26 March 1943

16th Parliament · 1st Session

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

page 2450



Senator LAMP:

– Has the Minister representing the Minister for Commerce and Agriculture read an article published in the Australian Cordial Maker, in its issue of the 15th March, on fruit and vegetable utilization? The article states that at Long Ashton, England, a process has been perfected for the extraction of carrot juice, which can be successfully blended with pineapple and orange juice. Owing to the acute shortage of orange juicein Australia, will the Minister have inquiries made as to the practicability of using carrot juice?

SenatorFRASER. - I have not read the article to which the honorable senator has referred, but inquiries: will be made. The Council for Scientific and Industrial Research is constantly giving attention to such matters.

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by leave-I desire to make a personal explanation. In to-day’s issue of the Sydney Daily Telegraph my name is mentioned in association with members of the United Australia party in a report as to’ the way members, of that party are likely to vote on the subject of the leadership of the party. I am glad to have this opportunity to clear my character in the eyes of the electors of Western Australia. I am a member of a political party which stands for the interests of the whole of the people, and not for a section of them. I regard the report as a downright insult, and I ask that a correction be made. To make the position worse, my name was coupled with that of Senator Allan MacDonald. There may be . two persons in Canberra named Clothier, but I have never met the other man. I reside at the Hotel Kurrajong, and can easily be found there.

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

by leave - Senator Herbert Hays has recently asked questions with regard to potatoes, and Senator Sampson also referred to the subject this week. They have asked for information concerning the system of marketing potatoes, with particular reference to Tasmanian potatoes. Control of marketing is exercised by the Australian Potato Committee, which was set up to ensure adequate supplies, and proper distribution, of this essential foodstuff. The war has brought a number of problems, and the ordinary peace-time set-up was not calculated either to ensure the supplies which were required or to distribute them according to our present needs. The committee works in co-operation with S’tate Departments of Agriculture and with advisory committees in each State. These advisory committees include representatives of State Agricultural Departments, and of growers and merchants, and they are relied on to a great degree in finding solutions of local problems. A minimum price has been guaranteed to growers, but the grower is allowed the benefit of the full market price when the market is higher than the guarantee. If the market is lower than the guarantee, the Commonwealth bears the loss, and regards it as a war cost necessary to ensure adequate food supplies. The effect is that growers can produce potatoes with the knowledge that in doing a public service they will not receive unprofitable prices and possibly ruin them:selves. As a result, the Commonwealth has been able to secure contracts for an area adequate for our needs, and much above the normal area planted with potatoes.

Growers are naturally concerned both as to the adequacy of prices and the promptness of payments. Tasmania is an exporting State, and always sells the greater part of its crop on the mainland.

These potatoes are usually required for civilian consumption, but there is now a considerable demand for Army purposes. The Army secures its potatoes at the ordinary market rate and pays for them through the regular Army channels. The remainder of the potatoes are marketed through agents in the States, and the drafts for payment are met promptly after arrival of the potatoes at the port concerned. Whilst Sydney is the usual port to which shipments are made, potatoes regularly go to other mainland ports. The time taken for transport will therefore vary according to the port of consignment, and so will the intervals between shipment and payment. It will be realized that there may be transport interruptions at any time which will extend the period beyond normal. It will also be appreciated that with large quantities of potatoes there will be delays with some consignments in any season and under war-time conditions these delays are more frequent. All that can be done is to deal with these special circumstances as they arise, and in this the advisory committees are consulted so that growers’ interests may be fully protected.

The market price of potatoes is a matter for the Prices Commissioner, and it is usually fixed at the beginning of the week. The Tasmanian grower, however, is .assured that he will receive the price ruling at the time when his potatoes reach the market, and he will in no circumstances get less than the guaranteed price. There may, of course, be an increase or decrease of price between the time when potatoes are shipped from Tasmania and their arrival on the mainland market. This is a normal risk for the grower, and he secures the price ruling at the time when his potatoes reach the market. The actual return to the grower may fluctuate between the lower limit set by the guaranteed price and the maximum price fixed by the Prices Commissioner.

In regulating supplies it is necessary that the old system under which the grower disposed of his potatoes at any time he desired should be abandoned. Two factors render that method impossible. The first is that shipments must now conform with the shipping space available, and the second is the necessity for regulating the flow of potatoes on to the market to secure even distribution and reasonable supplies for all demands. Accordingly, zones have been fixed for early, medium and late districts. Every grower will know the zone in which he is producing and when his crop is to be harvested. Growers will be placed on monthly quotas for deliveries with weekly quotas for merchants. According to the shipping space available the quantity of potatoes to be delivered will be allocated on a quota system to the growers. Later in the season a reserve supply of potatoes will be accepted at wharfs, so that weather conditions will not interfere with supplies. In this plan provision is made for potatoes grown for early markets or in low-lying districts. The plan is flexible and within the general scheme provision is made for the special circumstances which may confront any grower. These special circumstances are matters in which expert local knowledge is required, and the advice of the Tasmanian Department of Agriculture and of the Tasmanian Advisory Committee will, therefore, be of particular value in carrying it successfully into effect.

A number of changes have become necessary and new problems have arisen, whilst unexpected difficulties now appear frequently. In dealing with the difficulties the scales must be held fairly between the consumer and the grower. With that object in view, there is close cooperation between the Australian Potato Committee, State departments, growers and merchants, and the results have shown that potato-growers are prepared to plant much larger areas in the knowledge that they are assured of a fair return for their labour.

The Australian Potato Committee is fully aware of the fact that growers are perturbed from time to time by difficulties which become evident. As far as possible provision is made for them in advance, but many can hardly be foreseen. In all cases, however, the fullest advantage is taken of local advice in dealing with these matters. In the control which has to be enforced the committee is not trying to foist unwanted regulation on to growers but it is trying to get their co-operation in a plan for the common good. It is trying to get the assistance of growers to run their own industry in a time of stress, and it believes that the effort is succeeding in spite of the difficulties caused by the war.

Senator ARTHUR:

– Has the attention of the Minister for Trade and Customs been directed to the fact that the Prices Commissioner has fixed a maximum wholesale price and a minimum wholesale price of potatoes, and that certain foreign retailers in Sydney are retailing potatoes to consumers as though they had paid the maximum price? Will the Minister take steps to ensure that the consumers of potatoes are not fleeced by these racketeers?

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

– What the honorable senator complains of may occur, but, unless the Prices Commissioner is assisted by honorable senators and members of the public generally, it is impossible for him to police the operations of all potato sellers. His officers make organized raids from time to time, but it is difficult to secure proof of improper practices without the help of individuals. I shall bring the matter to the notice of the Prices Commissioner.

Senator GIBSON:

– As the potato season will be well advanced before the Parliament reassembles in July, will the Minister for Trade and Customs make a statement before the Senate rises for the recess setting out the action which a producer of potatoes must take in order to get the difference between the market price, which may be only £6 a ton, and the guaranteed price of £8 a ton?

Senator KEANE:

– I undertake to make a statement on the subject before the Senate rises for the forthcoming recess.

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Senator BRAND:

– Will the Leader of the Senate state whether the Government, in view of the war situation, will consider the postponement of the general elections until the war is over, and agree to the formation of a national government, thus bringing to an end the unseemly wr anglings and deadlocks which are bringing discredit upon the Commonwealth Government and retardinga wholehearted united war effort?

Minister for the Interior · QUEENSLAND · ALP

– The honorable senator has been a member of this chamber long enough to know the intentions of the Government with regard to matters of policy are not announced in reply to questions.

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Strangers in Corridors.

Senator COLLETT:

– Certain parts of Parliament House are set aside for the use and enjoyment of senators in the performance of their duties, and the presence of strangers within those precincts is at times embarrassing. Will- you, Mr. President, inform the Senate whether it is possible to bar strangers from the corridors leading to those parts of this building which are set aside for the use of senators?


– Strangers have no authority, without the consent of Mr. Speaker and myself, to go through the corridors. I shall protect the interests of honorable senators in any case brought to my notice in which their privacy is disturbed.

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Senator BROWN:

– In view of the need for increased efforts on the food front, will the Minister representing the Minister for the Army state whether there has been any relaxation of the conditions under which members of the forces are released from the Army in order to assist in the production of food? Would it be advisable for those members of the forces whose requests for release have been refused to make further application for release?

Senator FRASER:

– A considerable number of members of the forces has been released for rural work, but it is not always advisable to grant the requests of those who apply for release. Difficulty would sometimes be experienced in providing transport for a member of the forces to the locality where he desired to work on the land, because he might be in an operational area. The matter of releases is being reviewed by the Army authorities, and everything possible is being done to relieve the position.

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Senator DARCEY:

asked the Minister representing the Treasurer, upon notice -

  1. How much share capital invested in Australian industry has been compulsorily handed over to the United States Government under the Lend-Lease arrangements?
  2. Who is responsible for this transaction?
Senator KEANE:

– The Treasurer has supplied the following answer : - 1 and 2. Lend-Lease arrangements between the Commonwealth and the United States of America cover the supply of goods and services and are not concerned with share capital.

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Senator DARCEY:

asked the Minister representing the Minister for Supply and Shipping, upon notice -

  1. Is the Commonwealth oil adviser, at present advising the Government on the “ Dye “ retort, the same official who advised the Government on the Glen Davis shale oil project?
  2. Is it a fact that the Glen Davis project proved an economic failure mainly through the inefficient retorting of the shale?
Senator FRASER:

– The Minister for Supply and Shipping has supplied the following answers : -

  1. The Commonwealth fuel adviser did express views concerning the “Dye” retort but retorting difficulties which have been encountered at Glen Davis are not attributable in any way to advice offered by this officer.
  2. Production at Glen Davis was impeded due to the adoption by the company concerned of a type of retort which had not been proven. This retort was installed contrary to the advice of the Newnes Investigation Committee, whose report formed the basis of the development of the enterprise.

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Senator UPPILL:

asked the Minister representing the Minister for Supply and Shipping, upon notice -

  1. What was the production of wolfram from the Hatches Creek wolfram leases for - (a) The twelve months ended 31st December, 1941; (6) the four months ended 30th April, 1942; (c) the eight months ended 31st December, 194.2?
  2. What was the total amount expended by the Director of Minerals Production on wolfram operations at Hatches Creek to 31st December, 1942, classified as to - [a) purchase of plant and equipment; (6) Mining costs; (c) travelling expenses of transporting Chinese to field?
  3. What is the estimated production of wolfram from the Hatches Creek field for the year ending 31st December, 1943?
  4. . Did the Controller of Minerals Production determine that compensation should be paid to dispossessed mine-owners at a flat rate of 10 per cent. of the value of concentrates produced?
  5. If so, on what information and principles did the Controller determine the rate?
  6. Is it a fact that the Controller of Minerals Production fixed the rate of compensation without considering the facts in each individual case?

SenatorFRASER. - The Minister for Supply and Shipping has supplied the following answers : - 1, 2 and 3. It is not desirable in the present war situation to furnish information of this kind in regard to an outstandingly important strategic mineral.

  1. Yes. 5 and 6. The rate of compensation was determined in the light of information available concerning previous development of production, but the Controller is prepared to consider any claims made by the dispossessed mine-owners concerning the inadequacy of the rate, and one of the purposes of the present visit of the Deputy-Controller to Central Australia, is to investigate cases of this kind.

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clothing for Women’s Auxiliary Services.


asked the Minister representing the Minister for Defence, upon notice - 1, What is the cost of the clothing outfit for a member of the Australian Women’s Army Service?

  1. What is the cost of the clothing outfit for a member of the Women’s Royal Australian Naval Service?
  2. What is the cost of the clothing outfit for a member of the Women’s Auxiliary Australian Air Force?
  3. What is the total cost to date of the clothing outfit for each of the services referred to.

SenatorCOLLINGS.- The Minister for Defence has supplied the following answers : -

  1. Officers, £191s. 6d. each; other ranks, £16 5s.9d. each.
  2. Officers, £22 13s.6d. each, ratings £19 2s.6d. each.
  3. Officers, £22 19s.1d. each; airwomen, £17 5s. 7d. each.
  4. The cost to date of initially outfitting members of the services mentioned is approximately as follows: - Australian Women’s Army Service, £228,671 ; Women’s Royal Australian Naval Service, £15,815; Women’s Auxiliary Australian Air Force, £270,600.

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

– On the 18th March, Senator Collett asked when a reply might be expected to his inquiry as to the cost of printing and distribution of handbooks, memoranda, press articles, broadcasts and circulars issued or made by the authority of the Attorney-General in connexion with the first draft Commonwealth Powers Bill.

The Attorney-General has now supplied me with the following answer : -

On 28th January Senator Collett asked a number of questions regarding the Constitution Convention and on the same day an answer was given to all except those relating to the cost of printing the various documents. That information is now available. In connexion with the convention there were printed a brochure containing copy of the bill introduced into the House of Representatives together with a speech in the House introducing the bill; a book of 188 pages entitled Post-war Reconstruction, which was prepared for the information of members of the convention; a complete record of proceedings in the convention of 184 pages. The very wide demand for these brochures and hooks by members of all Parliaments in Australia, by universities, libraries and such institutions, and the requirements of government departments, the representatives of overseas countries in Canberra, and our own legations abroad, and by bodies like the returned soldier organizations and by the general public made it desirable to print a large number of copies. The total cost of all this printing, including postage and incidental expenditure, was £1,044 19s. 7d. All the printing was done by the Government Printer. There were no official press articles and only two broadcasts were given, involving no cost. This expenditure was shared between the Attorney-General’s Department and the Prime Minister’s Department. The latter department met the expenses directly related to the convention proceedings, while the former was responsible for the preparation of material for the convention.

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Bill returned from the House of Representatives with a message intimating that it had made the amendments requested by the Senate.

Third Reading

Motion (by Senator Cameron) proposed -

That the bill be now read a third time.

Senator McLEAY:
Leader of the Opposition · South Australia

– I am informed by the Clerk of the Senate that the procedure when messages dealing with requests and amendments are sent to the House of Representatives is for that House to deal first with the requests. The Senate is now asked to agree to the third reading of the bill as amended. I understand that if the third reading be agreed to the important amendments which the Senate has placed in the bill will then go to the House of Representatives for consideration. I should be glad to know from you, sir, whether I have stated the position correctly.


– That is the course which will be followed.

Question resolved in the affirmative.

Bill read a third time.

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

by leave - Much confusion has arisen in connexion with the operation of price control of primary products during the past year. That is due to the prominence given in some sections of the press to the comments of a few critics regarding the actions of the Prices Commissioner in controlling the prices of certain vegetables. In order to clarify the position, I shallbriefly survey the operations of price control in respect of leading primary products.

It is not generally realized that, over a large field of primary production, the Government, either through special boards or through the determinations of the Prices Commissioner, has guaranteed minimum prices in addition to fixing maximum prices. That has been done in respect of wool, wheat, hides and skins, rabbit skins, potatoes, sugar, flax and peas. In co-operation with the States, minimum prices for eggs, milk, and, in certain States, onions have been fixed. In addition, the arrangement made by the dairying industry, with the tacit approval of the Government, virtually provided for a minimum price. That action relates to production valued at more than £150,000,000 per annum which at present is guaranteed minimum prices, and provides an effective answer to those who contend that the Government, through its machinery of price control, is fixing maximum prices only, and leaving primary producers to the mercy of low prices during periods of over-supply.

The Government is extending its programme of guaranteed minimum prices. Honorable senators will recall that it was a part of the duty of the Meat Commission, regulations in respect of which were disallowed by the Senate, to guarantee minimum prices of all meats. Unfortunately the development of that plan has been suspended, but the Government intends to proceed with it as rapidly as possible in spite of the adverse vote on the regulations. Plans are also in hand for extending the principle to a number of fruit and vegetable products. There is already a minimum price for many fruits for processing purposes. These fruits include plums, pears, apricots, peaches, pineapples and all the terry fruits. Through the contract prices fixed for supplies of vegetables andfruits for the Department of Supply and Shipping, a lower limit has virtually been set for the prices of these vegetables and fruits, which, in addition to potatoes, for which special arrangements have been made, include carrots, parsnips, onions, cabbages, cauliflowers, turnips, oranges, lemons, grapefruit and pineapples. The action taken guarantees prices to producers. These developments are consistent with the view that the determination of maximum prices for seasonal products may impose disabilities upon producers unless they are protected from the low prices that will prevail in the event of periodic gluts occurring. The Government is fully alive to the position, and I think that it should be stated officially that the Prices Commissioner, whose principal duty hitherto has been to fix maximum prices, has advocated the principle of minimum prices for certain seasonal primary products. Up to the present time, maximum prices have not been fixed for many primary products for which minimum prices have not also been determined, either by the Government itself directly, or by the industry adopting an internal form of control which is recognized by the Prices Commissioner. For instance, in the dairying industry and the dried fruits industry, to cite two important examples, the arrangements made for the maintenance of minimum prices are recognized by the Prices Commissioner, and the practices adopted by the industries to maintain minimum prices are officially approved.

The principal primary product for which minimum prices have not been fixed, but for which a maximum price has been fixed, is meat. I have already indicated that that is not primarily the fault of the Government; its plans were temporarily held up. Because of the strong upward tendency of meat prices, it was necessary to exercise some form of control, and, accordingly, I took steps to declare meat under the National Security (Prices) Regulations, and the Prices Commissioner determined ceiling wholesale and retail prices as those operating on the 26th February, 1943. I give the assurance that, over a large field of the meat trade, if not over the whole field, while maximum price control is in operation, the Government will protect meat producers against a severe decline of prices brought about by temporary surpluses of supply. Plans for tin’s are being worked out by the Meat Controller in co-operation with the Prices Commissioner.

Butter and cheese were included among the basic commodities declared at the beginning of the war. The price was raised in February, 1942, by W- per lb. for butter, and l4d. per lb. for cheese. Later, the Government granted a direct subsidy to the dairying industry at the rate of £2.000,000 per annum. A review of wage rates is now being made by the Arbitration Court, and the industry has recently’ made application to the Prices Commissioner for a further rise of price.

For potatoes an interesting and effective experiment has been made. A maximum wholesale price of £17 5s. a ton in Sydney, with corresponding maximum prices elsewhere, has been fixed, and through (he Australian Potato Committee a minimum price of £8 a ton has been guaranteed to growers. The market fluctuates between these two limits, and in each State a committee representing the trade and the Potato Controller determines the level at which prices will be held from week to week. The producer is thus guaranteed a minimum price, but he also gets the current market price up to a maximum equivalent to £17 5s. a ton at Sydney.

Owing to the heavy demands of the services for fruit and vegetables, the Department of Supply and Shipping ‘has placed large contracts with growers for a wide variety of fruit and vegetables. Prices for these contracts are determined by the Prices Commissioner on the advice of a committee in each State representative of the Prices Branch, the Supply and Shipping Department and the State Department of Agriculture. This committee makes contact with producers or their representatives, and, in some cases, the Prices Commissioner himself meets representatives of the producers. The prices determined for these contracts are now regarded as satisfactory by most producers, and they offer most persons whose normal occupation is fruit and vegetable growing, the opportunity to obtain a guaranteed minimum price.

Unfortunately, the open market prices for vegetables have, on the average, been higher than the contract prices. Some margin is reasonable because the producer has to take the risk of fluctuating prices on the open market, and his costs of marketing are greater. Where, however, the open market price is very high, the tendency is for producers to supply the open market rather than to meet the urgent needs of the Supply- and Shipping Department. In order to correct this position, it has been necessary in a limited number of cases only, to fix maximum prices for fruit and vegetables in the open market. Commodities concerned are onions and carrots in all States, and tomatoes and peaches in one or two States. A semiofficial control was exercised over the price of citrus fruit in the open market last year, and it is intended to operate a legal control in the current year.

The limited sphere of operation of price control is in striking contrast to the extravagant statements that have been made concerning the effect of price control upon the production of fruit and vegetables. Present prices of fruit and vegetables are, admittedly, very high, and it is impossible to sustain the view that any general shortage of supplies is due to low prices, or to the operations of price control. There has been much discussion concerning the effects of price control upon crops of early onions and carrots. It does not occur to the critics to consider whether it is desirable in the interests of the war effort to encourage the production of expensive crops with relatively low yields to produce goods out of season in war-time. As regards peaches and tomatoes, the only reason for controlling their prices, and at the moment control operates only in New South Wales and Victoria, was the urgent need to divert sufficient supplies to the canneries to meet service requirements.

It will be obvious from this review that there is a vast range of primary products in which the producer is guaranteed a minimum price, a very narrow range in which maximum prices have been fixed without determining also minimum prices, and a considerable range of fruit and vegetables of which no maximum prices have yet been fixed. The contention that serious disability has been imposed upon primary producers by the operations of price control cannot be sustained, although at times the Prices Commissioner has been compelled to act quickly on account of legitimate pressure from the Department of Supply and Shipping. He has clone everything possible to meet the needs of special areas or special crops, and to adjust maximum prices accordingly.

The Government cannot permit prices of essential fruits and vegetables to rise to exorbitant levels. Such extreme levels press not only on consumer interests, but also tend to disrupt the general production programme. Steps are being taken to extend price control to the more important fruit and vegetables now uncontrolled. These goods were exempt from the blanket declaration of goods and services made by me on the loth April last. I propose gradually to include fruits and vegetables under the declaration of goods for the purposes of price control, and the Prices Commissioner will determine ceiling prices. He has intimated that he will fix ceiling prices at relatively high levels in present circumstances, but he may have to fix maximum prices lower than ceiling prices at certain times, and in certain areas, if the difference between the ceiling price and the contract price for the Department of Supply and Shipping is so great as to prevent that department from obtaining sufficient supplies for the essential needs of the armed forces.

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In committee: Consideration resumed from the 25th March (vide page 2351).

Clause 4 agreed to.

Title agreed to.

Bill reported with amendments.

Motion (by Senator Collings) agreed to-

That the bill be recommitted for the purpose of reconsidering clauses 2 and 3 and of considering the insertion of a new clause 2a.

In committee (Recommittal) :

Clause 2 -

Motion (by Senator Keane) proposed -

That the following clause be re-inserted : -

Section three of the War-time (Company) Tax Assessment Act 1940-1942 is amended -

by omitting from paragraph (d) of the definition of “taxable profit” the word “and” (second occurring); and

by adding at the end of that definition the following word and paragraph: - “; and (f ) so much of any interest derived from any securities to which section twenty of the Commonwealth Debt Conversion Act 1931 applies or from any loan to which subsection (2.) of section fifty-two b of the Commonwealth Inscribed Stock Act 1911-1940 applies, as is included in that taxable income;”.

Senator SPICER:

.- The purpose of re-inserting this clause is to prepare the way for the inclusion of an additional clause which will overcome the difficulties we encountered when dealing with the bill yesterday.

Question resolved in the affirmative.

New clause 2a -

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

.- I move -

That, after clause 2, the following new clause be inserted: - 2a. After section eighteen of the War-time (Company) Tax Assessment Act 1940-1942, the following section is inserted in Part III.: - “ 1 Sa. Notwithstanding anything contained in paragraph (/) of the definition of ‘ taxable profit ‘ in section three of this act, or in paragraph (v) of su’b-eectioii (1.) of section twenty-four of this act, a company shall not be liable to pay any greater amount of wartime (company) tax than the amount which it would have been liable to pay if - (ri) the specified in paragraph (/) of that definition were not deducted but were treated as income other than interest as specified in that paragraph; and

  1. the capital specified in paragraph (v) of sub-section (1.) of section twentyfour were not deducted in accordance with that section.”.

Since progress was reported on this measure yesterday, the Government, has given further consideration to the effect on companies of the amendments proposed by the Government and those foreshadowed toy Senator Spicer. The a pproach to the problem is that, whatever form of amendment is adopted, there must be no infringement of the ‘Commonwealth’s undertaking to bondholders as expressed in section 20 of the Commonwealth Debt Conversion Act and section 52b of the Commonwealth Inscribed Stock Act. The net effect of those provisions is that companies are not required to pay tax on the interest at a greater rate than Is. 4d. in the fl, that is, the rate of tax in operation for companies in 1930.

The. position to-day in regard to the war-time company tax is that, following a decision of the Taxation Board of Review, companies are not chargeable with the tax on the interest. The board has decided that the war-time company tax is an income tax and its imposition, in addition to the rate of Is. 4d., is an infringement of section 20 of the Commonwealth Debt Conversion Act and section 52b of the Commonwealth Inscribed Stock Act. The effect of the board’s decision is to free the interest from the war-time company tax while leaving the amounts invested hi the loans in the capital employed toy the company in earning the profits which are subject to war-time company tax.

This anomaly may he removed by either of two measures, viz., to include the interest in- the taxable profit and render it liable in full to war-time company tax and include the loan investments in the capital employed or, alternatively, to exclude the interest from the taxable profit and, correspondingly, to exclude the loan investment from the capital employed.

The objection to the first alternative is that it exposes the interest to a liability to war-time company tax which would be a limitation of the concession provided by section 20 of the Commonwealth Debt Conversion Act and section 52b of the Commonwealth Inscribed Stock Act.

The second alternative is the one embodied in the bill which the Government originally introduced. It is recognized that the exclusion of the interest from taxable profit and the loan investments from capital employed would operate to the disadvantage of companies because the rate of the interest on the investments in. the loans is less than the minimum statutory 5 per cent, allowed under the war-time company tax law.

The Government is most anxious to observe the spirit as well as the letter of the undertaking given by the Commonwealth to the bondholders in 1931. It is accordingly proposed that the clauses which were excluded from the bill on the motion of Senator Spicer be re-inserted and that an additional clause be included. The effect of the additional clause is that no greater amount of war-time company tax shall be payable on the exclusion of the interest and investments in loans than would be the case if the interest and loans were included in the calculation as an integral part of the company’s profits and capital. This proposal is in full accord with the spirit as well as the letter of section 20 of the Commonwealth Debt Conversion Act and section 52b of the Commonwealth Inscribed Stock Act.

Senator SPICER:

.- This has been a matter of some difficulty. It seemed clear to me that the Government did not intend in its original proposals to impose any greater tax upon companies than the Commissioner himself had originally claimed in his assessment, and that the purpose of the bill which the Government brought before us was to bring about that result. I think that I indicated yesterday that the bill went much further, in that its effect was substantially to increase the tax in the case of many of the companies interested. I discussed the matter with the Minister for Trade and Customs (Senator Keane) yesterday afternoon, and at that stage, as I understood it, he was prepared to accept an amendment. I referred to this in my speech yesterday. It is only fair to the Minister to say that, after he had agreed to do so, the difficulty of the amendment in its relation to the provisions of the Commonwealth Debt Conversion Act was pointed out, and I say quite frankly that he was justified in the attitude which he adopted, although he had said previously that he proposed to accept it. As a matter of fact, what occurred in relation to the matter completely justified my complaint that the bill was being disposed of too quickly. The Minister will remember that when I first interviewed him about it, although he asked me to accept the proposed amendment, my attitude was that I would prefer to see its consideration postponed rather than hastily accept a proposal which might have certain repercussions. The Government was anxious to pass the measure, and we moved our amendment, but the position is now, I believe, satisfactory. The amendment now moved by the Minister is a somewhat cumbersome piece of draftsmanship. It is not the best that could be framed, but I think that it does effect its purpose. The purpose which we all have in view is that the anomaly which the Commissioner has pointed out should be removed, but in such a way that by this bill at any rate we shall not impose a heavier burden of tax upon any of these taxpayers than that which the Commissioner himself claimed in the first place was due. I believe that the amendment which the Minister has moved does achieve that result. It reaches the point that I felt that we should reach when the matter was raised yesterday. I shall support the amendment.

Senator A. J. McLACHLAN (South Aus amendment moved by the Minister brings the position to that which the Government and the Commissioner of Taxation intended. The Minister, in moving the second reading of the bill, said -

The bill proposes to correct this anomaly by providing for the exclusion from the taxable profit of the loan interest’ to -which section 20 of the Commonwealth Debt Conversion Act or section 52u (2) of the Commonwealth Inscribed Stock Act applies.

That is an end which I think that we all desire to attain. Whilst it has been said over the air and elsewhere that there was refractory opposition to this measure in the Senate, the result of the conference between .Senator Spicer and the Minister has more than justified the attitude which this side of the committee adopted yesterday. I admit that these measures, particularly those dealing with war-time profits, are based upon an entirely different principle from that which governs other forms of taxation. Their complexities are manifold, and, whilst this amendment is a somewhat clumsy device to attain the end which we have in view, the measure will now have the same effect upon the taxpayer as that aimed at by the Commissioner of Taxation, whose decision was upset by the Taxation Board of Review. If I am right in that conclusion, I see no reason why we should not accept the amendment, but I deprecate the introduction of taxation measures so late in this period of the session. They are becoming extraordinarily complex - more and more so as we impose further taxes - and whilst we may have a rough knowledge of ordinary income taxation, this class of taxation bristles with complexities. I can understand the Minister’s attitude on the matter, but now that he has given effect in substance, although in a roundabout way, to what he indicated was his desire in his second-reading speech, I think that we should accept his amendment.

Senator McBRIDE:
South Australia

– I am very pleased at the outcome of the discussion between Senator Spicer and the Minister (Senator Keane) on this matter. It is satisfactory to know that the objection taken by the Opposition was real, and that this has been admitted by the Government. I point out, however, with all respect, that whilst by this amendment we have brought the position back to that which existed before the Taxation Board of Review gave its decision, we have completely ignored the decision of that board, which was that, under section 20 of the Commonwealth Debt Conversion Act, these profits were not taxable, or in other words, that this war-time company profits tax is an income tax and therefore under the Commonwealth Debt Conversion Act these profits should not be taxed. What we have done is to admit that the amount of money employed was invested in bonds as part of the capital of a company, and we have also admitted that the interest earned by those bonds is part of the profit of the company. We have averaged that part of the profit earned by investment in bonds and the part of the profit earned in the ordinary activities of the company, and placed them together, in order to arrive at the rate upon which the war-time profits tax shall be assessed. In order to give effect to the spirit and, indeed, to the letter of the Commonwealth Debt Conversion Act, we should not impose the rate then arrived at upon that portion of the profit which is made from interest on these loans. I admit that in the matter of interest the holders of the bonds enjoy tremendous concessions, and I personally doubt whether it is possible to justify its exclusion, but, if we are going to say that we are interpreting the letter and the spirit of the legislation, the only way in which we can do so is to exclude that portion of the profit which is obtained from interest on such loans. I make these few observations because, in spite of the fact that we have returned to the position that existed, before the Taxation Board of Review gave its decision, we have entirely ignored the practical effect of the decision of the board.

Senator McLEAY:
.South AustraliaLeader of the Opposition

– The Leader of the Senate (Senator Collings) should apologize for his outburst yesterday, in which he said that the Opposition was delaying business. The protest which I made yesterday against rushing business through the

Senate at the end of this period of the session and passing these complicated and intricate bills through the House of Representatives at 5 o’clock in the morning has been thoroughly justified. We have to-day evidence that the policy which we adopted yesterday was correct. The Senate was intended by the framers of the Constitution to be not only a States’ House, but also a house of review. Whatever the Leader of the Senate or the Prime Minister may say about nineteen men controlling 110, we shall insist, while we are in Opposition, and have the numbers, on doing our duty.

The CHAIRMAN (Senator Brown:

– Order! The honorable senator must deal with the amendment.

Senator Ashley:

– I rise to order. I submit that the Leader of the Opposition is out of order in making reference to the utterances of a member of the House of Representatives.


– I have already called the Leader of the Opposition to order. I ask him to deal with the question before the Chair.

Senator McLEAY:

– I support the amendment moved by the Minister for Trade and Customs (Senator Keane) with the reservation that the points put forward by Senator Spicer and Senator McBride ought to receive full consideration by the Government. I believe the amendment corrects the anomaly which existed, and I exonerate the Minister from any blame whatever for the attempt to rush the bill through. Taxation bills are very complicated, and sufficient time to consider them is essential. I do not think that it is fair to the taxation officials or to the Solicitor-General’s Department to call upon them to assist in rushing business through with undue haste. One of the reasons why mistakes such as have been discovered in this bill are made is that it is physically impossible for the officers in those two departments to give the time necessary to the work. The committee, in accepting the amendment, is in this extraordinary position : I am sure that not one honorable senator on the Government side of the chamber knows anything about it. I am surprised that the bill passed the House of Representatives without protest. We have heard cheap gibes from Government supporters about Senator Spicer and Senator A. J. McLachlan, who are members of the legal profession, but it is to those two honorable senators and Senator McBride that we owe our thanks for pointing out the defects inthis bill. I hope that the Government will give full consideration to the point raised by Senator McBride and do what is right. The taxation officials and officials with whom I have been associated in Canberra have no spare time, but work day and night, for which I give them every credit. I hope that the Government will consider them, and not work them to death.

Minister for the Interior · Queensland · ALP

.- I remind the Leader of the Opposition (Senator McLeay) that on previous occasions, when we have been approaching the end of a sitting period, there has been an accumulation of bills numbering as many as 23.

Senator McLeay:

– Two wrongs do not make a right.


– No, but the honorable senator has spoken about an apology ‘being due from me. There is nothing for me to apologize for. The notice-paper at the moment is clear of business. Instead of my apologizing to the honorable senator, I think it would be only courteous and just on his part if he complimented the Government on its sweet reasonableness in accepting the amendment of the Opposition. I consider that we have reached a very fair arrangement, and my only regret is that members of the Opposition have not accepted it so graciously as I should have expected in the circumstances.

New clause agreed to.

Clause 3 -

Motion (by Senator Keane) agreed to -

That the following clause be re-inserted: -

Section twenty-four of the War-time (Company) Tax Assessment Act 1040-1942 is amended -

by omitting from paragraph (iii) of sub-section ( 1 . ) the word “ and “ ; and

by adding at the end of that sub-section the following word and paragraph: - “ ; and (v) any capital, averaged over the accounting period, invested in any securities to which section twenty of the

Commonwealth Debt Conversion Act 1031 applies, or in any loan to which sub-section (2.) of section fifty-two b of the Commonwealth Inscribed Stock Act 1911- 1940 applies.”.

Bill reported with further amendments; reports adopted.

Bill read a third time.

Sitting suspended from 11.3 a.m. to 2.15 p.m.

page 2461


The following papers were presen ted : -

Lands Acquisition Act - Land acquired for Commonwealth purposes - Brisbane, Queensland.

National Security Act-

National Security (Apple and Fear Acquisition ) Regulations - Order - Nonapplication of Regulations 9, 10 and 11 to certain States.

National Security (General) Regulations - Orders - Control of -

Canned Fruits.

Ice (Queensland).

National Security (Land Transport)

Regulations - Order - Victoria No. 11.

National Security (Universities Commission) Regulations - Order - Numbers of students to be assisted.

Senate adjourned at 2.16 p.m.

Cite as: Australia, Senate, Debates, 26 March 1943, viewed 22 October 2017, <>.