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Senate
10 March 1943

16^th Parliament · 1^st Session

LEAVE OF ABSENCE
QUESTION
- COAL-MINING INDUSTRY
QUESTION
- ALUMINIUM PRODUCTION
REPATRIATION
- Treatment of Medically Unfit Personnel
QUESTION
- ROAD TRANSPORT IN TASMANIA
BEADING OF SPEECHES
QUESTION
- APPLES AND PEARS
QUESTION
- BLUE PEAS
QUESTION
- TASMANIA
QUESTION
- BANK OVERDRAFTS
QUESTION
- NEW BUSINESS AFTER 10.30 P.M
NATIONAL WELFARE FUND BILL 1943
- Second Reading
INCOME TAX ASSESSMENT BILL 1943
- Second Reading
PAPERS

The President (Senator theHon. J. Cunningham) took the chair at 3 p.m., and read prayers.

page 1399

LEAVE OF ABSENCE

Motion (by Senator Uppill) - by leave - agreed to -

That two weeks’ leave of absence be granted to Senator Allan MacDonald on account of urgent private business.

page 1399

QUESTION

COAL-MINING INDUSTRY

Senator FOLL:
QUEENSLAND

– Will the Leader of the Senate state on behalf of the Government whether the press statement is correct that, whereas yesterday there were strikes in eighteen collieries in New South Wales, to-day there are 22 strikes on the coal-fields? Has the Minister any information to give to the Senate as to what action is being taken by the Government with regard to this matter?

Senator COLLINGS:
Minister for the Interior · QUEENSLAND · ALP

– I have seen the report to which the honorable senator refers. I also remember the statement made by him in the Senate yesterday. I have now to inform him that already 278 convictions for absenteeism in the coal industry have been recorded this year, although we have only just entered the third month. There are other prosecutions pending, in addition to the Corrimal cases. All that I have to add is that the Government is doing the best it can in the matter.

page 1399

QUESTION

ALUMINIUM PRODUCTION

Senator GIBSON:
VICTORIA

– Will the Leader of the Senate state whether the Government intends to expend some millions of pounds on the production of aluminium? If it does, where will the expenditure be incurred, and what sum will he expended? Is the Minister satisfied that aluminium is of the same value as magnesium for the purpose for which it is chiefly used ?

Senator COLLINGS:
ALP

– Statements on matters of government policy are not usually made in reply to questions.

page 1400

REPATRIATION

Treatment of Medically Unfit Personnel

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

– by leave - On the 10th February last, Senator Cooper referred to the difficult position of a manwho has not been in an operational area, but is discharged as medically unfit. He stated that he is informed thai such a man cannot be assisted by the Repatriation Department, and at the same time he cannot be assisted by the Army authorities during the period in which he is convalescing. It would appear that there has been some misapprehension with regard to this matter. The present procedure is that which has been in operation since the commencement of this war, and is as follows: - In the case of a soldier who has had service overseas, pension and medical treatment are provided by the Repatriation Commission in respect of any disability which results from any occurrence happening during the period of service. In the case of a member of the forces who has served in Australia only, pension and medical treatment- are provided in the case of any disability which was directly attributable to service. Prior-to-enlistment disabilities which have been aggravated by service are recognized in both instances, excepting that, in the case of a man whose service has been confined to Australia, no responsibility is accepted by the Commonwealth unless such member has served at least six months in camp.

As indicated in the second-reading speech of the Minister for Repatriation (Mr. Frost) on the 17th February last on the Australian Soldiers’ Repatriation Bill 1943 the Government intends to amend the principal act to include service in Papua and New Guinea as representing overseas service, and thus provide eligibility for medical treatment and pension on a wider basis than exists at present. Power will also be given to include certain areas in Australia as the equivalent of overseas service. This does not mean, however, that all disabilities suffered by men on discharge will be recognized as war disabilities. The basic principle of the Australian Soldiers’ Repatriation Act must always be recognition of disabilities which are ascribable to war service. Unfortunately, as was shown in the Minister’s second-reading speech, it is not possible in all cases to prevent the enlistment of men who are suffering from definite mental and/or physical diseases. Where men enlist suffering from priortoenlistment conditions, the acceptance or otherwise of these complaints depends on the circumstances, but the benefit of doubt is given to the soldier in every case.

The medical treatment of serving members of the forces is, of course, a matter for the service department concerned. In connexion with the conditions relating to medical care, discharge and after-treatment, the practice is as follows : -

In general terms, a member of the naval, military and air force who, following examination by a medical board, is, in the opinion of the department, suffering from some condition which renders him unfit for further service, will be discharged from the forces -

when he is no longer, at the time, in need of further active medical treatment as an in-patient, and is capable of -

resuming his pre-enlistment occupation; or

following some other occupation; or

being trained for some skilled occupation; or

when he is, whether in need of further active medical treatment or not, unlikely within a reasonable period to improve sufficiently for employment in the general labour market; or

when the period of treatment in a service hospital in Australia has totalled six months, provided that, in special cases, on the recommendation of medical board, the period of treatment in a service hospital ma; be extended, but the maximum period of treatment in a service hospital in Australia shall not, in any such case, exceed twelve months.

– He will know of them before I have finished. After failing to put the regulations- into force for about two months, he, apparently, was censured by the Minister, and action was ultimately taken. Later, Mr. Wilson became Deputy Director of Man Power in Tasmania, but he made such a mess of things that he was put out of that position. During his term of office as Deputy Director of Man Power, he agreed that some men who had been ordered into camp need not do so. He made this decision without checking the facts. I have examined the files and can give the names of the individuals concerned. Honorable senators may be interested to know what this man thinks of members of Parliament. In the allocation of priorities on motor cars, he has given to a brewer’s agent a No. 3 priority, whilst a baker’s delivery van is given a No. 5 priority. Members of Parliament who use their cars for important government work have been given a No. 9 priority. 1 cite those instances in order to show that when complaints involving this gentleman are made they should be checked up. I have taken this opportunity to deal with the matter in the Senate in order to forestall any propaganda that complaints made against Mr, Wilson are unfounded, and are sheer untruths. If the Government wants to obtain a 100 per cent, war effort, it should appoint to responsible positions officials who are prepared to assist it in thai direction, and deal justly with all sections of the community, not victimizing one section and extending privileges to another section. If the Minister for Transport (Mr. George Lawson) is prepared to send an officer to Tasmania to investigate the complaints I have made, and allows me to accompany that official, I undertake to substantiate the complaints that I have just voiced.

The PRESIDENT:

– A ruling by a previous President lays it down that -

A senator in asking leave to make a statement should indicate the nature of it. thus enabling the Senate to judge whether permission should be granted, but the Standing Orders limit such statements to matters of a personal nature or concerning the business of the Senate.

Senator McLEAY:
SOUTH AUSTRALIA · UAP; LP from 1944

– I rise to order, Mr. President, though you have just touched upon the subject which I wish to mention. It is most unfair for an honorable senator to ask for leave to make a statement without complying with the ruling and Standing Orders to which you have referred. I am not concerned with the merits of the case raised by Senator Aylett; but he has been most unfair in making an attack under privilege upon a public servant who has no opportunity to defend himself. If any honorable senator should ask for leave to make a statement of that kind in the future, I shall certainly object.

page 1402

BEADING OF SPEECHES

The PRESIDENT (Senator the Hon 3 Cunningham:
WESTERN AUSTRALIA

– I have to inform the Senate that the Standing Orders Committee met this day and considered the application of Standing Order No. 406 to the reading of speeches in the Senate. The committee decided that it is not advisable to amend the Standing Order, but agreed that if a senator desires, for special reasons, to read his speech, he should be able to do so by leave of the Senate. I rule accordingly.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Are we to understand, Mr. President, from what you have just said, that leave shall be refused to an honorable senator to read his speech if one honorable senator objects ?

The PRESIDENT:

– That is so.

page 1402

QUESTION

APPLES AND PEARS

Senator LAMP:
TASMANIA

asked the Minister representing the Minister for Commerce and Agriculture, upon notice -

Will the Minister take into consideration the extra cost of orchard requirements and labour in Tasmania and Western Australia and grant an increase in the unit price of apples and [tears under the acquisition scheme?

Senator FRASER:
ALP

– The Minister for Commerce and Agriculture has supplied the following answer: -

Consideration is being given to requests for increased payments to apple and pear growers in Tasmania and Western Australia.

page 1403

QUESTION

BLUE PEAS

Senator HERBERT HAYS:
TASMANIA

asked the

Minister representing the Minister for Commerce and Agriculture, upon notice -

Is it a fact that the decision of the High Court in the case of Tonking v. The Australian Apple and Pear Marketing Board lays down that each individual grower has a legal right to be paid the full value ofhis fruit when acquired by the Commonwealth ?
Is it a fact that blue peas of the 1941-42 season were acquired at a price much below the marketing price ruling at the time of acquisition?
If the answer to 1. is in the affirmative, will the Minister inform the Senate whether the Government is prepared to accept that decision in regard to blue peas of the 1941-42 season ?

SenatorFRASER,- The Minister for Commerce and Agriculture has supplied the following answer: -

In reply to a similar question in another place the Attorney-General has advised that he will make a statement covering this subject at an early date.

page 1403

QUESTION

TASMANIA

Conciliation Commissioner

Senator AYLETT:

asked the Minister representing the Attorney-General, upon notice -

Will the Minister give early consideration to the appointment of a conciliation commissioner in Tasmania to adjudicate on local disputes which may occur between employers and employees engaged in industry in that State?

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

– The AttorneyGeneral has supplied the following answer : -

As occasion requires, a conciliation commissioner visits Tasmania and that practice will be continued. The question of the appointment of a permanent conciliation commissioner for Tasmaniawill be considered.

page 1403

QUESTION

BANK OVERDRAFTS

Senator McLEAY:
SOUTH AUSTRALIA

asked the Minister representing the Treasurer -

Is it a fact that the Commonwealth Bank has instructed the trading banks to reduce all overdraft limits by 25 per cent.?
If so, have the following factors been taken into consideration: -
1. The long delays experienced by business firms in receiving payment for government contracts ?
2. The great amount of capital that has to be outlayed on raw materials?
3. The increased disbursements on wages due to increases in the basic wage and by retrospective payments ordered by the Women’s Employment Board?

SenatorFRASER. - The Treasurer has supplied the following answers: -

No.
See answer to 1.

page 1403

QUESTION

NEW BUSINESS AFTER 10.30 P.M

Motion (by Senator Collings) proposed -

That Standing Order No. 68 be suspended up to and including the 26th March next, for the purpose of enabling new business to be commenced after 10.30 p.m.

Senator McLEAY:
Leader of the Opposition · South Australia

– I should like to indicate that the Opposition is prepared to sit from 11 a.m. to 11 p.m., but is not in favour of all-night sittings. In the interests of good government, and in view of the importance of the measures to be placed before us, the Opposition believes that honorable senators should not be asked to sit later than 11 p.m.

Question resolved in the affirmative.

page 1403

NATIONAL WELFARE FUND BILL 1943

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

Second Reading

SenatorFRASER (Western Australia - Minister for External Territories) [3.32].- I move-

That the bill be now read a second time.

As honorable senators are aware, the Government has already outlined its plan for ensuring minimum social and economic standards throughout the community. Briefly, those plans involve the introduction, stage by stage, of a comprehensive scheme of welfare services, including health, unemployment and sickness, and other associated services. Bills covering some parts of the scheme have already been prepared, and, it is hoped, will be dealt with during the present sittings. These bills relate to maternity benefits, a liberalized scheme of maternity allowances, and funeral benefits for invalid and old-age pensioners. Preliminary work on unemployment and sickness schemes is in hand, and it is anticipated that the bills covering these two benefits will be ready for consideration by Parliament within six months. It will be realized that the preparation of a comprehensive scheme of welfare involves considerable inquiry and investigation. The Social Security Committee is at present dealing with the health side of the scheme, which includes medical and hospital services, and the provision of medicines. As soon as its inquiries have been completed, bills dealing with these schemes will be submitted.

To finance these national welfare schemes, this bill proposes to establish a National Welfare Fund, which will take the form of a trust account under section 62a of the Audit Act 1901-1934.

Commencing from the 1st July, 1943, it is proposed to pay to the National Welfare Fund out of Consolidated Revenue an annual sum of (a) £30,000,000; or (b) a sum equal to one-quarter of the total collections each year from income tax on individuals for Commonwealth purposes, whichever is the less.

In the next financial year, 1943-44, the position will be as follows : -

In the first year, therefore, the Estimates suggest that the contribution to the fund will be about £30,000,000. Bills are now before the Senate containing the Government’s proposals for the increased taxation necessary to provide the contributions to the fund. Clause 5 of the bill provides that the fund “ shall be applied in making such payments as are directed by any law of the Commonwealth to be met from the fund, in relation to health services, unemployment or sickness benefits, family allowances, or other welfare or social services “. The charges on the fund in the next financial year will depend, of course, on how many services it is possible to begin in that year. For a full year, the services which I have just mentioned - maternity benefits, maternity allowances and funeral benefits - will cost, it is estimated, £2,250,000. If, as anticipated the unemployment and sickness schemes are commenced during the course of the next financial year, the cost of these will be met from the fund. When the welfare scheme becomes fully operative, it is unlikely that there will be any balance from current contributions to the fund. In the earlier stages, however, the fund will build up some credit balances. These will be used later when the welfare scheme reaches full operation. These balances will not be allowed to remain idle. Sub-section 1 of section 62b of the Audit Act, which provides for the investment of trust account balances is as follows: -

Moneys standing to the credit of the trust fund may be invested by the Treasurer -

in any securities of, or guaranteed by, the Government of the Commonwealth or of any State; or

on deposit in any bank.

If the balances are invested in Government securities, a useful source of temporary finance for war purposes will be provided. Later, as greater demands are made on the National Welfare Fund, the securities will be realized as required for the social welfare purposes approved by Parliament. Interest from the investment of any moneys standing to the credit of the National Welfare Fund will be credited to the fund.

Debate (on motion by Senator McBride) adjourned.

page 1404

INCOME TAX ASSESSMENT BILL 1943

Second Reading

Debate resumed from the 9th March (vide page . 1314) on motion by Senator Fraser -

That thebill be now read a second time.

Senator McLEAY:
Leader of the Opposition · South Australia

– The people of Australia who take an interest in the financial position of their country must be alarmed at the serious drift in the finances, and the position that will be revealed on the 30th June, 1943. We had the opportunity a few weeks ago of listening in this chamber to a speech by the Deputy Leader of the Opposition (Senator McBride), who put the facts before Parliament clearly and forcefully. I regret that greater publicity was not given to that speech, because the people of Australia should be told by their leaders in Parliament what they think of the problems confronting them. We have heard the financial statement of the Treasurer, and now we have this bill and the Income Tax Bill 1943 before us, and also the latest trick, the National Welfare Fund Bill, but the Standing Orders require us to confine our remarks to the measure before the Senate.

Senator Collings:

– I rise to a point of order. I object to a Government measure being termed “ the latest trick “, and I ask that the remark be withdrawn.

Senator MCBRIDE:
SOUTH AUSTRALIA

– -That is an accurate description of it.

The PRESIDENT (Senator the Hon J Cunningham:
WESTERN AUSTRALIA

– The Leader of the Senate takes exception to the remark of the Leader of the Opposition that a certain bill is a trick, and asks that the expression be withdrawn.

Senator McLEAY:

– I regret that I used the phrase, but when looking through the Treasurer’s speech, I noticed that he stated that “ no legerdemain can produce the needs of war”. Leger-de-main, of course, means sleight-of-hand, juggling, and trickery. However, I regret having used a term that is offensive to the Leader of the Senate (Senator Collings), and I withdraw it. It is estimated that by the end of June of this year, should the Government be successful in raising the £100.000,000 in April, thi3 country will be relying upon bank credit to an amount of approximately £300,000,000. Honorable senators will recall that in his budget speech in September, 1942, the Treasurer (Mr. Chifley) estimated that there would be a gap of £300,000,000 which would have to be filled by means of public loans; but what is the position in which we find ourselves to-day? Up to dato only £83,000,000 has been raised by way of loans, and if we are successful in raising a further £100,000,000 in April - ‘[ hope that the loan will be successful, and I shall give it my fullest supportthe total will be only’ £183,000,000. Various odds and ends probably will bring that sum np to £200,000,000; but what provision has been made for the other £1.00,000,000, plus the extra £90,000,000 required to cover additional expenditure not foreseen by the Treasurer? It seems that we shall be faced with a treasury-bill issue of approximately £207,000,000, which, coupled with the carry-over of about £83,000,000 on the 1st July, 1942, makes a total of £290,000,000. As I have said, the Treasurer’s estimate of expenditure was exceeded by £90,000,000, and it seems that he was wrong in his estimate of borrowings by £100,000,000. I should like to refresh the memories of honorable senators in regard to what was said by the Treasurer in his budget speech in September last. I snail quote the honorable gentleman’s remarks, because I consider that there is no better guide to the future than the experience of the past, and in a friendly manner I wish to draw the attention of the Leader of the Senate and his colleagues to the need for drastic action to meet the desperate financial situation into which we arc drifting rapidly. The Treasurer said -

We must resolutely face die fact that wre are engaged in an “all-in” struggle for our very existence. in that struggle physical resources will be the deciding factor. Those resources must come from the people. J hoy must lie need to the fullest capacity and whatever sacrifice is necessary must, hu accepted.

And here is the part I wish to emphasize -

No legerdemain can produce the needs for war. Neither can they be obtained by easy financial expedients. The plain fact is we aic lighting with all our resources for the very right to commence life as a nation afresh.

Without wishing to be discourteous, it would seem that the last paragraph was inserted for the benefit of our friend, Senator Darcey, who is always trying to convert honorable senators to his own pet financial theories, and apparently has been successful in converting the Cabinet. It is a fallacy to believe that we can continue to use unlimited bank credit, and when the history of these years is written, it will bc shown that, this Government failed to practise what it preached in the budget speech of its Treasurer to which I have referred. 1 have no hesitation in saying that I welcome this measure, and that I am prepared to support it. My only regret is that this step was not taken earlier.

Until now, the Government has failed to face up to the realities of the situation.

Briefly summarizing the position today, it can be said with justification, first, that the Labour party’s weak financial policy has produced an acute rise of the cost of living - 12 £ per cent, in twelve months and still it is rising. Secondly, the increased expenditure on war has occurred mainly because of increased costs and not because of increased efficiency or increased production. That point was established exceptionally well by Senator McBride. Thirdly, Australia’s financial position has become desperate and acute inflation appears to be inevitable. Acute inflation will affect all sections of the community seriously, particularly in regard to soldiers’ deferred pay, life assurance policies, savings banks deposits, and value of money generally. An examination of the causes of Australia’s acute financial position in December, 1942, reveals that one of the main reasons was that this Government has been more concerned with playing the party game than with playing the national game. It is interesting to read the election speeches made by party leaders in June, 1940. The then Prime Minister, the right honorable member for Kooyong (Mr. Menzies), drew the attention of the people of Australia to the financial difficulties that faced this country, and said that he was not prepared to make any reckless promises that he thought could not be fulfilled. The people of Australia in five States at least decided to support the policy enunciated by the right honorable member. The Labour party, then in opposition, was anxious to gain control of the treasury bench, and was prepared to follow the course which it thought would please its political supporters. It refused to face up to the necessity for increased taxation, and its opposition to the Fadden budget in October, 1941, has meant that there has been a delay of eighteen months in facing up to the true position. It is interesting to go back a few years and examine some views that have been expressed by the Leader of the Senate and by the Prime Minister (Mr. Curtin). I have no wish to be personal in this matter; I merely wish to indicate to the people of Australia just where this Government’s financial policy is leading. On the 28th November, 1940, speaking on the Estimates and Budget pa-pers, the then Leader of the Opposition (Senator Collings) said -

believe in income taxation, ami in the principle that the higher incomes should be taxed heavily, but I believe also that the lower incomes should not be taxed at all, and that the middle incomes should be taxed only moderately.

Apparently the Leader of the Senate has seen the light of day because he is now sponsoring a measure the principle of which is contrary to the words that he uttered on that occasion. On the 28th November, 1940, at page 240 of Hansard, the Leader of the Senate said -

Had 1 the power, my reprisals to these taxation proposals would be drastic. By act of Parliament I would provide that, for the duration of the war and twelve months thereafter, any one who attempted to justify the existence of this budget should be paid only what the Arbitration Court prescribed as the basie wage.

In discussing the 1941-42 budget, the Labour party was anxious, with the help of two members of the Opposition, to get into office, so it decided to attack the Fadden Government’s proposals, because that was a popular course to adopt and easier than taking the financial action which was demanded by the circumstances. The Prime Minister (Mr. Curtin), according to ‘Hansard, volume 168, stated on the 1st October, 1941-

When a government begins to tax incomes of £150 for the purpose of financing the war, it is beyond all doubt taking everything that the people in receipt of those incomes possess. Such persons arc being called upon to give everything except their lives. Everything they have must go. Their standards of living go at once. They are the first victims of the sacrifices imposed by war. Our view is that, apart from the soldiers and their families, the persons on low incomes should be the last victims of financial policy.

What are the sacrifices of men and women without dependants who have not contributed to the cost of the war? Under the first taxation proposals of the Curtin Government, in South Australia alone, 26,000 taxpayers without dependants were exempt from income taxation; but the Government, in order to obtain uniform taxation, promised that, as far as that year was concerned, no increase of tax would be made. What are the sacrifices of men in receipt of £156 a year, and without dependants, compared with those of members of the fighting forces in New Guinea and other theatres of war? At page 614 of Hansard, we find that on the 1st October, 1941, the Prime Minister said -

But when we step down into those categories of income receivers below £300, having regard to their obligations and the fact that so many of them are soldiers, we are not really diverting civil consumption to military purposes, but are greatly endangering the physical capacity of the country to withstand the demands of the war, for the majority of the workers in the factories and the majority of the men in the fighting forces are in receipt of less than £400 per annum.

Those figures display the attitude adopted by the present Government at that period. It is interesting to note that in the Fadden budget of 1941, which provided for post-war credits, the amount of tax that would be paid by a taxpayer without dependants, and in receipt of £156 a year, would be £11, whilst under the proposals now before us the tax will be £10 10s. A taxpayer in receipt of £200 a year is to pay income tax amounting to £21 15s. under the present .proposals, but under the Fadden proposals his tax would have amounted to £22 4s. It must be pleasing for the Leader of the Senate to be able to change his views on this matter; but I should think that his. conscience would prick him.

An interesting comparison can be made between the proposals now before the Senate and the rates of income tax in operation in Great Britain and New Zealand. The following table gives a comparison of the income tax imposed in Great Britain and in New Zealand for the year 1942-43, and that proposed for Australia under this bill. The United Kingdom figures include post-war credit amounts -

It will be seen from the foregoing figures that some people in this country are not contributing to the cost of the war to the same degree as people on similar incomes in Great Britain and New Zealand. New Zealand has adopted the right policy, and it is far preferable to inflation during or after the war, because all sections of the people would suffer from the effects of a serious depreciation of the currency. The present Government has adopted a policy which shows that it has been unable to dissociate itself from the vicious attack made by Labour organizations and Labour members on a small section of the community which has rendered good service to Australia. I refer to those engaged in private enterprise, many of whom have risen from the ranks of the workers and many of whom are largely responsible for the fine war effort that Australia has made. The present proposals are reminiscent of the vicious policy which the Minister for Aircraft Production (Senator Cameron) has often preached on the Yarra Bank. On incomes of £1,500, the income tax to be imposed in Australia will be £619, in Great Britain £606, and in New Zealand £534. Persons with incomes of £2,000 a year will pay £951 in tax in Australia, £856 in Great Britain, and £S05 in New Zealand. Those with incomes of £3,000 a year in Australia will pay £1,747 in tax, whilst similar taxpayers in Great Britain will contribute £1,462, and in New Zealand £1,472. Taxpayers on the £5,000 mark in Australia will be called upon to pay tax amounting to £3,530, whilst the taxpayer in Great Britain with a similar income will pay £2,837, and the New Zealand taxpayer £3,204. Under the Government’s proposals these people will have a further tax imposed on them ; the rate may reach 18s. 6d. in the £1. Having regard to the necessity to finance schemes for post-war reconstruction it is a great mistake to impose on high incomes a tax which can only be described as vicious, because if there is one thing that this country will need in the post-war period it is that people with money shall invest it in this country. Should taxation amounting almost to confiscation be in force we shall not get people with money to come here, so that whatever government is in office it will find its path more difficult than it should be. I, therefore, appeal to the Government not to overlook that aspect of the subject when considering financial proposals for the future. Official figures supplied by the Treasury some time ago showed that only 11,000 taxpayers had incomes of over £2,000 a year, whilst those with incomes in excess of £5,000 totalled only 2,000 persons. These people constitute a valuable national asset. It is a short-sighted policy on the part of the Government to make taxation so vicious that people with money will wish to leave this country, whilst others, who might otherwise invest their money in Australia, will be discouraged from doing so.

Under the Government’s proposals private companies will be placed in a different position. Small companies will bc worse off than bigger companies because, through their inability to create reserves, they will lack the capital and resources which would enable them in the post-war period to employ as many of the people as they may desire.

Senator COLLINGS:
QUEENSLAND · FLP; ALP from 1937

– In the depression years large sections of the community had to exist on the dole.

Senator McLEAY:

– During the depression years from 1929 to 1931 a Labour government was in office. Its record is not particularly inspiring. However, the sane financial policy of succeeding governments enabled this country to recover quickly from the depression.

At this stage I shall not oppose the Government’s proposals, but in committee I. shall move three amendments. The first will relate to clause 8, which deals with the deferred pay of soldiers. Senator McBride pointed out a few days ago that the deferred pay of 2s. a day which commences when a soldier leaves Australia may not be worth more than ls. 6d. a day when he returns, because of the increased cost of living in the meantime due largely to the Government’s use of bank credit to finance this country. I appreciate the Government’s need to obtain money from every available source and its reluctance to accept amendments which would involve any considerable sum, but my proposal in respect of the tax on deferred pay would not represent a great amount. It is not the fault of the Government that the deferred pay of the members of the fighting services i-s to bc taxed ; rather is it due to a provision in an act which has been in force since about 1916 empowering the Commissioner of Taxation to assess for income purposes 5 per cent, of an annuity. “With the zeal which the Commissioner rightly displays, I understand that he now proposes to tax 6 per cent, of the deferred pay of soldiers; but in view of the increased cost of living I ask the Government to make provision whereby this tax will not be imposed. I realize that certain exemptions already apply to members of the fighting forces, but these men are entitled to every concession that has been granted to them.

My second amendment will relate to clause 15. I propose to ask that a widower with children under sixteen years of age. who employs a housekeeper, shall be allowed the same deduction as is now granted in respect of a wife or a blood relation of the family.

The third proposed amendment relates to refunds of excess payments by taxpayer?. Although I shall reserve most of tuy comments on this subject until the committee stage has been reached, I point out now that in the third report of the Royal Commission on Taxation, elated the 12th April, 1934, Sir David Ferguson, a Judge of the Supreme Court of New South Wales, and Mr. E. Y. Nixon said -

Simplicity is not the only consideration, and vrc arc not prepared to recommend any method of collecting tax on wages at the source that does not provide for an eventual adjustment of over or under payments.

A careful examination of the Government’s proposals reveals that they differentiate between classes of taxpayers. The departmental experts will calculate what Ls a reasonable deduction to make each week for 52 weeks in order to obtain from each taxpayer the amount for which lie will be liable, but a taxpayer may have the misfortune to incur heavy medical expenses during the year. The limit of concessional deductions in respect of medical expenses is £50, and in respect of life assurance £100. Concessional deductions are also allowed in respect of gifts to charitable institution” and rates. In many cases departmental officers may not allow for th c maximum of concessional deductions in respect of taxpayers who qualify to claim the maximum. A taxpayer with a wife and two children may have an income of £1,000 a year. He spends £180 on life assurance, medical expenses, rates, superannuation, and the like. His weekly deductions at the prescribed rate will amount in 52 weeks to £261. On the £180 he will be allowed a rebate of £64. His tax, according to lists supplied to us, amounts to £285. If we deduct £64 from £285, his net tax is £221, yet his weekly deductions amount to £261. In twelve months, therefore, he would overpay £40. Under this measure it a proposed to issue certificates of credit to cover overpayments of tax, and to pay interest at the rate of 2 per cent, on the amounts overpaid. It is obvious that overpayments will occur only in the case of salary or wage-earners, and will not apply to taxpayers in business, because the latter will make their return at the end of the year. This system is bad in principle, because it applies one set of conditions to one class of taxpayer, and another set to another class. The Opposition intends to move an amendment to provide (hat overpayments of tax be refunded to any taxpayer who applies for such a refund. No doubt, thousands of taxpayers will not worry very much about overpayments, but at present, when the rates of tax are particularly high, many people will find it necessary to apply for a refund of overpayments. It is unfair to oblige such persons to plead hardship to the Commissioner in order to obtain such refunds. The Opposition’s proposal will ensure that justice is done in such cases. The proposal to issue certificates of credit is due entirely to financial stringency owing to our war expenditure. Many married women who to-day are earning more than their soldier husbands will leave their employment at the end of the war and return to their homes. When they do sr>, they will still be called upon to pay tax, and the object of the Treasury, no doubt, is to provide a reserve out of which those people will be enabled to meet their tax at that time. However, such reserves could be more equitably established under a system r>f post-war credits, based on ability to pay. Thousands of people would bless the day t that such a scheme were adopted. It would s spare them the embarrassment of having to approach the Commissioner to plead hardship in respect of the payment of tax after the war has ended when, most probably, they will be unable to meet their commitments from their reduced incomes. I again urge the Government to establish a system of post-war credits along the lines of the proposal advanced by the Fadden Government. Having gone so far as to tax incomes on the lower ranges it should deal with this problem thoroughly by compelling people to build up reserves upon which they can rely when their incomes are substantially reduced after the war.

Senator J. B. HAYES (Tasmania) 1 4.15]. - I realize that the Treasurer (Mr. Chifley) must be enabled to obtain sufficient money to meet the Government’s budgetary commitments. Although the Government has associated a proposal to establish certain social services with the taxation of incomes in the lower ranges, it is admitted that the money to be raised from that source is primarily required to meet war expenditure. I do not think that the people as a whole will object to that procedure. They realize that taxes to-day are necessarily heavy. At the same time, however, they expect that the money will be carefully expended. I have no charge to make against the Government in this respect; but wherever one goes to-day, in the trains, in the street and at home, one hears stories of wasteful expenditure. When large expenditure is being incurred it is impossible to watch every penny, but the people have a right to expect the Government to ensure that there will be no undue waste. The prevalence of the stories of wasteful Government expenditure reminds me of the saying that where there is smoke there is fire. It would seem that some aspects of Government expenditure to-day would bear investigation. I am pleased to note that the Government has at last decided to tax incomes in the lower ranges. About eighteen months ago our national income was estimated at £800,000,000. To-day it must, be nearly £1,000,000,000 annually, and about 80 per cent, of that income is owned by people who earn less than £8 a n-eek. Until recently that source of revenue was left practically untouched. To-dev. however, dire necessity has forced the Government to tax lower incomes.

We cannot have an all-in war effort unless every one pays his share. However, the Government’s proposal to tax incomes in the lower ranges will not be so effective as the post-war credit scheme put forward by the Fadden Government. That was an excellent proposition, because it at least guaranteed post-war savings to people who could least afford to make any contribution to our war expenditure. I urge the Government to reconsider the proposal to establish post-war credits. The proposal under this bill to retain overpayments of income tax is inequitable, because it is to be applied only to wage and salary-earners. The time has come when we must tackle the whole position. I believe that the Government should return the excess money which it takes in instalments, unless it is prepared to go all the “way and bring the taxation system up to date. It is necessary, in the interests of both the Government and the taxpayer, to bring our taxes and taxing machinery up to date. There is at the present time a lag of a year in taxation. Various opinions have been expressed upon the subject. I believe that the Crown Law authorities recently gave an opinion that there was no lag, and that, if one goes back over the twenty years during which we have been paying Commonwealth income tax, it can be argued that there is no lag, but two or three simple examples can be given which at least prove conclusively that a lag exists. If a man has an income of £1,000 this year, and no other assets, loses his position, and earns nothing next year, he must next year pay the tax on that £1,000. That is a situation which we should do something to avoid. The necessity of taking steps to introduce a fairer system is made more urgent by the fact that the taxes are so high. We have all known about the anomaly for years, but when we were dealing with normal taxation in normal times, and could take things, as it were, in our stride, and nobody was’ affected very much, the necessity for a remedy was not very much felt. With the present high taxation, however, there is a great need to consider this subject as it has been considered in other countries. I believe that a formula can be adopted whereby the taxpayer will get. tremendous relief, and the Treasury

Senator ./. 11. Hanes. will not suffer very much. I read about this matter last September in a letter which I propose to read to the Senate, because it Sets the position out so clearly that it would be an advantage to place it on record. It. came from the National City Hank of New York, which sends out a. monthly letter to anybody interested. I know that because 1 receive a copy every month. I wish to give to that bank and its letter the credit for having brought it to public attention in this country, where the view there expressed has since been widely adopted. This part of the letter is headed, “ The Rum Pay-as-you-go Tax Plan “, and is as follows : -

The increased coverage and high rates of personal income taxes, with the inevitable increase in difficulties of tax collection, have enlisted growing support for the pay-as-you-go plan proposed by Mr. Beardsley Ruml, treasurer of R. H. Macy & Co., and chairman of the Federal Reserve Bank of New York.

In brief, what the Ruml plan offers is a way of adjusting income tax payments to a current basis, instead of the present one-year lag, without forcing a “ doubling up “ of taxes on the taxpayer in the year of changeover.

That an adjustment of some kind to a pay-as-you-go basis is needed has become increasingly evident as the war tax programme lias advanced.

For one thing, the expansion in the number of taxpayers from a comparatively small number to some 20 millions, many of whom are not accustomed to make out forms, has greatly increased the need for some form of withholding tax, or collection at the source, to ensure collection and lessen the trouble and expense to the Treasury pf checking millions of small returns. And a withholding tax is, of course, a pay-as-you-go tax.

Secondly, the high rates to which taxes have advanced have made it more than ever desirable for individuals to pay taxes currently as income is received and when they have the money, rather than wait a year until the money may have been spent and the ability to pay taxes possibly reduced by shrinkage of income. Because of the tendency towards delay in passage of tax bills until late in the year, but with taxes retroactive to the first of the year, people do not even know what their tax liabilities are until too late in many cases to make adequate provision for them.

Thirdly, the lag of one year in tax collections, enhances the danger of inflation. With incomes rapidly increasing, the situation calls for taxes that can be applied promptly and mop up purchasing power before it can be spent.

The Treasury has recognized the need for pay-as-you-go taxation, and in a statement on the Ruml plan said that the present method of collecting taxes in the year after the income is earned is “ poorly suited to a mass tax a.t high rates”. The current tax bill provides for a beginning in this direction by requiring, starting January 1, 1943, a S per cent, deduction of tax at the source, to be followed by 10 per cent, in 1944. The difficulty is that any change of this kind runs headlong into the problem of collecting two years’ taxes in one, which with rates as high as at present would mean a total levy that large numbers of people would have very serious difficulty in meeting.

To avoid this doubling up, the Ruml plan proposes that individual income taxes now being paid on 1941 incomes be considered as taxes on 1942 incomes instead. In 1943 the tuxes payable would then be taxes on 1943 income, and the whole system would be on a current or pay-as-you-go basis. Adjustments for the difference between taxes paid and actual tax liability in any year would bo made the year following. While this plan means the dropping out of the taxes on 1941 income, the Treasury would continue to receive its revenue and the taxpayer would continue to pay his taxes. It would not involve any writing off of assets by the Treasury, whose accounts are handled on a cash rather than accrual basis, but would mean, of course, a loss of one year’s taxes when and as each individual taxpayer’s income ceased. Such loss would thus be spread over the lifetime of those already paying taxes, and would be offset in part if not entirely by lessened tax evasion and tax delinquency, higher estate taxes, and the fact that future tax rates should bc far lower than present war-time rates. /”lie Treasury, while endorsing the payasyougo objective of the Ruml plan, opposed the dropping out of the tax on 1941 incomes in their entirety on the grounds that it would constitute a “ windfall “ to some taxpayers having targe incomes in that year, and suggested that only the normal tax and the surtax on the first bracket of $2,000 of net income should be dropped. The Senate Finance Sub-committee, headed by Senator Clark, of Missouri, voted to recommend to the full committee the Ruml plan, with some modifications, but rejected the above alternative suggestion offered by the Treasury.

The full Senate committee at first rejected the report of this sub-committee, but as this goes to press, is reconsidering the matter in response to a widespread public interest in the plan.

I understand that the Ruml plan was at first rejected, but I have heard since over the wireless that it was being considered. It is now stated m the press that the Ways and Means Committee of the American Congress has adopted it. We have heard many times that a prudent man should pay his current taxes out of current income, but it is seldom done now. What we are now doing is to pay last year’s tax on last year’s assessment out of instalments collected from this year’s income, and of course we are always a year behind. Some one has to pay it eventually, generally at a time when he can least afford it, or else his executors have to pay it. It is not all one-sided, however. The Treasury and the taxpayer would both be distinct gainers. The Treasury would benefit by collecting larger estate duties, as the New York letter states, because if the taxation were not paid on estates there would be more estate duties to pay. I know that that would not be an adequate set-off, but it would be appreciable.

Senator Collings:

– It would not be a set-off at the same time, either.

Senator J B HAYES:
TASMANIA

– That does not come into the question, because the Government is getting its taxes at the present time on a cash basis. T do not think that it would mean any appreciable or immediate embarrassment to the Treasurer. I would not. advocate it if I thought that it would embarrass the Treasury, but my view is that such a scheme could be introduced without causing embarrassment, and that sooner or later some government will be forced to do it to protect its revenue. In a recent speech the Prime Minister (Mr. Curtin) forecast that some incomes would be lower in the future. Every one realizes that in many cases present-day incomes are abnormal, and that when the war is over they will be reduced greatly. When that occurs taxpayers will be called upon to pay high taxes out of greatly reduced incomes, and the taxation authorities will not be able to collect the money. It is impossible to get blood out of a stone. That loss of revenue could be avoided by the introduction of a “ payasyougo “ scheme, and now is the time to introduce it while wages are high. I am convinced that a. system could be evolved which would not embarrass the Treasurer, and which would be of tremendous benefit, to the taxpayer.

Senator Gibson:

– Virtually it would mean limiting purchasing power.

Senator J B HAYES:

– Yes, that is what the letter from the United States of America says. It would be a check on inflation, and I am scared of inflation. Every one knows that one ha.= to pay double the price which ruled twelve months ago for many articles. It is all very well to say that the cost of living has risen only by 22£ per cent. ; the fact is that in many directions the increase has been much greater than that. It is necessary that steps should be taken to check inflation, and a scheme such as I have advocated would be a definite check. Similar action has been taken in Canada. The taxation systems operating in .the United States of America and in Canada are similar to ours, and if such a scheme has been found necessary in those countries, it must have something to commend it. I do not say that a “ pay-as-you-go “ scheme has been introduced in the United States of America and Canada solely in the interests of the taxpayers. No doubt the governments of those countries desired also to protect their revenues. They could see the time coming when the taxation authorities would not be able to collect their revenues because of greatly reduced incomes. I realize that we cannot do anything about the matter when considering this measure or the other measures associated with it, because, for one thing, we have not time to establish a new system. Also, we have not all the data before us, nor have we obtained the advice of taxation experts who have devoted their lives to the study of these matters. In my opinion the taxation authorities would be very pleased to introduce a “ pay-as-you-go “ plan, because they realize that some time in the future they will find it impossible to collect their revenues. Although I am not keen on all-party committees, 1 think that, when this measure has been passed, the possibility of introducing a “ payasyougo “ scheme should be investigated by a competent body. When two great countries like the United States of America and Canada have seen fit to introduce such a scheme, there must be something in it. I ask the Government, to give this matter consideration, not only from the point, of view of the taxpayer, but also from the point of view of all concerned, because I believe that it should be possible to achieve something worth while in this direction.

Senator DARCEY:
Tasmania

– I was inclined to rise and challenge the statement of the Leader of the Opposition (Senator McLeay) when T heard him accuse. me of advocating the use of bank credit. Bank credit, as the honorable senator described it, amounts to bank debt, and I have never advocated that. For years I have urged the use of national credit through the Commonwealth Bank, but not through the private banks. The Leader of the Opposition eulogized a speech made last week by Senator McBride, who, unfortunately, left the chamber very soon afterwards, probably realizing that if he remained here he would hear the other side of the question from me. The Leader of the Opposition also- laid strong emphasis upon the heavy taxes imposed in New Zealand; but is the honorable senator aware that for years past a huge -octal service system has been in operation in New Zealand, and that notwithstanding the fact that the Government of New Zealand bought out the Central Bank of New Zealand established by Sir Orto Niemeyer it still borrows from the private banks? Surely the honorable r iia tor is aware that most of the revenue derived from taxation to-day is being used to pay interest on past loans and that notwithstanding the fact that we have paid more than £400,000,000 in interest, we are still repaying loans raised during the last war. Senator McBride complained about the tremendous increase of our note issue. Of course the note issue has increased ; does the honorable senator not realize that, tens of thousands, or even hundreds of thousands, of. people who did not have jobs prior to the outbreak of war arc now earning income? Obviously, these people cannot be paid in silver and copper, so that it has become necessary to increase the note issue. The honorable senator also said that before the war the private banks had only £13,000,000 worth of .notes between them ; but he did not say that in the first year of the war the private banks bought £67,000,000 worth of inscribed stock and treasury-bills. Yet it, is he who claims that banks do not create credit. Senator J. B. Hayes referred to what, is being done in regard to taxation in the United States of America, but is. he aware of the fact that although the total amount of taxes that it is possible to raise in the United St.°tes of A merica ?s 29.000.000,000 dollars, already the private banks in that country have loaned the Government of the United

States of America 49,000,000,000 dollars? The honorable senator also quoted a statement by the manager of the Central Reserve Bank in New York, but surely he knows that that bank is. a private institution like the Bank of England, and that, obviously, the advice of any private bank in regard to taxation would be to make the imposts as heavy as possible. I do not consider it right to tax individuals who are earning only £2 a week. I remember very well telling honorable senators, a few years ago, that not until they were paying away one-half of their salaries by way of taxes would they realize the truth of my remarks in regard to the use of national credit. Now it has come to pass, and I wonder how they feel. On an income of £1,000 a year the present uniform tax is £256, whereas under the proposed uniform tax it will be £355, so that whereas at present honorable members have £744 left out of their salaries, when the new scales are introduced, they will have only £645. The “heavier the taxation that is imposed the quicker will come to pass the fall of the present system. That is why those who “hold the same financial views as I do are :not very much concerned about the present heavy taxation. The Government will realize some day that instead of borrowing money from the private banks it rita obtain ail the finance that it requires from the Commonwealth Bank. Of course, the bogy of inflation is still being raised. As I have explained before, inflation simply means an increased cost of living. In seeking subscriptions to war loans the Treasurer (Mr. Chifley) is leading the people to believe that all the money that they subscribe will be paid back. They do not realize the great depreciation in the value of money which will take place before that time. In order to protect those who invest money in war bonds a fund should be established to compensate for any depreciation of the currency between the time when the bonds are issued and when repayment is made to the lender. It is proposed in Great Britain to take a proportion of the present income of the taxpayer and pay it hack to bini after the war, but how will the money be raised to enable repayment to be made? The Government is prepared to sell to a citizen for 16s. a certificate which in seven years will be worth £1, because it has not the necessary money at present with which to carry on the war; but how will the money be obtained to pay back the 20s. when the certificate matures? That can be done only by further borrowing. We need to raise, not money, but credits. Wars are not fought by means of money at all. Some honorable senators declare that we could pay for the war as we go by raising the necessary revenue by means of taxes, but the absurdity of that argument with respect to a war bill amounting to about £1,500,000 a day ought to be obvious. The Leader of the Opposition stated that he thought that copies of a recent speech made by his deputy. Senator McBride, ought to be widely distributed, but, in my opinion, the h’.-s publicity given to such a misleading utterance the better. That speech bristled with inaccuracies, especially where it referred to financial matters. For many years Senator McBride has supported the orthodox method of finance, which is responsible for the present financial tangle.

The people of Australia have never had a government worthy of their inheritance. We have had men in. power who knew nothing about finance. We started the war with a national debt of £1,200,000,000, fmd the interest on that debt has to be provided by a population of about 7.000,000, many of whom are children. Why does not the Opposition talk about national credit as opposed to bank debt? The Commonwealth Bank, as has been shown by the report of the Royal Commission on the Monetary and Banking Systems, could lend interest-free money to the Government or to anybody else. The highest financial authorities in the world have said that money can make or unmake governments. I read a statement in this chamber about a week ago relating to the financial position in Great Britain, where the war is costing £12,500,000 a week. -Sir Kingsley Wood has been asked over and over again why the Government of Great Britain does not use the national credit, but he will not hear of it. He asked for £1,000,000,000. not because the previous vote of a similar sum had been exhausted, but because the war expenditure had increased by £250,000 a week. Every £1,000,000 advanced to the Government through the private banks is new money created out of nothing, yet Senator McBride has told, us what a great financier Dr. Schacht was. When the latter was manager of the Reichsbank before the war, he desired to finance the German war effort by means of the old orthodox system of finance, but he was “ sacked “. When it was said that Germany could not go to war because if had not the necessary money, a finance committee in that country showed that ir was not necessary for Germany to Iia ve money in order to embark on war. The Bank of England lent £50,000,000 to Gem any before the war broke out. and Mr. Montagu Norman said that it was far better to lend Germany that sum, even if the bank did not obtain repayment, than to have Europe overrun by Bolshevism. We know to-day, however, u bother Nazism or Bolshevism is “ playing the game “ fairly.

The DEPUTY PRESIDENT (Senator Brown). - The honorable senator must confine his remarks to the bill.

Senator DARCEY:

– -I have come to Canberra to fight the money monopoly. T have done so for years, and I hope to live to see my financial views accepted by the Senate and the Government, in order that the present extremely heavy taxation may be avoided.

Senator MCBRIDE (South Australia) 4.4S j. - I congratulate the Government upon the introduction of this bill, which gives an indication that Ministers realize their financial responsibilities. I imagine that this measure is a product of great travail, and that Ministers generally have had much difficulty in inducing their supporters to agree to its presentation to Parliament.

Senator Collings:

– Honorable senators opposite are still disagreeing with regard to it.

Senator McBRIDE:

Senator Fraser:

– The honorable senator’s leader showed the justification.

Senator LECKIE:

– He did not. He advocated post-war credits, but surely the Minister does not claim that this is a post-war credit system, on the same terms and conditions as was proposed by this party when it sat on the government benches? The Minister cannot pretend that, post-war credits were to go only -to people on lower incomes, and that the rest of the community were not to contribute by means of compulsory loans. This clause appears to me to be thoroughly dishonest.

It differentiates between men on salaries and wages and those with other forms of income. It penalizes them, and prevents them from claiming their usual allowances. A man who has had a hard time during the year, and incurred medical and other expenses, is to be prevented from obtaining the benefit of the ordinary allowances. If he has overpaid his instalments, the only consolation he has is that he will receive 2 per cent, interest on the surplus. He cannot draw it, or set it off against the coming year’s income tax. He has to pay that as he goes, in weekly or monthly instalments, and “will probably have a surplus to his account at the end of the second year. Another man on exactly the same income who is in business for himself has not to contribute anything. I cannot understand how the Government can justify such a policy. I hope that when the bill is in committee the Government will recognize that this provision is unjust, unfair, and inequitable, because that is the outstanding feature of it.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Is this not a species of credit which the Government is creating for that particular taxpayer ?

Senator LECKIE:

– When is the credit to operate? He cannot use it to pay his next year’s income tax, and so far as I can gather from reading the bill it does not even indicate when, if ever, he will get it back. The arrangement is not even terminable at the end of the war. I presume that the scheme of the Government is that if, in consequence of a fall of his income, lie is not able to pay what he owes for tax, the overpayment will be confiscated. I am a great believer in the “ payasyougo “ principle, which means paying the tax on one’s income in the year in which the income is earned. The talk about a lag in income tax payments does not strike a responsive chord in my mind at all. I cannot see where it comes in. This provision appears to be practically confiscation of whatever surplus a taxpayer may have paid. He cannot regulate his payments, which are statutory. So much must be deducted on every pay day from his salary or wages. He cannot say that at the end of the year his salary will be so much, and that every month he will pay so much towards his tax. The Government fixes the amount that he has to pay, and so it is not his fault if he has a surplus to his credit in the hands of the Government at the end of the year. Looked at from any point of view, it has been a great advantage to a number of people to pay by instalments, because at the end of the year they know that there, will be so much to their credit, and the money will be useful to them. Under this bill, the taxpayer who would be glad of a few pounds at the end of the year will find that the money has been confiscated, and that he cannot use it. It will not be a provision in the ordinary way for a post-war credit. It is really a provision by the Government that, if a taxpayer loses his income, there will be enough money in its hands to cover his last year’s tax. That does not seem to be a fair or honest way of doing things. It differentiates between two classes of the community. It imposes a tax upon the taxpayer in receipt of salary or wages, and allows others to go free. It prevents the man on wages or salary from getting his usual allowance for medical expenses and other things, whereas the other class of taxpayer getting his assessment in the usual way, can put in his usual claim for allowances. I am dissatisfied with this bill, first, because the large amount of money which it proposes to raise will not be used solely for war purposes. It is a camouflage measure. The people of Australia would not object to the raising of £40,000,000 for war purposes, but to seek that sum for expenditure in directions other than upon our war effort at a time like this, when money is scarce and its value is decreasing rapidly, is quite wrong. Secondly, the measure is dishonest because it differentiates between various sections of the community, and I am astonished that it has been introduced by a government which has proclaimed from the house-tops its adherence to the principle that, the small man - the underdog - should be protected.

Senator COURTICE:

– Ever since honorable senators opposite have been in Opposition they have been urging that income tax should be extended to the lower income groups.

Senator LECKIE:

– I am afraid that the honorable senator is not in his usual fair mood. The claim that we on this side of the chamber have made consistently is that every member of the community should be called upon to shoulder his share of the burden in accordance with his ability to pay. In dealing with incomes of £104 a year, we are not dealing with men, but with boys and girls, and I see no reason why they should not have to pay their ls., 2s., or 2s. 6’d. a week, even on their small incomes. Honorable senators on this side of the chamber have always advocated an equitable distribution of the burden, but the proposal in this bill that excess payments of tax shall be retained by the Taxation Department amounts virtually to the imposition of an additional tax upon certain sections of the community. Such a proposition is thoroughly unfair. For those reasons I object to this measure, and I hope that when it reaches the committee stage certain clauses will be amended.

– Does the honorable senator object to that?

Senator SPICER:

Senator SPICER:
VICTORIA · LP

– It seems to me to be the height of extravagance to tell a woman who may have an income of £1,000 a year, that the Government intends to pay her a maternity allowance of £7 103., and £1 5s. a week for eight weeks.

Not only should the Government forgo duties, but the manufacturers, too, should forgo profits, for the wealthy status of the manufacturers is well recognized, and they could spare a. premium that insured to them their present place of safety and a consolidation of their financial edifices.

Senator McLeay:

– I rise to order. The Minister is not obeying the ruling that he must confine, his remarks to the subject-matter of the bill. His remarks have nothing to do with the bill before the Senate.

The PRESIDENT (Senator the Hon J Cunningham:

– No doubt the Minister intends to connect his remarks with the bill, but for some time he has not referred to its provisions. The subject before the Chair is the second reading of the Income Tax Assessment Bill, and I ask the Minister to confine his remarks to it.

Senator CAMERON:

– The Leader of the Opposition had a good deal to say about the sacrifice which the soldiers are making. He compared that sacrifice with what is demanded of others in the community who are in receipt of low incomes. I was pointing out that, on his own argument, wealthy manufacturers are not making a sacrifice which is at all comparable with that of the soldier or of the worker with a low income. In support of my argument, I was about to tell the Senate that the representatives of the soldiers are saying exactly what I say.

Senator McLeay:

– Is this one of the honorable senator’s Yarra Bank specials ?

Senator CAMERON:

– The Leader of the Opposition would never attain to the high intellectual level of the speeches delivered on the Yarra. Bank if he lived to be as old as Methuselah. The article in Reveille continues -

War, without profit, would be the slogan of such a tribunal, which would divert from the civilian money-grabbers the means sufficient to provide the soldiers with pay something commensurate to their work and to their risks.

Senator CAMERON:

– I did not increase it. I am only pointing out that the incidence of the policy of taxation which the honorable senator and I inherited, and which I reject and he accepts, is quite the reverse of taxation according to ability to. pay. Take the subsidizing of the butter industry, the tramways, railways or any other instance in which we all pay the same tax or fare. Those who receive the least by way of income pay a great dea’l more in proportion than those who receive high incomes. “Whether the members of the Opposition are prepared to do so or “not, they will have to getdown “to fundamentals. The more we do - and we are doing it rapidly - to organize _pr’imary and -secondary production on a more efficient and economic basis, the more we expose the extent to which these anomalies exist. If they are not .admitted and adjusted, there will be a considerable amount of trouble not only in this but also in other countries. Senator Leckie said that the money required was not to be used for the war e’ffort. J waited patiently for him to develop his argument in that direction, but he made no attempt to do so. If the money is used to enable the workers to become more efficient in industry as producers of wealth, then it is employed in connexion with the war effort, as it should be. To say that, if it is used to assist expectant or actual mothers, it is notbeing used for the war effort, is to make an incorrect statement which no intelligent man or woman will consider for a moment. I shall conclude by sounding aga’in the note on which I opened. Most authorities agree that taxation is the basis and machinery of government. If we raise money in the ordinary way, that is taxation. If we raise it by increasing excise duties, that is taxation. If we raise it by borrowing, that is deferred taxation. If we raise it by the issue of what are known as bank credits, that i3 taxation. All ‘that money is used for the purpose of obtaining materials and paying for the services of men and women engaged in industry who require them, so that the real taxation is represented by the materials that can be purchased with the money which is raised. The money, therefore, as I said at the outset, is merely the medium of exchange. A good deal has been written and spoken on the ‘subject, all of -which is intended to mystify and bewilder the average unsophisticated person who has never had the time or opportunity to study it. ‘To the extent to which people can be mystified and bewildered about money and its functions, so they can be impoverished, as they were in this and most other allied countries ‘when they were compelled to work in return for the dole The lesson, will not be forgotten. Many who were so- compelled accepted the statement, made in this chamber and elsewhere, that there was a genuine scarcity of money and that nothing else could be done. They accepted it because they did not know any better, but to-day they are realizing; that millions of pounds can he raised, in various ways to carry on a war almost indefinitely. When the war is over, they will ask themselves why, if money can be raised so abundantly and expeditiously to carry on a wai-, it cannot be raised to carry on the work of repair and reconstruction in peace-time. I present that thought to honorable senators opposite for their consideration. They may imagine that they are masters of the situation, and that, if they were in office,, they could do exactly as they pleased. I remind them that they are not masters of the situation any more than we are. The situation that will develop after this war will compel them to legislate on the lines which I have indicated, in such a manner as to do justice not only to returned soldiers but to all. others willing, and able to work. If they do not. do so, they will have to put up with the consequences, which, I warn them,, they will find both painful and costly.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– -I propose to address myself not to the higher branches of economics, or to dry dissertations by John Stuart Mill or other so-called economists, but to the bill itself, and to offer- one or two suggestions which the Government should accept as constructive criticism, because our Leader (Senator

McLeay) has indicated that in the main we shall support the bill. It is just as well that the Government should be reminded that, when the last budget was presented to the Senate, we referred in somewhat caustic terms to the gap in the finances, and the multiplication sum which the Treasurer (Mr. Chifley) was attempting- to do in order to balance his accounts. That gap, as I then predicted would be the case, has, on the statement made by the Treasurer himself in the House of Representatives on 11th February last, become a yawning chasm. In order to meet the. difficulties of the situation, he has now introduced this- measure with a covering of sugar to make it palatable, as I understand,, to a certain section of his followers. I re-echo every word that has been said concerning the danger of inflation, but I direct the attention of the Senate to the fact that the Treasurer, in the statement which was the precursor of. all these taxation measures, himself emphasized the necessity of mopping up a lot of the loose money in the country. In the second paragraph of that statement, he referred to tile increased taxes necessary to finance the scheme of which he spoke, to reduce the excess spending power,, and to provide further contribu-tions for war expenditure. The words I wish- to stress are those in which he favours a reduction of excess spending power.. He completely justifies the argu-ment so well pu t recently by my colleague, Senator McBride, regarding the danger of inflation,. He shows that he is alive to the situation, and that he proposes to absorb, by the method embodied, -in this measure and such others as he may. bring forward, the excess spending power to which he alludes. As he indicated in his budget speech that he was fully alive to the situation in that regard, I do not think that any exception can be taken by honorable senators opposite to the statements made on this- side of the chamber, that, there is an imminent danger of inflation. We need only call to mind what is occurring, in all other allied countries; In Great Britain they have already been very wary concerning inflation. In the vast United States of America, from a financial point of view probably the soundest country in the world, to-day, they are forever issuing warnings regarding the danger of the excess spending power in the hands of the people, brought about by the issue of additional paper money. I suggest to the Government that that is ons of the dangers with which this country also is faced. It is no use denying the fact, however Ministers prate about; credit, that excess spending power in the hands- of the people is the very beginning of inflation. The Treasurer has said so, and it is to prevent inflation that the Government has introduced this measure. We understand from the Treasurer’s statement’ that’ this revenue will be put into a trust fund; that that fund will be drawn upon and that when it has been exhausted by capital expenditure, as no doubt it will be in the course of time, it will be replenished by what the Treasurer has been pleased to call longterm loans. Surely that is unsound finance.

Senator FRASER:

– The Treasurer did not say long-term loans.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I draw the attention of the Senate to the f ollowing extract from the Treasurer’s speech : -

In the earlier stages, the fund will build up credit balances, which will be used later when the welfare scheme reaches full operation. These balances will not be allowed to remain idle, but will be invested and will provide a useful source of temporary finance for war purposes, which will be replaced by long-term borrowings when the moneys are required later for welfare purposes.

I am horrified to think that such a method of finance could be sanctioned by the -national parliament. Virtually, the National Welfare Fund is to be made up of borrowed money! That is a matter upon which honorable senators will have an opportunity to say something at a later date. In certain circumstances, borrowing from trust funds is a sound practice, and is authorized by the Audit Act, but I hesitate to think what would happen if a private individual were to handle a trust fund in this way. He would very soon be dealt with in the proper quarter. Notwithstanding the fact that I shall support this measure, I should like to stress certain observations that I have made more than once in this chamber. A system of high taxation is bound to defeat its object. It is stated that the National Welfare Fund will be replenished by borrowings, and taxation will be relied upon to secure the revenues of this country; but taxation on the scale proposed in a certain measure which will follow this one is self-destructive. There will be none of the incomes to which the Leader of the Opposition referred left. How then are we to obtain the revenue necessary to reimburse this fund and pay interest upon it? This method of finance is a positive menace. The experience all over the world has been that high taxation defeats itself. Particularly has that been the case in the United States of America.

At present, the Government is obtaining substantial revenue from income taxation because the spirit of the people is such that they are willing to do their utmost to produce everything they can, and so make as much money as possible, irrespective of where it goes; but the time will come when the people will realize what is taking place, and knowing that a large proportion of their earnings will be taken by the Government, they will not have the same inducement to work hard. They will say to themselves, “ What is the use of working ourselves to a standstill to produce this money when the Government will take a large proportion of it ? “ Recently, a man in this city told me that after paying taxation he had only £343 a year left out of quite a high income to keep his wife and young family, who were living in Melbourne, and to provide for himself while in Canberra. Such a state of affairs will not lead to an increasing revenue. We should look at the matter from a national point of view. Surely it is better to encourage people to earn high incomes and to take a reasonable proportion of those incomes by way of taxes, rather than to take as much as 18s. 6d. in the £1 out of certain earnings as we are doing at present and so to reduce the incentive to work. Large incomes are not nearly so numerous as many people would have us believe. In that regard the figures given by the Leader of the Opposition were interesting.

Senator J. B. Hayes advocated the introduction of a “pay-as-you-go” scheme. Whilst I subscribe to his views, and while such a scheme might be admirably suited to certain sections of the community in which fixed remunerations are the rule, from what I have seen of the operation of the present compulsory deductions system in Victoria, it is by no means satisfactory to the wage-earner, and I trust that if a similar scheme bc introduced under this measure, much better facilities will be afforded to the unfortunate individuals who have to cash their excess stamps or redeem overpayment certificates. The lunch-time crowds at the Taxation Office are huge. On one occasion when I happened to be one of such a crowd, one man told me that he had been in the queue for two and a half hours and was afraid that he would lose his job for being away so long. Surely the department could arrange for a more efficient method of dealing with these people. The inconvenience caused is quite unnecessary, and in addition, there is the risk of losing taxation stamps or refund certificates. I know one person who lost his certificate and never recovered it. I understand that representations were made to the Commissioner of Taxation, and something was done, but such inconveniences should not be tolerated if they can possibly be avoided. The waste of time that is going on all over this country in relation to every form of administration is tremendous. It makes me wonder whether we really appreciate the stress under which the people are living to-day. They have to fill in returns for this and for that, and seek permission to do all sorts of apparently insignificant things. For instance, if one wishes to destroy a few opossums, as I found it necessary to do quite recently, one first has to secure a licence, and then take the skins many miles to be stamped, and then a considerable distance to dispose of them. Inconveniences such as that involve a waste of time and petrol, and I see no reason why simpler methods of administration cannot be adopted. I merely mention that matter as an illustration. There are many ingenious minds in the Taxation Department - bright fellows who never miss a chance to extract a farthing from a taxpayer. Surely that superior ability could be applied to devising a method of simplifying this system of taxation.

I can see that there would be certain advantages in a “ pay-as-you-go “ taxation system, but also there would be certain difficulties, as for instance, in the case of a person who carries on more than one vocation. Such a system could never be applied to the taxpaying public of this country as a whole. It certainly could not be applied to primary producers.

I have listened with some interest to the discussion that has taken place on the proposal that the Taxation Department should retain indefinitely any overpayments made by a taxpayer, and I understand that the Leader of the Opposition proposes to move an amendment in that regard when the bill is in committee. This proposal amounts to a scheme of post-war credits, which, when advocated by the Fadden Government, was vigorously opposed by honorable senators opposite. No doubt the proposal will have certain advantages so far as the Taxation Department is concerned, in that it will not be so easy for unscrupulous persons to evade their taxation commitments in future by changing names and addresses and so on. No doubt the Commissioner of Taxation already has been able to make good use of the identity card system for that purpose, because before a person can secure employment, he must produce his card. I do not hold a brief for any one who seeks to evade the payment of his just taxes, and I have no doubt that officers of the Taxation Department devised this scheme so that they will have some hold upon taxpayers in the future, when identity cards have disappeared. I do not know whether or not the amendment forecast by the Leader of the Opposition is acceptable to the Government, but I trust that it will be. The taxation of a percentage of soldiers’ deferred pay is a paltry matter, especially at a time like this when we are dealing with so many millions of pounds. That proposal is not in the best interests of Australia, nor will it do this Parliament any credit in the eyes of the people. Deferred pay is for the benefit of the soldier, and he should have it.

Senator FRASER:

– That provision has been in operation since 1915.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The power existed to tax the emoluments paid to people for long service, but I deprecate the idea of placing such an impost on. returned soldiers. I support the bill with considerable misgiving as to the benefit that will accrue to the Government from rates of tax as high as those proposed. It may become necessary to impose even higher taxes, but I trust not. I believe that the Government would have been able to obtain more revenue by loosening up a little with regard to the economic activities of this country, and even reducing taxes in some directions. Every industry is carrying on to-day on a smaller margin of profit than in the past. The activities of many industries are cramped by governmental action, arid the revenues will bc- reduced in consequence. I realize the great difficulties experienced by the Government, and I am aware -of the cry that went out as a result of the financial proposals submitted in February, but I still think that the Government should reconsider its proposals. I shall not enter those higher realms of finance where the Minister for Aircraft Production (Senator Cameron) delights to dwell, but I can say, as a practical man, that the .kind of taxation now .proposed by the Government will tend to reduce revenue rather than increase it. Apart fr.om .being unfair and inequitable as between persons within certain ranges of income, the incidence of -the proposed taxes may surprise the Treasurer :and his advisers, but I. shall reserve my remarks on that aspect of the .matter until the bill reaches the committee stage. Statements made bv the ‘Treasurer in the House of Representatives, and which have ,Deen repeated in this chamber., admit the ;principle of post-war credits, upon which the Fadden Government was thrown out of office. The ‘present Ministry (has bowed .its head to the inevitable, -and has decided to impose income tax,on people in the lower income groups, who have been offered as a sop the promise that a national welfare fund of some kind will be established by means of money which -will be borrowed, instantly used ‘for war purposes, and replaced by borrowed money.

Senator ARNOLD:
New South Wales

– I regret that on every occasion when the “Government submits legislation to confer -benefit on the masses of the people its action is regarded with disapproval and suspicion ;by the Opposition. Senator A. J. McLachlan looks upon this measure as a sugar-coated pill, designed to enable the Government to obtain additional -revenue, but it is nothing of the kind. It represents the first instalment of a scheme for improved social sendees which the Government has planned in the brief time it has been in office. The Opposition parties were in power for many years, but it has remained for the present Ministry to submit a measure which will do much to relieve distress and suffering among the people. I resent the implication that the proposal for a National Welfare Fund is merely a sugar-coated pill to enable increased taxes to be raised.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It would be a very bitter pill without the additional -revenue.

Senator ARNOLD:

– In a time of grave national crisis those people who have money which could be placed at the disposal of the nation should not feel bitter about a bill of this kind. After a’ll, their capital and their very existence are being protected by the members of the fighting services who are prepared t» sacrifice their lives. The primary object of the -Government is to absorb certain additional purchasing power, created by war expenditure, that is flowing out to individuals at a -rate far greater than that at which civilian goods can be provided. Unless the -Government can mop up this additional purchasing power the quantity of civilian goods available will be reduced. I believe that the Opposition is -in “agreement on that point. The proposed additional income tax will provide an extra £40,000,’000 a year, and the new civil expenditure is estimated to be £4,280,000 a year, leaving over £3’5,0O0,000 to be devoted to war purposes. Of the sum of £40.000.000 £30,000,000 is to be paid into a trust fund. There is no legerdemain about that. If a company desires to erect a new building, or -increase its plant, it commences some years in advance to set aside a reserve for that purpose, but it does not lock the money up in a bank. It creates a reserve fund for the purpose of replacing -certain assets at -some future date. The Government merely proposes to place £30,000,000 in a reserve fund against a contingency that may arise after the war. The money to be placed in the National Welfare Fund, will be lent out for war purposes.

Senator Latham:

– Will it not be difficult to replace that money?

Senator ARNOLD:

– The way in which the Government may invest it is laid down definitely in the Audit Act, section 62b of which provides that money standing to the credit of a trust account may be invested by the Treasurer as follows : -

In any securities of, or guaranteed by. the Government of the Commonwealth or any State: or (‘/<) mi deposit in any bank.

Senator McBride:

– How could we recoup ourselves for money that had gone up. in smoke ?

Senator ARNOLD:
NEW SOUTH WALES · ALP

Senator COLLINGS:

– And because we are doing it, I have been accused of the cannibalistic act of eating my own words. Replying to that assertion by way of interjection, I said that it was much better that we should eat our own words than that we should eat Japanese “tucker”.

– The honorable senator knows better than that. To-day, no private bank can gamble in treasurybills, but that could be done ad lib during the administration of anti-Labour governments, even during the early stage of the war. It may be true that this Government is doing everything the wrong way, and that its actions cannot be justified before the people of this country; it may be that by an undue use of bank credit, or by using the

Commonwealth Bank, the Government is doing things which may lead to disaster. I deny that that is true, hut the alternative is to submit to something far worse. On Sunday last, in a remote part of this continent I heard a gentleman talking to a Cabinet Minister - I was not that Minister - and he said, “ This war is a racket and the way your Government is conducting it is a racket”. The reply of the Cabinet Minister was, “Suppose it is. You must have either this racket or Togo’s racket “. I ask Senator Spicer which he prefers.

I was interested in the remarks of Senator Latham, who said that the Government had reached the danger point. Looking like a Daniel bearding the lions in their den he asked, “ Why do you not tell the people the truth ? “ In other words, he might have asked, “ Why do you not tell the people you want this money in order to be extravagant and pay higher wages ? “ . The Government is merely advertising in an extensive way throughout the Commonwealth that it needs £100,000,000 from the people. It is not strutting about posing as the saviours of the country. We say to the people, “ Ladies and gentlemen, this country is at war. We believe that if we can keep the Japanese from obtaining a foothold in the islands which they desire to occupy, and can drive them from the islands where they are already established, we can prevent them from invading Australia. We want £100,000,000 from you now, and we know that we are going to get it.” There is nothing heroic about that. The people know that when the £100,000,000 has been raised, a demand will be made later for a further £100,000,000. Senator Latham says that the Government desires to do something ultra-courageous, and should say frankly what it wants this money for. He said another thing which I regard as unkind. You. Mr. Deputy President, have the good fortune at the moment not to be a Cabinet Minister. Some members of the Government who are more or less new to ministerial duties have had gruelling experiences in the last sixteen months. An honorable senator asked me a few moments ago at what hour the Senate would meet to-morrow. When I replied that it would meet at 3 p.m., he asked, “Why not 11 a.m.?” I replied that Ministers must have some time during the day to do their ministerial work. Senator Latham also said, “ Ministers are not fully engaged in war work “. That remark comes with ill grace from an honorable senator who does not know anything about the duties which the war imposes on Ministers. Senators McLeay, McBride, Foll and Leckie are acquainted with the pressure of ministerial duties, and that pressure has not slackened since the previous Government relinquished office. The gibe that Ministers are not doing all they could in connexion with the war is exceedingly unkind and is not in accord with the facts.

Senator McBride:

– Does the Minister believe in the bill?

Senator COLLINGS:

– It is remarkable that I should be twitted with not dealing with the bill before the Senate, since I have merely replied to criticisms offered by honorable senators opposite. Obviously, their remarks also were not strictly confined to the measure. No doubt the bill will pass its second reading, and I hope that- it will pass its remaining stages, because the Government must have the bill. The war, unfortunately, will go on, and the Government must have the revenue which it seeks to raise under this measure, if it is to do the job which it considers should be done. I express my gratitude to the Opposition for the fact that, although its criticism has been harsh and unjustified at times, it has promised to support the second reading of the bill.

Senator ASHLEY:
Postmaster-General · New South Wales · ALP

– I am. somewhat bewildered at the reception given to this measure by the Opposition. There has been joy on the part of honorable senators opposite in the knowledge that persons in receipt of low incomes are to be taxed, and sorrow that they themselves are not on the Government benches to levy that tax. The Opposition has decided to support the second reading of the bill with a view to moving amendments in committee. Honorable senators opposite have raised objections to the bill on two or three grounds. Exception has been taken to the statement that in 1940, when the then

United Australia, party Government proposed to reduce the exemption below £200, the Labour party applied pressure, and the proposal was not proceeded with. This afternoon. Senator Spicer made clear the weakness of a, previous government’ which, notwithstanding that it had a majority in, both Houses, surrendered to the Labour party in connexion with an. important taxation measure.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– It was not- a surrender, but a mutual arrangement.

Senator ASHLEY:

– It was a surrender. I believe that proceedings were held up for a day or two while the leaders of the parties conferred. A good deal’ has been said- about the need for courage, but it remained for” the Curtin Government to taKe the courageous step of reducing the income tax exemption. As the Leader of the Opposition (Senator” McLeay) gave certain figures in connexion with post-war credits, I desire to compare the proposals of the Fadden Government with the measure now before the Senate. The Leader of the Opposition cited examples of the effects of taxation proposals on incomes of £150, £200 and £250 a year. Before dealing with those examples, I remind the Senate that the 1941-42 budget, which was rejected by the Parliament, proposed to refund a sum of £20,000,000 of the national contributions. We were told that that amount was practically equal to the assessments on the lower incomes. A point ignored by the Opposition, is that when the Fadden Government introduced its post-war credit scheme the contemplated war expenditure for the year was £217,000,000 compared with £500,000,000 to-day. Let us compare the figures in the Fadden budget with the proposals now before the Senate. Under the present scheme it is estimated that the collections of uniform income tax on individuals will amount to approximately £139,000,000 for 1943-44. Of that sum, £21,000,000’ will be collected on behalf of the States, leaving the collections for Commonwealth purposes at about £118,000,000. One quarter of that sum would be £29,500,000 or, say, £30,000,000. According to the Leader of the Opposition, John Smith, a taxpayer -with an income of £150, would have paid £11 as a national contribution under the Fadden proposal, and his post-war credit, taking the average for all States, would have been £’7 12s. Under the present proposals, John Smith with a: similar incomewill pay £10 5s.-, but as- the amount- to be raised is £500,000,000 compared .with £2ie;000,000 under- the Fadden Government’s proposals, it will be seen howmuch better– off he- will be under theseproposals: Under the Fadden post- war credit scheme he would have a postwar credit of £11 5s. A married man with, an income of £200’ a- year would have contributed £22 4s., and would have had a post-war credit’ of £15 14s. under the Fadden scheme,. whereas under the present scheme,, which provides for a war expenditure two and a half times- greater, he would pay 9s. less; and share in the benefits for which the scheme provides-. According to the Leader of the Opposition a married man with an income of £250 would have paid. £33 6s. under theFadden scheme, compared with £36 14s. under the present proposal, and would, have had a post-war credit of £16>2s. lit is reasonable to assume that a married, man will incur medical expenses of at least £16 a year. My point is that fora payment of £3 8s. more than under theFadden scheme he- will be provided with social security throughout the year, the benefits including insurance against unemployment, doctor’s expenses, medicine,, a liberalized maternity, allowance, and so* on. I emphasize also that the figures given by the Leader of the Opposition are similar to the rates on individual incomes. This difference is accentuated when werealize that the amount involved under this scheme is two and a half timesgreater. The social security scheme proposed by this Government is estimated tocost 50 per cent, more annually than theam ount which the Fadden Government proposed to refund to the people by way of post-war credits. Much has been said about the fact that the Government now proposes to tax incomes in the lowerranges. I point out that the circumstances pvevailing to-day differ entirely from those existing in 1940 and 1941. Manythousands more people are now employed in industry. At present, many members of thousands of families are engaged” in industry, whereas previously only the- bread-winner was in employment, and whereas he brought into the home from £5 to £6 a week, the total income being earned by members of the one family now amounts to from £20 to £25 a week. With regard to the Government’s proposal to issue certificates of credit in respect of overpayments of tax, any government must, at this time, pay regard to the fact that thousands of married women now earning substantial wages will be obliged to relinquish their employment at the conclusion of the war. Therefore, it is the duty of the Government to put intooperation a scheme to establish reserves from which those persons will be enabled to meet their tax commitments when they return to their homes. If such provision be not made, it will be found that the soldier husbands of many women will, on their return, be obliged to pay the tax commitments of the latter,who will not then be earning any income. Honorable senators opposite have not suggested one improvement of the Government’s proposal in that respect. The Leader of the Opposition (Senator McLeay) was generous enough to say that provision of this kind must be made in order to protectthose persons who are now earning substantial wages, but will have to relinquishtheir present employment when the war ends.

Many of the remarks made by the members of theOpposition during this debate willnot helpour war effort. Some honorable senators opposite constantly refer to inflation. The same practice is indulged in by responsible personsoutside this Parliament. They have declared that within twelve months the £1 note will be worth only about 10s, Those persons who are always crying inflation do -the country a disservice. Honorable senators opposite declare that they will do their utmost to ensure the success of the next war loan, but they are certainly not helping in that direction by making speeches such as they have made during this debate. Any government, regardless of its political colour, cannot completely prevent inflation. Honorable senators opposite also take every opportunity to draw comparisons between conditions in Australia and those in New Zealand with the object of disparaging this Government. The fact that New Zealand is in a favorable posi tion to-day is because, in 1936, a Labour government in that country stabilized the prices of primary products. Had United Australia party-United Country party governments in the past adopted a similar policy in Australia,we should now be in as favorable a position as New Zealand. Further, those honorable senators who are pr one to draw such comparisons to our detriment always fail to complete their comparisons. For instance, they have failed to point out that the Australian people to-day are paying 70 per cent, more for wool than they paid before the war, in order to maintain stability in the wool industry.

Senator Gibson:

– The price of wool has not increased by more than 15 per cent.

Senator ASHLEY:

– It has increased by nearly 70 per cent, on pre-war figures. Further, honorable senators opposite who arc constantly attempting to draw comparisons to our detriment between conditions in Great Britain and those in Australia have failed on this occasion to point out that whilst the cost ofliving in Australia has increased since the outbreak of the warby 221/2 per cent., in Great Britain it has increased by29 per cent. Any undue increase of the cost of living in this country has resulted from the maladministration of past governments, which, with the exception of two years, during the last quarter of a century, have been United Australia party-United Country party administrations.

Senator Foll:

– Great Britain is obliged to import a large number of products.

Senator ASHLEY:

– I commend the bill to the Senate, and hope that, in the committee stage, due consideration will be given to the amendment which the Government proposes to introduce.

Debate (on motion by Senator Fraser) adjourned.

page 1447

PAPERS

The following papers were pre sented : -

National Security Act-

National Security (General) Regulations - Orders -

Prohibiting work on land (2).

Taking possession of land,&c. (156).

Use of land (15).

Regulations - Statutory Rules 1943, No. 35.

Senate adjourned at 11.11 p.m.

Cite as: Australia, Senate, Debates, 10 March 1943, viewed 22 October 2017, <http://historichansard.net/senate/1943/19430310_senate_16_174/>.

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Senate10 March 1943

LEAVE OF ABSENCE

QUESTION

COAL-MINING INDUSTRY

Senator FOLL:QUEENSLAND

Senator COLLINGS:Minister for the Interior · QUEENSLAND · ALP

QUESTION

ALUMINIUM PRODUCTION

Senator GIBSON:VICTORIA

Senator COLLINGS:ALP

REPATRIATION

Treatment of Medically Unfit Personnel

Senator CAMERON:Minister for Aircraft Production · Victoria · ALP

QUESTION

ROAD TRANSPORT IN TASMANIA

Senator AYLETT:TASMANIA

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

Senator AYLETT:

Senator Gibson:

The PRESIDENT:

Senator AYLETT:

Senator Foll:

Senator AYLETT:

The PRESIDENT:

Senator McLEAY:SOUTH AUSTRALIA · UAP; LP from 1944

BEADING OF SPEECHES

The PRESIDENT (Senator the Hon 3 Cunningham:WESTERN AUSTRALIA

Senator JAMES McLACHLAN:SOUTH AUSTRALIA · UAP

The PRESIDENT:

QUESTION

APPLES AND PEARS

Senator LAMP:TASMANIA

Senator FRASER:ALP

QUESTION

BLUE PEAS

Senator HERBERT HAYS:TASMANIA

QUESTION

TASMANIA

Senator AYLETT:

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

QUESTION

BANK OVERDRAFTS

Senator McLEAY:SOUTH AUSTRALIA

QUESTION

NEW BUSINESS AFTER 10.30 P.M

Senator McLEAY:Leader of the Opposition · South Australia

NATIONAL WELFARE FUND BILL 1943

Second Reading

INCOME TAX ASSESSMENT BILL 1943

Second Reading

Senator McLEAY:Leader of the Opposition · South Australia

Senator Collings:

Senator MCBRIDE:SOUTH AUSTRALIA

The PRESIDENT (Senator the Hon J Cunningham:WESTERN AUSTRALIA

Senator McLEAY:

Senator COLLINGS:QUEENSLAND · FLP; ALP from 1937

Senator McLEAY:

Senator Collings:

Senator J B HAYES:TASMANIA

Senator Gibson:

Senator J B HAYES:

Senator DARCEY:Tasmania

Senator DARCEY:

Senator Collings:

Senator McBRIDE:

Senator Collings:

Senator McBRIDE:

Senator FRASER:ALP

Senator McBRIDE:

Senator COURTICE:QUEENSLAND

Senator McBRIDE:

Senator LECKIE:Victoria

Senator Courtice:

Senator LECKIE:

Senator Collings:

Senator LECKIE:

Senator Fraser:

Senator LECKIE:

Senator A J McLACHLAN:SOUTH AUSTRALIA · NAT

Senator LECKIE:

Senate
10 March 1943

Senator FOLL:
QUEENSLAND

Senator COLLINGS:
Minister for the Interior · QUEENSLAND · ALP

Senator GIBSON:
VICTORIA

Senator COLLINGS:
ALP

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP

Senator AYLETT:
TASMANIA

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

Senator McLEAY:
SOUTH AUSTRALIA · UAP; LP from 1944

The PRESIDENT (Senator the Hon 3 Cunningham:
WESTERN AUSTRALIA

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

Senator LAMP:
TASMANIA

Senator FRASER:
ALP

Senator HERBERT HAYS:
TASMANIA

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

Senator McLEAY:
SOUTH AUSTRALIA

Senator McLEAY:
Leader of the Opposition · South Australia

Senator McLEAY:
Leader of the Opposition · South Australia

Senator MCBRIDE:
SOUTH AUSTRALIA

The PRESIDENT (Senator the Hon J Cunningham:
WESTERN AUSTRALIA

Senator COLLINGS:
QUEENSLAND · FLP; ALP from 1937

Senator J B HAYES:
TASMANIA

Senator DARCEY:
Tasmania

Senator FRASER:
ALP

Senator COURTICE:
QUEENSLAND

Senator LECKIE:
Victoria

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

Senator SPICER:
Victoria

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

Senator SPICER:
VICTORIA · LP

Senator CAMERON:
Minister for Aircraft Production · Victoria · ALP