Senate
3 June 1942

16th Parliament · 1st Session



The President (Senator the Hon. J. Cunningham) took the chair at 11 a.m., and read prayers.

page 1895

WIDOWS’" PENSIONS BILL 1942

Message received from the House of Representatives intimating that it had agreed to the amendments made by the Senate in this bill, which was previously amended by the House of Representatives at the request of the Senate.

page 1895

QUESTION

BROADCASTING STATIONS

Effect or War-time Conditions.

Senator FOLL:
QUEENSLAND

– Is the PostmasterGeneral aware that,, on account of the new regulations promulgated limiting the activities of certain broadcasting stations in Queensland to daylight hours, and owing to restrictions brought about entirely fay war-time conditions, the finances of some of those stations have been seriously affected ? Does he also know that some of the stations cover areas which are not adequately served by national stations? Will he give consideration to the whole matter, in order to ascertain whether it is possible to recompense those stations for loss that they have suffered on account of war-time activities?

Senator ASHLEY:
Minister for Information · NEW SOUTH WALES · ALP

– Action has already been taken with a view to granting relief to the stations mentioned. As the honorable senator will recognize, stations in other parts of Australia will ultimately become involved in loss, and the financial position of each station will have to be examined, but sympathetic consideration is now being given to the matter.

page 1895

QUESTION

COAL-MINING INDUSTRY

Attitude of Prime MINISTER

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– I ask the Leader of the Senate the following questions: -

  1. Is the Prime Minister correctly reported in to-day’s press where it is stated that he has dramatically defied the enemy to land a large force in Australia ?
  2. If so, can the Leader of the Senate secure from the Prime Minister an indication as to how tin’s challenge compares with his Government’s challenge to the disruptive elements in the coal-mining and other industries during the last six months?
  3. If so, will the Prime Minister display the same courage in connexion with the disruptive elements in the coalmining industry, and so discontinue the political sham fighting consistently displayed by this Government?
Senator COLLINGS:
Minister for the Interior · QUEENSLAND · ALP

– I have not seen the statement to which the honorable senator has referred, and I am in no way in control of the Prime Minister’s actions.

Senator McLEAY:
SOUTH AUSTRALIA

– Seeing that the Leader of the Senate states that he has not seen the press report referred to, I inform him that five coal mines are idle to-day. In view of that fact, what does the Government intend to do about the matter?

Senator COLLINGS:

– I am of opinion that that question is entirely out of order. The honorable senator knows that he is not entitled to be informed regarding matters of government policy under cover of a question.

page 1895

QUESTION

CANBERRA OMNIBUS SERVICE

Senator COOPER:
QUEENSLAND

– Will the Minister for the Interior state whether he was correctly reported in the press last week as having said that his department was doing everything possible to ensure that the Canberra omnibus service would be conducted with a view to securing the utmost possible comfort and safety of the passengers? If so, is the Minister aware that last night the omnibus which leaves Parliament House at 11.10 p.m. - incidentally that is the last omnibus to the northern suburbs - was so overloaded with passengers standing up that it was impossible for the conductress to move among the passengers until after the bus had left the Acton Guest House, and that passengers complained severely of overcrowding? Will the Minister have inquiries made, and instruct a responsible officer either personally to make the journey at peak hours, or visit the Parliament

House stopping places at peak hours, in order that he may see for himself the conditions and danger existing on the last omnibus at night for the northern suburbs ?

Senator COLLINGS:
ALP

– The answer to the first part of the honorable senator’s question is that I was correctly reported. In reply to the remainder of his question, I have to inform him that the matter is continuously under serious review. The present congestion is inevitable, and is due to the greatly increased population of Canberra, on account not only of the natural increase but also the presence of a large number of temporary residents. Owing to the war situation, it is impossible to get new omnibuses in Australia or from other countries, and until new vehicles can be obtained those who travel in the present omnibuses, including mem.bers of Parliament, must suffer the general inconvenience which war conditions demand.

page 1896

QUESTION

SUGAR INDUSTRY

Senator COURTICE:
QUEENSLAND

– Has the Minister for Trade and Customs read a statement published in the Brisbane Daily Mirror of the 1st June, concerning the sugar position in Australia?

Senator KEANE:
Minister for Trade and Customs · VICTORIA · ALP

– I have seen a statement attributed to Senator Crawford which appeared in that journal on the 1st June regarding the sugar industry. I assure honorable senators of the strict attention which is, and has always been, paid by the Commonwealth Government to the sugar industry, and the close contact which is being maintained with leading persons in the industry. As a result of this the Government has a keen appreciation and full knowledge of the present position. With regard to the 1941 crop, I am pleased to state that the whole of the sugar has now been moved from Queensland ports. The harvesting of the 1942 crop will commence within the next few days, and my department, in collaboration with the Department of Labour and National Service, is making every effort to ensure that sufficient man-power for both canecutting and milling is available. A senior officer of the Department of Labour and National Service recently conducted a full investigation’ of the manpower position in the sugar-growing areas. Provision has been made whereby workers engaged in the sugar industry may transfer from a protected industry provided that they have been engaged in the sugar industry during the last two years. Furthermore, a seasonal register is being compiled for this type of labour. It is not expected that the 1942 crop will be as large as the 1941 crop. Nevertheless, it will be more than adequate to supply Australia’s full needs, both for household consumption and manufacturing requirements, and will leave a quantity available for export. In addition, emergency stocks of sugar have been built up throughout the country. Public statements of the nature of that made by Senator Crawford might have an alarming effect on the general public, and might cause a rush of panic buying, thus creating an artificial shortage of sugar. As honorable senators will remember, there was an unprecedented volume of buying by the public some months ago, due to a fear of a sugar famine. I made public announcements at the time reassuring the public on the sugar supply position, and am happy to state that the demand is almost back to normal. With regard to the 1943 crop, preparations for which are now being made, I assure honorable senators that my department is closely watching the position, and is doing everything practicable to ensure that the sugar yield will be as high as possible.

page 1896

QUESTION

PARLIAMENT HOUSE

Exterior Lighting Arranngements

Senator GIBSON:
VICTORIA

– I ask you, Mr. President, whether, in view of the grave danger to persons who have to leave this building during the hours of darkness, you will co-operate with the Speaker of the House of Representatives and issue an instruction that shaded lights shall be placed over the exits, especially at the front of the building, in order that the steps leading to and from the interior may be clearly visible?

The PRESIDENT:

– I give the assurance that I shall look into the matter to-day.

page 1897

QUESTION

NEWSPAPER REFLECTIONS ON SENATE

Senator ASHLEY:
ALP

– In view of the restrictions imposed by you, Mr. President, on a news service provided to a section of the New South Wales public by the Sydney DailyTelegraph, will you inform me of the position that will apply when the Minister for the Navy and the Minister for Munitions, whom I represent in the Senate, the Minister for Commerce, the Minister for Labour and National Service, and other Ministers whose offices are located in the precincts of the Senate, wish to issue statements to the Sydney morning press? Are those Ministers, including myself, to be deprived of the right to give press interviews, as we wish, in our own offices at Parliament House, or are we to be obliged to walk elsewhere in order to issue statements to representatives of some newspapers? In addition, will you advise me whether the decision, so far as it affects King’s Hall and the Parliamentary Refreshment Rooms, was made by you as chairman of the Joint House Committee? If so, was a meeting of that committee called for the purpose of discussing the proposed restrictions ?

The PRESIDENT:

– I am not concerned with the business of Ministers with representatives of the press. I did not consult the Joint House Committee, but acted as custodian of the rights and privileges of the Senate.

page 1897

QUESTION

TASMANIAN BERRY CROPS

Senator LAMP:
TASMANIA

asked the Minister assisting the Minister for Commerce, upon notice -

Will the Government set up a committee to acquire the whole of the black currant and raspberry crops of Tasmania this season, so as to ensure an adequate supply for Commonwealth purposes?

Senator FRASER:
WESTERN AUSTRALIA · ALP

– The Commonwealth Government is at present giving consideration to the representations submitted by the Government of Tasmania in connexion with this matter.

page 1897

QUESTION

BOARD OF BUSINESS ADMINISTRATION

Senator E B JOHNSTON:
WESTERN AUSTRALIA

asked the Minister representing the Treasurer, upon notice -

  1. Who are the members of the Board of Business Administration, attached to the Defence Department?

    1. What are the duties of the said Board?
    2. What salaries, allowances, or fees are paid to the members thereof?
    3. When expenditure is desired by General MacArthur, General Blarney, Mr. Theodore, Mr. Essington Lewis, or the Ministers controlling the fighting services is it in any degree subject to the approval of this Board?
    4. If not, why is the Board retained?
Senator COLLINGS:

– The Treasurer, under whose department the Board of Business Administration now functions, has supplied the following answers: -

  1. The members are -Right Honorable Sir George Pearce, K.C.V.O., Chairman, F. W. Spry, H. F. Richardson, P. L. Coleman and H. M. Cremen. Messrs. H G. Brain and W. Sydney Jones are co-opted members for Navy and Air matters respectively, and Mr. A. D.J. Forster for special subjects.
  2. The powers and functions of the Board of Business Administration are set out in Regulation 9, National Security (Board of Business Administration)Regulations, as under : -

    1. To advise concerning expenditure or proposed expenditure for any purpose connected with the defence of the Commonwealth or the prosecution of the present war, and to report as to the nature and scope of the expenditure and the organization and methods adopted or to be adopted to achieve the purpose for which the expenditure is required, and as to the possibility of effecting economies.
    1. To report on the progress of defence preparations in relation to arms, armament, ammunition, equipment, stores, supplies and materials, and the effectiveness of the organization and methods employed in connexion with such preparations.

    2. To report generally on the business organization and administration of the Departments with a view to promoting efficiency and economy.
    3. To provide for such inspections as the board considers necessary to enable it to ascertain directly the situation in regard to matters in respect of which the board is required to advise or report, and to ensure that the administration of the departments is being carried out economically and efficiently.
    4. To investigate and report on any matters referred to the board by the Department of the Treasury, or any of the departments, or by the Minister administering any of those departments; and
    5. To submit reports on any matters which, in the opinion of the board, it is desirable to bring under the notice of the Minister.
  3. Sir George Pearce receives a salary of £500 per annum as chairman of the board. Mr. P. L. Coleman receives an allowance of £460 per annum for duties associated with the work of the board and the defence division of the Treasury. Other members do not receive any salary or fees as members of the board or any allowance other than for travelling expenses, if travelling on duty. 4 and 5. The board does not approve expenditure. It examines, from the business aspect, proposals costing over £10,000, and records its views for the information of the Minister.

The departments to which thu board’s responsibilities for review extend are Navy, Army and Air, and Supply and Development in respect of supply matters directly affecting the service departments.

In cases of urgency, ,i proposal may be approved by the Minister or other approving authority, prior to reference to the Board of Business Administration. In such cases, the Board of Business Administration is immediately informed, and, after reviewing the project, furnishes its observations for the consideration of the Minister.

page 1898

INCOME TAX (WAR-TIME ARRANGEMENTS) BILL 1942

Second Reading

Debate resumed from the 2nd June (vide page 1812), on motion by Senator Keane -

That the bill be now read a second time.

Senator McLEAY:
Leader of the Opposition · South Australia.

– I wish to direct my remarks to the proposals contained in the four hills which were presented to the Senate yesterday, namely, the Income Tax (War-time Arrangements) Bill 1942, the States Grants (Income Tax Reimbursement) Bill 1942, the Income Tax Assessment Bill 1942,’ and the Income Tax Bill 1942.

The PRESIDENT (Senator the Hon J Cunningham:
WESTERN AUSTRALIA

– Is it the desire of the Senate that the cognate measures be discussed concurrently with the bill now before the Senate?

Honorable Senators. - Hear, Hear !

Senator McLEAY:

– .These proposals are the most important that have come before the Senate since I have been a’ member of this chamber. I regret that in recent years, due particularly to the rigid control of the Labour party by the Labour caucus, the Senate has not functioned as a States House or a house of review as was intended by the framers of the Constitution. There is evidence that, during recent weeks, the Labour caucus has issued instructions that regardless of their personal views all members of the Labour party must support the Government’s taxation proposals.

Senator Courtice:

– That is quite untrue.

Senator McLEAY:

– We know from reports which have appeared in the newspapers that even those members of the Labour party who spoke in opposition to these proposals in the House of Representatives supported them when the votes were taken. That is most regrettable; but what is more regrettable is that in recent years the political Labour party has been controlled by forces outside the Parliament. When these proposals were placed before the State Premiers, who represent all shades of political opinion, they were unanimously opposed.

Senator Foll:

– Self-preservation was uppermost.

Senator McLEAY:

– The framers of the Constitution intended the Senate to represent to the country the views of the States. A .study of the history of Australia since the inception of federation shows that the Senate ha? played an important part in the political life of this country. During the war of 1914-18, and on other occasions when Labour governments holding extreme views were in office, the country was fortunate in having in the Senate a majority of senators opposed to such views. On those occasions, this chamber rendered good service to Australia. I suggest - and I do so without heat and in no bickering spirit - that if this chamber is to perform its proper function, every honorable senator should, to the best of his ability, study the proposals placed before him before casting his vote.

As the proposals of the Government are intricate, I shall place some illuminating facts and figures before honorable senators. I have carefully examined the measures now under consideration, and it i.s my considered opinion that they reveal evidence of political cunning and legal trickery and that they contain grave inequalities and anomalies, under the camouflage of uniform taxation. .

Senator Armstrong:

– Those are serious charges.

Senator McLEAY:

– The Government attempts to camouflage its real intentions, because uniform taxation is not mentioned in its proposals. The lack of uniformity is revealed by’ the necessity to introduce four separate bills.

Senator SPICER:
VICTORIA

– And even if they become law, uniformity will not be achieved.

Senator McLEAY:

– I agree.

Senator Collings:

– The Senate has agreed to discuss the four measures concurrently.

Senator McLEAY:

– Those persons who are telling the people of Australia that these proposals will institute a uniform system of taxation are attempting to mislead the public. My first objection to these proposals is that the taxes will not be uniform. As State land tax has not been included I submit the following statement showing the yield from land tax in the several States: -

Those State taxes have not been included in the compensation which it is proposed to pay to the State. We can say that, for all practical purposes, there is no land tax in New South Wales. Thus, a Victorian farmer just inside the border would receive one assessment for income fax and another for State land tax, whilst the farmer just over the border in New South Wales would receive an assessment for income tax, but would not be required to pay any land tax. It cannot, therefore,

be said that the plan makes for uniform taxation. The Victorian Commissioner of Taxation has estimated that Victorian taxpayers will be compelled under this plan to pay an additional £4,000,000, or an average of £10 10s. for each taxpayer, over and above what he is now contributing. I draw the attention of honorable senators to clause 4 of the States Grants (Income Tax Reimbursement) Bill -

  1. In every financial year during which this act is in operation in respect of which the Treasurer is satisfied that a State has not imposed a tax upon incomes, there shall be payable by way of financial assistance to that State the amount set forth in the schedule to this act against the name of that State, less an amount equal to any arrears of tax collected by or on behalf of that State during that financial year.

That represents an attempt by the legal draftsman to circumvent the provisions of the Constitution. If Victoria does not accept the plan it will, in effect, be fined £6,500,000; but if it does accept the plan, the taxpayers will be compelled to provide £4,000,000 more than they are paying now, and Victoria will become the highest taxed State in Australia.

Senator Gibson:

– Instead of the lowest.

Senator McLEAY:

– Yes, instead of the lowest. As additional proof that this plan will not bring about uniform taxation, I quote the following table, which shows the total collections from taxes in the various States, and sets forth the proportions received from income tax and from other taxes: -

Taxes other than income tax include probate, succession and stamp duties, land tax, liquor licences, lotteries, entertainments tax, and motor licences. For the purpose of my argument, I propose to concentrate on the three more populous States because, apart from my general objections to the Government’s proposal, those States furnish the strongest argument against it. The States of Tasmania, “Western Australia, and South Australia are in a different position from them, because the Commonwealth Grants Commission will still function, and will recommend the granting of special assistance to them from time to time. The Commonwealth Government has, in the past, treated those three States well. Honorable senators who represent Tasmania, South Australia and Western Australia appreciate the action of honorable senators from other States in having agreed to the granting of such assistance as the Commonwealth has given. I cannot remember having ever heard any honorable senator from one of the nonclaimant States objecting to the making of grants to the claimant States. When we compare the spirit of fairness which animated past governments in this respect with the proposed treatment of Victoria under this plan, I find it difficult to imagine how the special taxation committee could possibly have suggested it.

Senator McBride:

– It was handpicked.

Senator McLeay:

– Yes, as the honorable senator suggests, it was apparently hand-picked. It was a monstrous thing that, when a matter so closely affecting the vital interests of the States was at issue, it should be handed over to a committee upon which the States had no representation, and which did not even invite the opinion of the States.

Senator FoLL:

– The States had an opportunity to consider the plan when it was placed before the Conference of Commonwealth and State Ministers.

Senator McLEAY:

– The States had no voice in the preparation of the plan, and at the conference could only accept or reject it. They are now asking the Senate to protect their interests.

My second objection to the plan is that the benefits under it will not be uniform.

The more I examine the figures regarding the proposed payments by way of compensation, the more convinced I am that the compensation to New South Wales is more than generous. The following table shows the distribution of the proposed compensation payments on a population basis: -

Those figures show that the treatment to be meted out to Victoria is most unfair. New South Wales is to receive nearly two and a half times more compensation than Victoria. Therefore, it cannot be said that the benefits under this scheme are to be distributed uniformly among the States. A careful examination of the basis on which the committee arrived at the amount for New South Wales emphasizes the inequalities of the scheme. One reason why the proposed allocation to New South Wales is so high is that that State’s expenditure on social services, including unemployment relief, during the two years which have been taken as a basis, was unusually high. The following table, which has been compiled by the Commonwealth Statistician, summarizes the cost per capita of the States in respect of the three main groups of social services provided by the States -

Senator Gibson:

– And Victoria has provided social services of as high a standard as the other States.

Senator McLEAY:

– I emphasize that under these proposals, which are camouflaged as uniform tax proposals, it is intended to pay to the people of New South Wales for social services an amount of £4 9s. 3d. per capita, whilst the amount to be paid to Victoria for the same services is only £3 Is. 2d. per capita. How can any one justify the payment of so high a rate to people living in New South Wales, and so low a rate in respect of the same services to people living just over the border? Education and health are the principal social services in all States; and Australians as a whole are entitled to the same standards in respect of those services. Therefore, no justification whatever exists for such a great disparity between the amounts of compensation to be paid to the States to enable them to maintain those ‘ services. The injustice of this disparity, particularly in respect of Victoria, is emphasized by the fact that Victorians will be obliged to pay higher taxes in order to finance r.hose services, whereas taxpayers in New South Wales will not be asked to carry any additional burden. A careful perusal of the figures which I have quoted forces one to the conclusion that it is the policy of this Government to pay a premium on extravagance. The cost of social services in New South Wales reached a record “ high “ during the Lang regime ; and this Government, apparently, proposes to perpetuate that state of affairs. At the same time, Victoria, which has set an example to the States of thrift and frugality in its administration, is to be penalized.

I now draw the attention of honorable senators to what I consider to be the most iniquitous feature of compensation proposed to be paid to New South Wales. As from the 1st July, 1941, New South Wales was relieved of a payment of £1,337,000 annually in respect of its child endowment scheme which was superseded by the Commonwealth scheme. However, no deduction has been made in respect of that sum in computing the amount of compensation to be paid to New South Wales under these proposals. In addition, New South Wales will also be relieved of an annual expenditure of £427,000 in respect of its widows’ pensions scheme as from the 1st July next, when the Commonwealth widows’ pensions scheme will be inaugurated. The amount of £427,000 has been deducted in calculating the amount of compensation to be paid to New South Wales under these proposals. Therefore, I fail to understand why the amount of £1,337,000, of which New South Wales has been relieved in respect of its State child endowment scheme, has not also been deducted. I listened to the debate on this measure in the House of Representatives. I was pleased to note that the honorable member for Parramatta (Sir Frederick Stewart), who was Minister for Social Services in the previous Government, severely criticized this omission on the part of the Government. In the committee stage, I propose to move an amendment that this amount of £1,337,000 be deducted from the amount of compensation proposed to be paid to New South Wales. After the special committee had examined various proposals for arriving at a basis of compensation, it adopted, fortunately for New South Wales, the average of State collections from taxes on incomes in the financial years 1939-40 and 1940-41. In New South Wales during that period receipts from taxation increased by £4,000,000, but collections in other States remained stationary. I have prepared an interesting summary of the basis of the calculation of compensation that will be paid to New South Wales. If honorable senators examine these figures, they will understand why the proposed compensation to New South Wales is so high and disproportionate to the reimbursements to other States -

The average for those two years is £16,004,000, from which must be deducted the cost of collection, namely, £208,000, and the adjustment due to the payment of widows’ pensions by the Commonwealth, amounting to £427,000. That reduces the total to £15,369,000. The Commonwealth proposes to pay as compensation to New South Wales the sum of £15,35.6,000.

Items of expenditure from the New South Wales social services fund are as follows : -

That expenditure, which was previously met by New South Wales, will now be borne by the Commonwealth. My figures indicate that an adjustment of approximately £2,050,000 should be made on account of expenditure that is now met by the Commonwealth, whereas the Treasurer’s calculations disclose that only £427,000 will be deducted. Consequently, the compensation payable to New South Wales should be reduced by £1,623,000.

My third objection to the proposals of the Government is that they will destroy the power of the States to impose income taxation.

Senator ARTHUR:
NEW SOUTH WALES

– For how long?

Senator McLEAY:

– For the duration of the war and twelve months thereafter. As the result of this legislation, the States will be placed in a most embarrassing position. They are answerable to the people in the same way as is the Commonwealth Government, but, in effect, their future policy will be dictated by the Commonwealth Treasurer and Treasury officials. If the Labour party manages to secure its way, it will ensure that this legislation will never be repealed. Its policy is unification, and I hope that it will not try to mislead the people into believing that these measures are not an attempt to give effect to a plank of its platform. The special committee misrepresented the position in yet another way. Although itselected the financial years 1939-40 and 1940-41 as the basis for the payment of compensation, honorable senators should remember that the receipts from income tax applied to earnings in the years 1938-39 and 1939-40. For all practical purposes, the earnings in those two years covered only ten months of the war. Misleading statements have been made about the increased earnings of the States as the result of the Commonwealth’s expenditure on the conduct of the war, but they are not justified because in the first twelve mouths of the war, the effect of the increased expenditure had not been felt in the various States. Whilst the Commonwealth’s proposals will peg the income of the States to their receipts for the years 1939-40 and 2 940-41, costs have risen sharply. For example, this Government recently increased the sales tax, and raised old-age and invalid pensions by 25 per cent. The income of the various States has been pegged at the figures which ruled before the outbreak, and during the first ten months, of the war, but their expenditure lias increased considerably. The Commonwealth continues blithely to increase expenses, and the States are obliged to meet them. I ask honorable senators to consider the difficulties of, say, the Treasurer of Western Australia, in preparing his budget for the next financial year.

Under these proposals, of course, he will ,be permitted to appeal to the Commonwealth Grants Commission against the amount of compensation allotted to that State; but he will be in an almost hopeless position to budget for the future, because the policy of the State will be dictated by the Commonwealth Treasurer or Treasury officials. From my experience as a Minister, I know that some Commonwealth officials fairly delight in “ putting it over “ the States. They adopt a “ take-it-or-leave-it “ attitude, because they contend that they are the controllers of Australian governmental finance.

My fifth objection to these proposals is based upon the vicious increase of tax on incomes exceeding £1,000 per annum. The proposed increases on higher incomes are out of all proportion to the increases on lower incomes. The Government knows that, politically, this discrimination is popular because it will release large numbers of people from the obligation to pay income tax. But I prophesy that before the conclusion of the war, the Government will be compelled to tax the lower incomes in order to obtain money for war purposes. If it continues to impose on high incomes rates of tax exceeding 20s. in the £1, it will dry up those sources of revenue and next year the day of reckoning will be at hand. Whilst the Government proposes to compel persons with incomes exceeding £1,000 a year to pay an additional £1,500,000, it will relieve incomes under £400 and between £400 and £1,000 per annum of the payment of £750,000 per annum respectively. The preamble to the bill, states that the purpose of the measure is to ensure the more effectual prosecution of the war. Is the Minister for Trade and. Customs aware that the Government’s uniform taxation proposals will relieve 60,000 or 70,000 single persons without dependants of the obligation to pay income tax? In South Australia alone, 19,000 single persons without dependants will now not have to pay income tax and the number in “Western Australia must be even greater. However,, the decision of the Government will be politically popular, although it will not help the war effort.

Senator ASHLEY:
NEW SOUTH WALES · ALP

– Those people pay indirect taxation.

Senator McLEAY:

– That is only a parrot cry. Does the Postmaster-General imply that persons with incomes exceeding £1,000 a year do not pay indirect taxation ?

Senator ASHLEY:
ALP

– They are in a position to pay it.

Senator McLEAY:

– They will not he in a position to pay it after this Government has finished with them, and the country will be poorer as; a result.

In its present form the bill will permit all taxpayers whose incomes are lower than £156 per annum: to escape direct taxation entirely Although under the existing, Commonwealth law no tax is payable on> such incomes, it is noteworthy that the three less populous States have found it necessary to tax- incomes below £156’ derived by persons without dependants. It is considered that no hardship bins been: imposed on this section of the community, and in war-time no justification exists for the outright exemption proposed. The extent of the loss of revenue from this source is indicated by the following figures representing taxes payable at present on a personal exertion income of £150 derived by a person without dependants: -

This is a most inappropriate time to consider lightening the burden on any part of that section of the community which at present pays a very small proportion of the aggregate income taxation although it derives about 70 per cent, of the national income. On the lower ranges of incomes Australian taxes are considerably lighter than those imposed by the Labour Government in New Zealand or the National Government in Great Britain. Yet Australia^ destiny is just as dependent as that of those two countries on the outcome of this conflict. I suggest that the Commonwealth Government has not spread the burden as the corresponding burden has been allocated in those two countries, and I object to this decision of the special committee.

My sixth objection is based on the question of the constitutionality of I he proposals before the Senate.

Senator ASHLEY:

– The honorable senator had better leave that matter to the lawyers.

Senator SPICER:

– What about the Government’s lawyers? What do they say on this matter ?

Senator McLEAY:

– I regard the proposals as a vicious attack on the present system of government in Australia. With my limited knowledge of law I shall not attempt ait this- stage to discuss that important aspect.

Senator Cameron:

– The honorable senator’s opinion might be worth as much as those that he intends to quote.

Senator McLEAY:

– No”. I shall place before the Senate views which have been expressed’ by well-known constitutional authorities of this country. Honorable senators should consider calmly these different views. The first is that of Mr. G. Ligertwood, K.C., of South Australia - a) That it violates section 51 (11) of the Constitution in that it discriminates between those States which are willing to vacate the income tax. field and those which are not.

  1. That the making of grants to the States by way of reimbursement of income tax is not a bona fide exercise of the powers of the Commonwealth Parliament under section 9G, but is part of a scheme designed to destroy the powers of States to levy income tax.

    1. That the scheme is a law of revenue and violates section 99 of the Constitution, in that it gives a preference to those States willing to come into the scheme over the States not so willing.
    2. That the scheme is directed towards the destruction of the activities of the States and violates the fundamental principle of the limited sovereignty of the States intended to be secured by the Constitution.
    3. That the scheme cannot be justified under the defence power because that power ib given to the Commonwealth subject to the Constitution, whereas the scheme is subversive of the fundamental principle of State sovereignty implied in the Constitution. (/) I might add a subsidiary ground that the taxation act may be invalid, because it is designed to raise taxes for both Federal and State purposes, whereas the Constitution only authorizes the Commonwealth Parliament to raise taxes for federal purposes.

The next opinion is that of the right honorable member for Kooyong (Mr. Menzies), an authority for whom I have the highest regard -

The real test of the validity of any law is not the wording of the law, but its substance … Is this law which prohibits the imposition of an income tax by a State a law with respect to taxation within the meaning of the Commonwealth taxation? Now as to that, I have no hesitation whatever in saying that in my opinion it is not. And there is abundance of authority to support that view. The proposed law in this case, in my opinion, is not made for the peace, order and good government of the Commonwealth, with respect to taxation. It seeks to impose a tax for partly Commonwealth purposes and partly for State purposes. . . . This is not a Commonwealth taxation law. . . . This scheme is an endeavour to make the taxation power exclusive, although the Constitution has made it concurrent. . . . By depriving the States of an important fiscal power reserved for them, this scheme violates the federal nature of the Commonwealth Constitution. I am unable at present to believe that this law can be upheld under the taxation powers.

The question of whether what the Government is now proposing can be done under the defence power of the Commonwealth is, to my mind, immeasurably more difficult to Senator answer than the first question I asked. All I can say about it is that 1 am left in grave doubt as to whether it can be done. . . .

The honorable member for Bourke (Mr. Blackburn) said -

My main reason for opposing the legislation is that it tends to alter the substance and nature of the Commonwealth Constitution without the consent of the Australian people who created it.

Finally, I shall quote from a judgment given by His Honour Mr. Justice Starke, of the High Court of Australia, in the case Andrews v. Howell. His Honour’s judgment was a dissenting one, but that does not detract from its value -

Almost every citizen is injuriously affected by the war, and the argument we have heard leads apparently to the conclusion that in time of war the Commonwealth has complete power to legislate in respect of the social and economic condition of Australia, but I cannot agree. After all, the government of Australia is a dual system based upon a separation of powers.

Senator McBride:

– The Government could avoid all this trouble by taking a referendum.

Senator COLLINGS:
ALP

– Whilst the nation is at war?

Senator McLEAY:

– With the object of scaring a number of uninformed people, the statement has been made on the Government’s behalf that these uniform taxation proposals are essential for the proper prosecution of the war. That statement is not true. The Commonwealth has the power to tax and to borrow compulsorily without compelling or bludgeoning the States to enter into the scheme. If the States then found that their citizens were taxed too heavily they could reduce their own taxes. The onus would be on them to do so, but itis certainly not the responsibility of the Commonwealth to interfere.

Senator Crawford:

– They could then apply to the Commonwealth for a grant.

Senator McLEAY:

– There would be nothing wrong in the States applying to the Commonwealth for grants. I appeal to honorable senators not to be misled into believing that these measures are essential, for the efficient prosecution of the war, because it is not true. Another argument advanced in support of these measures is that man-power will be released. It is a pity that the Minister for Trade and Customs and his colleagues who profess to want to release man-power do not turn their attention to dog-racing and to the ranks of the union secretaries who are sheltered from war service. Very little man-power can be released by means of the uniform tax because, in Western Australia, South Australia, Tasmania and Victoria, Commonwealth and State taxes are collected by the one authority. Moreover, State taxation departments are conconcerned with taxes other than income tax and a staff will have to be maintained to deal with those taxes. The Commonwealth has the power but not the courage to raise all the revenues it needs.

Senator Darcey:

– By the use of national credit.

Senator McLEAY:

– No, the national credit policy espoused by Senator Darcey would lead to disaster. According to the last figures I have seen the national income amounted to £800,000,000. I understand that this financial year it will rise to £1,000,000,000. Of that income 70 per cent, is earned by people earning less than £400 a year. This Government lacks not only the courage to tax the wage-earners sufficiently, but also to compel them to save by the system of post-war credits on which theFadden budget was based. People on small incomes would find postwar credits a godsend when the war ends. I oppose the bill and I trust that it will be rejected by the Senate.

Senator E B JOHNSTON:
Western Australia

– I shall speak very briefly on these measures which have received the unanimous opposition of the parliaments and governments of all States regardless of their political colour. A resolution opposing this legislation was carried by both Houses of the Parliament of Western Australia, with only one dissentient. I have received from the Premier of Western Australia the following letter, dated 15th May last: -

I desire to inform you that the following resolution has been carried by both Houses of the Parliament of Western Australia: - “ That this House expresses its strongest opposition to what are known as the uniform taxation proposals. These proposals would deprive the States of their constitutional power to levy income tax and thus seriously impair the exercise of functions entrusted to them under the Constitution for the welfare of the people. They would effect a fundamental change in the Constitution of Australia in an undemocratic manner without reference to the people, and would violate the rights of the States and the people. It has not been shown that the proposals are essentia] for the war effort and it is the opinion of this House that they should not be put into effect. The Western Australian members of the Senate be requested by this Parliament to exercise their privileges as protectors of State rights and in the interests of this State to oppose the proposals. Other State governments be requested by the Premier to take similar action “.

This is the first time within my memory that honorable senators representing Western Australia have been directly and unanimously appealed to by both Houses of the State legislature. The appeal carries great weight with me. The letter continues -

The fact that this resolution was carried by both Houses of the State Legislature with only one dissentient voice indicates clearly the feeling of the people of Western Australia on this issue.

The resolution is forwarded to you accordingly for your earnest consideration.

In view of that resolution and believing that the Senate should be essentially a States House I intend to vote against the second reading of the four taxation measures introduced yesterday. I welcome the desire of the State Parliament and the Government of Western Australia to co-operate with honorable senators representing that State as expressed in that resolution. I hope that it is the forerunner of closer association between the State Parliament and senators representing that State regardless of party.

Another matter of first importance to Western Australia engaged the attention of the State Parliament during the week in which that resolution was carried. The Western Australia Hansard dated the 13th May last, records the almost simultaneous passage through both Houses of a resolution regarding the gold-mining industry in Western Australia. That resolution reads -

That, in the opinion of this House, in view of the vital importance of the gold-mining industry to Western Australia, it is highly undesirable that the continuance of the industry should be imperilled by further heavy demands upon its personnel until there has been a comprehensive marshalling of the manpower available from other avocations less essential to the stability of the State and to the successful prosecution of the war effort.

Last week a deputation from Western Australia, headed by the Premier and the

Minister for Mines of the State, visited Canberra and presented that resolution to the Prime Minister (Mr. Curtin) and the Minister for War Organization of Industry (Mr. Dedman). I saw some of the members of that deputation about the Souse and at the Hotel Canberra, but I, as a Western Australian senator, was not asked to assist the deputation in any way.

Senator Collett:

– The honorable senator was not the only one overlooked.

Senator E B JOHNSTON:

– I understand that my Western Australian colleagues on both sides of the chamber were overlooked. Honorable senators representing Western Australia, including yourself, Mr. President, have been endeavouring to protect the interests of the gold-mining industry of Western Australia. I am told that the deputation had a long interview with the Prime Minister and the Minister for War Organization of Industry and that the honorable member for Kalgoorlie (Mr. Johnson) was quite properly present at the gathering. I regret that the same privilege was not afforded to Western Australian members of the Senate who were in Canberra at the time. I should have appreciated the opportunity to be present as one of the representatives of the gold-fields of Western Australia. Believing that it is the duty of the Senate ro safeguard the interests of the States in general, and those of the less populous States in particular, I intend to oppose the second reading of this measure. If, contrary to my vote the principle of uniform taxation be approved by the passage of this bill, I shall then accept the Government’s proposals, as a war-time measure only.

Senator DARCEY:
Tasmania

– It is estimated by the Commonwealth Treasury that the Commonwealth will collect over £130,500,000 in income tax in the financial year 1942-43, the amounts for the various States being assessed as follows : -

From the total sum of approximately £130,500,000, an amount of £33,389,000 will be required to pay compensation to the States, and the balance of slightly less than £100,000,000 will be available for war and other purposes. The compensation payments will be collected and distributed as follows: -

It will be seen, therefore, that, in accordance with the original scale, Tasmania, which is the State with the lowest relative taxable capacity, would have been called upon to contribute to the compensation payments made to the wealthier States of New South Wales, Queensland and Western Australia. Apart from Victoria, Tasmania would thus be the most adversely affected State. Victoria can afford, to make a very substantial contribution in view of the accumulated wealth of its people and the great benefit that they are receiving from Commonwealth war expenditure. When the war started, Tasmania, from an industrial point of view, was very much behind the mainland States and, therefore, could not expect to benefit greatly from the war effort in the early stages. That, however, was three years ago, but since then very little money has been expended in Tasmania on war purposes.

Senator McBRIDE:

– That is not correct.

Senator DARCEY:

– At least, war expenditure in Tasmania has been far less than in the mainland States. All that Tasmania has got out of the war effort so far is a huge exodus of its population to the mainland. Last year; 3,000 people left Tasmania, many of them going to South Australia. The Government of Tasmania did not hesitate to address a reasoned and reasonable case to the Commonwealth on the 28th April for a larger compensation payment. A claim for £1,050,000 was submitted, but it has been revealed since that Tasmania would receive substantial concessions. These concessions are not the result of political intrigue, but were based on the findings of an independent tribunal, namely, the Commonwealth Grants Commission. The suggestions of political intrigue were made by the Premiers of the other States, who did not wish to see a larger grant made to Tasmania. The people of Tasmania are glad that the appellate tribunal under the Commonwealth uniform tax proposals is the Commonwealth Grants Commission which, in the past, has complimented the Treasurer of Tasmania upon the full and adequate presentation of the case for that State. The opposition from Victoria is understandable, but that from Queensland is not, because that State is to receive considerably more by way of compensation. Tasmania is adversely affected in other ways ; it is a small State and its revenue is small. The special committee decided that the basis of compensation for the six States should be their average collections for the years 1939-40 and 1940-41, and, therefore, any representations that were likely to succeed on behalf of Tasmania, had to be more or less consistent with that basis. The reasons for the claim made by Tasmania for an increase of compensation from £823,000 to £1,150,000 were as follows : -

  1. The known requirements of the budget of 1942-43.
  2. The unusual circumstances of the assessment and collection of income tax in Tasmania in 1939-40 and 1940-41.
  3. Certain definite adverse effects on Tasmania of the proposed scheme.
  4. To some degree, the unequal effects of Commonwealth war expenditure in the various States.

In respect of the last mentioned factor, the effect of this differential expenditure upon the finances and economy of Tasmania is so serious that Tasmania would have been justified in requesting the addition of a further sum of at least £100,000. The income tax laws in Tasmania provide concessional allowances for taxpayers who are married and those who have depen dent children. A taxpayer who supports a wife has £40 deducted from his income before it is assessed for taxation purposes, and a similar deduction is made for each dependent child. Under the Commonwealth uniform tax proposals such concessions will be provided by totally different methods, and the question can well be asked which system suits the Treasurer best and which system suits the taxpayer best. The special committee suggested the following allowances for dependants : Spouse or female relative, £100; mother, £100; one child, £75; and children in excess of one, £30. These concessions were to be given by means of rebates of taxation. If the recommendations stopped there the situation would be simple, but they do not. First the rebate of taxes in connexion with these allowances is to be “ calculated at the personal exertion rate appropriate to the taxable income “ of the taxpayer concerned, and, secondly, they are not, in any case, to be greater than the following amounts: Spouse or female relative, £45; mother, £45; one child, £45; and children in excess of one, £5. These two qualifications deprive the concessions of much of their apparent generosity. The effect on taxpayers can be illustrated by a few figures as applied to a married taxpayer with one child. If such a taxpayer had an income of £200 a year, and deductions of £45 were made in respect of his wife and child, according to the Tasmanian system, he would, at the rates set out in the Commonwealth’s proposals, pay nothing at all, whereas a single man would pay £7 18s. However, by the application of the rebate of tax system, as set out in the special committee’s report, he would pay 18s. A single man. with an income of £250 would pay £19 4s. under the Commonwealth’s proposals, and a married man with one child would pay £3 16s., so that the value in reduced taxation of his combined concessions would be £15 8s. A single man with an income of £300 would pay £31 10s., and a married man with one child would pay £13 2s., so that the value in reduced taxation of his concessions would be £188s. A single man with an income of £400 would pay £57 6s., and a married man with one child would pay £32 6s., so that the value in reduced taxation of his concessions would be £25. A single man with an income of £500 would pay £84 16s., and a married man with one child would pay £55 4s., so that the value in reduced taxation of his concessions would be £29 12s. It is obvious that that system would result in increased concessions as the incomes increased. The Premier said that he had not yet been able to ascertain which system would suit the Treasurer best, because this would involve complicated calculations covering all classes of incomes. However, he wanted to make it clear that the nominal concessions of £100 for a wife and £75 for the first child by no means reflected the real value of the concessions, which in no case could exceed £45 for a wife and the first child and £5 for each additional child.

In order to show how poor we are in Tasmania I refer honorable senators to what the Commissioner of Taxes in that State said in 1934, when he was asked what would occur if he doubled income taxes on all persons with assessable incomes of more than £1,500 a year. He said that the State’s revenue would be increased by not more than £12,000. Of course, there has been a considerable general improvement since then. Nevertheless, most people would be surprised to learn that the taxation assessments for 1940-41 showed that, in the income year of 1939-40, there were only 263 persons in Tasmania with assessable incomes of over £1,500. If it were possible to bring the figures up to date, it would be found that the situation has altered very little. The total of the taxable incomes of those 263 persons was £583,682, and the tax levied upon that amount was £41,650. Thus, less than 1 per cent, of the taxpayers, whose incomes totalled a little over 6 per cent, of the total gross incomes, paid more than 20 per cent. of the total income tax levied on individuals, apart from the special tax, through which they had to contribute a further £12,172. In 1940-41, it was reported on good authority that morethan 1,000 Australian taxpayers had incomes of £130 a week, but not one of them lived closer to Tasmania than Melbourne. There was no great aggregation of wealth in Tasmania to be taxed and, conse quently, in order to meet the ordinary requirements of the community, the State Treasurer was obliged to impose a considerable burden on low incomes. Under the proposed uniform taxation scheme, the Commonwealth Treasurer will collect income tax from all over Australia and, therefore, he will be able to do what the State Treasurer is unable to do. As a matter of fact, the figures of proposed taxation set out in the committee’s report show large decreases of taxation on low incomes in most States, and Tasmania in general will be required to pay about £16,000 less in 1942-43 than it is paying now in combined Commonwealth and State income taxes. It is not yet possible to analyse the 1940-41 income figures satisfactorily, but my argument may be illustrated by an analysis of the income figures for the preceding year, when there were 30,948 taxpayers in Tasmania with a total gross income of £9,429,195. Of that number, 24,624. or nearly 80 per cent., had incomes of less than £301, and more than 61 per cent. had incomes of less than £201. The gross income of four-fifths of the taxpayers amounted to £5,519,416, or more than 58 per cent. of the total gross income of all taxpayers. The average income in this group was about £224 per annum. Quite rightly this group will benefit by abatements of tax totalling £1,814,142, leaving a taxable amount of £3,705,274. The tax assessed in this group was £68,968, or almost exactly 3d. in the £1 of gross income, and less than 4½d. in the £1 of taxable income. There were no persons in Tasmania receiving incomes of £5,000 solely from personal exertion, business, or property, but five persons were in receipt of composite incomes exceeding £5,001 a year, four persons were in receipt of incomes exceeding £4,001 a year, and eighteen persons were in receipt of incomes exceeding £3,001. Including these persons, there were 682 persons in Tasmania with incomes of over £1,000 a year, and their gross incomes totalled £1,086,697.

In opposing this measure, the Leader of the Opposition (Senator McLeay) referred to the “ foolish ideas “ which I have been expressing in this chamber for nearly four years. He seems to be quite unaware that five of the six States have passed resolutions urging the Commonwealth to make use of the Commonwealth Bank for the issuing of interest-free money in order to finance the war. The first State to do so was South Australia, which the honorable gentleman assists to represent in this chamber. Tasmania followed and later Queensland and Western Australia did likewise. I was amazed to hear an honorable senator representing Western Australia say today that that State would receive £566,000 more revenue under the proposed uniform taxation scheme than previously, and that the Parliament of that State had passed a resolution urging the provision of interest-free money by the Commonwealth Bank. He may agree now that my ideas are not so foolish, after all. I should be glad to see the Parliament of New South Wales support the provision of interest-free money, so that all States would confirm what I have repeated in this chamber so often about financing the war effort through the Commonwealth Bank. That is the only means of saving the nation from financial ruin. Yesterday, I quoted from the London Times a passage which declared that the amounts loaned to the Government by the banks were only book entries. It is significant that that view should be expressed by such a conservative journal as the London Times.

The Leader of the Opposition devoted a good deal of attention to the taxation of income from personal exertion, which reminds me that the public debt of Australia has increased since 1914 from £4 19s. to £26 per head of the population, due principally to the fact that successive governments have declined to draw upon national credit resources to finance national projects. Of what use was it to appoint a royal commission, on our monetary and banking systems, seeing that its recommendations in regard to national credit have been ignored? Now that private banks have been prevented from buying war bonds and from making credit available in the form of overdrafts for the purchase of war bonds, it seems to me that there is nothing left to the nation except to increase the present high rates of taxation, which I regard as inadvisable and unnecessary, or to use national credit, which I regard as proper. At any rate, those are the only two avenues left from which funds may be obtained. The Government’s uniform income tax plan is estimated to yield only an additional £12,000,000 a year. On the present basis of expenditure that sum will pay for only twelve days of war. In one period, not a great while before the outbreak of this war, the annual Commonwealth expenditure on defence was only £7,000,000 per annum. When war threatened to occur, the Loan Council considered a proposal for the raising of £10,000,000 for defence purposes. Mr. Dwyer-Gray was Acting Premier and Treasurer of Tasmania at that time and he attended the Loan Council which considered that proposal. When it was suggested that the money should be borrowed from the private banking companies by orthodox methods, Mr. Dwyer-Gray said that if it were obtained by that means it would be an ignoble concession to an inadequate system of finance. I entirely agree with that view. In my opinion it is just as necessary that we should defeat the present financial system as it is that we should defeat the Germans and the Japanese. It is significant that Mr. Dwyer-Gray’s opinions on the proposal submitted to the Loan Council at that time were suppressed by the only daily newspaper published in Hobart, yet, in the next week, the opinions of the Leader of the State Opposition were published in a full column of that newspaper, which pointed out that what were called “ the fantastic financial proposals of the Treasurer of Tasmania at the Loan Council “ had been opposed by even Labour Premiers and Treasurers of other States. I regret to say that that is a fact. The Premier of Western Australia, for example, remained silent at the council meeting, in company with his Labour colleagues.

I trust that this bill will be passed. I am glad that Tasmania is to receive a higher amount of compensation than was proposed originally. So long as State rights in regard to taxation are not definitely and irreparably injured by this plan, I can see no reason why it should not be endorsed.

Sitting suspended from 18.J/J/. to 2.15 p.m.

Senator SPICER:
Victoria

– I express my unqualified opposition to the whole’ of the measures now being debated in this chamber. That attitude is not actuated in my case by any prejudice whatever in favour of our present form of government. As long as I have been interested in politics, I have been a declared unificationist and as such I have no doubt that I shall find many honorable senators on the opposite side of the chamber who would agree with me on that subject. I have no prejudice in favour of federation, but that is not the issue with which we are concerned in this debate, except to the degree that, whilst the measures now before the Senate are not designed legally to alter the Constitution, they will have the effect of destroying the States as a part of our federal structure. I do not believe that it is wise or proper to meddle with constitutions in that way. Constitutions are extremely important documents. Our Constitution is the basis on which the peace, order and good government of this country are founded.

Senator Arthur:

– In peace-time.

Senator SPICER:

– In war-time also. The nonsensical argument is heard that, because we are at war, we can disregard the Constitution; but that seems to run counter to all the ideals for which we are fighting. If there is anything in respect of which the communities on our side in this war differ fundamentally from our opponents it is that we believe In the rule of law. We do not consider it to be within the province of any Ministry to disregard the law, and far less for any Parliament in this federation to disregard the fundamental constitutional provisions upon which the Commonwealth is founded. It is important to bear in mind that the real foundation for the successful operation of any constitutional instrument is the consent of the governed. We know that, far from flic people of certain parts of Australia being prepared to accept unification, the people of Western Australia not long ago were prepared to go to the length of presenting a petition in order that they might secede from the federation.

Senator FRASER:
Minister for External Territories · WESTERN AUSTRALIA · ALP

– That wa-s in peacetime.

Senator SPICER:

– That is true, but there is no justification in war-time or peace-time for indulging in a subterfuge in order to undermine the Constitution.

Senator COLLINGS:

– That is an expression of opinion.

Senator SPICER:

– I hope to be able to satisfy some honorable senators opposite that I have stated a plain fact.

Let us consider one or two of the fundamental provisions of the instrument which governs the relations between this Parliament and the Parliaments of the States. The Commonwealth Parliament has conferred upon it by the Constitution an unqualified power, except in one respect, to impose taxes.

Senator Courtice:

– But it has priority.

Senator SPICER:

– I do not agree with the honorable senator. It has power to impose taxes for the purposes of the Commonwealth to the degree that it considers necessary, but the Constitution deliberately provides that this power shall be exercised subject to the condition that this Parliament shall not discriminate between States or parts of States. That is a condition of the compact upon which the people of this country agreed to become united in a federation. How is it suggested that that provision is overcome by the scheme which is presented to us to-day? The actual effect of this scheme is that it discriminates, for the purpose of Commonwealth income taxation, between citizens of the States.

Senator Collings:

– The purpose is to prevent discrimination.

Senator SPICER:

– The facts are perfectly plain. If the scheme be put into operation, a citizen of Victoria will pay more tax for Commonwealth purposes than a corresponding citizen in Queensland or New South Wales.

Senator Large:

– Because New South Wales and Queensland taxpayers have been paying higher taxes for years.

Senator SPICER:

– I am glad to have that admission.

Honorable senators interjecting,

The PRESIDENT (Senator the Hon, J Cunningham:
WESTERN AUSTRALIA

– Order! The honorable senator addressing the Senate is entitled to be heard but the chorus of interjections makes that impossible.

Senator SPICER:

– 1 am grateful for the admission from some honorable senators on the Government side of the chamber that the effect of this scheme will be to extract from a taxpayer in Victoria more taxes for Commonwealth purposes than will be paid by a corresponding taxpayer in Queensland. It will be admitted that to do that directly would be contrary to the Constitution. Why does not the Government act in a straightforward way? If it believes in discrimination between individuals in different States, why does it not submit a taxation measure which provides in plain language that it is proposed to take 5 per cent, from the citizens of Victoria and only 2£ per cent, from the citizens of Queensland ? The Government will not do so because, apparently, its legal advisers have said that that would be directly contrary to the provisions of the Constitution.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– If some of the contentions of the Government he right, it could do so.

Senator SPICER:

– The only ground upon which it is suggested that this scheme is valid is that, the nation is at war, and that it is supposed to be an exercise of Commonwealth powers in relation to the defence of this country. If that argument be sound, it would justify an act which expressly discriminated in the tax which it imposed on the citizens of Victoria and that imposed on the citizens of Queensland. But the Ministry has no real faith in that argument; it is not prepared to tie itself to an argument of that kind. The Ministry has been told that reliance on the defence power of the Commonwealth will not enable it to avoid that difficulty, and therefore, the only chance it has to get a way with its proposals is to hide behind a smoke screen.

Senator Collings:

– The Government never received advice to that effect.

Senator SPICER:

– It would be interesting to know what advice the Ministry did receive. I now suggest to the Leader of the Senate (Senator Collings) that this chamber is entitled to see the legal opinions on which this scheme is based. Those opinions have been obtained with public money for a public purpose, namely,, to assure the Commonwealth Go vernment that its proposals are a valid exercise of its power under the Constitution.

Senator Cameron:

– The honorable senator will next ask that the Senate should be supplied with various reports and recommendations made to Cabinet.

Senator SPICER:

– I invite the Minister to lay on the table of the Senate the opinions that have been obtained.

Senator Ashley:

– That is contrary to established practice.

Senator SPICER:

– It is not. In a matter concerning which there may bt some dispute as to the facts, as when all the circumstances may not be known. 1 could understand the Ministry saying that it would not lay on the table the opinions it had obtained before prosecuting a particular individual in respect of an offence. But what is the justification for withholding from the responsible representatives of the people in this chamber opinions which have been obtained on the purely legal question as to whether this scheme is, or is not, a valid exercise of Commonwealth power? Is not the Senate entitled to be guided in this matter by the legal opinions on which the Government relies?

Senator Allan MacDonald:

– How does the honorable senator know that the Government obtained any legal opinion ?

Senator SPICER:

– I suspect that legal advice was obtained by the Government, because I do not think that the Government itself is capable of the ingenuity which this scheme reveals. One can see the hand of the lawyer in it. I have suggested that the provision in regard to discrimination between States and citizens of different States cannot be overcome simply by reliance on the defence power of the Commonwealth. The Constitution provides that the Commonwealth shall not discriminate between the citizens of different States. Evidently the Ministry is not prepared to introduce a measure which did that directly. Does any honorable senator seriously believe that, if the Commonwealth passed legislation which provided that a citizen of Victoria should pay ten times as much in taxes as a citizen of Queensland, that it would be a valid exercise of the defence power? Yet, that same result might be achieved by imposing what is nominally the same lax. and handing back to the taxpayers of Queensland, under another name, some portion of the money which they have contributed. Would the Government and its supporters say that that action would be in accordance with the provision of the Constitution?

Senator FRASER:
WESTERN AUSTRALIA · ALP

– That would be camouflage.

Senator SPICER:

– I agree; but it would be no more camouflage than is this bill.

Senator Collings:

– There is a difference.

Senator SPICER:

– Let us see what the difference is. Let us suppose that the Commonwealth Government were to say to a taxpayer in Victoria, “ You are to pay £10 in taxes, £3 of which represents your State taxes, and £7 taxes for Commonwealth purposes “ ; and that to a citizen of Queensland it said, “ We intend to impose on you taxes amounting to £10. For Commonwealth purposes we shall retain £3, and we shall hand back to you £7, out of which you will be able to pay £3 to the State.” The Minister for External Territories (Senator Fraser) admits that that would be merely camouflage, and I agree with him.

Senator COLLINGS:

– Why make the suggestion?

Senator SPICER:

– I do so, because the scheme before us provides for that operation, except that it is shortcircuited. In these proposals the Commonwealth Government does not say to the taxpayer in Queensland, “ We shall not hand the money back to you for you to pay to the State “. It says, “It will save you trouble if we short-circuit the operation and pay to the State Commissioner the amount which, under the other scheme, you would have to pay “. It is just for that reason that this scheme is camouflage. I believe that it is contrary to the express provisions of the Constitution. 1 may be wrong - lawyers differ - but, even if the scheme can be justified by some legal argument as a strict compliance with the language of the Constitution, 1 still hold that it is diametrically opposed to the spirit of the Constitution. For that reason alone it should be rejected by the Senate. But do not let us be too confident about the legal position. I have no desire to read the opinions of various legal authorities on this subject.

Senator COLLINGS:

– That would be just as interesting as anything else that the honorable senator is likely to say.

Senator SPICER:

– As such opinions may be informative, even to the Minister, let us hear what the highest tribunal in the British Commonwealth of Nations - the Privy Council - had to say in respect of a similar matter. Only a couple of years ago, a case was taken to the Privy Council in which our flour tax legislation was challenged as being unconstitutional. Some features of that legislation were not dissimilar to the fundamental ideas underlying this legislation.

Senator Crawford:

– Was that legislation passed in war-time?

Senator SPICER:

– No; hut it was passed with the consent of all the States. I am concerned only with what the Privy Council had to say upon the subject of giving a colour of legality to a scheme of this kind. It said that we had to look at all the acts associated with the scheme in order to see what the substance of the scheme was. The Privy Council did that in the flour tax case. In respect of this legislation, it will not take each measure separately, and say, for instance, this is a tax measure, and this is another measure providing financial assistance to the State, and therefore both are good. It will look at the scheme as a whole. That i3 what it did in the flour tax case. I take the following quotation from the judgment of the Privy Council in that case reported in 63 C.L.R. at page 349 -

In coming to this conclusion, their Lordships wish to make it clear that, as at present advised, they do not take the view that the Commonwealth Parliament can exercise its powers under section 96 with a complete disregard of the prohibition contained in section 51 (ii), or so as altogether to nullify that constitutional safeguard.

Section 52 (ii) prohibits discrimination between the States. The judgment proceeded -

The prohibition is of considerable importance; and the Constitution should be construed, bearing in mind that it is the result of an agreement between six high contracting parties, with, in some respects, very different needs and interests. Cases may be imagined in which a purported exercise of the power to grant financial assistance under section 96 would be merely colourable. Under the guise or pretence of assisting a State with money, the real substance and purpose of the Act might simply be to effect discrimination in regard to taxation. Such an act might well be ultra aires the Commonwealth Parliament.

Senator Keane:

– It might he.

Senator SPICER:

– Yes; the Privy Council did not decide the matter.

Senator FRASER:

– In that case, the Privy Council’s judgment rested largely on the fact that Tasmania, which is not a wheat-growing State, had been refunded an amount from the flour tax revenue.

Senator SPICER:

– There was more to it than that. As I said before, the scheme with which the Privy Council was dealing was a scheme carried out with the complete concurrence of each State. That concurrence is absent on this occasion.

Senator Keane:

– But the Privy Council left the matter undecided.

Senator SPICER:

– I agree; it said that such action might be ultra, vires the Constitution. I have not been able to find anywhere else a better description of these four measures than that which I have just read from the judgment of the Privy Council. If this is not a colourable scheme for the purpose of bringing about discrimination in taxation, I do not know what such a scheme is.

Senator Arthur:

– “What about the Braddon blot?

Senator SPICER:

– At the moment we are concerned with what I heard one honorable member of the Parliament describe as the “ Spooner smudge “. First, I submit that this is a colourable scheme for the purpose of discriminating between the taxpayers of different States. For that reason, to put it at its lowest, there are grave doubts about its constitutionality. In any event, as I said before, so far as this chamber is concerned, it is a clear device to defeat the real meaning and spirit of the Constitution. That, in itself, is a very strong reason why we should refuse to pass these measures. What, after all, will he the result if this scheme be upset by the High Court or Privy Council? In these days, is it desirable that we should throw the country into confusion in respect of taxation measures when such confusion can well he avoided by refusing to go on with a scheme of this kind ? However, that- is not the only ground on which I submit that these measures are unsound. I submit two other legal grounds; and I propose to deal with them briefly. First, this scheme is not a proper exercise of the powers of this Parliament, because it is a scheme whereby this Parliament proposes to impose taxes, not only for Commonwealth but also for State purposes. We have no right to do that.

Senator Courtice:

– That is a new one.

Senator SPICER:

– No; other people have said the same thing ; and, as I understand it, that is the way the scheme works out. We say, in effect, to the States: “ If you will not impose an income tax, we shall raise by our taxes the revenue which you require for the purpose of carrying on your services “.

Senator Courtice:

– That is one way of putting it.

Senator SPICER:

– Yes ; and it is the truthful way of putting it. What is the money that is to be paid out in the form of grants?

Senator Collings:

– Money which the States themselves previously raised by income tax.

Senator SPICER:

– Yes ; and my complaint is that this Parliament is now being asked to pass measures ‘to enable the Commonwealth to raise taxes for the States. How can any one say that a sum of money raised under legislation of this Parliament for the purpose of financing services for the States is money raised for federal purposes? Of course, one can advance a spurious legal argument about the matter. You can say that we are raising this money in order that we can make grants to the States; and those grants are made out of Commonwealth revenue. But that is not the reality.. The reality is that this Parliament is passing this scheme-

Senator Courtice:

– To raise more revenue for defence.

Senator SPICER:

– I shall deal with that aspect later. This Parliament is being asked to adopt this scheme in order to enable the Commonwealth Government to raise State taxes, and having raised those taxes to hand the revenue to the States. If necessary, I could quote a number of authorities to indicate the unsoundness of such a proposal; but I do not wish to labour the subject with lengthy, legal quotations. However, I take the following quotation from a judgment by Mr. Justice Evatt in the case of West v. The Commissioner of Taxation. In his judgment, Mr. Justice Evatt quoted with approval the following opinion that had been expressed by Sir Robert Garran: -

The draftsman was evidently scratching around for a peg on which to hang the bill; hut taxation was certainly a forlorn hope. The power of the Commonwealth Parliament as to taxation ib a power to make laws “for the peace, order and good government of the Commonwealth “ with respect to “ taxation, but so as not to discriminate between States or parts of States “.

It can hardly be questioned that these words refer only to Commonwealth taxation, uniform throughout the Commonwealth, for Commonwealth purposes and do not cover control of State taxation. Nothing in any decision of the High Court suggests a doubt of this; and indeed the principles of interpretation laid down by the court make doubt impossible.

That is a fairly strong authority for the proposition that I have been putting. The Minister for Aircraft Production (‘Senator Cameron) stated, by interjection, whilst I was quoting Sir Robert Garran’s opinion, that he was not giving his view of this scheme but of something else. That is true, but Sir Robert Garran was stating general propositions which are just as applicable to this scheme as they were to the one to which he was referring. If there is that fine distinction between this scheme and that on which Sir Robert Garran and Mr. Justice Evatt expressed their views I have no doubt that those fine points are indicated in the legal opinions that the Government has obtained. I may add that it would assist me and other honorable senators on this side of the chamber if those legal opinions were laid on the table of the Senate.

My third objection to this scheme as a taxation measure is that it destroys or penalizes the States’ inherent right to tax. There is no provision of the Constitution authorizing the Commonwealth Parliament to penalize a State because it exercises its taxing power. The right of the States to impose taxation is just as clear as that of the Commonwealth. The Commonwealth does not possess any exclusive power of taxation except in relation to customs and excise. Its power to impose income tax is a concurrent power similar to the power of a State.

Senator Courtice:

– But the power of the Commonwealth is supreme.

Senator SPICER:

– One section of the Constitution is relevant to that proposition. Section 109 of the Constitution provides in a case such as this that if there is a conflict between a law which the Commonwealth Parliament has properly passed in accordance with its powers and an act of a State parliament, the Commonwealth act shall prevail, but that supremacy does not empower the Commonwealth to go outside its field of taxation and penalize a State for imposing taxes itself. On this particular question Mr. Justice Evatt in his judgment in The State of Victoria and others v. the Commonwealth of Australia, reported in 5S C.L.B… at page 638, states-

It is unnecessary to examine the concept that, if the Commonwealth Parliament “intends to cover the field”, section 109 is attracted. Ordinarily, the intention of the Commonwealth Parliament in such matters is by no means conclusive because, as I have previously suggested, a direct statement by the Commonwealth that it intended that the State should, or could, no longer act, may only raise the question whether such a statement does not invalidate the particular Commonwealth enactment.

In other words, that expression of judicial opinion means that in the event of the Commonwealth seeking to exercise its power by saying to the States, “ We shall tax and you shall not”, that exercise of power does not give to the Commonwealth act any supremacy, but it renders it very doubtful whether the Commonwealth act itself is a valid piece of legislation. For these reasons, I submit that on legal grounds, there is the gravest doubt concerning the constitutionality of this measure. The only justification for its constitutionality that has been suggested by anybody is the fact that we are at war and this legislation is necessary for defence purposes. In the first place, I deny that as a statement of fact. No evidence has been brought before this chamber or submitted anywhere else proving that it is necessary to introduce this scheme in order that the Commonwealth shall be able to obtain the revenue that it requires for war purposes. So far it has been suggested that the maximum amount of additional revenue that the Government will obtain from the operation of these measures is £12,000,000, but when one examines the position, it appears that that sum will go into Commonwealth revenue not as the result of this scheme but in consequence of the increased incomes of individuals as the result of Commonwealth expenditure for war purposes. That was the ground upon which the case was put by the Treasurer (Mr.Chifley).Whether this scheme is or is not introduced, there will be an increase of income in the community and whatever scheme of Commonwealth taxation is brought in the fact that incomes have increased will be reflected in the taxation returns of the Commonwealth.

Senator Courtice:

– And in the revenues of the States.

Senator SPICER:

– Yes ; it is false for the Government to declare that it is going to obtain £12,000,000 additional revenue as the result of this scheme when that sum of money will flow into Com- monwealth revenue because of the increase of individual incomes as a result of war expenditure. I propose now to turn from legal problems, and to examine this matter as a practical proposition.

Senator Cameron:

– What is the difference?

Senator SPICER:

– There are some differences, although I agree that the scheme is bad legally and practically.

Senator McBride:

– And politically.

Senator SPICER:

– Yes. In the first place the scheme is unfair and inequitable in its incidence, and for that reason it should be rejected by the Senate. It is called a uniform taxation scheme, but I doubt whether any measure ever introduced into this chamber has been so misnamed. It is not uniform taxation for Commonwealth purposes at any rate, because the effect of the scheme will be to increase the contribution of the Victorian taxpayers to Commonwealth revenue by £4,000,000 annually. That addition represents £10 10s. per head of the taxpayers of Victoria.

Senator Cameron:

– Does the honorable senator object to making that contribution to help the war?

Senator SPICER:

– I do not object to paying anything to help the war effort, but citizens in all parts of the Commonwealth should be called upon to make the same contribution.

Senator Cameron:

– They are making it.

Senator SPICER:

– They are not; that is the whole point. Victorian taxpayers already pay more, in terms of money, to help the war effort than do the citizens of any other State.

Senator Large:

– What do they pay for social services?

Senator SPICER:

– I shall come to that in a moment. Social services are mainly the concern of the States, and at the moment I am dealing with something which is the concern of the Commonwealth. In effect, the Constitution says to me as a citizen of Australia, “Your liability to Commonwealth revenue shall be the same as the liability of any other citizen in a similar position”. But now the Government tells me that I have to pay more towards Commonwealth revenue than the citizens of Queensland. Ever since the war started, citizens of Victoria have paid more per head in taxation than have the citizens of other States. The question with which we are concerned is how much is paid to the Commonwealth, and I repeat that Victorian taxpayers have paid more per head to the Commonwealth than the taxpayers of other States. And why?

Senator Ashley:

– Because Victoria has had most of the defence work.

Senator SPICER:

– That is not so. My contention is that since the war started a taxpayer in Victoria in receipt of £1.000 per annum has paid more towards the war by way of taxes than has a taxpayer in Queensland receiving a similar salary. The reason is that State taxes are deducted when estimating the income which is to be taxed for Commonwealth purposes. Because the State taxes of Victoria are lower than those of Queensland, a higher taxable income is left in the hands of Victorians for taxing by the Commonwealth. Consequently, the Victorian citizen pays more, and has paid more all the time, than the citizen of any other State. But we are not complaining about that, and we never have complained. Surely it is not a matter upon which the Commonwealth has any cause for complaint that Victoria has been careful with its revenues, has not indulged in mad-cap schemes that have been suggested in other places, and has not found it necessary to raise so much for State purposes as have other States. That is the position to which no one in Victoria has any objection; what we do object to i3 that the Commonwealth proposes to take an .additional £10 10s. per head from Victorian taxpayers in order to reduce the amount of taxes paid by the citizens of Queensland. This money is not entirely for war purposes. The uniform tax scheme is designed to effect a reduction of the taxes paid by Queenslanders.

Senator Keane:

– “Who is objecting in Victoria ?

Senator SPICER:

– Most people are objecting.

Senator Keane:

– Through what organizations?

Senator SPICER:

– I am not concerned with organizations. I am concerned with citizens who understand these proposals and object strongly to them. The more they get to know about them the more they will object. I wonder if the citizens of Victoria will be very pleased when they realize that this extra taxation is not all for war purposes, but is to be used, in part, for the purpose of subsidizing the rich State of New South Wales, because that is what it boils down to. Let us examine what has happened in connexion with the grant to New South Wales. That State is to receive approximately £15,000,000, despite the fact that it is one of the richest States in the Commonwealth. In other words, it is to receive two and a half times the grant that is to be paid to Victoria. We are told that these figures have been arrived at on a certain basis, but obviously it is a basis which is peculiarly favorable to .Yew South Wales. I wish to discuss that matter for a moment, because I put it to the Minister seriously that when the citizens of Victoria realize what is happening, they will have something to say to the individuals responsible for this measure. The grants have been arrived at on the basis of collections during the financial years 19,39-40 and 1940-41, and it is proposed to give to New South Wales an amount equivalent to the average income tax collections in those years. But how was it that New South Wales collected more than £15,000,000 in those years? What were its obligations?

Amongst other things, New South Wales was obliged to raise £1,300,000 for its child endowment scheme, and that sum was raised by means of taxes. Now, New South Wales has been relieved of that obligation, and therefore is better off to that degree, yet, under this scheme, it is proposed to pay the whole of that sum to New South Wales. Why? Surely it is not right merely to take the figures for 1939-40 and 1940-41 and say to New South Wales: “You raised this amount in those two years, therefore we shall continue to pay that sum to you, despite the fact that by act of this Parliament we have relieved you of the responsibility to pay £1,300,000 out of your revenue for child endowment purposes “.

Senator Arthur:

– New South Wales has additional war obligations.

Senator SPICER:

– That is not so. The financial obligations of that State to-day are materially less than they were in 1939-40 and 1940-41. During that period, according to the figures referred to by the Leader of the Opposition, New South Wales had a heavy obligation to its unemployed. In those two years it raised approximately £6,000,000 annually for the relief of unemployment. That State has nothing like the same financial responsibility for unemployment relief to-day as it had then. Its responsibility in that regard to-day as compared with those two years is practically negligible. Yet the Commonwealth is to pay to New South Wales a sum for the relief of the unemployed, although there are practically no unemployed to be relieved.

Senator Keane:

– What is Victoria doing with its unemployment relief money? The unemployment relief tax is still in operation in that State, although there are no workless people.

Senator SPICER:

– Victoria has been reducing the tax consistently year after year. The estimate of the sum to be received this year by Victoria from the unemployment relief tax was a little over £1,000,000. That was £500,000 less than the sum which was collected in the previous year, and the amount collected in that year in its turn was less than the sum obtained in the year before that. If Victoria had kept the level of the unemployment relief tax up to £2,000,000, instead of £1,000,000 a year, it would, on r.be present calculation, have got another £1,000,000; but because Victoria has acted properly, and has reduced its tax as the number of its unemployed has dwindled, it is to receive less, and New South Wales is to get more. These are very serious matters.

We are told that uniform taxation will be provided under this measure, but the bill provides for an unfair discriminatory tax on the citizens of Victoria to provide, in part, a subsidy of about £5,000,000 to New .South Wales. If a proper examination were made of the obligations of New South Wales to-day, compared with 1939-40 and 1940-41, in relation to child endowment, unemployment and widows’ pensions I believe that it would be found that that State is being overpaid by not less than £5,000,000. If the allowance as proposed to be made under the bill were reduced as it should be, having regard to the relative populations and wealth of Victoria and New South Wales, from £15,000,000 to £10,000,000, we might be nearer the proper figure. Not only is the Victorian taxpayer being dealt with unfairly, but I suggest that Victoria, as a State, is being most unfairly treated. We have already been reminded that Victoria raises only about one-half of its revenue from income tax, whereas New South Wales and some of the other States raise two-thirds or more of their revenue from income tax. Considering this proposal from the point of view of equity, we must regard it as a whole. Victoria, because it receives only one half of its revenue from income tax, will have only one half of its revenue provided for it by way of the Commonwealth allowance. It has already exploited the land tax and other imposts, because those are the sources from which it gets over 50 per cent, of its revenue. In New South Wales and Queensland, however, two-thirds or more of the revenue is obtained from income tax, and therefore two-thirds of it will be provided by the Commonwealth allowance. If New South Wales still wishes to add to its revenue by imposing fresh taxes, it has unexploited fields to which it may resort. It can take the grant from the Commonwealth, and it can also impose a land tax.

Even then, its citizens will not be so badly off as the citizens of Victoria.

I believe that this scheme has been resorted to by the Government to raise revenue because it is not prepared to propose measures to which it should resort in order to supplement the revenue needed for war purposes. I have said before, and I repeat, that it is desirable that we should tax more heavily than before incomes under £400 a year. I say that, not because I desire to see anybody deprived of whatever little income he or she may have, but merely because that corresponds to the reality of the situation to-day. Honorable senators are aware that the capacity of this country to produce the things which contribute to the standard of living is not the capacity we had in peace-time. We cannot take men out of industry by hundreds of thousands and put them into the armed forces, and still be able to maintain the real standards of living of the community. In the process of doing that, we distribute throughout the community a tremendously increased purchasing power. Persons with incomes under £400 a year will contribute under this scheme less than they were contributing before, and I cannot see any justification for that. The Government says that it is forced to introduce this scheme, which will upset the whole constitutional structure of this country, in order to get £12,000,000 or £15,000,000 and at the same time it claims that it will thus reduce the tax payable by some people in this country. I have never been able to see any sound reason why a single woman, without responsibility, who earns £3 a week as a typist should not contribute something to the nation’s war effort. [Extension of time granted.) Nor have I heard of a valid reason why a lad, without responsibility, who receives £3 a week should not pay a small amount in taxes. Until I became an adult I did not receive anything like £3 a week, but there are plenty of young fellows in this country to-day receiving at least that amount. The only reason why the Government does not require these persons to contribute to the revenues necessary for the prosecution of the war is that it is more concerned about the popularity of its proposals than with the need for raising revenue for war purposes. Under this scheme, an additional £12,000,000, or perhaps £15,000,000, is to be extracted from the taxpayers of Australia; but, as I have pointed out on other occasions, at least £28,000,000 could be obtained if the Government would adopt the system of taxation in operation in New Zealand.

Senator Cameron:

– The honorable senator is concerned only with protecting the wealthy taxpayer.

Senator SPICER:

– No ; he has already “got it in the neck “. for be may be taxed up to 18s. in the £1. The people about whom I am concerned, and about whom the Government will have to be concerned, are not those who are paying taxes at the rate of 18s. in the £1, but the people in the middle ranks with incomes of between £500 and £1,000 a year. Most of the people in this income group already have heavy responsibilities, but they are being forced by the Government to carry a heavy additional load. To their credit, it can be said that they carry it cheerfully; but they would carry it even more cheerfully if they knew that those who enjoy 70 per cent, of the income of the community were making some contribution to the nation’s needs.

I wish now to refer in some detail to the provisions of the bill providing for the transference of State officers to the Commonwealth service, for the purpose of carrying out this scheme. I am particularly concerned about officers of the State Income Tax Department, who are temporarily absent on war service. Under the conditions which govern their employment in the State, they are regarded as applicants for any higher positions which may become vacant during their absence from their departments. Should an absent officer be selected to fill a vacancy, some other person will temporarily carry out the duties until his return.

Senator Ashley:

– That is the position.

Senator SPICER:

– In effect this scheme is designed to take over the State income tax departments, and for the period during which it will operate those departments will be conducted as Commonwealth departments. There is noth ing in this legislation to preserve the rights of State officers serving overseas. I am concerned about those men.

Senator Keane:

– The point raised by the honorable senator is now being examined.

Senator SPICER:

– I am glad to have that assurance from the Minister.

There are other aspects of the situation which require consideration. In respect of some of them the Minister has been communicated with.For instance, under existing conditions, officers in other State departments may apply for transfer to the State Taxation Department. With this scheme in operation, what will be their position should vacancies occur in the ranks of taxation officers ? That is a matter which requires consideration.

Senator Large:

– Is the honorable senator in favour of reducing overhead expenses ?

Senator SPICER:

– Yes; but no evidence has been presented to show that this scheme will have that effect. It has been said that the Government’s scheme will release 1,000 men in the taxation departments, but I cannot see how that can occur.

Senator Cameron:

– That was stated by the committee in its report.

Senator SPICER:

– I am not astonished that the Minister is not prepared to support that estimate. Probably he has learned, as I have, that the maximum saving in Victoria will be 43 men.

Senator McBride:

– There will not be any great saving of men in New South Wales.

Senator SPICER:

– Should the position be as stated by the committee, what is the intention of the Government in respect of those officers who would become redundant ?

Senator Allan MacDonald:

– There will not be many redundant officers.

Senator SPICER:

– So far as I can see, these matters have not been given consideration by the Government.

Senator Keane:

– They have been considered.

Senator SPICER:

– If the Commonwealth Government, having embarked upon this scheme, intends to see it through, it must make provision to meet the problems which I have mentioned. I cannot see in this measure any provision to meet the cases of public servants who may have certain rights, or of those who may become redundant.

Among the other matters to which reference could be made is the fact that these State officers are now members of State public service organizations. The scheme before us is for a limited period only. Will those State public servants who are to be taken over by the Commonwealth have access to the Commonwealth Public Service Board ; and, if not. how will matters affecting their rights be determined? I urge the Government to give careful consideration to all that has been said by the public servants in relation to these proposals; and I hope that, before we go into committee, the Minister in charge of the bill will be able to give an assurance to me in relation to the matters State public servants have raised, and in respect of which they are entitled to every protection.

The Senate has a very special obligation in relation to these measures. The Senate, as we have been so often reminded, was created as a States House in order to preserve not merely the letter but also the real spirit of the Constitution. For that reason, honorable senators owe a special obligation to the people of Australia in exercising their vote on these measures to ensure that nothing shall be done by the Senate that will destroy the real foundations of the Constitution of the Commonwealth of Australia.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– It is an old saying that the power to tax is the power to destroy. It is also the power on which to build; and it is through taxation that we build our national structure.Right through the ages taxes, and tax-gatherers, have been far from popular; and they are no more popular to-day. It is certain that they will not be too popular in the future. That, perhaps, explains why measures of this kind give rise to so much difference of opinion. Since the inauguration of federation, much legislation has been placed on our statute-book. However, it would be impossible to find on the statute-book a parallel to this legislation, particularly insofar as it hides its sinister objective. This legisla tion represents a blow at the Constitution. Its real objective is hidden from the public. Usually the title of a bill is a fair index to its purpose. Before a measure is reported from committee, its title is specifically agreed to by the committee as a fair expression of its object. The titles of these measures are misnomers. The principal bill would be more accurately described as a New South Wales benefit bill. Probably, that accounts for the support given to this legislation in the House ofRepresentatives by members who represent electorates in that State. However, honorable senators are under an obligation to consider all legislation submitted to them from the point of view of the States. This is a States House. We are the guardians of State rights. Therefore, the Senate has a very special function to perform in dealing with legislation submitted to it. In passing, I express appreciation of the action taken by you, Mr. President, during the last few days, to maintain the status and dignity of this chamber. I have no doubt that the majority of our people, as well as of members of this Parliament, are in favour of a uniform income tax. I regret, however, that these proposals were not fully considered before being submitted to Parliament. They have been handled very hastily. A special committee was appointed to investigate them and to make recommendations to the Government. It is worthy of note that those recommendations as embodied in these measures are regarded more as the responsibility of that committee than of the Government. That fact was made clear in the House ofRepresentatives a few days ago when, in rejecting an important amendment proposed by the Opposition, the Treasurer (Mr. Chifley) could only advance the argument that the proposal embodied in the amendment had not been recommended by the special committee. He made no mention at all about the Government’s view on the matter. Further, when it was expected that one member of that committee would be able to bring argument to bear on that matter, he merely spoke platitudes.

Senator Keane:

-One cannot box without boxing gloves.

Senator JAMES McLACHLAN”.The honorable senator has put the matter in a nutshell. I repeat that the report on which these measures have been based was prepared too hurriedly. The special committee did not have an opportunity to give the subject the attention it merits.

Senator Allan MacDonald:

– And it did not hear any evidence.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– That is so. The States as a whole are vitally concerned in this matter. If only out of courtesy, the Premiers should have been called together .before the committee prepared its report. Only by such means could the Government possibly hope to win that support which proposals of such importance may merit. I am aware that the Commonwealth’s proposals were submitted to the last Conference of Commonwealth and State Ministers; but at that stage the Commonwealth had made up its mind. It was only after the Premiers had unanimously rejected the Commonwealth’s proposals that the Prime Minister again met them, and told them that the Commonwealth was resolved to proceed with this legislation, whether the Premiers approved of it or not. In any consideration of taxation, the two aspects of collection and distribution must be dealt with conjointly. Much doubt has been expressed as to the constitutionality of these measures. Senator Spicer, who is a lawyer, has ably given us his views in that respect. As a layman, I do not pretend to he able to deal with the legality of these proposals, but it is clear that opinion amongst lawyers on them is greatly divided. This matter should have been given more consideration because, in the event of the legislation being challenged before the High Court and being ruled as unconstitutional, the result will be financial chaos in Australia. However, the Government in its wisdom or impetuosity - I do not know which - has decided that the proposal must be debated and settled by both Houses of Parliament.

Senator McBride:

– It will probably be settled by the High Court.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– The Senate must decide the issue first. If these bills were solely taxation measures, we could regard them from a different angle, but, as I said, not only the collection, but the distribution of taxation revenue by the Commonwealth is involved. It is futile to talk about uniform taxation unless there are resultant uniform benefits. The Government’s proposal is that the States shall receive their fair share of the Commonwealth revenue from income tax after it is collected. I am afraid that the special committee which considered uniform income taxation failed to realize the importance of this aspect of the question. The committee decided to adopt the present Commonwealth formula of income taxation and apply it to the States, and recommended that amounts equivalent to their average income tax collections for 1939-40 and 1940-41 should be paid to them by the Commonwealth. The committee made this decision without fully considering the conditions obtaining in the States. The conditions in each are different. The committee paid no regard to the thrift and careful administration of some States. On the other hand, other States have been guilty of maladministration and extravagance. The committee did not take into account the taxing powers of the States or the conditions peculiar to those States with large areas and those with large populations and wealth. Nor did it take into consideration whether the source of their wealth is mining, manufacture or primary production. Although apparently these considerations were not appreciated by the members of the committee, they are of the utmost importance to those in control of State instrumentalities. I regard this measure as probably ‘75 per cent, political. 1 admit that there is much to be said in favour of a system of uniform taxation, and one reason is contained in the evidence submitted to the special committee that investigated uniform taxation. The committee in its report consisting of 25 foolscap sheets set out the various forms of taxes levied in the different States. There were about 25 items covering income tax on different kinds of incomes, but there was no uniformity between the Commonweal th and the States on any one item. That shows that there is need for uniform taxation. I shall take the company tax as an example. In NewSouth Wales, the rate of tax is 3s. in the ?1 for resident taxpayers, and 3s. 6d. for non-resident taxpayers; in Victoria, the tax is 3s. in the ?1 ; in Queensland, Is. 9d. to 3s. 3d. on a sliding scale; in Western Australia, 2s. 6d. ; in South Australia, 2s. and in Tasmania the rates are 2s. 3d. up to ?520, 2s. 6d. on ?520 to ?2,500, and 2s. 10-Jd. on higher incomes. I appreciate the argument that a State has the right to tax its citizens in whatever way it thinks fit. The States claim that they should have control of their own revenue, and I think the claim is admitted generally. Under prevailing conditions large amounts of Commonwealth money are being contributed to the States and those States which are fortunate enough to have large government works, such as munitions factories within their borders, are benefiting by the expenditure of a large amount of Commonwealth money. I suppose the Commonwealth is entitled to follow its own money. If that principle is admitted it is one argument in favour of uniform taxation.

I shall now comment on anomalies and injustices of the Commonwealth taxation system, and I think that this is one of the first matters which any committee appointed to examine proposals for uniform taxation proposals should have considered. The committee that was requested by the Government to consider uniform taxation adopted the Commonwealth formula of income taxation, but I think that the committee would have acted wisely if it had given more thought to improvement of the formula before the recommendation was made that it should be applied generally to income tax throughout Australia. The answer might be that the committee did not have the power to recommend alterations, but the fact remains that it did suggest some alterations of the formula. If the committee had examined the present Commonwealth formula, and removed some of the anomalies aud injustices arising from it, a better scheme of uniform taxation and one that would have given greater satisfaction to taxpayers would have been recommended. In my opinion, the Commonwealth formula is defective. I support the view of Senator Spicer that income tax should he levied on some in- comes below ?156 a year, and I agree with him that it would not be a hardship if many persons earning less than ?156 a year were taxed on their incomes and thereby had to contribute even to a small degree to the revenue of their country. I am under the impression that 19,000 taxpayers in South Australia, are relieved of the payment of income tax. At the same time, they enjoy all the privileges and services that are available to citizens who pay income tax. 1 understand that in New Zealand income tax starts on a flat rate which applies up to a certain income level. I believe that the rate is Is. 6d. in the ?1 up to an annual income of ?250. That rate may be too high, on a low income, but I favour the principle adopted in New Zealand. The computation of rates of income tax in Australia is too complicated. Taxation measures are in effect agreements that the people, in return for certain services provided by the Parliament, will contribute to the revenue. Every such agreement should be intelligible to both parties to it, but I am certain that our income tax assessments and returns are not intelligible to many taxpayers. Does any honorable senator who has business interests know the amount of his income tax until he receives his assessment. He does not know, and he cannot work it out unless he is a mathematician. Take the case of a man whose income does not exceed ?200. It is provided that he shall pay Sd. in the ?1 for every ?1 of taxable income over ?156. That is quite plain, but then we find that for eve?-y ?1 of taxable income in excess of ?156, he has to pay 8.12d., increasing uniformly by .12d. for every ?1 by which the taxable income exceeds ?156. That is very difficult to calculate. Surely that could be made a great deal simpler. We find, however, he is further embarrassed by the fact that where the taxable income is less than ?200, the net tax payable shall not exceed one half of the amount by which the taxable income exceeds ?156.

I should like to deal now with the difference between the rates of tax on personal exertion income and property income. In my opinion this difference is most unjust, especially as it applies 10 small incomes. In many cases, people who are obtaining £200 or £300 a year are widows or invalids who have invested their money in property and that is the only source from which they obtain their income. I contend that in such cases the rates should be the same as they are for income from personal exertion.

I shall deal now with the injustice of the company tax. Perhaps injustice is too mild a word ; it is actually highway robbery. Ned Kelly cannot be compared with the person responsible for this imposition.

Senator Collings:

– -Ned Kelly was not faced with the Japanese.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Although the Japanese are close to Australia justice should be done. Take the case of a person who has £8,000 invested in a company, which has a capital of £400,000, and an annual profit of 8 per cent., or £32,000. The company tax is 6s. in the £1, plus super tax of Is. in the £1 on the amount over £5,000. On these figures the taxation payable by that company would amount to £10,950. In addition, it would have to pay 2s. in the £1 on its undistributed profits. A dividend of 5 per cent, would absorb £20,000 of the balance, leaving £1,050 to be taxed at the rate of 2s. in the £1. That makes the total tax payable by the company £11,055. A person who invested £8,000 in the company would have a fiftieth share in it, and therefore his share of the £32,000 profit would be £640. However, after paying taxes and holding the undistributed capital, the company would pay him £400, on which he would have to pay £71 12s. 6d. by way of property rax, making the total tax paid by him £311 12s. 6d., and leaving him a net income of £328 7s. 6d. In other words, his tax would be practically 10s. in the £1. On the other hand a man earning £400 an annum from personal exertion would pay only £57 10s. by way of income tax, which is only one-fifth of the tax which would be paid by the man who had invested his money in a company such as that mentioned.

The anomalies that exist in regard to distributions to the States are just as great as they are in relation to collections.

The basis of distribution is inequitable and cannot be justified. Some years ago, it was realized that certain States suffered disabilities as the result of federation, and the Commonwealth Grants Commission was set up to examine the matter and evolve a solution. Surely this matter is of sufficient importance to warrant treatment on the same basis. The Leader of the Opposition (Senator McLeay) and Senator Spicer have pointed out quite clearly that New South Wales will derive certain big advantages under this scheme, and there is no need for me to reiterate the arguments advanced by those honorable senators. Virtually the Commonwealth proposes to give to New South Wales £7,000,000 or £8,000,000 to meet the cost of child endowment, unemployment relief and so on, for which that State no longer has the responsibility. The Leader of the Opposition has indicated that he will move an amendment in committee when, no doubt the question will be more thoroughly discussed. It is useless to say that the Commonwealth is returning to the States the amounts collected by them in the base years. That is not good enough, nor would it be good enough if the distributions and collections were the same. -It would not be so bad if the proposal were to return to New South Wales the amount collected from that State, but it is much worse than that. The proposal is to take money from Victoria and other States to make up the grant allocated to Queensland.

I do not propose to discuss these measures from the constitutional aspect, but one must realize there is some doubt as to their legality. I am reminded of the experience of Mr. Aberhart, the Premier of Alberta, when he tried to introduce the Douglas credit system. In order to do so, he considered it necessary to prepare the way, and he decided first to get rid of the private banks. He conceived a plan whereby he could do so by imposing excessive taxes upon them. If the hanks could have been forced to pay those imposts, they would have been taxed out of existence, but they appealed to higher authorities, and the case eventually came before the Privy Council, which ruled that the Parliament of the province of Alberta had not power to pass the proposed legislation. The case was argued, from the premise, not of taxation, but of the objective, and the Privy Council ruled that the purpose of the tax was to put the banks out of existence and to substitute something in their stead. We should ask whether the proposals now before the Senate are designed to raise taxes or to give to the Commonwealth Parliament a grip over the States that it is not likely to relax. Is this proposal an attempt to introduce unification?

Senator Large:

– Here’s hoping!

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– I do not favour unification and will fight it to the last ditch. I am a democrat. If the people of Australia want unification, and can get it in a constitutional manner, I shall submit to it; but I shall not agree to its introduction under cover of a bill of this kind. I favour uniform taxation, if it .be brought about by an equitable scheme, but in my opinion the proposal now being debated is the child of avarice and greed. It is ill-conceived, and for the benefit of Australia I trust that it will be strangled at birth.

Senator BRAND:
Victoria

.- The broad principle that in war-time the Commonwealth Government must have first call on taxable incomes and the capacity to pay is not open to challenge. The great mass of Australian citizens place State rights in the background while the nation is fighting for its existence. Not being a lawyer, I do not propose to voice an opinion from the constitutional aspect regarding the proposals under consideration. Lawyers, like doctors, often differ when professional advice is sought. I intend to vote against the second reading of the bill on the ground that it does not tend to assist in the production of a total war effort which the present Government has consistently and rightly urged. This is an opportunity to force States spending their revenue very freely to curtail their expenditure on non-essential commodities. This is an opportunity to tax the incomes not subject to direct taxes or to treat them very tenderly. The Government has not given effect to the policy for a total war effort that it has proclaimed over the air from time to time. Ministerial appeals for equality of sacrifice in order to win the war are mere words.

State revenue and expenditure have increased considerably during the war, yet this uniform income tax bill condones extravagant and free spending habits and penalizes prudent administration. By careful administration Victoria has kept its income tax rate the lowest in the Commonwealth. When the Commonwealth Government, under this bill, collects the proposed uniform State and Commonwealth income tax in the forthcoming financial year, thrifty Victoria will be handed back £3 Ss. Id. per capita to carry on essential State services, whilst New South Wales and Queensland will receive £5 13s. 9d. and £5 14s. lOd. per capita respectively, because they have continued or increased their pre-war expenditure during the last two years of the war. Is it not surprising that Victoria is appealing for more equitable treatment? About one half of Victoria’s revenue in past years has been derived from State income tax and the other half has been collected by means of various imposts such as land tax, estate duties, stamp duties and similar charges. New South Wales acquired the bulk of its revenue by means of income tax. This fact was not mentioned by the Minister (Senator Keane) in his second-reading speech on this measure. Victoria collects £500,000 a year from land tax as against £2,000 collected by New South Wales. When these imposts are taken into account, the taxpayers of Victoria will, under the so-called uniform proposals, pay taxes far heavier than those paid by taxpayers in New South Wales.

The bill should be re-drafted with the object of putting Victoria on a fair basis. This measure is only half baked. I admit that the problem is a difficult one; but until there is a clear cut division of the field of taxation, under which income taxation is left to the Commonwealth and land and other forms of taxation are reserved to the States, the unfair discrimination will not bo eliminated. The Commonwealth Government must have all of the money that it needs to prosecute the war, and if it be wisely expended, the public will respond. All of the States have commitments to honour, but the expenditure on non-essentials should be regulated by the sum collected annually from sources other than income tax. The emergency which has given rise to the present uniform income tax proposals lies in the fact that Commonwealth taxes on Queensland taxpayers cannot be raised, because after the Government of Queensland has collected the taxes due by them they have little or nothing left. I repeat that the present Government has in this so-called uniform income tax bill, failed to tap the incomes which are either excluded from direct contribution to paramount war needs, or are very tenderly handled. This category of earnings, relatively immune, from direct taxation or obligation to make a proportionate contribution to war costs has been increased substantially by the vast disbursements on war industries. The Government’s uniform income taxation plan applies only to taxpayers who are at present liable to pay Commonwealth income tax. In other words, persons without dependants, receiving up to £3 a week are not to pay anything, although in four States they have hitherto paid some income tax. The existing immunities for, or light imposts on, incomes up to £300 or £400 are to be preserved. The incomes of many families with individual members within this income range have been greatly expanded by war employment, yet in many instances it may be found that only one person in a family is making a direct contribution by means of income tax. Lavish private spending seriously detracts from the efforts of a country fighting for survival, and organized for total war. Exemptions from taxation in respect of the lower levels of income are justified where there are dependants, but many of those benefiting by employment in war industries and defence services are either married and without dependants, or single persons with no obligations other than their own maintenance, in whole or in part. Before the recent selfish rush for clothing began, there was evidence of heavy spending on nonessential and luxury goods. Such conduct was wholly inconsistent with the maximum use of the people’s resources for war purposes. It showed, moreover, a taxable capacity still untapped, or at least very lightly treated. A system of compulsory savings in one form or another offers the obvious solution. If such a system were adopted there would be less need f for complicated rationing devices. These arise because numbers of people enjoy spending power in excess of the goods available. The Fadden Government’s scheme for post-war credits was a good one, as a proportion of the money received as taxes would have been placed in a big war expenditure pool, and returned, with interest, to contributors after the war. If the proposals of the present Government in respect of uniform income taxation become law, the legislation will operate during the war and for twelve months afterwards. But what guarantee have we that similar proposals will not again be enacted? Measures imposing additional taxation usually remain on the statutebook. There must, therefore, be a definite provision to ensure that the period during which this system shall operate shall not extend beyond a year after the termination of the war.

When the bills reach the committee stage, I intend to seek from the Government an assurance - it has already given it to me personally - that the status and promotion rights of transferred State taxation officers who are serving in the fighting forces shall be adequately protected, either by regulation or otherwise.

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

– We have had a most remarkable series of speeches on the bills now before the chamber.

Senator Gibson:

– There have been some excellent speeches.

Senator COLLINGS:

– At the moment, I am not criticizing their excellence as speeches. I was about to say that every Opposition speaker commenced by saying that he was in favour of uniform taxation, and then proceeded to use every argument which his imagination could devise against an honest attempt to bring about uniform income taxation. Reference has been made to the claim that the Senate is a States House, and that therefore we must be careful that the rights of the States are not infringed. Whatever may have been the original intention of the framers of the Constitution., the inescapable fact is that, although the Senate consists of six representatives from each of the six States of Australia, for a long time honorable senators have ranged themselves, not as representatives of States, but as the champions of different classes of society. We on this side object to taxing people with incomes of £156 a year or less on any pretext whatsoever, whilst on the other side of the chamber <it the champions of vested interests who are determined that the common people .shall always “get it in the neck”.

Senator McBride:

– That is what has happened under Labour administration in Queensland.

Senator COLLINGS:

– The vigorous interjection of Senator McBride reminds me that this morning, when his distinguished leader, Senator McLeay, opened the discussion on these measures, he asked us to consider the matters before us without heat.

Senator McBride:

– That is so.

Senator COLLINGS:

– I am pleased to hear the honorable senator’s interjection, even though it be disorderly, because hardly had I started my speech before he displayed such heat that I began to fear for my physical well-being. I regret that [ have selected a time when the Leader of the Opposition happens to be out of the chamber to commence my remarks on she Government’s proposals, because the honorable gentleman, having requested us not to get heated, set about to rack his brains, and .has more or less fertile imagination, to find things to say which he knew would tempt us on this side to become heated. Never previously, during my experience as a senator, have I heard in so short a period so many remarks deliberately designed to provoke the Government and its supporters. When the honorable gentleman roared the word “ caucus “, I looked around expecting to see honorable senators faces blanched with fear. The Leader of the Opposition knows that his purpose in securing the adjournment of the debate yesterday, thereby wasting much time, was that members of the Opposition parties should themselves meet in caucus to decide what to do in regard to these measures.

Senator McBride:

– Nonsense ; the honorable senator’s information is incorrect.

Senator Crawford:

– All of us on this side are not bound by caucus.

Senator COLLINGS:

– It is refreshing to hear that. Following the outbursts of the Leader of the Opposition about caucuses, I had almost come to believe that honorable senators opposite were as caucus-ridden as their leader wanted the remainder of honorable senators to believe that we on this side are.

Senator McBride:

– I should like to hear what the honorable member for Kennedy (Mr. Riordan) has to say about that.

Senator COLLINGS:

– I cannot allow a colleague of mine to be slandered. The fact remains that the honorable member for Kennedy voted for the second reading of this measure.

Senator McBride:

– But he spoke against it.

Senator COLLINGS:

– And many members of the Opposition in the House of Representatives did the same thing. They started off by saying that they believed in a uniform tax, but they voted against it. Having terrorized honorable senators with the spectre of the caucus, the Leader of the Opposition proceeded to intensify the horror by referring to the A.C.T.U. For the benefit of the uninitiated, I shall explain what A.C.T.U. actually is. We talk about the A.C.T., which means this glorious territory in which the National Capital is established. The A.C.T.U. does not mean anything more terrible than does this glorious national territory. It is simply the Australasian Council of Trade Unions.

Senator McLeay:

– It is a short title for the honorable senator’s boss.

Senator COLLINGS:

– I have been my own boss for quite a long while, insofar as I rise when I feel inclined, and commence and leave off work when I feel inclined. But I have about 1,000,000 bosses in the State whom I represent in this chamber, whereas I have not even the semblance of a boss in the Australasian Council of Trade Unions. All the members of that body are my comrades, and are doing the work in which I believe. They are recognized by the law of the land, a law which governments politically akin to honorable senators opposite did their utmost to defeat. The Australasian Council of Trade Unions is a council of delegates of lawful unions; and it is consulted by this Government, as it is consulted by other governments, regardless of political colour, when they want something which they are afraid they cannot obtain without the goodwill of the workers of this country. The Leader of the Opposition said that all the States were against these proposals. That is not correct; and when the honorable senator made that statement, he knew that it was not correct. What he really meant to say was that all the State governments had expressed opposition to these measures.

Senator McBride:

– Does the honorable senator suggest that the State governments do not represent the people in their respective States?

Senator COLLINGS:

– The people of this nation are more whole-heartedly behind these measures than they have been behind any other measures submitted to this Parliament for many years.

Senator Sampson:

– How does the honorable senator know that?

Senator COLLINGS:

– I can quite understand that Senator Sampson, who moves perpetually among people well conditioned in this country, is in some doubt as to the correctness of my statement; but I move among the working people who comprise SO per cent, of Australians. What the Leader of the Opposition should have stated, had he wished to be perfectly fair, was, “All the State Premiers are opposed to these proposals; and I regret very much indeed that my Leader in the House of Representatives supported them”. He wanted us to believe that the people of the States were unanimously opposed to these proposals because the Premiers had become frightened of them. He knows, however, that the Leader of the Opposition in the House of Representatives spoke for the people of the State which I represent in this chamber when he supported these measures.

Senator MCBRIDE:

– Does not the Premier of Queensland represent the people of that State?

Senator COLLINGS:

– That is for the honorable senator to work out. It follows from the logical sequence of events that bitter opposition to these measures, and others which have been enacted since this Government assumed office eight or nine months ago, has come almost invariably, in a united way, in both this chamber and ‘ the House of Representatives, from South Australian members. Honorable senators representing South Australia do not support these measures. That has been made quite obvious to-day. But during the whole of the time that the previous Government poured defence expenditure by millions into South Australia those honorable senators did not utter one solitary comment on the fact that the State of Queensland, in respect of which they have spoken unfavorably to-day, was starved of defence expenditure. It was not until this Government came into office, and decided that our real danger zone was the northern part of Australia, that Queensland was considered worthy of very much attention so far as defence expenditure is concerned.

Senator McBride:

– The honorable senator knows that that is absolutely incorrect.

Senator COLLINGS:

– I am merely stating what I, as a representative of Queensland, know to be true. The previous Government depopulated the northern part of Queensland. I do not blame it because tens of thousands of young men from that area enlisted in the fighting services, or because thousands of people migrated from northern Queensland to South Australia, and Victoria, and other places, where munitions works were being established. I recognize that munitions factories were established not on a State basis, but on an Australian basis. After all the war is being fought on an Australian basis.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– Why mention the matter?

Senator COLLINGS:

– Because honorable senators opposite have alleged that injustice will be done to South Australia under these proposals. Another argument used by the Leader of the Opposition was that the enactment of these measures would prevent a State Treasurer from budgeting because he would not know what the State’s income would be. It is much more essential that during the present precarious stage of the war the Commonwealth Treasurer should be able to .budget not for one month or one year ahead, but, as the legislation proposes, for the duration of the war and one year after, so that he will be able to estimate the amount of money he will have available to provide for the safety of the people of Australia and the proper equipment of the fighting forces. Yet the bogy of State rights is raised in this chamber whilst Australia is in danger of enemy attack. I have great regard for the prestige of the Senate, of which I am particularly jealous because it is an integral part of the Australian Parliament, which, in turn, is an integral part of the British Commonwealth of Nations. I regret that due consideration for that fact did not silence all opposition to these measures. The statement was made by honorable senators opposite that there should be no alteration of the Constitution except with the consent of the people. These measures do not even make a pretence of altering the Constitution without the consent of the people, ft is stated in the main bill as plainly as language can express it, that these measures, if they become law, will operate only for the duration of the war and one year after.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– Tie Government is breaching the Constitution by the introduction of these measures.

Senator COLLINGS:

– If I agreed with the honorable senator I should have to admit that these measures represent an alteration of the Constitution by what Senator Spicer so inelegantly described as “ camouflage “. I make no such admission. Honorable senators opposite advocate that the Government should appeal to the people for their decision on these proposals. During the present grave emergency the Government would not attempt to make an appeal to the people. I know and I believe that honorable senators opposite also know that this country was never more unified than it is at present and if i he Government appealed to the country the forces of the honorable senator’s party would be decimated. At least these measures are an honest attempt by the Government to give Australia a fair chance in the present struggle and it will be the first time that Australia has had the opportunity of meeting the enemy on something like terms of equality. Senator Spicer delivered a speech entirely different from that of the Leader of the Opposition, and treated the Senate to a reasoned argument. He treated the Senate to an interesting legal dissertation, and I imagine that, with his brilliant legal mind and his capacity for expressing himself, he nearly convinced himself that his argument was irrefutable particularly when he was quoting from ponderous legal volumes. The honorable senator should have told the whole story. He should not have started the story unless he was sure that the ending would support his argument What happened in the case to which the honorable senator referred - the flour tax case, which was taken to the High Court and later to the Privy Council?

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– We know what happened in that case.

Senator COLLINGS:

-Senator Spicer did not tell the whole story. He did not say that both the High Court and the Privy Council held that the flour tax act was valid. That legislation was in the same category as the legislation under discussion.

Senator SPICER:

– I do not agree with that statement.

Senator COLLINGS:

– I did not expect the honorable senator to agree with me, because I am showing the hollowness of hip legal conclusions. The honorable senator also forgot to tell the Senate that the legal argument over the flour tax act occurred in peace-time. Then, not satisfied and knowing, I believe, the true weakness of the illustrations that he called to his aid, the honorable senator set up several hypothetical cases. He said, with all the dignity that requires only a wig and gown to make it impressive, that under this scheme a Victorian taxpayer would pay £10 a year more in income tax, and a Queensland taxpayer would pay £20 more. Then the honorable senator reversed the figures, and stated that a Victorian taxpayer would pay £20 more and a Queensland taxpayer £10 more. These hypothetical cases are useless now. On Sunday night last the Japanese caused loss of life in Sydney Harbour. Surely that attack has brought the war home to us. This bill is a war necessity, so that the Commonwealth Treasurer may be able to assess the amount of money he will be able to secure by income tax for the defence of Australia. That is an accurate picture of the position. It does not require research into the past and the quoting of what somebody said years before the outbreak of the present war to clarify the position. We must all realize that this war is real and physical, and can be fought only with real and physical things. We must have money. There should be no opposition to a measure which honestly proposes to put Australia in a position to defend itself. My friend, Senator Spicer, who apparently is the legal adviser to the Opposition, claimed that the Government should place on the table of the House, the legal opinions which guided it in regard to the constitutionality of this measure. I assure the honorable senator that members of the Government are not mere babes in the wood. First of all, the party to which the honorable senator belongs says it will fight this measure in the High Court.

Senator Spicer:

– That was not said; obviously, we cannot fight it in the High Court.

Senator COLLINGS:

– It has been said that the measure will be challenged, because it is unconstitutional.

Senator Spicer:

– I did not say that.

Senator COLLINGS:

– I remind the honorable senator that his is only the voice which chatters about the principles laid down by those individuals who stand for the faith that he holds. Now, having attempted to frighten the Government by threatening to challenge the constitutionality of this measure, honorable senators opposite wish us to place our cards on the table.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– The Leader of the Senate should realize that Senator Spicer was speaking for himself and not for every one on this side of the chamber.

Senator COLLINGS:

– Although I could derive little satisfaction from the speech made by Senator Spicer, at least I can find a little comfort in what has just been said by Senator Foil. This is not the time for sparring for political advantage; it is the time to do the things that matter, and by means of these four bills, honorable senators are being given an opportunity to do the things that matter. At least Senator Spicer was gracious enough.to admit that section 109 of the Constitution gave Parliament the right to do certain things which then take priority over any State action in a similar regard. I am glad that he realized that.

Now I come to the real crux of Senator Spicer’s argument, namely that there should be heavier taxes on all incomes under £400 a year. I do not think that the honorable senator realized the implications of that remark. Apparently, he believes that the Government has not yet hoed hard enough into salaries of £8 a week and less.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

‘Senator Spicer mentioned £400 a year for a man without dependants.

Senator COLLINGS:

– I heard no mention of “ without dependants “. The honorable senator .merely said that heavier taxation should be imposed on incomes under £400 a year. I wrote down his words. Later, the same genial gentleman, apparently believing that he had not been brutal enough, came lower down the scale, and spoke of single men and women, with no responsibilities, who were receiving the princely sum of £156 a year, or a wretched £3 a week. 1 point out to the honorable senator that the majority of the people to whom he refers are getting that wage for the first time in their life. To-day, many workers who previously have not had the chance to live decently and enjoy some of the amenities of life, are receiving this magnificent sum of £156 a year, due mainly to war expenditure. Apparently honorable senators opposite consider that the Government is to be indicted because it has not slashed into this income group. In recent weeks, we have seen yards and yards of declamations in the newspapers in regard to the shopping rush which occurred after the announcement of the rationing of clothing. It has been said that people stormed the counters of the drapery shops.

Senator McBride:

– The Minister for War Organization of Industry said that Mother’s Day was the cause of the rush.

Senator COLLINGS:

– Even if that were true, it would he nothing for Australians to be ashamed of. What is wrong with the young people of this country thronging drapery counters to obtain small gifts for their mothers? However, [ am not dealing with Mother’s Day; I am dealing with what the press throughout Australia described as an unseemly rush to the drapery shops. That rush was not caused by the welltodo people ; they had no occasion whatever to indulge in extensive buying of clothes, because their wardrobes were already stocked with all that they needed. The rush occurred because for the first time in their life, hundreds of thousands of working people, owing to greatly increased war expenditure, are able to get some of the things which make life worth while.

Senator FOLL:

– The rush was due to the manner in which the Government handled the situation.

Senator COLLINGS:

– I realize that in the eyes of honorable senators opposite, whatever is done by the Government is wrong, simply because it is not done in the way that the Opposition would like it to be done. The trouble is that my friends opposite cannot appreciate the fact that they are no longer in occupation of the treasury bench.

Senator Crawford:

– That is apparent to every body.

Senator COLLINGS:

– Of course, and the people of Australia arc more united than ever because of that fact.

Senator James McLachlan said that there is no precedent for this measure. That is quite true. Nor is there any precedent for the conditions which alone make it necessary for the Government to introduce this bill. Never before have we had the Japanese slaughtering our own people on our own soil or in our own waters. If any apology were needed for the bill, which I deny, that would be my excuse. Senator James McLachlan said that this measure should be entitled “ The New South Wales Benefit Bill “. I remind him that he will have anoppor tunity to propose an amendment of the title when the bill reaches the committee stage, but neither he nor any of his colleagues has raised objection to proposals passed by this chamber providing for the expenditure of millions of pounds for the purpose of establishing and maintaining munitions factories and other defence works in South Australia. I am in a position to know the volume of Commonwealth Government work authorized to be carried out in that State, because, as Minister for the Interior, I sign the papers relating to all such expenditure. I am not objecting to that expenditure, but the honorable senator has never protested against Queensland being denuded of its man-power because of the demand for men for the fighting services and for the munitions establishments. Honorable senators opposite should try to be logical.

It was also said by Senator James McLachlan that this was a committee bill, and that, in his opinion, it was 75 per cent, political. That was a “ pearl of wisdom “ the value of which I could not appreciate. I had a further look at the bill and began to wonder what the honorable senator meant. He suggested that it was intended as a sop to certain interests whose political support the Government hoped to gain. That remark was unworthy of him, and I do not think that he meant what he said. I do not believe that the honorable senator, who smiles so pleasantly and disarmingly, could possibly consider that the present Government, because it is a Labour Ministry, has deliberately introduced a vote-catching proposal. This measure has been designed for one purpose only, and it has one scope. It proposes to raise for the purposes of this war the greatest amount of tax that could be obtained without breaching the Commonwealth Constitution. It is proposed to give to Commonwealth income tax priority over State income taxes, and it proposes to do that only for the duration of the war and for one year afterwards. When we have effectively strengthened our fighting forces in this theatre of war, and have for the first time given to our fighting men and women a chance to meet the enemy on something like terms of equality, there will be no further need for this legislation. We desire to drive the enemy from our shores, and show that there is at least one nation that will not retreat. This small nation of Australia is determined to make an all-in war effort to preserve everything that we cherish now, and hope for in the future. Such an objective is immeasurably above any proposal to make political capital. It is the only objective that we dare think of in these perilous times. The danger to our country is not remote as it was a few months ago; it is now present on our own soil. Despite the arguments adduced by the Opposition, the issue that I have just stated is the only one that is worthy of a moment’s consideration. As Leader of the Senate, I urge honorable senators on both sides of the chamber to consider the situation most carefully before casting a vote on this measure.

Senator COOPER:
Queensland

– I intend to support the principles of the bill and to vote for the second reading. I believe sincerely that this is a war measure, and that the Government has introduced it to facilitate the collection of taxes and to provide means of assessing the amount in taxes that can be obtained from the various States. The bill is also designed to bring about equality of sacrifice upon the part of the people. Honorable senators on both sides of the chamber have said that every person in the community should be prepared to make some sacrifice in the interests of the country’s war effort. No man can offer more than his life in the service of his country ; but those of us who cannot do that should endeavour, even at considerable sacrifice, to ensure that those who do so shall have the necessary equipment, and in all respects shall be adequately- provided for. No one disagrees with that view.

I agree with Senator Spicer that under these proposals citizens of certain States will make a greater contribution to the revenue of the Commonwealth than will citizens of other States. That is admitted.. It is impossible, however, to provide that every person in the community shall be placed on exactly the same basis in regard to income taxation although that, result would be achieved if the States

Grants (Income Tax Reimbursement) Bill were not proceeded with. The dropping of that bill would not, however, meet the position fairly, because the responsibilities of the several States differ so tremendously. Senator Spicer said that, as the result of good government, citizens of Victoria have for a number of years paid less in taxes than have the citizens of the other States, including Queensland. That also is admitted. But the honorable senator seems to forget that Victoria, in addition to being a much smaller State than Queensland, was developed earlier when money and materials were much cheaper than they are now. Moreover, wealth attracts wealth. That is one reason why many large companies have their head offices in Victoria.

Senator MCBRIDE:

– Good government attracts wealth.

Senator COOPER:

– The fact that citizens of Victoria have for many years paid less taxes than citizens of other States .have had to bear, should make them all the more anxious to do their part now, if they really believe in equality of sacrifice. That Queensland is- not so well developed as Victoria is due to its much greater area - Queensland is about eight times- the size of Victoria - and also to its development having commenced much later. I am proud of the development that has taken place in Queensland, and of the fact that the population of the State is increasing each year.

It has been said that this legislation will present constitutional difficulties. As I am not a constitutional authority, I cannot say whether that, is, or is not, likely. I do know however, that Australia is facing the greatest crisis of its history and, in my opinion, we can afford to take the risk of legislation being unconstitutional at a time like this. I believe in taking my hurdles as. they come. The bill before us is to remain in force until twelve months after the termination of the war. When that time arrives, it will automatically expire. Should the electors then wish to continue the arrangement, they can send to this Parliament representatives in favour of its re-enactment.

Senator McBride:

– They will express themselves long before then.

Senator COOPER:

– I do not think so. When that time comes, they will have the opportunity either to revive this legislation or to revert to the system under which there will be several taxing authorities. The war may end within six months, in which event this legislation would expire within eighteen months. That is to say it would not remain in force beyond the constitutional life of the present Parliament. I consider that ample safeguards are provided.

There are some grounds for the view that party political considerations have influenced the Government in its preparation of this measure. The average elector is easily influenced by promises of reduced taxation or a higher income. A citizen of South Australia without dependants who has a taxable income of £200 a year now pays £18 2s. in taxes whereas under these proposals he will pay only £7 9s. That reduction of his obligations gives colour to the argument that party political considerations have influenced the Government.

Senator McBride:

– It is a form of political bribery.

Senator COOPER:

– Instead of paying approximately7s. a week, he will nowpay only2s. 10½d. a week. Naturally, taxpayers in this class will react favorably to the fact that they will save approximately 4s. a week under this measure. I cannot understand why the Government did not take this opportunity to make the rate of tax on lower incomes on the same basis as that of South Australia. That could have been done very easily, and it would have removed the impression that these proposals are designed to some degree as political propaganda.

The Commonwealth has an excellent opportunity to increase its revenue substantially by increasing slightly the rate of tax on incomes of £400 and under. In this respect, I refer only to taxpayers who have no dependants. Substantia] rates of tax are now levied by the British Government on incomes in the lower ranges, and that Government has realized the necessity and wisdom of combining tax on incomes in this field with a scheme of post-war credits. These rates are as follows: -

Under these proposals, the rates of tax payable on corresponding incomes are as follows : -

I urge the Government to follow Britain’s example, and to institute a system of post-war credits in conjunction with taxation of incomes in all ranges. We are fighting for the same objective as Great Britain; and we are fighting the same enemies.

We cannot regard with equanimity the enormous disparity between the amounts paid by single persons in Great Britain on the incomes I have quoted above, and those paid by single persons in Australia on similar incomes. This raises the problem of equality of sacrifice. If the people of Great Britain, despite the losses they have already suffered in the war, and the volume of war work which they are now doing, can afford to make such contributions, surely Australians on corresponding incomes can reasonably be asked to make approximately the same contributions. The collections made in respect of post-war credits have proved most valuable in raising revenue for war purposes in Great Britain and New Zealand. I can see no reason why this form of saving should not be applied in this country. Actually, it is already being applied to our soldiers, inasmuch as a fixed portion of the soldier’s daily pay is retained by the Government as deferred pay, and is not made available to the soldier until he is discharged. Surely, therefore, it is not unfair to suggest that the same system should be applied in respect of civilians. In that way, substantial revenue could be raised for war purposes without imposing undue hardship on our people.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– They are making such contributions now by buying war savings certificates.

Senator COOPER:

– To a degree, that is correct, but whereas purchases of war savings certificates are purely voluntary, the provisions in respect of deferred pay are compulsory. I think that the method of post-war credit or deferred payment is excellent and that it would prevent a great deal of panic spending of the type that has been witnessed in the last three weeks. I do not blame people for spending money when they have it.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– This is the first time that many people have had money to spend.

Senator COOPER:

– I have observed the spending of money in shops recently, and I am sure that it is not only those who previously have had little money to spend who have joined in the rush to buy goods. I think that those who have formed the habit of saving are holding on to their money. Obviously many young people who are earning good wages are spending freely. I am certain that if a post-war credit scheme were introduced many people when they found that they had, say, £50 to their credit, would be grateful to the Government that had introduced the scheme. My experience has been that when people have £20 or £30 to their credit in a savings bank they try to increase their savings. An immense pool of wealth has been formed by the expenditure of public money on war material and a large proportion of incomes below £400 and even £600 have been largely augmented by this expenditure. The introduction of a post-war credit scheme would not only provide a means of taxpayers saving their money, but it would also make available a great amount of revenue to the Government because it would remove from the market millions of pounds of spending power which is now being used to purchase goods, the manufacture of which keeps engaged plant that is urgently required for war purposes. I believe that the enactment of this legislation will simplify to a large degree the preparation of income tax returns by taxpayers. Many people, and I include myself, have found the preparation of their returns a nightmare.

Senator McBride:

– The payment of income tax is a nightmare.

Senator COOPER:

– The completion of returns is a preparation for the nightmare to come. One good effect of the measures will be that the Treasurer, no matter what government is in power, will be able to estimate fairly accurately the amount of taxation revenue available for the country’s needs.

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

– The. Leader of the Opposition (Senator McLeay) and Senator Spicer opposed these measures on the grounds that they are unconstitutional. In reply to an interjection, Senator Spicer said that he was quoting facts; he would have us believe that it was a fact that the bills are unconstitutional. I shall quote several authorities in opposition to that contention. The first is the right honorable member for Kooyong (Mr. Menzies) who said recently that -

No one will know what the constitutional position is until the High Court has spoken. The line of High Court decisions on the Constitution has never been constant.

I suggest that what Mr. Menzies meant by that statement was that the High Court’s interpretations of the Constitution vary in the light of changed circumstances or conditions. Therefore, it is never constant. The High Court might give a decision to-day and reverse it twelve months hence in the light of changed conditions. The following is also a statement by Mr. Menzies : -

Referring to a judgment of the High Court during the last war. the words of the Constitution were given an interpretation in wartime which they could never have been given in peace-time. The result is that he would be a wise man who, to-day, would set out any limitation to the words.

Here again, Mr. Menzies, as the result of his training and experience, was not prepared to go as far as the Leader of the Opposition and Senator Spicer, and dogmatize by declaring that these measures are unconstitutional. When Mr. Menzies speaks in such terms he is running true to form in his legal career as far as I can judge. In 1917, he won the Bowen prize essay at the “University of Melbourne. The title of his essay was, “The Rule of Law during the War”. What I am about to quote from the essay had the full support of the legal intelligentsia of that period, so much so that the right honorable gentleman was awarded the Bowen prize. In his essay he wrote -

In times of stress, parliaments are ready to delegate to executives extended powers or determination of policy, and courts of law will stretch rules of interpretations to the utmost - ut res magis valeat guam pereat.

I understand that the translation of that Latin phrase is, “It is better for a thing to have effect than to be made void “. He goes on to say -

That this is by no means an uncommon practice is apparent to any student of ancient constitutional systems However much the free man might boast his freedom, however republican his civic government might become, the presence of an enemy knocking at the gates almost invariably produced a military dictator - the personification of a strong aud effective central government.

I agree entirely with that statement. Danger faced in common is still the strongest bond of unity between men, and as that danger becomes greater, as is the case in this country, obviously it is the duty of a central government such as the Commonwealth Government to increase its powers in order to provide for more effective resistance to the enemy.

I should like to quote also another eminent legal authority, the honorable member for Warringah (Mr. Spender), who, during the debate on this measure in the House of Representatives, said -

From time to time, the phrase “ sovereignty of the States “ has been uttered in this chamber and the Commonwealth has been criticized for invading the rights of the States. Opponents of the bill have declared that this legislation will force the States to vacate the field of income taxation. That is regarded as sacrosanct. In war-time, I am not concerned about those concepts. I am not concerned, for example, with the concept of whether the spirit of the Constitution means one thing or another. I point out one elemental truism, that what the Constitution permits ib consitutional.

I am advancing reasons why this legislation will be found to be proper. I am not concerned about whether it is against the spirit of the Constitution as interpreted by Mr. A or Mr. B. What concerns me is whether what is being done is a proper thing to do.

It seems idle to argue that there is any doubt as to what power the Commonwealth possesses under the Constitution in time of war. The power of the Commonwealth transcends all other power; and if, in point of fact, it can only be incidentally related to the object of winning the war, then the court does not sit in judgment as to whether it would come to the same conclusion. This Parliament is the repository of the views of the people, and the Commonwealth Government is responsible to this Parliament. It is for this Parliament to say whether this legislation will aid in the prosecution of the war.

It seems, therefore, that these two legal gentlemen, who, incidentally, are both in opposition to the Government, agree, in effect, that these proposals are likely to be judged to be constitutional.

Senator McBride:

– They did not both say that. One of them expressed exactly the opposite opinion.

Senator CAMERON:

– I am merely giving my interpretation of what the honorable gentlemen said. Surely it is quite legitimate to do that. I should not attempt to express the opinion of Senator McBride, or any one else who would join issue on this question, but, in my view, what the two authorities whom I have quoted have said, in effect, is that these proposals are likely to be judged to be constitutional, and that, in time of war, the interpretation of the Constitution by men, whether they be members of the Senate or of the High Court Bench, is different from what it would be in time of peace. The point is emphasized that, when the enemy is knocking at the door, a strong central government is required to build up effective resistance to the enemy. That is exactly what this Government is attempting to do. So much for the constitutional aspect of this matter. It has been said that this scheme has not the support of people outside Parliament, but I have here a letter from the Australian National Services League, dated the 29th May, which reads as follows : -

At a meeting held in Sydney yesterday, convened by this league, and comprising representatives of the following commercial and financial associations of New South Wales: -

Sydney Chamber of Commerce (Incorporated ) ;

New South Wales Sheepbreeders Association;

Chamber of Manufactures of New South Wales ;

New South Wales Wholesale Tobacco Association ;

Constitutional Association of New South Wales;

New South Wales Wholesale Softgoods Association;

Cartridge Convention :

Patent Medicines and Proprietary Articles :

Employers Federation of New South Wales :

Wholesale Distributors Association;

Farmers and Settlers Association of New

South Wales;

Pharmaceutical Society of New South Wales ;

Galvanized Iron Agreement;

Retail Traders Association of New South Wales:

Graziers Association of New South Wales;

Sydney and Suburban Timber Merchants Association :

Iron and Steel Association :

Sydney Woolselling Brokers Association : New South Wales Wire Nail Distributors Association;

Wire and Wire Netting Association;

New South Wales Traders Protection

Association :

Wine and Spirit Association of New South Wales ;

Wholesale Grocers Association of New South Wales, the following resolution was unanimously adopted: -

This meeting strongly supports the present proposal of the Federal Government to have one taxing authority for the Commonwealth for the duration of the war and one year thereafter, recognizing as it docs the great benefit it will bestow on the business community, not only in the simplification of its taxation returns, but in the saving of man-power both to the Government and the taxpayers in this time of great national crisis.

A copy of this resolution has already been forwarded to the Prime Minister and the meeting also decided that a copy should be sent to you.

It was felt that you should know that the organizations represented fully supported the principle of one taxing authority for Australia.

Yours faithfully, (Signed) Martin McIlrath, Chairman.

It is quite obvious that if so many commercial organizations in New South

Wales are satisfied that these proposals are in the interests of the nation, they also will prove beneficial to the business community throughout Australia. They all, more or less, have interests in common, and any legislation which would benefit the commercial community of Nev South Wales must necessarily be of benefit to business people in Victoria. Senator Spicer remarked that he was speaking for the citizens of Victoria. He had not attempted to mention any responsible organization that had discussed the present proposals and had come to any conclusion regarding them, so the weight of evidence from that point of view is against him. The Melbourne Trades Hall Council, which represents the organized workers of Victoria, has passed a motion in favour of these proposals. The Victorian Chamber of Manufactures is in favour of uniform taxation. It believes, however, that Victoria should be more generously treated than it will be under this bill. Throughout Victoria the people generally are in favour of this legislation. The Victorian branch of the Labour party, for instance, is in favour of it. The great body of the people who a re capable of making their views known through organizations are uncompromisingly in favour of them.

It was stated by the Leader of the Opposition (Senator McLeay) that the Senate was established to represent the States. That is true, but again the question of interpretation arises. What does the honorable senator mean by “ the States “ ? They are made up of people whose interests are very much in conflict. Between the “ haves “ and the “ havenots “ there is an eternal conflict. That must be so, and it must be reflected in the representation of the States in the Senate. The “ haves “, as expressed by the owners of the privately controlled monopolies, are increasing their powers, both industrially and financially, each year, as improved methods of production are introduced, to the detriment of the “ have-nots “. As that position develops, and is seen in a clear light by the average working man, his views are reflected in this chamber. Merely because each State sends six representatives to the Senate, it does not follow that the people in the

States are unanimous, or that the interests of all of them are identical; therefore, the contention of Senator McLeay does not convey a great deal. He claimed that the Labour caucus is responsible for the Senate being a party House. [ join issue with him and say that that is n.04. so. The reason why the Senate has developed into a party House is that the conflicting interests of the people are now represented more truly in this chamber than they have been in the past. In the circumstances, the Senate must inevitably remain a party House. So long as the struggle between the “ haves “ and the “ have-nots “ continues, we shall have, in our legislative halls, members of parties representing opposing interests.

The Leader of the Opposition also said that the Premiers of the States had opposed the present proposals, but it does not follow that the Premiers have consulted the people of the States on the matter. Without a mandate, they probably took it upon themselves to speak in the names of their Parliaments.

Senator KEANE:
ALP

– The Parliaments of the States are in recess.

Senator COLLETT:

– The Parliament of Western Australia was consulted.

Senator CAMERON:
ALP

– 1 accept that correction. In Western Australia, a motion opposing the scheme was passed in both branches of the legislature, but it cannot be truthfully said that the Parliament of that State has consulted the people of Western Australia on the matter, despite its unanimous decision.

Victoria has the doubtful credit of coming within the category of thrifty States. It is thrifty because governments of Victoria have starved the social services of that State. They have set out to attract capital to their State, where a higher margin of profit from capital invested could be obtained than in other States, and social services have been reduced to a minimum for that purpose. In addition, some Victorian industries particularly the clothing industry, have been notorious for the “sweating” conditions that existed in them. At one time, a Victorian government fraudulently appropriated £100,000 intended for the relief of unemployment in order to grant assistance to hospitals. In order to pre serve its reputation for thrift it was prepared to rob the workers will 0 had provided that money. It took that step rather than impose heavier taxes on vested interests and the wealthier sections of the community. Victoria also has the unenviable record of having at the same time taxed women in order to provide for those who were unemployed, and of refusing relief to unemployed women. Yet honorable senators opposite hold up Victoria as an almost ideal State. However, the people, not only of Victoria, but also of the other States are beginning to see the position more clearly. The result will be that before long we shall have in this Parliament a Labour government with a majority in both houses, and therefore able to give effect to its policy. The present Government is handicapped as to numbers, but it is doing the best that it can in the circumstances. I regret, therefore, that when it has proved that it has increased the country’s resistance to its enemies beyond what existed when it came into office, honorable senators opposite should be prepared to vote against proposals which would improve the position still further. When these proposals become law, Australia will have only one income taxing authority, instead of seven. That will mean a considerable reduction of overhead costs, and the release of manpower. With the enemy at our doors, honorable senators opposite say that we must be careful how we act, because oi some doubt as to the constitutional aspects of this legislation. At such a time, they are concerned that some citizens might have to pay a little more than is paid by the citizens of other States! When I reflect on these things, I wonder whether some honorable senators opposite have the interest of the country as much at heart as they would have us believe. It would appear that the prospect of increased profits is to them a more important consideration than the defence of their country. That, at least, is a logical deduction from their attitude towards this bill. Senator Spicer had a good deal to say about taxpayers in Victoria who would be taxed £10 a head more than if they lived in another State. That may be the position according to the honorable senator’s arithmetic, but it is not what is found in practice, because whether the small wage-earner lives in Victoria, New South “Wales or any other State, he will always be taxed to the fullest degree that he can be persuaded or coerced to accept. A country may be flowing with milk and honey ; there may be abundance for every man, woman and child; yet by a process of assessing wages based on the cost of living, minus both indirect and direct taxation, the workers are forced to accept the very lowest in terms of commodities or of gold. Our arbitration courts and other wage-fixing tribunals act in that knowledge. Senator Spicer’s remarks will not apply to persons in receipt of low incomes, but they may, as they should, apply to persons in the higher income groups. When incomes are not equal, and the whole economic structure is not on an equitable basis, all this talk about persons paying so mucin a head is merely so> much political window dressing. No real increase of wages is ever granted by any wage-fixing tribunal. In terms of fictitious currency, or substitute money, that would appear to be so ; but the fact is that to-day the wage of the average worker will not purchase, in terms of commodities, more than the average wage of 30 years ago. That cannot be denied. Senator Spicer said that he could see no reason why a man, or woman, earning £3 a week should not be taxed. The proper time to consider such a proposition will be when all single men and women now receiving in excess of £3 a week are taxed down to that income. Why should persons in receipt of £3 a week be taxed simply because they are single when many other single persons in the community, after paying tax, still enjoy considerably in excess of that income ? That would be unjust ; and such a proposition would not be supported by any one who really desires to treat the people as a whole as fairly as possible. Would any one suggest that a man under the age of 21, who is serving in the front line, should be taxed because he is single, when many other single persons in the community are in receipt of incomes considerably in excess of that amount after they have paid their tax? It cannot be said that the latter are doing anything nearly so useful in the defence of the Empire as the soldier in the front line. Before a young man in the firing line is taxed simply because he is single, the incomes of all other single persons should be taxed down to the level of his income

Senator Leckie:

– The young soldier under 21 years of age does not pay tax.

Senator CAMERON:

– Then let on take the single man, or woman, who is employed in a workshop on necessary work for the defence of the country. Is it fair to propose that he, or she, who may be receiving £3 a week, should be taxed while other single people who are engaged on non-essential work receive considerably in excess of £3 a week even after they pay tax?

Senator Leckie:

– How many “ £3 a weekers “ are there in munitions factories ?

Senator CAMERON:

– I was stating a hypothetical case. However, if that does not satisfy the honorable senator, let us take the single man, or woman, employed on a farm, who receives a wage of £3 a week, or less. Why should he, or she, be taxed when other single persons in the community, who are not doing work nearly so useful in the interests of Australia, enjoy an income considerably in excess of that amount, even after they pay tax? A young man may be drawing considerably in excess of £3 a week as the proceeds of investments in war bonds made on his behalf by his parents. He is doing nothing towards the war effort, and, certainly, is not so useful to the community as the average farm labourer. Honorable senators opposite appear to take the view that individuals should be judged not on the value of their efforts in the interests of the community, but on the basis of their incomes; and they are not very much concerned how the well-to-do obtain their incomes. I can well imagine that a man who may have won, say, a prize of £5,000 in a lottery, would make a much more favorable impression upon honorable senators opposite, and would be considered by them to be a more valuable member of the community than the average farm worker who receives a wage of £3 or less for the essential work he performs on behalf of the community. Honorable senators opposite would not dream of taxing these two classes of taxpayers in proportion to their incomes. In considering the incidence of taxation we should have regard to these factors.

We should realize that persons on lower incomes pay more indirect tax, at all events, than those who enjoy higher salaries, or incomes.

Senator Leckie:

– Is the honorable senator suggesting that every one should be taxed down to £3 a week?

Senator CAMERON:

– No. Men and women who are doing useful work in the interests of the community, whether it be in munitions factories, or on the farms, or any work essential to our interests, and are earning only £400 a year, or less, should not be taxed. If we really want to set an example in equality of sacrifice, we should decide that no one earning under, say, £1,000 a year, should be taxed until every one receiving an income in excess of that amount is taxed down to that level.

Senator McBride:

– Has the honorable senator yet been able to convince his colleagues in that direction ?

Senator CAMERON:

– My colleagues are quite convinced on that point; and I have sufficient faith in them to believe that when we obtain a majority in both Houses, we shall give effect to such a policy. Under more favorable conditions, we shall find a very severe and necessary levelling down of incomes generally, particularly the incomes of those who are making unprecedented profits out of the war. The longer the war lasts, the greater will be the danger of the small man being driven out of business, whereas big business in both primary and secondary production will tend to expand. That is one effect of war under existing conditions. It was one of the results of the last war. For instance, the last war did more to establish the Broken Hill Proprietary Company Limited than any other event in the history of that company. That observation applies to every privately controlled monopoly, or privately controlled financial institution. So long as the means of production are monopolized by private interests, war will have the effect of driving the small men out of business to the advantage of big business. If we do not prevent this development, we may well wake up when this war is over to find that Australia is owned, not by the people, but by a handful of monopolists in private and secondary production. Small business people, such as retail shopkeepers, are being forced out of business because vested interests in this Parliament, even now, are stronger than the people. Long before the war, members of the parties in opposition to the present Government were cogitating amongst themselves how best they could put the small wheat-growers out of production in the interests of the private banks. It is because this situation has developed that public opinion throughout Australia is hardening in favour of the Labour party.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Will uniform income taxation have that effect?

Senator CAMERON:

– Uniform income taxation is not an end in itself ; it is only a means to an end. We are living under a system which is centralizing ownership and control of primary and secondary production into fewer and fewer hands and at the same time increasing the number of men and women who will be forced to work for wages or low salaries. I shall now comment on Senator Spicer’s reference to the effect of these measures on theCommonwealth and State Public Services. He said that if uniform income taxation in accordance with the proposals of the Government were introduced in peacetime, a number of public servants would become redundant. The policy of honorable senators opposite would be to put them on the street to look for another job. That would not occur if a Labour government were in power implementing its policy. Instead of public servants being put out of the Service as redundant and reduced perhaps to the dole, the conditions of public servants generally would be improved. Senator Spicer said in one breath that the enactment of uniform income taxation legislation would not result in any saving of man-power, and in the next breath he asked what would be done with the public servants who became redundant. My answer is that in wartime these public servants will be placed in positions in which they can give better service to the nation than duplicating work in the taxation offices. Those not required for taxation work could be transferred to other work without loss of status or pay. That is within the realm of practical politics. The only eventuality public servants have to fear is that a large number of their colleagues will not vote for the Labour party but will vote for the United Australia party, which will impoverish them.

Senator MCBRIDE:

– There is nothing political about this matter!

Senator CAMERON:

– I sit in this chamber as a representative of the workers of Victoria in duty bound to do the best I can politically in their interest. When I. use the word “ workers “, I apply it in the widest way to include professional and other people who render good service to the nation. Under a uniform system of income taxation, the conditions of public servants can be improved, particularly in Victoria, where they have been kept on the lowest level by the Dunstan Government.

Senator MCBRIDE:

– The Dunstan Government has been kept in power by the Labour party.

Senator CAMERON:

– The Labour party is in a minority in the Victorian Legislative Assembly. All the public servants will need to be afraid of will be that their colleagues will vote for the parties opposed to the Labour party. The public servants of Victoria were stupid enough to accept the 10 per cent, cut in salaries at the beginning of the depression. If the public servants of Victoria and other States had taken a lead from Judge Lukin. who would not accept the emergency cut in his salary, their salaries would not have been reduced.

Senator E B JoHNSTON:

– Another Commonwealth judge adopted the same attitude as Judge Lukin

Senator CAMERON:

– Then those judges showed an. intelligent appreciation of their value. When workers generally realize their real value, honorable senators opposite will either have to reverse their views or resign themselves to exclusion from this Parliament. I commend the four measures to the Senate, not as an end, but as a means to an end, so that this country can be governed more efficiently, more economically and more successfully in. the interests of the nation generally.

Senator COLLETT:
Western Australia

– In a debate of this nature it. is impossible to avoid, a certain amount of repetition, but I propose to confine my remarks, so far as possible, to the Western Australian aspect of this legislation, and in doing so I shall be brief. The bills now under discussion have a special claim upon the attention of the Senate because they deal indirectly but seriously with State rights. The provisions of the hills have been canvassed extensively by other honorable senators and in the press, and therefore, I shall not attempt to go into details of rates, compensation to States, including the “ bonus “ of more than £1,000,000 to New South Wales, the placating of Tasmania, and other such anomalies. These matters have been dealt with effectively by the Leader of the Opposition (Senator McLeay), Senator Spicer and others. It may be taken for granted that nobody opposes the principle of uniform income taxation, which in its true incidence, eases the general position of the taxpayer, and at the same time, lessens the cost of collection. That postulates sound government, but it is. not the only issue. A study of the geographical make-up of Australia, with its vast undeveloped areas and scattered population, emphasizes the need for strong local and independent authorities in order that sound social progress may be planned and sustained. That cannot be done without financial resources. The mere pittances which are likely to be forthcoming from a politically sensitive and extravagant central authority with a depleted Treasury chest are useless. To use an old phrase, the people should beware of selling their birthright for a mess of pottage. I am convinced that after the war any government would find it most difficult to relinquish the authority now sought under these bills, professedly as a waT necessity. Perhaps a reminder is needed that this Commonwealth is a federation of sovereign States. On the 1st January, 1901, each State, acting under a constitution granted, directly by the Crown, delegated certain powers which it was thought could be used more effectively by a centra] authority. Those powers are set out in the Commonwealth of Australia Constitution Act of which section 128 provides a necessary protection for the

States against further encroachment upon their realm. It is true, of course, that section 51 vi. throws upon the Commonwealth, the responsibility for the defence of Australia against attack, and that section 51 ii. furnishes a legal means of obtaining funds to meet the expenses of war, but it was never contemplated that the exercising of these two powers conjointly could be made the means of forcing unification upon the States. If a State’s ability to obtain money by means of taxation no longer exists, then its means of livelihood as a sovereign entity disappear, and it becomes dependent upon the grace of the other States acting in consort, for a mere existence in which its ideals of industrial expansion and social betterment can find little if any scope. The presentation of this legislation by the Government reminds me of an occasion in the last war when a commander-in-chief, anxious to be rid of an inefficient general who had strong political backing, adopted the device of removing the corps from the general rather than the general from the corps. At the same time I do not admit that the system of government in Western Australia is lacking in the necessary properties to enable it to maintain the battle of progress. I am one of the six representatives of Western Australia in this chamber, and I desire to put forward authentic views upon the issue with which we are now dealing. For that purpose I desire to quote from the West Australian, of the 13th May, an account of the proceedings in the State Parliament which, in effect, epitomizes the reasons for the rejection of the Curtin Government’s uniform income taxation plan. When the Legislative Assembly met the Premier moved the long resolution which has been read to the Senate by Senator Johnston. The newspaper report of the proceedings is as follows: -

Submitting the motion, the Premier said he objected to the principle of uniform taxation, not the details. Western Australia was being deprived of the right of self-government. deakin had said truly that “the power of the purse was the power of the government”. ‘ Ever since federation the federal authorities had been constantly trying to gut more .power. “If these proposals are forced on us,” he said, “we will lose all semblance of the power of self-government.

Even municipalities and road boards, he proceeded, had power to raise revenue. It was symptomatic of the attitude of federal governments to the States that within a short period both a non-Labour and a Labour government had favoured uniform taxation. The cooperation of the State Premiers should have been sought to overcome any federal taxation difficulties. The interests of the State were being sacrificed for something not essential to the war effort. This State had been badly treated in regard to munitions manufacture. The Industries Commission, on which high hopes had been founded, had proved to be a tremendous disappointment. Instead of being an executive body it was merely advisory. If the State lost its right to tax it lost the right to govern. The uniform taxation scheme would impose all the disabilities of unification without conferring any of its benefits. The outlook for Western Australia would be nothing short of tragic if it lost the right to manage its own affairs. If Western Australian people could have envisaged the consequences of federation they would never have agreed to enter federation.

I do not subscribe to that sentiment. No such judgment can be justified in the light of the advantages gained by Western Australia under federation. The report continues - “ I have no faith in protestations that the tax proposals are for the duration of the war only,” said Mr. Willcock. “ I don’t doubt the present Federal Government’s sincerity, but they cannot bind the future. All our experience has shown that, once having surrendered a right to the Commonwealth, the States never have it returned to them.” This State’s gold industry, continued the Premier had been singled out for heavy taxation on production, and the State’s wheat acreage had been more drastically reduced than that of any other State. Factory personnel here was just about being maintained at a time when Australia’s industrial expansion was at its maximum. At Loan Council meetings it was always difficult to get money for development in this State. Now the State was to be prevented from getting money from revenue - the Commonwealth was to have the right of determining the amount of “’ compensation “ each year the States were to have in lieu of taxation. The Commonwealth could give them what it liked, possibly through some such body as the Grants Commission. The States were to be hamstrung -bound hand and foot - by the tax proposals. He hoped his motion would be carried unanimously by the House. The motion could not be regarded as unpatriotic or as hindering the war effort.

After two days debate, with only three members speaking against it, the motion submitted by the Premier was carried in the Legislative Assembly without a division, whilst in the Legislative Council it was agreed to with the following addition : -

The whole question of financial relationships between the Commonwealth and the States should be submitted to the State Parliaments before ratification of the proposals.

Rightly or wrongly, Western Australia has complained of receiving a raw deal, and it has given evidence of the neglect of its best interests. The people of Western Australia believe that their geographical remoteness implies a crass ignorance on the part of the inhabitants of this side of the continent of both that State’s strength and weaknesses. Western Australia’s direct contributions to the war effort have been exemplary, and its loyalty to the ideals of the Commonwealth is undoubted, and has been demonstrated. Nevertheless, it is not prepared to forfeit its independence, and thus come under the political domination of another State, the -social codes of which are, to say the least, not on a high ethical plane. That which the Government seeks to obtain, by means of these measures, namely, more money for the conduct of the war, could have been secured by other means, particularly by a system of compulsory loans, as was planned by the former Prime Minister, Mr. Fadden. I was prepared to support that scheme, because it would have equalized the payments for war purposes, without intruding upon State rights in any way. It is quite true that the Australian Labour Party Council in Western Australia is backing this scheme, and, in so doing, is clashing with the Labour Government of Western Australia; but the Australian Labour party is all out for unification, despite the damage which, as it knows, must follow to State interests. It is possible that some of my colleagues on the other side of the chamber may have other views. If so, that is their concern. No doubt they will be able to offer a perfectly good explanation to the people of Western Australia; but I consider these measures to be ill designed and badly timed, and I shall vote against the motion for the second reading of the bill.

Senator COURTICE:
Queensland

– I support the bill because there can be no doubt that the Commonwealth

Government is responsible for the defence of this country. I accept the assurance that the Commonwealth has full power to take the action provided for in this measure, and to take priority over the States in regard to the raising of money for defence purposes. I listened with interest to the debate on this measure both in the House of Representatives and in this chamber, and I do> not propose to occupy the time of the Senate by discussing it at length. However, I was interested in Senator Spicer’s contribution to the debate this afternoon. The honorable senator certainly made a very good speech in his customary professional manner. He stressed all the disadvantages of this scheme, but was unable to discover even one redeeming feature. I am sure that Senator Spicer cou’d be quite eloquent on the subject of the disadvantages of multiple taxation, and no doubt he is prepared to admit that a great deal could be done towards the simplification of existing methods. In fact, I should be surprised if Senator Spicer did not become a strong advocate of a scheme of this kind some time in the future. He was at great pains to convince the Senate that Victoria would suffer great disadvantages under these proposals. I refuse to accept the suggestion that the plan is to be of a permanent nature. It cannot be fairly claimed that the Government intends that it shall continue to operate after the war. .Senator McBride. - The honorable senator must be the only government supporter who holds that view.

Senator COURTICE:

– I think that many responsible parliamentarians, including supporters of the Government and members of the Opposition, would say that the proposals relate only to war expenditure. Senator Spicer stated that 50 per cent, of the revenue in Victoria was obtained from sources other than income tax, and he made a comparison between the State land tax collected in Victoria and that received in Queensland. The tax obtained in Victoria amounts to 5s. 2d. per capita of the population, whilst in Queensland it represents Ss. per capita.

Senator Spicer:

– I made a comparison between Victoria and New South Wales.

Senator COURTICE:

– Does the honorable senator now wish to shift his ground? Revenue from stamp duties amounts to 10s. 3d. per capita in Victoria as against 10s. 6d. per capita in Queensland, whilst Victoria received 15s. per capita from probate and succession duties as compared with 10s. lOd. per capita in Queensland. A considerable number of Australians spend the closing years of their life in New South Wa.es and Victoria, although they may have amassed wealth in other States, with the result that the death duties collected in Victoria are greater per capita than in a State like Queensland. Victoria expends 17s. 6d. per capita on health services, hospitals and charities, whilst Queensland expenditure in that direction amounts to £1 4s. 3d. per capita. Hospitals in Queensland are maintained partly by the local governing authorities. Victoria imposes State income tax amounting to £3 9s. 7d. per capita as against £6 2s. lid. per capita in Queensland. Would Senator Spicer like war expenditure to be allocated on a per capita basis? Victoria, of course, would not then have a great advantage over Queensland. It is difficult to make any satisfactory comparisons between Queensland and Victoria. The latter is a small compact State and is a much older State than Queensland, which is of immense area; Queensland has a greater mileage of railways per capita than any other State. I regret that the people of Australia generally have not forgotten State boundaries, so that railway and similar services could be developed as they should be.

These proposals may not be 100 per cent, fair to all of the States, but they are, as I have said, only of a temporary nature. There must be no limit to the resources available to the Commonwealth Government for the prosecution of the war. The subject of war-time finance has been discussed frequently in this Parliament, and it would have been creditable to all political parties if mutual arrangements had been made which would have obviated the necessity for this legislation. War expenditure lias resulted in buoyant revenues to the States, and it is only reasonable that full powers should be given to the Commonwealth authorities to obtain, by taxation, money required by it to finance the war. The complacency regarding the war situation that is noticeable in some parts of Australia is not to be found in the far north of Queensland. I believe that Australia has had a narrow escape from invasion, and we are not yet out of the wood. Therefore, the whole of the resources of the country must be at the disposal of the Government. The argument advanced that these bills represent an attempt to deprive the States of their rights will not bear investigation. If we were not at war we should not now be discussing measures of this kind.

Much could have been done to improve the situation from the constitutional aspect. I remember the discussions that took place prior to the establishment of federation to induce the States to enter the union. It was never anticipated that the Commonwealth Parliament would have to wear swaddling clothes indefinitely, and it is a reflection on governing bodies in Australia that arrangements have not been reached to give increased powers to this Parliament. We need a Commonwealth in reality. The people were assured, at the establishment of federation, that the motto would be “ One nation, one people, one destiny “ ; but it seems to me that the States have still a long road to travel before complete understanding between them will be reached. Why should this’ Parliament be suspected of being prepared to do an injustice to the States? The objection to an increase of the powers of this Parliament is based entirely on suspicion for which there is no foundation. I do not think that honorable senators would sincerely suggest that the carrying of the present proposals would endanger the position of the States.

Senator Spicer referred to the position in New South Wales with respect to child endowment. If provision were not made for New South Wales to receive an amount of over £1,000,000 in respect of child endowment, it would experience a deficit of over £1,000,000, and that would cause financial difficulty to that State. If the present proposals were to be of a permanent nature, they would not be constitutional.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– Why not?

Senator COURTICE:

– I do not propose to discuss these proposals from the constitutional aspect. I heard a fine speech on that phase of the proposals in the House of Representatives by the right honorable member for Kooyong (Mr. Menzies) and another good speech by the honorable member for Warringah (Mr. Spender), who spoke in opposition to the view propounded by the right honorable member for Kooyong. That indicates that legal men can take up any side in a discussion and present a fairly good case. During the last war, Sir Isaac Isaacs, then a member of the Commonwealth judiciary, made the following remarks : -

A war imperilling our very existence, involving not only the internal “development of progress, but the array of the whole community in mortal combat with the common enemy, is a fact of such transcendent and dominating character as to take precedence of every other fact of life. It is the ultima ratio of the nation. The defence power then has gone beyond the stage of preparation, and passing into action, becomes the pivot of th» Constitution, because it is the bulwark of the State. Its limits then are bounded only by the requirements of self-preservation.

I subscribe to that view. I believe that Australia is in great danger, and that all that we hold dear is at stake. In my opinion, we in this country have been fortunate in that Japan did not attempt to invade our shores before attacking Burma. Had the Japanese forces concentrated on Australia two or three months ago, when we had hardly a popgun with which to resist them, they might have established a hold on our territory and been most difficult to displace.

I do not say that it would be impossible to carry on the war without giving effect to the proposals of the Government; but I do say that the Government, having given the matter serious consideration, believes that some such scheme is necessary in order to provide the funds required for the defence of Australia. For that reason I support the measure. Senator Spicer’s suggestion that the incidence of taxation should be altered, and revenue obtained from other sources, opens up a big question. The honorable senator may be right. I believe that every individual in the community should accept some responsibility to contribute to the revenue of the country; but it is ridiculous to expect a man on the basic wage, who has a wife and family to maintain, to contribute by means of direct taxation. It is not economically possible for such a man to do so, and it would be morally wrong to force him. From a mathematical point of view, it may be all right to say that incomes below £400 per annum should be taxed, but, in putting forward that argument, Senator Spicer did not tell us how many people are in receipt of less than £4 a week and are finding it hard to make ends meet. Although these people may escape direct taxation, they contribute a considerable amount through indirect taxation. The workers expend nearly all that they earn in keeping body and soul together and in contributing to the country’s revenue by means of indirect taxation. We could not get very much more from them. I shall support the bill, because it is necessary to enable the Commonwealth Government to obtain funds for carrying on the war.

Reference has been made to the subject of unification, but I do not believe that the Government desires to introduce unification at present. There was a time when I was a keen unificationist, but since I became a senator I have learned that there can be too much centralization. In the matter of war expenditure, Queensland has been forgotten. Until comparatively recently, there was scarcely a gun along the whole of the long coastline of that State. Ever since the war began most of the war expenditure has been in the southern portions of Australia. It may be that that was the most suitable place for the work to be done. Australia’s fiscal policy has led to the establishment of numbers of secondary industries in Victoria, and so, when the war broke out, there was in that State a nucleus for the establishment of war industries. The people of Queensland do not complain of that; but I say in all seriousness that, if this country is to develop, there will have to be a reorientation of powers and responsibilities in many respects. We cannot maintain a White Australia if our population remains small. Those parts of Australia which are crying out for development should be developed along proper lines. I predict that, if we come through the war successfully, large numbers of people will gravitate to Queensland,, with the result that the development of that State. will be so great that the cost will not represent so great a problem as it does to-day. There has been a good deal of foolish criticism regarding taxation in Queensland. It must be remembered that Queensland is a vast State. In my opinion, the development which has taken place there is a credit to the government and the people of Queensland. I remember when Queensland had only a few “ niggers “ on its coast; to-day large numbers of the best men and women in Australia are to be found there. Queensland has not received from the Commonwealth the consideration to which, it has been entitled, and consequently the criticism by the Premier of that State, Mr. Forgan Smith, of the proposals of the Commonwealth Government are understandable. He is judging these proposals by what has happened in the past; he is afraid of the treatment that might be meted out to his State.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– By a Labour government?

Senator COURTICE:

– No. Comparisons are difficult in matters affecting taxation, especially when those who make them are not acquainted with all the. circumstances. Many who speak of the high rates of taxation in Queensland, are unaware that the hospital and medical services of that State are probably the best in the Commonwealth. That reputation could not have been gained without the expend! iture of considerable sums of money. During the last eight or ten years, very many maternity hospitals have been built in north-western Queensland under Labour administration. Such services confer great benefits on the community, but they require the expenditure of considerable sums of money. Those who criticize the taxation legislation of Queensland must take into consideration what has been achieved. Money wisely expended is of benefit to the nation. I believe that these proposals will assist the nation’s war effort. “When the war is over, the whole question of the relations between the Commonwealth and the States should he discussed, with a view to arriving at an understanding which will enable the Commonwealth to tackle the problems confronting industry so that the things which retard development may be removed. I am confident that the passing of this and the other cognate measures will be in the best interests of Australia.

Senator J B HAYES:
Tasmania

– I shall support the second reading of the bill, but I reserve the right in committee to move amendments which will improve it. I regard the measure as war legislation. Its preamble reads -

Whereas, with, a view to the public safety and defence of the Commonwealth and of the several States, and for the more effectual prosecution of the war in which His Majesty is engaged, it is necessary or convenient to provide for the matters hereinafter set out . . .

The final clause limits its operation thus -

This act shall continue in operation until the last day of the. first financial year to commence after the date ort which His Majesty ceases to engage in the present war, and no longer.

Those provisions indicate clearly that it is a war measure. Their inclusion in the bill is one of the main reasons why 1 shall support it. I shall not vote against any proposal which might help in the more effectual prosecution of the war.

A good deal has been said, both in this chamber and in the House of Representatives, as to the constitutionality of this measure. Although eminent lawyers have expressed different opinions on this subject, we are entitled on the one hand to presume that the Government has received advice that it is acting constitutionally in bringing this legislation forward. On the other hand, we have heard legal opinions by eminent lawyers in which doubt is expressed as to the constitutionality of this legislation. The only point which I, as a layman, make is that the Government should satisfy itself beyond reasonable doubt that its proposals are constitutional. It does not need much imagination to visualize the result of this legislation being found ultra vires the Constitution after it has been in operation for, say, twelve months. Were that to happen, the result would be a state of chaos. If it has not already done so, the Government should take steps immediately to ensure that the Constitution is not infringed.

Senator McBride:

– The Government got as many “ yes “ men as possible to express their opinion.

Senator J B HAYES:

– On this subject, I speak as a layman. I should not be so foolish as to attempt to say whether one set of lawyers, or another set, is right. I have always had my own opinion about the Constitution; and perhaps this is the most appropriate time and place to express it. In my opinion, all doubt as to the constitutionality of this measure, and other measures in connexion with which doubt is raised, should be settled without recourse to law. Honorable senators have expressed some doubt as to what the High Court would decide if called upon to settle this question. I suggest that the High Court should be asked to settle that matter now. It should not be difficult to insert in the appropriate act - probably the Judiciary Act - a provision that, it shall be the duty of the High Court to determine the constitutionality of a measure of this kind before it is enacted.

Senator Crawford:

– That is what is done in the United States of America.

Senator J B HAYES:

– It should be done here. .Surely this Parliament has the power to determine what the functions of the High Court shall be. It is absurd that before we can say whether legislation is constitutional or otherwise, some one has to invoke the law. In order to test the validity of this legislation, a State must sue the Commonwealth. I know of nothing more stupid than that a State government, which represents the people, should be obliged to sue the Commonwealth, which represents the same people, in order to test the validity of legislation. “Whether a State, or the Commonwealth wins, the people must pay. What is the necessity for lengthy litigation in order to determine a question which could be submitted direct to the High Court for its opinion? Many cases of this kind have gone on appeal to the High Court, and the Privy Council ; and the proceedings have involved the parties in an expenditure of thousands of pounds. Is it not possible, after this legislation has received the Royal Assent, to submit it direct to the High Court for its opinion on its constitutionality ?

These measures can be improved in many respects. The Treasurer (Mr. Chifley) has estimated that the Commonwealth will receive an additional revenue of from £12,000,000 to £15,000,000 under this scheme. I have carefully examined the figures circulated by the Treasurer but I fail to see how that estimate will be borne out on the schedule of rates supplied to us. For instance, on an actual income of £1,000, the difference between the State tax and the amount of tax payable under this scheme in the respective States is as follows : - New South Wales no change, Victoria £12 more, Queensland £26 less, South Australia £31 less, Western Australia £11 less, and Tasmania no change.

Senator McBride:

– That is on a taxable income of £1,000 ?

Senator J B HAYES:

– No; an actual income of £1,000. I endeavoured to ascertain exactly what was meant by actual income. Actual income is the term used in the schedule of rates circulated among honorable senators. Averaging these alterations of the tax payable on an income of £1,000 in the respective States, I find that the Commonwealth will receive over all of the States £9 less in tax on each income of £1,000. Therefore, I fail to see how the Treasurer’s estimate of an additional revenue of from £12.000,000 to £15,000,000 will be realized. I ask the Minister in charge of the bill to indicate clearly the basis on which that estimate has been made. I realize, of course, that the application of higher rates in Victoria will substantially favour that estimate; but even that factor does not reassure me that the Treasurer’s estimate is sound.

The Government could very well have taken this opportunity to implement specific measures for the purpose of financing the war effort. Every individual in the community should be obliged to contribute towards the cost of the war according to his, or her, means. I believe that such contributions can best be handled by a scheme combining taxes and post-war credits, such as was propounded in what is known as the Fadden plan. It was pleasing to note that the last war loan was over-subscribed by £12,000,000. Naturally, we were inclined to flatter ourselves on that success; and we sincerely hope that the current war loan will be equally successful. The fact remains, however, that comparatively very few people subscribe to war loans. The record number of subscribers, recorded in the last war loan, was approximately 250,000. That number represents a very small percentage of the total number of persons who can reasonably be expected to subscribe to war loans. That number should be at least doubled. I have not the slightestdoubt that the Fadden plan of postwar credits would have met with the approval of a majority of people in the lower income field. I have gained that impression from conversations which I have had with many workers whom I know. Many of these men live frugally, and their wives are constantly working for the Red Cross, and other patriotic organizations. When they have a few pounds to spare, they immediately make donations to patriotic funds, or buy a £10 war bond. They do everything within their power to assist the war effort. At the same time, hundreds of thousands of people, who are much better off, make no contribution whatever for the purpose of helping our war effort. They spend everything they can get their hands on. It is not fair that one man should contribute all he can spare to help the Government finance the war effort, whilst another person in exactly the same economic circumstances, makes no contribution whatever to assist the war effort. Whilst one person is doing his level best all the time, the other person does nothing. The only way to spread the burden fairly over all classes of the community is to implement a scheme, such as the Fadden post-war credits scheme, whereby the money will be taken by the Government at its source, and held in trust for contributors until after the war. I feel sure that any thoughtful person will agree to such a scheme. Whilst I do not think that this war will be followed by so serious a depression as occurred after the last war, economic conditions will naturally be such as to make these war credits very welcome to contributors, and will help to tide them over the bad time which must follow the present heavy expenditure. Australia’s national income was estimated a few years ago at approximately £900,000,000. Allowing for economic development which has taken place in the meantime, it must now be over £1,000,000,000 annually. At the same time, we shall require about £400,000,000 annually to finance this war. Surely we can raise that money if every one does his best. Whatever special means are adopted for raising revenue for war purposes, the system of floating loans can still be continued, as an avenue of investment for many people who can well afford to invest their money in that way. I repeat that if every one did his, or her, fair share we should have no trouble at all in financing the war.

The bill contains several anomalies. I fail to understand why the amount of compensation to be paid to New South Wales is nearly two and a half times greater than that to be paid to Victoria. The amount to be paid to Tasmania will not be sufficient to enable that State to meet its requirements, although, through the representations of the Tasmanian Premier, the amount originally proposed to be paid to Tasmania has been increased by £77,000.

Senator McBride:

– Is the honorable senator suggesting that that was Tasmania’s price for its acquiescence in this scheme ?

Senator J B HAYES:

– No. I have no doubt that the Premier of Tasmania put up such a good case that the Commonwealth was impelled, in justice, to make available the extra amount. I feel sure that after the scheme has been in operation for some time, Tasmania will be enabled to secure further adjustments through the Commonwealth Grants Commission. I shall support any move to embody a system of post-war credits or any other means under these proposals, in order to ensure that every one will be obliged to contribute according to his ability towards the war effort.

Senator Sampson:

– This is a uniform income tax measure.

Senator J B HAYES:

– I have no doubt that some scheme similar to this will be continued following the war provided we are able to improve it in the meantime and thus win the support of the people for it. However, this measure itself will lapse a year after the war ends; and should it be desired to implement a scheme along these lines, it will be necessary to enact entirely new legislation for that purpose. All of us accept the principle of uniform income taxation.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– This hill is supposed to be a uniform tax bill.

Senator J B HAYES:

– It has often been said that the title of a bill is designed to conceal its real purpose. However, I am not entitled to say that the Government does not mean what it says on this occasion. I am prepared to take the bill at its face value. At the same time, I think that honorable senators on this side would have brought down a much better measure had they had the opportunity to do so.

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

– I am surprised to find so many honorable senators opposite in favour of unification and uniform taxation. I listened very attentively to those honorable senators who have spoken, but I did not hear one of them advance any formula designed to improve the proposals now before the Senate. The Government is now attempting to implement what has been promised for a long time, namely, a uniform tax scheme. The anomalies apparent in these proposals are attributable to the varying systems of taxation in the different States. Listening to the remarks of honorable senators opposite, one would think that there were only three States in the Commonwealth, namely, Queensland, New South Wales and Victoria. The point at issue is not the amount of revenue collected by the States during the financial years which have been taken as a basis for the calculation of the amounts to be paid to them under this scheme. The real issue is what the States have provided with that revenue. I say frankly that the standard of social services in New South Wales is much higher than those in Victoria. The amount of £15,356,000 to be paid to that State merely represents the value of the services which New South Wales has provided in the past for the people in that State. The cost of social services in New South Wales is three times greater than the cost in Victoria.

Senator SPICER:

– New South Wales is not now required to meet the cost of child endowment.

Senator ASHLEY:

– The honorable senator made an excellent speech this afternoon, but he had a bad case to argue. The cost of social services in New South Wales in the financial year 1939-40 was £7,074,031, and the cost in Victoria was £2,387,612.

Senator Spicer:

– The expenditure in New South Wales was due largely to unemployment relief, which cost £5,000,000 in that period.

Senator ASHLEY:

– The cost of unemployment relief in New South Wales was not £5,000,000. It was £2,007,962, and the expenditure on food relief was £1,7”91,000.

Senator Spicer:

– The total cost of those two services totalled nearly £5,000.000.

Senator ASHLEY:

– The total amount of the two items, according to the figures that have been furnished to me, is not £5,000,000. When the cost of social services in New South Wales and Victoria are compared, I do not think that it is improper that New South Wales should receive £15,356,000 as compensation under the terms of this legislation and Victoria should be paid £6,517,000. I am sure that every honorable senator will agree with the view that the requirements of the nation should be paramount in time of war. There is no limitation in regard to the defence of any one State of the Commonwealth, and, therefore, in the matter of defence we are one. The same principle should apply to the raising of money for the defence of Australia. Honorable senators opposite suggested this afternoon that the field of income tax has not been sufficiently exploited over the lower range of incomes. Advocacy of that sort is not unusual by honorable senators opposite. They have suggested that all persons in receipt of more than £3 a week should pay income tax, and that even those receiving up to £400 a year, should pay higher taxes. I would point out that every person in that income field pays indirect taxation.

Senator Leckie:

– As do all taxpayers receiving higher incomes.

Senator ASHLEY:

– Taxpayers on the higher incomes are better able to afford the payment of direct and indirect taxes.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– What indirect tax does the person on a low income pay?

Senator ASHLEY:

– He pays indirect taxes on most of the articles that he buys. The proposal has been put forward that girls earning £3 a week should be brought into the income tax field. I do not agree with that proposal. I think that Senator Spicer said that persons earning £3 a week are not subject to income tax because of the possible political effect if they were taxed. I would point out that many people earning £3 a week are under 21 years of age, and, therefore, not having the right to vote, they have no political influence. Prior to the war these people and their parents in many instances were living on the dole. Honorable senators opposite have referred frequently to the thrift of Victoria, but they should not forget that that State has benefited during the last few years in respect of defence expenditure. For several years I have complained of the high rate of defence expenditure in Victoria as compared with other States. Honorable senators representing Queensland have commented on the small amount of defence expenditure in that Statu. In the financial years 1939-40 and 1940-41 the Commonwealth Government contributed substantially towards the increased revenue of the State of Victoria. As a result of the vast volume of employment provided in war industries, the revenue of that State has increased considerably. It is true that taxes in Victoria have been reduced in the last few years hut other States might find it possible to reduce their taxes when their revenue is substantially improved as a result of increased expenditure of Commonwealth money on war industries within their boundaries. I do not intend to pit myself against .Senator Spicer on the question of the constitutionality of these measures. The honorable senator quoted several eminent legal authorities in support of his view that the legislation is unconstitutional. One authority was a King’s Counsel, of Adelaide, and another was the right honorable member for Kooyong (Mr. Menzies), whose opinion must be respected. However, Senator Spicer did not quote another eminent King’s Counsel, the honorable member for Warringah (Mr. Spender). .Speaking on the constitutional aspect of these proposals, Mr. Spender said-

I imagine that the Government concerned, before introducing the legislation, would satisfy itself as to the constitutionality of the measure to he brought forward.

Senator Spicer:

– Did the Government satisfy itself?

Senator ASHLEY:

– Yes.

Senator Spicer:

– Then produce the evidence. (Senator ASHLEY. - It is not usual for a government to lay documents of that character on the tabic of the Senate. I shall continue the quotation -

If that be done, and the Government is convinced that its proposals are constitutional,, it is a matter of little consideration for this House; but if obviously the constitutionality of a measure is doubtful, it is a matter which is properly debatable here. It is somewhat improper to engage in a long legal dissertation on the subject of whether a measure is or is not constitutional. My own view is that in respect of this measure there can be no doubt whatever that it is constitutional, both upon the ground of the’ power of the State to tax and upon the basis of the defence power of the Commonwealth. I advance my views with the same degree of hesitation as any lawyer advances a view. The right honorable member for Kooyong (Mr. Menzies) has expressed the view that, in respect of both the power to tax and the defence power, he is satisfied that it would come under the taxation power, but he doubts whether it can be said to come under the defence power. I desire to have it recorded, for what it is worth, that my view is that if the constitutionality of this measure were ever assailed, the matter would be settled beyond all dispute in favour of its constitutionality.

Two eminent members of the legal fraternity. Mr. Menzies and Mr. Spender, are in conflict on this question and I am sure no honorable senator will venture to say which is right. The Government has had advice which coincides with the view of Mr. Spender. I doubt whether any test will be made of the legislation in the High Court or the Privy Council. Statements that the legislation will be challenged are merely threats by opponents of the measures to endeavour to stampede the Government. Every judge, .1 should say, must give some consideration to war conditions.

Senator SPICER:

– A judge can only apply the law as it is.

Senator ASHLEY:

– A judge can apply the law sympathetically or unsympathetically. His duty is to interpret the law as it stands, but his decision can be influenced by prevailing conditions. 1 should welcome any proposal for an effective formula for the simplification of taxation measures. No suggestion has been made, although I believe that Senator McBride said that one would be made at a later stage. I assure honorable senators opposite that if a proposal were made, although it could not be adopted at present, consideration would be given to it when the budget was being dealt with in August. Like other honorable senators, [ desire that there should be a uniform taxation system throughout the Commonwealth. We have not got it to-day because of the wide variations in the different States. Otherwise, a more acceptable formula might have been provided now. The formula on which this legislation is based was drawn up by the special committee which investigated uniform income taxation. Surely nobody will question the qualifications of members of that committee. The right honorable member for Yarra (Mr. Scullin) is an ex-Prime Minister, and has been a student of finance all his life. When he speaks on measures of this kind he is listened to with respect by members of all parties. Another member of the special committee was the honorable member for Robertson (Mr. Spooner), a former Treasurer of New South Wales, and a man who has had extensive experience in financial matters. I am confident that nobody questions the ability of the chairman of the committee, Professor Mills, who is a professor of economics at the University of Sydney, and is also chairman of the Commonwealth Grants Commission. The recommendations of such men cannot he ignored, and I pay a tribute to the work that they have done. They have accomplished an excellent task by endeavouring to draw up a formula to overcome the many vexatious problems encountered by people in every walk of life under the existing complicated system of multiple taxation. I commend the bill to the Senate and trust that it will have a speedy passage.

Senator LECKIE:
Victoria

.- This measure is probably the most momentous and far reaching piece of legislation ever brought before this Parliament. Therefore, it has to be considered in all its aspects. I shall not deal with the constitutional aspect of this scheme, other than to say that even to a lay mind, it is obvious that at any other time but the present, the High Court would have no hesitation in declaring these measures to be unconstitutional. The argument advanced by honorable senators opposite that because we are at war, the High Court will decide that this proposal is constitutional, is a peculiar form of reasoning. Surely it is the duty of the High Court to interpret the Constitution. It is possible that on small issues it might be tempted to strain a point, as it has done in the past, but on a question of this kind which, in effect, means violating the Constitution, I have no doubt as to the attitude that it will adopt. However, let us assume that these bills are passed, and that an appeal to the High Court results in the measures being declared constitutional. What will be the position then? At any time, and without entertaining any fear of the legislation being declared ultra vires, the Commonwealth may bring in bills of this kind. On the other hand, should the High Court declare these measures to be unconstitutional, what an unholy mess the Government will be in !

Senator CAMERON:

– There is no unholy mess in England, where there is no written constitution.

Senator LECKIE:

– But we have written Constitutions, embracing both the Commonwealth and the States. Therefore the constitutionality of measures of this kind should be beyond doubt.

Senator COURTICE:

– Does the honorable senator think that the war does not matter ?

Senator LECKIE:

– I am not saying that the war does not matter, but I object to honorable senators opposite claiming to be super patriots, and alleging that honorable senators on this side of the chamber are unwilling to prosecute the war to the best of our ability. I agree entirely with Senator Courtice that the entire resources of this nation should be at the disposal of the Government, and that the war must be pursued to a victorious conclusion. If necessary, everything that we possess must be put into the common pool, but could that not be done without violating the Constitution? Is it necessary to do what the Government is attempting to do by means of these measures? In view of the fact that its declared policy is the unification of Australia, is the Government not leaving itself open to grave suspicion by adopting a scheme such as this? This scheme is an attempt to achieve unification under the guise of necessary war measures. I agree that our Constitution has not stood up to the test of time, either in peace or in war, and when the war has terminated, we shall have to make an honest endeavour to alter the Constitution in the light of what has transpired. However, we have a written Constitution to-day and it is not for this Government to say that it shall be regarded as a mere scrap of paper to be torn to pieces at the will of one political party. By way of excuse, it is argued that the uniform income tax scheme will operate only for the duration of the war and one year thereafter. I presume that we shall all be fairly satisfied if these measures remain in force for three years at the least. Therefore, in effect, the Government says “ We shall tear up the Constitution, and in three years’ time we shall give you back the scraps of paper “. Proposals of this kind cut right across all our preconceived ideas of constitutional authority, and strong reasons should be given before they are introduced into the Parliament. To justify this scheme and, no doubt, to indulge in a little bit of propaganda, the Government has inserted the following preamble in this bill : -

Whereas, with a view to the public safety and defence of the Commonwealth and of the several States and for the more effectual prosecution of the war in which His Majesty 18 engaged, it is necessary or convenient to provide for the matters hereinafter set out:

The use of the words “necessary” and “convenient” is interesting. Un doubtedly that preamble was so framed to persuade the people that without these measures the Government would not be able to obtain the money necessary for the successful prosecution of the war. The justification for this scheme has been set out under three headings, each of which, in my opinion, is totally inadequate. They are, first, that it is necessary to raise the money for war purposes. Strong emphasis is laid upon that point. Secondly, it is claimed that the scheme provides for uniform taxation, but actually it does nothing of the kind. Thirdly, it is claimed that the scheme will operate for only a specified period. In order to obtain support for this scheme the Government has already granted concessions to Tasmania, Queensland, Western Australia and New South Wales. Obviously the Government realized that it was on shaky ground politically, and, being composed of wise politicians, it decided to obtain the support of at least some of the States. After all, what is a few hundred thousand pounds or even a million pounds so long as the Government is safe.

Senator Large:

– Is that worthy?

Senator LECKIE:

– It certainly was not a worthy action on the part of the Government to grant concessions in order to obtain support for this legislation. The Government claims that this scheme is necessary in order to obtain money to carry on the war successfully. The Treasurer says that the rates of taxes will be approximately the same as they are now, so that no one will have to pay more tax than he does at present. However, at the same time, the Treasurer claims that the uniform income tax scheme will result in the raising of an additional £12,000,000 or £15,000,000. The explanation given is that the additional amount will come from increased income tax payments due to expanding war expenditure. It has been estimated that the national income amounts to £1,100,000,000, threefourths of which is earned by people having taxable incomes of under £400 a year, so that those members of the community who earn over £800,000,000 of the national income contribute very little in taxes, and those who earn the remaining £300,000,000 are .to be called upon to provide the money required for the prosecution of the war.

Senator COLLINGS:
QUEENSLAND · FLP; ALP from 1937

-lings. - Nobody has ever said that.

Senator LECKIE:

– That is what the proposals of the Government involve. The Government desires to raise from £350,000,000 to £400,000,000 for war purposes, and one of the arguments advanced in justification of the scheme is that persons in the lower income groups are to be lightly taxed. In estimating that this scheme will result in an increase of revenue to the Commonwealth to an amount of from £12,000,000 to £15,000,000, I fear that the Government has lost sight of the fact that the greater proportion of the extra income that will be expended on the war effort will be earned by people who have taxable incomes of less than £500 a year. Therefore, I consider that the estimate of an increased revenue of from £12,000,000 to £15,000,000 is too great. The Treasurer (Mr. Chifley) has said that the present rates of tax will be altered substantially when the new budget is presented in August, so it is useless, for the purpose of inducing the Senate to pass these bills, to base arguments on the rates of tax laid down in one of the measures now before us. If the Government is able to raise £12,000,000 extra by way of income tax, it could get that amount under the present system of taxation. It could get all the money required for the war effort from practically the same taxpayers in other ways. Had not the present Government come into power by displacing the Fadden Government, it would have welcomed the Fadden scheme of post-war credits with open arms; but, because it put the Fadden Government out of office on its financial proposals, it would not now be prepared to accept them. It is claimed by the Government that the adoption of the present proposals is necessary in order to raise the required revenue, but the Government should not attempt to discriminate between taxpayers in the various States.

Another argument advanced in favour of the proposals is that they provide for uniform taxation. The scheme has no semblance of that. It will certainly provide for uniform income taxation, but not for uniform taxation generally. The Government claims that there will be one income tax return and one taxing authority, yet in some of the States only half of the revenue of (the States is raised by means of income tax, the other half being raised by other taxes. The people of Australia are to be called upon to pay extra taxes, yet the Government insists on claiming <that these proposals provide for uniform taxation. It is surely a subterfuge to say that there will be one taxing authority for the whole of the States. Every body knows that in all of the States the local taxing authorities will remain in the field. Whilst in South Australia, Victoria, and Tasmania half of the revenue of those States is raised outside the income .tax field, in the other States very little revenue is so raised. The cry of one taxing authority is so much balderdash. The corollary of uniform taxation would be uniform benefits.

The reason that has been offered freely on the opposition side of the chamber as to why Victoria should be penalized is that its social services have not been provided on a scale equal to that of the social services in New South Wales, and that therefore the allowance to Victoria should be reduced to the lowest possible amount, so that for the future Victoria should have to deny its people the social benefits that have accrued to the people of New South Wales and. other States. Victoria is to be prevented by this measure from putting into operation social services for which it is blamed for having failed to provide in the past. There is no doubt as to the efficiency of the education system in Victoria. The question has been raised as to whether the Public Service in that State has been of as high a standard as that of the other States, but under these bills Victoria and South Australia will be prevented from raising the salaries of State public servants, because the Commonwealth will invade their fields of taxation and deprive them of avenues of taxation that they have enjoyed in the past. New South Wales, for instance, has imposed practically no land tax, since it raises only about £2,000 a year from that source. To talk of one taxing authority, when half of the income of Victoria, Tasmania and South Australia is not obtained from income tax, is most absurd. Yet the Government calmly tells Victoria that it must pay £4,000,000 a year more than it has been accustomed to pay towards the war effort. I could conceive of the Commonwealth Government saying that the people of Victoria are more vitally interested in the war effort than the people of other States, or thatthey have more to lose, but the Government asks that Victorians should be required to pay annually, on the average, £10 10s. per capita more than the inhabitants of other States towards the cost of the war effort. Yet it is claimed that these proposals provide for uniform taxation! Whilst Victorian taxpayers are to pay more, the taxpayers in certain other States will pay less. Honorable senators opposite have waxed indignant at the suggestion that the legal opinions on. which the Government has based this legislation should be placed before the Senate. They do not appear to have much confidence in the opinions, they have received. If the Government thinks that they are right, why does it not produce them? Should this legislation be declared to be unconstitutional, the Government will have to start all over again, and things will be in a state of chaos. I was astonished to hear one honorable member on this side say that, he was in favour of equality of sacrifice.

Senator Courtice:

– That was an astonishing admission by an honorable member on that side of the chamber.

Senator LECKIE:

– The honorable senator who made that statement then proceeded to support the bill, which will reduce the taxes payable by citizens of his own State and add to the amount to be paid by citizens of Victoria.

Senator Collings:

– The honorable senator is placing Victorian citizens in a bad light. They will repudiate his statements.

Senator LECKIE:

– I have nothing to say against the committee which submitted a report to the Government on its proposals. It was a suitable committee to bring in such a report.

Senator McBride:

– It was hand-picked by the Government.

Senator LECKIE:

– It was selected with a certain purpose in view; and it did its job well, because the results of its investigations were satisfactory to the Government.

Senator Collings:

– Even if not to Senator Leckie.

Senator LECKIE:

– No one who knows the members of the committee expected anything else from them. With the committee’s report before it, the Government can say, “ This legislation is not our responsibility. A committee made recommendations which the Government accepted “. Uniform legislation should give uniform benefits. During the discussion, an honorable senator said that Victoria had not widows’ pensions or child endowment schemes.

Senator Keane:

– The Victorian scheme of widows’ pensions has not been in operation long.

Senator LECKIE:

-Child endowment is now the responsibility of the Commonwealth. Before Commonwealth legislation provided for child endowment, New South Wales had its own child endowment scheme, which cost that State £1,300,000 a year. Although New South Wales has been relieved of the obligation to find that amount, there is to be no deduction from the grant to be made to that State.

Senator Keane:

– The honorable senator is not telling the whole story.

Senator LECKIE:

– In effect, New South Wales is to be given £1,300,000 to be expended in other ways. New South Wales also had its own widows’ pensions scheme, but the legislation recently passed by the Commonwealth will relieve that State of the necessity to find money for that purpose. What justification is there for New South Wales being allowed a considerable portion of the money previously expended on widows’ pensions? That State is to be rewarded because it had provided certain social benefits for its people, but Victoria is to be penalized th rough not being permitted to bring in social legislation, or to increase the emoluments or improve the conditions of its own public servants. Its revenue will remain static. The Government endeavours to justify its proposals on three grounds, the first of which is that this is the only way to get the money that it needs. The money could be obtained in another and a better way, which would not involve a possible violation of the Constitution. The second ground advanced by the Government is that these proposals provide for uniform taxation. I have shown that they do not do so, and that, even if they did, the benefits would not be uniform. Surely the inhabitants of a State are entitled to fair benefits from the taxes that they pay? The third ground is that this legislation is only for a definite, and, it is hoped, short period. That is an absurd reason, because the altered arrangements will penate, not for two or three years, or for four or five years, but, should the war last longer, they will operate indefinitely. Those who vote for these measures in thebelief that the legislation will operate for only a short period are misleading themselves. The Government has not advanced sound reasons for its proposals, and therefore I hope that the Senate will refuse to pass legislation which, if passed, will do a great injustice to a considerable proportion of the people of Australia, whilst not achieving what it purports to achieve. It will, however, help to destroy the Constitution on which the federation is based.

Senator LAMP:
Tasmania

.- I whole-heartedly support the bill. In his second-reading speech, the Minister for Trade and Customs (Senator Keane) said -

Commonwealth expenditure in the manufacture of munitions of war and on the many services utilized for war purposes has created a wave of economic prosperity throughout the States and has enlarged the field of income available for taxation. The increased taxable capacity created by the Commonwealth’s war expenditure has considerably increased the revenue of the States and has absorbed their unemployed. The result is, therefore, that while the obligations of the Commonwealth have multiplied the obligations of the States have diminished.

The position now is that almost all sections of the community are supporting the Government’s uniform income tax proposals. Earlier to-day, Senator Cameron read a memorandum from certain organizations in New SouthWales which urged the endorsement of these proposals. The people of Tasmania wholeheartedly endorse them. They are supported by the manufacturing and commercial interests, the Trades Hall Council and the Labour party. The

Tasmanian people share the view held by the people of New South Wales that this scheme will simplify our taxation methods and will effect considerable savings in the collection of taxes. At the same time, income tax will be spread fairly over all sections of the community. I was amazed to hear some honorable senators opposite declare that this Government was endeavouring to make political capital out of these proposals. Is any one so foolish as to believe that a political party could make political capital out of income tax legislation? Taxation measures are the most unpopular of all kinds of legislation. Indeed, a member of the Tasmanian Government told me that so far as Tasmania was concerned the Commonwealth was welcome to take control of income tax because it was the only legislation that reduced the State Government’s popularity.

The following statement, which was issued by the Premier of Tasmania through the Treasurer of that State, and was published in the Tasmanian press on the 21st May, 1942, definitely refutes the statement made by the Leader of the Opposition (Senator McLeay) that Tasmania is opposed to these uniform tax proposals : -

In view of the paramount importance of financing Australia’s war effort as equitably as possible, he had no sympathy with the emphasis given to State rights, and still less sympathy with those Australian State statesmen who offered violent protests without proffering any sort of practical alternative. The Tasmanian Government on the contrary had acted with sense, decision and promptness, quite rightly regarding the issue of State rights as settled for all practical purposes by what occurred at the conference of State and Federal Ministers on uniform taxation in Melbourne on 24th April.

On the following day, 22nd May, 1942, the Hobart Mercury published the following report : -

page 1952

QUESTION

SATISFYING RESULT

Opinions of State Ministers on Tax Compensation.

The Premier (Mr. Cosgrove) and the Treasurer (Mr. Dwyer-Gray) are pleased with the result of their representations.

The Premier said last night that the Government would be well satisfied with the latest proposals by the Commonwealth. The Commonwealth had met the State on both requests put up to it, and it demonstrated that the

Commonwealth realized the importance of ensuring that the smaller States were maintained on a footing comparable with that in the larger States.

That gives the lie direct to the Leader of the Opposition and his colleagues, who have stated that the Tasmanian Government was opposed to these proposals. In reply to Senator Leckie, who said that Tasmania regarded these proposals as general taxation proposals, I quote from the second-reading speech of the Minister in charge of the bill (Senator Keane) -

The Government takes the definite view that the increased national income should be used solely for national defence. The purpose of this bill is to provide the machinery for the establishment of a single income tax authority which will make available to the Commonwealth for taxation the increased field of income resulting from war expenditure.

As a member of the Joint Committee on War Expenditure, I do not find it difficult to visualize “the vast increase of revenue which has been made available to the States through Commonwealth defence expenditure, and the States which have benefited most from such expenditure are New South Wales, Victoria and South Australia.

Under a proper financial system we should not find it necessary to levy income tax at all. The main purpose of a war-time tax is to withdraw surplus purchasing power from the people. Under a proper banking system, we could use the national credit of the country to finance the war effort. We have already pegged wages and prices; and, under a unified system of rationing, nothing should prevent us from putting into operation a ticket system that would be operated in much the same way as bank notes. Actually, there is no need for loans, or taxes, except for the purpose of withdrawing from the community the extra purchasing power made available through government war expenditure.

Senator MCBRIDE:

– How could that be withdrawn from the public except through taxes?

Senator LAMP:

– If the surplus purchasing power were placed in a nationally controlled bank, and in that bank alone, it could be used over and over again by the Government. If that were done the need for floating loans would be eliminated.

On behalf of returned soldiers generally, I urge the Government to incorporate in these proposals a concession now given in Tasmania to returned soldiers who are totally and permanently incapacitated. The Tasmanian law provides that an unmarried returned soldier, totally and permanently incapacitated, is not liable to tax unless his income exceeds ?400, and, in the case of a married returned soldier, unless his income exceeds ?500. There is a general provision under which married returned soldiers are entitled to an allowance of 10 per cent, of their tax if their income does not exceed ?500, and of 5 per cent, of the tax in the case of each unmarried returned soldier whose income does not exceed ?400. It would be a fine gesture on the part of the Commonwealth Government to apply that provision in respect of all totally and permanently incapacitated returned soldiers. I earnestly hope that these proposals will be adopted.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– These measures have been described as the most important that have been submitted to the Senate for many years. I make it clear that I approach them as a federalist, and not as a unificationist. However, I shall not allow my views as a federalist to prejudice my criticism of these measures. The Senate is certainly entitled to more cogent reasons for the introduction of these proposals than have yet been given by the Minister in charge of the bill (Senator Keane) or any of his colleagues. Two other Ministers in addition to the Leader of the Senate (Senator Collings) and the Minister in charge of the bill have spoken in this debate, but none of them made any real attempt to explain the urgent necessity for these measures. Neither did they attempt to substantiate any of the reasons which were baldly stated to be the basis of these measures. I know that the Government, before introducing this legislation, endeavoured through a kind of Gallup poll to ascertain public reaction to proposals of this kind. Further, the members of the Government exercised considerable political acumen in coining the title “ uniform taxation “ as a general title for these proposals. Very few people in this country would not welcome any scheme for the simplification of our present taxation laws. However, when the real import of these measures is disclosed to the public in the operation of this scheme, the public reaction to this legislation will be in violent contrast to the apparent goodwill .that has been exhibited towards it up to date in many quarters. I propose to examine the objectives of these measures as propounded by the Treasurer (Mr. Chifley) and the Minister in charge of the bill in this chamber, in order to see whether any real attempt is being made to achieve such objectives. The Treasurer, in the course of his second-reading speech on this bill, said -

If a single income tux be imposed to raise revenue for the requirements of both the Commonwealth and the States, it will be. possible to levy that tax on every section of the taxable field and to apply it to the nation as a whole on a basis of equality of sacrifice and equality of citizenship.

Those are very high principles. Indeed, if they had been adhered to in the drafting of these measures, this legislation would not have met with the opposition which it aroused in both this chamber and the House of Representatives. The Treasurer’s statement is a travesty of the real purpose of these measures. Equity and equality of sacrifice might very well be asked for from our people at present. However, we find that these measures do not provide even uniform income taxation. No honorable senator opposite has had the temerity to suggest that the benefits proposed to be given to the States are anything like uniform. In dealing with these proposals, the Treasurer has had much to say about the present crisis and the seriousness of the war position. Those aspects have been referred to ad nauseam They have been put forward as the only reasons for the introduction of this measure. The Treasurer proceeded -

Que to the serious crisis through which the nation is now passing, every benefit which one section of the community has over another must be surrendered in the interests of total war.

That is another very high principle; but we do not see even a semblance of it in these measures. The real intention of the Government is that those sections which have enjoyed generous social services up to the present are to be allowed to retain those services and benefits at the expense of other sections of the com- munity. To make it more certain that those benefits will be preserved to them for the duration of this legislation the Government introduced into one of the bills a provision that in the event of a State considering that it was entitled to larger benefits it could approach the Commonwealth Grants Commission, but no provision is made for an approach to the commission for the reduction of a grant to a State. When it comes to making effective this principle which, the Treasurer enunciated there is no compulsion on a State to accept a reduction of benefits.

Senator Courtice:

– To what benefits does the honorable senator refer?

Senator McBRIDE:

– I refer to the benefits that the inhabitants of one State are enjoying over those of other States. Those are the benefits which should be surrendered in the interests* of a total war effort.

Senator Ashley:

– ‘Does the honorable senator suggest that widows’ pensions should be surrendered ?

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– I am not suggesting that widows’ pensions should be surrendered. I am suggesting the surrender of benefits enjoyed by certain sections of the community. I mean that certain social services, which are enjoyed by the people of certain States, should not be continued when the inhabitants of other States are denied similar benefits. I agree entirely with the principle of uniform taxation- enunciated by the Treasurer, but I can find no evidence of any attempt, in any one of these measures to give effect to that principle. The question of the constitutionality of the legislation has been- thoroughly debated already, and in respect of that matter I intend to accept the advice of Senator Courtice. Being a layman, I am not going to pit my opinion against those of men better qualified than I am to express an opinion on the question. I consider that sufficient has been said by competent legal authorities to suggest to honorable senators that there is at least some doubt as to the constitutionality of the measures. I suggest that a government which feels it incumbent to propose alterations in the laws of the Commonwealth, particularly in war-time when mistakes might prove serious to the body politic and the people of Australia, should examine its . proposals carefully when there is doubt as to their constitutionality and endeavour to evolve some other method of achieving its objective - a method which would not be doubtful constitutionally. I know that the Government is hamstrung in suggesting alternative proposals because, unfortunately for members of the Ministry, their party was in opposition for many years.

Senator Courtice:

– Unfortunately for Australia.

Senator McBRIDE:

– No, fortunately. During the Labour party’s long period in opposition a number of its members made many irresponsible statements. Consequently, when the party becomes the Government these statements are on record against them and they have to try to live up to them. From practically every member on the Government side we hear in support of these measures the parrotcry “War crisis”. They declare that these measures must be considered in an atmosphere of war crisis which overrules every other consideration.

Senator COURTICE:

– Of course it does.

Senator McBRIDE:

– I have as clear an appreciation of the seriousness of the war crisis as it affects Australia as has any honorable senator on the Government side, but it is flapdoodle for Ministers and their supporters to place such emphasis on the war crisis for the purpose of pushing this legislation through this Parliament. Honorable senators on the Government side showed a great lack of appreciation of the necessities of the war effort during the whole of the period they were in opposition. When the Government of the day proposed certain expenditure on defence before the outbreak of the present war, fierce opposition was expressed by the present Leader of the Senate in this chamber (Senator Collings) who was then Leader of the Opposition. He accused the Government of being war-mongers and scare-mongers, and asked who were our enemies. Members of the Government have been very slow in appreciating the changed conditions in Australia since the outbreak of the war. I yield place to no honorable senator on the Go vernment side in my earnestness for the implementation of a full war effort throughout Australia. The purpose for which these measures have been introduced could have been effected by either of two other methods. One was contained in the national loan contribution proposals submitted by the previous Prime Minister, Mr. Fadden, the constitutionality of which were beyond question. However, the Labour party having thrown the Fadden Ministry out of office on it3 budget, which contained those proposals, its Government could not be expected to adopt the proposals submitted by the leader of the defeated ministry.

Senator ASHLEY:
ALP

– Who threw the Government out?

Senator McBRIDE:

– The Opposition.

Senator Ashley:

– The Government could not carry on.

Senator McBRIDE:

– If these measures were necessary for the prosecution of the war the Government could have put the constitutional question beyond all doubt by referring the proposed alteration of the law to a referendum of the people.

Senator CAMERON:
ALP

– During the war?

Senator McBRIDE:

– Yes. I suggest that the time that would be involved in the taking of a referendum will be increased .by the time that will be occupied by the High Court of Australia and perhaps the Privy Council in determining whether these measures are constitutional. The Government has shown no sincerity in respect of this legislation, and it is trying to bludgeon itthrough the Parliament. Another method that the Government could have adopted would have been to meet the Premiers of the States in conference and convince them of the need for this uniform taxation scheme. The Premiers could then have agreed on behalf of their States to hand over the field of income tax to the Commonwealth. Had that method been adopted there would have been no question of unconstitutionality. I question the sincerity of the Government when it declares that the introduction of these measures is the only method by which it can promote a complete war effort throughout Australia. The Government is most misleading when it attempts to define its attitude to the legislation. The Treasurer, when moving the second reading of one of these bills, said -

The Government does not seek to take away from the States their power to impose taxes upon incomes.

That is a travesty of fact and to show how hollow and base that statement is I shall quote what the Treasurer said when moving the second reading of another of the bills -

I also draw the attention of honorable members to clause 30 of the bill, which provides that payment of federal income tax shall have priority over payment of State income tax assessed during the period of the war and for one financial year thereafter.

On the one hand the Treasurer said that the Government did not desire to take away from the States their power to impose taxes on incomes, and on the other hand he made it clear that the Government intended to render ineffective the right of the States to impose and collect income tax during the operation of this legislation. In view of these contradictory statements opponents of the measures are entitled to question the honesty of purpose and sincerity of a government which introduces such legislative proposals. The Government submitted these bills to Parliament under the cover of high ideals, but it has descended to base action. Ministers have stated repeatedly that the enactment of these measures is necessary in order to raise money for war purposes, but Senator Leckie has already pointed out that the measures will not yield to the Commonwealth one penny more than it would receive if the legislation had not been introduced. The special committee which was appointed to examine the question of uniform taxation, and to make a report upon it, admitted that the basis upon which its recommendations were made would return to the Commonwealth Treasurer only the same amount of revenue as he would have obtained under the existing taxation legislation in the year for which these calculations are made. It was assumed that the same return would be received from goldmining, which is one of the industries that are being severely damped down.

Senator Courtice:

– That applies to many industries.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– Yes, but the estimated revenue under this scheme is based on the maintenance of the goldmining industry on its present scale, and that cannot be contemplated. Consequently, on the taxation rates set out in these measures, Commonwealth revenue will be less than it would be under the present legislation. It is true that, in the next financial year, the Treasurer expects to receive between £12,000,000 and £15,000,000 more, as the result of the increased national income, but that sum would have been much greater had tax on the lower incomes not been reduced as it is in these measures. Assuming that the additional £12,000,000 or £15,000,000 were divided between the States and the Commonwealth, as it would be in accordance with the present taxation system on the basis of the present division of revenue, at least three-quarters of that amount would have come into the Commonwealth coffers under the existing legislation. The purpose of taxation is twofold: First. its object is to raise revenue, and, secondly - this applies particularly in time of war - it is aimed at reducing the purchasing power of individuals.

Senator COURTICE:

– That is reduced by means of rationing.

Senator McBRIDE:

– No ; rationing may reduce the capacity of the public to purchase certain items, but it has not been suggested that the whole purchasing field is to be subject to rationing. I am sure that the Minister for Trade and Customs (Senator Keane) will support that contention. Therefore, I make bold to say, that instead of achieving the most desirable objects which I have specified, these measures will actually increase the purchasing power of the people, particularly in certain States. No doubt, it is most difficult for this Government to ask the States to economize. I recall that not very long ago, when the then government tried to curtail State expenditure by reducing loan allocations, a terrific hue and cry was raised by honorable senators opposite, who then sat in Opposition. They claimed that such action would result in a reduction of living standards, and a curtailment of development. Less than twelve months ago, when the war had been in progress for nearly two years, so oblivious to the realities of war needs were honorable senators opposite, that they were urging the Government not to be parsimonious with the States, but to give them all the loan money that they required. I notice with some satisfaction that, when this Government took over the treasury bench, it made no step in the direction of remedying the crimes of which it accused the previous Administration in relation to loan moneys. I looked at this Government’s budget, and its loan allocations, and I saw no sign that it was prepared to fulfil the lighthearted promises which its (members made while in Opposition. Clearly, it was just beginning to come up against the realities of war. I contend that, apart altogether from loan expenditure, the Commonwealth Government, and the people of this country, are entitled to ask governments, as well as individuals, to economize. Yet, what do we find? “We find members of the present Government, who, in season and out of season - I support them in thi= regard - appealed to the people of this country to economize, perpetuating the high expenditure of certain States. It may have been accidental, but it was very fortunate for one State that the years selected by the special committee to provide the basis for compensation to the States were the years in which New South “Wales - the only State which was completely out of touch with war realities - had actually increased its taxation revenue by £4,000,000. Now, by means of this legislation, this Government, which is asking individuals to economize, is perpetuating “the high and extravagant standards of that State. In addition to that, provision is made in these bills for an approach to the Commonwealth Grants Commission by any State which considers that circumstances justify an increase of compensation; but no provision is made for an approach by the Commonwealth Government to the commission for a reduction of compensation payable to any State. In New South Wales,- and, indeed, all States, revenue from public utilities is increasing. The railways, which in times of peace have always been a burden on the finances of the States, are now profitable undertakings, and I contend that with this extra revenue finding its way into the hands of the States, the Commonwealth should have a good case to place before the Commonwealth Grants Commission for a reduction of compensation. But this Government has not the courage to do the decent thing and to ask the governments of the States to reduce their expenditure in order to assist the war effort-. I admit that I am not completely satisfied that the Commonwealth Government itself is setting a good example in this regard. I have grave doubts about that, but nevertheless I know that State revenues are expanding rapidly, owing to increased war expenditure within their boundaries.

I shall deal now with the amounts of compensation which are to be paid to the various States. This shows that all sections of the community are expected to make a sacrifice and give up special conditions which they enjoy. There is a wide disparity between the amounts to be paid to the various States by way of compensation.

Senator Arthur:

Per capital

Senator McBRIDE:

Per capita and in the aggregate.

Senator Courtice:

– They will receive what they got before.

Senator McBRIDE:

– I agree with that, but I am sorry that the honorable senator is so out of touch with war realities that he believes no State government should he asked to contribute towards the war effort.

Senator Courtice:

– On the contrary, I take the opposite view.

Senator McBRIDE:

– Then the honorable senator cannot, support these bills. In any’ case, the amounts of compensation specified indicate definitely that in order to curry favour with some of the State governments, the Commonwealth Government has deliberately set out to appease them with political bribery. This is the equality of sacrifice which is to be made by various States; Victoria is to receive a grant equivalent to £3 7s. per head of its population. Tasmania will receive £3 14s. per head ; South Australia, £3 19s.; Western Australia, £5 8s.; New South Wales, £5 10s.; and Queensland, £5 12s. That should be a sufficient reason why honorable senators f<rom Queensland should unanimously support the bills. It can be truly said that the. States have other fields of taxation and that some of the States have taken greater advantage than others of those fields. In New South Wales only £2 16s. 5d. per capita is collected by means of taxes other than income tax. Victoria raises £3 2s. Sd.; Queensland, £2 17s. 5d.;, South Australia, £3 5s. 6d. ; Western Australia, £2 14s. 7d.; and Tasmania, £3 17s. 6d., per capita from fields of taxation other than income taxation. That shows a great disparity, and the inequity of the compensation payments is accentuated because they are based on the assumption that those States will continue to tax in those other fields on the same scale as at present. In order to maintain even their lower level of expenditure, they have to pay more in State taxes than the taxpayers are asked to pay in an extravagant State like New South Wales. That State is to receive compensation at the rate of £5 10s. per capita, and only supplements that sum from taxes other than income tax to the amount of £2 16s. 5d. per capita. Victoria, which gets £3 7s. per capita will supplement that amount by £3 2s. 8d. per capita, in order to maintain even the lower standards that its people now enjoy. I can imagine the reaction of those who have been attracted by the catch-phrase “uniform taxation “, when they will find that the only uniformity about these proposals is confined to the amount of tax that they will have to pay to the Commonwealth Government. The proposals do not mean even uniform taxation between the various States. In addition to paying more in taxes, they will be tied down to lower scales of social benefits than those of the States which will draw from the Commonwealth pool £5 12s. and £5 10s. per capita of the population. If the Government wishes to be fair in this matter, it should do what it can to equalize these payments and distribute the money among the States on a per capita basis, so that whilst each resident of Australia will pay a similar amount of tax on a similar income, each State will be compensated on an equal basis by the Commonwealth Government. If that were done, all of the people throughout Australia would pay a uniform income tax, and receive a uniform compensatory payment, not £5 12s.. but £4 14s. per capita. The only States that would be at a disadvantage as the result of that payment, would be Queensland which now gets approximated £5 12s. : New South Wales, £5 10s. ; and Western Australia, £5 8s,, per capita. Every other State would be benefited. It has been said that ii that were done, certain States could not maintain their present standards of social ‘benefits.

I recall the principle enunciated by the Treasurer that those States which enjoyed a high standard should give up certain benefits for the purpose of bringing about a total war effort. Even on the basis of maintaining present standards, the formula on which the Government bases the present proposals does not pretend to peg even the present standards. The basis of compensation is taken on years in which the States had obligations that they do not now have to meet. If the formula is to be worth while, we might expect the Government to observe it in an equitable manner; but when the matter was raised in the House of Representatives. it was pointed out to the Government that, apart from the relief to the States owing to defence expenditure, awing to the Commonwealth Government having assumed responsibility for certain social services of which the States had been directly relieved, this benefit had not been deducted from the amount of compensation. It was said that under its child endowment scheme New South Wales had previously had an annual commitment of £1,300,000. When the matter was put to the Treasurer, he did not even attempt to justify the evasion of the very formula of which the Government has approved. I have found no record of the Treasurer, the Prime Minister (Mr. Cur tin) or any other Minister or member supporting the Government, having attempted to justify what has been done.

There is another service that will operate simultaneously with these measures which relieves New South Wales of over £600,000 for widows’ pensions. I have not heard that statement questioned, yet we find a reduction of £427,000. In other words, there is to he a direct rakeoff by New South Wales of £200,000. I believe that this chamber is entitled to be informed as to the reason why the Government has not taken these sums into account. I ask the Minister in charge of the bill to state, in his reply ro the second reading debate, why these amounts have been omitted. I have no doubt that similar sums that might be questioned are to be paid to other States. If there are amounts that could reasonably be deducted from the compensation payable to other States, the Government should do the right thing and deduct them. In view of its inaction and lack of courage, the Senate is entitled to assume that the Government knew of these amounts, but for reasons of its own, and in order to ingratiate itself with the Governments and people of those States, glibly took no account of those amounts in assessing the compensation. Unless a satisfactory reason is forthcoming for this action, I intend at the appropriate time to move that the two amounts to which I have referred be deducted from the compensation to be paid to New South Wales, [f excess payments are being made to other States, these should also be deducted. The initiative in the matter is the responsibility of the Government. I regret that it has not acted fairly and squarely. I shall vote against the bill and do all I can to prevent it from becoming law. I do not believe that it is a. war measure or necessary to the conduct of the war. It is merely a piece of camouflage and affords another illustration of the Government trying to implement Labour policy under the guise of war emergency. The Government of the day should have all the power necessary to mobilize the man-power resources of this country. As a member of a previous government I had no hesitation in supporting the passage of the National Security Act which gave very wide powers to the Government. Little enthusiasm was then shown for that measure by Labour senators who were then in opposition. But if there be any doubt as to the necessity for increased powers to be granted to the Executive, I am prepared to resolve the doubt in .favour of the Executive. T believe that the Government should have the’ fullest powers necessary to wage the war, but I also have some regard for the Constitution under which we live. I do not hold with the. policy expressed by the Leader of the Senate that war-time emergency overrides every other consideration. [ do not follow him. I do not follow Hitler. That policy is the policy which Hitler announced to the German nation a few months ago. We on this side believe that we can win the war by constitutional methods. We believe also that the Government will get a greater measure of co-operation from the people of this country if it acts within the Constitution and observes the law of the land.

Senator BROWN (Queensland) [11.1 J. - On one occasion, when my leader (Senator Collings) was speaking at a meeting he told a story of one of England’s greatest writers, Robert Blatchford, who, in addition to being a brilliant writer, did much to forward the interests of the Labour movement in England. At a dinner which he attended one night some one, knowing that Blatchford was an agnostic, asked him to say grace. Blatchford stood on his feet and said, “Lord, forgive us for partaking of such splendid food whilst so many thousands of our fellow men are starving outside “. Listening to the debate to-day, I thought that if the Government were as bad as the Opposition would make it appear, and if the Opposition were as bad as some honorable senators on this side would make it appear, I would have to ask the Lord to forgive me for speaking on the measure before us in this time of crisis. I say in all sincerity that honorable senators c:i the other side are as patriotic as we on this side are. Every honorable senator is anxious to do his best for his country. I also believe that honorable senators opposite have expressed views which they honestly believe are right; and I say frankly that many of their arguments have appealed to me. If I may say so without making invidious distinctions, I was particularly interested in what Senator Spicer said. Often as I listen to the honorable senator or to Senator A. J. McLachlan, who also is a lawyer, I wish that I had had their training, so that I could express in ordered sequence my ideas on various subjects.. Unfortunately, I have been brought up in an altogether different school. It has not been my lot in life to be trained as they have, and therefore I cannot express my thoughts in the same cultured and interesting way.

Senator Lamp:

– The honorable senator sympathizes with those in need.

Senator BROWN:
QUEENSLAND

– I hope that I have the truth within me, and also the desire to express it. As to this measure, I say frankly that it can be criticized. No one can deny that. In Queensland, there is a strong movement against this legislation, and that opposition is not confined to politicians. I know of many trade unionists who are bitterly opposed to it, because they visualize a swing of the political pendulum against Labour and the coming into office of a government containing men like Mr. Menzies, Mr. Fadden, Senator McBride, Senator Spicer and the Pickwickian Senator McLeay. These unionists fear that a government so constituted would take action detrimental to the interests of Queensland, and that a Labour government might be treated like the martyrs of old who were burned at the stake for the good of their souls. As the persons responsible for the burnings believed that they were taking action to save their victims from eternal damnation, so a Commonwealth government, constituted along the lines that I have suggested, might in all earnestness and sincerity use uniform taxation legislation against the workers. About a decade ago Queensland had some experience of tory legislation. It had such an effect on the people of that State that many electors who voted for that tory government have never voted in the same way since. A Labour government has been in power in Queensland since 1915, with the exception of those three lamentable years when a gentleman known as “ Misery “ Moore was Premier of that State. During that time, as has been admitted by Senator McBride, the Parliament of Queensland has passed social legislation which confers .many advantages on the people of that State. So many reforms have been introduced by the Labour Government of Queensland that for many years that State has stood pre-eminent above the other States of Australia in such matters. Many persona connected with the Labour movement are fearful that a turn of political events might place in power in the Commonwealth a tory government, and that with legislation of the kind now before us on the statute-book, legislation to limit, or prevent, any further reforms contemplated by a Labour government in Queensland might be passed. I remind the Senate thai “finance is government and government is finance”. If we limit the power of a State to impose income tax we at the same time limit its capacity to introduce reforms which it may desire to bring about. Those are points on the debit side of this legislation. I speak frankly, because on a measure of this kind every honorable senator should speak what is in his mind. It is remarkable how many honorable senators opposite have spoken in support of this measure, and I confidently expect that they will vote for it. In the House of Representatives the bill was passed by 41 votes to 11. It is, therefore, almost a non-party measure. That being so, one can speak with more freedom than otherwise. It cannot be denied that, many measures that come before us are dealt with on party lines. The proposals are discussed by the various political parties, which then come to a decision regarding them, and instruct their members how to vote. From my point of view, there is a debit side to this measure. But there is also a credit side. Once it becomes law, a Labour government must follow it up with other measures. In an able speech, Senator McBride pointed out that certain States have social amenities not possessed by other States. If we are to have allround justice, the Commonwealth should say that the social measures which are in operation in certain States shall apply universally throughout Australia. A previous Commonwealth government introduced a scheme providing for child endowment, and the present Government has introduced legislation providing- for widows’ pensions. Those measures will apply throughout the Commonwealth. But there must be other social legislation, which also will apply throughout Australia, if the anomalies suffered by certain States, particularly Victoria, are to be removed. I agree with those who say that, as a State, Victoria will be adversely affected by this legislation. The arguments to which I have listened in both chambers have convinced me that this legislation does provide for a certain amount of differentiation. That is unavoidable, because it is impossible to have absolute uniformity. Just as in philosophy there is only one absolute, and it is impossible to say that there is an absolute good or an absolute evil - for both good and evil are relative - so with a collection of States each carrying out its own laws, it is impossible to bring about absolute uniformity in taxation 1 defy the Opposition to get absolute uniformity in taxation matters. In the?e proposals there is a measure of uniformity, in that I shall pay the same tax as any other person elsewhere in Australia who lives under conditions the same as I do, and whose domestic responsibilities are the same as mine. Honorable senators opposite, however, say that these proposals do not provide uniformity. I therefore ask them how they would bring about uniformity. Some individuals in some States, in relation to present State taxation, will pay more in the form of taxes than other individuals in other States. It is impossible to establish absolute uniformity of taxes under the conditions now operating in Australia, where we have several States in a federation. Therefore, it is useless to argue in regard to that aspect. However, the Government has approached this problem with a desire to establish as great a measure of uniformity of income taxation as possible. The members of the special committee which investigated the subject did a good job; but I shall not say that their recommendations represent the be-all and end-all of legislation of this kind, or that these measures do not contain anomalies. It is absurd for honorable senators opposite to insist, as they sometimes do, that this, or any other, Government could devise a system of absolute uniformity of taxation. That is mathematically impossible. The anomalies contained in these measures are largely responsible for the stand taken by the Premier of Queensland, Mr. Forgan Smith, in respect of this legislation, and its effect upon the States. With a view to overcoming those ano malies, he made several suggestions, one of which was that there should be uniformity throughout Australia in the collection of income tax, and that all administrative redundancies arising from the varying State taxation systems should be eliminated. He also suggested that, in order to enable the States to meet their respective needs, each State should be allowed to impose a special percentage rate of income tax. That would overcome many of the objections of honorable senators opposite to these measures. Honorable senators opposite have quoted the rates of taxes in Victoria, and have related them to the rates applying in the other States. They have contended that those States which have been extravagant in their expenditure will benefit under this scheme, whilst a State like Victoria which has been conservative in its expenditure will be penalized. The suggestions made by Mr. Forgan Smith should appeal to them. Briefly, he suggests that the Commonwealth should have control of income tax, but should allow each State to impose a special percentage rate to meet its particular requirements. If that proposal were adopted, no argument would arise concerning the inequalities apparent under this scheme. In that case, the Queensland Government, for instance, could submit a certain programme of works to the electors. If the people of that State endorsed such a programme they would naturally be prepared to pay for it ; and the State should be permitted to levy taxes to meet that particular expenditure. All taxes come from the people, and not from governments. The people provide the revenue, and governments merely take it. Much of the criticism levelled against the Premier of Queensland, and leaders of the Labour movement in that State, who opposed these proposals, has been absurd. I hold those leaders in as high esteem as I hold the Prime Minister (Mr. Curtin) and the leaders of Labour in this Parliament. Each has his point of view. I say in all sincerity, and without being personal, that if my tried and true leader, the Leader of the Senate (Senator Collings’ were now the Premier of Queensland he would be just as vehement in his opposition to these proposals as is Mr. Forgan

Smith.. I notice that he shakes his head ; but I know him better than he knows himself. Possibly, if Mr. Forgan Smith occupied the position now held by the Leader of the Senate, he would be just as vehement and forcible in his arguments in support of this legislation as is the Minister. Thus, despite the bitter and vitriolic attacks that have been made upon the Premier of Queensland, and the absurd statements made about him, it is not a matter of personalities at all. He has a reason for his attitude, just as a reason exists for the almost unanimous opposition of Victorian members of this Parliament to these proposals. I noticed that in the division on these measures in the House of Representatives, practically all honorable members from Victoria voted against them. Honorable senators representing Victoria have spoken against these proposals. A reason exists for their opposition, just as a reason exists for the opposition of a State Premier, whether he be Conservative or Labour. These reasons are not merely political in character. Some honorable senators on this side have said, in effect, to honorable senators opposite, “ The States which you represent are going to receive compensation equal to the average revenue raised by those States in the financial years 1939-40 and 1940-41 ; why do you squeal ? “ I am putting Queensland’s point of view, because it is right that that point of view should be placed before the Senate in order that Queensland’s attitude will not be misunderstood. It has been said that Queensland will do very well under this scheme. Undoubtedly, with every other State, Queensland has derived certain benefits from increased Commonwealth war expenditure. However, the Premier of Queensland points out that whilst Queensland has gained in that respect, the State’s expenditure has also increased, and may be further increased as the result of future legislation enacted by the Commonwealth. It is known that Queensland has the highest basic wage, the shortest working week, and the lowest cost of living. An increase, of even Is. in the basic wage would involve the State Government in an additional expenditure of £80,000 annually. Those two items show how the expenditure of a State can be increased for reasons beyond its control. However, under this scheme, a fixed amount of compensation will be made available to each State, and, consequently, no State will be able to meet increased expenditure unless its application to the Commonwealth Grants Commission for additional compensation succeeds. The Premier of Queensland objects to that. He contends that it is not right that any State should be obliged to approach any body as. a mendicant. There is force in his argument. He, or his supporters, cannot be decried merely because they oppose this scheme, and show how it will adversely affect Queensland.

I should like to see the Commonwealth approach the problems inherent in matters of this kind from the fundamental economic aspect. I do not think that by merely altering the incidence of finance we shall effect any substantia] increase in the economic productivity of this country. Economic reasons exist for our backwardness, and we should concentrate upon the economic rather than upon the financial aspect. I admit that finance is a powerful factor; and I agree with Senator Darcey that if we had a reasonable financial system we could eliminate many of the economic bottlenecks that now retard our development. For instance, I can see no reason why the Commonwealth should not take complete control of our railway systems. We should have unified control and unification of our railways. Labour members of this Parliament, particularly the Minister for Air (Mr. Drakeford), fought very hard in the past to effect such reforms. That honorable gentleman showed how valuable a uniform railway gauge would prove in war-time. To-day, our defence organization has been seriously affected because of varying railway gauges. If we had been wise, we should also have placed education under the complete control of the Commonwealth. Some people contend that this legislation will lead to complete unification. Insofar as it brings about economic changes which will enable us to eliminate present production bottle-necks, it will be justified. I support the principle of unification; it is one of the planks of Labour’s platform. Mr. Forgan Smith also supports that principle. It would be a splendid thing if we could eliminate obstacles which now hinder our war effort, and which are due to lack of unification.

I propose now to deal with the constitutional aspect of this legislation. I agree with the views expressed on this point by some honorable senators opposite. When I listen to a 100 candlepower legal luminary like the right honorable member for Kooyong (Mr. Menzies), I am inclined to conclude that the constitutional implications of this legislation are not so clear as some people would make out. When I listen to the honorable member for Warringah (Mr. Spender) I am inclined to think that the arguments of the right honorable member for Kooyong are not quite sound. Then 1 listen to the honorable member for Bourke (Mr. Blackburn) and, lo and behold, he is of opinion that constitutional difficulties may arise. Then we have the lesser legal lights of 75, 50 and 25 candle-power ; and they differ in their opinions also. I do not know at what candle-power I should assess Senator Spicer. Perhaps I should rate him as 100 candle-power; we must uphold the status of the Senate. Then we have all kinds of bush lawyers, whose opinions also differ on this matter. We shall not advance our cause if we deny the possibility that this legislation will be attacked in the courts of this country. This legislation may prove to be highly successful, and on its results may win the commendation of a great majority of our people. However, some people are sure to see that the legislation is tested at law if they really (believe that it is not constitutional. I am as concerned as anybody about the validity of this legislation. I say frankly it may be that the exigencies of war will sweep aside the Constitution at least for the duration of the war. The Japanese will not discuss, the Constitution, if they get a footing in A ustralia.

Senator Aylett:

– Nor will they talk about State boundaries.

Senator BROWN:

– No. Probably the Constitution, or parts of it, will have to be pushed into the background during the present tremendous struggle. Even if the legislation is challenged in the courts, the judges might give political verdicts.

Senator Cameron:

– All judgments are political verdicts.

Senator BROWN:

– Our philosophical senator remarks that all judgments are political verdicts. Perhaps they are, but we do not always describe them as political verdicts. The Treasurer (Mr. Chifley) has pointed out that the operation of this legislation will effect a large saving of labour because a number of public servants employed in the taxation offices of the States will be freed to undertake work essential for the prosecution of the war. That is all to the good. Naturally, any well-ordered State that is fighting for its life will try to eliminate redundant labour and find other work for those who are displaced. During this war, all unnecessary labour in Australia should be eliminated, but other work should be found for all those who are taken out of their jobs. That is the policy of the Labour Government, which is trying to place labour on a war-time basis. I have had supplied to me certain information which, I think, will prove interesting to honorable senators. Under the uniform income taxation scheme, the total collection of income tax in Queensland will amount to £16.504,000. Of that amount, £5,982,000 will be paid to the State government as compensation. The net contribution to the Commonwealth will, therefore, be £10,522,000, or £10 6s. 8d. per head. The net contributions to the Commonwealth per capita of population in all States will be as follow: -

The total income tax collections in each State and the compensation to be paid to each State are as follow: -

Regardless of the figures submitted by the Treasurer in support of these bills, several honorable senators opposite are capable of twisting them in such a way that they can be made to prove or disprove anything. I have already related to honorable senators the story of the Jew who convinced an employee who asked for a week’s holiday that he really owed his employer a fortnight’s wages because, taking into consideration Saturday afternoons and Sundays, public holidays and the hours he had slept, he had not worked at all. We must consider this measure by and large and decide whether it will advance the interest of Australia so that this country will be able to wage war successfully on our enemies. The Labour Government, under the leadership of John Curtin, believes that it can be done, and that the implementing of uniform income taxation proposals will assist the Government materially. The Queensland Labour Government, under Mr. Forgan Smith, opposes these proposals, and considers that straight-out unification would be preferable. The Queensland Government takes the view that the proper course to adopt is for the Commonwealth to take over certain State instrumentalities and their reorganization, with a view of obtaining the maximum benefit. What we need in this country is not financial “hokeypokey “, but economic organization, the utilization of the labour of every man and woman, and the elimination of profit and interest mongering, so that we, as a nation, can defeat the enemy and ensure that our democratic system is safeguarded.

Senator CRAWFORD:
Queensland

– I have listened with the closest attention to most of the speeches that have been delivered on the uniform income tax bills, and although I disagree with much that has been said, I do not attribute to any honorable senators who have spoken improper motives for the opinions that they have expressed. No doubt, environment influences views on public questions, and probably that is one reason why honorable senators representing the southern States are unable to perceive clearly the provision required in legislation of this character to meet the conditions of the large State of Queensland, which I assist to represent in this chamber. The opinion has been expressed that we are representatives of the States, and therefore we should speak and vote in the interests of the States which we represent without paying due regard to the general effect which legislation might have upon Australia as a whole. I admit that we represent all the people in the States which we represent, but I cannot concur with the view that we represent exclusively the governments in power in such States. Much has been said in the course of this debate in regard to what some speakers apparently consider to be the especially generou,treatment of Queensland, but it is a mistake to forget the area of Queensland, its geographical situation, and its fertility. Any one who is acquainted with that State knows that it is particularly fertile; that it is specially vulnerable, and that because of its fertility, it is the part of Australia most coveted by our enemies.

Senator Aylett:

– Victoria would be lost in Queensland.

Senator CRAWFORD:

– That is so. The area of Victoria is less than one eighth of the area of Queensland. As a matter of fact, York Peninsula has a larger area than Victoria. The population of Queensland is a little more than 1,000,000 whereas the population of Victoria is approximately 2,000,000. The area of Queensland is 670,000 square miles and the density of population is 1.3 persons a square mile, whereas in Victoria there are no fewer than 25 persons to a square mile. The higher taxation in Queensland has not resulted from the fact that that State has not been as well governed as other States, but is due to its sparse population. Id Melbourne alone there is a population .approaching 1,250,000 settled on an area of a few square miles.

Senator Spicer:

– The population of Western Australia is just as sparse as it is in Queensland.

Senator CRAWFORD:

– Yes, but a great part of Western Australia is not settled at all.

Senator Spicer:

– It is the same in Queensland.

Senator CRAWFORD:

– That is not correct. Practically the whole of Queensland is more or less settled.

Senator Keane:

– And it is worth while.

Senator CRAWFORD:

– Yes, it certainly is worth while. In my opinion, the one great mistake made by Queensland governments is that they have not applied for Commonwealth grants. I do not agree with the Premier of Queensland, able man though he may be, that States which apply for Commonwealth assistance do so as mendicants. That right is given to the States under the Constitution. Certain speakers have stated that the money to be collected under these measures should be allocated to the States on a per capita basis, and I point out that large sums of money have been distributed in the form of federal aid roads grants, partly on the basis of population and partly on the basis of area. However, I am not advocating that; I contend that this money should be distributed according to needs. I have no fault to find with the system of Commonwealth grants to States for disabilities suffered under federation, and my vote for the legislation setting up the Commonwealth Grants Commission was given willingly. Since that time, South Australia has received approximately £6,500,000 in the way of Commonwealth grants, Western Australia has received £3,250,000 and Tasmania £3,000,000, a total of £12,750,000. I have always been willing to accept the recommendations of the Commonwealth Grants Commission, because I believe that the less populous States really need the assistance which is freely given by the Commonwealth. I was surprised to hear it stated that the position of Victoria was due’ entirely to the fact that that State had super men for its legislators and administrators, whereas those charged with similar responsibility in Queensland, were of a lesser breed. I do not know on what grounds that statement is based because the legislators of Queensland are equal in ability and honesty to those of any other Parliament of Australia, including the Commonwealth Parliament itself. Tt is our boast - I think it is quite justifiable - that we can produce in Australia anything that is necessary to satisfy ordinary human needs, and that claim can be made in respect of Queensland, which has a complete range of soils and climatic conditions. In addition, Queensland can produce some commodities which cannot be produced in any other part of the Commonwealth.

Senator Lamp:

– Queensland has some of the best land in the world.

Senator CRAWFORD:

– I am confident that no other country in the world has soil equal to that found on the Atherton Tableland. I always think when I visit that part of Queensland bow many millions of Asiatics it could sustain.

Senator MCBRIDE:

– Keep it white.

Senator CRAWFORD:

– I have done my best to keep it white, and I have done my best to keep it British. I have never employed any one on my property in north Queensland who was not a Britisher. Since the last war, my sons have been managing the property, and so far as possible they have endeavoured to employ only returned soldiers. Both of them at present are in the Volunteer Defence Corps and have been drilling for twelve months. They are ready to give their services when required. Unfortunately, it appears that the Army authorities have forgotten that such an organization exists in north Queensland.

I intend, of course, to vote for the bill. This scheme is intended to operate for the duration of the war and for one year thereafter, but I should not be surprised if by that time, the people, generally, desired that it should continue. I have discussed this question - it is not one of uniform taxation, but of uniform rates of income tax - with a number of people and I have found that business men who take an interest in public affairs, are entirely in favour of it. I am not a lawyer, but I do not fear that this legislation will be upset by the High Court or the Privy Council. I hope that when the war is over, our Constitution will be so altered that on constitutional questions at any rate there will be no appeal against decisions of the High Court.

Senator J. B. Hayes expressed an opinion with which I agree entirely, namely, that proposed legislation involving constitutional issues should be submitted by the Commonwealth Government to the High Court for an opinion as to its constitutionality. If that were done, we should be merely following the example set by the United States of America. I maintain that members of this chamber have a right to exercise their own judgment with regard to legislation submitted to them for consideration. If that were not so, then honorable senators might as well be appointed by the State Parliaments, instead of being elected by the people. That was the case in the United States of’ America for many years, but the system was altered to provide for election by popular vote; and we are elected by popular vote. I have heard some people say that it is just a swing of the pendulum, but I do not believe that. I am confident that in Queensland, the candidates elected have been the men in whom the people had the greatest confidence. “We are here to do what we consider to be the best in the interests, not only of the State which we represent, but also of Australia and the Empire. It is my intention to vote for this measure, reserving, of course, the right to vote for or against any amendment which may be moved when the bill is in committee. I believe that this is a good measure and is an honest attempt on the part of the Government to do what is the best for Australia, having due regard to the interests of all of the States.

Sitting suspended from 12 midnight to 1 a.m. (Thursday).

Thursday, U June 19^2.

Senator LARGE:
New South Wales

– I had not intended to speak on this bill, but I am impelled to do so because of certain remarks by honorable senators opposite. I was impressed by the obvious concern of the Leader of the Opposition (Senator McLeay) at the alleged disciplining of members of the Labour caucus. On several occasions the honorable senator has expressed similar concern, and I am beginning to wonder how soon we shall see him in open rebellion against his own caucus. Members of the Opposition are as much subjected to caucus discipline as are members of the Labour caucus. The honorable senator knows that the parties are lined up to represent class interests. On the one hand we have the owning and employing class, shortly described as the capitalist class, and on the other hand there is the working, wage-earning and real taxpaying class. Here and there an independent comes into the picture, but soon he is either swallowed up by one of the two contending parties, or, by showing his independence, he becomes unpopular in his electorate and is rejected. From his dissertation on the rigours of caucus discipline, the Leader of the Opposition passed on to something worse. If party politics are anathema to him I was surprised that he introduced the petty State rights squabble that has agitated the minds of many electors in the various States since the establishment of federation. At a time when the nation is at death grips with powerful enemies, the Opposition should have been bigger than that. It should have been prepared to direct all of its energies to the successful prosecution of the war. The Leader of the Opposition was obviously anxious to bring into the income tax field the people in the lower income groups. Invariably, when the opportunity offers, the honorable senator and his colleague, Senator McBride, are anxious to tax those people. When I look at the Leader of the Opposition, I am reminded of an advertisement which was popular a few years ago. It depicted a cherubic child who, while having a bath, was straining to reach a piece of soap lying outside the bath, the caption being, “He won’t be happy till he gets it”.

The Leader of the Opposition was followed by Senator Spicer, who has a keen analytical mind. He made a gallant attempt to make the best of a weak case, but he found his task difficult. His contribution was marred by his continuation of the squabble about State rights. He declaimed against the fact that New South Wales, whose initiative was probably responsible for the meritorious social legislation recently passed through this Parliament, was to be rewarded because it had made sacrifices in order to implement similar legislation. He should know, as almost every thinking person is aware, that what New South Wales does to-day the Commonwealth does tomorrow, and the rest of the world does 8 month later. He does not seem to have realized that, whilst manufacturing or commercial classes in New South Wales were making a sacrifice in order to give effect to mat beneficial social legislation, other States, and particularly the State that he represents, were taking full advantage of the handicap that New South Wales manufacturers and traders suffered in that respect

Senator MCBRIDE:

– The honorable senator admits that it was a handicap.

Senator LARGE:

– It was, in the circumstances, but it is not now. I recall attending a meeting of a wages board many years ago, and, at the conclusion of the evidence tendered on behalf of the employees, the chairman said that he was convinced that the engineers had made out a case for the granting of the full amounts claimed, but he considered that he would be inflicting an injustice on the manufacturing section in New South. “Wales if he gave to the engineers the increase of pay sought by them, because it would act as a handicap to the employers in their competition with manufacturers over the border, particularly Victoria. The employers’ representative remarked that they would not object to the employees receiving double the wage they claimed if similar conditions operated in the other States. Of course, Senator Spicer is a good party man, and he makes the best of a bad case, but he spoilt his effort in trying to preserve the disparity that existed between the States prior to the present attempt by the Government to secure uniform income taxation.

In the opinion of Senator Leckie, this bill is unconstitutional,, but he thinks that it is quite possible that the High Court will decide that the measure is constitutional, and, in the event of the court so deciding, the Government might introduce all kinds of drastic legislation on a similar basis without consulting the people. Obviously this measure is to operate only for the duration of the war and one year afterwards. I regret that fact, and I hope that, at the end of the period for which the bill will operate, a referendum of the people will be taken to determine whether the system of uniform income taxation should be maintained. 1 should have little doubt as to the result of a referendum on the matter. Personally, I am so incensed at the petty squabbles between the States that I should be prepared to abolish the State parliaments. There are too many parliaments at present. In place of the State Parliaments, I should substitute provincial councils.

Senator Foll:

– I should be happy to support such a proposal.

Senator LARGE:

– I have always advocated the abolition of the State parliaments, although many friends of mine are members of those institutions. Senator Leckie is concerned at the fact that New South “Wales will apparently benefit because it has been the spearhead of social legislation for many years. Were it not that that legislation was initiated in that State, we should not now be debating the present proposal. Many years ago, the Commonwealth Government should have taken the steps that it now proposes by presenting the bills now under discussion. During the last ten years, the parties in power have not represented the vast majority of the voters who were anxious for an improvement of the social conditions of the “ under-dog I did not expect anything beneficial to the workers to happen during that period. The Commonwealth Government ought to have acted many years ago. Federation was secured by means of misrepresentation. The people voted for it under the impression that the Commonwealth would gradually assimilate various State activities, until eventually the many State Parliaments would disappear. To-day Senator McBride became jubilant at the prospect of facing honorable senators with statements that they made some time ago - statements contrary .to those which they have expressed when discussing this bill; but the honorable senator did not give one instance of such a reversal of form. He had another brain-wave when he advocated that the Prime Minister should first have convinced the State Premiers of the necessity for these proposals, in which event they would not have been opposed when brought before the Parliament. I cannot imagine any proposal which emanated from the present Government pleasing Senator McBride; nor can I imagine State Premiers, jealous of their own place and power, agreeing to a proposal which would take from them th? right *« levy taxes.

Senator MCBRIDE:

– Even though four Labour Premiers were among them?

Senator LARGE:

– Even though all of them were Labour Premiers. When travelling in Queensland recently, I met a number of prominent and wealthy citizens who reside in the Darling Down3 electorate. One of them said that the passing of legislation to provide for uniform income taxation would confer a great blessing on the community. Another who is an accountant, told me that if these proposals became law, his duties would be greatly simplified. He explained that his employers had financial interests in several States, necessitating the preparation of 30 different returns. He rejoiced in the prospect of uniform income taxation simplifying his task. Two other gentlemen in the party who had always voted for United Australia party candidates - that is to say. candidates who to-day would be classed as members of that party - said that if a decent, clean-living man of reasonable intelligence were to offer himself as a candidate in the Labour interests, they would vote for him. That statement was a sign of the times - an indication of the swing that is coming. The opposition to this measure is only a sham fight. When I compare the expressed desire of honorable senators opposite to support the Government’s war effort, with the enthusiasm with which they take every opportunity to hinder that effort, I can come to no other conclusion than that they are insincere. A close analysis of the remarks of various Opposition senators who have spoken will be sufficient to condemn them in the eyes of the general public. I shall support the bill, which I am confident will be passed by the Senate.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Unlike Senator Large, I had prepared extensive notes on this and the cognate measures, because I regarded them as being of great importance. However, owing to some mismanagement on the part of the railway authorities of either Victoria or New South Wales, they are still in process of travelling to Canberra. I hope, however, to bring to the minds of honorable senators some facts which will cause them to pause before launching this country in a sea which is full of uncharted rocks. It is unfortunate that at such a time in the nation’s history we should be considering legislation which is likely to promote ill feeling between certain States, and between all the States and the Commonwealth. During my political and professional novitiate the proposed federation of the Australian colonies was a general subject of conversation amongst the people, and consequently as I listened to the debate to-day I could not help contrasting the attitude of honorable senators in this chamber, which is supposed to be the guardian of the rights of the States, with the spirit that prevailed when the duties and obligations, powers and responsibilities of the various States and of the Commonwealth were being framed. Should the legislation before the Senate be passed and be held to be constitutional, we shall have departed a long way from the spirit of those times. I cannot but feel that the measure before us is one of the most important pieces of legislation that has been introduced into the Commonwealth Parliament since it considered the financial agreement between the Commonwealth and the States, upon which I shall have something to say in a moment. To use the words in which the Privy Council referred to the Commonwealth Constitution, “ the pith and substance “ of the four bills which have been introduced to give effect to the policy of the Government is that the power of the States to levy taxes is in some degree to he taken away. That is something which was never contemplated by the framers of the Constitution. They never envisaged a state of affairs in which sovereign States would be asked to barter their right to tax the incomes of the people. In my earlier years I read that certain crowned heads sold the right to tax the people; and I can well understand how some of the well-informed State Premiers would feel at the prospect of being asked to surrender the right of a State to tax its people. It seems to me that there is some misapprehension in the minds of many people regarding the right to surrender certain powers. The proposals before us amount to a bargain between the Commonwealth and the States. I shall have something to say about the binding nature of that bargain, and the danger to the States that it represents. The legislation that we are asked to pass to-day amounts to an offer by the Commonwealth to buy from the States their right to tax. I do not deny that a considerable degree of trouble is associated with the various systems of taxing th»* incomes of the citizens of the several States. The present Government knows well of the steps that have been taken with a view to bringing about some measure of uniformity in the methods of taxation, although such proposals did not go so far as to seek uniform rates of tax. Those negotiations took place when I was in office as Postmaster-General. Many conferences were held between the various taxing authorities, and some measure of agreement was reached respecting uniformity of taxation returns. There is, however, a tremendous difference between uniformity in that respect and uniformity as to the taxes which may be levied, the deductions which are allowable, and so on. The keynote of the speech of the Treasurer (Mr. Chifley), when introducing these measures into the House of Representatives. was that expenditure incurred by the Commonwealth in connexion with its war activities will increase the revenues of the States beyond all expectation. He regarded that benefit to the States as the result of the expenditure of Commonwealth moneys obtained for the most part by the Commonwealth as loans, and for which the Commonwealth is responsible. He contended that it was not fitting that the States should reap the benefit of the expenditure of Commonwealth moneys. I admit that there is some force in that argument, but surely that does not warrant violence being done to the States. After all, there is no justification for treating the States as foreign bodies; they are part and parcel of the Commonwealth of Australia. The real position had never been placed before the States. If it be the intention of this Parliament that the revenue to be paid to the States should remain static, dependent upon the bounty of this Parliament, and additional grants from time to time, then the Constitution makes provision for such an arrangement. If the Government rests its case on the defence powers of the Commonwealth, I think, without elaborating the matter, that such a contention will be found wanting. The defence power given under section 51 of the Constitution is subject to the Constitution as a whole; and the Constitution makes certain provision for the guardianship of the States in their particular spheres. Eight through these measures we find reference to the Commonwealth’s defence powers. Sometimes those references are implicit and sometimes explicit. The Government has endeavoured to dress up this bill to make it look like a war measure, when, in fact, it is nothing of the kind. It is a bargain designed to buy from the States their right to levy income tax. I doubt whether any State has the authority to sell that right. I have no doubt that some of the Premiers who view the matter in that way would be only too prepared to do the fair thing by the Commonwealth. Therefore, the Commonwealth should pause before it proceeds to do violence to the rights of the States. What security does the Commonwealth offer to the States in respect of these grants? I think that when Mr. Forgan Smith asked for some guarantee in this matter, the rejoinder of the Prime Minister (Mr. Curtin) was that the Commonwealth Parliament has never refused to pass a grant recommended by the Commonwealth Grants Commission. That is true; and that fact stands to the credit of the Commonwealth Parliament. But is that sufficient security to a State? Is this legislation, which can be repealed the day after it is passed should the Parliament see fit to do so, any security to the States? Senator Brown has pointed out that a change in the political atmosphere in this Parliament may bring about results which are anything but beneficial to the various States.

Senator CRAWFORD:

– We are not Huns.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The honorable senator will remember that legislation which the present Government party held as dear as that providing any grant to the States had to be amended, and grants made under it to certain people had to be reduced because of financial circumstances then existing. Mr.

Forgan Smith has raised the query as to what might follow in the wake of this devastating war. He asks for security for these grants. This legislation is hardly satisfactory, because in case of necessity it could readily be repealed, although I do not think that any Government would do so unless it was absolutely driven to take such action. Nevertheless, the Premier of each State, as the person responsible to the people of his State for safeguarding its rights and interests, is more than justified in asking for more than a mere legislative enactment as security for these grants to the States. There are two vital issues so far as the States are concerned: First, the States have no right to bargain away their taxing power; and, secondly, these grants are not secured by this legislation, which may he repealed by Parliament within a few months. For these reasons, I am amazed that the Commonwealth did not make efforts to deal with this problem on a permanent basis rather than resort to the device of dealing with it under the defence powers of the Commonwealth. Section 105 of the Constitution provides machinery for taking over State debts. If that were done, this transaction would be placed on a permanent basis. The safeguard to the States should be embedded in the Constitution. I can find no authority which would lead me to believe that this legislation is constitutional. The Government has decked out this legislation with the object of making it attractive to the tribunals which will have to decide whether it comes within the scope of the Commonwealth’s defence powers. I fail to see the distinction between this legislation and that which has been universally recognized as an exception to our power under the National Security Act. For instance, property taken under the National Security Act must be taken in the terms of the Constitution, notwithstanding the terms of the National Security Act. Under the Constitution, certain rights of freedom of religion are preserved to the people of this country. No government could take away those rights by any act of Parliament. Those things are inherent in the Constitution, and are secured because they are embedded in the Constitution. These proSenator posals should also be embedded in the Constitution in the form of an agreement along the lines set out in section 105. In that case, we might have to take over the States’ debts. Would it not be a better process to clean up the position in that way ? We speak of uniform taxation. Some honorable senators have shown that these proposals cannot be described as uniform taxation proposals at all. Certainly, we must not consider them from the point of view as to how they may affect us as individual taxpayers. In matters of this kind which so closely concern the . Constitution, we must look not to to-morrow, or the day after, but hundreds of years ahead. .1 agree with Senator Large that a great many alterations may be made in the system of control as now exercised conjointly by the States and the Commonwealth. I am not a rigid adherent to the present system; but I cannot subscribe to unification in the broad sense in which Senator Spicer does. I prefer to ally myself with the views expressed by Senator Courtice in this matter. I am a federalist to the core. I believe in the balance that has already been achieved between the Commonwealth and the States; but I can see the need for alterations in many respects. However, when the States’ right to tax is attacked, we shall never secure real uniformity in any sense. By this piece of legislative juggling, the Government seeks to take revenue out of the pockets of the people of Australia as a whole on a level footing. A man with an income of £400 in one State will pay the same tax as another man with the same income in another State. Having collected the revenue in that way, the Commonwealth proposes to ladle out to those States whose taxation has been high, not something taken out of the purses of the people resident in that State, but something that has been extracted from the pockets of the people of the Commonwealth as a whole. Such a method reminds me of the trick played by a gentleman who used to frequent the shows when I was a small boy. He would offer you a purse into which he would drop four sovereigns, and, placing the purse on the palm of his hand, would offer to sell it to you for £2. Any one who bought the purse would find that it contained not four sovereigns, but four half-pennies. That is the sort of thing the Government is doing in this case. The Government proposes to collect the taxes from the taxpayers as a whole, and with the revenue thereby received to subsidize the highest taxed States. That is the class of finance that has hypnotized this Government. I can understand how a master juggler in finance, or a mind which is as keen as a razor blade on financial matters, can dazzle people who do not deal with finance to the same degree. Although, in the past, I have received much money as a legal adviser from the Commonwealth and individuals, I candidly confess that to-day I do not think of making up my own income tax return. I shall not risk it, because I do not think that I am clever enough to cope with all the modern niceties of the income tax laws, both Commonwealth and State. I have always advocated simplicity in our taxation systems. Apparently no one wants simplicity and nobody can get it. We have bred in this community through the very department that has done so much good work for the Commonwealth a class of men who have gone from the department into the business world and have become experts in securing justice for the taxpayers. If the officers of the Taxation Department had acted as revenue officers as they should, they would not have let lie in their offices files which enabled these gentlemen to go to taxpayers and offer to secure for them a rebate of their taxes provided they paid these gentlemen a certain percentage of the amount refunded. That should not be the principle guiding our taxation system. I oppose the main bill because I doubt its validity. As one honorable senator said it is camouflage legislation. I should have preferred the Government to have gone the whole hog, but it could not go that far. The Government knew that the bill was unconstitutional so it was dressed up to look constitutional by the insertion of a’ provision limiting its operation to the war period and one financial year thereafter. I think that the legislation will continue in operation after that period if it is held to be constitutional. It will be difficult to extricate ourselves from the situation in which we shall probably find ourselves after the war, and I hope that before that eventuality develops the States will be made secure. It is clear from the speeches of honorable senators on this, the Opposition side of the chamber, that this uniform taxation scheme is unjust in its incidence and on that ground alone I would vote against it. It would have been fairer had the Government said to the States, “Levy your income taxes on such and such a rate and collect them ; all the yield up to a certain amount you may retain and we shall take all the revenue above that level “. That arrangement might have been difficult to put into operation but it would have contained a certain element of justice. There is no security to the States in the Government’s scheme and the States have no right to sacrifice their powers to impose income tax, because there is no power in their constitutions to justify a surrender of their taxing powers. There is a provision in the Constitution for the surrender of powers by the States, but that is not what the Commonwealth Government is aiming at. It is out to purchase something from the States. It says in effect to them, “ We will give you so much money during the war provided you abandon your income tax”. I do not think that the States under their constitutions can abandon the collection of their income taxes. The Minister for Aircraft Production (Senator Cameron), stated in an interjection during the debate that the objective of the legislation is to secure the levelling up of taxation. That objective will not be secured by the Government’s scheme, because, as has been pointed out, the whole field of taxation is not being covered. The quantum of income tax in one State varies from the quantum in another. The Government is trying to perform an impossible task and one which I think will not stand an airing in the High Court. Moreover, it is not an act of justice on the part of this Parliament to every State of the Commonwealth. If anything exemplifies the blindness of the special committee that reported to the Government to a true sense of justice it is the omission to deduct the sum of £1,300,000 from the amount of compensation to be paid to the State of New South Wales. I do not desire to attack any State. I applaud the attitude of Mr. Forgan Smith, the Premier of Queensland, who realizes the insecure position in which that State will be left after this scheme begins to operate and the inability of the State to surrender its taxing power. By a sort of hypnotism exercised by the two gentlemen from New South Wales who were members of the parliamentary committee, Mr. Scullin, the other member, was persuaded to become a party to an act of injustice to the Commonwealth, which otherwise would have retained the amount of £1,300,000 in its coffers. I do not think Mr. Scullin would have agreed to such an act of injustice if he had not been persuaded to agree with the other two members of the committee. The Government’s proposition that this measure is war legislation is hollow. The measure is garbed in such a way as to give it a semblance of constitutional authority. However, it will have to stand the test in the courts.

Senator Crawford:

– It will be an excellent thing for the lawyers.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Next to sugar I know nothing that is sweeter to lawyers than litigation of this kind. However, we should not be thinking of lawyers or sugar-growers.

Senator Courtice:

– The honorable senator is not thinking much of the war.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Honorable senators of the Labour party have been thinking of the war only recently. How they thundered when I, in my ministerial capacity in this chamber, tried to do something for the defence of Australia. They wanted to know what war the then government was talking about. It is better for them that their record in relation to defence over the last ten years should remain a closed book. What did they do for the defence of Australia during the last ten years except obstruct defence measures? Honorable senators on this, the Opposition side, are thinking of the war just as much as are honorable senators on the Government side. We take the long view. I am sure this scheme will be litigated. Will that be helpful to the war effort? If it be essential that more revenue should be obtained by the Commonwealth for the prosecution of the war the States should be consulted even at this, the eleventh hour. If ever there was a measure that ought to have been referred to a select committee of this Parliament it is this bill and the three associated bills. The measure is an attempt to take away from the States the right to tax which is given to them under the Constitution. Apparently the Constitution has been ignored by the Government and its advisers. One could be excused for thinking that this is a Parliament with plenary powers. Apparently the idea got into the heads of the Government and its advisers that because Australia is at war anything can be done by legislation. I believe that this bill should have been examined by a select committee on which the Senate would have had representation. The constitutional side and the incidence of income tax could have been better dealt with by a select committee than the special committee that the Government set up and which has not inspired confidence by the compilation of the figures contained in its report.

Senator ARNOLD:
New South Wales

– I believe that it is imperative to consider these bills in the light of the present national crisis. We, as a people and not as a series of governments, must measure up to the war situation as it confronts Australia. The national Government is faced with the problem of marshalling Australia’s resources of manpower and finance in the most effective way possible for the conduct of the war. It is desirable, in my opinion, that we should have regard for these fundamental facts when we consider the attitude of any Australian government, whether it ‘be a State or Commonwealth government, towards the uniform taxation proposals. These measures are part of the necessary means towards an end, which is the most effective method of defending Australia. Consider what this measure, which makes provision for a uniform income tax scheme to operate for the duration of the war and one financial year thereafter, means to the Commonwealth Government as the national Executive of our war effort. The problem of financing the war is one which the Government is attempting to solve by various methods, including voluntary loans, bank credit and taxation. We must not overlook the fact that not one of the belligerent countries is able to carry on the war with voluntary loans and not one of them would attempt to carry on without heavy taxation imposed with the view of restricting the dissipation of its resources in useless spending and preventing inflation. It has been said that inflation cannot take place in Australia because we have legislation to control prices and peg wages, but I point out that inflation can occur in a form other than increased prices; it can take the form of queues of people lining up at shops to purchase commodities which are in short supply. Such a state of affairs could have a serious effect upon the morale of this nation. In Australia, we have now reached a position in which we find it necessary to divert man-power from non-essential industries to the war effort. We have long passed the stage of employing our idle manpower and labour not usually available for work. We must now divert to the war effort the extra money that is being poured into the community. It must be diverted from civilian spending to the Commonwealth Treasury in greater and greater amounts. We cannot finance this war without some disruption of our social system and without making some alterations of our financial methods which were laid down long before there was an Adolf Hitler and 90,000,000 fanatical Germans prepared to spend their last mark to achieve victory over us. If we were to adhere rigidly to those outworn methods we should be sailing with a wind which might easily wreck the ship. What powers does the Commonwealth Government possess to obtain money to finance its war effort? First, it can ask the people to surrender voluntarily their spending’ power by contributing to war loans ; secondly, it can utilize bank credit, and thirdly, it can impose taxation. The crux of this discussion is to be found in paragraph 4 of the report of the special committee which states -

The committee is impressed with the urgency of this reform, particularly under war conditions. The expeditious and effective raising of revenue assumes greater importance during a period of national crisis. Income tax is the main source of revenue from which the Commonwealth finances war expenditure and that source is limited. The Commonwealth, therefore, should not be hampered by State laws which prevent the fullest exercise of taxation powers essential to the nation at war. The presence in the field of six States imposing eleven taxes on income at widely differing rates restricts the power of the Commonwealth in raising revenue from income taxation.

In my opinion, the Government has made the best effort possible to obtain money by means of war loans, and has exploited bank credit to the fullest extent that is wise. If the problem were merely one of obtaining money it would not be so bad, because money could be obtained. Unfortunately, it is also necessary to provide a means of siphoning out the additional money that is injected into the economic system, in order to prevent it from being used as civilian spending power. Bearing these factors in mind, we are bound to ask ourselves whether the powers that are now available to the Commonwealth for taxation purposes are adequate for the job of financing our war effort at a time when the only thing that matters is the survival of the nation. That is not merely a matter of opinion, but also it is one of fact. The report of the special committee shows clearly that unless we differentiate between individuals in the various States the Government will be unable to secure by means of taxation all the revenue that is necessary to meet war commitments, and cannot make that discrimination because such action would he ultra vires the Constitution. Therefore it is evident that the powers of the Commonwealth at present are not sufficient to ensure a maximum war effort. Having regard to the financial and economic problems of Australia in time of war, and to the disastrous effect upon this nation of a weak financial policy - inflation and its consequent wreckage - the Commonwealth should not be hampered in the collection of income tax. I do not intend to speak at length on the problems of the States in regard to these proposals, but I do not believe that this scheme will have any great or lasting effect upon the problems of the States in post-war years. However, as the issue has not been raised seriously it is not necessary to defend the measure on that principle. Therefore, I conclude by repeating, that in my opinion, the existing powers of the Commonwealth to collect income tax are insufficient to meet the vital needs of the nation in the crisis which now confronts us and in these circumstances, I believe that the people generally, will agree tha,t in order to retain their security and independence, this measure should be passed.

Senator SAMPSON (Tasmania) [2.12 a.m. - Before dealing with the bill, I should like to refer briefly to the speech made by the Leader of the Senate (Senator Collings), who, after stating that he had spent his life amongst the workers and therefore knew what he was talking about, said that I had spent my life amongst well-to-do and rich people whom I represented in this chamber. It was rather unkind of the honorable senator to make such a statement, because I have been a worker all my life. I was taken away from school at the age of fourteen and put to work on a farm. After a couple of years of farming I had a go at most jobs. I spent seven years sawmilling as an employee, and for a couple of years after the war, I was manager of a “ show “ in which I lost all my deferred pay, war gratuity and other assets. That was during the depression of 1921-22 which followed the war boom. Perhaps it is as well that I should point out these things to the Leader of the Senate because I have a high regard for him, and I had hoped that in the course of his speech to-day, he would have told us something about the bill. However, he merely gave us one of his familiar tirades of sound and fury, like a tale told by an idiot, signifying nothing. In the course of this debate we have been reminded continually of the great danger which confronts this country to-day. Honorable senators on this side of the chamber were practically told that they did not know anything about it. This country has been in dire peril for the last twelve years and more, and time and again in this chamber I drew attention to what was threatening us. On many occasions I stressed the fact that it was up to us to make equipment and train our men to handle it; and now honorable senators opposite talk about danger. God knows we are in peril to-day, and nobody knows it better than I do. My only regret is that the writing which was on the wall for every body to see was not heeded. . General Chiang Kai-shek, the Chinese generalissimo, has truly said that if we sweat more in peace we shall bleed less in war. We have paid for our refusal in the past to realize what was coming to us. We did not train our young men in order to give them a chance to fight for their womenfolk and their country. I believe that we shall win this war, but, when I think matters over calmly, I doubt very much whether we deserve to win. Discussing the bill itself, I draw attention to the preamble, which states -

Whereas, with a view to the public safety and defence of the Commonwealth and of the several States and for the more effectual prosecution of the war in which His Majesty ia engaged, it is necessary or convenient to provide for the matters hereinafter set out:

Be it therefore enacted … as follows: -

In my opinion the preamble provides a fairly good smoke-screen. This measure and the bills associated with it, which are described as embodying the uniform income taxation proposals of the Government, have been dictated by the war and the national peril. The suggestion that these proposals are necessary to meet the demands of national safety is a mere pretence. It cannot be successfully argued that the enactment of these measures is essential to the war effort. Will these allegedly uniform taxation proposals provide one more tank or plane, or give to ns more munitions or Bren gun carriers? Hard economic realities, rather than monetary difficulties are the chief obstacles in the way of a full war effort. No amount of money would enable us to make anti-aircraft guns out of steel which has not been smelted, or to get coal which has not been taken from the earth. What Australia requires for the winning of the war is not money but increased production and man-power. Lack of money has never stopped a war yet, and never will. To suggest that the passage of these bills is essential to the war effort is mere balderdash. Our essential problem is to decide how to obtain the requisite raw materials, how to build and equip the necessary munitions factories, and how to provide all the labour needed and men of fighting age trained to use the intricate modern instruments of war. If we had all the money in the world it would not save us from destruction, unless we had the men, the machinery, and the raw materials required for the manufacture of the munitions of war.

The pretence that these measures are essential to the prosecution of the war has been largely abandoned, and an open bid has been made for what amounts to a system of unification. I believe in decentralization. I tremble to think of what would happen to Tasmania if it were to be governed solely from Canberra. Legislators who are familiar with local conditions are the best judges of what is best for the people. I favour the federal system, which provides for a partnership under which certain functions have been surrendered by the States to the central government. I do not regard unification as practicable in a country having an area of about 3,000,000 square miles. To-day there are seven governments in the Commonwealth. Canada, with an area similar to that of Australia, has ten Parliaments. The United States of America, which has an area of a little more than 3,000,000 square miles, has 49 Parliaments. Brazil is a country similar in size to Australia, and it has 27 Parliaments. Despite our sparse population, if one Parliament attempted to govern the whole of Australia, it would have a very difficult problem. It would be necessary to delegate certain powers to the State authorities, and therefore the Parliaments of the States should be retained. If the present proposals were agreed to, their effect would be harmful, because we are now desperately in need of the closest national unity and the utmost co-operation obtainable between the Commonwealth and the States, as well as complete co-operation between all organizations and individuals. This bill seems to be a somewhat cynical attempt to destroy the very basis of federation. It will produce distrust and dissension, and make effective cohesion well nigh impossible. These proposals are alleged to have arisen from the Commonwealth’s need for increased revenue, and from a desire to ensure equality of sacrifice as between file people of the several States. Those are most desirable objectives, but this scheme will not attain them. If adopted, it would intensify and perpetuate the existing inequalities between the States and throw their affairs into confusion.

Having studied the Commonwealth Constitution as a layman, I suggest that this bill, if passed into law, would violate the spirit of the Constitution. Senator A. J. McLachlan and Senator Spicer and other honorable senators skilled in the law, may be able to say whether the bill violates even the letter of the Constitution. If carried to its logical conclusion, legislation of this kind would destroy the federal system. I regard the bill as a party measure, which is not even thinly veiled; it stands naked and unashamed. Regardless of opposition to these proposals, even from supporters of the Government - the bills were opposed by Labour members in the House of Representatives - I believe that the Government, knowing that some of its supporters are unable to vote for the bills without acting contrary to their convictions, is bent on driving them through this chamber with all the force of cast-iron party discipline.

Senator Keane:

– The voting was 41 to 11 in the House of Representatives.

Senator SAMPSON:

– Although members of the Labour party may talk as they like, they must vote as they are told. I confess that at times I should have liked to see similar discipline enforced on members on this side, but, fortunately, we are not subjected to such cast-iron discipline; we have souls that wecan call our own. If ever there was a matter which demanded consideration on its merits, or its demerits, it is the bill, or collection of bills, now before the Senate. They constitute a threat to federation and all that federation implies. To those who do not believe in federation, that may be all right. I, however, have always believed in federation. I remember distinctly the conference held in Hobart in 1897, and the discussions which took place then. The conference was open to the public, and I attended some sessions and saw some of the political giants of those days. It is claimed that these measures will ensure greater uniformity in respect of war taxation, but a careful examination will show that the effect will be just the opposite. The most glaring inequalities in our war taxation are due to the disinclination of the

Government to demand a just contribution from wage-earners in the lower income groups. Those inequalities will be intensified under this plan, because those groups will be relieved of the necessity to pay State taxes as is now the case in respect of federal taxes. Even if the contributions were fixed on a low scale, every person in receipt of a reasonable wage should be expected to contribute something to the cost of conducting the war.

Senator Keane:

– What will happen when the electors get a chance to deal with the honorable senator?

Senator SAMPSON:

– I have never been concerned about matters of that kind. I first entered the Senate in 1925, and it was because of my disregard of such matters that I, possibly, “got it in the neck” in 1937. I do not pander to the electors; I tell them what I think is right, and if they do not like what I say, they know what to do about it. I am expressing my honest opinion about these bills. The electors do not come into the matter at all.

Senator Keane:

– The honorable senator is not loyal to the State which he represents.

Senator SAMPSON:

– I am.

Senator Keane:

– At one moment the honorable senator is a federalist, and the next moment he is just the opposite.

Senator SAMPSON:

– I am both.

Senator Keane:

– Tasmania will gain under these proposals, but the honorable senator is letting that State down.

Senator SAMPSON:

– Tasmania will not gain. Does the Minister say that the price of Tasmania is £77,000?

Senator Keane:

– There is also a grant of £1,000,000, and lower taxation.

Senator SAMPSON:

– Is that the price? It is not. I shall not support these proposals, because they are utterly contrary to the spirit of federation. I remind the Minister for Trade and Customs (Senator Keane), who has interjected freely, that it is unwise to prophesy. It may not be long before the scales fall from the eyes of the electors, and they see what these proposals really mean. I think that I have shown that the preamble to the bill should be altered. All the money in the world could not ret us out of the mess that we are in, unless we have the right spirit, the will to resist and, if need arose, are willing to go down and die before we give in to the “ Jap “, or any one else. Money is quite a side issue. Wars are not fought with money. The belief that money wins wars has been the trouble with the British nation over and over again. Britishers have neglected their defences and have relied on raising a few million pounds to put things right, if trouble came. That conception is wrong, because armies cannot be created in a moment. It takes years of preparation to train and equip an army. More than anything else, patient training is necessary before men become masters of the art of war. Otherwise, a nation merely pits amateurs against professionals. That, unfortunately, is what has been happening in this war, and that is why, so far, we have hardly won a round in the, fight. Up to date, it has largely been a case of the enthusiastic amateur, not too well equipped, facing men trained to the minute and having the best equipment that can be provided.

It has been said that these proposals will release a big reservoir of manpower. I do not know the position in the other States, but Mr. Dwyer-Gray, the Treasurer of Tasmania, said the day before yesterday that the special committee’s report on which this scheme is based, estimated that 30 per cent. of the staffs of various State departments could be released when these proposals were in operation, and that £250,000 a year would be saved in salaries. I do not follow that reasoning, because I presume that the men who would be released would still get some payment. Mr. DwyerGray said that, in his opinion, the figures were greatly exaggerated, He estimated that Tasmanian State departments might suffer a reduction of 20 officers, all of whom were temporarily employed. He went on to say, however, that their rights would be conserved, either by the Commonwealth or the State. That would be only just.

In conclusion, I repeat that I am opposed to these proposals, lock, stock and barrel. They are absolutely contrary to the spirit, if not to the letter, of the Constitution; they are quite unnecessary; whilst the same amount of money which it is estimated that these proposals will yield could be raised more easily by other methods.

Senator AYLETT:
Tasmania

– I support the bill. Senator Sampson said that he was unable to see how this measure would assist this country’s war effort. I shall endeavour to show the honorable senator the relation between this legislation and the war effort. If the nation were not at war, these proposals would not have been introduced. War conditions have forced the Government to bring in this legislation. The strongest objection to this bill comes from honorable senators representing South Australia and Victoria. Let us consider, first, the effect of these proposals on South Australia. I should like to hear what the taxpayers of that State will say when they read the speeches made by their representatives here to-day. An examination of the Government’s scheme reveals that under it a. taxpayer in South Australia, without dependants, who has a taxable income of £200 will pay £7 9s. in taxes compared with a present impost of £18 2s.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– He has not complained.

Senator AYLETT:

– The honorable senator would not take any notice of him if he did complain. Under the proposals of the Government, a taxpayer in South Australia, who is married, and has a taxable income of £250, will pay £9 6s. in taxes, whereas under the system now in operation in that State he pays £16 2s. The position, however, is different in respect of the higher incomes. Taxation in South Australia on the higher incomes is below that of the other States, but in respect of the lower incomes, the position is reversed. The effect of these proposals, therefore, will be to grant relief to South Australian taxpayers with low incomes, and to cause persons in the higher income groups to pay a little more. In the light of those facts, it may be asked whether the representatives of South Australia in this chamber are voicing the opinions of the taxpayers of that State. It would appear that honorable senators representing South Australia are somewhat peeved at the prospect of persons with low and moderate incomes being granted some relief from the heavy burden of taxation which they have been carrying for a number of years.

Senator COOPER:

– The electors of South Australia are satisfied to re-elect them.

Senator AYLETT:

– That does not surprise me, because, so far as I know, the only guide which is available to electors in that State is the daily press, which is most one-sided. If those people have only the speeches of men like the honorable senators representing South Australia to guide them in these matters, it is no wonder that they re-elect their representatives in their Parliament.

Senator McBride:

– I do not like the honorable senator’s chances at the next general elections.

Senator AYLETT:

– If this legislation plays any part in the matter, I am confident about the result of the next general elections so far as Tasmania is concerned. Honorable senators opposite have had much to say about equality - They know perfectly well that under existing State taxation systems, in spite of rebates and other adjustment devices, some taxpayers are paying over 20s. in the £1 tax. Only last week, I met a man who told me that his rate of tax was 20s. 6d. in the £1. Such anomalies cannot possibly be adjusted so long as the present multiplicity of taxation systems remain. When this legislation is put into operation no person in the Commonwealth will be obliged to pay tax at the rate of 20s. in the £1. Every one on the same income will pay the same rate of tax. The Treasurer (Mr. Chifley) estimates that under these proposals the Commonwealth will receive an additional revenue of from £12,000,000 to £15,000,000. Honorable senators opposide contend that that additional revenue would be collected in any case. I point out that, but for this legislation, it would be divided between the States and the Commonwealth and, consequently, the advantage to the Commonwealth would not be very substantial. However, 1 cannot follow the argument of honorable senators opposite that the States are in need of additional revenue, when it is understood that the Commonwealth is transferring increasing numbers of employees, of the State governments to war work. The States do not share the cost of war production in any way whatever. No honorable senator opposite has looked at the scheme from that viewpoint. The honorable senator who has just resumed his seat declared that the present war emergency was being used by this Government merely as a pretext to secure the passage of this legislation in order to give effect to Labour’s policy of unification. The obvious advantages which will accrue to our war effort are sufficient recommendation for this legislation. The special committee estimated - that under these proposals public expenditure amounting to £601,000 annually will be saved. No State will lose financially under this legislation. In addition, 1,000 men will be made available for war work. Senator Sampson declared that man-power for war production, and not money, should be the Government’s main concern. If only for the reason that these proposals will release an additional 1,000 men for war work, its passage will be justified. In view of the fact that we require 300,000 additional men for our war industries, that is surely worthy of consideration. The argument of honorable senators opposite that these measures are designed to enable the Labour party to give effect to a policy of unification is also refuted by the fact that specific provision is made that this legislation shall operate only for the duration of the war, and for twelve months thereafter. I need hardly remind them that the previous Government, which they supported, made that the basis of many of its decisions, for instance, its contracts for the acquisitions of various commodities. Thus this Government is merely following the example of the previous Government in applying measures of this kind for the period of the war and twelve months thereafter. Honorable senators opposite have also had much to say about interference with State rights. I did not hear any of them protest against the Government’s decision to commandeer ‘manpower, including State government employees. Is that not interference with State rights? Further, does not the Commonwealth also interfere with State rights when it commandeers railway accommodation for the transport of Commonwealth materials?

Senator Cameron:

– Honorable senators opposite are concerned only about profits.

Senator AYLETT:

– They are eager to preserve only the selfish rights of vested interests which they represent in this Parliament. That is proved by the fact that they have opposed the provisions under these measures reducing the rate of tax on incomes in the lower ranges. Apart from the constitutional aspect, no sound argument has. been advanced against these measures. However, legal critics of this legislation are divided. I for one am not very much impressed by the legal opinion of men who now claim that legislation which has been in operation for the last twenty years is unconstitutional. I doubt whether any State government would have the audacity to challenge the constitutionality of this legislation in a time like the present. The British Government would certainly frown upon any State government which forced this matter to the Privy Council under existing conditions. Such action would be ridiculous in view of the repeated declarations of the States that they are wholeheartedly co-operating with the Commonwealth in our war effort. Surely no State would contemplate taking such action when, as Senator Sampson has said, we are fighting for our existence. It would he senseless for any State government to dispute this legislation, which has been carried by a very substantial majority in the House of Representatives, and will be carried by a substantial majority in this chamber.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Very often the minority is right.

Senator AYLETT:

– I agree with the honorable senator. Senator Sampson declared that Australia has been in danger for years. In 1937, the present Prime Minister (Mr. Curtin), when Leader of the Opposition, advocated the building up of a strong air force in Australia as our first line of defence, in preference to the construction of naval units. The Labour party was then -in a minority, and its policy in that respect was laughed at by th.e majority.

Senator Keane:

– And the Prime Minister enunciated that policy as far back as 1934.

Senator AYLETT:

– Yes, and Labour emphasized it at the general elections in 1937. However, the majority at that time declared that it was ludicrous to think of defending Australia with aeroplanes. They said that we could defend this country only with battleships. That was an instance in which the minority was proved to be right.

The DEPUTY PRESIDENT (Senator Brown). - I ask the honorable senator to connect his remarks with the bill.

Senator AYLETT:

– I was about to say that the Commonwealth Government urgently requires the additional £12,000,000 to £15,000,000, estimated to be raised under these proposals, for the construction of a strong air force, as was advocated by the Labour party in 1937. In view of the fact that the Commonwealth Government proposes to spend approximately £360,000,000 on defence during the next financial year, I think that the place to start to economize is at the top. The Government is setting an example of economy by the introduction of a uniform income taxation scheme. One result will be that the services of nearly 1,000 officers will no longer be required in the taxation offices and the consequent saving in salaries and other expenses will he £600,000 a year. Further, an additional revenue of between £12,000,000 and £15,000,000 will be made available to the Commonwealth Government for the prosecution of the war.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– T intend to vote for the second reading of the bill providing for the introduction of a uniform income taxation system, which I consider is long overdue. Several attempts were made to bring in a system of uniform taxation during the regime of the previous Government, but owing to various obstacles being placed ;n the way of the Ministry, the system was not introduced. I regret that the Government of which I was a member, did not succeed in establishing the reform. The present Government deserves congratulation for bringing forward this legislation. My only .regret is that the Government introduced it in an apologetic manner. I do not think that the Government should apologize for the legislation.

Senator Cameron:

– Ministers in this chamber did not apologize for it.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– The Leader of the Senate (Senator Collings) adopted an apologetic attitude towards the measures when he spoke earlier in this sitting. He appealed to the senior legislative body in Australia to support the bill because it was to operate only for the duration of the war and one financial year thereafter. He stated that it would he the means of raising additional money for the prosecution of the war and that the legislation would cease to operate twelve month? after the termination of hostilities.

Senator Collings:

– That is a fact.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– I hope that the operation of this system of uniform income taxation is not to be limited to the duration of the war and one financial year thereafter. I am supporting the bill because I believe that the scheme is a real step towards unification and I tender no apology for supporting unification. I believe that the old State boundaries are out of date. I see no reason why the Constitution of Australia, which was created by men whose main outlook at that particular time was the preservation of State rights, should remain unaltered for all time. I believe that the men who framed the Constitution were highly capable men, but it must be realized that they had devoted much service to State Parliaments and were blinded to some degree by the State outlook. Many difficulties under which Australia is labouring now are due to the fact that the men who framed the Constitution were blinded by what are termed the sovereign rights of the States. Australia’s whole outlook has changed since federation was established. I doubt whether the present boundaries of the States are the best boundaries for carrying on the economic, financial and scientific administration of Australia. Whilst State boundaries and State jealousies exist, we shall not get a true federal spirit. I do not think that there would have been the present -lack of uniformity of railway gauges bad the men who established federation been more far-sighted. In my opinion, Australia will not progress as a united country if we allow ourselves to be blinded by State prejudices which undoubtedly exist. Senator Cooper referred to the differentiation between income tax rates in Queensland and Victoria. Other honorable senators pointed out that taxes in Victoria are much lower than that in Queensland. Because of the difference in area and economic conditions in the two States, taxes should always be lower in Victoria than in Queensland, but I see no reason why the people of Queensland, who have still to develop huge areas, should bear a much heavier burden of tuxes than the people of Victoria, which is a highly developed State.

Senator Leckie:

– The development has already been carried out in Victoria.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– Victoria is a rich territory and has a large population, but I see no reason why that a tate should be permitted to occupy a privileged position compared with that of Queensland. Victoria, generally speaking, has no huge areas to develop; it does not suffer the .same hardships of drought experienced in Queensland, and it is not required to develop such, long lines of railways and roads, and to instal costly water conservation schemes. ‘Consequently Victoria has been and can be developed on a much lower rate of tax than Queensland has been compelled to impose on its citizens.

Senator E B Johnston:

– Victoria has received great benefit from the tariff.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– Undoubtedly it has. Senator Leckie is fond of twitting me about the sugar industry, but I should like to remind him that as far as I know sugar is the only primary commodity sold at a fixed price which has not been increased in price since the outbreak of the war. Although there have been substantial increases in the cost of production and transportation the sugar-growers have not received any assistance. Woolgrowers have received a much greater advantage than have the sugar-growers. Since the outbreak of war Great Britain has assured the wool-growers of a market and paid them a fixed price for their commodity, whether it is or is not shipped to Great Britain, and recently the British Government increased the price by 3d. per lb. sterling. Senator Johnston, who represents Western Australia, appreciates the difficulties confronting the large States. . although Western Australia occupies one-third of the area of Australia, its population is a little less than 500,000. Such large States are confronted with greater developmental problems than is Victoria. South Australia has been well treated by the Commonwealth Government in the last twelve years. It has now joined Western Australia and Tasmania as a mendicant State and has sought its pound of flesh from the Commonwealth. Admittedly it has been well treated by the Commonwealth Government. However, honorable senators representing New South Wales, Victoria and Queensland raise no objection to assistance being granted to South Australia, which has been well treated by the Commonwealth Government. South Australia has received concessions from other States.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– What concessions ?

Senator FOLL:

– Defence expenditure in South Australia has been greater per head of the population than in any other State.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– South Australia is considered to be the safest State in which to erect munitions establishments.

Senator FOLL:

– If that be so, then it is the good fortune of South Australia. The fact that South Australia is regarded by this Government’s advisers as the safest place for war industries is an added reason why the people of that State should not grumble at this scheme.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– They are not grumbling about it.

Senator FOLL:

– Its representatives are opposed to the bill. Queensland and Western Australia are the battlegrounds which are helping to defend South Australia. Legislation to bring about uniform taxation in this country is long overdue. It is all very well for opponents of this bill to say that State Premiers have opposed this scheme. That makes no impression upon me at all. Conferences of Commonwealth and State

Ministers have been held in this country for years past, and I venture to say that any proposal which it was considered would infringe the sovereign rights of the States, even to the slightest degree, has been vigorously opposed by the Premiers even though it may have been in the best interests of the Commonwealth as a whole. For instance, many conferences of Commonwealth and State officials have been held with a view to inaugurating a uniform electoral roll, but they have not been able to agree even upon such a minor matter as that. A uniform roll should be a very simple thing in this country where every man and woman over the age of 21 years is entitled to a vote, but objections have been raised because such a proposal might infringe State rights, or abrogate the authority of some State public servant, and therefore nothing has been done. In Queensland, to-day, there is a State roll and a Commonwealth roll despite the fact that there is no real difference in the franchise. The only reason is that some petty jealousy exists between State and Commonwealth officials.

I consider that in saying that this is only a temporary measure the Government has been too apologetic. I know that it is being introduced as such, but I make no apology for saying that I hope that it will continue, not only for the duration of the war, but so long as it will be of service to the people. E am supporting this measure because I believe that it is a step in the direction of unification, of which I am a strong supporter. Senator Spicer stated that this proposal was constitutionally unsound. I am not a lawyer, and I shall not attempt to express a legal opinion, hut I say with a full sense of my responsibility as a member of this chamber and as an ex-Minister that I do not believe that any Government, regardless of its political colour, would bring down a measure such as this unless it had obtained legal opinion in regard to it. It is significant that a certain eminent legal gentleman in the House of Representatives who is opposed to the Government has expressed the view that this measure is constitutionally sound, and that the Commonwealth has priority over the States in the collection of taxes for war purposes. It has been stated also that had these bills been brought down as separate measures, allowing a reasonable time to elapse between their presentation, no question would have been raised as to their constitutionality. It is recognized that the Commonwealth Government has prior rights in regard to all legislation, and those prior rights must operate in regard to taxation. If the Commonwealth Government brings down legislation providing for a new method of collecting taxes, it must have prior right over the States, and if, after having collected the taxes, it wishes to compensate the States for their loss of revenue, there can be no question of its constitutional right to do so. That is the whole principle upon which this measure is based.

I should like to congratulate my colleague, Senator Cooper, upon the very able manner in which he dealt with the question of compulsory loans. I agree with the honorable senator that there is an obligation on every income earner in the community to play his or her part in providing “money, material or services for the war effort. It is not possible to achieve a 100 per cent, war effort from every person in the community unless a measure of compulsion is applied. Therefore, I am strongly in favour of compulsory loans. Senator Cooper referred to the fact that men of our fighting forces had to put up with deductions in the form of deferred pay ranging from 2s. a day in the case of privates, and rising according to rank of 7s. or 8s. a day for senior officers. Surely, if the system of deferred pay is good enough for our fighting men, it is good enough for the civilians.. When members of the fighting forces, who sometimes serve 24 hours a day seven days a week, are compelled to deduct from 2s. to 8s. a day from their pay, I do not see why men in civil occupations should not be called upon to make a similar sacrifice in order to assist in financing the war effort. Why should members of the Navy, the Army and the Air Force be compelled to make interest free loans to the country by a system of deferred pay, when all other members of the community are to be permitted to please themselves whether they make a similar contribution. Senator Cooper remarked that many people, including those with small incomes, hare contributed to the cost of the war by purchasing war savings certificates. I admit that the sales of those certificates have been large, and I give all credit to the purchasers; but the system of post-war credits proposed by the Fadden Government, of which I was a member, was far more equitable than that proposed by the present Government. I believe that before the war is over this Government will be compelled to call upon every person in the community who is in receipt of an income to contribute a percentage of it, in the form of compulsory savings, to the cost of the war effort.

I regard the attack made by the Leader of the Senate upon the Opposition as unjustified. He did not wait to hear all of the speeches from honorable senators on this side of the chamber. He assumed that because the Leader of the Opposition (Senator McLeay) and Senator Spicer had spoken they had expressed the views of the Opposition as a whole. They spoke only for themselves, and I have the right to express my own views. There are nineteen honorable senators in the Opposition, and, if eighteen of them agree to any proposal, and one of them dissents, he has every right to express his views and vote as he pleases. Members of the Opposition are not governed by caucus rules. When the Leader of the Opposition spoke against the bill, he was not speaking on my behalf. I have my own views as a representative of Queensland, and I shall support or oppose any bill or amendment according to my convictions, irrespective of the opinions or votes of any other member of the Opposition. I do not suggest that every measure submitted by the Government will receive my unqualified support, but I am aware of the problems with which the Government is confronted, and I shall help it in every way I can to promote the war effort. I am under no obligation to cast a vote in accordance with the views of the majority of the Opposition, and therefore I intend to vote for the second reading of this bill.

Senator ARTHUR:
New South Wales

– I had no intention to par- ticipate in this discussion because I had imagined that popular opinion would at least have influenced honorable senators, but I am impelled to add my quota to the debate by reason of the references by honorable senators with a legal training to the constitutional aspects of the measure. I propose to make reference to legal opinions which they have overlooked. Prior to the establishment of federation, interstate conventions were held and legal luminaries and statesmen of the calibre of the late Sir Henry Parkes brought to the notice of the people of Australia the need for the adoption of the principle of “one nation, one people, and one destiny”. I believe that I am the oldest member of the Labour party now in Parliament. I always doubt opinions expressed by legal minds. Decisions by justices of the peace are frequently reversed by police magistrates, and the verdicts of the latter are often dissented from by higher courts, until the decisions are finally reviewed by the Privy Council. The Leader of the Opposition (Senator McLeay) and Senator McBride claim that this bill does not provide for uniform taxation. I am reminded of the Braddon “ blot “, and I remember that in 1915, when the people were about to be appealed to at a referendum to grant increased powers to the Commonwealth Parliament, the Labour movement found “ rats “ in its own ranks and the referendum was withdrawn. In 1926, the people were again appealed to, and the result of the referendum was that certain financial matters were placed under the control of the Commonwealth. This led to the establishment of the Australian Loan Council. Is it not a fact that a State which needs money must come to the Commonwealth for it through the Loan Council? The Government’s proposals for uniform taxation arise out of a desire to improve the country’s war effort. This debate, particularly the speeches of the Leader of the Opposition and Senator McBride, reminds me of that old-time Greek philosopher Diogenes, who was always searching for an honest man to show him the light. There are many persons in the community who, although not members of the Labour party, have views which accord with mine, as the following letter which I have received from the Australian National Services League, of Dalton House, Sydney, shows -

At a meeting held in Sydney yesterday, convened by this league, and comprising representatives of the following commercial and financial associations of New South Wales: -

Sydney Chamber of Commerce (Incorporated),

Chamber of Manufactures of New South Wales,

Constitutional Association of New South Wales,

Cartridge Convention.

Employers Federation of New South Wales,

Farmers and Settlers Association of New South Wales,

Galvanized Iron Agreement,

Graziers Association of New South Wales, Iron and Steel Association,

New South Wales Wire Nail Distributors Association,

New South Wales Traders Protection Association,

New South Wales Sheepbreeders Association,

New South Wales Wholesale Tobacco Association,

New South Wales Wholesale Softgoods Association,

Patent Medicines and Proprietary Articles,

Wholesale Distributors Association,

Pharmaceutical Society of New South Wales,

Retail Traders Association of New South Wales.

Sydney and Suburban Timber Merchants Association,

Sydney Woolselling Brokers Association, Wire and Wire Netting Association,

Wine and Spirit Association of New South Wales,

Wholesale Grocers Association of New South Wales, the following resolution was unanimously carried : -

This meeting strongly supports the present proposal of the Federal Government to have one taxing authority for the Commonwealth for the duration of the war and one year thereafter, recognizing as it does the great benefit it will bestow on the business community not only in the simplification of its taxation returns, but in the saving of man-power both to the Government and the taxpayers in this time of great national crisis.

A copy of this resolution has already been forwarded to the Prime Minister and the meeting also decided that a copy should be sent to you.

It was felt that you should know that the organizations represented fully supported the principle of one taxing authority for Australia.

When a collection of organizations such as that is found supporting this legislation, one looks for a motive behind the opposition to it which has been voiced in this chamber. The motive of Senator McBride is not that of the Graziers Association of New South Wales, which stands behind that letter, nor is it that of the Graziers Association of South Australia, which is associated with the Adelaide Steamship Company, which in turn is interlocked with the coal-mines and other mining institutions and metal concerns in New South Wales, because those organizations favour this legislation. I suspect that we shall find it in the international financial bloc, with Australian head-quarters in Melbourne. That international bloc is directed from Switzerland, which is a neutral country. It represents German interests, as well as interests controlled by the Bank of England, with which Mr. Montagu Norman is so closely associated.

Some honorable senators opposite have advocated the imposition of taxes on incomes in the lower groups. Statistics show that 70 per cent. of the people of Australia have incomes below £300 a year. Under the uniform income tax proposals, a person without dependants, who has a taxable income of £300 a year, will pay £31.5 in taxes. At present, if living in New South Wales, he pays £35.1. Should he live in Victoria, his tax would be £31.6. A taxpayer, with a dependent wife, who has a taxable income of £300, would, if living in New South Wales, pay £24.7 in taxes. If living in Victoria or South Australia, his payment to the Treasury for income tax would be £21.5 and £29.3, respectively. A taxpayer with a similar income, but who has a wife and one child, will pay £13.1 under the uniform income tax proposals, compared with a present payment of £15.3 if he be a resident of New South Wales. The respective figures for Victoria and South Australia are £12 and £18.5. Should a taxpayer with a taxable income of £300 a year have a wife and two children, the payment under these uniform income taxation proposals will be £10, compared with £10.8 and £9.4, respectively, now paid by him according to whether he is a resident of New South Wales or Victoria. The Commonwealth Statistician’s figures show that the average family in Australia consists of less than two children. In my opinion, Senator Spicer’s speech to-day was the most hollow one that I have heard from him. Statistics presented to this Parliament by the Treasurer (Mr. Chifley) prove the incorrectness of the honorable senator’s assertions. The Leader of the Opposition referred to the Government’s proposal as camouflage and political trickery, but he did not adduce any arguments in support of his charge. The legal aspect of the Government’s proposals has been discussed. I have had some legal training. So did Sir Isaac Isaacs, “ Toby “ Barton, and others who were prominent in the early days of federation. In an attempt to belittle the Treasurer, and to support the plea that these proposals are so much camouflage and trickery, honorable senators opposite tried to show a lack of uniformity in these proposals. In considering them, the marital condition of taxpayers should be taken into account. Of the people who pay taxes, 60 per cent, are married and 40 per cent, single. Of the former group, about 40 per cent, have only one child. Medical men say that children require certain food. Those requirements are based on the calorific value of such food. The same medical men say that a man doing hard work needs 3,400 calories, whereas a man in a sedentary occupation requires only 3,000 calories daily. Soldiers and others doing strenuous work require up to 3,800 calories a day. Where is this food to come from? If girls receiving £3 a week are to be taxed, they will have little money left with which to buy necessary clothing, pay travelling expenses to and from work, and meet their other needs. I disagree with any proposal to take so much out of their pockets each week in taxes; too little would remain for their needs. Preference has been made during this debate to the child endowment scheme of New South Wales. Since the passing of Commonwealth legislation providing for child endowment, the Commonwealth Government is the authority which deals with this matter throughout Australia. Some honorable senators opposite complain that, in calculating the amount of compensation to be paid to New South Wales, the special committee made no allowance whatever for the fact that New South Wales has been relieved of an annual expenditure of £1,337,000 in respect of its State child endowment scheme, which was superseded by the Commonwealth scheme. However, they omitted to mention that these amounts of compensation to the States may be increased, or decreased from time to time. It is a reflection upon this chamber thai we are obliged to stay here until the early hours of the morning to debate proposals which are obviously designed to benefit our people, as a whole and to improve our war effort. Many honorable senators opposite are strongly opposed to these measures. The reaction to the Government’s proposal outside of Parliament has not been unfavorable. The contrary is disclosed in the following report of sales on the stock exchange from to-day’s Sydney Morning Herald : -

Sales lists on the Sydney Stock Exchange yesterday were longer, than usual for present day trading.

Commonwealth bonds were lively at firm prices. Industrial shares generally had a stronger tone.

Opening business was a little brighter, but it was in. the afternoon that spread of buying interest became denned. A rather strange feature of trading was that no transactions were effected -in the classified sections in the morning. Even in the afternoon business in these sections was restricted. This was often because of the lack of sellers.

The price index of industrial shares rose by nearly half a point, resulting in further payment of the index for representative ordinary shares.

No guide to a market trend was given by the ‘key shares because of irregularity of movement in the group. Colonial sugar stood out with a gain of 15s. to £42 10s. Last month these shares, on an ex-dividend basis, rose from £39 7s. fid. to £41 15s. British tobacco was slightly firmer. Broken Hill Proprietary held steady, and Australian Consolidated Industrie* and Electrolytic Zinc, new, were shaded.

Senator Spicer strongly opposed this legislation on constitutional grounds. He did not tell us that for many years certain classes of wealthy companies in the State which he represents have escaped their fair share of tax. He also failed to point out that the State governments may continue to levy taxes, other than income tax, and that many avenues are open to them to increase their revenue from those sources. The Victorian Government, for instance, could justly demand a much greater contribution to its revenue from wealthy sporting bodies in that State. Under

Victoria’s system of taxation the wealthier taxpayers paid considerably less tax in proportion to income than persons with incomes in the lower ranges. The wealthy section of the community is invariably enabled to obtain advantages which are denied to the poorer sections. For instance, wealthy people did not go empty handed in the recent rush to buy clothing in the capital cities following the Government’s announcement of its intention to ration clothing. In most cases they were able to reserve the articles they desired to purchase merely by telephoning the big emporiums with which they had accounts. Further, they were not obliged to accept the shoddy material that was passed on to the workers. Senator Spicer urged that incomes of £3 a week should be taxed. That would be most unfair at a time when the lounges of the leading hotels in the capital cities are filled at all hours with well-to-do individuals who draw big incomes in the form of interest on investments in war industries. I cannot understand why the Senate is not prepared to pass these measures on the voices. I strongly support the principle of unification, and sincerely hope that before the war is over many more sections of our people, like those represented by the associations I have cited, who could not possibly be considered to be supporters of Labour, will swing in behind the movement to apply that principle to a still greater degree in our legislation. I also sincerely trust that we shall gradually improve our financial system. The Royal Commission on Monetary and Banking Systems declared that it was possible for the Commonwealth Bank to lend money free of interest to the Commonwealth Government. I can see no reason why we should not scrap our present financial system, and like the people of Russia, whom we hail as our saviours to-day, start completely afresh. Nazi Germany, or Fascist Italy, did not bother about uniform taxation. Despite any provision contained in these measures, the Commonwealth Government has power to levy taxes at the rate of 20s. in the £1 if it so desires. It could levy a tax at a rate of, say, 18s. in the £1, with the result that the States would be practically unable to obtain any revenue whatever. Much has been said about legal luminaries who discussed the constitutionality of these measures. Like Diogenes, they are looking for honest men to show them the light. I firmly believe that members of this Parliament who have opposed this legislation would be decisively defeated were general elections held in the immediate future.

Senator FRASER:
Minister for External Territories · Western Australia · ALP

Senator Collett stated that both Houses of the Parliament of Western Australia carried a resolution expressing opposition to these proposals. I contend that that decision in no way expressed the opinion of the people of that State, but simply the fear of that Parliament as to what might befall State revenues as the result of the passage of this legislation. State Parliaments have no authority from the’ people to declare that the Commonwealth Government is doing something detrimental to the interests of the nation in introducing this legislation. Those who are charged with the task of financing this war, and conducting the defence of this country, are best able to judge whether this legislation is necessary. When federation was established 42 years ago, Western Australia was reluctant to join the other States, but ultimately it consented to enter the federation. The Constitution has been more or less a plaything of the Senate in this debate, and it has been used as a means to cloud the real issue. Senator Spicer admitted that there were differences of opinion between eminent lawyers as to whether this legislation was ultra vires the Constitution. I think it goes without saying that the Government would not have introduced the legislation if it doubted its validity. It is interesting to note, however, that on almost every occasion on which legislation of the Commonwealth Parliament has been challenged on constitutional grounds the action of Parliament has been upheld. An honorable senator mentioned by interjection the James case, but I would point out that the validity of the law was upheld by the Privy Council to which the case had been sent on appeal from the High Court of Australia. Legal members in the House of Representatives have disagreed as to whether this legislation is constitutional. Therefore, there appears to he a doubt as to the constitutionality of the legislation. The action of the Government in introducing these measures has roused opposition in South Australia, because the effect of uniform income tax will increase the rate of tax on higher incomes in that State and relieve from payment of income tax persons in receipt of low incomes. The Leader of the Opposition (Senator McLeay) and Senator McBride pointed out that the Government of which they were members attempted to introduce a scheme of compulsory loans, but they did not emphasize that that scheme would have applied to low wage-earners. In South Australia, the rate of income tax imposed on incomes up to £250 a year is double the rate of tax imposed in any other State. The effect of the uniform income tax system proposed by the Government will increase the rate of tax on the higher incomes in South Australia to the level of corresponding incomes in the other States, and that is why honorable senators representing South Australia are trying to defeat the legislation. It is true that the industries of South Australia have been built up, in the main, by the expenditure of Commonwealth loan money. An enormous amount of loan money has been spent in that State on defence establishments, and the Commonwealth must provide the interest on that expenditure. The Commonwealth is spending more than £300,000,000 a year on the prosecution of the war, and it cannot permit a continuance of such high expenditure in South Australia. Honorable senators should discuss the Government’s measures on their merits. They should not oppose the measures because one result will be to increase the rate of tax on high incomes in South Australia and relieve from payment of tax persons in receipt of low incomes. A member of the party to which the Leader of the Opposition belongs stated in the House of Representatives that the leakage of Commonwealth money being spent iti South Australia and Victoria could not be tolerated much longer.

Senator Spicer:

– The Commonwealth taxes the money that the honorable senator describes as a leakage.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– I agree that the Commonwealth taxes it, but not to the extent that the State Parliament taxes it. Honorable senators will recall that Western Australia decided at a referendum to secede from the federation.

Senator E B JOHNSTON:

– By a two to one majority.

Senator FRASER:

– It is interesting, too, to recall that soon after the referendum the Premier who was responsible for submitting the question of secession to the people lost his seat in the State Parliament which he had held for the Country party for 25 years. If the people of Western Australia displayed the same energy in demanding from the Commonwealth Government the protection and concessions to which they are entitled, and which were- promised to them when federation was established, as they did when they attempted to secede from federation, the progress of that State would have been more advanced than it is at present. It is true that this legislation has been introduced as a wartime measure, but if the State Parliaments remain - I do not believe in the whittling away of their powers - they will probably realize its value. If we are to have unification, let us obtain it in the proper manner.

Senator SPICER:

– Why not do it now!

Senator FRASER:

– The Premier of Western Australia is concerned about the effect of this legislation upon State’ taxation. Such fears are understandable when one remembers that the system of deductions and allowances, which was built up in Western Australia over a period of many years, disappeared at the hands of an anti-Labour government. After a long time, Labour administrations succeeded in having those concessions restored, and now there seems to be a fear that that good work will be undone.

Senator Cooper referred to equality of sacrifice, but equality of sacrifice is not achieved by taking 2s. or 3s. out of the wages of typists who receive £3 a week. What is really important is the amount that a wage-earner has left after his tax is paid. That is the real test Equality of sacrifice is not achieved by leaving some income-earners with £3,000 or £4,000 a year and imposing a heavy taxation upon incomes of £200 a year or less, as is done in South Australia. Apparently, that is the principle which the Opposition supports. Such a proposal will not be countenanced by this Government.

It has been claimed by Senator Sampson that the Labour party has only itself to blame for the present defence position, ‘but apart from the short term in which the Scullin Government was in office, the political parties represented by honorable senators opposite had an opportunity extending oyer many years to build up the defences of this country. Therefore, it ill-becomes Senator Sampson to endeavour to throw upon the present Government the responsibility for whatever shortcomings may exist to-day. As has been pointed out by my colleagues, at two successive Commonwealth elections, the present Prime Minister (Mr. Curtin) tressed the necessity to build up a strong air force, and it cannot be denied that had that policy been adopted, Australia would be in a much better position to defend itself than it is to-day. I repeat that unification should be brought about by a decision of the people, but surely no one will suggest that, because there is a difference of opinion in regard to the legality of these measures, a referendum should be held. This legislation will operate only for the duration of the war and for twelve months thereafter.

Senator McBride:

– That does not make it valid.

Senator FRASER:

– I do not say that it does, but that provision is conclusive proof that the legislation is being introduced as a war measure. If it is to continue, it will have to be re-enacted upon the expiry of that term, and I predict that it will be re-enacted . regardless of what government is in office. I am convinced that, if a referendum were taken, a vast majority of the people would favour a scheme such as this. Also, I predict that there will be many other constitutional changes after the war.

Senator Collett:

– They are overdue now.

Senator FRASER:

– I agree with the honorable senator. I supported the referendum to give the Commonwealth greater marketing powers and it is generally admitted that, had that referen dum been carried, the Commonwealth Government would have been in a far better position than it is to-day. As a matter of fact, there is hardly a. problem of government to-day which does not. relate directly to the Constitution. I supported the referendum for increased marketing powers because I was not propared to be a dog in the manger just because the State which I represent could not persuade the Commonwealth to incorporate the question of greater indus trial powers in the questions submitted to the people. I shall have no qualms in facing the electors of Western Australia and giving them my reasons for supporting this legislation. I am confident that the scheme will stand the test of time and will become a permanent feature of our legislation.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– in reply - .When one realizes that there have been 27 speakers on this bill, it can be appreciated that the subject has been well debated. The discussion has been mainly on the legality of these proposals. I assure the Senate that the Government took every precaution to ensure that the measures were constitutional. I emphasize that, on matters such as this, it is virtually impossible to get unanimity of opinion amongst legal minds. Senator Spicer himself admitted that when a similar case was taken to the Privy Council no decision could be obtained. If urgent legislation is to be held up merely because some doubts are expressed by legal luminaries such as the right honorable member for Kooyong (Mr. Menzies), the right honorable member for Barton (Dr. Evatt) when a member of the High Court Bench, or Senator Spicer, who, after all, are expressing only their own opinions, it will be a sorry state of affairs. I have no faith in any of them because I saw evidence of their inconsistency in proceedings in which I appeared over a number of years. Senator J. B. Hayes suggested that this legislation should be submitted to the High Court, but an experiment of that kind was made in 1920 in the case of the Judiciary re and v. the Navigation Act, and the High Court declared the procedure to be invalid. I do not wish to discuss at length the legality of these measures, but as Minister in charge of this bill, I say that if the High Court is to be permitted to interfere with the considered decisions of the elected representatives of the people in this Parliament, the position will have to be reviewed. A bench of five men should not be permitted to dominate the Commonwealth Parli.ment. Such a position arose in the United States of America and honorable senators know what happened there.

Comment was made in regard to the number of officers whose services would be made available for other duties with the introduction of a uniform income tax scheme. The Government still contends that the special committee’s estimate of 1,000 is a reasonable one. A detailed survey of this matter cannot be made until a single taxing authority is established, but from information which it has received the Government expects that the saving of staff expected by the committee will be substantially realized.

There has also been considerable argument in regard to the Treasurer’s statement that an additional £12,000,000 or £15,000,000 will be obtained under the uniform income tax scheme. The explanation is that the higher earnings of the people will be responsible for that increase. That matter was clearly explained to the Senate by one or two speakers on the Government side of the chamber. Senator Brand, Senator Spicer and Senator Leckie referred to requests received from the Victorian Public Service Association.

Senator SPICER:

– And a number of other organizations also.

Senator KEANE:

– That is true. A number of requests were submitted which are largely covered by clauses 4, 5 and 6 of the bill. The first request was that all officers, permanent and temporary, of the State taxation departments, serving with the armed forces, be transferred to the Commonwealth. The reason given for the request was to protect the promotion rights of officers. Advice received from the Attorney-General’s Department is to the effect that such an amendment would bring the validity of the bill into question. The rights which any permanent State officer who is at present serving in the armed forces, would have in regard to promotion in the State service will not be affected. Promotion of transferred officers in the Commonwealth service will be temporary only. An assurance is given that the bill in its present form will permit the taking over of any officer who was previously on the staff of a State taxation department, and who, subsequent to the commencement of this legislation, is discharged from the forces. The Government will use every endeavour to collaborate with the States to ensure that the interests of officers serving with the armed forces are not jeopardized. The second request reads -

That an officer of the State service shall be eligible to he transferred or promoted to the Taxation Office while it is under Commonwealth control in all respects, as if he were * transferred officer within the meaning of the act.

It is not necessary to amend the law to give to officers of the State service eligibility for transfer or promotion to the taxation office of a State, but those transfers or promotions could not, of course, be put into actual effect while the staff was temporarily transferred to the Commonwealth. Since the bill provides only for the temporary transfer of officers connected with the assessment or collection of taxes upon incomes, a transferred officer not so connected, would be outside the scope of the bill. It would be subject to the same constitutional objections as the first request. The relative positions of officers of the State service not transferred, and transferred officers, would be consistent. If a transferred officer were promoted to a State department, other than the Taxation Department, he would not be permitted to take up actual duty in the position to which he was promoted while a transferred officer. The third request reads -

That all officers who at the time of th« commencement of the act were engaged, on income tax duties and who became redundant because of non-transfer to the Commonwealth, be compensated if they are not absorbed by the State, the compensation to follow the line, of the Income Tax Collection Act 1923.

The present proposals are not comparable with the circumstances which arose in 1923 when an arrangement for all practical purposes of a permanent nature was entered into for the collection of State and Federal income taxes by one authority in each State. The present proposals are temporary only - for the duration of the war - and it seems inconceivable, in the light of existing staff shortages, that the State will not absorb any officers not temporarily transferred to the Commonwealth. If the State does not absorb its excess officers, the matter of compensation appears to be one to which it should give every consideration. The fourth request reads -

It should be made clear that while a transferred officer is still serving in the Commonwealth Public Service, that length of service should be regarded as service with the State for the purpose of any rights which accrue to him by virtue of length of service.

Sub-clause 2 of clause 5 of the bill is designed to safeguard the rights of an officer after re-transfer to a State, and to ensure that his service as a temporary officer with the Commonwealth shall be taken into account. With regard to any rights which may accrue to the officer while serving as a temporary officer with the Commonwealth, those rights can be protected by regulation. It is not clear what rights it is sought to cover, but if, for instance, the association has in mind the matter of extended leave or furlough, an assurance is given that this will be provided for. The fifth request was -

That a transferred officer shall not be deprived in any respect of any rights, privileges, or advantages, present, accruing or prospective, appertaining to bis employment, office or position in the State service which be possessed immediately prior to his transfer.

The objects of the provision in the bill covering this matter are -

  1. To ensure that transferred officers who enlist for active service will continue to have the difference between their civil and military pay made up in accordance with the conditions existing in their respective States.

    1. To enable the transferred officers to retain State conditions where they are favorable as well as State remuneration where it is favorable.

Both of these matters are proper subjects for consideration in the formulation of the prescribed conditions of employment, referred to in sub-clause 1 of clause f> of the bill.

An indication is given that the proposal that transferred officers who enlist for active service while with the Commonwealth will have the difference between their civil and military pay made up in accordance with the conditions existing in their respective States, will be considered. The proposal that officers’ State conditions should be preserved while serving in the Commonwealth should, it is thought, be refused, since Commonwealth conditions of remuneration will no doubt be adopted. In some States the hours of duty and the number of days worked weekly are less than those worked by Commonwealth officers. The sixth request reads -

That the organization to which the transferred officer belongs at the time of transfer shall have the same right of access and the same privileges which exist at present for organizations registered under the Arbitration Public Service Act 1911-1029.

This is a matter which it would be appropriate to deal with in the regulations to be made under sub-clause 1 of clause 6 of the bill prescribing terms and conditions of employment of transferred officers. The proposal will be favorably considered. The seventh request is as follows : -

That provision should be made to meet the case of ex-Commonwealth officers now with the State who are entitled to retire under the law of the Commonwealth.

As the agreements from which the exCommonwealth officers derive the right to retire in accordance with Commonwealth Public Service conditions are merely suspended, and will come into force again when the measure under discussion ceases one year after the end of the war, no rights are taken away. However, it may be necessary to consider the effect upon Commonwealth officers who reach the retiring age during the currency of the suspension of the agreement. The Commonwealth could give an assurance that whatever steps were necessary to protect the rights which exCommonwealth officers derive under the agreements would be taken to preserve those rights during the period of the suspension of the agreements. The eighth request was -

That provision should be made for the nonsuspension of agreements so far as officers who were transferred to the States from the Commonwealth but who are now not transferred officers.

It is considered that it would not be practicable to suspend portion of the agreements, but the objective sought in this request can be achieved in the regulations, and an assurance is given that it will be done.

I appreciate the general tone of this debate, which was of an informative nature. The main point at issue is the doubt as to the legality of the proposals of the Government, and as to whether a fair deal will be given to all of the States. The suggested payments to the States show that taxpayers in all of the States, except Victoria, decidedly benefit as a result of the measures. A perusal of the proposals shows that an honest effort has been made to bring about a uniform system of income taxation. Taxpayers in South Australia will experience considerable gain. Those in receipt of incomes amounting to £200 and who have been paying £18 4s. in tax, will pay under this scheme £7 18s. Those who have been paying £47 10s. on incomes of £300 will now pay £31 10s., and on salaries of £6,000 the tax imposed will represent a saving to the taxpayer of £66. This shows that an effort has been made to make the taxes uniform. Taxpayers in Victoria, where low income taxes have been imposed, will suffer a loss. Without wishing to disparage the State of Victoria, in which I have lived all my life, I admit that, owing to economical governmental management, certain social services have not been received by the people of that State. I admit that the Labour party, Because of its alliance with the Country party, has helped to keep the present Government in office in that State, but, if the Labour party held every seat in the Legislative Assembly of Victoria, it could not get one bill passed through the State Parliament, because of the hostile Legislative Council in which Labour has only six members.

Senator SPICER:

– The Government is making it impossible by this legislation.

Senator KEANE:

– I am not concerned with the fate of the States. The retention, after 42 years of federation, of thirteen legislative chambers in Australia is an outrage. Senator Sampson seems to be under the impression that, if unification were introduced, the States would suffer as a result of it. The honorable senator knows that the elimination of State Parliaments would mean greater representation in the House of

Representatives and in the Senate, together with the establishment of State provincial councils which would attend to some of the detailed work which the Parliaments of the States are now doing. The corollary of federation was to have been one people and. one Parliament. I remember when the vote was taken to determine whether the federal union should be consummated, and I recall clearly that the average man and woman . believed in 1901 that the establishment of the Commonwealth Parliament would result in the gradual elimination of the Parliaments of the States. That was the propaganda published in the Melbourne newspapers at the time.

Senator Sampson:

– The Constitution itself is the reply to that.

Senator KEANE:

– All of us are agreed that, after the war, a review of the Constitution should be made, more particularly with a view to granting increased industrial powers to the Commonwealth. It may be news to some honorable senators when I inform them that similar legislation to that now proposed is in force in Canada, although similar objection to that raised in this chamber was taken in Canada. The fact that the preamble of the bill has been criticized does not deter the Government from proceeding with the measure. I admit that the preamble is an elaborate one, but, when analysed, it is seen to be sound. The main reason for- the introduction of this bill is known to all honorable senators. At the conference of Commonwealth and State Ministers, held on the 22nd April last, the Prime Minister (Mr. Curtin), said - “ If the States would accept the principle of one taxing authority I should say: ‘Let us get down to tin tacks and see what we can do ‘. But the States have rejected it. proclaiming it to be an invasion of the .sovereignty of the States and said that it took the heart out of State governmental structure. The States do not give us any hope of doing other than going to the Commonwealth Parliament a,nd saying: ‘Gentlemen, yours is the responsibility for making the requisite financial provision for the conduct of the war; here are the proposals which the Government lias formulated “The -proposal which the Commonwealth Government has placed before this conference is that the States shall suspend the right to impose income tax for the duration of the war and twelve months thereafter, and that the Commonwealth will pay to the States for that period the amount that they broadly received in the two years during which the States’ affairs were examined, so that a fair figure could be secured. What every body leaves out of account is that, as the resultof the increased Commonwealth expenditure on the war by £120,000,000, comparing the year 1940-41 with 1939-40, there has been a great increase of the taxable capacity of the country. The proposal of the Commonwealth is that the States shall not share that increase, which will be made available to the Commonwealth Government for the prosecution of the war. “ The Commonwealth has to cope with many commercial shipping and transport problems, not only external, but also internal. There has been a tremendous increase of army expenditure for transport, some of which is not wholly related to the movement of troops, because of the deficiencies of therailway systems compelling us to use roads and provide trucks. All that goes into the war cost. I put it to you, without any political ideas whatsoever, as a cold and, I believe, a rational way to look at the problems of this nation. That is as much your concern and your interest as it is mine or that of my colleagues. “The fact is that this nation has not expended enough money on preparations for war, with the result that we now have to improvise, which is always more costly than a carefully considered plan. I do not know how the States will be able to look electors and parliaments in the face and say : ‘ We have rejected this principle of uniform taxation because it strikes at the sovereignty of the States ‘. The sovereignty of the nation calls for a reform of this nature during wartime for the purpose of conducting the financial obligations of the national government rationally.

That sets out clearly the main reasons for the introduction of this legislation. Honorable senators know that whenever a conference with the States takes place, obstacles are raised to the proposals of the Commonwealth. As an instance of what happens when attempts are made to secure the co-operation of the State, I mention that last November the ports of Melbourne, Sydney and Adelaide were congested with shipping. In the port of Melbourne there were 63 ships. The Government decided to issue certain regulations relating to the handling of cargo, but immediately the harbour authorities became frantic. They forgot that this Parliament had made available £214,000 to meet harbour charges in Sydney and Melbourne, and that, later, an additional £1,000 was paid to the Melbourne harbour authorities. The Premiers of South Australia, New South “Wales and Victoria communicated with the Prime Minister and practically held up opera tions. That is an example of the way in which the States act when the Commonwealth tries to help them.

The second reading of the bill has been fully discussed, and although I have not answered all the points which were raised during the debate I shall, if necessary, do so in committee.

Question put -

That the bill be now read a second time.

The Senate divided. (THE President - Senator the Hon. j. Cunningham:.)

AYES: 20

NOES: 12

Majority . . . . 8

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 12 agreed to.

Clause 13-

Provided that any persons authorized by the Treasurer of a State shall, at all reasonable times have access to any such returns which relate to the assessment or collection of any tax imposed upon incomes by or under any law of that State.

Amendment (by Senator McLeay) agreed to -

That the words “ any such returns “ be left out, with a view to insert in lieu thereof the words “, and may make and take away copies of, any such returns and records “.

Clause, as amended, agreed to.

Clauses 14 to 16 agreed to.

Preamble and Title agreed to.

Bill reported with an amendment; report adopted.

Bill read a third time.

page 1992

STATES GRANTS (INCOME TAX REIMBURSEMENT) BILL 1942

Second Reading

Debate resumed from the 2nd June (vide page 1814), on motion by Senator Keane -

That the bill be now read a second time.

Senator McLEAY:
Leader of the Opposition · South Australia

– I do not propose to debate these cognate taxation measures. I take this opportunity to indicate that, in the committee stage, Senator McBride will move that the amount of compensation proposed to be paid to New South “Wales be reduced by £1,630,000.

Question resolved in the affirmative.

Bill read a second time.

In committee: ‘Clauses 1 to 8 agreed to.

The schedule -

Senator McBRIDE:
South Australia

– I move -

That the words and figures “ New South Wales, £15,356,000 “ be left out with a view to insert in lieu thereof the words and figures “New South Wales, £13,726,000.”

On the information available to us, it appears that the Government has not taken into consideration the relief which has been aff orded the Government of New South Wales in respect of social services which have already been taken over by the Commonwealth Government and other services which will be taken over by the Commonwealth as from the 1st July next. In the financial years 1939-40 and 1940-41, the cost of the State child endowment scheme to the Government of New South Wales was £1,337.020 and £1.337,489 respectively, and the cost of widows’ pensions to that Government in 1939-40 and 1940-41 was £630,721 and £609,037 respectively. The State will also be saved a considerable sum in respect of the cost of administration of those schemes. The total cost to the State Government in respect of both those services in the years 1939-40 and 1940-41 was £2,0S0,000 and £2,032,000 respectively, or an average expenditure for the two years of £2,056,000. The special committee recognized that relief had been given to the States in respect of that expenditure, and it recommended to the Government, which accepted the recommendation, that an amount of £427,000 be deducted from the amount of compensation to be paid to New South Wales. However, no explanation has been given - and, so far as I know, there is no explanation available - as to why the balance of the expenditure of which the State has been relieved has not been deducted from the amount of its compensation. I also draw attention to the fact that, as the result of Commonwealth war expenditure in New South Wales, the State Government has been relieved of considerable expenditure in respect of other social services. Is 1939-40, the State unemployment relief tax yielded £5,588,696, and in 1940-41, £6,341,836. In the former year, an amount of £2,200,000 was expended from that revenue for works undertaken to afford relief for the unemployed, £370,000 for food relief, £100,000 for clothing, and £603,000 on relief work provided by the Sydney Water Board. I am informed that in that year £5,819,000 was expended in the provision of relief for the unemployed. It must be admitted that the unemployed problem has now practically ceased to exist in New South Wales. 1 admit that it is difficult to ascertain exactly the amount of relief afforded to the State in this respect, and, consequently, I do not include any amount in respect of that item in the sum by which I propose the amount of compensation to be paid to that State under this measure be reduced. However, for the reasons I have given, we are justified in asking the Government to reduce the amount of compensation to New South Wales by £1,630,000.

Senator FOLL:
Queensland

– I merely rise to say that, if the position be as Senator McBride has explained it, namely, that New South Wales has virtually been credited twice in respect of its expenditure on child endowment and widows’ pensions, I propose to vote for the amendment, but not otherwise.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– The amendment moved by Senator McBride proposes to reduce the grant to New South Wales by £1,630,000. That reduction, I understand, is made up of £1,337,000, which the State has been saved in respect of child endowment. The balance is made up of the excess cost of widows’ pensions over the amount of £427,000 already actually deducted. New South Wales will not be relieved of the whole cost of widows’ pensions, because that State provides 10s. a week for each dependent child, whereas the Commonwealth scheme provides for only 5s. a week for the first dependent child. The estimated saving to New South Wales through the Commonwealth scheme is £427,000. The amendment moved by the Opposition should refer only tothe £1,337,000 in respect of child endowment. Regarding that amount, I would observe that the compensation payable under the bill is based on average collections of State taxes on income during the years 1939-40 and 1940-41, less deductions, as under: -

During the two years mentioned the amount paid from revenue on account of family endowment, together with the deficits experienced on revenue, were as follows : -

From this it will be seen that the State revenues were insufficient in either year to finance cost of any part of family endowment at all. The effect, therefore, of relieving the State of family endowment in those years would have been merely to reduce the deficits, but not to extinguish them. From the 1st July, 1941, State revenues are charged with the pay roll tax amounting in 1941-42 to £260,000 for governmental services, and a further £400,090 for the business undertakings included in the revenue budget. It will be seen, therefore, that the net gain to the State budget as a result of the Commonwealth child endowment scheme is £677,000, not £1,337,000. The saving of £677,000 in itself does not go far towards extinguishing the deficits totalling £3,916,431, experienced in 1939-40 and 1940-41, when the State was responsible for child endowment.

The special committee did not recommend that the compensation payable to New South Wales should be reduced by the amount of £1,300,000 for the following reasons : -

  1. Although compensation was based on the years 1939-40 and 1940-41, it is necessary that the compensation payable should not upset existing financial arrangements in the States.
  2. The compensation payable is £1,009,000 less than the revenue from income taxes budgeted for by New South Wales in the current year.
  3. In the two years on which compensation is based, New South Wales paid child endowment of £1,300,000, but had an average deficit of £2,000,000.
Senator Foll:

– I suggest that the figure that is the subject of the amendment is not correct. It should be £1,307,000. Would the Minister accept an amendment including that amount ?

Senator KEANE:

– I will not accept any amendment.

Senator McBRIDE:
South Australia

– I regard the Minister’s explanation as unsatisfactory. In the financial years 1939-40 and 1940-41 the New South Wales Government collected £4,000,000 more in income tax than had been collected in the previous two years.

Although the Government is appealing to citizens to economize, it is prepared to accept a basis for the payment of compensation which is altogether unfair to the other States. Under the present proposal of the Government, New South Wales will get a little each way. The New South Wales widows’ pension scheme made provision for the payment of a pension of £1 a week to a widow and 10s. a week for the first child. The Commonwealth pension scheme, which will operate from the 1st July next, provides a pension of 25s. a week for a widow and 5s. a week for the first child, any other children being covered by the Commonwealth child endowment scheme. The Government of New South Wales wants to subsidize the Commonwealth payment of 5s. for the first child by the payment of another 5s., making the weekly payment for a child 10s. a week. I consider that my amendment is fair and treasonable.

Senator FOLL:
Queensland

– The Minister practically admitted that it would be a fair amendment if the intention was to reduce compensation to the State of New South Wales by £1,337,000, the sum which the Government of that State is not now called upon to pay annually for child endowment. I understand that the New South Wales Government has entered into an agreement with the Commonwealth Government that will bring that State into line with the other States in relation to widows’ pensions.

Senator McLeay:

– That is not the case. The Government of New South Wales wants the widows’ pension rate in relation to the first child increased to 10s. by a subsidy of 5s. a week to be paid by that Government. In that event widows in New South Wales would receive 10s. a week for the first child, but the payment in respect of the first child in the other States would be 5s. a week.

Senator FOLL:

– There is no reason why the Commonwealth should be expected to pay to one State in respect of widows’ pensions a higher rate of pension than is paid in the other States. I have been informed that the Government of New South Wales has decided to come into line with the other State governments in relation to widows’ pensions. I think that the Minister is unreasonable in asking for special consideration for one State because the whole basis of this legislation should be uniformity. I suggest that the Minister, should reconsider the matter.

Senator E B JOHNSTON:
Western Australia

, - I have a copy of a statement that was distributed by the Government a few days ago relating to the uniform income taxation scheme, and I should like to be informed by the Government whether the figures contained in it are correct. I shall read the statement -

Under the uniform scheme the total collection of income tax in Queensland will be £16,504,000. Of that amount £5,932,000 will he paid to the State Government in compensation. The net contribution to the Commonwealth will therefore be £10,522,000 or £10 6s. 8d. a head. The net contribution to the Commonwealth in all States will be as follows: -

It will be seen that Queensland’s contribution 13 the lowest per head.

The total income tax collections from each State and the compensation to each State are as follows : -

I understand that the information set out in that statement was prepared by Professor Mills, the chairman of the Commonwealth Grants Commission, who acted as chairman of the special committee. Although Western Australia has a much larger area to develop than has South Australia, the grants that that State has received on the allocation by the Commonwealth Grants Commission, have exceeded those granted to Western Australia. In 1938-39 South Australia received £1,044,000 and Western Australia, £570,000; in 1939-40 South Australia obtained £995,000 and Western Australia, £595,000; and in 1940-41 South Australia was paid £1,000,000 and Western Australia received only £650,000. I have never been able to obtain the reason why South Australia has been so well treated as compared with Western Australia.

Senator McBride:

– The honorable member for Robertson (Mr. Spooner) was also a member of the special committee to which the honorable senator referred.

Senator E B JOHNSTON:

- Mr. Spooner is a resident of New South Wales, as is also Professor Mills. The other member was theright honorable member for Yarra (Mr. Scullin). I think that Professor Mills would give the States a fair deal. When it was announced that the report of the special committee had been circulated, I went to Mr. Scullin to obtain a copy of it. I knew that he would not be a party to foisting anything unjust upon the people of Australia. I should like to know from the Minister in charge of the bill what the effect of this amendment will be. If we cut down the allocation to New South Wales, are we also to deal similarly with other allocations. This is the ‘first time that Western Australia has ever received a larger Commonwealth grant than South Australia.

Senator E B JOHNSTON:

– I realize that, but Professor Mills is the chairman of both bodies. Apparently, these allocations have been arrived at on a basis which is much more favorable to Western Australia than the basis of previous Commonwealth grants. It seems. therefore, that Western Australia should have had more consideration in the past. I have never seen the Senate so willing and anxious to alter entirely the basis of allocations which were made on similar grounds. The Minister’s explanation was clear and convincing. I do not know why Senator McBride wishes to upset the allocations which treats all States on the same scientific basis.

Senator J B HAYES:
Tasmania

– In the base years 1939-40 and 1940-41, child endowment cost New South Wales about £1,300,000 annually. The Commonwealth Government has now relieved the Government of New South Wales of the responsibility of paying child endowment, and consequently I contend that the grant to New South Wales should be reduced by that amount. I shall support the amendment.

Question put -

That the words and figures proposed to be left out be left out (Senator McBride’s amendment ) .

The committee divided. (The Chairman - Senator G. Brown.)

AYES: 16

NOES: 17

Majority 1

AYES

NOES

Question so resolved in the negative.

Schedule agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 1996

INCOME TAX ASSESSMENT BILL 1942

Second Beading.

Debate resumed from the 2nd June (vide page 1816), on motion by Senator Keane -

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to18 agreed to.

New clause18a.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That, after clause 18, the following new clause be inserted: - “ 18a. Section one hundred and three of the principal act is amended by omitting paragraph (a) of the definition of ‘distributable income ‘ and inserting in its stead the following paragraph: -

all taxes which are paid in the year of income -

under this or the previous act;

under any law of a State or of a Territory being part of the Commonwealth imposing a tax upon incomes, if the taxes have not been allowed or are not allowable as deductions under section seventy-two of this act in any assessment for any financial year; or

in any country out of Australia in respect of income of the company which is taxable under this or the previous act, less any refund received in the year of income of any tax to which this paragraph refers ; and ‘ “.

The amendment to section 72 of the principal act contained in clause 8 of this bill will have the effect of withdrawing the deduction previously allowed for State and territorial income taxes paid during the year of income. Consequently, State and territorial income taxes paid in respect of the financial year 1941-42, during the year ended the 30th June, 1942, will not be allowed as deductions from income derived during that year. The withdrawal of this deduction follows the recommendation of the special committee which considered that with the introduction of a uniform income tax there would be no necessity for such a deduction during the period of the scheme. In fixing the rates of uniform income tax which it recommended, the committee took into account the fact that such a deduction would not be allowed from the income of the year ending the 30th June, 1942. As the non-allowance of State and territorial income taxes as a deduction from assessable income has the effect of increasing the amount upon which tax on the undistributed income of public and private companies is levied, representations have been received from various bodies requesting that State income tax paid for the financial year 1941-42 should be allowed as a deduction for undistributed profits tax and private company tax purposes. These requests are considered reasonable, and it is there- fore proposed, by the amendment that I have moved, to allow, for the purpose of arriving at the distributable income, and, therefore, the undistributed amount of a private company, a deduction of all State and territorial income taxes which have not been allowed as deductions in any assessment for any financial year.

Senator McLEAY:
South AustraliaLeader of the Opposition

-I support the proposed new clause. Under . the New South Wales, act passed last year, any company deriving profits in that State, and paying a dividend wholly or partly from those profits, is required to deduct from the dividend tax on the New South Wales portion of the dividend at the rate of1s. in the £1 for individuals and 3s. 6d. in the £1 for companies. Such tax is then paid by the company to the Commissioner. The effect of this provision is that certain dividends received by shareholders during the year ended the 30th June, 1942. have already borne some New South Wales State income tax, and since the uniform proposals would tax this income at the new combined rate, it would amount to double taxation. The whole cause of the trouble is the action of New South Wales in taxing the dividends as they are paid instead of following the normal course of taxing in the following year. In view of the fact that an assessment bill will be brought down with the budget in August, I mention this matter in the hope that the Minister and his technical advisers will consider it.

Senator Keane:

– It will be examined.

New clause agreed to.

Clauses 19 and 20 agreed to.

Clause 21 -

Section one hundred and twenty-five of the principal act is amended by omitting from sub-section (1.) all the words after the word “ Parliament “ and inserting in their stead the following words and proviso: - “ income tax upon that interest :

Provided that this sub-section shall not apply where the person to whom the interest is paid or credited is not a company and the interest so paid or credited during the year of income does not exceed One hundred and fifty-six pounds.”.

Section proposed to be amended - 125. - (1.) Where interest is paid or credited by a company lo any person who is a non-resident -

on money secured by debentures of the company and used in Australia, or used in acquiring assets for use or disposal in Australia; or

on money lodged at interest in Australia with the company, the company shall be liable, without affecting its liability (if any) in respect of other income tax payable by it, to pay at the rate declared by the Parliament -

i ) where the person to whom the interest is paid or credited is a company - income tax upon that interest; and

where the person to whom the interest is paid or credited is not a company - income tax upon so much of that interest paid or credited in the year of income as exceeds Two hundred pounds.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That all words after “ sub-section ( 1. ) “ be left out, with a view to insert in lieu thereof the words “ the words ‘ Two hundred pounds ‘ and inserting in their stead the words ‘ One hundred and fifty-six pounds ‘ “.

Under the clause as it now stands, a company which pays to a non-resident individual depositor or debenture holder, in the year of income, interest amounting to less than £157, is not liable to pay tax in respect of that interest. But, if it pays interest amounting to £157 or more to any non-resident individual, it is liable to pay tax at the rate of 6s. in the £1 in respect of every pound of such interest. The company is empowered to recoup itself by deducting the tax before paying the interest to the non-resident depositor or debenture holder. As such a provision would create anomalies and impose hardship in some instances, it is proposed that a company shall be liable to pay tax only on so much of any interest paid to a non-resident individual as exceeds £156. The effect of the proposed amendment is that, generally speaking, the amount of tax paid by the company and borne by the individual nonresident in respect of interest so paid will be substantially similar to that payable by a resident taxpayer deriving the same amount of property income. In any case, the act gives the commissioner a right of assessment. The non-resident taxpayer may accordingly be assessed on the actual amount of interest paid to him, and allowed a rebate of the amount of tax paid by the company on that interest.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 22 agreed to.

Clause 23 (Concessional rebates).

Senator ALLAN MacDONALD:
Western Australia

– The deduction allowed in respect of medical expenses should be extended to include dental and optical expenses. Dental treatment is essential in any family, especially where there are children, and neglect of such treatment may have a deleterious effect on the health of the members of a family. A similar remark applies to defects of the eyes,where spectacles have to be provided or treatment given. If a person breaks an arm and goes into hospital for a fortnight, he or she usually suffers no after effects; the medical expenses thus incurred are allowed as a deduction, but through defects of the eyes, a person may become an invalid at an early age. I disagree with the amount proposed as a concessional deduction in respect of the first and only child of £75 and in respect of the second child of only £30. The first child in the family is not the child that involves the parents in the heaviest expense. The ratio should be inverted, and the allowances should be, say, £30 for the first child, £40 for the second, £50 for the third, £60 for the fourth, and £70 for the fifth. It is ridiculous to suggest that, in respect of an only child, the allowance should be £75, and in respect of the second child only £30.

Clause agreed to.

Clauses 24 and 25 agreed to.

Clause 26 -

Section one hundred and sixty c of the principal act is amended -

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That, after thewords “is amended”, the following new paragraphbe inserted.: - “ (aa) by omitting paragraph (i)of subsection (1.) and inserting in its stead the following paragraph: -

all taxes which are paid in the year of income -

under this or the previous

Act;

  1. under any Act passed by the Parliament imposing a wartime tax upon companies;
  2. under any law of a State or of a Territory being part of the Commonwealth imposing a tax upon incomes, if the taxes have not been allowed or are not allowable as deductions under section seventy-two of this Act in any assessment for any financial year; or
  3. in any country out of Australia in respect of income of the company which is taxable under this or the previous Act, less any refund received in the year of income of any tax to which this paragraph refers;’;”.

By clause 8 of the bill it is proposed that the deduction for State and territorial income taxes be withdrawn. This means that State and territorial income taxes paid by taxpayers during the year ended the 30th June, 1942, will not be allowed as deductions from income derived by them during that year. This proposal follows the recommendation of the special committee which, in arriving at its recommendations regarding the rates of uniform tax which it suggested shonld be imposed-, took into consideration the fact that such deductions would not be allowed under a system of uniform income tax. Representations have since been made, however, that State income tax paid in respect of the financial year 1941-42 should be allowed as a deduction from taxable income for the purpose of ascertaining the amount upon which tax on the undistributed income of both public and private companies should be levied. This is considered a reasonable request, and it is proposed, by the amendment I have just moved, that it be acceded to. The effect of the amendment is that State and territorial income taxes which have not been allowed as deductions in any assessment for any financial year will be allowed as deductions from taxable income for the purpose of ascertaining the undistributed income of a public company.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 27 to 31 agreed to.

Title agreed to.

Bill reported with amendments; report adopted.

Bill read a third time.

page 1998

INCOME TAX BILL 1942

Second Reading

Debate resumed from the 2nd June (vide page 1817), on motion by Senator Keane -

That the bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without requests or debate.

page 1998

DAIRY PRODUCE EXPORT CONTROL BILL 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Fraser) read a first time.

Second Reading

Senator FRASER:
Minister for External Territories · “Western Australia · ALP

– I move -

That the bill be now read a second time.

This measure is introduced with the object of including in the Dairy Produce Export Control Act 1924-1938 provisions similar to those contained in other acts which govern the export and overseas marketing of Australian products. An examination of that act has shown that the general powers and functions of the Australian Dairy Produce Board, the body appointed to administer the act, are not clearly defined, although certain functions are clear. The Governor-General, however, is empowered to take certain action for the purpose of enabling the board effectively to control the export and the sale and distribution after export of Australian dairy produce such as butter and cheese, but such powers are limited.

The Dairy Produce Export Control Act 1935 was introduced for the purpose of amending the constitution of the then existing board so as -to extend its functions to include those performed by the Australian Dairy Council, which was a voluntary organization financed by a fee imposed, under the provisions of the Commerce (Export Dairy Produce) Regulations, on butter and cheese exported. That council took an active interest in the dairying industry and rendered financial assistance in certain instances to improve conditions associated with that industry. It was subsequently found that the powers of the Australian Dairy Produce Board were lacking in statutory authority to render assistance to the dairying industry in many directions, such as -

  1. granting assistance in the establishment of State dairy colleges for the training of competent dairy operatives; (6) subsidizing a campaign fund for the advertising of Australian dairy produce; and (c) encouraging improved manufacture by contributing to funds of the Australian Institute of Factory Managers for competition; Tt is desired that the existing legislation should be amended in order that the board may not in any way be restricted in its activities.

Clause 2 gives to the board general powers which it does not at present possess, but which are considered essential for the satisfactory administration of the act. Authority for the payment of expenditure incurred by the board as a result of the general powers outlined is provided for in clause 3 and is in keeping with authority provided for in other export, control acts which relate to dried and canned fruits, meat, wine and fresh apples and pears.

Under existing war-time conditions, the organization of the dairying industry is being carried on with the assistance of a special committee which, however, is making extensive use of the staff and organization of the Australian Dairy Produce Board. For this reason, the Government desires that the statutory position of the board be clarified by the incorporation of these amendments.

Senator McLEAY:
Leader of the Opposition · South Australia

, - Although there has not been much time to study this bill, a short examination of it indicates that it contains nothing of a contentious nature. For that reason, and in order to meet the wishes of the Government to have this legislation passed to-day, the Opposition will not delay its passage.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 1999

RABBIT SKINS EXPORT CHARGES BILL 1942

Bill received from the House of Representatives.

Motion (by Senator Collings) pro: posed -

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

Senator LECKIE:
Victoria

– Will the Leader of the Senate. (Senator Collings) indicate how much longer it is desired that honorable senators shall remain here? Instead of dealing forthwith with further legislation, would it not be better to suspend the sitting for a short period so that honorable senators could have a bath and shave, and partake of breakfast?

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

– I assure the honorable senator that I have not been unmindful of the needs that he has mentioned. This is the last bill with which the Senate will he asked to deal before suspending the sitting.

Question resolved in the affirmative.

Bill (on motion by Senator Fraser) read a first time.

Second Reading:

Senator FRASER:
Minister for External Territories · Western Australia · ALP

.- I move-

That the bill be now read a second time.

This bill is introduced for the purpose of amending the Rabbit Skins Export Charges Act 1940, which imposed a charge on the export of rabbit skins in order to provide funds for the administration of the marketing scheme which it was found necessary to introduce in June, 1940, in order to ensure supplies of skins to Australian hat manufacturers at fixed domestic prices for the production of military and civilian headwear.

Honorable senators may be interested to know how the scheme works. In collaboration with the Prices Commissioner the Australian Rabbit Skins Board, appointed under the National SecurityAct, prepared a list of prices at which the numerous grades of rabbit skins normally used in hat production would be made available to Australian hat manufacturers. At the commencement of each winter buying season - April to September - the board allocates to each hat manufacturer the quantities and grades of skins which he is permitted to purchase month by month under the scheme for his requirements. This phase of the scheme is very closely controlled in order to ensure that hat-makers do not secure an undue advantage. They buy their quotas of skins at open auction, and are paid compensation from the board’s funds to the amount of the difference between the fixed domestic prices and the ruling auction market prices on the day of purchase. The export levy imposed under the Rabbit Skins Export Charges Act provides the funds from which the compensation is paid. This modified control of a difficult industry has. functioned smoothly and efficiently under a small organization, whose overhead expenses are light. For some time the board’s only real embarrassment has been in respect of finance; and is solely due to the extraordinary heights to which rabbit skin prices have risen.

Last year, with heavy exports and with an increase of the fixed domestic prices of skins, the board managed to balance its budget with the export levy at the maximum rate of 9d. per lb. provided in the existing act. This year exports will be lighter, as supplies are not so plentiful. The main reasons for this are two consecutive years of very heavy trapping, seasonal conditions, and depletion of man-power in country districts. Lessened export quantities mean lower collections at the same rate of levy, and on present indications the board has little possibility of obtaining this year from an export levy of 9d. per lb. sufficient revenue to meet its liabilities for compensation payments. Normally, the extra cost might be passed on to the buyers of civilian hats, and I should not regard that as a great hardship in wartime. However, the demands for military hats are such that our factories are not now making civilian hats. Any additional cost of production of military hats would, of course, become a direct charge on Commonwealth funds. Any deficit in the board’s accounts must be made up in one of the following ways : -

  1. By an increase of the rate of export levy;
  2. by increasing the cost of military hats at the Government’s expense; or
  3. by a direct grant from Commonwealth revenue.

In view of the great benefits which this industry has obtained under war conditions, it would be impossible at this stage for the Government to countenance any increase of military hat prices, whilst a direct contribution from Commonwealth revenue is undesirable. The alternative is an increase of the export levy. Any increase of that means a corresponding decrease of market values, and ordinarily I should be very diffident about sponsoring a bill which would have that effect. However, after an examination of all the facts, and with the knowledge that the alternative is to impose an additional burden on Commonwealth revenue, I am convinced that the best way to meet the problem is in the manner proposed in the bill.

The rabbit skins industry has enjoyed greater war-time benefits than any other industry. In the immediate pre-war year - 1938-39 - the value of the Australian rabbit skins catch was under £600,000, whilst last year it was over £4,000,000- an all-time record. The figures speak for themselves. A reasonable increase of the export levy will not affect trapping activities as prices are good.

It may interest honorable senators to know that the Government compulsorily acquired rabbit skins during the last war, and, that the highest price paid to suppliers for the best grades was 20d. per lb. Last week, in the Sydney market the price for similar grades was 123d. per lb., even though skins had not reached top winter quality and an export levy of 9d. per lb. operated. When the legislation was introduced in 1940, it was apparently thought that 9d. per lb. was a reasonable maximum, but the heights which skin prices have since reached have upset calculations. The maximum of 2s. 6d. per lb. now suggested is relatively high, but it is not probable that this rate will have to be reached. The actual rate is regulated by the market prices and the quantities available for export. No attempt is made to provide a surplus in the board’s fund, the aim being to obtain only sufficient revenue from exports to meet compensation payments and cover the working expenses of the scheme.

Senator McLEAY:
South AustraliaLeader of the Opposition

– The Opposition will not oppose this measure.

Senator J B HAYES:
Tasmania

– I should like to know what proportion of the skins is exported and what proportion is sold in Australia? What will be the effect of the loading of 2s. 6d. on the price of skins to the trapper ?

Senator E B JOHNSTON:
Western Australia

– The proposed charge appears to me to be very heavy. There was a time when pioneers were able to make a fair living by getting sandalwood and mallet bark, kangaroo skins and trapping and hunting marsupials generally, while clearing and preparing their land. To-day, however, all sorts of impositions and restrictions are placed upon these activities. In the past a man who went out to build a home in the wilderness was helped very much by the revenue he derived in this way. This policy will discourage the pioneering of new districts, and will act unfairly against settlers in established areas.

Senator Collett:

– It is probably designed to help the war effort.

Senator E B JOHNSTON:

– At any rate I am opposed to this charge. I do not think that we can justify placing extra imposts on rabbit trappers. I take it. that the export charge ultimately comes out of the pocket of the trapper.

Senator Fraser:

– No.

Senator E. B. JOHNSTON.Whether this export charge is paid at the other end or in Australia, I find it hard to believe that it does not ultimately come out of the price that the trapper receives for his product.

Senator SPICER:

– Is the honorable senator opposing the Government?

Senator E B JOHNSTON:

– Yes; 1 am entirely opposed to this measure. I doubt whether a government in which the honorable senator hopes to become Attorney-General would readily abolish many of these charges. I repeat that such charges are a tax on our pioneers.

Senator AYLETT:
Tasmania

– I should like a further explanation from the Minister on this matter. I remember that when the original charge of 9d. was imposed, the buyers immediately dropped the price to trappers by a corresponding amount: We do not want to see that happen again. Will this charge be imposed only on skins for export ?

Senator Fraser:

– Yes.

Senator AYLETT:

– I urge the Minister to ensure, by strict policing of such charges, that no reduction is made in the price to the trapper. I shall be satisfied with such an assurance.

Senator FRASER:
Western AustraliaMinister for External Territories · ALP

in reply - Senator Johnston, apparently, is under a misapprehension regarding this matter. One-third of. the skins are used locally, and two-thirds are exported. The trapper does not pay in any way any charge imposed on skins exported. He gets the full market value of his skins.

Senator E B Johnston:

– Will not this charge reduce the market value ?

Senator FRASER:

– No.

Senator J B Hayes:

– Who will pay it ?

Senator FRASER:

– The exporters will pay the money to the board.

Senator Cooper:

– This scheme is similar to that applying to wool realizations ?

Senator FRASER:

– Yes. The skins are bought here, and exported by dealers : but the funds collected go to the board to pay expenses. The board has now a deficit of £300,000, and the Government will be obliged to meet that liability, unless the export charge be raised. It may not be necessary to raise the charge to the amount I mentioned in my secondreading speech. In all circumstances, the trapper will get his price.

Senator Cameron:

– Who fixes the price to the trapper?

Senator FRASER:
WESTERN AUSTRALIA · ALP

– That is determined by the market. At present this is one of our most profitable industries. I pointed out at a recent meeting of the Agricultural Council that the present price of from 8s. to 9s. per lb. is a record, In the last war the highest price paid to suppliers for best grade skins was 20d. per lb., whereas the price last week on the Sydney market was 123d. per lb. I have previously suggested that it may be necessary, in view of increasing prices, and the consequent cost to the Government as a purchaser of military hats, to peg the price of rabbit skins. In view of the fact that wages are pegged, that procedure would be fair. However, the Government takes the view that as the board now has a deficit, it is preferable to allow it to finance itself in this way, rather than attempt to peg prices, in which case the Government itself would have to take over the board’s present liability.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 (Charges on export of rabbit skins).

Senator DARCEY:
Tasmania

– It is an economic fact that the only way of protecting exporters is by penalizing the local consumer. That applies in respect of all commodities.

Clause agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

Sitting suspended from 6.45 to10 a.m.

page 2002

NAVIGATION. BILL 1942

Bill returned from the House of Representatives without amendment.

page 2002

COMMERCIAL BROADCASTING STATIONS LICENCE FEES BILL 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Ashley) read a first time.

Second Reading

Senator ASHLEY (New South Wales-

Postmaster-General) [10.1 a.m.]. -I move -

That the bill be now read a second time.

The Joint Committee on Broadcasting has recommended that the present fee of £25 per annum payable in respect of each licence for a commercial broadcasting station be continued and that, in addition, in any case where the licensee of a station makes a declaration that a profit has been made from the operation of the station, a further amount, calculated at the rate of onehalf of 1 per centum of the gross earnings of the station during the previous twelve months, shall be payable. The purpose of this bill is to give effect to the recommendation of the committee respecting an additional fee. The making of a declaration by a licensee of a commercial station as to the profits earned was provided for in the Australian Broadcasting Bill 1942 which was passed by the Senate. The present proposal was not included in that bill as the imposition of the licence-fee may be regarded as a form of taxation and, therefore, necessitated a separate bill.

Senator GIBSON:
Victoria

– The bill gives effect to one of the recommendations of the Joint Committee on Broadcasting. It provides for the continuation of the present fee of £25 per annum for each licence for a commercial broadcasting station, and the payment of an additional fee by stations which make a profit. It is only reasonable that stations which make a profit should pay this additional amount.

Senator FOLL:
Queensland

– I wish to refer to a matter affecting certain B class stations which I raised yesterday at question time, and I should be pleased to receive an assurance from the Postmaster -General (Senator Ashley) that he, in conjunction with the Treasurer, will investigate this matter. I am aware that B class stations broadcasting over huge areas in Queensland that are not provided for satisfactorily by the national stations are rendering excellent service, and it would be disastrous if these stations were forced to go off the air. For security reasons, these stations are restricted to broadcasting in the hours of daylight. Honorable senators who are acquainted with the problems of B class stations will realize that the hours of darkness are the most profitable for broadcasting. The restriction necessarily enforced by war conditions deprives B class stations of the most profitable hours for broadcasting, and this matter should be considered by the Government. I hope that the Government will not delay in the preparation of a formula under which these B class stations will be granted some compensation for the loss of the broadcasting hours which would be more profitable to them than the hours to which their services are now restricted.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2003

LIGHTHOUSES BILL 1942

Bill returned from the House of Repre.sentatives without amendment..

page 2003

SUPPLY BILL (No. 1) 1942-43

Bill received from the House of Repre.sentatives

Standing and Sessional Orders suspended.

FIRST Beading.

Motion (by Senator Keane) proposed -

That the bill be now read a first time..

Senator FOLL:
Queensland

– I desire to refer to several matters that were raised by the Leader of the Senate (Senator Collings) when he was allegedly speaking yesterday on the motion for the second reading of the bill dealing with uniform income tax. I do not think that the honorable senator made more than one passing reference to the bill ; if he did, it was largely accidental. He took the opportunity to indulge in one of those tirades of abuse for which he is famous, and he referred particularly to the activities of the previous Government and its defence programme as it affected the State of Queensland. He stated that the previous Government practically denuded northern Queensland of population by its defence policy, and that it neglected to provide for the adequate defence of northern Australia. Now that there has been a change of Ministry the Leader of the Senate is subject to the -same advice as was given to me and my ministerial colleagues when we were in office. Neither the Prime Minister (Mr. Curtin) nor the members of the War Cabinet act on their own initiative in matters connected with troop movements and the priorities for defence activities, nor are they responsible for the selection of air bases or the location of coastal defences. The members of the previous Ministry have no need to apologize for their defence programme. Everything we did was undertaken on the advice of the chiefs of the Navy, Army, and Air Force. I know from my association with the War Cabinet, and particularly from my association with the Department of the Interior, that large sums of money have been provided for carrying out defence works in the north of Australia. That expenditure has not been confined to Queensland, or to any other one State. The work has been undertaken in the interests of Australia as a whole, and a great deal was accomplished during the two years of war which preceded the advent of the present Government to office. The Leader of the Senate, who is also Minister for the Interior, will realize that particular areas are not selected for the expenditure of defence money merely in the interests of those areas. I feel bound to say, on behalf of my former Cabinet colleagues, that the location or priority of defence works was not influenced in any way by the sectional interests of one particular area. The Leader of the Senate referred last night to the expansion of the munitions industry in South Australia. I do not know whether I agree entirely with South Australian senators in this regard, but I say definitely that big munitions establishments were not built in that State merely because it was South Australia, or because any pressure was brought to bear upon the Government by representatives of that State.

Senator Ashley:

– No one suggested that.

Senator FOLL:

– The Leader of the Senate drew attention to what had been done for South Australia, which I admit has developed considerably from an industrial point of view. Munitions establishments were constructed in that State for two reasons : First, because it was the most suitable area for the erection of those establishments, and secondly, because it was regarded as being the place where the type of work being undertaken could best be decentralized, and where labour could be obtained in sufficient quantities. Never whilst I was a member of the Government, were State interests allowed to influence the expansion of our defence programme. The Leader of the Senate knows something of the expenditure on defence works in the northern part of Queensland, and he knows also that those works were undertaken, not as a hand-out to the State of Queensland, but because of strategic considerations relating to the defence of the entire continent generally.

Senator COURTICE:

– They were long overdue, too.

Senator FOLL:

– Yes, but the whole Australian defence programme was overdue. The responsibility for that does not rest with the Government of which I was a member, but must be shared by the Australian people generally, who for many years adopted an indifferent attitude towards defence proposals. That applies not only to the Australian people, but also to the British people generally. Honorable senators know that for years the advocacy of greater defence expenditure in this country was not popular. In that connexion I wish to give credit to Senator Sampson who, in season and out of season, advocated the strengthening of our defences, and the re-introduction of compulsory military training. For many years, his was a voice crying in the wilderness, and there was little support for his pleas on either side of the chamber. Due mainly to the fact that the democratic peoples of the world, who think as we do, had got into a state of complacency, they thought that it was not necessary to spend large sums of money on defence. Furthermore, the taxpayers of this country would not have tolerated for one moment an attempt by any government to embark upon defence expenditure to anything like the same extent as we are spending money for war purposes to-day. They did not realize the danger that was facing them. Therefore, I say let us be fair in connexion with the responsibility for Australia’s defences. When I was Minister for the Interior, proposals involving millions of pounds went through my department for expenditure on defence work in all parts of Australia. The Leader of the Senate knows that when he signs a requisition to-day for, say, £500,000 for a new defence establishment or air field in the north of Queensland or in Western Australia, that work is being undertaken not in the interests of the particular area or State in which it is to be carried out, but in accordance with plans prepared by our leading strategists who advise the Government on these matters. Therefore, it illbecomes the Minister to suggest, as he has done, that certain parts of Australia have been neglected deliberately in favour of other areas. When the full history of our war effort is written, and details can be given of how much, or rather how little, we were producing when Australia was first plunged into the conflict, no name will stand higher in the opinion of the Australian people than that of a former Prime Minister, the right honorable member for Kooyong (Mr. Menzies). I know something of the work for which that right honorable gentleman laid the foundation in this country. One thing that pleased me more than anything else was the fact that when the Labour Government succeeded the previous administration, it did not set out immediately to do what its supporters had always said would be done, namely, to dispense with the services of industrial experts and representatives of capitalist monopolies, as they were so often called. In fact, the Labour Government actually .”ave many of these people more power than had been conferred upon them by the previous administration for the building ur> of our munitions and aircraft production programmes. For instance, Mr. Essington Lewis has already built for himself a wonderful monument in the work he has accomplished in the expansion of our munitions programme. I remind the Leader of the Senate also that it was not the Government of which he is a member which laid the foundation of the shipbuilding programme in this country. No State has received more benefit from the expansion of that industry than Queensland. To-day shipbuilding in that State is an important and rapidly-expanding industry, due to the fact that, when the former Government was in office, it did not hesitate to give to a progressive engineering firm in Queensland an opportunity to expand its activities and to include in its operations the construction of such vessels as corvettes and destroyers. Now mediumsized cargo vessels are being built, and the industry has been developed to a degree which was not even visualized only a few years ago. Not only does that industry benefit Queensland from an economic point of view, but also it gives to the artisans of this country an opportunity to engage in the various shipbuilding trades. I have no doubt that, in years to come, the construction of ships of all types will be one of our most important industrial undertakings. One of the biggest problems which the nations of the world will have to face after the war will be the rehabilitation of merchant shipping services, and I believe that Australia will play a big part in that work, not only by providing ships for its own services, but also for other countries. [ should like to refer also to the disgraceful bungling which took place in connexion with the rationing of clothing. There has never been more serious bungling by any Minister. But before dealing with the rationing of clothing I should like to say a few words in regard to the manner in which the Department of War Organization of Industry is deliberately setting out to restrict certain industries, the curtailment or closing down of which cannot possibly assist the war effort in any way. I refer particularly to an industry of which Senator Darcey knows a great deal more than I do, namely, the manufacture of jewellery, watches, &c. No doubt it is claimed that such products are luxuries and therefore are not required in war-time, but many of the employees and most of the machinery used in that industry have no value whatever in the production of war materials. In some cases the men are partly incapacitated but can adapt themselves fairly well to that type of work, whereas they would be useless on any other job. It is nonsensical to pick out an industry and say “ We are going to shut that down” without making any endeavour to give the men employed in it an opportunity to use their talents in any other direction. 1 can cite scores of such industries. It is necessary to divert as much capital as possible to the war industries. The Leader of the Opposition (Senator McLeay) directed attention to the simplest way in which that could be done, but the Government is not prepared to act on the advice tendered. The introduction of a system of deferred pay would enable the Government to obtain a large sum from the employees in industry. If the members of the fighting services, who are sometimes on duty for 24 hours a day, are called upon to adopt the system of deferred pay, there is no just reason why the principle should not be applied to the workers in industry. Every section of the community, regardless of the work in which it is engaged, should be brought within the scope of such a scheme, and a small regular contribution from each worker would provide millions of pounds which could be used in the war effort. Thousands of men and women are faced with the possibility of being thrown out of business, and they may be unable to regain their businesses after the war. In many cases they will lose their plant and machinery, because the Department of War Organization of Industry will not stand up to its obligation in connexion with the financing of the war. The department is under the control of two most impracticable men. I refer to the Minister (Mr. Dedman) and the permanent head of the department, Mr. Ifould. The Minister himself knows nothing about commerce. He is a well-meaning and fanatical student of economics, but his administration has displayed a lamentable lack of business experience. Mr. Ifould is an elderly man who, I understand, was a chief librarian, but the has had no practical business experience. Before the Government causes men to be thrown out of work and business establishments to be closed up, it should refer such matters to a body that has had sound commercial experience. Honorable senators opposite directed much criticism against the Government of which I was a member, because of its appointment of various boards and commissions. Many such appointments have been made by the present Government, and I admit that many of them have done good work in promoting the war effort; but, in cases where the livelihood of people is at stake, they should be given an opportunity to consult a competent authority before their businesses are taken away from them.

We have had no more glaring example of unfair administration, and no worse exhibition of bungling on the part of a government, than was provided by the Government’s management of the rationing of clothing. No credit has been reflected on those members of the public who fought like maniacs to purchase clothing which they really did not need, but the Government is largely responsible for what occurred. It would have been better had it not given notice of the fact that rationing was to be introduced. Rather than make a premature announcement on the matter, it should have closed down the whole of the retail establishments until ration tickets were available. Even to-day the position is unsatisfactory. Purchasers find it necessary to go to the shops at an early hour of the day, and, instead of having an opportunity to select goods to their liking and spend their money economically, they often have to take the first article that is offered by the shop assistants and pay the price asked, because they are afraid of the shops being closed or the quota for the day of the particular commodities in which they are interested being sold. Parents who desired to fit out their children for the new school term experienced difficulty at the time to which I am referring. Others have to line up in a queue and buy as many goods as they can and as quickly as possible. These undesirable conditions have prevailed for many weeks in the retail stores, although if proper action had been taken by the department, the trouble could have been avoided. I realize that many people who are earning more money than they have ever had before have made heavy purchases of goods, but the action by the department has deprived the average shopper of an opportunity to spend his or her money economically by the amateurish way in which the rationing of clothing has been managed. In dealing with the trouble in the coal mining industry, the Government has called into consultation representatives of the employers and employees, and it would have been easy for the Government to have consulted with the representatives of the retail stores and of the shop assistants’ organizations, who could have supplied valuable advice as to the best course to adopt in implementing the rationing programme. Any sane person could have forecast that confusion would have resulted from the policy that was adopted.

Senator Sampson:

– It put a premium on greed.

Senator FOLL:

– Yes, the selfish persons obtained all the advantages, although there was plenty of clothing for all would-be purchasers. I am in favour of the rationing system, and I regret that the Government of which I was a member did not put such a system into operation. I regard rationing as the true corrective of inflation and a useful means of transferring much valuable money to the financing of the war effort.

Some time ago, the Minister fo» Labour and National Service (Mr. Ward) said that men in protected war industries were to be pegged to their jobs, and that their employers could not dismiss them without approval; but in many industries, in outlying country districts, the employees decided that if they were to be pegged in a job they would prefer the congenial atmosphere of a city or coastal area, rather than a rural district. If there is one thing which members of the Government preached more than anything else, when they were on the Opposition side of the chamber, it was the necessity for the decentralization of industries.

Senator COURTICE:
QUEENSLAND · ALP

– In many cases the men who left the country areas are now invited to return.

Senator FOLL:

– Yes. The Government must take drastic and unpleasant action in order to deal effectively with this problem, but it would have the backing of this Parliament and of the community if it did so. Many of us will be called upon to experience discipline before the war is over, and we shall have to do and accept things which we do not like. The Government should introduce restrictions with the least possible disruption, and in a manner that will be as fair as possible to all sections of the community.

I again refer to the attack made by . the Leader of the Senate, to which I referred in my opening remarks. I realize that the honorable gentleman is a man of strong words, but his observations were uncalled for, particularly his reference to the defence activities of the present Government and of the Ministry which preceded it. I realize that our common desire is to build up the defences of this country.

Senator COLLETT:
Western Australia

– Owing to the pressure of important Government business, there has been little opportunity for private members to speak on matters in which they are greatly interested. I, therefore, ask the indulgence of the .Senate if I take up some time in associating myself with other honorable senators who have felt impelled to offer comment on the conduct and progress of the war. The war itself is a subject that fills the minds of most of us in our waking hours and often, I fear, intrudes upon our dreams. It is, therefore, all to the’ good if we are able, from time to time, to examine the position anew, and seek, where necessary, the means to amend our plans so as to cope successfully with contingencies as they arise.

In the opening paragraphs of a recent statement made . by the Prime Minister (Mr. Curtin), he declared -

Now, in April, 1042, we stand with the United Nations in a war encompassing the world. From confined campaigns within limited areas, the war lias passed to an affair of wide-ranging strategy; of disposition of supplies and reinforcements covering two hemispheres; and of vast but inter-related theatres of military activity.

This enlargement of the war, and the direct danger to Australia which has arisen with it, have compelled radical changes in our own war policy. To-day, after five months of war in the Pacific, and our association with the United States of America as an active ally, the full scope and significance of these change* are becoming apparent.

I wonder if honorable senators ever ro-read the speeches that they have delivered. Sometimes it may be a labour well rewarded - serving, perhaps, to keep us humble. I have been guilty of so doing and yet I am unabashed. In this Senate on the 30th November, 1938, nine months before war broke out, I outlined what were, in my opinion, the principles to be observed in planning an effective defence of Australia. In the full light of subsequent events, I see no reason to qualify the views I then expressed. Nor do I intend now to repeat myself; but I intend to comment on some matters that obtrude themselves into any considerations of war happenings and war measures. A retrospect of the two years and nine months that have elapsed since the commencement of hostilities, at first sight, affords us but little comfort. Our British idealism and sense of international fair play; our acceptance in good faith of the protestations of our neighbours of peace and good will, led us into a state of unpreparedness for war, bringing lamentable consequences. We have suffered many reverses; there may yet be others to come. Nevertheless, we are conscious that we are rapidly recovering from a series of unpleasant shocks, from a condition of almost stunned surprise, and even- from a feeling of defeatism in some quarters; and are now gripping ourselves, as of old, with an inward and ever-increasing determination not only to hold that which we have but also to move forward on to lost ground and beyond and exact some guarantees serving to avert a repetition of the tragedies of this enlightened twentieth century.

But although the chances of war - and chance is an ever-present feature of warfare - have brought us ill fortune, we have nothing of which to be ashamed with respect to the measures taken on and since the 4th September, 1939. The previous decade was one of economic and political turmoil, during which consideration of the provision of an adequate defence system was forced to the background and the arena filled instead with, contention over the ideologies of the several parties. It was the threat of danger to our very existence that rallied us to make common cause. Overnight Labour took unto itself the much maligned system of compulsory military training, and to-day, facing a vivid picture of what the strategy of future campaigns may entail, the same party is prepared to look upon the existence of section 49 of the Defence Act and section 13a of the National Security Act as no obstacle to an advance to ultimate and complete victory. This is not the time or place to discuss this matter at length. We have now one Army, and one Army only. It is a citizen force welded together for a common and vital purpose with, I trust, a common spirit. In view of the gravity of the task confronting us, it admits of no limitations of service; and for this all-important reason I hope that the hindering provisions of the acts that I have mentioned will quickly be repealed. We shall then be in line with, the rest of the Empire, for it is obvious that if our Allies have crossed thousands of miles of ocean in order to go all the way with us, we ourselves should show no hesitation in accompanying them - “ knee to knee “ as the Prime Minister has said.

I repeat, that up to date we have nothing of which to be ashamed. As honorable senators well know, the development of our munitions output has been little short of wonderful. The improved position of to-day is a tribute to the past and present administrations, the captains of industry, engineers, scientists, craftsmen, mechanics and the workers generally. It is true that production might have been greater still; but that phase I shall not go into now. The causes for default range around questions of a highly controversial nature, and will recur unless the Government definitely determines and announces that ideals that depend for their requisite development on static peace-time conditions may be, and frequently are, entirely alien to a wartime policy, when the very life, as well as the possessions, of the people is the stake.

At this stage it is best that I should refer to a matter of considerable importance which it is still possible to adjust, namely, the extension of the standard gauge railway from Port Pirie to Broken

Hill and from Kalgoorlie to Perth. The creation of a uniform railway system was envisaged at the time of the drafting of the Commonwealth Constitution. On numerous occasions it has been further emphasized since the late Lord Kitchener stressed the necessity for a uniform gauge in his report of 1910. Amongst other things that soldier then said was the following: -

Different gauges in most of the States isolate each system, and the want of systematic interior connexion makes the present lines running inland of little use for defence, though possibly of considerable value to an enemy who would have temporary command of the sea.

The failure to arrive at a solution of this now almost age-old problem can be blamed, largely, upon two States for their selfish and parochial outlook, and also upon successive governments of the Commonwealth and Western Australia for their indifference to vital national interests. What was foreseen is happening. For reasons well known, Western Australia is at the moment almost cut off from the rest of the Commonwealth, not only as to the requirements of defence, but also in respect of many essential commodities and conveniences in ample supply elsewhere. Again, despite the acceptance of the principle of the defence of Australia as one indivisible whole, I must confess to the existence of a condition of grave anxiety amongst the people of Western Australia. This difficulty I know the Government is aware of and is taking certain measures to meet it. Time is, however, the all-important factor, and I trust that vigorous action will be sustained. The contemplation of the possible consequences of undue delay is depressing indeed. It stands to reason, therefore, that if the war is to last, as it may well do, for some years, the construction of these railway extensions should be entered upon at once as an integral part of the programme of the Allied Works Council.

There has happened to us something at which I hinted in 1938. To-day we are on the defensive - devoting every ounce of our as yet imperfect strength and resources, not only to the purposes of the immediate protection of this country, but also to a great counteroffensive to be undertaken at some time in the future when the tide of fortune is more in our favour. There is no need for me to enlarge upon, or belittle, the dangers to which Australia is exposed. I think that they are now apparent to all. Realism has taken the stage and is directing our minds and energies. In this respect I recall that in 193S one honorable senator said, “No nation is likely to attack Australia directly “. “When I asked, “ What makes the honorable senator think that?” the reply given was, “ I have sufficient common sense to understand the position”. To my further question, “ Does the honorable senator know what has been going on during the past three years?” the reply came, “ I do “. And yet the Prime Minister has told us, “Invasion is a menace capable hourly of becoming an actuality”. That incident goes to show how difficult it is, in some cases, to clear the mind so as to allow of the normal processes of thought. For real value the opinion expressed was. on a par with the profound announcement we read, not so long ago, as to the “psychological effect - in war - of a good haircut “. But I desire to he serious. The circumstances that have brought us to our present position are to be deplored. Nevertheless we, as a people, can take heart from the stout example set us by our brothers of the British Isles, who, Phoenix-like, have risen from the ashes of disaster and are to-day stronger than ever and resplendent in the display of courage and determination - qualities so characteristic of the race. We, ourselves, are reinforced in our resolves to persevere by the epic deeds of our Navy and Air Force; by the brilliance of the conception and execution of the first Libyan campaign; by the second Gallipoli enacted at Tobruk; by the generalship used and tenacity displayed in securing the victory in Syria; by the heroism and sacrifice in Greece and Crete; and last, but not least, by the gallant and not altogether fruitless attempt to stem the flood of invasion in the Malay Peninsula and in neighbouring territories.

In having a thorough appreciation of our real position, we must go beyond the material and place a sane estimate upon the moral. Of the justice of our cause there is no doubt. Thus far we are “ thrice-armed “. Napoleon is credited with saying, “ The moral is to the physical as three to one “. In these days of mechanization, and the higher development of lethal weapons, that dictum may be discounted. Nevertheless, if the people are prepared, as I think they are, to give their all in an attempt to preserve the civilization we have helped to build up, then victory is possible. After all, we are a homogeneous community with an acknowledged record of great achievement and worthy traditions. In adversity we have kept out’ heads, and despite a few whimperings, and fewer shrieking, in higher places, we have comported ourselves with dignity. The only discouragement offered to those who look to this Parliament for guidance has been our failure to agree to the formation of a government truly representative of the people’s war-time aspirations and needs. There was the plea, heard by some of us, the tenor of which was, “ For Heaven’s sake do not compel our men to serve outside Australia or you will split the Labour party”. In view of the gravity of our position and our commitments, such an appeal is quite untimely.

We need to mark, and continue to take inspiration from the example and deeds of our volunteer forces who have been, and may still be, abroad. They have rendered great service, and I am told by their leaders that the men of to-day are the equal of the men of 1914-18. That goes, too, for the members of the home forces who may not yet have been under , fire, but whose discipline and promise are almost all that can he desired. Let nothing be done, therefore, to discourage or divide them. Their morale is of immense value in the purpose of their existence, and every support should be extended to the leaders in their endeavours to improve it. Complaints as to the behaviour of individuals in the capital cities whilst serious enough, should not be stressed. Those concerned in unseemly incidents are a very small percentage of the whole forces, and whilst they evince the effect of their civil upbringing and environment, can be suitably dealt with provided that there is no political interference with legitimate military authority. Only hard training will impress on young minds the real needs of an army that is to be an efficient fighting machine. Sobriety, cleanliness and orderliness are important factors in its make-up. I have had the privilege of perusing an Army order on these subjects issued recently by the Commander-in-Chief. This will, I am 3ure, if properly - enforced, meet the situation. An initial fault, not that of the Army, has been the failure to recognize that men are men, and to provide . accordingly. Well-regulated canteens, and a tighter control of the liquor trade, are desirable, and, indeed, necessary. With these should go a delegation of authority, such as was conferred by the Defence of the Realm Act in Great Britain, so that undesirable women and establishments can be banned from occupied areas. Every general has a strong personal interest in his troops. I well remember, as do other honorable senators; the great influence for good exercised in the first Australian Imperial Force by men such as Lord Birdwood, the late Sir Brudenell White, and others of high rank.

This brings me to another important point. Men will fight all the better for a good cause if they realize -that the degree of their sacrifice is fully appreciated, and that some attempt at adequate recompense is to be made on their return to civil life. Those who serve in the fighting forces are entitled to great consideration at the hands of their fellow citizens. This Government has been in office for seven months. In its possession is the declaration of the previous Government in respect of preference in employment, and also full reports on the measures necessary for the successful repatriation of discharged personnel, Upon these two issues the Government has not, as yet, made a pronouncement. I urge it at once to stand up to its responsibility and make its position clear. The party to which the Administration owes allegiance is, as we well know, pledged to preference to unionists ; but there are greater things than that, and, unless the right action be taken now, not only will ou-r sailors, soldiers and airmen be shamefully neglected, but there will also be, I fear, storing up for the future such political strife as has not hitherto been experienced in Australia. In the end, it would seem, much harm must thereby be done to the Australian Labour party, and its good work.

In these days we are apt to talk rather glibly, and without a full understanding of the morale of the people. This morale is appreciably raised, or lowered, according to the quality of the public press in our midst. A newspaper service of some kind is indispensable; but honorable senators on both sides of this chamber, and thinking people outside, must have encountered many disappointments during the last two and a half years when viewing the treatment meted out to questions that were the real issues before the nation. Of course, there have been, and are, exceptions to the general rule, and, on the whole, the editorials, excluding a few instances where personal bias has obtruded itself, have been of a high order of journalism and really helpful. But I refer particularly to the so-called “ news “ items wherein futile conjecture and indulgence in sensationalism and personalities, combined with the suppression of inconvenient matter, seem to be the governing factors almost to the entire exclusion of factual matters, and healthy precept. This treatment is, in the long run, extremely harmful, and has been the subject of much adverse comment. That comment does not, of course, ever receive much publicity; but honorable senator* must recall many occasions when thoughtful and valuable speeches delivered in the Senate have been allowed to pass entirely unnoticed or the space in print which they might have occupied has been given over to an account of some clash of personalities in the House of Representatives, the reading of which has served only to belittle this Parliament in the eyes of most Australians.

It is possible that some kinds of journalism operate two codes. Glimpses of such duality have been conceded to us from time to time and I regret that further revelations were denied to the community by this Government one of whose first acts, after assuming office, was to amend the terms of reference to the royal commissioner appointed to investigate the circumstances surrounding certain expenditure from secret funds and the alleged mis-use of secret or confidential documents. My expression of opinion is comparatively mild, but I can recall an occasion when the present Leader of the Senate (Senator Collings) when Leader of the Opposition in this chamber declared, inter alia, in emphatic tones -

The newspapers of Australia must stop their damnable practice of crying war, and emphasizing imaginary dangers when it is well known that within recent months we have been getting further and further from the danger of war. I remember how relieved we all were when the Munich Agreement was signed. I remember one Australian newspaper - I forget which one - saying a few weeks later” Now that the emotional and mental strain has been relieved, now that men are beginning to collect their reason which they had almost lost in the trying times of a few weeks before, the question is being generally asked ‘ What price has been paid for peace’?” This newspaper said it would be far wiser to ask “ What price would we have paid for a world war ?”

At that stage Senator Wilson interjected -

Does the honorable senator suggest that there should be a censorship of the press?

The present Leader of the Senate continued -

I am not suggesting anything of the kind. Even members of the Government in this chamber has expressed personal grievances against the press. I never do that. After more than 50 years of public life - not the whole time in Parliament - my opinion of the press is that when I receive its approbation I have cause to be ashamed. Whenever I feel that perhaps my public record would need to be bolstered up a bit, I point with pride to what this or that newspaper has said about me, and I am perfectly happy. As honorable senators know, I am not in the habit of raising personal grievances in this chamber, but I say with all the emphasis at my command that this Parliament has a duty to protect the people of Australia from the press. I do not mind very much what is said about me by the mad dogs of journalism - perhaps I should substitute the word “ newspapers “ because there is very little journalism in this country - but I believe that a sane Commonwealth government would publish its own newspaper not for the purpose of expressing party opinion, but in order to tell the truth about government policy and state the why and wherefore for its actions.

That opinion was uttered on the 17th May, 1939, or four months before we again became involved in war. To some who heard it the statement was sensational ; to those who read it, it may have been news; but no mention of it ever appeared in the press.

Since then the Prime Minister has publicly stated that the Australian press is a good one. As he is a journalist, he should know. Certainly, it must have rendered him great assistance in the performance of a most responsible and difficult task. Possibly some change, imperceptible to many, has occurred and my honorable friend opposite is now easier in his mind. Or does he intend to pursue his ideal of a government-owned newspaper? Nevertheless, there is a type of journalism acutely harmful to the community. Its effect in one direction is best summed up in the words of the honorable member for Warringah (Mr. Spender), who, speaking recently of whisperers, said -

We have whisperers who seek to destroy the reputation of public men and leaders, and in doing so destroy the confidence of the people and bewilder them.

There is a continuous threat to the stability of public morale by a press whose better function is to raise our ideals and encourage the people to unite wholeheartedly in the great common cause with which we are all so vitally concerned.

Good leadership, which includes sound planning, raises the morale of those who follow. Such leadership is expected from a government of the people chosen by the people. I am sure that the Prime Minister has our regard and respect. To-day he is the hardest-worked man in our midst. His problems are numerous and immense. I hope that he will secure from all his Ministers, as well as from his party, that good service, obedience, and loyalty that he invites from his fellow Australians. He has said, firmly, that the Government will govern. In Perth, on the 27th January last, he told an immense audience of the public that -

The Government would have to enforce discipline in order to win the war. In the course of the next few weeks some enterprises would be closed down and diverted. When this happened it would be no use appealing to the Government because the Government would not take any notice. Instead of contesting what is being done and being snaky about it, see how quickly you can adapt yourselves to the changed state of affairs. If you spend much time arguing with the Government you might later on find yourselves arguing with the Japanese. . . . “ Fight or work “ is the policy now for Australians.”

No one will quarrel with that statement, but the desirable has not yet been attained. There are those who, seemingly, will argue but will neither fight nor work. Until there is a 100 per cent. response and national discipline is fully enforced we shall fail to arrive at the goal Ave have set up for ourselves. This is not the time for party platforms and shibboleths, but rather for hard unremitting labour in national interests alone. The people will respond as do the fighting services if the right standards are set up before them.

I believe that our relations with our allies are being developed along right lines. The Government is to be commended on its appointment of Sir Owen Dixon to succeed Mr. Casey at Washington. Our cousins from America, now joined with our own men on the sea, on the land, and in the air, are warmly welcomed. The same can be said of our very gallant friends from the Netherlands East Indies. United we shall grow from strength to strength, capable not only of effective defence but also, in due time, of a great counter-offensive. The appointment of General Douglas MacArthur, of the United States Army, as the sole director of our strategy and battle organization is an act of statesmanship which has greatly increased the confidence of the people and paved the way for a muchneeded re-organization of the services. The Prime Minister’s and the General’s strategical conceptions are, we are told, identical. The horizon is now clearer. General MacArthur comes to us with a well-established reputation for knowledge and skill and courage in action. Even if wo did not know this we have had the comfort of being informed upon it by the Minister for the Army (Mr. Forde), who seems to repeat, parrot-like, anything that he is told. Mr. Forde ought to be proud of his association with the Army. He should endeavour, in his office, to make the Army proud of him. It does not help our vital cause to witness the operations of a system of intensive personal publicity illustrated by such poignant scenes as -

Mr. Forde in conference.

Mr. Forde visiting the wounded.

Mr. Forde in a camp.

Mr. Forde aiming the . . . gun.

Back view of Mr. Forde giving the civilian salute.

Mr. Forde putting out his shoes to get cleaned.

I submit that there are better things to be done. Things such as these are of no value as a contribution to the war effort. If there is anything worse in war-time than a publicity-hunting Minister it is a publicity-hunting general. Both are apt to talk too much, and it is in this regard that the Military Board has, quite recently, issued a warning. I believe, too, that the arrival of General MacArthur has greatly encouraged our forces, who seemed confused upon the point as to whether or not the generals were really in command. I imagine that General MacArthur wears the “ old school tie “, because among the first things he told us was that like the great generals of old he would “ Keep the soldiers’ faith “. Soldiers know what that means. Its profession inspires confidence amongst his followers. This leads me to say at this stage that I desire to thank the Assistant Minister for the Army (Senator Fraser) for the answer given to my recent question on Lieutenant-General Bennett’s command during the operations in Singapore. I feel now that the very frank statement made by the Government as to its complete confidence in the officer named ought to satisfy all former critics of a soldier with so long and enviable a record of gallant service.

I shall say something more about generals. Great was my surprise recently to be told by a member on the government side of the chamber that there was difficulty in alight- ing upon the general who had the right outlook upon the conduct of the war. Need I say that it is not a recommendation for leadership to have been concerned in a major disaster. If honorable senators have read what Lord Birdwood has said about the battle discipline and courage of our soldiers, together with the effective use made of these great qualities by our own senior officers, they should realize that in our present leaders of the land forces we have men of character, sound training and ripe experience. Indeed, I doubt if it would be possible to find a better group of men elsewhere in the armies of the Empire. Most of them, if not all, have taken part in war conducted on a major scale. Like my friend and colleague, Major-General Brand, they have known what it was to appreciate a share and more than personal responsibility when there have been 500,000 men engaged in battle, for weeks on end, with a gun to every yard of front, tank and aircraft support, lethal gas, and other accessories of “modern war “. The principles of war do not change. I have been re-informing my mind by reading the Lees Knowles lectures delivered at Cambridge University in 1939 by General Sir Archibald Wavell. Sir Archibald has reminded us that Socrates, who lived in the era 400 B.C., was also disturbed in mind on the defence question, and this is what he wrote at that time -

The general must know how to get his men their rations and every other kind of stores needed for war.

That is the supply problem -

He must have imagination to originate plans, practical sense and energy to carry them through.

There is the strategist with organizing and directing capacity -

He must be observant, untiring, shrewd, kindly and cruel; simple and crafty; a watchman and a robber; lavish and miserly; generous and stingy; rash and conservative.

Then the psychologist and politician -

All these and many other qualities, natural and acquired, he must have. He should also, as a matter of course, know his tactics; for a disorderly mob is no more an army than a heap of building materials is a house.

Therein we observe the trainer of men and the disciplinarian. This ancient philosopher has left to us what would seem to be a complete catalogue of the military virtues; but we may, perhaps, forgive General Sir Thomas Blarney and his colleagues if they fail to register 100 per cent. However, there is one picture of a leader, but knowing the men, as some of us do, I should like to end this phase of my remarks by quoting General Wavell’s concluding words -

The pious Greek, when he had set up altars to all the great gods by name, added one more altar, “ To the Unknown God “. So whenever we speak of the great captains and set up our military altars to Hannibal and Napoleon and Marlborough, and such like, let us add one more altar, “To the Unknown Leader”; that is to the good company, platoon, or section leader who carries forward his men or holds his post, and often falls unknown. It is these who in the end do most to win wars.

The General goes on -

The British have been a free people and are still a comparatively free people; and though we are not, thank heaven, a military nation, this tradition of freedom gives to our junior leaders in war a priceless gift of initiative. So long as this initiative is not cramped by too many regulations, by too much formalism, we shall, I trust, continue to win our battles - sometimes in spite of our higher commanders.

In conclusion, and still on the subject of morale, I come to the part to be played by this honorable Senate. We are of the elect of the people, and it is to this Parliament that our countrymen look for leadership, guidance and example in seeing the nation through a sea of troubles; and, conducting it, ultimately victorious, to a haven of peace. I am sure that it is the desire of every one to conduct himself in accordance with the measure of his responsibility - having regard to the gravity of the task in hand. In English literature few of the human emotions have escaped examination and portrayal. Perhaps Shakespeare was the greatest exponent of this art, and honorable senators may find both exhortation and comfort in lines said to have been spoken 500 years ago and which, certainly, were written not later than the period of Queen Elizabeth. Henry V. is haranguing his forces. He is taking them into battle and seeks deeds rather than words. He says -

Fathers that, like so many Alexanders, Have in these parts from morn to even fought,

And sheathed their swords for lack of argument.

Dishonour not your mothers; now attest

That those whom you call’d fathers did beget you.

Be copy now to men of grosser blood, And teach them how to war.

The Prime Minister concluded his statement to Parliament with this injunction -

The task that confronts us is the most formidable the nation has ever faced. Its magnitude is not a matter of statistics. It calls for everything the nation can do. Anything less than that would amount to criminal folly on our part and a base desertion of the cause to which we are pledged and the United Nations to which we belong, and who look to us no less than we look to them.

In that connexion, I have been pleased to read, in a recent instruction to the Army by the Military Board, the following words : - . . morale in a democracy is more than superficial optimism; it is the will to resist and endure, based on an understanding of the issues at stake, and made resolute by the realization that, the outcome of the struggle is of vital concern to every individual man and woman.

And on that note I end.

Senator DARCEY:
Tasmania

– The honorable senator who has just resumed his seat has dealt with Australian affairs in retrospect, and he has given us some wonderful information, particularly in regard to military affairs. In the first year and also in the second year of the war people were asking themselves, “ What is the matter with the Empire’s war effort? Why have these disastrous things happened which we were told could not happen? Why were we caught so terribly unprepared? Why has the Empire lost battle after battle - Norway, Libya, Greece, Crete, Hong Kong, North Borneo, Malaya, Singapore, Rangoon, and the greater part of Burma? Why is the enthusiasm lacking to make this in the nature of a holy war for democracy?” There is one short answer to all these questions: Because of a traitorous financial system. That is what has starved defence and left the Empire perilously unprepared for war; and that is what has piled defeat and humiliation upon the Empire’s head. It is the popular doubt about the private banker’s financial system, together with the depression and untold suffering that it has caused, which makes too many people treat this struggle with a measure of disinterest and hold back the help that they could give. There was no limit before the war to the Empire’s physical resources, but for six years, while Germany and Japan prepared, Great Britain reduced its navy, scrapped or sold a large part of its merchant fleet, failed to mechanize fully its army, and did not do anyt!hing to build a real air force. Why? Because the bankers said that those things could not be afforded. France and the British dominions listened to the same treasonable counsels. They saw aggressive dictatorships grow to menacing size, but they “ could not afford “ to build and equip their armies, and “ could not afford “ the “ luxury “ of a bigger navy or a more powerful air force. When the former Premier of Tasmania, the late Mr. Ogilvie, returned from Europe some years ago he said that Australia’s defenceshould be in the air and that we should make the sky black with aeroplanes. But, the orthodox economists of the day who were advising the Commonwealth Government, said, “Where is the money to come from ? “ The Treasurer of Tasmania, Mr. Dwyer-<Gray, urged that the Commonwealth Bank should be asked to find £100,000,000 to provide the aeroplanes. That statement was published in the newspapers and. can be verified. That is the tale of high finance. I am confident that not one honorable senator who has listened to me during the past three years is not convinced that what I say is true, but, unfortunately, it does not suit their purpose to admit it, despite the fact that I have quoted the highest authorities in the world for my state. ments on finance and economics. It was not until the shadow of war was upon us that those who control the money of every nation - the private bankers - made some funds available for eleventh hour defence measures, but it was too late. France was overrun and subdued in a few weeks, and only a miracle saved Britain at Dunkirk. From thence onwards the British Empire has staggered from defeat to defeat. Why was the Maginot Line never completed ? Because the hankers of Paris said that it had already cost £600,000,000 and that was all that was to be spent on it. I grant that no great war can be all victories, but so far, there is no feeling of assurance that the long series of reverses has come to an end, and men and women are asking themselves, “ What is the matter with us ? What is holding us back ? “ On several occasions I have explained the difference between our financial ^.system and the system used in Germany. When Hitler decided to conquer Europe he required finance. Dr. Schacht had been the head of the German Reischbank for many years, and he wanted to stick to the old orthodox methods of finance. The result was that he lost his job. What is the position in Germany to-day? How have the Germans been able to build up their enormous war machine? The answer is to be found in the difference between their financial system and ours. In Germany everything is rationed, including money, food and clothing. In a totalitarian state, the individual has no claim to anything. That system is responsible for Germany’s tremendous strength to-day. When the German State requires 100,000,000 marks worth of guns, an order is given to Krupps, the guns are finished, and the Krupp organization is paid by cheque. It is allowed to make only 6 per cent, profit, but it has to its credit in the bank, 6,000,000 marks. The government comes along and says, “ We require your money, so we shall take it and pay you 4 per cent, for it “, and the Krupp organization then has to buy government bonds. The profit motive remains, and that is why the people in Germany work so hard to produce their war requirements. But what do we find in the democratic countries under their out-moded financial system? The profit motive has been taken out of business, with the result that many concerns have no incentive to continue in operation. Recently, I met a man in Sydney who has a large estate on the south coast of New South Wales. He told me that he had a big stock of timber which he could cut and sell at a high price, but he would not do that because it would mean that his income tax would reach 18s. in the £1. Therefore, he was content to let the trees grow. It is true that that is not a patriotic attitude, but this man feels that he is obliged to adopt that course under our present rotten financial system. That is merely an instance of what is going on to-day.

In 1941 the Sydney Daily Mirror published a series of articles by Sir Vincent Vickers, exposing the “money trick”. The following is an extract from one of those articles: -

Unless we can contrive to design and establish an improved and reformed financial system, which is the first essential towards a new and better economy in our own country, no satisfactory outcome of the war is possible. It would have been wise to have expended some of our energies in strengthening our home defences by placing democracy in an impregnable position under a money-machine managed and controlled by its government and worthy of the public confidence.

That was published in the Daily Mirror on the 24th October, 1941. Sir Vincent Vickers was for 22 yeaTS a director of Vickers Limited. He was a director of the Bank of England from 1910 to 1919, and a deputy lieutenant of the City of London. He lifted the lid off the banker’s “ box of tricks “ in his book Finance in the Melting Pot. He claims to hold views which the London press would not publish. Of course, the London press would not publish his views, for the simple reason that it is controlled by the banks. Three years ago the bank overdraft of the Melbourne Argus was £224,000. It can be seen, therefore, who controls the policy of that journal. In fact, the banks control all newspapers. The overdraft is a tremendous weapon in the hands of the banks, and they use it on every occasion when it suits their purpose. Sir Vincent Vickers also said -

Let us recognize that great social change is coming to this country also, and that a serious social upheaval, even in this country, is not impossible; that prompt action only can ensure that the future shall bring reform and not revolution.

Recently, Lord Baldwin said that if the present system continued, the people would rise and- tear their Government to pieces. Who is responsible for the terrible state of the world to-day if it is not the Government? I have said before in this chamber that the destiny of the people is placed in the hands of their governments, and if we cannot charge world conditions to world governments, to what can they be charged? I have also said on previous occasions that corrupt and incompetent governments calling themselves democracies brought Hitler and the other dictatorships into existence. There is nothing surer than that. Sir William Vickers also made the following statement : -

I have watched for ten years every move, every wriggle, of financial policy; I have seen the effects of the greatest financial blunder the world has ever known - our return to the gold standard after the war.

In the Atlantic Charter, which was signed by 25 nations, provisions is made for a return to the gold standard, if possible, despite the fact that in the past the gold standard has produced most disastrous results. Again quoting Sir Vincent Vickers -

As long as the present system is allowed to remain unchanged, nothing can permanently alter the present tragic state of affairs or resolve this devastating economic paradox.

Of the “ enemy within he says - Are we now fighting to uphold freedom and democracy, or are we fighting to uphold and strengthen the dictatorship of international finance? But this world power, with its permitted control of the national money supply, and with its support of a monetary system that has plunged every nation into the miseries of irretrievable debt and the world into economic strife, should not be underestimated.

It is well known to most honorable senators that I do not approve the present system of raising war credits. I have said more than once that wars are not fought with money, but with credit. Whilst these credits have the same purchasing power as money they are manufactured on the bank premises, and the raw materials used are pens, ink and paper. Banks are allowed to make a profit on advances of over 100 per cent. Some time ago when they were offering 2£ per cent, on deposits they were charging 6 per cent, on overdrafts, which is a profit of over 100 per cent. Australia’s development was retarded in the early days of settlement in this country because of the lack of money with which to purchase raw materials. The Government has a £35,000,000 loan on the market today. When the war broke out I said that in a total war there should be only one party, namely, the National party, that there should be financial, industrial and military conscription, and that the Commonwealth Bank should be in charge of the war expenditure. Had that policy been adopted we should have had the whole of the financial strength of the country behind us, but we have been fighting financially with our hands tied behind our backs. Honorable senators opposite do not desire to hear the truth, but the truth must prevail.

Senator Foil spoke of the uneconomic and haphazard way in which men are being taken out of industry. He referred to the jewellery trade. I have been in that trade for over 50 years. A week ago a manufacturing jeweller ‘in Sydney told me that there are 165 working jewellers in Sydney, and that 119 of them are between the ages of 50 years and 60 years. It would be useless to put those men into a labour battalion, or to ask them to do work other than that to which

Senator Darcey they have been accustomed for many years. The factory in which I was once employed is now closed, because the only jewellery permitted to be manufactured is wedding rings. Even the manufacture of engagement rings is prohibited. In the House of Commons on the 9th April, 1941, Mr. P. C. Loftus M.P., remarked-

There has been a lot of talk about the period after the war. Many think it premature to discuss what will happen after the war. I think it right to do so. We have the lessons of the last war before us. I well remember coming back from France in 1919. This country’ was richer and had a higher prestige than ever before in its history. We had the greatest navy, the greatest air force, and the finest army in the world. We had the land of England better cultivated than it had been for two generations. We had more skilled mechanics, more skilled shipbuilders in the country, with magnificant new factories and machinery. The whole world was clamouring for our goods, and primary producers throughout the world had good incomes because prices were satisfactory, and they could pay for our goods, and they were demanding our goods. Our position was of immense wealth, but financial theory sa id : “ You are poor “, and for twenty bitter, heart-breaking years we laboured to make the actual facts fit financial theoryPrices of primary producers throughout the world were forced down by our financial policy of deflation, we ruined the farmers of the world, and the farmers of our own country. We destroyed shipbuilding yards, pulled down factories, scrapped machinery, forced our skilled mechanics and artisans to migrate to America and the Dominions; we made the soil of England go out of cultivation and become more derelict than it had been for hundreds of years. And at the end of twenty such years of “bitter and hard work, we had made the actual facts fit the financial theory, and we ‘were poor indeed and unable to keep up adequate armaments, and our prestige sank almost as low as it had ever been.

I remember that in 1922 the Bank of England introduced a deflationary policy, but in Australia the late Sir Denison Miller, then governor of the Commonwealth Bank, purchased £20.000,000 worth of securities in a few months, and thus Australia avoided the experience undergone by the people of Great Britain. Mr. James Griffiths, M.P., speaking in the House of Commons, said -

I came into this House very largely because of the way industry was being neglected. We are paying the price for the last twenty years in allowing our industrial equipment to met and to rot. For twenty years we lived in a period when coal-mines workshops and shipbuilding yards wee being closed down. By whom ? By financiers of this country who are in this House to-day.

Here is an account of how Nazi Germany was financed -

In the spring oi 1934, a select group of international financiers gathered around Mr. Montagu Norman, governor of the Bank of England, in the Bank of England in Threadneedlestreet. Among those present were Sir Alan Anderson, partner in Anderson, Green and Company; Lord (then Sir Josiah) Stamp, chairman of the L.M.S. Railway System; Edward Shaw, chairman of the P. & O. Steamship Lines; Sir Robert Kindersley, a partner in Lazard Bros.; Charles Hambro, partner in Hambro Bros.; and C. Tiarks. head of J. Schroeder Company (international banking houses ) .

But now a new power was established on Europe’s political horizon, namely, Nazi Germany. Hitler had disappointed his critics. His regime was no temporary nightmare, but a system with a good future, and Mr. Norman advised his directors to include Hitler in their plans. There was no opposition, and it was decided that Hitler should get covert help from London’s financial section until Norman would have succeeded in putting sufficient pressure on the Government to make it abandon its pro- French policy for a more promising proGerman policy.

Immediately the directors went into action. Their first move was to sponsor Hitler’s secret rearmament, just about to begin. Using their controlling interests in both Vickers and Imperial Chemical Industries, they instructed these two huge armament concerns to help the German programme by all the means at their disposal. . . .

In the same year your English armament firms placed huge advertisements in the Militaerischer Wochenblatt, offering for sale tanks and guns, prohibited by the Versailles Treaty. A statement made by General Sir Herbert Lawrence, chairman of Vickers, furnished the necessary evidence that the British Government knew about and approved these advertisements. When, at his company’s annual meeting, he was asked to give assurance that Vickers arms and munitions were not being used for secret re-arming in Germany, he replied, “ I cannot give you an assurance in definite terms, but I can tell you that nothing is done without the complete sanction and approval of our government “.

I often wonder whether honorable senators who have been members of this chamber for over twenty years feel any responsibility with regard to the unpreparedness of Australia for this war. Why do they adhere to the orthodox financial system when the national credit should have been utilized through the Commonwealth Bank? They are largely responsible for the conditions prevailing in Australia to-day. It is fortunate for this country that the Broken Hill Proprietary Company Limited had been developed as it hnd when the war broke out, otherwise we should have been in a particularly unenviable position to-day. The war could be financed without borrowing money as the Government is seeking to raise it to-day. The cost of floating loans is tremendous. The cost of floating the loan raised in February was ?41,800. As the Royal Commission on Monetary and Banking Systems has said that the Commonwealth Bank could lend the necessary money to the nation free of interest, there is no reason why a high rate of interest should be paid for it. Do honorable senators imagine that our financial difficulties can be overcome by orthodox methods ? Australia started the war with a national debt of over ?1,200,000,000. The debt arising from the last war was ?385,000,000, in respect of which we have already paid over ?400,000,000 in interest. Great benefit would have been derived from the use of the national credit. Shall we allow the banks, as in the past, to create credit to the amount of hundreds of millions of pounds and charge the nation 3? per cent, interest upon it, or shall we instruct the Commonwealth Bank to provide those credits? This country has great productive power, yet we are dealing with the economic situation as if we lived in an age of scarcity of commodities. I was glad to hear Senator Sampson say last night that wars could not be won with money; but until the present dreadful tragedy overtook the world the people did not realize it. Money does not count at all. Yet when loans are being floated we are told that if the people will not subscribe to them voluntarily, the money will be taken from them compulsorily. There would be no necessity for the heavy taxes which are being imposed if the Government would decide to use the credit of the nation. All the debate yesterday on uniform income taxation related to measures estimated to yield only an additional ?12,000,000 which, at the present rate, would meet our war expenditure for only twelve days. When Mr. Menzies was Prime Minister, I told him that if his Government wanted credit to finance the war, all it had to do was to tell the manager of the Commonwealth Bank to issue the necessary credit Paragraph 530 of the report of the Royal Commission on Banking and Monetary

Systems stated that, ultimately, Parliament is responsible for finance and everything necessary for the good government of the country. The Government of the day is the executive of the Parliament with power to act up to its constitutional limit. The report to which I referred also said that certain powers had been granted to the Commonwealth Bank by .statute, and that those powers are to be used in the interests of the nation. If at any time there is a difference of opinion between the Government and the Commonwealth Bank Board as to the policy to be followed a free and frank discussion shall take place Should their views still be irreconcilable, the Government shall tell the beard that it takes Ml responsibility for what is to be -done and then direct the hoard how to act. I cannot understand why that system is not being used to-day. Regulations recently promulgated prevent the private banks from buying bonds or issuing overdrafts; but as the Government has gone into debt to the amount of £131,000,000, what is the use of denying the banks the right to buy bonds at one end of the counter, if at the other end of the counter they can buy Treasury bills and inscribed stock which bear interest? In a newspaper published last Monday the following paragraph appear-ed : -

The Federal Government was unable to carry out its banking policy because it did not have a majority in both houses. The Prime Minister, Mr. Curtin, stated this in reply to the Newcastle Australian Labour party -council’s protest against the non-use of the Commonwealth Baric to the fullest extent.

Mr. Menzies said that his Government was prepared to use credit up to the limit of safety, but he did not say what that limit was. The limit of safety is the productive capacity of the nation. Mr.. Menzies did not say that his Government had imposed heavy rates of taxes on higher incomes and had added greatly to the credit issued by the private banks. The operations of the trading banks have not been placed under effective control and so long as the Government is prepared to sell interest bearing inscribed stock and Treasury bills, it will not control them. The control still rests with the banks. For many years no more money was available once a loan which had been placed on the market, was not fully subscribed by the private banks. The Commonwealth Bank did not come to the assistance of the Government. There is some hope that, at long last, national credit will he used. If the private hanks are prevented from buying bonds and issuing overdrafts to customers, only two honest ways to finance the war remain. The first method is by the issue of national credit; the second is by imposing tremendously increased taxes. The Labour party’s defence policy provides that war expenditure shall be financed out of taxation. In the year in which that resolution was passed, the total expenditure on defence was £7,000,00©. At present, defence expend iDare is £7,000,000 a week, and therefore, it is clear that effect cannot be given to that resolution. I hope that the new loan will be floated through the Commonwealth Bank, interest fr-ee, .so that the people will be saved from having to bear heavy taxation in perpetuity.

Senator COOPER:
Queensland

– I understand that it is the intention of the -Government to take over the control of meat supplies in Australia. 3 raise this matter how, because we have reached practically the last hours of the present sittings., and shall probably not meet again for some weeks. This matter is of great importance to producer of meat.; it also affects abattoirs, butchers, and. consumers. Should it he the intention of the Government to take over the control of meat supplies, I am confident that all honorable senators would appreciate a statement setting out whether it is intended to take over supplies on the hoof, at the abattoirs, at butchers’ shops, or elsewhere.

Senator BROWN:
Queensland

– Some time ago the Senate discussed s motion for the disallowance of a regulation relating to the sale of Werribee beef. There was considerable talk of ‘* wogs “ and tapeworms. Senator Gibson painted such a painful picture and. expressed his arguments so forcibly that my judgment was affected. Since then, the honorable member for Kennedy (Mr. Riordan) has inspected the Werribee farm from which the meat in question comes, and from the information which he has given to me, I have come to the conclusion that meat from that farm is quite fit for human consumption. Some weeks ago my attention was drawn to an article written by Mr. G. F. Cottam, an organizer of the Meat Industry Employees Union of Brisbane, which appeared in the Meat Industry Journal of Queensland. As those honorable senators who were so solicitous for the health of the people of Melbourne would probably be interested, I shall read some extracts from the article referred to. I hope that the statements contained in it are not true, but I urge the Minister concerned to see Mr. Cottam in order to ascertain the truth or otherwise of his. statements. Speaking of military contracts, the article stated - 1 have Been uncovered trays of meat being loaded on to wagons with millions of greenbacked flies crawling all over it. Again, just recently, I saw a number of slicers working at a table cutting away the outside of what appeared to me as shin beef. The outside of this meat was as green in colour as the shades worn on St. Patrick’s Day . . . Apparently, the position appears to be no matter how green or smelly the outside of the meat might be, our slicers just cut the outside away, which goes to the pots, but the inside of the meat, once freed of its overcoat of green and stench, goes to the soldiers. Many of our members have seen pork sausages which, through age, have turned pink and give off rather an unpleasant smell; these are packed into tins and Bent to our soldiers.

Those honorable senators who had so much to say about Werribee beef should insist on this charge being thoroughly investigated. I hope that something will be done in the matter.

I draw attention to matters associated with the freezing of paper stocks used for the publication of small journals. In some instances, although stocks sufficient for a number of years are held, they are still being frozen. I cannot understand this action, because I am informed that the paper that I have in mind is not used for other purposes. One gentleman who is interested in this matter is connected with a journal which contains a good proportion of light reading and humorous items. In these difficult times, such publications serve a good purpose. I am the last man to say that paper should be used in this, way if it is required for more important purposes; but if it be true that the paper in question has no other use, and if there be sufficient stocks available, this man should be allowed to use it until the supply is exhausted, when of course nothing more can be done. I hope that inquiries will be made into this matter.

Senator LAMP:
Tasmania

.- I bring before the Senate two matters in which I am especially interested. We have in this country the tragic spectacle of the most sparsely populated of all the continents and, at the same time, the most centralized of all populations. Yet by their refusal to sponsor decentralization, those directing the nation’s affairs are crowding more and more people into the big mainland cities. In consequence of this, folly, the country districts of Australia, and the whole of Tasmania, are suffering acutely. Unless the present policy be reversed, the time is fast approaching when half of the population of Australia will be resident in thi narrow coastal belt embracing Sydney, in New South Wales, and around the shores of Port Philip Bay, in Victoria. One has to indulge in a little simple arithmetic when reading in the Sydney press figures relating to black-out tests carried out in New South Wales. The result has been startling. The newspapers have disclosed that, in the area extending from Cessnock and Newcastle, north of Sydney, to Wollongong and Port Kembla, south of Sydney, 1,800,000 people have their homes. That belt of country is 150 miles long by 30 miles wide, and contains 4,500 square miles. Tasmania,, with its 26,215 square miles, is six times as large; yet its population, including that of Hob-art and Launceston, is less than 250,000. In other words, the density of the population in the two areas is in the ratio of 50 to 1. Should the present tendency towards concentration of. population in the first-mentioned areacontinue, the ratio will be nearer to 100 to 1 in the near future. In accordance with Labour’s policy of decentralization, a greater share of war expenditure should be allocated to Tasmania and the more sparsely populated areas on the mainland. For many years, Tasmania has specialized in the manufacture of furniture, which has been shipped to the mainland in large quantities. I urge the Minister for Aircraft Production (Senator Cameron) to give consideration to the manufacture of aeroplane frames of wood, and in this work to utilize the vast timber resources of Tasmania, as well as large numbers of skilled furniture-makers in that State. Factories, fully equipped for this important work, are available. However, owing to slackness in the trade, I know several skilled furniture tradesmen who are now working on the wharfs in Hobart. One very great advantage of the manufacture of aeroplane frames of wood would be that the whole of the work could be done by carpenters and joiners, extensive supplies of jigs and tools would not be necessary. The only difficulty would be in regard to engines; but I understand that engines are now being manufactured in Australia. If we undertook the manufacture of aeroplane frames of wood, the skilled men now engaged on the manufacture of metal aeroplane frames could be diverted to the manufacture of engines.

It is unfortunate that developments in modern aircraft production overseas have apparently not been available to or utilized by us. The Aeronautical Branch of the Institution of Engineers, Sydney Division, and the Furniture Trade Panel have for the last eighteen months urged the Federal Government to construct timber aircraft on the plastic plywood or laminated wood principle. Great Britain and enemy countries build many wooden aeroplanes, and a cable published in the press some time ago declared that in Canada plastic plywood had become “an important factor in aircraft production”. The seaplane which holds the world’s record of 441 miles per hour was constructed of wood. The Aeronautical Branch of the Institution of Engineers, in a report to the Commonwealth Government early last year, strongly recommended timber aircraft frames, including the fuselage, and immediate production in the furniture and joinery establishments. Among those who have supported the production of timber aircraft are Captain P. G. Taylor, Professor T. D. J. Leech, now of Auckland University, Mr. S. C. Roberts, lecturer in aeronautical engineering at Sydney Technical College, and Mr. R. G. Griffin,

A.M.I.E., chairman of the Institution of Engineers. The many advantages which timber in plastic plywood form has over metal include much quicker production - up to 30 per cent. - greater speed for the same engine-power, the fireproof value is considerably higher, it is not affected by temperature changes, is easier to design and cheaper to build, service, and repair. A speed-up in aircraft production is urgently necessary. A deputation from the Institution of Engineers and the Furnishing Trades Panel told the Minister for Aircraft Production some time ago that enemy aircraft of wood and moulded plastics were having marked success abroad. The Minister said -

Since my return to Melbourne, I have been informed that aircraft embodying wood plastic* are durable, fast, and possess great manoeuvrability. It is stated they are more quickly made than metal planes, and the risk of hold-ups, which unfortunately occur with metal supplies, would be greatly reduced.

The Minister added that members of the Sydney deputation had complained that bias had been shown in Melbourne when the question of wooden aeroplanes was raised, and that there must be no such bias in future. I hope that the Government will give Tasmanian skilled tradesmen a chance to show what really can be done in this direction with the wide range of timbers available in that State.

I desire to refer briefly to the failure of the Commonwealth Bank to engage actively in business as a general trading bank. Sir Ernest Riddle, when Governor of the Commonwealth Bank, stated that -

When a customer of a trading bank asked the Commonwealth Bank for accommodation, that bank undertook, with his permission, to investigate his position, if satisfied that he was entitled to the accommodation. The trading banks were advised and informed by the Commonwealth Bank that if the other bankers were prepared to give the accommodation to the customer, the Commonwealth Bank would retire from the negotiations.

That is an extraordinary state of affairs. Some time ago I asked a question on this subject in this chamber. I have repeatedly stated that we should use the nation’s credit to the fullest possible degree. However, we cannot do that until the nation’s bank operates as a general trading bank. The following quotation, which I take from an article by Mr. H. G. Wells, admirably sums up the duties of a community bank: -

page 2021

THE CHEQUE

Unexpected consequences of banking convenience have appeared. The idea of the cheque was a very obvious and a simple one, yet its working out leads us to quite a remarkable kind. The opening nineteenth century saw the rise of the cheque to an importance far exceeding that of the restrained aud regulated bank note. If cheques were forbidden to-morrow, all the money in the country, even if no one held any for more than a day, would scarce suffice for half the needs of the very slackest working of our economic life. An enormous amount of business of the English-speaking communities is now transacted by cheque without the moving of a bank note or the shifting of a coin. The clearing house has become an organ of primary importance in our economic life.

The Commonwealth Bank cannot function as it was originally intended to function in our economic life until it engages more actively in general banking business. It should determinedly compete with the private banks in order to control more effectively the economic resources of the country. The article continues -

The experience of the century is making it clear that, except for the convenience of paper end coins for small immediate transactions, it would be possible to dispense with actual concrete money altogether; it would be possible co sustain the general working of an entire economic system by clearing-house bookkeeping by the continual transfer of money on account, of crude purchasing power, that is, from one account to another.

I hope that the Government will take steps to see that the Commonwealth Bank extends its operations along the lines I have indicated.

Senator BRAND:
Victoria

.- During the last war, many officers, warrant-officers and non-commissioned officers of the permanent forces were retained in Australia as instructors at training schools. A period of active service enhances the prestige of every permanent professional soldier. If he does not possess a service ribbon, the value of his services as an instructor is nullified to a great degree. Although this war has now been in progress for nearly three years, over 700 officers, warrant-officers and non-commissioned officers of the regular forces are engaged in instructional duties at schools and military centres. These men have been denied the opportunity to gain experience in actual warfare, which every professional soldier desires in order to top off his own training. The men now engaged on instructional duties include permanent and temporary officers. The former number over 600, but I do not know the total of the latter. At the end of the war, the permanent men will be retained as instructors for the building up of our post-war army. However, if they have not had a period of active service, or cannot show a service ribbon, they will fail to impress the younger generation, whose training is entrusted to them. It may be said that under existing conditions it is impossible to release the majority of these instructors for active service. I suggest that they could be released in batches of, say, 10 per cent, or 20 per cent, of the total number of instructors. I urge the Minister for the Army (Mr. Forde) to give consideration to my suggestion.

Senator SPICER:
Victoria

.- On several occasions, my colleague, Senator A. J. McLachlan, has directed attention to the necessity for giving greater publicity to national security regulations and orders. I now bring an important aspect of this matter to the notice of the Leader of the Senate (Senator Collings). He will realize that regulations are now being enacted at an unusual rate. During this year, at least 50 regulations a month have been gazetted. Many regulations amend existing regulations, and, frequently, there are several amendments of the one regulation. In these circumstances, it is most difficult even for a lawyer to ascertain what the state of the law is on a particular matter. The position is aggravated by the wide interference with State laws and powers. In March of last year, the Government Printer published a consolidation of the national security regulations issued up to that time. That volume was most useful not only to the legal profession, but also to the public. However, no similar volume has been issued this year. I urge that steps be taken at an early date to publish a consolidation of all the national security regulations.

Senator Lamp:

– Probably, sufficient man-power is not available to enable that to be done.

Senator SPICER:

– .This matter is of very great importance. As a practising lawyer, I realize the very great inconvenience caused to the community by reason of the fact that it is not possible to obtain in a handy form a volume which will enable one to ascertain what the law on a particular subject may be at a particular time. A revision and consolidation of these regulations should be published. In addition, a large number of orders are being made by Ministers. These orders are not issued in the form of regulations, but they sometimes effect very drastic alterations of the law. For instance, the rationing system has been implemented by means of ministerial’ orders which do not appear in the regulations which are circulated to members of Parliament and others.

Senator Keane:

– They are gazetted.

Senator SPICER:
VICTORIA · LP

-ER - Yes; those orders which are of public utility are gazetted. But not very many people obtain a copy of the Gazette. In any case, the Minister will realize that the Gazette does not enable one to retain these orders in a handy form for permanent use. I suggest that in addition to a consolidation of the national security regulations a real need exists for the publication in a handy form, for the use of the public, of all current orders which are of general utility. I realize, of course,, that many orders relate merely to suck matters as the taking over of land, &c. I do- not suggest that orders of that kind should be published. Consideration should be given to this matter in order that the delay now associated with the ascertainment of the law might be eliminated.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- in reply - I have taken a note of the matters raised by honorable senators during the debate. I shall call for a full report in each ease, and when it is received I shall have it conveyed by post to the honorable senators concerned. The Leader of the Senate (Senator Collings) and I agree with Senator Spicer’s suggestions that the national security regulations should be revised and consolidated so that the effect of regulations may be ascertained readily by members of the public interested. One instance that came to my notice illustrates the need for giving effect to the honorable senator’s suggestion. Honorable senators will recall that the Government issued a regulation affecting landlords and tenants, mainly with the object of preventing unscrupulous landlords from exploiting old-age pensioners who rent rooms, and families renting small houses. On three occasions statements appeared in the press commenting on the fact that the public generally was ignorant of the existence of the regulation.

Question resolved in the affirmative.

Bill read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That the bill be now read a second time.

The purpose of this bill is to secure the necessary appropriation of money to carry on the services of Government until the annual appropriation bills for 1942-43 are approved by Parliament. The bill “makes provision for the expenditure of an amount of £37,409,000 for revenue services for the period of the. first three months of the financial, year 1942-43. The provision may be summarized under the following heads : -

This bill provides only for the amount which is estimated to be sufficient .to carry on- the essential services on the basis of the appropriations passed by the Parliament for the financial year 1941-42. The items excluding defence and! war services- making up this total represent approximately one-fourth of those appropriations except in a few instances where expenditure is heavier in the early months of the financial year than in the later months. The provision for defence and war services represents the estimated amount which will be available from revenue receipts for the first three months of the year after making allowance for our other obligations. In addition to the defence expenditure from revenue there will of course be much greater expenditure which will be covered by loan appropriations. The usual provisions are made in the bill for “ Refunds of Revenue “ “ Advance to the Treasurer”, the amounts being £1,000,000 and £5,000,000 respectively. This latter amount is mainly required to carry on uncompleted civil works which will be in progress at the 30th June, and also to cover unforeseen and miscellaneous expenditure. It will also temporarily finance the special grants to South Australia, Western Australia and Tasmania on the same basis as that approved by Parliament for the present financial year until a bill can be submitted after receipt of the report of the Commonwealth Grants Commission. Except in the case of defence and war services no provision is made in the bill for any new expenditure; no departure from existing policy is involved.

Question resolved in the affirmative. .Bill read a second time and passed through its remaining stages without requests or debate.

page 2023

QUESTION

AUSTRALIAN SOLDIERS’ REPATRIATION ACT

Appointment of Special Committee.

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

by leave - The Government has decided that having regard to the great number of men who, because of the dimensions of our present forces, will be affected by and have rights under the Australian Soldiers’ Repatriation Act, it is desirable that this legislation should he examined. As a result of consultation between the Prime Minister (Mr. Curtin) and the Leader of the Opposition in the House of Representatives (Mr. Fadden) the Government has decided to appoint a committee of mem bers of both Houses of Parliament to inquire into and report upon the general question of the Repatriation Act and the amendments, if any, which the joint committee recommends as desirable in the light of the conditions caused by the present war. The members, of the committee will be Senators H. B. Collett and C. A. Lamp, and Messrs. R. T. Pollard, D. O. Watkins, E. J. Harrison and J. Francia The Prime Minister has requested Mr. Pollard to act as chairman of the committee. The Government believes that this matter can be treated on a purely parliamentary basis, and that the interests of the soldiei-3 in relation to the nation will be well reviewed by the honorable senators and members mentioned who have consented to act on the committee.

page 2023

INCOME TAX (WAR-TIME ARRANGEMENTS) BILL 1942

Message received from the House of Representatives intimating that it had agreed to the amendment made by the Senate in this bill.

page 2023

INCOME TAX ASSESSMENT BILL 1942

Message received from the House of Representatives intimating that it had agreed to the amendment made by the Senate in this bill.

Silting suspended from 12.^2 to 2.15 p.m. LEAGUE OF NATIONS.

INTERNATIONAL Labour ORGANIZATION.

Senator COLLINGS:
Minister for the Interior · Queensland · ALP

– I lay on the table of the Senate -

International Labour Organization of the League of Nations - Twenty-sixth Session, held at New York, 27th October to 5th November, 1°4I - -Reports of Australian Delegates.

Ordered to be printed.

page 2023

AUSTRALIAN BROADCASTING BILL 1942

Bill returned from the House of Representatives with amendments.

In committee (Consideration of House of Representatives’ amendments) :

Clause 3 -

This act is divided into parts as follows: -

Part III. - The Commercial Broadcasting Service -

Division 1. - Licences.

Division 2. - Limitation on Ownership or Control of Broadcasting Stations owned or controlled by one Person.

Souse of Representatives’ amendment No. 1. - Leave out “Broadcasting Stations owned or controlled by one Person “, insert “ commercial broadcasting stations “.

Clause 4 -

In this act, unless the contrary intention appears - “ Commercial broadcasting station “ means a broadcasting station in respect of which a licence has been granted by the Minister. “The Minister” shall be the PostmasterGeneral ;

House of Representatives’ amendment No.

– Leave out “ in respect of which a licence has been granted by the Minister “, insert “ other than a national broadcasting station “.

House of Representatives’ amendment No.

– Leave out “ shall be “, insert “ means “.

Clause 17 - (1.) The commission shall appoint a general manager and such other officers and such servants as it thinks necessary.

House of Representatives’ amendment No.

Clause 19 -

For the purpose of the exercise of its powers and functions under this act, the commission may compile, prepare, issue, circulate and distribute, whether gratis or otherwise, in such manner as it thinks fit, such papers, magazines, periodicals, books, pamphlets, circulars and other literary matter as it thinks fit (including the programmes of national broadcasting stations and other stations) :

House of Representatives’ amendment No.

– After “ other “ insert “ broadcasting “.

Motion (by Senator Ashley) agreed to -

That amendments Nos. 1 to 5 be agreed to.

Clause 27 - (1.) There shall be an Australian Broadcasting Commission Fund into which shall be paid from time to time an amount which represents such portion of the fees received from broadcast listeners’ licences as is fixed by or under this act.

(2.) . . .

June, One thousand nine hundred and forty-two. during which the licence is in force; and

House of Representatives’ amendment No.

House of Representatives’ amendment No.

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

– I move -

That amendments Nos. 6 and 7 be agreed to.

Senator E B Johnston:

– Does that effect any change?

Senator ASHLEY:

– No. In order to make some allowance for the less reliable service available to listeners resident at great distances from broadcasting stations, fees for listeners’ licencesare based on a zoning system. Zone 1, as will be observed from clause 103, is defined as the territory within an approximate radius of 250 miles from any broadcasting station which the Minister specifies. In practice, it is the area within approximately 250 miles of every national broadcasting transmitter. The remainder of the Commonwealth is regarded as being in zone 2. The fee for a listener’s licence is at present £1 in zone 1 and 14s. in zone 2, but, under clause 104, provision is now being made for a reduced fee at the rate of 10s. per annum for zone 1 and 7s. for zone 2 for each receiver in excess of one owned by any person.

Question resolved in the affirmative.

Clause31 (l.) For the purpose of enabling the commission to defray any expenses incidental to its establishment and operation, the Treasurer may advance such amounts not exceeding in all the sum of £30,000 as are, in the opinion of the Minister, required by the commission.

House of Representatives’ amendment No. 8, - After “advance”, insert “, out of the Consolidated Kevenue Fund, which is hereby appropriated accordingly,”.

Clauses 36 to 43 (Division 4. - Issue of debentures by the commission).

House of Representatives’ amendment No. 9. - Leave out the clauses.

Clause 50 - (1 . ) The commission shall, as soon as possible after the expiration of each financial year, prepare a statement of income and expenditure . . .

House of Representatives’ amendment No. 10. - After” possible “, insert “, but not later than six months,”.

Clause 52- ( 1.)The Ministermay grant to any person a licence for a commercial broadcasting station in accordance with the form determined by the Minister.

House of Representatives’ amendment No.11 - After “station” insert “upon the conditions and “.

Clause 56 - ( 1. )T here shall be payable in respect of every licence for a commercial broadcasting station for each year or part of a year during which the licence is in force a licence fee as prescribed by the Commercial Broadcasting Stations Licence Fees Act 1942.

House of Representatives’ amendment No. 12 - Leave out sub-clause (1.), insert the following sub-clause: - “ (1.) There shall be payable by the licensee in respect of a licence for a commercial broadcasting station granted or renewed under this act, for each year or part of a year of the currency of the licence or renewal, the fee prescribed by the Commercial Broadcasting Stations Licence Fees Act 1942.”.

Clause 58 - ( 1 . ) Except with the consent in writing of the Minister, a licensee of a commercial broadcasting station shall not transfer the licence or assign, sublet or otherwise dispose of the licence or admit any other person to participate in any of the benefits of the licence, or to exercise any of the powers or authorities granted by the licence. (2.) Where, with the consent in writing of the Minister, any licence for a commercial broadcasting station is transferred, assigned or sublet . . . the application of the provisions of this act relating to licensees of commercial broadcasting stations shall extend to that person as if he were the licensee, and any reference in this act to the licensee of a commercial broadcasting station shall, in respect of that station, be read as including a reference to that person.

House of Representatives’ amendment No.13 - At the end of the clause add the following proviso: - “Provided that the perfor mance by the licensee or that person of any obligation imposed upon the licensee by any provision of this act shall, to the extent of that performance, release both the licensee and that person from the obligation.”.

Clause 66-

A commercial broadcasting station shall be operated only by such persons as, in the opinion of the Minister, are competent to operate the station.

House of Representatives’ amendment No. 14 - Leave out “ A “, insert “ The technical equipment of a”.

House of Representatives’ amendment No. 15 - Leave out “ station”, second occurring, insert “ equipment “.

Clause 69- (2.) A licensee desiring to broadcast advertisements shall publish a tariff of advertising charges, and shall make his advertising service available without discrimination to any person. - (3.) A licensee shall not broadcast advertisements on a Sunday except in such manner and in accordance with such conditions as are prescribed. (4.) An advertisement relating to any medicine shall not be broadcast unless the text of the proposed advertising matter has been approved . . .

House of Representatives’ amendment No. 16 - After “and”, sub-clause (2.), insert “ , except as prescribed,”.

House of Representatives’ amendment No. 17 - Leave out “ are prescribed “, sub-clause (3.), insert “the Minister determines”.

House of Representatives’ amendment No. 18 - Before “an”, sub-clause (4.), insert “ except as prescribed,”.

Clause 75 - (1.) The licensee of a commercial broadcasting station shall -

  1. within one month after the thirtieth day of June in each year, furnish to the Minister a statutory declaration stating -

    1. whether the operations of the station during the year ended on that date resulted in a profit or otherwise; and
    2. the gross earnings of the station during that year; and

House of Representatives’ amendment No. 19 - Leave out “one month”, paragraph (d), insert “three months”.

House of Representatives’ amendment No. 20 - After “profit”, sub-paragraph (i), insert “ to the person operating the station “.

House of Representatives’ amendment No. 21 - Leave out “of the station during that year”, sub-paragraph (ii), insert from the operations of the station during that year, of the person operating the station “.

Clause 76 -

The licensee of a commercial broadcasting station shall, at all times, keep the Minister indemnified against any claim for royalties in respect of any equipment operated under bis licence, or against any claims whatsoever arising out of the licensee’s operations.

House of Representatives’ amendment No. 22 - Leave out “or”, insert “and”.

Clause 79-

Any notice, request, or consent (whether expressed to be in writing or not) to be given or made under any of the provisions of this Fart, by or for the Minister, may be under the hand of any authorized officer, and may be served on the licensee of a commercial broadcasting station by sending it by registered letter addressed to the licensee at the usual or last-known place of residence or business of the licensee, and any notice to be given by a licensee may be served by sending it by registered letter addressed to the Director-General at. his official address within Australia, or such other officer as is prescribed.

House of Representatives’ amendment No. 23 - Leave out “ request “, insert “ requirement “.

House of Representatives’ amendment No. 24 - Leave out all words from and including “and any” to end of clause.

Clause 92 -

The powers, privileges and immunities of the committee and of its members shall, subject to this Part, be those of each of the Houses of the Parliament and of its members.

House of Representatives’ amendment No. 25 - At end of clause add” and its committees “.

Motion (by Senator Ashley) agreed to -

That amendments Nos. 8 to 25 be agreed to.

New clauses -

House of Representatives’ amendment No. 26-

After clause 96, insert the following new clauses: - “96a.. - (1.) Subject to the provisions of this; section, the commission may determine to what extent and in what manner political speeches or any matter relating to a political subject may be broadcast from national broadeasting stations, and the licensee of a commercial broadcasting station may arrange for the. broadcasting of such speeches or matter from that station. (2.) The commission or the licensee of a broadcasting station shall not, at any time prior to the close of the poll on the day on which any election for the Parliament of the Commonwealth or a State or for any House of any such Parliament or for any vacancy in any such House is held, or at any time on either of the two days immediately preceding that day, broadcast, in whole or in part, any speech or matter -

commenting on, or soliciting votes for, any candidate at the election;

commenting on, or advocating support of, any political party to which any candidate at the election belongs ;.

commenting upon, stating or indicating any of the issues being submitted to the electors at the election or any part of the policy of any candidate at the election or of the political party to which he belongs; or

referring to any meeting held in connexion with the election. (3.) The commission or the licensee of a commercial broadcasting station shall not, at any time on or after the date of the issue of the writs and before the close of the poll for any such election, broadcast any dramatization of matter relating to any candidate, political party, issues, policy or meeting referred to in the last preceding sub-section.. 96b. - (1.) The commission, in the case of a national broadcasting station, or the licensee, in the case of a commercial broadcasting station, shall cause to be announced the true name of every speaker who is, either in person or through the agency of a sound recording device, to deliver an address or make a statement relating to a political subject or current affairs for broadcasting from the station. If the address is to be delivered or the statement is to be made on behalf of a political party, the name of the party shall be included in the announcement. (2.) The announcement shall be made at such a time and in such a manner, before and after the address or statement, as fully to disclose the identity of the speaker to any person listening to the broadcast of the address or statement. (3. ) The commission or the licensee, as the case may be, shall keep a record of the name, postal address and credentials or occupation of each such speaker, and shall furnish to the Minister any particulars of the record which the Minister by notice in writing requires.”.

Motion (by Senator Ashley) proposed -

That amendment No. 26 be agreed to.

Senator GIBSON:
Victoria

.- Sub-clause 1 of proposed new clause 96a might lead one to believe that the commission is to have control of the broadcasting of political speeches over the commercial stations, but that is not the intention.

Senator SPICER:
Victoria

.- The latter portion of the sub-clause states that “ the licensee of a commercial broadcasting station may arrange for the broadcasting of such speeches or matter from that station “. It is possible to read the phrase “ such speeches or matter “ as meaning the political speeches’ or matter relating to a political subject which may be broadcast from a national station. I move -

That the amendment be amended by leaving out of proposed new clause 96a, sub-clause (1), the words “such speeches or matter” with a view to insert in lieu thereof the following words: - “political speeches or any matter relating to a political subject “.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It appears to me that there need he no controversy over the amendments of the proposed new subclause submitted by Senator Spicer. The amendments are in conformity with the ideas expressed by the Senate when the bill was last before it.

Senator FRASER:
Minister for External Territories · WESTERN AUSTRALIA · ALP

– There have been occasions when the managers of commercial stations have deleted portions of political speeches that have already been censored, and have so mutilated them a few minutes before delivery that they have been unsuitable for broadcasting.From what I know of these things, it would not be too much to allow the national stations to exercise some form of control over commercial stations. I am confident that had the speeeh to which I have referred been referred to the Australian Broadcasting Commission, not one word would have been deleted from it. The manager of a commercial broadcasting station should not have the right to say what shall or shall not be included in a political broadcast.

Senator ALLAN MacDONALD:
Western Australia

.- When the bill was before the committee previously we had great difficulty in providing for the treatment of political speeches two days preceding the date of an election. On reading the amendment of the House of Representatives, I do not see that that difficulty has been overcome. Let us suppose that during the five weeks preceding a Commonwealth election there were two or three by-elections for a State Parliament. That would mean that on two days out of every week the broadcasting of speeches in connexion with a Commonwealth election would be prohibited. It will be seen that, because of a State by-election, there may be interference with a general election for the

National Parliament.

Senator SPICER:
Victoria

.- I cannot say that I was particularly enthusiastic about my amendment; but the position which it sought to overcome was a possibility. I gather that Senator

Gibson has consulted the Crown Law authorities on the matter, and that he is now of the opinion that the position is reasonably safe with the clause in its present form. With the consent of the committee, I shall withdraw my amendment.

Amendment of amendment - by leave - withdrawn.

Senator SPICER:
Victoria

.- Dealing now with the restriction of political speeches and the broadcasting of political matter before an election, the proposed new clause as now drafted will, in my opinion, overcome the principal difficulty associated with the clause in its original form. If the honorable senator who has raised this question will read sub-clause 2 of the proposed new clause, he will see that the restrictions upon the broadcasting of political speeches or matters of political concern during an election campaign are greatly limited by this proposed new clause, which provides that a person shall not comment on or solicit votes for any candidate at the election.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The word “ the “ in paragraph a of sub-clause 2 of the proposed new clause governs the position.

Senator SPICER:

– That is so. The provisions of paragraphs a, b, c and d of sub-clause 2 limit the matters which may not be broadcast to matters relating to the particular election. In my opinion, that removes the difficulties to which I previously referred.

Original question resolved in the affirmative.

Clause100- (1.) A person shall not broadcast a talk on a medical subject . . .

House of Representatives’ amendment No. 27. - Before “A person” insert “Except as prescribed,”.

Motion (by Senator Ashley) proposed -

That amendment No. 27 be agreed to.

Senator ALLAN MacDONALD:
Western. Australia

– Does a talk on a medical subject include matter broadcast by manufacturers of medicines in advocating the use of some patent medicines of their manufacture? If so, will such manufacturers have to obtain the approval of the Director-General of

Health before any such advertisement can be broadcast over a B class station?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– That is a matter which would be prescribed. .

Senator DARCEY:
Tasmania

– In Hobart, a good deal of dissatisfaction has arisen amongst members of the medical profession because certain chemists advise people to visit them for attention instead of consulting doctors. Something should be done in the matter.

Senator ASHLEY:
New South “WalesPostmasterGeneral · ALP

– The matter raised by the honorable senator is covered by clause 69 (4), which provides -

An advertisement relating to any medicine shall not be broadcast unless the text of the proposed advertising matter has been approved in writing by the Director-General of Health or, on appeal to the Minister under this section, by the Minister.

Question resolved in the affirmative. Clause 102- (6.) The occupier of any premises or place in which there is any appliance . . . shall be guilty of an offence . . .

  1. It shall be a defence … if the defendant proves that he was not aware . . . of the existence in the premises of the appliance in question.

House of Representatives’ amendment No. 28. - After “place”, sub-clause (0.), insert “ , or part of any premises or place,”.

Bouse of Representatives amendment No. 29. - After “ premises “, sub-clause (7), insert “or place, or part of the premises or place,”.

Motion (by Senator Ashley) agreed .to -

That amendments Nos. 28 and 29 be agreed to.

Clause 104 -

The fees payable for broadcast listeners’ licences or renewals thereof granted under this act shall be as follows: -

In the case of a licence for zone 2 -

Provided that -

a broadcast listener’s licence or any renewal thereof may be granted free of charge to any blind person over the age of sixteen years, or to any school maintained by or registered with the Education Department of any State which has an enrolment of less than 50 pupils;

Bouse of Representatives’ amendment No. 30. - Leave out “to any school maintained by or registered with the Education Department of any State “, insert “ , with the approval of the Minister, to any school “.

Clause 106-

Any vendor of appliances capable of being used for the reception of broadcast programme*’ shall . . . supply . . . the name and address of each person to whom he has . . . sold any such appliance.

Bouse of Representatives’ amendment No. 3i. - After “sold” insert “, hired, lent, leased or otherwise disposed of,”.

Clause 113- ‘J. lie Governor-General may make regulations . . . for carrying out or giving effect to this act, and in particular -

  1. for providing for the issue, inscription, transfer, transmission and redemption of inscribed stuck of the commission, and all matters in relation thereto: and

    1. for varying or adding to the conditions

Bouse of Representatives’ amendment No. 32. - Leave out all the words from and including “particular - “ to aud including “and (6)”. insert “ particular “.

Motion (by .Senator Ashley) agreed to-

That amendments Nos. 30 to 32 be agreed to.

Resolutions reported ; report adopted.

page 2028

LOAN BILL (No. 2) 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– 3 move -

That the bill be now read a second time.

The purpose of this bill is to obtain loan appropriation of £100,000,000 to finance war expenditure from the loan fund in 1942-43 and to authorize the raising of an equivalent amount of loan moneys to finance that expenditure. With Japan at our gates, our war effort had to be accelerated to the greatest possible degree and, with it, our expenditure has risen. Great numbers of men have been brought into our armies; costly works such as modern aerodromes have to be constructed, aeroplanes, war materials and supplies have to be acquired. Allied troops have arrived in Australia to assist in its defence, and this has involved additional expenditure under reciprocal lease-lend arrangements. The Loan Act 1942, which was approved by Parliament in March last, appropriated an amount of £75,000,000 and this, with the balance of earlier appropriations, will be sufficient to cover war expenditure from the loan fund up to about the end of June, 1942. A further appropriation is therefore necessary to carry on our war plans during the early months of the next financial year. Since the beginning of the war, Parliament has granted war loan appropriations totalling £309,000,000. 1 commend the bill to the Senate.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 (Authority to borrow £100,000,000).

Senator DARCEY:
Tasmania

– This morning I drew attention to the fact that the first loan bill introduced by this Government was to raise £50,000,000 under the Inscribed Stock Act. I also pointed out that, whilst the Government has prevented the banks from buying war bonds, and from advancing money to other people to buy war bonds, it still issues treasury bonds to the banks. It is incredible that the Government should now propose to sell £100,000,000 worth of inscribed stock. Obviously, the only people who will be able to buy such stock in any substantial measure will be the banks; and this stock carries the usual rate of interest. It will be impossible for any one to ascertain who buys the stock, even if the banks should take the lot. It is farcical to say that we shall not sell bonds to the banks at one counter, but at another counter will sell inscribed stock to them. We do not utilize the national credit by selling inscribed stock. Such a method of raising revenue is against the interests of the people, and will place an insupportable burden of debt upon this nation. I am afraid that I cannot say much more on the subject without repeating what I said this morning. However, I notice that more honorable senators are now in the chamber than when I spoke on this subject before the suspension of the sitting.

Senator MCBRIDE:

– The honorable senator will send us all out of the chamber if he continues talking nonsense.

Senator DARCEY:

Senator McBride is the most irresponsible member of this chamber. All he does is to sit on his seat and laugh. I repeat that this method of raising revenue will involve the country in very heavy taxes; and every increase of taxes lowers the standard of living. Senator McBride may well smile. Recently, he boasted that over 100,000 sheep had been shorn during the last season on his property. Apparently, his association with the sheep business has given him a sheepish mentality. I repeat that there is nothing to stop the Government from - obtaining this £100,000,000 from the Commonwealth Bank. I defy any honorable senator to challenge the correctness of that statement. However, it seems to be a waste of time to place these matters before honorable senators. My only reason in seeking election to the Senate was to fight the money monopoly; and I have carried on that fight since I became a member of this chamber. No honorable senator can challenge successfully the correctness of any statement I have made in this chamber on finance. Honorable senators opposite do not doubt the truth of my statements; but they refuse to admit the fact. Only this morning I quoted the greatest financial authorities in the world in support of the arguments I have consistently placed before this chamber on financial matters.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– Why does not the honorable senator convince the Government?

Senator DARCEY:

– The honorable senator is most insulting; he laughs at any honorable senator who presents a proposition with which he does not agree. The recent criticism by a Sydney newspaper of the manner in which some honorable senators conduct themselves in this chamber was quite justified.

The CHAIRMAN (Senator Brown:
QUEENSLAND

– I remind the honorable senator that he must deal specifically with the clause under consideration. On the third reading, he will have an opportunity to express himself on financial matters generally.

Senator DARCEY:

– I snail reserve my further remarks on this bill.

Senator ALLAN MacDONALD:
Western Australia

– I deplore the indecent haste with which the Government seeks to deal with this measure. The Senate has been given very short notice of this bill. No need exists for rushing it through, because the Treasury, I understand, is receiving a very steady flow of money from taxes, whilst it is not experiencing any difficulty in raising internal loans. The last Liberty Loan, for instance, was an outstanding success; and the current Liberty Loan is also proving successful. The explanation given by the Minister in charge of the bill (Senator Keane), that the Government requires this money in order to meet its commitments in respect of the requirements of allied troops in this country, does not convince me. Portion of those requirements has already been met by an inflation of the note issue. When the Government assumed office a few months ago, the note issue was approximately £72,000,000, whereas it now stands at £98,000,000, which represents an increase at the rate of approximately £3,250,000 a month. The Government is actually making a profit out of the requirements of allied troops in this country, because those troops are being paid in Australian currency, and the credit to meet that payment is an external credit under the lease-lend arrangement. Consequently, there is no need to rush this measure. I object to it.

Clause agreed to.

Clauses 4 and 5 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 2030

INVALID AND OLD-AGE PENSIONS APPROPRIATION

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

The purpose of this bill is to provide £22,000,000 out of the Consolidated Revenue Fund for the payment of invalid and old-age pensions. It is similar to that periodically submitted to Parliament for the purpose of appropriating an amount from the Consolidated Revenue Fund for payment into a trust account to enable pensions to be paid at rates already approved by Parliament. The balance of the appropriation now remaining is sufficient to meet pension payments only to the middle of this month. Parliament is being asked to approve the appropriation of £22,000,000, which is approximately a year’s expenditure. This figure compares with expenditure of £17,366,000 and £19,865,000 in 1940-41 and 1941-42 respectively. The amount now appropriated will not be withdrawn from revenue immediately. Revenue is only drawn upon for payment to the trust account as required to enable pension payments to be made as they become due. This measure has no relation whatever to the rates or conditions under which invalid and old-age pensions are paid. These have been v dealt with separately. This bill merely seeks the provision of funds for the purpose.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2030

WAR PENSIONS APPROPRIATION BILL 1942

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That the bill be now read a second time.

The purpose of this bill is to provide £10,000,000 out of the Consolidated

Revenue Fund for the payment of -war pensions. This is one of the recurring measures periodically submitted to Parliament for the purpose of appropriating an amount from the Consolidated Revenue Fund for payment into a trust account to enable war pensions to be paid therefrom at the rates, already approved by Parliament. The balance of the appropriation now remaining is sufficient to meet pension payments only to the end of August next. Although Parliament is being asked to approve the appropriation of £10,000,000, which is the usual amount appropriated, this sum will’ not be withdrawn from revenue immediately. Payments from revenue to the trust account are made only periodically as it becomes necessary to meet the payments, to pensioners. The basis of payment of war pensions has already been established by Parliament and this measure merely seeks the provision of funds, for the purpose.

Senator LECKIE:
Victoria

.- I recall that when the Leader of the Senate (Senator Collings) was Leader of the Opposition hie- denounced the previous Government for introducing bills appropriating millions of pounds and expecting the Senate to pass them in a few minutes. Although the bills were formal the honorable senator missed few opportunities of criticizing the Government for what he used to term “ indecent haste “ in the passing of money bills. The Leader of the Senate and his colleagues are now on the Government side of the chamber, and they have adopted the same method of dealing with formal money bill’s as was employed by the previous Government. I wonder whether the Leader of the Senate will rise and ask that his past sins be forgiven, now that he has seen the light.

Senator FRASER:
Minister for External Territories · WESTERN AUSTRALIA · ALP

– When the Labour party was in Opposition its members made no attempt to deny the then Government the money that it required. This afternoon Senator Allan MacDonald, who is a representative of the State which I represent, denounced not only the Government for introducing a loan bill, but voted against that bill which made provision for the raking of £106,000,000 for the prosecution of the war.

Senator McBride:

– No division was taken on that bill.

Senator FRASER:
ALP

-One honorable senator- opposite said that he did not agree to the raising of the sum of £100,000,000 required by the Government for the prosecution of the war. It is the first time since the outbreak of the war that an honorable senator has. opposed, a Loan bill.

Senator ALLAN MacDONALD (Western Australia) [3.18). - Apparently, the Minister for External Territories (Senator Eraser) misunderstood my attitude on the bill to which he referred. I protested against the indecent haste with which that bill providing for the raising of. £100,000,000 by borrowing, was introduced.

The PRESIDENT (Senator the Hon J Cunningham:

– The honorable senator is not in order in referring to a bill which has been dea.lt with, by the Senate during, this sitting.

Question resolved in the affirmative.

Bill read a second time and reported from committee without amendment or debate; report; adopted.

Third Reading

Motion (by Senator Keane) proposed -

That the bill be now read a third time.

Senator DARCEY:
Tasmania.

. Will the Minister representing the Treasurer inform me whether the amount of £10,000,000 to be appropriated by this bill for war pensions is to be obtained from the loan fund of: £100,000,000 which is to be raised under the authority of the Commonwealth Inscribed Stock Act 1911- 1940?

Senator Keane:

– The amount of £10,000,000 is to be obtained from Consolidated Revenue.

Question resolved in the affirmative.

Bill read a third time.

page 2031

JOINT. COMMITTEE ON SOCIAL SECURITY

Senator COOPER:

– I present the fourth interim report of the Joint Committee on Social Security.

page 2032

SPECIAL ADJOURNMENT

Motion (by Senator COLLINGS) proposed -

That the Senate, at its rising, adjourn to a date and hour to be fixed by the President, which time’ of meeting shall be notified to each senator by telegram or letter.

Senator LECKIE:
Victoria

.- On previous occasions when a similar motion has been moved by the Leader of the Senate (Senator Collings) he has indicated the date on which the Senate shall meet. As the Government has obtained Supply until October it need not call Parliament together until that month, hut I think that the Senate should meet before then.

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

– In the exceptional circumstances existing at present it is not possible to fix a definite date for the next meeting of the Senate. However, I can say with a considerable amount of certainty that the Senate will not meet earlier than the first week in August.

Question resolved in the affirmative.

page 2032

LEAVE OF ABSENCE TO ALL SENATORS

Motion (by Senator Collings) - by leave - agreed to -

That leave of absence be granted to every member of the Senate from the determination of the sitting this day to the date on which the Senate next meets.

Silting suspended from S.SO to 4.84 p.m.

page 2032

INTERNATIONAL AFFAIRS

Review of War Situation

Senator COLLINGS:
QueenslandMinister for the Interior · ALP

by leave - read a copy of the Ministerial Statement delivered in the House of Representatives by the Prime Minister (Mr. Curtin) (vide page 2183).

page 2032

APPROPRIATION BILL (No. 2) 1941-42

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– 1 move -

That the bill be now read a second time.

An additional appropriation of revenue is rendered necessary by reason of the fact that more revenue is available for defence expenditure than was anticipated when the main appropriation bill was passed by Parliament. The budget estimate of total revenue on which the main appropriation was based for 194142 was £186,000,000. Of that amount £104,000,000 was appropriated for purposes other than war and defence services, whilst £82,000,000 was set aside for the prosecution of the war. Since the budget was passed, various factors have combined to increase the amount of revenue available for the services of the year. The most important of these factors was the war taxation imposed in December, 1941, after the budget had been passed by Parliament. This consisted of an addition to the income tax on individuals by means of a special war tax designed to yield £8,000,000 in the current financial year, and an increase of the tax on companies to yield an additional £4,000,000, making £12,000,000 in all. No appropriation was taken in respect of the yield expected from these increased taxes, it being deferred pending a clearer view of the result of the year’s finances. It is now apparent that the receipts under certain other heads of revenue will exceed anticipations. The main increases over the budget estimates are in respect of customs and excise and sales tax. The increase of revenue from customs and excise will amount to approximately £6,000,000. The increase is due to two factors, viz., a continuance of overseas trade at a higher level, and greater consumption of excisable goods than was anticipated.

The yield from sales tax will exceed the estimate by £2,000,000. The increase is due to the greater volume of trade resulting from the increased purchasing power of the community, and the increased rates imposed in April last. Collections under other heads of revenue show a tendency to exceed the estimates, and, in addition, there will probably be a net saving on the various heads of expenditure other than war and defence services. In the aggregate these factors will probably necesitate an appropriation of, say, a further £22,500,000. It will beappreciated, however, that it is difficult in present circumstances to provide exact estimates, even for short periods. In order to ensure an adequate margin for other possible excess revenue collections which cannot at the moment be foreseen, an appropriation of £25,000,000 is being sought in this measure.

When the budget was introduced in October last the total war expenditure for 1941-42 was estimated at £221,000,000, of which approximately £139,000,000 was to be provided from loan fund. Since then our commitments have greatly increased. With the entry of Japan into the war, it became necessary for us to increase and accelerate our war effort to a still greater degree than formerly. Many more men have been called into the Army; munitions production has been still further expanded ; additional defence works have been undertaken ; and in every direction we are faced with considerably increased expenditure in our preparations to prosecute the war with vigour. Allied troops have arrived in Australia to assist in its defence and that of the south-west Pacific area. This has involved additional expenditure under what is known as reciprocal lend-lease arrangements. On present indications, it is now probable that our war expenditure for the year will reach approximately £300,000,000, of which about £194,000,000 must be provided from loans. The £300,000,000 represents an increase of £80,000,000 on the original programme. Of this £80,000,000, as already stated, £25,000,000 may be obtained from revenue, leaving £55,000,000 to be charged to the loan fund. This additional estimate and revenue appropriation is shown in the schedule. The following table shows the amounts, including the present £25,000,000, which will be appropriated to meet defence expenditure in 1941-42 : -

In the main appropriation the total amount estimated to be expended, namely, £22l,000,000, was shown under the votes for the various services. In this additional appropriation it is not so shown, but the divisional allocation will be set out in Supplementary Estimates when the requirements of the respective departments are definitely known.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 (Issue and application of £25,000,000).

Senator DARCEY:
Tasmania

– I again enter my strong protest against money being raised in this way.

The CHAIRMAN:

– This bill provides for the appropriation of money from Consolidated Revenue, not from loan.

Clause agreed to.

Clause 4 agreed to.

Schedule agreed to.

Preamble and title agreed to.

Bill reported without requests; report adopted.

Third Reading

Motion (by Senator Keane) proposed -

That the bill be now read a third time.

Senator DARCEY:
Tasmania

– I draw the attention of honorable senators to the heavy taxes imposed on the people of Australia by reason of this country’s war commitments. I appeal to honorable senators opposite, who from time to time have shown great antagonism to the statesman-like measures introduced by the Government–

The PRESIDENT:

– This is not a taxation measure but one to appropriate a sum of money from the Consolidated Revenue Fund.

Senator DARCEY:

– May I not comment on the taxes which are imposed in order to meet the country’s commitments ?

The PRESIDENT:

– The honorable senator would be out of order in doing so on this bill.

Question resolved in the affirmative.

Bill read a third time.

page 2034

JOINT COMMITTEE ON WAR EXPENDITURE

Message received from the House of Representatives intimating that Mr. Rosevear had been appointed to serve on the Joint Committee on War Expenditure.

page 2034

SUPPLEMENTARY APPROPRIATION BILL 1940-41

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– I move -

That the bill be now read a second time.

The Supplementary Estimates for the year ended the 30th June, 1941, which have been tabled cover the items of unforeseen expenditure for which no specific parliamentary approval has been given but which were met temporarily out of Treasurer’s Advance pending submission to Parliament in the form of these Estimates. Particulars of this unforeseen expenditure are now submitted for approval by Parliament. As copies of these Estimates have been circulated, I do not propose at this stage to refer to the items in detail. Of the amount of £5,000,000 voted for Treasurer’s Advance in 1940-41, £1,419,090 was expended on ordinary departmental services and war services payable from revenue, whilst £239,596 was used for additions, new works and buildings. Supplementary estimates will shortly be submitted in respect of the latter amount. Although in this bill, Parliament is being asked to appropriate £1,419,090, the expenditure for the year was. actually £119,786 less than the total provision for ordinary services in the main Appropriation Bill. This is because, in many cases, this new expenditure was made contingent on savings of similar amounts in other items. In other votes, straight-out savings were possible. Defence, and war services account for £881,631 out of the amount of £1,419,090 included in the bill.. Full details of the expenditure which is now submitted for approval have already been furnished to Parliament in the Estimates and Budget Papers for 1941-42. In the Estimates a. comparison is made between the amount voted for 1941-42 and the actual expenditure for 1940-41; the Budget Papers also record the expenditure. Details were also included in the Treasurer’s Finance Statement for 1940-41, which has been tabled for the information of honorable senators. In order that the Senate will have an assurance that these Estimates are based upon properly audited accounts, it is the practice to await the report of the Auditor-General on the accounts of the year under review. That report was laid on the table of the Senate on the 25th February last.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without requests or debate.

page 2034

SUPPLEMENTARY APPROPRIATION (WORKS AND BUILDINGS) BILL 1940-41

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

. -I move -

That the bill be now read a second time.

When the Supplementary Estimates for ordinary services were presented, honorable senators were informed of the reason for, and the procedure adopted with, bills of this nature. This bill provides for an appropriation of £239,596 for expenditure on additions, new works, buildings, &c, which has been met from the vote, “ Advance to the Treasurer “ during the year 1940-41. Although the amount involved in this bill is £239.596, that sum does not represent an amount expended on works and buildings in excess of the original estimates. Actually, the total expenditure of £3,211,764 was £209,236 less than the sum of £3,421,000 appropriated for this purpose. Parliament is therefore being asked to approve new works expenditure which was more than counterbalanced by savings on other works. I do not propose at this stage to refer in detail to all the items which are included in the papers made available to honorable senators.

Question resolved in the affirmative.

Sill read a second time, and passed through its remaining stages without amendment or debate.

page 2035

ADJOURNMENT

commonwealth BaNK : exemption of

Employees from Military Service; General Banking Business - Timber Freights - Commonwealth Loans - Loss of Aircraft “ Marika “ - Vital Metals - Control of Meat - Captain Annand - National Security Regulations: Application of Landlord and Tenant and Contracts Adjustment Provisions; Issue of Comprehensive Precis - Parliamentary Pressmen - Taxation and Loan Bills: Attitude of Opposition - Gold-mining Industry - Railways: Standardization of Gauge of transaustralian LlNE- senator CoLLETT’s Speech on Defence - Post War Planning.

Motion (by Senator Collings) proposed -

That the Senate do now adjourn.

Senator KEANE:
Minister for Trade and. Customs · Victoria · ALP

.- On the 28th May, the Leader of the Opposition (Senator McLeay) asked me, as the Minister representing the Treasurer, the following questions, uponnotice: -

  1. Is it the policy of the Commonwealth Bank to retire bank officers, including State managers of the bank, when they reach the age of 65, whilst at the same time junior officers of the bank who are within the military age groupsare exempted from military training ?

    1. If so, does the Government, in view of the acute man-power shortage, intend to take any remedial action?

The Treasurer has now supplied the following answers : -

  1. I am informed that it is the bank’s policy to retire its officers at 65 years of age, but that only nine officers have been retired from the bank under this arrangement since the outbreak of war. The Commonwealth Bank has released practically all its unmarried officers between the ages of 18 and 30 for military training, and the remainder will go into camp in the near future. All officers attaining the age of eighteen years are released when called up for training and unmarried officers volunteering for the Royal Australian Air Force or for the Australian Imperial Force are released immediately. No less than 52 per cent. of the bank’s male staff as at the outbreak of war are engaged in the fighting services. This has been achieved in spite of the fact that the bank is undertaking many special services connected with the war effort and which take up the full time of a large number of the staff.
  2. See information supplied in answer to No. I. The question of granting exemptions is a matter for the man-power authorities.

On the 28th May, Senator Lamp asked me, as the Minister representing the Treasurer, the following question, upon notice : -

Will the Treasurer issue instructions that the Commonwealth Bank shall accept general banking business without having it first referred to the private banks?

The Treasurer has now supplied the following answer: -

By virtue of existing Commonwealth legislation, the conditions under which the Commonwealth Bank shall accept general banking business are entirely within its own jurisdiction. It is understood, however, that the Commonwealth Bank accepts all general banking business, such as current accounts and the issue of drafts,&c., without question, and only consults with a trading bank when it is a question of taking over an advance.

On the 3rd June Senator Aylett asked me the following questions, upon notice : -

  1. Will the Minister have an investigation made into the timber freights between Tasmania and the mainland?
  2. Have such freights increased by 68 per cent. since the beginning of the war?
  3. Is the Prices Commissioner controlling all increases in freight now charged by interstate shipping companies?
  4. If not, why not?

The answers to the honorable senator’s questions are as follows: -

  1. Freight rates for the carriage of timber on requisitioned vessels which carry the bulk of timber from Tasmania to the mainland are under the control of the Shipping Control Board.
  2. Sec answer to No. 1.
  3. No.
  4. See answer to No. 1.

On the 3rd June Senator Lamp asked me as the Minister representing the Treasurer, the following questions, upon notice -

  1. What Commonwealth loans are subject to Commonwealth and State taxation?
  2. What Commonwealth loans are subject to Commonwealth taxation only?

The Treasurer has supplied the following answers: -

  1. and 2. Interest derived from investment in all Commonwealth loans is at present free of State taxation and is subject to Commonwealth taxation. In order to continue the concession of freedom from State taxation, a provision is being made in the legislation which is being introduced for the adoption of a uniform tax system, for a rebate of tax to be allowed in respect of interest from those Commonwealth Government securities which are subject to full Commonwealth taxation. It is proposed that this rebate shall be at the rate of 2s. for each £1 of such loan interest included in the taxable income.
Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

– On the 3rd June, Senator Lamp asked me as the Minister representing _ the Minister for Air, the following questions, upon notice : - 1”. Does the Government intend to hold an inquiry into the loss of the Australian National Airways de Havilland Dragon Rapide _ aircraft Marika, near Flinders Island on Friday, the 29th May?

  1. If so, will the terms of reference include whether the maximum safety load of 5,000 odd pounds on one engine was progressively lowered with the age of the aircraft?
  2. What arrangements are being made to provide a service for the isolated districts of Flinders and King Islands?

The Minister for Air has supplied the following answer: -

  1. An investigation into this accident in accordance with regulation 123 (a) of the Air Navigation Regulations has already been commenced and a decision whether further inquiry is necessary will be made after the report of this investigation is received.
  2. The aspect raised by the honorable senator will be borne in mind during the investigations.
  3. Since the accident, air communication! to Flinders and King Islands have been maintained by the Douglas aircraft which normally operate dire.t to and from Tasmania calling at these islands en route.
Senator FRASER:
WESTERN AUSTRALIA · ALP

– On the 3rd June, Senator Lamp asked me as the Minister -representing the Minister for Supply and Development, the following questions, upon notice : -

  1. Has the Commonwealth Controller of Metals received from the Tasmanian State Committee for Essential Metals Production a case for increased production in vital war metals ?
  2. If so, what is the cause of the delay in dealing with this matter?

The Minister for Supply and Development has supplied the following answers : -

  1. Yes.
  2. There has been no undue delay in dealing with this matter. Some of the recommendations of the State committee had been anticipated in connexion with mining generally and certain of these have been implemented. Others are being considered by the Government. A meeting of the Chairman of the Minerals Committee, the Controller of Minerals and the principals of Tasmanian companies will be held in Melbourne next week with the object of arriving at a satisfactory scheme for the further development of mining in that State.

On the 3rd June, Senator Lamp also asked me as the Minister assisting the Minister for Commerce, the following questions, upon notice: -

  1. What was the pre-war rate per 100 superficial feet for the transport of timber from Hobart to Melbourne?
  2. What increases have taken place since the war commenced?
  3. What is the present rate per 100 superficial feet ou requisitioned ships?
  4. Did the Shipping Control Board or the Prices Commissioner authorize the increases?
  5. Did the Shipping Control Board issue instructions that 20 per cent, must be added to the charges for green timber cut under four months; if so, why?

The Minister for Commerce has supplied the following answers : -

  1. The basic timber rate was 5s. per 100 superficial feet. 2. (o) 2nd October, 1939 - 10 per cent, war surcharge authorized; (6) 1st October, 1940 - 10 per cent, war surcharge was increased to 15 per cent; (c) 1st April, 1942 - 15 per cent, war surcharge was increased to 30 per cent, and 6d. per 100 superficial feet added to basic rate.
  2. 5s. 6d. plus 30 per cent.
  3. Increases (a) and (b) above were authorized by the Commonwealth Prices Commissioner. Increase (c) was authorized by the Shipping Control Board.
  4. The Shipping Control Board issued directions for 20 per cent, to be added to specification measurements in order to cover the overcut in the case of green timber.
Senator GIBSON:
Victoria

.- I draw the attention of the Minister assisting the Minister for Commerce to a question asked by Senator Cooper in regard to the control of meat. About 1917, the Government of the day set out to control the production and handling of meat from the calf till the meat was on the butcher’s block. That scheme proved an absolute fiasco. We do not want to see the same thing recur. The graziers are entitled to know what is to happen to their stock. Does the Government propose to control stock in the paddock, or in the yards, or at the abattoirs? Where will the control be exercised? What classes of stock will be controlled? Will sheep or cattle or both be controlled? All these questions should be answered. The graziers are entitled to be told exactly what the Government intends to do so that they will know where they stand. Many classes of stock cannot be killed. We do not know whether the stock killed is to be canned, frozen or dehydrated. Seeing that a conference has been held on this subject, the Government should be in a position to tell us where and how the control will be exercised, and what stock will be subject to control.

Senator Allan MACDONALD:

– Does this arise out of the decision with respect to Werribee beef?

Senator GIBSON:

– No, it has nothing to do with Werribee beef. That issue has been settled for the time being.

Senator COOPER:
Queensland

– Six weeks ago I handed to the Minister for the Army (Mr. Forde j an appeal made by Colonel Annand, of Queensland, on behalf of his son, Captain Annand, who had stated that he had suffered as the result of a military inquiry, the decision of which had reflected upon his good name and had ended his military career. Three weeks ago I handed a copy of that appeal to the Minister representing the Minister for the Army in this chamber. So far I have had no reply to those representations. Captain Annand is under a shadow because his good name has been questioned. I urge the Minister representing the Minister for the Army to make an immediate inquiry into this matter.

Senator SAMPSON:
Tasmania

– I am glad that the Minister representing the Acting Attorney-General is in the chamber, because I desire to bring to his notice a matter arising out of the National Security (Landlord and Tenant) Regulations and the National Security (Contracts Adjustment) Regulations. The case relates to certain individuals who were in business as hairdressers and tobacconists. The circumstances suggest to me that this is a case of hardship, although I cannot say whether there has been any departure from the strict letter of the law. The details of the case are related in a letter written to me by the wife of one of the men concerned, himself a returned soldier. The letter reads -

Dear Senator Sampson,

I know you are a busy person these days, but I have always felt you would help any digger, so I will try and explain things as briefly as possible. To put the whole matter in a nutshell, an agent is trying to hold us to paying six months rent in lieu of notice for the shop in the Quadrant, but the men don’t think they are liable under the National Security Act. Tony S tubbings, (one hairdresser we had) was called up for the duration of the war. At the beginning of the war George Curwen enlisted in the Volunteer De’fence League, and got tired of it so was transferred to the Reserve Garrison and was called up at the end of February. Bill has had the “jitters” because he was above the age and couldn’t enlist too, so he applied to the Defence Department about twelve months ago to see if he could do anything to help, and two days after George got his notice, Bill was notified to report to the Defence Department ten days later. Some time ago, a chap said he would take the business over if they were called up but in the meantime he took another man’s business over at Smithton so that he could enlist and so left us to find someone else. In the short time George and Bill had they simply sifted Tasmania to try and get someone to take over, but the answer was the same - either going into camp, or expecting to be, &c., so they decided to store the equipment, &c. and make a new start when hostilities cease.

The first person they got in touch with, of course, was the agent, who simply refused to listen to them, told them not to be silly and to stick to their business,&c. Wouldn’t take any notice, said they were joking and that he didn’t have time to talk because he was going for a holiday and would see them when he came back. Bill tried to give him a week’s notice and said theywouldn’t be there when he came back from his holiday, but he still waved them aside and walked out. So they didn’t know what to do, so went to see the agent’s brother who was very nice, accepted a week’s notice and aweek’s rent. However, they asked if they may be allowed first offer of the shop when they are released from military obligations, and the agent’s brother said he would notify the owner and do all he could for them.

When the agent returned from Melbourne he had the impertinence to come to me and tell me I was liable for six months’ rent. This is the way his poor mind reasoned it. When George and Bill started off in business they got the lease in my name merely as a precautionary measure. The lease was for five years terminating in October 1940. When the lease expired the agent asked Bill if he would renew it, but he said things were too unsettled and that they would rather go on from week to week. By this time the Government had stepped in and fixed the rental values which riled the agent immensely and he has been everlastingly harping to George and Bill - “How lucky they were there’s a war on!” or their rent would go up, &c. The lease doesn’t state that any notice should be given from either side, but my solicitor informs me that it is in an act of Parliament that if any tenancy is held after a five years’ lease has expired the tenants are still liable to give six months’ notice, and because the lease was in my name that is the little technicality they are trying to work on. However, we served a notice on the agent to appear at the Court at Bequests and we were appealing under the National Security Act. Anyway this gave him a bump and the owner came down to four months, then to three and I still think the whole thing is an imposition. And the agent will find that there is one woman who will fight for justice and not bo bounced into paying instead of appearing in court. Anyway, they are now asking me to keep it out of court. Why?

I wrote to the owner and tried to explain the situation to him and I received a sniffy letter back saying “that as we had a lease it prevented him getting higher rent and he felt justified in claiming six months’ rent “. I am afraid I saw red for once in many years. I asked the agent why he didn’t talk to the man at the shop before he went away. He said, “ He didn’t have the time as he was in a hurry to go away for his holiday “, and I said, “ Well, the men were in a hurry to fight for their country and evidently he was going to give them a dig in the back while they were doing it”. I was wondering if you could give me some information regarding leases or any amendments under the National Security Act. Bill mentioned it to the head of his department here and he said he hadn’t anything to worry about,but they are still trying to take it out on me. I would be so grateful to get some information from you.

I received another letter from the writer, and I wrote to her and sent her the following telegram suggesting that it might be wise to compromise: -

It might be wise to compromise for month. If this not accepted two points should be taken: (1) Keith’s acceptance of week’s rent, (2) If rent paidweekly or monthly that period should be limit of liability.

Her letter in reply reads -

Thank you so very much for letter and telegram. It was so good of you to bother for me, but the case went against us at the court to-day and it seems that the National Security Act isn’t much use in protecting members of the fighting forces. Hence this letter to you. The act didn’t seem to be taken into account at ail, but because the lease was in my name and expired eighteen months ago was all the police magistrate seemed to worry about. He terminated the lease, but was very sorry for the owner and said he thought that 50/50 was a fair thing. That is, of course, that the owner demanded six months’ rent in lieu of notice and said that we would have to pay three months’. It didn’t matter that the three men were serving their country, it didn’t matter that they voluntarily gave up their business and were ready to fight tor their country when the Government called for them. It didn’t matter that the owner is a rich man and a mean man at that, it didn’t matter that the agent’s brother accepted a week’s notice and a week’s rent. It doesn’t matter that the rats like – won’t help in any way except sit at home and make capital, and not even made to help in any civilian capacity (air raids precaution work, &c ) . It didn’t matter that the little bit of cash I had was in that business and I cheerfully gave it up because I would burst before I tried to prevent any one on earth fighting for our country and everything that is decent and clean, and because of a technicality, the civilian court can override justice that the National Security Act has tried to provide. The police magistrate didn’t worry about the business being closed owing to the war. He just seemed to be terrified he might not be fair to the owner. Please don’t think I am kicking against the cash; it will take me some time to pay it, but that isn’t the point: Why should cads like these have the laugh over men willing to give their lives even, if needs be? Please, couldn’t something be done about it? Couldn’t the Prime Minister cancel all leases from the [outcome of] or beginning of the war to release men for military duties? You will find businesses in plenty tied up with leases, and if people still have to pay rent like we are doing where is the sense in the National Security Act? People will think that they may as well carry on their business. Wouldn’t it be possible to approach the Prime Minister about cancelling of all leases? It would be the biggest knock to some of these “ know-all

Shylocks”.. I am afraid I am feeling very much in a fighting spirit aud take the view that owners not willing to- waive their rights at such a grave time, are nothing less than disloyal traitors It’s men like these who, after telling the men at our shop “ HOt to he fools and stick to their business” have the laugh. Please, is it right? The only plea made in court- for the owner was that, poor man, he had suffered a lot over his property in the depression, and that he would be very lenient if we had to pay anything and the police magistrate thought longer notice should have been given to the owner. I ask you, how on earth, was it possible? The men had only a week’s notice themselves. The solicitor for the owner said that tenants, shouldn’t be allowed to walk out and leave the onus on ‘the owner. So at that rate men are not being allowed to answer’ Mr. Curtin’s appeal for mee men unless they stay and finish’ the full period of a lease first. In the meantime, the Japs can come in and make owners of themselves. Please, just once again: would it be possible to approach the Prime Minister on the subject of leases, or am I presuming too much? The old diggers here- have a lot of faith in you and I feel you are with us too.

The case as put to me appears to be a very hard one, and I want to know whether the Attorney-General’s Department can take any action in the interests of these men.

Senator ASHLEY:
Postmaster-General · New South Wales · ALP

– The matter raised by Senator Sampson is complicated, but I am prepared to have it investigated by the Attorney-General’s Department if the honorable senator does not desire to place it before the department. Recently Senator Sampson directed the following question, upon notice, to me, as Minister representing the Minister for Labour and National Service: -

  1. In view of the proposed drastic reorganination of industry, as announced by the Government, so that 318,000 additional men amd women will be provided by the end of December for the armed forces, munitions, shipbuilding and aircraft programmes, and for allied work, will the Minister consider the diversion to useful war-time occupations of the large number of persons at present occupied in the parliamentary press galleries?
  2. Are these press representatives, in a reserved occupation;; if so, why?
  3. If not, do their present activities serve any useful purpose or help the national war effort? 4’. What is the number of males employed in this manner, and what are their ages and medical categories?
  4. What newspapers do they represent, and what, is the number attached to each newspaper ?

The Minister for Labour and National Service has furnished the following answers : -

  1. All occupations are kept- under constant review by the man-power authorities. The position of journalists is considered in the tight of where they might give the greatest service to the: war effort.
  2. Newspaper employees, are not included in the schedule of reserved occupations.
  3. They are dealt with having regard to the importance of the work they perform. In considering plans for the proper utilization of man-power, the newspapers organizations arc not being overlooked, and the question is at present receiving further consideration at the- hand’s of the Government.
  4. There are 40 pressman engaged, in the Canberra gallery. The information regarding their ages and’ medical categories could be obtained but only at the cost of a great deal of the time of an organization already heavily overburdened.
  5. They comprise separate, staffs for the following papers: - Melbourne Argus, Melbourne Age, Melbourne Sun News-Pictorial, Melbourne Herald, Sydney Morning Herald. Sydney Truth, Sydney Daily Mirror, Australian United Press, Brisbane Telegraph, Sydney Sun, and the Australian Broadcasting, Commission and Renter’s Cable Service. These pressman have additional duties in representing the following papers: - The Perth West Australian, Adelaide Advertiser, Adelaide News, Hobart Mercury, Launceston Examiner. Brisbane Courier-Mail, and country papers throughout Australia, and the British and American cable services apart from Renter’s.
Senator DARCEY:
Tasmania

– Prom time to time the Opposition, true to the political axiom that it is the ditty of an opposition to oppose, attempts to defeat measures that are of great value to the people. In the last few days, honorable senators opposite have opposed the uniform income taxation, bills. They have allowed loan measures to go through without any opposition. I take this opportunity to bring this matter before the notice of the Senate. It. is very hard to look after the interests of the taxpayers. Members of this Parliament take the oath to do their best for their King, and country, and, after all, the taxpayers are citizens of this country. Notwithstanding the protests that have been made, the policy of raising large loans has been, continued, without bringing any challenge from the Opposition in this chamber.

Senator ALLAN MacDONALD:
Western Australia

– I should like to direct attention again to the man-power situation on the gold-fields, which has been the subject of recent conferences: in

Canberra. Parliament will not reassemble for several weeks, and I should like to know if, in the meantime, the Minister for Labour and National Service (Mr. Ward), who controls man-power, will advise Western Australian members of what the future holds in regard to the gold-mining industry in that State. As has been stressed in this chamber on several occasions, this matter is of great importance, and I have no intention of covering the ground again now. However, we are very much concerned with the future of this industry, because, with a further demand on man-power, the underground conditions in many workings in the Western Australian gold-mines will deteriorate to such a degree that subsidences will occur, especially in the stopes which are already worked out, and the inflow of water will cause so much damage that the future of the mines will be in danger. That is not a very happy outlook for all those men - their number is legion - who have enlisted in our fighting forces from the gold-fields and hope to return to their old jobs at the conclusion of hostilities. If present conditions be permitted to continue, they will find that the work on which they were engaged is no longer available to them. That position should be faced squarely before any further demand is made upon the gold-mining industry for manpower. I ask the Government to advise honorable senators after their return to Western Australia of any developments in regard to this matter, because we are concerned with the future of that State.

I ask the Minister for the Interior (Senator Collings) to do his best to expedite the standardization of the railway gauge from Broken Hill to Port Pirie, or Port Augusta, whichever route the engineers consider to be the better. The position now is immeasurably worse than it was some time ago. The trans-Australian railway is carrying a load which I am sure no railway engineer ever anticipated, with the result that rolling stock is deteriorating rapidly through too much use and insufficient time for reconditioning. That deterioration is so great that in the very near future, if the vehicles in our rolling-stock yards are not given the attention which they urgently require, I am afraid that there will be a major breakdown in the transport service between the eastern and western areas of the Commonwealth. Owing to constant troop movements, the existing rolling stock is insufficient to cope with the greatly increased traffic and, at the same time, provide any semblance of a service to the people of Western Australia. It stands to reason that the Army must have priority, but I consider that provision should be made for the carriage of a certain number of civilian passengers and a reasonable quantity of goods and mail matter.

Senator COLLETT:

– And essential raw 113 Si 1 6 r 1 £1 1 s *

Senator ALLAN MacDONALD:

– Yes. The only way to do that is to draw upon the rolling-stock of the New South Wales Government railways. The rollingstock of Victoria and South Australia, which States, of course, are closer to the transcontinental line, is unfortunately useless, because it is of the 5-ft. 3-in. gauge; whereas the New South Wales rolling-stock is of standard gauge, and could be taken to Kalgoorlie if a connexion were made between the Commonwealth railway system and the New South Wales system at Broken Hill. This is a matter of national importance. The people of Western Australia are at an enormous disadvantage as regards communication with the eastern States, and that disadvantage cannot be tolerated. They want to be in touch with the eastern States, and as there is practically no sea traffic, the railways are the only means of transport. I ask the Minister for the Interior, who, of course, enjoys the benefit of a standard-gauge line from Sydney to South Brisbane, to remember that the people in Western Australia also wish to keep in touch with the more populous centres.

I should like to congratulate Senator Collett upon the excellent speech which he delivered in this chamber this afternoon. He gave us food for thought as regards the future. I suggest to him that, when he is in Melbourne again, he should see the statue of General Gordon of Khartoum, because it might give him inspiration in regard to the future disciplining of our people. He will see that the very gallant general holds the bible in one hand and a cane in the other. A mixture of the two might do the people of this country a world of good.

Senator ARNOLD (New South Wales; [5.58]. - I should like to bring before the Senate the tremendous task which trill confront this nation in the post-war years, when it will be necessary to reverse and adjust the present diversion of more and more man-power and resources from war-time economy to a peace-time economy. The problems which will be associated with the coming of peace will be of such magnitude and complexity that I consider that this Parliament should be making some preparation to deal with them. The Joint Committee on Social Security, of which I have the privilege to be a member, has given some consideration to post-war problems, and has recommended to the Government that something should be done in regard to housing. It has urged that a planning committee be set up now, to draw up a programme of housing which can be put into effect immediately the war is over. We could win the war but lose the benefits of peace. I make no apology for drawing attention to the seriousness of the problem, and I urge honorable senators to give consideration to it during the parliamentary recess.

Senator COLLINGS:
Minister for the Interior · QUEENSLAND · FLP; ALP from 1937

in reply - The comments of honorable senators will be referred to the appropriate Ministers, and where they have asked for information it will be supplied to them. I assure Senator Allan MacDonald that the matter to which he has referred, concerning the trans-Australian railway, is continually under the closest observation. It would be unwise for me to go into details; but when he next travels over the line he will appreciate the extent of the operations that arc being conducted there. The subject of post-war planning, referred to by Senator Arnold, is most important. The Prime Minister (Mr. Curtin) already has the matter in hand, and certain action will be taken, supplemented probably by further action. In March last, Senator A. J. McLachlan urged upon the Government the advisability of issuing a precis of the contents and effect of the numerous regulations that have been promulgated under the National Security Act. On the 6th May last, I stated in this chamber that the Attorney-General’s Department had had the matter under serious considera tion and was then issuing to the press a condensed statement indicating the trend of the regulations and their relation to one another. I understand from the honorable senator that the statements issued to the newspapers are not regarded by those controlling them as having much news value. He desires that they shall be distributed throughout the country districts. I hope that at an early date action that will be more satisfactory to him will have been taken. The probable date of the resumption of the sittings of this Parliament cannot be stated more definitely than that it will meet again early in August.

Question resolved in the affirmative.

page 2041

PAPERS

The following Papers were presented : -

Postmaster-General’s Department - Thirtyfirst Annual Report, for year 1940-41.

Commonwealth Public Service Act - Regulations - Statutory Rules 1942, Nos. 225, 249.

National Security Act -

National Security (Emergency Control Regulations - Order - Military power during emergency.

National Security (General) Regulations - Orders - :

By State Premiers - New South Wales, Queensland (2), South Australia.

Prohibited places.

Taking possession of land, &c. (67).

Use of land (28).

National Security (General) Regulations and National Security (Supplementary) Regulations - Order by State Premier of South Australia.

National Security (Supplementary) Regulations - Orders -

Closing Time for Shops.

By State Premiers - New South

Wales (2), Queensland (8), Victoria.

Regulations - Statutory Rules 1942, Nos. 237, 238, 239, 240, 241, 242, 243, 244. 245,. 246, 247, 248.

Peace Officers Act - Regulations - Statutory Rules 1942, No. 212.

Ordered to be printed.

Seat of Government Acceptance Act and Seat of Government (Administration Act - Canberra University College Ordinance - Report of the Council of the Canberra University College for the year 1941.

Seat of Government Acceptance Act and Seat of Government (Administration) Act- Ordinance No. 11 of 1942- Rural Workers Accommodation.

Senate adjourned at 6.5 p.m. to a date and hour to be fixed by the President.

Cite as: Australia, Senate, Debates, 3 June 1942, viewed 22 October 2017, <http://historichansard.net/senate/1942/19420603_senate_16_171/>.