary not only to install pipelines but to rail water at great expense. The budgetary position, on the same plan as last year, is difficult even without a reduction in the grant below last year’s amount, and if the reduction is made our position will be critical. I desire to lodge the strongest protest and, to request that the amount of last year’s grant be continued fur this financial year pending further consideration.
Interviewed on the same subject, Mr. Troy stated - lt is difficult to say what the Grants Commission has based its calculations on in assessing the grant, but it is a very disastrous thing for this country. It docs not seem the proper thing for the Commonwealth Government to be reducing taxation and making concessions when the State, through no active maladministration, is facing serious burdens The telegram which I am sending to the Prima Minister does not in any way exaggerate the position, but is a plain statement of fact.
Mr. Troy pointed out that a reduction of the amount of the grant by £300,000 would affect the budget position of tha State for 1936-37, as proposed in the Estimates introduced into the Legislative Assembly on the previous Tuesday, by converting an estimated surplus of £5,674 to a deficit of £294,326, and would react on the loan fund. That reduction was particularly unfortunate in that it came at a time when the Government was trying to improve the lot of the unemployed.
– Is there not a Labour government in Western Australia?
– At the moment, I do not care what government it is, so long as it is doing its duty toward the State. It was the duty of the Government of Western Australia to object not only to the drastic reduction of the grant, but also to the way in which it was communicated to the State, and I support its protests on both these matters. The report of the Commonwealth Grants Commission is dated the 16th July last. No doubt the Commonwealth Government long ago decided to act upon its recommendation; but it did not convey its decision to the State until after the Commonwealth Treasurer had introduced his budget on the 10th September.
– That was most unfortunate.
– The Government of Western Australia was not advised of the reduction until after the Treasurer of the State had submitted his budget to the Parliament. That budget was framed in the expectation that the grant would remain at £800,000, as for the previous year. In the words of the Premier of Western Australia the budgethas been “ skittled “, and the State Government now expects to end the year with a deficit of over £290,000 instead of a small surplus. It is regrettable that the policy adopted by the commission gives to the State Treasurers no financial stability. It is wrong to keep State governments in doubt and ignorance of their grants until their budgets have been delivered, and nearly one-quarter of the financial year to which they relate has expired.
– Western Australia was lucky in that the State budget had been delivered. Its position would have been worse had the budget not been presented to Parliament.
– The people of Western Australia believe that there are three main grounds for the making of grants to States; first, the disabilities arising from federal policy, which was the original claim of Western Australia; secondly, financial necessity; and, thirdly, consideration on a national basis should be given to the burden placed, upon one-sixteenth of the population of Australia in developing one-third of the continent. The commission admits that the figures submitted by Western Australia last year actually understated the tariff burden on primary industries. I quote its own words - “ The burden of the tariff is much greater on “Western Australia than on any other State”. That has been proved by other independent tribunals, including the five economists who wore appointed by the Bruce-Page Government to study the effect of the Australian tariff, and whose words onthis subject I have quoted previously in the Senate.
– Does the honorable senator agree with the commission’s findings in that respect?
– Yes; but I disagree with its contention that disabilities under federation are not grounds for grants.
– Then the honorable senator accepts what is pleasing in the commission’s report, but not that which is not pleasing?
– No, certainly not. I have explained my reasons for disagreeing with the commission’s recommendation. Notwithstanding that the commission admitted that the tariff burden is heavier on Western Australia than on the other States, it recommended for that State the biggest reduction of the grants previously made; it recommended that Western Australia should receive a smaller grant than any other State. The truth is that the secondary industries of the eastern States have been developed under a policy of high protection, which has led to high costs of production in our primary industries, and been excessively harsh on Western Australia. Even at this late hour, I urge the Government to withdraw its budget figures relating to grants to the States, and to restore to Western Australia and South Australia the amounts taken from them. They alone appear to have been singled out for reductions, while other sections of the community have had restored to them the amounts previously taken from them.
I wish, now, to touch on that portion of the Treasurer’s budget speech which related to the wheat industry. Mr. Casey said -
In view of the fortunate and substantial improvements in the price of wheat, it is unnecessary for the Commonwealth to contemplate further assistance to wheat-growers during the present financial year.
– The Treasurer was more sympathetic last Friday.
– Although it is a matter for rejoicing, a better price for wheat is not of much value to the man who has no wheat to sell, and will have to obtain seed wheat for next year’s planting. That paragraph in Mr. Casey’s budget speech was read with dismay by the people of Western Australia. Some time ago the Assistant Minister for Commerce (Mr. Thorby) visited the wheat districts of Western Australia, and personally inspected some of the areas which had’ suffered from last year’s drought. Hundreds of settlers in that State expected that, as a result of Mr. Thorby’s visit, an additional payment of £150,000 for drought relief would have been made to Western Australia under this budget. I regret exceedingly that that has not been done, >because Mr. Thorby, who is a practical man, gave a sympathetic hearing to the requests made to him. But “sympathy without relief, is like mustard without beef “. I urge the Government to give sympathetic consideration to the requests of the wheatgrowers of Western Australia for assistance, and even at this late hour to grant the amount of £150,000 still required to assist the farmers in that State who suffered from last year’s drought.
I ask leave to continue my remarks at a later date.
Leave granted; debate adjourned.
Bill received from the House of Representatives and (on motion by Senator Brennan) read a first time.
Business of the Senate.
[6.6].- I move-
That the Senate do now adjourn.
I am endeavouring to ascertain what bills are likely to be dealt with by the House of Representatives, and passed on to the Senate before the House of Representatives deals with the tariff and the budget.
The consideration of both will be protracted, and probably the Senate will be enabled to adjourn for three or four weeks. I hope to be able to make a fuller announcement on this subject to-morrow.
Question resolved in the affirmative.
Senate adjourned at6.8 p.m.
Cite as: Australia, Senate, Debates, 30 September 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360930_senate_14_151/>.