17th Parliament · 1st Session
The President (Senator the Hon. Gordon Brown) took the chair at 10.30 a.m., and read prayers.
Stoppage ofwork at Port Kembla.
-Has the Leader of the Senate read the report in the Sydney press this morning relating to an order issued by the Government to Australian Iron and Steel Limited calling upon that company to take its menback to work by the 3rd April? I particularly direct the Minister’s attention to some of the points raised in the report, which states-
A statement issued by the directors to-day said that they knew nothing of the Government’s order until they saw it announced in the newspapers. . . . ‘ The order provides that the company must pay the men laid off from the time the order was issued.. . . Since the resumption of operations at the South Coast collieries the inflow of coal has been considerably below normal, and the companyhad asked the Coal Commissioner for more. This, unfortunately, was not made available. “ Providing adequate supplies of coal are made available in the meantime, the management hopes to be able to start bring- ing the coke ovens back to normal operations on 11 th April,” the directors continue, “but we have been advised that that is the earliest date that can be fixed with safety.” . . . If the company is compelled to take back its full labour force before the coke ovensare back to normal production, . it would simply mean that a large number of men will be on the works without having any useful work to do.
– An honorable senator is not in order in quoting at length from a newspaper report when asking a question.
– The point made by the directors is that, if the men are brought back, there will not be any work for them to do. In view of the fact that the present sittings of the Senate will end this week, does the Government intend to laya copy of the order on the table before we adjourn, so that the Senate may take appropriate action?
– The order was carefully considered by. the Government. It was made with a view to the proper carrying on of the industry, and the observance of the Man Power Regulations. The order directs the company to take certain action, and it willbe enforced.
– Will the Minister lay a copy of the order on the table of the Senate before we adjourn on Friday?
– I shall confer with the responsible Minister and ascertain whether I can comply with that request.
– Has the Minister for Trade and Customs read the report in the Sydney press to the effect that exporters of books in Great Britain have been unable to ship any books to Australia since early in October last, and that there is an accumulation of £20,000 worth of books, a large proportion of which arc of a technical and educational kind? Is that report correct, and will the Minister inform the Senate whether he proposes to take action to relieve the position ?
– I am aware of the position outlined by the honorable senator, and I hope during the day to make a statement on the matter. The difficulty is really one of shipping, and, for security reasons, I cannot disclose the shipping position at the present time.
– In view of the reports current that there arc large accumulated stocks of motor tyres inthe hands of the Defence Department and the Allied Works Council, will the Minister representing the Acting Minister for Supply and Shipping Lave a thorough inquiry made as to whether such surplus stocks exist, and, if they do, will favorable consideration be given to their distribution to people in country districts who are urgently in need of motor tyres for transport purposes?
– I shall have the matter investigated and an effort will be made to give effect to the honorable senator’s representations.
– I have received from Senator Foll an intimation that he desires to move the adjournment of the Senate for the purpose of discussing a definite matter of urgent public importance, namely, “ The immediate necessity for the expansion of Australian publicity overseas, and, with this end in view, the early appointment of a joint parliamentary committee to go into the matter “.
SenatorFOLL (Queensland) [10.36]. - I move -
That the Senate, at its rising, adjourn to to-morrow, at 9 a.m.
– Is the motion supported ?
Fourhonorable senators having risen in support of the motion,
– Without desiring to initiate a lengthy debate on this matter, I am sure that the subject of Australia’s overseas publicity is of sufficient importance to warrantmy action in moving the adjournment of the Senate. My proposal that an all-party committeebe appointed to consider the matter and assist the Department of Information is made with a view to being helpful and constructive. As a former Minister for Information I hav.e no hesitation in saying that a committee of that kind would have been valuable to me on many occasions. At least twice I remember discussing the affairs of the department with the present Prime Minister and the Labour members of the Advisory War Council with valuable results. We are all gravely concerned at the reports reaching Australia from time to time as to the lack of publicity overseas with regard to this country’s contribution to the war effort. Only in the course of the last few weeks we have read statements that at exhibitions of war pictures in London no Australian pictures were shown. When looking through the illustrated London magazines in the Parliamentary Library a few days ago, I noticed that, although a great deal of space was devoted to pictures relating to war activities in the South- West Pacific Area, they were confined entirely to the work of our American Allies. The activities of Australia should not have been overlooked. I have no desire to cause any ill feeling between ourselves and our American Allies with regard to publicity, but we lag far behind them in the matter of photographic publicity in our own sphere of operations in the South-West Pacific Area. One of the reasons is that the equipment made available to our photographers and the operators of moving picture machines working under the Department of Information is inferior in quality and quantity to that given to the Corps of Signalling Photographers attached to the American Army.
I propose to convey some idea of the disadvantages under which our men are working iu this matter by comparison with our Allies. I pay the fullest possible tribute to the work being done by the representative photographers from the department. In the course of a conversation with me recently, an officer serving with the American forces paid a striking tribute to the work which our men are doing despite their inferior equipment. The Americans do not reserve the field of operations exclusively for government photographers. The Corps of Signalling Photographers, which is similar to our Army Public Relations Department, has its own operators in the South- West Pacific Area. Its wort is carried out mainly for historical and documentary purposes, but it releases photographs to the public, and to the press and moving picture syndicates which send their men to that area. The Americans allow representatives of the press and of the motion picture interests to send their own operators into the front line with the forces, for the purpose of taking pictures firsthand and sending them back to the United States of America for publication. Australia, however, limits the service to men associated with the Department of Information. Just as we allow accredited representatives of the press to accompany the troops into the front line, so, I think, we should permit the photographic section of the press and the motion picture interests to have their representatives working in the same way as the photographers do in the American forces. The importance of publicity is so great that the photographic section should receive as much attention as the literary section. That is the main reason why we are at a disadvantage in this respect as compared with our Allies. In addition to their equipment being of higher quality, they have arrangements on the field for the processing of pictures. They have special dark rooms for processing and reproducing pictures almost as soon as they are taken. In some cases pictures are radio-telegraphed to Washington where they are exhibited within four or five hours of the time when the scenes were photographed. Washington is the clearing-house of all pictures taken for the American forces, and our Department of Information, instead of trying to take all of our pictures themselves, should consider whether it should not become a clearing-house for pictures like that established in Washington. Although all pictures go into one pool in Washington for censorship and approval, each is released under the name of the individual or the syndicate responsible for its production. A great deal of the difficulty which we are experiencing in relation to the lack of proper publicity overseas has been caused by the fact that accredited photographic operators from the press and moving picture interests have not had opportunities to do their work equal to those of war correspondents who write descriptions of operations on the field. Our equipment has never been regarded as anything like sufficient for the work which these men are doing. Within the last few weeks, a new darkroom has been erected at Port Moresby by the Department of Military History, and is shared by the Department of Information. A report that I have received states that it is badly planned, is without adequate cooling water, and is not efficient for the purpose for which it was designed. On the other hand, American photographers have airconditioned mobile dark-room units, with refrigeration for water and all the chemicals that are necessary to maintain a constant temperature, which is a most important factor in producing highquality prints. They also have other equipment of the latest design, including electric driers, automatic printing machines, and plenty of materials. Recently, , a photographer attached to the Department of Information asked to be supplied with flash-bulbs. One dozen were sent, and he was informed that they were in short supply. An American photographer supplied him with many more, and said that he had on the spot about 600, whilst several thousand were in store in Brisbane. Any one who is acquainted with the work of press photographers will know that a dozen bulbs would not be sufficient to take a number of photographs at an important indoor function. Furthermore, the Department of Information has never had a pictorial editor, or any officer with experience of the problems of pictorial work for the press or other agencies. When its photographers ask for materials or gear, they are referred from one man to another, and cannot obtain what they require. Recently, a photographer in New Guinea is reported to have received six telegrams in one day, giving conflicting orders. Americans, on the contrary, have a large degree of individual freedom, and work under officers who arrange or organize their tasks and their output just as a military officer deals with fighting units.
American photographs are supplied by several units. The Fifth Army Corps, the Signal Corps of the Army, and the Navy all have their own photographers.
I leave that aspectof the matter for the time being, and turn to publicity generally overseas. If one thing is essential at the present time, it is that not only Australia’s war effort, but also its potentialities and its post-war problems, should be made as fully known as possible in Allied countries. At the present time, the Commonwealth is expending over £750,000 a year, only £50,000 of which has been set aside for the biggest publicity job of all, that of making known to the world the war effort and the post-war resources and problems of this country. Some of the governments now in exile in the United States of America, such as the Dutch and the Belgian, are expending more on publicity than is being expended by Australia in that country. The United States of America, which is almost the size of Australia, has a population of 130,000,000, and we are closely associated with it at the present time, yet our total expenditure on one establishment there amounts to only £35,000 a year. That establishment was set up while I was Minister for Information, but the arrangements for it had been made by my predecessor (Mr. Menzies), prior to my assuming control of the office. I pay tribute to the work of Mr. Bayley, the first news representative of Australia in America. Considering the small staff and the meagre financial accommodation that he had, he performed a colossal task, and every credit is due to him. On the west coast of America, where we might best hope to establish a joint interest in the Pacific questions which will govern the future welfare as well as the security of Australia, we have no representative. In Hollywood, the centre of the great film industry and a splendid medium for propaganda purposes, we have not even a liaison officer. In the Middle West, which was the centre of American isolationism, the position is identical. In the great South American republics, with which we shall have to deal in the post-war period, we have no representation. In the heart of the Empire, our position is worse than in the United States of America. Until recently, our expenditure upon publicity in London amounted to approximately £1;600 a year; the staff consisted of one officer and a typist. I commend the Government for having recently increased the appropriation to approximately £15,000 a year; but even that will be quite inadequate if Australia’s efforts and its future development are to be made known. I discovered only yesterday that the Commonwealth Parliamentary Library had sent an officer to London for the purpose of establishing there a library for the dissemination of information concerning Australia. That i3 a most valuable form of propaganda, t was also pleased to note this morning in yesterday’s Melbourne Argus the statement that the Government of the United States of America had set up an information library in Australia. I place the highest value on such libraries. If we are to make ourselves known as a nation, we should concentrate more and more on this form of publicity, because the representatives of tie various press agencies would thus be enabled to obtain whatever information they might require. I do not consider that the “hand-out” is a good method of publicizing Australia. I do not underestimate the value of it; but as every newspaper has a distinctive character of writer and reader, libraries at which they are encouraged to obtain whatever information they may need would be far more valuable to us than “hand-outs”, which may not suit all and, being identical in every case, are not likely to be given the widest publicity. Outside Britain, we have made practically no publicity effort within the Empire; yet in the post-war discussions and settlements a proper understanding in Canada, Kew Zealand, South Africa and India of Australia’s problems in relation to such questions as migration, tariffs, air traffic, and a dozen other subjects, will be absolutely essential. During the last two years, the Government of Canada has maintained in Australia a press attache who has done an excellent job in making known to the people of this country the efforts of that dominion. So far, Australia has not reciprocated, despite the fact that an understanding of our problems in Canada will be of tremendous importance in the post-war period, when questions concerning the Pacific have to be settled. It is already accepted that the Big Four, which will draw up the peace settlements - which we hope will continue for many years - will ,be Britain, the United States of America, China and Russia. At present, we are not sending any publicity into Russia and China with a view to their people becoming more acquainted with our problems. I emphasize that it cannot be expected that diplomatic representatives such as Mr. Maloney and Sir Frederick Eggleston can handle publicity. This must be kept separate from diplomatic relationships, for very many obvious reasons, one of which is that these gentlemen have to conduct very delicate ambassadorial negotiations.
I have traversed quickly a number of the matters which I consider demand attention. by an all-party parliamentary committee. It is a great pity that, within the last few weeks, there has been a certain amount of cross-firing and hostility between sections of the press and the Minister for Information (Mr. Calwell). The Department of Information, above all others, should maintain the closest and most friendly relations with all sections of the press; it should be most helpful to the press, and the press should be helpful to it. Only through the avenues of the press, the radio, and films can we have a proper medium for the dissemination of the publicity which Australia so badly needs. In addition to the task of publicizing Australia’s war effort, we need to look to a considerable increase of tourist traffic to this country. Such matters could scarcely have been discussed during the last three or four years, owing to the difficulties of the international situation. But a change has now come over the scene, and the outlook is much more hopeful than it was; consequently, other nations are turning their attention to publicity, in order to make known their . potentialities. I do not want Australia to lag behind them. The appointment of an all-party parliamentary committee would help to coordinate the work that is being done by the various publicity agencies which the Government now uses, and would assist the Department of Information, or any other department, with whatever publicity work it is doing. I know that all is not well between the Department of Information and the Army Public Relations section of the Department of the Army. While I was at the Department of Information, I frequently found the Service Public Relations sections difficult to work with, because they were jealous of their rights, just as was’ the Department of Information. I regard the Department of Information as a clearing house for news, as well as a source from which information is obtainable. The position now is that there is competition for space between the public relations departments of the Army and the Air Force, and the Department of Information. That is not desirable. I assure the Postmaster-General (Senator Ashley) that I have brought this matter forward only with a desire to give greater publicity to Australia throughout the world. I suggest that a publicity committee, representative of all parties and of both branches of the legislature, should be appointed to investigate the existing avenues for publicity, and to advise the Government as to the best way to improve the present set-up. That is my purpose in submitting this motion, and I hope that the Government will give to it careful consideration.
– I support the motion because I am convinced that Australia needs greater publicity in other countries. That was made clear to the Australian members of the Empire Parliamentary Delegation when they were overseas last year. The lack, of publicity in regard to Australia was most noticeable in Great Britain. It is true that a reneod publication issued by the authorities at Australia House gives some Australian news to the men in various Australian camps, and to Australian visitors to the Old Country. There are many reasons for the lack of news concerning Australia in Great Britain. One reason is the smallness of British newspapers to-day, compared with their size in pre-war days. Newspapers which formerly contained from fourteen to eighteen pages are now confined to two pages, and therefore it is easy to understand why little publicity is given to Australian happenings even in such newspapers as the Daily Express and the Daily Chronicle. However, there are means other than newspaper publicity by which happenings in Australia can be made known in other countries. I have in mind particularly the radio. Australia has expended a considerable sum of money in establishing a short-wave radio service, but while absent from Australia I was unable to hear Australian news broadcast by means of that service until I was within 500 mile; of the Australian coast. It would appear, therefore, that that service is not giving the satisfaction that was expected when it was established. There is scope for a regular news service, not necessarily daily, by which happenings in Australia and the South- West Pacific Area could be made known to the people of Great Britain. From my contacts with people there 3 know that they would welcome news over the air about Australia. I do not suggest that there should be two or three Australian bulletins each day, but it should be possible to inaugurate a regular news service from Australia, and I am sure that the British Broadcasting Corporation would be pleased to co-operate by broadcasting such news at appropriate times, say, at 9 a.m. and 9 p.m. I am confident that such a service would bc most popular in Great Britain, because everywhere I went in the Old Country the word “ Australia “ acted as a charm, equal to “ Open Sesame “. A man had only to say that he was from Australia, and places which the ordinary Englishman or Scotsman could not enter easily were thrown open to him. In the United States of America the position as regards publicity concerning Australia is worse than in Great Britain. While in the United States of America I saw no sign.? whatever of any Australian publicity: and I do not usually go about with my eyes shut. I found there a lack of even the most elementary knowledge of Australia - what this country produces, what it is doing in the war, and so on. The average American is absorbed in the affairs of his own country. I do not say that offensively. The United States of
America is a large country with a big population and the scope of its activities is sufficient to absorb the attention of most Americans. Indeed, their interest in their own country to the exclusion of other countries can be said to le too great. While in the United States of America I met many Americans who have near relatives in the South-West Pacific Area, but when I tried to explain the geographical situation of Australia in the South-West Pacific, I could tell by the looks on people’s faces that they had no idea whatsoever of the size and importance of Australia. When I said that Australia was nearly as large as the United States of America I could detect an incredulous look on their faces. However, I was able to give” them some idea of the size of Australia by saying that for me to travel from my home in Western Australia to Canberra was equivalent to travelling from Portland in Oregon to the State of Maine. Any improvement of Australian publicity in the United States of America would be a step in the right direction. The time when trade followed the flag has passed; trade now follows the camera. The kind of publicity that is wanted nowadays is picture stories. People have not the time to read long articles, or to listen to long addresses, concerning any country; ‘but they are prepared to watch newsreels and travelogues. By means of cinema displays they will learn more about Australia than in any other way. We should do in the United States of America what the Americans do for themselves; we should publish information concerning our country !by means of well-illustrated magazines. As honorable senators know, many of the illustrated publications from the United States of America have a circulation, not of hundreds of thousands, but of millions of conies. We have not yet started to impress our American cousins with what Australia has done, and is doing in the war. If we are to tell the true story we shall have to expend a fairly large sum of money; we shall have to depart from the time-honoured Australian habit of cheese-paring. Publicity cannot be obtained without the expenditure of considerable sums of money; but publicity is our best means of advertising our products. After the withdrawal of Australian troops from the Middle East, there was a falling off of Australian publicity in Great Britain, especially in the illustrated journals published in that country. Possibly that was due to lack of contact with Australian troops on the part of photographers for those journals. The same reason for lack of publicityregarding Australia has been given by my relatives in the Old Country. At the moment, the New Zealanders have pride of place among men from the Dominions in the Old Country, and, that, I think, is clue mainly to the presence of New Zealand troops in Italy. The “ Kiwis “ are justly entitled to all the publicity that they are given, and I hope that they will get more of it. At the same time, there is less general knowledge of New Zealand on the part of Britishers generally than there is concerning Australia. Many people in the Old Country are not quite sure whether or not New Zealand is a part of Australia. But there is no doubt as to Australia’s standing in Great Britain; and for that reason more publicity concerning Australia should be given to the people in that country. As I have said, the expenditure of fairly large sums of money will be involved, but there is no other way to get the required publicity. When I was asked by the British Minister for Information, Mr. Brendan Bracken, what I thought was the reason why Australia stood high in the esteem of the British people I replied that it was probably due to the fact that in educational publications in the Old Country the word “ Anzac “ was fully explained, so that the children at the schools, as well as their elders, had a good general knowledge of tlie landing at Gallipoli in April, 1915, and of the subsequent deeds of Australian soldiers. The memory of Gallipoli is still green in the minds of the British people, due, no doubt, to the exploits of their own men, particularly those of the 29th Division, as well as the Australian and New Zealand troops. In many of the larger towns in the Old Country, there is an impressive ceremony on each Anzac Day. By such means Australia is kept before the British people. We have a great man in England to-day representing Australia, the Right Honorable S. M. Bruce, who stands head and shoulders above all the other high commissioners at present in London. It is a source of great pride and comfort to Australians visiting the Old Country to know that they are so admirably served there by a great Australian. I have no doubt, however, that he and his staff are circumscribed in their activities by the unfortunate lack of funds. The mimeograph newsletter issued by Australia House is all very well, but it is concerned mostly with domestic matters of interest to Australians only. There should be in London an active branch of the Department of Information, and it should have plenty of cameras. I have no doubt that all the space required in English newspapers for Australian publicity, especially in the case of pictures, will be available, if not this year, then certainly next year.
– The honorable senator’s time has expired.
.- In the past, short-wave transmission from Australia to overseas was unsatisfactory, but I understand that it has been much improved of late. I should like to see the closest co-operation between the Postal Department, the Australian Broadcasting Commission and the Department of Information.
– Would the honorable senator include the Department of External Affairs?
– In the United States of America a new system of ultrashortwave broadcasting has. been instituted which, I understand, will supersede the present short-wave systems. In this field of transmission we have been left far behind. Prom Japan, there is a short-wave broadcast which can be heard in Australia remarkably well. We havethree different systems in operation here. The Department of Information acts independently. Then there is the Postal Department which, on the communications side, also acts independently, and finally we have the Australian Broadcasting Commission. There should, as I have said, be complete co-ordination between these three departments, rather than that a new department should be set up. The Department of Information should collate the matter which is to be broadcast to overseas countries. The Postal Department, which controls the technical services, should do the transmitting, while the Australian Broadcasting Commission, which has the experts at its disposal, should broadcast me : matter. I agree with- Senator Allan MacDonald that Australia is not known overseas. When I was in London some time ago, I was surprised that so little Australian news was published there. Now the opportunity is available through short-wave broadcasts to make ourselves known abroad. I am sure that much matter could be transmitted overseas that would be of great value to Australia. I have read some of the scripts of matter that Avas broadcast for overseas reception about two years ago, and ‘ I was horrified to note its poor quality and unsuitability. I understand that an improvement has since been effected, but there is still room for improvement, especially when Ave compare our efforts Avith those of other countries.
.- This matter is so important that it deserves immediate attention by the Government, and I congratulate Senator Foll on having brought it forward. In these times, it is essential that Australia should receive adequate publicity abroad. What Senator Allan MacDonald said about Australia not being known overseas has been said repeatedly by other Australians who have returned from abroad. We are now doing something to improve the position, but. more should be done. I was interested to hear the interjection of Senator Ashley that, in arranging for co-ordination between the various departments, the Department of External Affairs should be included. I endorse what Avas said by Senator Foll, and I hope his remarks will be heeded by the Government.
Senator ASHLEY (New South WalesPostmasterGeneral [11.22] . - I appreciate the very temperate manner in which this ‘ subject has been debated. ] realize that Senator Foll, in bringing it up for discussion, was actuated by a desire to improve Australian publicity overseas. He has had experience in the administration of the Department of Information, and he will agree that the great limiting factor to its activities is lack of funds. Senator Foll referred to the quality of the equipment available to photographers attached to the Department of Information. I remind honorable senators that, after the outbreak of war, photographic materials were very scarce, so much so, that at one time we were seeking second-hand equipment. I agree that the Americans probably have better equipment than our men, and that was true when the honorable senator was in charge of. the department. Our photographers have the best that we can get for them, either from the United States of America or elsewhere, but we may not always have been able to get the latest. I do not think that the honorable senator intended to convey the impression that it was the fault of the department that our equipment was not equal to that of the Americans.
The honorable senator also complained of the facilities available to our photographers in the field. It should be realized that restrictions are placed upon the movements and activities of photographers by Army authorities, and it may be that more latitude is allowed by the United States of America authorities to their photographers than our Army authorities allowto our men. I cannot say whether our photographers have mobile units for developing films, as the Americans have. If they have not, it is probably because we have been unable to obtain such equipment. I feel confidentthat, if it were available, the department would have obtained it, so that our photographers would be placed on the same footing as others.
Senator Foll said that the Americans had official photographers making pictures for historical records, and that there were also press and cinematograph photographers in the field. The Australian Army authorities will not allow press photographers to visit operational areas, and the Department of Information cannot give permission for them to do so. Only photographers attached to the Department of Information may take pictures at the front.
– Does the honorable senator believe that press photographers should be allowed to take pictures?
– I do, but it is not a matter for me to determine. I was glad to hear that the honorable senator appreciated the services of Mr. Bailey in New York. I agree that he has done a wonderful job. I was surprised to hear Senator Allan MacDonald say that he did not hear our short-wave overseas broadcast until he was within 500 miles of the Australian coast. That is a serious allegation, and I shall bring it to the notice of the authorities.
– I told the departmental officials of the matter long ago.
– If what the honorable senator says be true, a great deal of money and; time has been wasted on the preparation and transmission of short-wave broadcasts. I cannot understand Senator Allan MacDonald’s statements about the lack of knowledge in the United States of America of Australia’s war effort. It may be that, during his brief stay in the United States of America, he did not have an opportunity to observe how much publicity Australia was actually receiving. I propose later to make available a report showing the volume of publicity which is being released in the United States of America. I agree entirely with the. suggestion madebySenator Gibson that the Department of Information, the Postmaster-General’s Department and the Australian BroadcastingCommission should co-ordinate their activities in respect of short-wave broadcasting. The Postmaster-General’s Department provides the technical services, and the Department of Information, in conjunction with the Department of External Affairs, supplies the material to be broadcast, whilst the commission handles the matter over the air. The Department of External Affairs knows of the latest developments in the international and diplomatic spheres and, therefore, should exercise a certain degree of supervision over information which is broadcast to overseas listeners. As Senator Foll informed me that he intended to move this motion, I obtained from the Minister for Information (Mr. Calwell) relevant information concerning the general activities of his department. The policy of the department is to avoid wasteful expenditure in Australia and to take advantage of every opportunity to expand its publicity services abroad. Honorable senators, perhaps, do not realize the results that have been achieved. Since Japan came into the war the department has played a far more vigorous and vital part in maintaining national morale than it was obliged to do previously, when the war was confined to Europe and Africa. The Pacific war dictated the necessity for the rapid transfer of man-power from peacetime to war-time production. It created the shortages that led to a policy of rationing and demanded all the other radical and almost revolutionary changes that had to be made swiftly in our normal way of living. It fell to the lot of the Department of Information to be the channel between these war-time decisions and the public. The department had to explain the factors that made these changes necessary, and the machinery which was devised to effect them. It will be admitted that in such vital matters as the registration of man-power, the first issue of ration books, the rationalization of clothing, and the limitation of non-essential production, our war effort had the benefit of a wellinformed public opinion. Publicity in respect of these matters became part of the department’s routine, superimposed upon its primary function of bringing to the public through the press, photographs, films, pamphlets and other means tlie true story of Australia’s war effort.
It is to the credit of the Department of Information that despite these additional activities, it is one of the few departments which did not greatly increase its budget after the outbreak of war in the Pacific. In the financial year 1940-41, before Japan came into the war, the department’s expenditure was £182,074. In the year 1942-43, the first full year after Japan came into the war, its expenditure was only £119,000. In a comparison of these figures allowance must be made for a reduction of approximately £80,000, the cost of the Censorship Branch and the Short-wave Division, which had in the latter year been transferred from the department. However, the expenditure after the outbreak of war in the Pacific was kept virtually at its previous level, despite the increased duties and responsibilities that the Pacific war threw upon the department. How did our external services fare in these circumstances? The overall figures are interesting. The department was set up on the 13th September, 1939, and in the remaining nine months of that financial year the total expenditure on overseas war publicity was £120. In the next year, 1940-41, it rose to £7,792. In 1941-42, the first financial year covering the Pacific war, it rose to £15,670. For the last financial year the expenditure on publicity overseas again doubled, reaching £30,686. The overseas expenditure in the current financial year was £16,697 to the end of December, and is estimated to reach £35,000 for the full financial year. Most of this increased expenditure was incurred in the United States of America, where there was so little knowledge of Australia, but a great interest in this country, to which Americans were coming as soldiers for the first time in history. From the time that Japan entered the war up to the present, expenditure on Australian publicity in the United States of America has been increased almost fivefold.
The increases of publicity expenditure in Great Britain have not been so spectacular. But recently, the Government sent the editor of the department, Mr. C. C. Dawson, to London to open a News and Information Bureau on lines similar to that now functioning in New York. To enable this bureau to do an equally successful job, the department has made provision for initial expenditure at the rate of £15,000 a year, compared with a total expenditure of £1,622 in 1940-41. The organization in New York is functioning to-day with fourteen officers, as against eight in 1940-41. The London bureau will open with eight officers, whereas up to the present the department has only two officers in London. It will be seen, therefore, that the department has greatly expanded its overseas services, without inflating its budget.
I shall now review briefly the work that has been carried out by the departmental officers abroad, with the material that is made available to them by the department in Australia. Time will not permit one to discuss publicity operations in detail. However, I snail lay upon the table unofficially, for the benefit of honorable senators, a special review of the work of the New York bureau during last year. I point out that the document is confidential. The review covers the exploitation of all publicity media - press, magazines, the issue of literature, radio material, the circulation of films, the re-circulation of short-wave news broadcasts from Australia, the sponsoring of lectures and supply of lecture material, and allied activities. The newsreel material sent to the United States of America, Great Britain, and other United Nations has (been judged to be among the best which has come out of the war. Any publicity organization operating in the United States of America must submit to the Department of Justice in that country quarterly returns covering every one of its activities.
I shall give a broad picture of the work as revealed in the report for the quarter ending the 31st December, 1943. In addition to a number of pamphlets and booklets which are in continuous circulation by the bureau, the distribution of its monthly bulletin, which is named Australia, and is made available only on request, has increased to 12,000 a month. Fact bulletins, covering activities of Australian women in the war, have been distributed to 1,000 women commentators. The circulation of a weekly matrix sheet to 450 American newspapers has been continued. Seventy special news releases, based on recordings of short-wave broadcasts from Australia, have been distributed to special publications. Apart from routine servicing, research and inquiries, the radio activities of the bureau included participation in 156 separate American broadcasts. These included 129 sessions on the three largest American networks. In addition, members of the bureau staff either rook part in, or otherwise assisted in, the compilation of seven feature radio programmes, and circulated to 125 radio stations each week a transcribed commentary entitled “ This Week in Australia “. Li addition to these transcriptions, copies of the printed script were circulated to an additional 250 stations. During the same period nineteen Australian newsreel sequences were distributed to newsreel companies, and were made available to United States Army and Navy services. The bureau also continued the lending of Australian films to educational, army, trade union and other organizations which sought them. Under this heading, 344 separate films were distributed. As these films are distributed only on request, it can be assumed that they reach the audience for which they are intended. The ‘bureau’s participation in lecture activities falls into two sections, first, those directlypromoted by the bureau, and, secondly, those for which material is made available. During the three months under review, thirteen separate lectures were directly sponsored and arranged by the bureau, and special material was prepared for many others. During the same period the bureau arranged several press conferences, including one with the members of the British Press Delegation when on their way back from Australia to Britain. In the same period seven separate pictorial and other exhibitions were arranged, as far apart as Los Angeles in California, Boston in the east, and St. Louis in the south.
Finally, without dealing with the huge volume of inquiries answered, and the assistance given to people engaged in various forms of publicity in the United States of America, the bureau distributed 2,270 separate pictures of Australian troops in action during the three months. Of this number, 837 went to press and photographic agencies, 577 to newspapers and publishers, and 856 to other journals.
It was reported in the press a few days ago that a volume on the war effort of Australia, which has just been published with a first print of 50,000, has practically been sold out in London. A similar volume was recently produced in the United States of America, where 50,000 copies were circulated widely among the most influential and opinionforming sections of the community. A very important part of the work of the bureau is tracking down misapprehensions, and endeavouring to secure correction of misstatements, which are due mainly to the natural enthusiasm of American correspondents, as of Australian correspondents, to make the publicizing of their own forces their first and immediate concern. In view of these facts, Australia, in return for its expenditure of £35,000, is getting very excellent publicity in competition with every other nation which is trying to impress the American public. Even with our limited organization in London, there has been a continuous flow on to the cinema screens of .Great Britain, and into the news and photographic columns of the British newspapers and magazines of material from the whole of the South-West Pacific battle-fronts stressing the part being played by the Australian forces. The reports from- London show that week by week the amount of space commanded in the British newspapers by activities in this war theatre far exceeds that devoted to any of the other dominions. The following are a few typical cases from the department’s weekly reports : -
In three weeks in December, 1943, news from this theatre in the leading British newspapers aggregated 21 columns, 26f columns and 37 columns as against Canada’s 8$ columns, 3) columns, 5) columns, New Zealand, nil, 3J columns, 1 column and South Africa, 2$ columns, 2 columns and 104 columns.
Since the beginning of this year, the department’s reports from London show an increasing amount of space being given to Australian affairs in the same newspapers, rising from 42 columns in the week ended the 12th January, 1944, to 46-J columns in the following week, and to 81 columns in the week ended the 27th January.. On the basis of these figures, Canada, South Africa and New Zealand might claim that they have a more legitimate cause for complaint thai, we have. We must not forget that the great bulk of American forces, virtually the whole of the Canadian forces, and the largest proportion of British forces are being concentrated at the moment for the second front offensive. Therefore, when this country is given 81 columns of space in one week in newspapers severely rationed in newsprint, with the small inadequate service we have had in London, it must be conceded that we have not been sitting down on the job. As the result of our liaison work with the
British Ministry of Information, it is at iiib moment producing, in co-operation with Australia House and the Australian Department of Air, a special film for exhibition in Britain and throughout the Allied world, dealing specifically with the heroic part that the Royal Australian Air Force is playing in the battle of Europe.
I appreciate Senator Foil’s motive, but I cannot, at this stage, agree to a committee being set up. I promise, however, that I shall place his suggestion before Cabinet and endeavour to influence Cabinet in giving effect to it. The Government is anxious to ensure full publicity of the activities of Australian soldiers in the front line and worker? in industries.
– I agree with the Postmaster-General (Senator Ashley) that the debate on the overseas activities of the Department of Information can do no harm. The Minister gave an interesting resume of our overseas effort, and there is no doubt that the Government has done fairly well with the resources at its disposal. He said that for an expenditure of £35,000 we were doing a good job overseas, but insufficient money is being expended. One of the rudest awakenings one can receive, particularly in the United States of America, Canada, and Great Britain, is the colossal ignorance about Australia and its work in this war. At the city of Portland, in the United States of America, members of the Empire Parliamentary Delegation, of whom I was one, saw a series of newsreels the highlight of which was Damien Parer’s film, The Battle of the Bismarck Sea. It was screened without any reference in the sub-titles or by the announcer to the fact that it was an Australian production. That battle was one of the epic3 of this war, ending in complete victory for the Allied Nations, and it displayed a striking instance of the co-operation of the American and Australian forces. We found that the Canadian people were absolutely ignorant about Australia.
They were generous. “ Oh, you are doing a good job,” they would say ; but, when we asked them in what way we were doing a good job, they just said that it was good,but they had no actual knowledge of what we were doing. It was disturbing. “We cannot possibly have a good cover of our news overseas with the small expenditure now incurred. I congratulate the Minister for Information (Mr. Calwell) on setting forth in a more progressive manner to make up the leeway in our overseas propaganda. But he must have more money at his disposal if the ignorance that exists abroad about us is to be dispelled. The extent of that ignorance shocks one. For instance, I encountered in America an extraordinary number of people who did not understand Australia’s position in the British Commonwealth of Nations. They are quite certain that Australia is a vassal state. Bad as they think India’s position is, they think ours is worse. Consequently, it is most important that we. should ensure the provision of sufficient money to enable the facts about Australia to be put plainly, and I ask the Postmaster-General and all other Ministers to take note of that fact. It is also essential that any man working for Australia overseas should be an Australian. The greatest mistake that this and previous Governments have made is in the appointment of Americans or Englishmen, particularly Englishmen, to work in our overseas offices. I do not refer particularly to the Department of Information. Officers of the Division of Import Procurement and the Department of Supply and Shipping and our diplomatic staff must be 100 per cent. Australian, because the common reaction among Americans, when they see an Englishman doing a job in an Australian office, is to believe that that proves that England tells us what to do and that we do not move independently. Englishmen working in Australian organizations overseas are regarded as being there on behalf of the British Government. Nothing is farther from the truth, but it makes it more difficult for the Australian story to he told in full. Senator Foll has done well in ventilating this matter, if only to encourage the Minister for Informa tion to go farther ahead with his progressive policy. When we were in London there was a staff of two - Captain Smart and his typist - in the London office of the Department of Information. Captain Smart is doing a wonderful job. When the Attorney-General (Dr. Evatt) arrived in London, Captain Smart worked day and night and the cover that he got was wonderful. The British press wants Australian news if it can get it, but it was beyond the physical capacity of one man to maintain the supply of news to the newspapers. I sent a cable from London to the PostmasterGeneral who was then Minister for Information, asking that he send to London as many issues of South- West Pacific as possible. It was published by the Department of Information for distribution overseas and it contained matter of the type for which the British press was clamouring. In other words, it was “ full of dead Japs “. I asked a number of English pressmen if They had ever seen the publication and their answer was “No”. Several copies were sent to the London office of the department, but Captain Smart could not cover the ground alone. I asked the Minister to send me as many more copies as he could, because it was the type of publicity needed. Once copies were given to British newspapermen, they were very anxious to make use of them.
I did not rise to thresh this subject, but I consider that we are just at the beginning, because there is no doubt that one of the most important aspects of this war is that paper bullets are nearly as useful as steel. Force is given to the saying that “ The pen is mightier than the sword” when one sees what other countries will pay to ensure that their point of view shall be understood. It is, therefore, our duty to ensure that every available penny that can be squeezed from the Treasury for propaganda purposes is expended to better advantage. I can see no other avenue in which money can be used to greater benefit than in publicizing abroad Australia’s effort in the war.
SenatorFOLL (Queensland) [11.55]. - in reply - I appreciate the way in which my motion has been received and also the remarks of the PostmasterGeneral (Senator Ashley). In view of his promise that he will place before Cabinet the suggested appointment of a parliamentary publicity committee to assist in this work, I ask leave to withdraw my motion.
Motion - by leave - withdrawn.
Motion (by Senator Keane) agreed to-
That Standing Order 68 be suspended up to and including Friday, the 31st March, to enable new business to be commenced after 10.30 p.m.
– I move -
That thebill be now read a second time.
This is an exceedingly simple measure, and very brief. Apart from a machinery clause providing that at a referendum a copy of the text of the proposed law shall be exhibited at service voting places, it has two purposes only. First, by an amendment of the principal act, it provides definitely that only members of the forces who are British subjects shall be entitled to vote under the special provisions of that act, and, secondly, it extends the privilege of voting under those special provisions to members of the merchant navy engaged in seagoing service and to accredited press correspondents and other persons employed or associated with the forces outside Australia or in Australia north of the 26th parallel. The reason for the first mentioned provision is that as the statute stands an alien member of the forces might lawfully claim a vote although this was never intended by Parliament. In 1940 when the original war-time bill was prepared British subjects only were accepted for war service and consequently it was not then necessary to set out specifically that only servicemen who are British subjects would be entitled to vote under the special provisions enacted. Latterly, however, aliens have been admitted to the forces, and as it is deemed proper that the franchise should be restricted to British subjets it is now proposed to insert this specific provision accordingly. As already mentioned, the only other purpose of the bill is to permit seagoing members of the merchant service and certain other civilian personnel in areas north of the 26th parallel to record their votes in the same manner as members of the forces. The Government considers that, so far as the electoral law is concerned, the merchant navy in war-time ought to be regarded as part of the nation’s forces at war, and for that reason sea-going personnel as well as accredited press correspondents and others closely associated with the forces in the war zones, who have no other means of recording their votes, should be accorded the privilege of voting under the special arrangements provided in respect of members of the forces. I commend the bill to honorable senators, and urge that its passage be agreed to without delay.
Debate (on motion by Senator McLeay) adjourned.
.- I move -
That the bill be now read a second time.
The purpose of the measure is to obtain a loan appropriation of £200,000,000 for war purposes and also to authorize the raising of an equivalent amount of loan moneys to finance war expenditure. Honorable senators were informed, when the budget for 1943-44 was brought down in September last, that it was estimated that war expenditure for the year would reach £570,000,000 of which £167,000,000 would be met from revenue resources, leaving a balance of £403,000,000 to be provided from the Loan Fund. The requirements of the fighting services, together with munitions, aircraft production and reciprocal lend-lease to the United States forces, were shown in the Estimates for 1943-44 in one amount of £503,000,000 for which no details were given for security reasons. The balance, amounting to £67,000,000, was grouped under “ Other War Services “, details of which are shown in the Estimates. The actual expenditure for the eight months ended the 29th February last was £358,000,000. This is about £22,000,000 less than the pro rata budget estimate. However, it is invariably found that in the last two months of, the financial year the actual payments are much heavier than in the earlier months. A general review of the Estimates has been made in the light of the actual expenditure for eight months. On some items a saving is expected, whilst on others, notably reciprocal lend-lease to United States forces, there will be some increase over the budget estimate. It is difficult to make an accurate forecast, because there are many factors which cannot be foreseen. For instance, our overseas expenditure, for which the budget estimate was £70,000,000, will depend largely upon the actual accounts presented for payment by other governments. Taking a broad view of the probabilities, however, it is considered that the actual expenditure for the year will be fairly close to the budget estimate of £570,000,000. There may be an increase, but it should not be very great.
The balance of loan appropriation available at the 30th June, 1943, was £183,000,000. Further loan appropriation of £200,000,000 was obtained in October last making a total available For this year of £383,000,000. In the budget it was estimated that the amount of war expenditure to be provided from the Loan Fund would be £403,000,000. The appropriation now proposed, and the associated borrowing authority of £200,000,000, will cover our requirements for the balance of this financial year, and provide for the early months of next financial year.
Debate (on motion by Senator McLeay) adjourned.
.- I move -
That the bill be now reada second time.
The purpose of this measure is to provide £23,000,000 out of the Consolidated Revenue Fund for the payment of in valid and old-age pensions. Bills seeking appropriations of this nature are submitted to Parliament periodically to enable amounts to be paid to the credit of a trust account, from which pensions are to be paid at rates already approved by Parliament. The unexpended balance of the existing appropriation is sufficient to meet pension payments to the end of May. Parliament is now asked to appropriate £23,000,000, which is sufficient for approximately a year’s expenditure, to provide for pension payments after that date. This amount will, however, not be withdrawn from revenue immediately as payments to the trust account from revenue are made only as required to meet the periodical payments to pensioners. This bill has no relation whatever to the rates or conditions under which invalid and old-age pensions are paid, but merelyseeks funds to enable payments to be made on the basis already approved by Parliament. The total expenditure on these pensions was £19,257,000 and £22,293,000 in 1941-42 and 1942-43, respectively, while the estimate for the current financial year is £23,100,000.
Debate (on motion by Senator McLeay) adjourned.
– I move -
That the bill be now read a second time.
This is a very short measure, practically entirely of a machinery character, and as its intention is to enable the great and important work of forestry to he carried on in a more efficient manner, I make no apologies for its introduction. The Empire Forestry Conference held in Australia in 1928 recommended that the Australian universities be approached with a view to granting a degree to any man who successfully completed an agreed two years’ course in science at the university of the State in which he resided, together with the forestry course at the Australian Forestry School at Canberra. The universities agreed to the recommendation subject to the condition that suitable steps were taken to safeguard the curriculum of the Forestry School. It was decided that the most suitable means by which the curriculum of the school could be safeguarded would be the establishment of a board consisting of the principal of the school, the InspectorGeneral of Forests and a representative from each of the universities concerned. The board was formed in 1930, and is known as the Board of Higher Forestry Education. It also comprises a representative of each State Government. At a recent meeting the board requested that regulations should be promulgated under the Forestry Bureau Act 1930-32, setting out the constitution, powers and functions of the board. The act in its present form does not, however, authorize such a course. The bill now submitted makes provision for the establishment of a Board of Higher Forestry Education, for the attendance at meetings of deputy members, the prescription of the powers and functions of the board and the making of regulations regarding matters concerning the functioning of the board.
Debate (on motion by Senator McLeay) adjourned.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Keane) read a first time.
.- I move -
That the bill be now read a second time.
Since the inception of the entertainments tax law in October, 1942, experience in its administration has revealed certain weaknesses both in the liability provisions and in the machinery provisions relating to the collection of tax and the enforcement of the law. It has been found desirable to seek amendments of the law to remove those defects so that the revenue may be satisfactorily protected. The chief weakness brought under notice is in regard to liability for tax in respect of charges paid by patrons of dances. Where a patron of a dance pays one fixed amount which entitles him to both entertainment and refreshment, and the refreshment is subordinate to the entertainment, the law gives clear authority for collection of tax upon the total payment made by the patron, even though a substantial part of the payment might be attributable to refreshments. This being so, it was intended that the tax should also fall upon separate charges for refreshments supplied at such entertainments. It would be manifestly inequitable if it did not do so. The Supreme Court of Queensland, however, recently gave a judgment which shows that this intention was not effectuated by the law. It was decided by that court that, in the case before it, tax is not payable in respect of a separate charge for refreshments served at certain dances. There is a fixed price for admission to these dances, and patrons may obtain refreshments on the premises upon the payment of a separate charge. The serving of refreshments at dances is regarded as a normal part of the entertainment. It is a general practice, in regard to balls and other dances, to charge a fixed price which entitles the patron not only to be admitted to the entertainment but also to be served with supper or other refreshment free of extra charge. Supper has become a traditional integral part of such entertainments. The Government takes the view that it is impossible to justify the taxing of composite charges which carry a right of refreshments without further charge, unless the tax is levied also upon separate charges for refreshment. If the tax is not so levied, it is only to be expected that promoters of entertainments, who hitherto have charged composite amounts for entertainment and refreshment will consider the apportionment of their charges between entertainment and refreshment so as to secure freedom from tax on payments attributable to the latter. This would involve considerable loss of revenue. There are luxurious cabarets and night clubs in which the charges are very substantial. The Government proposes, therefore, to amend the law to give clear authority, as originally intended, for the taxing of charges for refreshments served at dances, whether or not those charges are separate from the charge for admission. However, consideration has been given to the fact that charges for admission to dances conducted regularly by small societies or clubs and for refreshments are on a very moderate scale. The Government has no desire to cause the tax to fall upon the charges for refreshments in this type of ease. Therefore, it is proposed that the tax shall not apply to charges for refreshments supplied at any entertainment if the Commissioner of Taxation is satisfied that the average total amount which will be paid by each patron for entertainment and refreshments will not exceed 3s. Subject to this exemption, it is intended that the tax shall apply to charges for refreshments served at all classes of entertainments where the Commissioner is of opinion that the refreshments are related subordinately to the entertainment. The tax will thus fall on ref freshments served at dances, card parties and skating rinks. As hitherto, the tax will, however, not apply to charges for refreshments served at other forms of entertainment such as picture theatres, race meetings, football matches and carnivals, as the obtaining of refreshments at such entertainments is regarded as separate from and not an integral part of the entertainments.
It is proposed that liability for tax on the charges for refreshments shall arise only after the service of notice to that effect upon the proprietor by the Commissioner, except in cases where the proprietor fails to register thd entertainment for entertainments tax purposes, or fails to advise the Commissioner of his intention to serve refreshments and of the conditions under which those refreshments will be served. Where the proprietor so fails to meet his obligation under the law, he will not thereby obtain relief from tax. The arrangement to serve notice on proprietors who are liable for tax will obviate misunderstanding on their part as to their liability. In the absence of any special provision to the contrary, it would be necessary for the proprietor of a dance to have a record of all amounts expended by each patron on refreshments in order to determine the amount of tax payable. This arises from the fact that under the existing law the tax is not imposed at a flat rate. The rate increases as the charges increase. It is impracticable for proprietors to keep a record of payments by individual patrons, and for this reason it is proposed that the following special rates of tax shall apply to separate payments for refreshments : -
Where the charge is not less than 3d. but does not exceed 4d. - Tax Id.
Where the charge exceeds 4d. but does not exceed 5-Jd. - Tax l$d.
Where the charge exceeds 5£d. but does not exceed 7-Jd. - Tax 2d.
Where the charge exceeds 7£d. but does not exceed 11 1/2 d - Tax 3d.
Where the charge is ls. or over - Tax at ordinary rates now in force.
THe charging of tax on separate payments in this manner will facilitate the calculation of the tax by the proprietor, and will enable’ him readily to pass on the tax in respect of each individual charge. He will know, for example, that for each charge of 6d. for refreshments the tax is 2d., regardless of what other payments have been or will be made by the particular patron. To prevent evasion of tax on charges for refreshments by the transfer of catering rights by the proprietor of an entertainment to some other person who would act on his behalf, it is proposed that, where refreshments are supplied by a person other than the proprietor, the actual supplier of the meals and other refreshments shall be responsible for tax on payments for all refreshments served by him on the premises to persons taking part in the entertainment.
The bill is designed also to give clear authority for the levying of tax upon payments for amusement at parks, such as Luna Park in Melbourne and in Sydney, where a number of amusement facilities of different kinds are conducted. In 1925, when the former Commonwealth entertainments tax was in operation, the High Court decided, by a majority decision, that Luna Park Limited was obliged to furnish returns and pay tax in respect of payments for admission to the amusements conducted by it, even though individual payments for particular amusements were less than the minimum taxable amount of1s. It was clear that many persons patronized more than one amusement, and paid amounts totalling more than1s. In effect the court decided that, where the total amount paid by any person for amusement exceeded1s., tax was payable. Following upon this judgment the company agreed to lodge returns and pay tax on an arbitrary basis designed to arrive at the equivalent of the tax payable in respect of patrons whose payments for admission exceeded1s. Despite the judgment of the High Court, practical difficulties in the collection of tax upon charges for amusement at such parks have been encountered. To enable the collection of the tax to proceed smoothly in such cases, it is proposed that all charges of not less than 3d. for amusement at amusement parks shallbe subject to tax separately at the special rates announced by me earlier in regard to charges for refreshments. Although this proposal involves taxing individual charges below1s. in the case of amusement parks, it is necessary to bear in mind the fact that the average patron of these places of amusement pays a total amount of more than1s. for what is, after all, only one entertainment, because either he patronizes more than one of the amusement facilities, or he patronizes one of those facilities more than once. For the purposes of entertainments tax, therefore, he should be no better off thana person who pays1s. or more inone payment for entertainment. The rates proposed are so fixed as to enable proprietors readily to pass on the tax to patrons. It is not proposed that the tax shall fall upon payments made by way of inserting coins in automatic slot machines designed to provide entertainment. Entertainments tax is intended to be passed on to patrons of entertainments, and it is apparent that proprietors of such slot machines would find it impracticable to pass on tax to persons making use of the machines. The bill includes also a number of machinery provisions which have been found to be necessary in the light of experience in the administration of the law. These provisions are modelled on existing provisions of other taxation laws, and relate to the making of assessments where tax is not paid and also to procedure in regard to prosecutions and penalties, obtaining of information for the purposes of the law, and the making of refunds of tax overpaid. It is proposed that refunds of tax overpaid shall be made only where the Commissioner is satisfied that the tax has not been passed on to patrons of the entertainments in question. Already refunds of sales tax are subject to the same condition. To give refunds in other circumstances would be to give an unwarranted bonus to the taxpayer. In. the committee stages I shall he pleased to give any explanation that honorable senators may desire in respect of the individual machinery provisions. I commend the bill to honorable senators.
Debate (on motion by Senator McLeay) adjourned.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Keane) read a first time.
.- I move -
That the bill be now read a second time.
This bill is associated with the Entertainments Tax Assessment Bill which has already been explained. Under that bill liability for entertainments tax is placed upon certain payments made by the patrons of amusement parks and payments made for refreshments which form part of the entertainment provided at dances, cabarets, night clubs and certain other forms of entertainment. It is necessary for Parliament to declare the rates of tax which shall be payable upon the payments referred to and these rates are specified in the third column of the schedule to this bill. No other alteration is being made to the schedule. The rates of tax payable in respect of all other entertainments remain unaltered and are specified in the second and third columns of the schedule. As these rates are precisely the same as those already in force they do not call for further comment.
The altered schedule will come into operation on a date to be proclaimed. This will enable taxpayers concerned to familiarize themselves with the provisions of the law and to make the necessary arrangements to meet their liability, before the date of proclamation.
Debate (on motion by Senator McLeay) adjourned.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Keane) read a first time.
.- I move -
That the bill be now read a second time.
The purpose of this bill is to amend the Commonwealth Employees’ Compensation Act of 1930. That act provides for the payment of compensation and benefits to employees of the Commonwealth for injuries and certain industrial diseases suffered in the course of their employment. No amendments have been made to the act since it was passed in 1930. Workers’ compensation legislation in all the Australian States has been amended in recent years, in some cases extending its scope and covering workers for additional risks to which they are subject, and in others increasing the scale of payments and the benefits awarded. The Government considers the time opportune to bring the Commonwealth act into line with the modern trend and practice in such legislation.
This bill, therefore, makes important alterations to the present law, the principal ones being -
Where death results from injury, provision is made for an increase of the maximum payment to dependants from £730 to £800 and for an additional payment of £25 for each dependent child under the age of sixteen years. The minimum payment has also been varied from three years’ pay or £400 to four years’ pay or £400, whichever is the larger. The act at present provides for a weekly payment during incapacity of two-thirds of an employee’s pay with a maximum of £3 10s. a week, towhich is added 7s. 6d. a week for each dependentchild under the age of fourteen years. It is now proposed that the weekly payment, in respect of the injured employee, be £3 with an additional payment of £1 a week for a wife or a dependent housekeeper and 8s. 6d. for each dependent child under the age of sixteen years. Provision has been made, however, to ensure that no weekly payment of compensation will exceed the weekly pay of the employee at the date of his injury. The maximum of the aggregate amount of the total of weekly payments is limited by the act to a sum of £750, except where the injury results in total and permanent incapacity, in which case payments continue indefinitely. In view of the proposed increase of weekly payments the maximum is being increased to £1,000 to provide that weekly payments will continue for approximately the same period as at present with the smaller payments. An important addition to compensation legislation in recent years has been the acceptance of liability for injuries sustained by an employee while journeying between his place of abode and his place of employment and between either of those places, and any trade, technical or other training school which he is required to attend by the terms of his employment. This benefit has been granted in more than one State, and the hill makes a similar provision for employees of .the Commonwealth.
The second schedule to the present act describes the industrial diseases for which compensation is payable and is being replaced by a new schedule. On the advice of the Director-General of Health and the Munitions Health Advisory Committee, the names of additional diseases have been inserted. This is necessary owing to the Commonwealth’s extension of its industrial activities and to new processes introduced by modern industrial practice. On the recommendation of the Director-General of Health it is also proposed, in respect of two diseases, to provide that the Commissioner may, after full inquiry, extend to fifteen years the period during which an employee can contract them and receive the benefit of the act. The act at present prescribes that a disease must be caused within twelve months prior to incapacity, but the nature of these two diseases is such that they are contracted by a gradual process and may not manifest themselves for some years. The third schedule to the present act specifies certain injuries for which fixed amounts of compensation are payable. It is not sufficiently comprehensive and contains anomalies. With the assistance of the Department of Health a new schedule lias been prepared, based on a maximum payment of £800 instead of £750, specifying a greater number of injuries and thereby eliminating anomalies. The bill also provides for several minor and consequential amendments, chiefly to overcome administrative difficulties. These will be explained at the committee stage.
Debate (on motion by Senator Leckie) adjourned.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Fraser) read a first time.
– I move -
That the bil! be now read a second time.
In my second-reading speech on the Invalid and Old-age Pensions Bill which will be introduced shortly, I shall explain the Government’s reasons for departing from the policy of periodically varying the maximum rate of pension in accordance with cost-of-living fluctuations. I shall also justify the Government’s action in temporarily dealing with an urgent situation by means of a regulation under the National Security Act. Because the principle of linking the maximum rate of pension with the costofliving figures applies also to widows’ pensions, the remarks to be made with respect to the Invalid and Old-age Pensions Bill apply with equal force to this bill. Therefore, the Government proposes to repeal those sections of the Widows’ Pensions Act which provide that the maximum rates of widows’ pensions and allowances shall be related to the cost-of-living variations. As in the case of invalid and old-age pensions, the standard rates of widows’ pensions and allowances are being advanced to the rates at present actually payable, thereby avoiding any reduction in the amount of pension or allowance available to the recipients. Future adjustment of the maximum rates of widows’ pensions and allowances will be determined by Parliament. Under the existing provisions of the principal act, a widow, who has not attained the age of 50 years, and who was granted a pension on the basis that she was maintaining a child under the age of sixteen years, can be deprived of that pension within a few weeks after the death of her husband, because her only or youngest child has attained the age of sixteen years, has ceased to be maintained by her, or dies. In such a case the widow, although in necessitous circumstances, is placed at a disadvantage as compared with a widow of the same age and in similar circumstances who was not maintaining a child at the time of her husband’s death, for the latter may receive an allowance at the rate of-£l 7s. a week for a period not exceeding 26 weeks immediately after the death of her husband. In order to remove this anomaly, provision is made in the bill that a widow who, at the time of the death of her husband, or within 26 weeks thereafter, is’ not maintaining a. child, is less than 50 years of age, and in necessitous circumstances, may receive an allowance at the rate of £1 7s. a week for a period not exceeding 26 weeks immediately following the death of her husband. An allowance will not be paid, however, for any period in respect of which a pension has been paid. The bill also makes provision for the repeal of section 42 of the Widows’ Pensions Act, which requires that a widows’ pension or allowance shall be cancelled in any case where the recipient is convicted twice within any period of twelve months of any offence punishable by imprisonment for not less than one month or is convicted of an offence punishable by imprisonment for twelve months. In order that no hardship may be caused in any case where a widow pensioner who is imprisoned has a child dependent upon her, provision is made for the payment to some person approved by the Commissioner or a Deputy Commissioner of the whole or any portion of the instalment of pension falling due during the term of the widow’s imprisonment for the benefit of the child. I am sure that honorable senators will appreciate the genuine desire of the Government further to improve our social service legislation and will therefore co-operate in passing this measure.
Debate (on motion by Senator McLeay) adjourned.
Bill received from the House ofRepresentatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Fraser) read a first time.
– I move -
That the bill be now read a second time.
The main feature of this measure is the proposal to abandon the principle of associating the rate of invalid and oldage pensions with the price index number as ascertained from time to time by the Commonwealth Statistician. Honorable senators are no doubt aware that during recent years the maximum rate of invalid and old-age pensions has been subject to quarterly review and adjustment where necessary on the basis of the costofliving figures, namely, the weighted average retail price index numbers for all items of household expenditure - “ C “ series - for the six capital cities. As a consequence of a reduction of the price index number for the quarter ended the 30th September, 1943, it became necessary to reduce the maximum rate of pension to take effect from the 25th November, 1943. The Government, however, considered that a thorough investigation of the merits of this reduction was warranted, and, after giving careful consideration to the report of a subcommittee of Cabinet appointed for the purpose, reached the conclusion that, as a result of conditions arising out of the war, the operation of various regulations under the National Security Act, and the effect of economic adjustments made by orders issued under those regulations, anomalies had been created in relation to the rates of pension. For example, in Tasmania the cost-of-living figures for the September quarter of 1943 actually rose, whilst in other parts of the Commonwealth there was also a rise, or the downward trend was so slight as to be actually negligible. In the circumstances, the Government decided that an immediate restoration of the maximum rate of pension to the rate in force prior to the 25th November, 1943, was justified, and a regulation under the National Security Act was made on the 31st December, 1943, to give retrospective effect to that decision. This bill, therefore, seeks to give legislative effect to the Government’s action.
There hasbeen some criticism of the use of a regulation under the National SecurityAct to prevent a reduction of the rate of pension, but I remind honorable senators that the National Security Act authorizes the making of regulations for securing public safety, the defence of the Commonwealth and the more effective prosecution of the war. In effect, it gives to the Government, for the duration of the war and six months thereafter, the power to legislate by regulation with respect to the prosecution of the war. The regulation which was made by Statutory Rules 1943, No. 315 was designed to prevent invalid and old-age pensioners from suffering hardship because of circumstances inseparable from the conditions of war and attributable to a great degree to the establishment of war-time controls, restrictions and limitations. At first sight, it might be considered that the reduction of the pension rates in accordance with the fall of the index number would leave pensioners no worse off financially than they were before. This is not so, however, with regard to pensioners in some parts of Australia at least. To give general effect to the reduction, therefore, involved special hardships in many cases which would react unfavorably, not only on pensioners, but also on the community generally. One of the reasons for which this war is being fought is to ensure that fair living conditions be guaranteed to everybody in the community, and the bare sufficiency which the pensioners receive should certainly be maintained as a matter of national policy.
The High Court has held that the National Security (Contracts Adjustment) Regulations were valid insofar as they provided for the adjustment of contracts which had become inequitable or unduly onerous “by reason of circumstances attributable to the war. It clearly follows from that decision that a regulation designed to prevent such circumstances from causing the Invalid and Old-age Pensions Act to operate in an inequitable or unduly onerous manner would be valid as being reasonably incidental to defence. I am sure, therefore, that honorable senators will agree that ample legal power exists to authorize the making of a national security regulation to prevent a reduction of the rate of pension, and that the making of that regulation was justified in the circumstances. As a result of a further examination of the position and having regard to the fact that considerable administrative work and many complications arise from the present system, the Government has decided to repeal the sections of the Invalid and Old-age Pensions Act which provide for the adjustments of the maximum rate of pension in accordance with the variations of the price index number.
In order, however, that pensioners may not be adversely affected by that action, the bill provides for the standard rate of pension to be advanced from £65 per annum - £1 5s. a week - ,to the present actual rate of £70 4s. per annum, or £1 7s. a week. Provision is also made for the adjustment of the maximum weekly rate of pension payable to inmates of benevolent asylums from the existing standard rate of Ss. 6d. a week to the present actual rate of 9s. 6d. a week. In consonance with the Government’s decision to remove the cost-of-living provisions from the act, the bill provides for the omission of the term “ federal basic wage “ in relation to the permissible income for blind pensioners and the substitution therefor of a fixed sum1 of £260 per annum - £5 a week - which a blind pensioner may earn without affecting his eligibility for the full pension. In making this alteration, it was considered desirable to select a figure which would be high enough to avoid frequent or an early adjustment.
Under the present provisions of the principal act, where a pensioner is convicted of an offence punishable by imprisonment for not less than twelve months, or is twice in any twelve months convicted of an offence punishable by imprisonment for not less than one month, cancellation of pension is mandatory. If the convicted person is an invalid pensioner, any allowance payable to his wife and child must also terminate with the cancellation of his pension, thus causing hardship to innocent persons. Moreover, should the ex-pensioner die while in prison no funeral benefit would be payable. The act also provides that an applicant for a pension must be a deserving person, and, in relation to an old-age .pensioner of good character. Further, a pension is deemed to be forfeited for any period during which a pensioner is in prison. From time to time it has been pointed out that in particular eases refusal to grant a pension upon a person’s discharge from prison causes extreme hardship and tends to aggravate the conditions nhat have contributed to the offence, because the person concerned is deprived of the necessary means of sustenance at the very time when he is in greatest need of assistance in order to re-establish himself in civil life. The Government considers that the present provision operates too harshly, and that the question of renewing the pension should not be removed from the discretionary authority of the officers, but on the contrary should be entrusted to their common sense and administrative judgment. The bill, therefore, provides that if a pensioner is imprisoned, his pension, instead of being absolutely forfeited, may be suspended, or any instalment thereof forfeited. If such a pensioner has a wife or child dependent upon him, authority is provided for the payment to the wife or child, or to an approved person on their behalf, of an amount not exceeding the amount which would have been payable to the pensioner if his pension had not been suspended, or an amount not exceeding the forfeited instalments. As I have said, the whole matter is remitted to the discretionary authority of the proper officer. I commend this measure to honorable senators for a speedy passage.
Debate (on motion bySenator McLeay) adjourned.
Sitting suspended from 12.49 to 2.15 p.m.
SenatorKEANE (Victoria - Minister for Trade and Customs). - by leave - Earlier to-day Senator Spicer asked whether I had seen an article in the Melbourne Herald of the 22nd March on the shortage of shipping space for books from the United Kingdom. I have made inquiries, and find that for the greater part of 1943 sufficient shipping space was available to move, with little delay, all books offering for export from the United Kingdom to Australia. In the last month or two of that year, however, the shipping tonnage allocated to the Australian trade was capable of moving only those goods which Commonwealth Government authorities had certified as being essential to the war effort. The result was that goods which had not been so sponsored began to accumulate. Shippers of goods for which space could not be provided informed Australian importers that only sponsored items were being shipped, and many firms which had lodged orders in the United Kingdom for educational books applied to the Division of Import Procurement for sponsorship. In cases in which orders covered educational or scientific books exclusively, or in which the major part of the orders was for books of that character, sponsorship was accorded immediately. Where the orders were entirely or predominantly for general literature, however, sponsorship had to be withheld. Shipping space had to be found for materials essential to the prosecution of Australia’s war effort, and with the present shortage of tonnage, shipment of books of all kinds would inevitably result in the displacement of urgently needed materials. I have no reason to believe that the present shortage of shipping on the United Kingdom to Australia route will be of long duration, and I believe that, before long, provision will be made for the transportation of all books awaiting shipment to Australia.
Debate resumed from the 28th March (vide page 2072), on motion by Senator Keane -
That the bill be now read a second time.
Senator JAMES McLACHLAN (South
Australia) [2.17]. - Last night the Senate listened to a well-considered and remarkable speech by Senator Arnold. The honorable senator went to a great deal of trouble to prove that there was a decided lag in the taxation methods of the Commonwealth. He said that the Government had been most generous in forgiving 75 per cent. of that lag, and proceeded to say that, of course, taxpayers would have to pay the remaining 25 per cent. A most remarkable statement followed; the honorable senator said that taxpayers would not have to pay any more than they had paid before. It is difficult to reconcile those statements. The honorable senator also told us that one of the main objectives of the bill was to prepare for falling wages and salaries, which werebound to occur after the war. Ever since this series of sittings began we have heard from Government supporters that, should the present Government remain in office, there will be no depression, no reduction of the standard of living and no loss of income.
– Honorable senators on the Government benches have claimed that with a continuance of Labour rule depressions will not overtake the people of Australia. Some of the provisions of the measure before us are welcome. If ever the old adage about the curate’s eggwas applicable, it is applicable to this bill: it is good in parts. Some of its provisions will be most welcome to the people of this country. The principle of payasyouearn taxation has been adopted in Great Britain, Canada and the United States of America, and from what we can learn of its operation it has proved most successful where it has been longest in force. Those countries decided on this reform because they knew that they were doing an injustice to numbers of their people, and that they could repair that injustice without dealing unfairly by any other section. I should be gratified indeed ifI could believe that the same motives prompted the Government of this country. For some time there has been an agitation for the introduction of pay-as-you-earn taxation in Australia. Some time ago legislation was passed by this Parliament to enable what was termed uniform taxation to apply throughout the Commonwealth. When that bill was before the Parliament, the proposal embodied in this measure could appropriately have been dealt with. Since the passing of that legislation, there has been a general election. Honorable senators will recall that the principle of pay-as-you-earn taxation was a prominent plank in the policy of the Opposition. During the election campaign candidates supporting the Government said that should the Labour Government be returned to power there would be no increase of taxation.
– That was said in this chamber.
– The Government has repudiated that statement.
– No, the Government has kept its word.
Senator JAMES McLACHLAN.After the Parliament met, the Treasurer was at his wits’ end to find means of raising more revenue. He had piloted through the Parliament so many social service bills that the sum of £30,000,000 set aside in the National Welfare Fund was not sufficient. The honorable gentleman was wondering how he would meet his commitments when the Leader of the Opposition in the House of Representatives (Mr. Menzies) suggested the appointment of a committee to inquire into the principle of pay-as-you-earn taxation. The Treasurer grabbed that suggestion with both hands, with the result that a committee was appointed. The bill before us is a subterfuge, under the guise of payasyouearn taxation, to bring to the Treasury another £15,000,000 a year. The report of the committee which was appointed indicated that there was a lag in regard to taxation in Australia. No doubt the whole situation in regard to taxation was placed before the committee concisely by officers of the Taxation Department. The committee began its deliberations believing that there was a lag or loss. There is great difference of opinion among members of the legal fraternity as to whether there is any loss. If a loss does exist - if there is a lag of a year - what right has the Government to forgive 75 per cent. of the amount payable? A just debt should be paid. One would at least have expected the committee, when it was examining the proposal to introduce pay-as-you-earn taxation, to investigate this matter of a lag so that we should know what the committee thought about it. In my opinion, the only possible loss to the Government is the revenue that would be lost by a person dying during the changeover year: and even then the Government would have collected income tax for the part of the year in which he lived. In dealing with such a loss, we can only submit a hypothetical case, such as an earthquake or a tidal wave destroying every taxpayer except the Commissioner of Taxation. In that event, the commissioner could collect on everybody’s estate. The Crown Solicitor of South Australia, Mr. Hannan, who is an authority on constitutional law, says, “ There is really no lag, either from the point of view of the Commonwealth or from the point of view of the taxpayer “. That legal opinion is worthy of consideration. I think that Mr. Hannan arrived at that conclusion after a perusal of the Income Tax Act of 1915. Honorable senators will recall that income tax was first imposed by the Commonwealth in 1915. Section 10 of the Income Tax Act of that year provided that income tax be payable each year on the taxable income derived by every taxpayer during the twelve months ended on the 30th June preceding the financial year in and for which the tax is payable. The Income Tax Rates Act of the same year provided that income tax should be levied in and for the financial year beginning on the 1st July, 1915. That proves that, from the beginning, income tax was payable for the year of its introduction. It should have remained so. But the act was altered in 1936 to exclude from the tax income derived during the period commencing on the day of the year of income in which a person dies, and ending on the date of his death, if his estate were liable to estate duties. In 1941 that provision was repealed on what I believe was a false principle. It is from that amendment that the general opinion that income tax was paid retrospectively has developed. That was the position when the first income tax measure was passed in this Parliament. Honorable senators opposite have stated that the pay-as-you-earn principle has been introduced in the United Kingdom, the United States of America, and Canada, and there can hardly be anything wrong in our following the example set by those countries. One must be fully cognizant of the incidence of taxation in those countries before one is entitled to draw that conclusion. A few months before the last general elections, the Government increased income tax rates, but, believing that such action would enrage the public, it said that the additional revenue was required to meet war expenditure. During the election campaign, however, the Government supporters gave a pledge to the people that if returned to office they would not further increase taxes. Incidentally, government supporters at that time also declared that they were opposed to the pay-as-you-earn principle. To-day, the Government finds itself in a dilemma. It must explain, first, why it now proposes to increase taxes under this measure; and, secondly, why it now has decided to adopt the pay-as-you-earn principle. Despite the contention of Government supporters that no increase of tax is involved in this measure, the fact remains that it is estimated that an additional £15,000,000 will be raised under this bill. Therefore, it is mere subterfuge on their part to claim that the measure simply implements the payasyouearn principle, when, at the same time, the Government anticipates receiving an additional amount of £15,000,000 under this measure in the next financial year.
– If this measure involved a capital levy, honorable senators opposite might have some ground for complaint.
Senator JAMES McLACHLAN.I shall show that in its incidence this measure practically imposes a capital levy. The existing rates of tax in respect of all income grades is already so high that a rise of 25 percent. will cause much hardship. As I am not a lawyer or a taxation expert, I am obliged to rely to some degree upon the views which taxation experts have expressed with regard to this measure. I have here a copy of the report of the joint committee which inquired into the payasyouearn principle. This measure is based largely on that committee’s report. At the end of that report, I find set out figures supplied by the Taxation Department showing the increases of tax which will be involved in the application of the pay-as-you-earn principle, as proposed in the bill. These figures give the lie to the contention of honorable senators opposite that under this measure income tax rates will not be increased by 25 per cent.
– That committee recommended a forgiveness of 75 per cent. of the deferred liability of the taxpayer.
– But, at the same time, the committee recommended that 25 per cent. of the deferred liability be collected, and it is proposed under this measure tocollect that additional tax. Therefore, how can honorable senators opposite claim that income tax will not be increased under this measure?
– Will there be an increase of 25 per cent. instead of 100 per cent.?
– The fact remains that there will be an increase of tax of 25 per cent.
– There will be a reduction of 75 per cent.
– Perhaps I shall convince honorable senators opposite that tax will be increased under this measure by citing the following cases, of which particulars were made available for publication by the Crown Solicitor in South Australia. He pointed out that the tax payable by a married taxpayer with a salary of £200 will be increased from £3 18s. to £10 18s., or an increase of £7. A married man with one child who now pays £13 2s. in respect of a salary of £300 will be obliged to pay £22 18s., or an increase of £9 16s. I have already said in answer to an interjection by the Minister for Aircraft Production (Senator Cameron) that the increase of tax imposed under this measure virtually amounts to a capital levy in respect of the higher incomes. A taxation expert calculates that under this measure a taxpayer with an income of £20,000 will pay tax amounting to £21,755 or £1,755 more than his income, whilst a taxpayer with an income of £9,000 will pay £38 more than his actual income. Not only does this measure increase income tax by 25 per cent., but the method by which it is proposed to impose this increase is also bound to give rise to many anomalies. For instance, a taxpayer whose income increased from £600 in 1942-43 to £900 in 1943-44 will pay tax amounting to £137 5s., whereas a taxpayer whose income was £900 in each of those years will pay only £77 10s. A taxpayer whose income rises from £800 in 1942-43 to £1,200 in 1943-44 will pay tax amounting to £199 15s., whereas had he earned £1,200 in each of these years he would pay only £113 3s. Surely, no one will claim such a system to be just. A taxpayer whose income increases from £1,200 in 1942-43 to £1,800 in 1943-44 will pay tax amounting to £372 7s., whereas if his income were £1,800 in each of those two years he would pay only £20211s.; and a taxpayer whose income increases from £1,500 in 1942-43 to £2,000 in 1943-44 will pay £343 13s., whereas if his income were £2,000 in each of those years he would pay only £237 16s. The Government should take steps to remove such anomalies which are inherent in the method by which it proposes to implement the pay-as-you-earn principle under this measure.
In spite of the facts which I have just given, the Treasurer (Mr. Chifiey) still persists in stating that no taxpayer will be called upon to pay additional tax. This measure flatly contradicts that statement. Indeed, in introducing this measure, the Treasurer declared that each taxpayer would have to pay either directly, or over a period of three years, a surcharge of 25 per cent. ; but he followed that statement with one to the press to the effect that tax will not be increased. Surely the Treasurer does not think that his sweet voice will be sufficient to hide the facts from taxpayers. His attitude in respect of this subject reminds me of the story of the man who, being hard-pressed for a job, accepted the work of a missionary in the South , Sea Islands, and preached so fervently to the natives that he converted himself. It is idle for Government supporters to talk about a forgiveness of 75 per cent. of the taxpayers’ deferred liability, and, at the same time, say that tax will not be increased by 25 per cent. under this measure.I repeat that the Government in implementing the pay-as-you-earn principle in this fashion is not forgiving the taxpayer anything, because, as I have already pointed out, having regard to the position existing when the first income tax measure was introduced in this Parliament, the pay-as-you-earn principle should mean that the taxpayers’ tax for this year should be exactly the amount of tax he paid last year. Although I welcome the payasyouearn system of taxation, which will be beneficial to those who will follow us in a few years’ time, I still maintain that at this juncture, when it is being forced upon us in this chamber, the 25 per cent. penalty is unfair and unjust. When the bill reaches the committee stage, I shall do all I possibly can by way of amendment to have the provision relating to the 25 per cent. increase deleted. I congratulate the Government upon the introduction of the principle of pay-as-you-earn taxation,but I ask it to play the game fairly by the people, and to honour the promise made to them in August last that there would be no fresh taxation and no increase of rates. I ask the Government to stand up to its promise.
– It always does.
– The Government is not doing so in this instance. When we advocated the pay-as-you-earn system during the last general election campaign, it was opposed by honorable senators opposite.
– We did not oppose pay-as-you-earn taxation, but we did oppose post-war credits.
Senator JAMES McLACHLAN.Honorable senators opposite were adamant in their opposition to payasyouearn taxation, until the Treasurer found that he needed an extra £15,000,000 of revenue, whereupon they grabbed the pay-as-you-earn system with both hands. I do not believe in this imposition, which is the thin edge of the wedge which the Minister for Aircraft Production (Senator Cameron) is so anxious to drive into this country, namely, a capital levy.
– This subject has been discussed for many weeks in the press, by the public and in the House of Representatives. I do not propose, therefore, to labour it at great length, particularly in view of the formidable list of business which the Senate has yet to consider. Incidentally, I should like to draw the attention of the Government to the manner in which legislation is brought before the Senate towards the end of this period of the session. I hope that the Government will not follow the very bad example set by previous governments in that regard. I believe, as I am sure the Leader of the Senate also believes, that the
Senate does not receive the respect and consideration which is due to it, particularly from the House of Representatives. In my view, the legislative programme of the Government should be so arranged as to give us a better opportunity to discuss the many matters which the Senate still has to consider. I shall not speak at length on the bill, partly because I realize that we have a great deal to do and also because I am sufficiently modest to admit that I cannot offer anything new concerning its provisions. Its purpose was well set out in the first paragraph of the Minister’s second-reading speech, in which he said that the main purpose of the bill was to give effect to -
The Government’s proposal to adopt the principle of relating the taxation liability to income of the current year in lieu of income of the previous year.
This legislation will, I believe, be a great boon to the taxpayers. The present method, as we all know, can result very often in great hardships in various circumstances. So serious has been the effect on some sections of industry, particularly primary industry, in the past, that a policy was adopted of averaging the income over a period of five years. That was done to save great hardship to many primary producers, who were faced with an income tax for a reasonably prosperous preceding year, which had to be paid in a year of great difficulty and of perhaps no income at all. The Government was practically compelled to arrange the payment of the tax in such a way as to make it reasonably possible for the primary producers to meet it. That is some indication, at any rate, that the present method does not apply satisfactorily to all the taxpayers concerned.
The two main advantages of the bill are, first, the fact that the taxpayer on a declining income finds his tax adjusted accordingly and, secondly, that in the event of his earnings ceasing altogether, by his income being perhaps abruptly terminated by death or other means, his dependants will not be faced, as they are under the present system, with a very severe income tax which they are not in a position to meet. I shall not cloud the issue by talking about a lag. I think that Senator Spicer analysed the position very thoroughly, but he was consistently wrong, because, in my opinion, he argued on .wrong premises altogether. I have paid taxes for a long period, and there is nothing like personal experience to educate one.
– We have all had that experience.
– No doubt, honorable senators opposite have had greater experience in that regard than I have, but I shall be faced at the end of this month with a tax for an earning period of 21 months, and I know that I shall have a similar tax next year unless the bill bc passed. In the event of my income ceasing after this month, I know that, so long as this bill is passed, my dependants will not be faced with amy income tax at all. That is a great boon which must commend itself to the taxpayers of Australia. I realize that the Treasurer is not going to lose anything in this matter, neither is he going to gain anything.
– Then what is the justification for this impost?
– I believe that the direct effect of this measure on certain individuals, particularly in cases where income fluctuates, will be such that it will find the taxpayer in a position to meet the situation reasonably. In my opinion, that is the main purpose of the bill. The Government realized that the comparatively large earnings of the people, due to the unusual and abnormal times that this country was experiencing, could not continue, and that the time would certainly arrive when the incomeearner would be receiving a lower income, and would have to pay taxes on an income received in the previous year. In my opinion, that is the chief principle and the chief value of the bill. I do not know that I can add anything more.
– Because the bill is too complicated.
– It may be complicated, but I have given a great- deal of study to it, and discussed it with members of Parliament and friends in all sections of the community. Never have I heard anybody say that, by and large, the measure will not be to the advantage of the people. As to the question of the lag or the increase of tax, T have not heard anything said about individuals who will pay this year a tax which otherwise they would not pay. That phase of the matter has not been stressed. There is no doubt that the measure will affect people who otherwise would not be taxed. I am sure that the Senate will pass the bill in its present form, because the idea of the Government sacrificing or forgiving or forgoing 100 per cent, of the tax is foolish. If the tax were so heavy or the community so large that the amount involved was £75,000,000’ or £100,000,000, no Treasurer could possibly surrender such an amount. In order to meet the situation that has developed the Government has offered this compromise. Its attitude is reasonable and if the 25 per cent, is in some instances spread over three years that is a fair way in which to meet what honorable senators may, if they wish, term extra taxation. I am quite satisfied that so far as a large number of people are concerned who to-day are compelled to live up to their incomes, the measure will be of great benefit.- Such people cannot make provision for income tax because they cannot visualize what it will be. In many cases the demands on their incomes are fairly great, and they do not make the necessary sacrifices to make provision to pay the taxation the following year. As Senator Spicer pointed out, unless something of this kind is done a number of people will escape taxation, and a more deserving section of the community will have to pay higher taxes. I therefore support the bill wholeheartedly and hope that the Senate will pass it.
– It appears to me that one has to clear one’s mind regarding the incidence and imposition of income tax in the first instance in order to get a correct understanding of what has happened in regard to this measure. Income tax can be levied only under the system which we have adopted in Australia - a graduated system with the rates of tax rising gradually according to the increase of income - after the income of the previous year has been ascertained. That is’ the course which has been adopted in this and other countries which have put this system of taxation into force. That being so, I fail to see where there is any lag at all. There lias never been a lag, because although the income was earned in one year the .tax in respect of that year was levied in another. The trouble in connexion with this bill arises from the fact that the budgetary position is not as satisfactory as the Treasurer would like. If we are going to attain absolute equity and equality, the whole rebate of tax under proposed new section, 160ah, will be not 75 per cent, but 100 per cent, of the 1943-44 impost. The whole difference arises because the Government on the hustings pledged itself to no increase of taxation. If the Treasurer, instead of having the matter involved in mystery, were to say flatly - and this is the stark reality of the position under this measure - “ We are taking tax on every year, and in respect of 1943-44 we are going to extract another £15,000,000, or one-quarter of £60,000,000, from the taxpayers, which in some instances will be spread over three years, to ease the position, as is done in other countries “, one could not have complained. The position that has arisen in regard to this measure is this. The Treasurer is confronted now with the promises which he made upon the hustings that taxes would not be increased. Pie finds himself roped and bound by commitments under certain social service legislation, and he is now seeking to make up the deficiency which will exist during the next three years by extracting an additional £15,000,000 by way of income tax from wage and salary earners, plus the corresponding sum payable by other taxpayers. Instead of boldly increasing the rate of tax to make up the deficiency, which would have been the honest way to tackle the problem, he has decided simply to. grab the extra tax. The committee which investigated this matter estimated that the 25 per cent, would represent £15,000,000 in respect of wage and salary earners, and under this measure that sum, plus whatever amount is payable by other taxpayers, will be held to assist the budgetary position over the next three years. That is the whole history of this matter. The stark, naked truth is that the Treasurer is seeking to take money from the taxpayers of this country unjustly. The manner in which the entire matter has been handled has created confusion and doubt in the minds of .the people. Had the Treasurer been frank and said, “ We want £15,000,000 extra from salary and wage earners, plus another £15,000,000 from other taxpayers “, there is little that we could have done about it because, after all, we have to pay for the war. Apparently, the Government is quite prepared to undertake the responsibility of paying all. sorts of de luxe benefits to the people of Australia, and to make up its revenue deficiency by this means which quite obviously is a straight-out increase of taxation. I can only regard this measure as imposing an extra burden upon the people of this country. However, we must face the position. The Treasurer requires this money and he must have it. The Government is faced with .the responsibility of providing free medicine, unemployment and sickness benefits, and other social services of that nature, all of which have to be paid out of the National Welfare Fund, and it may well be that in order to obviate the necessity ,to draw upon that fund for other purposes, the Treasurer has had to resort to this method of raising additional revenue. If the Treasurer had come forward frankly and said, “ We want this revenue for war purposes “, he would have got it; but woe betide this country if practices of this type continue. Already the Treasurer has found that his style has been cramped by his promise that taxation would not be increased. He requires this money urgently and it is not for us to say nay. He requires it because he has “ outrun the constable “ in regard to the National Welfare Fund. Although the “ toad beneath the harrow “ is not called upon to contribute directly to social service benefits, he has to pay for them indirectly by means of this additional taxation, just as he will pay for them indirectly by means of customs and excise duties, and other imposts of that nature. To those who are contesting this measure I say that we cannot deny the Treasurer this money.
– Who is contesting this legislation?
– It is being contested by many people. I have a file of letters from many individuals and organizations, including trade unions, asking why the entire 100 per cent. should not be rebated. Obviously, the misapprehension has been caused by the Treasurer’s announcement that taxation would not be increased. The fact remains that it is being increased.
– Nonsense !
– No doubt the Minister for Aircraft Production (Senator Cameron) is an authority on that subject; but his ignorance upon taxation matters is obvious. There can be no escape from the fact that income tax is paid on current income, and that the object of this measure is to “ nip “ a few more millions from the people of this country. The Treasurer should have stated quite frankly, as was done in the United States of America, Canada and Great Britain, upon the introduction of “payasyougo” taxation, that the Government could not afford to rebate an entire year’s tax because there is no escape from the fact that this 25 per cent. is an extra burden on the taxpayers of this country. I admit that the matter requires some understanding. The complexities of our present income tax law should be tackled by the best intellects in both Houses of Parliament. For years I have pleaded for more simplicity. In fact, I have earned considerable fees because of the involved nature of income tax law, and no doubt my fellow lawyers in Sydney, Melbourne, and other places, will continue to find taxation matters a substantial source of revenue. Because it now affects nearly every man and woman in the country, income tax legislation should be reduced to its simplest terms. To-day, few business people care, or are able, to prepare their own income tax returns.
Undoubtedly this legislation, if passed, would benefit quite a number of people in the community who have been improvident enough not to make provision for future income tax payments, or whose circumstances have been such that it has been impossible for them to make that provision, but let us regard this bill in its true perspective. The 25 per cent. undoubtedly represents an increase of income tax rates, and a direct impost upon the people of this country. There is one feature of this bill which I regard as rather alarming. I refer to the fact that in some cases, as has been pointed out by Senator James McLachlan, there will be virtual confiscation of moneys. After all, income tax cannot exceed 20s. in the £1 without raising constitutional difficulties which may have far-reaching consequences. There are certain aspects of this measure which, of course, lend themselves to discussion and comparison in relation to the incidence of the tax, but I defy any one to draft legislation which does not contain some anomalies. I have had numerous letters on the subject of these anomalies and I find that by far the greatest proportion of them has come from wage-earners. No doubt most of these anomalies will be eliminated by the Taxation Department as time goes on. Whoever hopes to see “ perfect peace “ in the income tax field is dreaming of something which never was, is not, and never shall be.
– As one who supports the principle of “ pay-as-you-earn “ taxation,I am pleased that the Government has decided to reverse its frequently declared opposition to this method of payment. As Senator A. J. McLachlan has said, before the last elections, and during the election campaign, honorable senators opposite were very definite in their opposition to two things, namely, post-war credits and “ pay-as-you-earn “ taxation. Therefore, I consider that it is worth while to endeavour to analyse the bill now before the Senate to ascertain the reason for the reversal of form. The Treasurer (Mr. Chifley) has stated frequently that under this proposed reform of our income tax system, taxpayers of this country will not be called upon to pay any more taxes. That is not a correct statement of the position. I realize that the real issue has been clouded by the raising of the question of whether or not there is a lag in tax payments and the question of whether or not the wage and salary earners of this country will be called upon to make increased contributions; but, in my opinion, the reason for the introduction of this measure is the present financial position of this country. I am completely indifferent as to whether or not there is a tax lag. In spite of what has been said by various legal luminaries, my own opinion is that income tax to-day is imposed on the income of the preceding year. That there is still a liability in respect of income earned during the current year is proved by the liability of deceased estates to pay income tax in respect of the current year.
– Does the honorable senator believe that that has always operated ?
– I do not know how long it has operated but it has been in operation for quite a considerable time andI have had some experience of its operation. I had to meet that liability in respect of a certain estate, and had I thought that the impost was illegal I should have contested the question of my liability. The Government, under these proposals, has brought the year of income into the same period as the year of tax. Under the present law the year of income is one year and the year of tax is the subsequent year. Under this bill the year of tax is to be the same as the year of income. I approve that principle because it will give real advantages to some individuals and relieve them of what would otherwise be a great hardship. The taxpayer whose income ceases after the 30th June next, orwho experiences a substantial reduction of income after that date, will be greatly assisted under this measure, and it will also assist the beneficiaries of taxpayers who die after the 30th June. For these reasons the bill should have the support of honorable senators on both sides of the chamber. I have no quarrel with the Government up to that point, but I strongly object to its effort to deceive the people asto the real incidence of the present proposal. If, is easy for the Government to say that taxpayers will not pay more tax in 1945, assuming that their income remains the same, than they would under the present system. I agree with Senator A. J. McLachlan that all of the taxpayers who will be affected by this bill - public companies, of course, are excluded - will make an extra contribution to the revenue. It is interesting to know that the people who will pay the most in the present taxation year are the wage and salary earners. They are to be called upon to pay an extra £15,000,000 during that period.
– The others will take three years to do it.
– The other taxpayers will during three years pay an extra £7,000,000 a year. I know that this country stands in need of the extra revenue. I have said on several occasions that the expenditure exceeds the taxation and loan resources, but it was sheer humbug for the Treasurer (Mr. Chifley) to promise the people that extra taxes would not be imposed.
This measure has had unanimous support throughout the country on the assumption that it will bestow individual and collective benefits upon the taxpayer. The Treasurer is not restricted to orthodox financial measures. He would have no compunction about using bank credit to an increased degree, but he has at last come to realize that bank credit has already been availed of to such a degree that further resort to that method of finance would have a detrimental, if not a disastrous, effect on the economy of this country. Yet he has not the honesty to tell the people that we cannot continue to finance the war effort and the social services by that method of finance, but must resort to increased taxes. The Treasurer has stated, through the press, that relief will be given from 75 per cent. of the income tax for the year 1943-44. That is a completely misleading statement. I see no sign that he is prepared to cut his coat according to his cloth, but in the matter of votecatching he is willing to “go the whole hog “ in giving handouts to the people. I am alarmed at the prospects for the future. Realizing the dangerous nature of this method of finance, the Treasurer should be prepared to budget on a more conservative basis, and reduce public expenditure, having regard to the taxation resources available; hut during the present sittings of Parliament, measure after measure has been brought down which will irrevocably commit this country to an expenditure of at least £20,000,000 a year. Before we have finished with the social service commitments, I think that the expenditurewill be in the region of £80,000,000 or £90,000,000 annually. Under the pretence of giving something to the people. the Treasurer is taking an extra £22,000,000 for the next financial year. I admit that for the next two years he will get an extra £8,000,000 a year, but our social services, war commitments and ordinary governmental expenditure will not be reduced in the next few years if the war continues. I do not think that the Treasurer is in a position to say that the war commitments will substantially diminish. Whatever the position may be, this country is irrevocably committed by the Government to an expenditure which the present taxes will not meet. Instead of getting real benefit from this bill the people will have further taxes imposed upon them in the not far distant future.
It was interesting to hear in this debate for the first time the statement by honorable senators opposite that there will be a reduction of income in. the postwar period.
– In the war period. We did not refer to the post-war period.
– The Minister says that a fall of income will occur in the war period also. The cold fact is that the people who were so certain during the last election campaign about the financial position are beginning to doubt their own optimism, and realize that despite all the efforts that can be made, and all the promises that have been given, the great probability is that incomes will fall.
– Even under the new social order.
– Quite so. That entirely coincides with my own view. The reduction of income will undoubtedly be due to the actions of this Government. It is futile for it and its supporters to imagine that the present punitive rates of income tax can be maintained without a reduction of the national income. People will not go on endlessly giving of their best and returning 18s. 6d. in the £1 by way of tax to the Treasury. A great deal of the absenteeism that has already occurred in industry is due to the refusal of workers to work overtime, or even full time, because they consider that they are called upon to pay an undue proportion of their wages as taxes. The same thing applies with more justification to the professional man, and the self-employed man, in the higher ranges of income. Is it suggested that legal men of high standing will continue to work sixteen hours a day in order to pay 18s. 6d. in the £1 of their earnings to the Commissioner of Taxation; or that manufacturers and commercial men will take the risks which are necessary to the making of big incomes in order that the Commissioner of Taxation may have over 90 per cent. of it? The Government has got itself into a vicious circle, and the people of this country will realize before long what its financial proposals and social service legislation will mean to them. I say without hesitation that, having collected an extra £22,000,000 in the next financial year and over £7,000,000 in each of the two succeeding years, the Treasurer will be compelled either to impose further taxation - I do not know under what guise - or else to rely to a greater degree on bank credit, with all its attendant dangers.
I have endeavoured to express my views on this measure generally and on the effects of the proposals now before the Senate. I now desire to refer to some of the clauses of the bill, and their incidence. I wish first to refer to the proposed 75 per cent. rebate. It is fairly simple in its application to wages and salaries. Under the Government’s proposals, the fact of a fluctuation in respect of wages and salaries under £500 a year does not affect the rebate, but the same cannot be said in regard to other incomeearners in this country. Proposed new section 160ah sets out clearly the method by which income is to be assessed for the purpose of the rebate. In effect, it means that, provided a man’s income is more or less normal and steady, he will get the full benefit of the 75 per cent. rebate; but if, for some reason, his income for 1943-44 exceeds’ his income for 1942-43 by more than 20 per cent., he will be heavily penalized. I entirely agree with the Government’s efforts to prevent manipulation by taxpayers of their 1943-44 income. If taxpayers set out deliberately to inflate their incomes by the manipulation of stock values or the deferment of expenditure, as has been referred to in the report of the committee, they should be penalized. But we all know that some types of income, normally fluctuate considerably. The incomes of primary producers are cases in point. Other industries also may provide incomes which fluctuate widely, without any malpractice or wrong intent on the part of the taxpayer. Under this proposal, where the rebate will be based on the income for the preceding year plus 20 per cent., some taxpayers will be extremely heavily hit. I shall cite a case which came before the committee. The Commissioner of Taxation took as an example a taxpayer whose 1942-43 income was £1,000, and who owing to fortuitous circumstances beyond his control, had an income of £2,000 in 1943-44. The Commissioner pointed out that the rebate which he will get will be based, not on tie tax payable on the £2,000, but on the tax payable on his 1942 income of £1,000 plus 20 per cent- on £1,200. The effect of that is that had that taxpayer’s income in each year been £2,000 he would have paid a tax on the 1943-44 income, which included the 25 per cent.-
– He would have more money.
– If he has not more money, but less, he will be called upon to pay more. That is the point. If his income in the year preceding the base year was £1,000, and his income in the base year was £2,000, he would be called upon to pay £1,563 in that year. That is to say, out of his income of £2,000 he. would be called upon to pay £1,563 in 1944-45. But had his income been £2,000 a year in each of those two years, he would be called upon to pay only £1,189. In other words, because he had £1,000 less out of which to make his payments, he would be called upon to pay nearly £380 more. I know that there is a discretionary clause in the bill under which the Commissioner may make certain allowances in such cases; but that clause does not meet the case, because proposed new section 160aj gives to the Commissioner power to make a remission of tax should he be ^satisfied that the income for 1942-43 was less than might be expected normally to be derived in a year by the taxpayer. In other words, instead of saying that if the Commissioner is satisfied that the 1943-44 income had not been unduly inflated by manipulation, these things shall apply, it says that if the Commissioner is satisfied that the income for the preceding year is subnormally low, certain things may be done. As the whole purpose of these provisions is to prevent abuse and manipulation by the taxpayer, once the Commissioner is satisfied that the taxpayer has not unduly inflated his income, it should be mandatory for him to apply the provisions of this proposed new section. That is something about which more may be said at the committee stage, but it is a matter of real importance and will affect a large number of taxpayers in this country who have honestly made their taxation returns and ha.ve honestly earned the income shown in them.
Another provision which will do a real disservice- to the employees in industry is that which relates to the amount allowable a3 contributions to a pensions fund or superannuation fund. I know that the provisions of the existing legislation have been abused, but I suggest that it is bad legislation to concentrate on dealing with offenders rather than on the general run of taxpayers. Bad actions on the part of a section of the community may lead to bad legislation.
– The action of such taxpayers is to be condemned.
– I agree. I have no hesitation in supporting the Government in its efforts to prevent a repetition of such cases, but when it goes so far as to prevent companies from making bona-fide provision for their employees I think that a real disservice is being done to the community. I have no doubt that the amount allowable under these provisions, namely, 5 per cent, of the income of the employee, or £100, whichever is the greater, is sufficient to carry on established provident funds, but as is known, when a fund is being established so limited a contribution will not be sufficient to enable the fund to meet demands on it if older employees of the company are to be given the benefits which the company desires to give to them. All of us know that when these funds are established, the company concerned contributes towards them very generously in the early stages. Therefore, whilst existing funds may very well be able to carry on in spite of this limitation upon contributions, it is clear that no new schemes will be established on a worthwhile basis so long as these limitations continue.
I now desire to refer to the taxation of persons who have come to this country to do a job, probably a war job, at the request of the Government, or companies, or organizations, which are doing work on behalf of the Government. Such persons accepted engagement in this country on a certain basis of remuneration which no doubt they considered sufficient in view of all the circumstances, including the fact that they would not be subject to income tax in this country. Now, however, the Government declares that in spite of the fact that they were engaged on that basis in accordance with the law, these people are not entitled to go free of tax. I entirely agree with the contention that no person should escape his or her fair share of the financial burden which the war has imposed upon the peoples of all the United Nations, and I shall support any provision to tax these people in the future. But what is it proposed to do under this measure? Clause 5 provides that these persons shall now be taxed in respect of incomes received in this country from the 1st July, 1941. These persons will now be asked to pay tax on incomes which they received two years ago. No one would expect that persons who came to this country and accepted employment under conditions which I have already described, including the condition that they would not be subject to income tax in this country, would set aside sufficient to meet a commitment of this magnitude. This is a retrospective provision of the worst possible form. In addition, it places an unfair burden upon a class of person who has rendered yeoman service to this country.
– Our own people are being taxed retrospectively to the degree of 25 per cent. extra under the pay-as-you-earn principle.
– In the case of our own citizens, the tax is to be retrospective for one year only, whereas these persons are to be asked to pay tax in respect of incomes which they received two years ago. Had these people been obliged to pay tax in this country from the date of their arrival here, I have no doubt that they would have done so, just as they would be prepared to meet any liability imposed upon them by the laws of this country. But they were told that our taxation law did not apply to them. To-day, two years later, this Government, grasping for revenue, now decides to impose this hardship upon them. I hope that the Government will realize the inequity, and I might say the dishonesty, of this provision.
Finally, I should like to say a few words regarding the general set-up of this measure. Clause 2 pretends to state when the hill will come into operation. It says -
That is perfectly clear. I should think that it was intended that honorable senators should look up succeeding subsections to acquaint themselves of the incidence of the various provisions in the measure, but the Government, which invariably tends to conceal instead of stating its intentions frankly, has inserted another clause which definitely prescribed the dates upon which certain provisions under this measure will come into operation. Clause 28, under an innocuous heading appearing on the last page of the bill, provides that the provisions, which I describe as dishonest, particularly those in respect of the taxation of persons who have come to this country, shall come into operation upon a certain date; and this clause is set out in such a manner that honorable senators are compelled to ascertain its full meaning by referring to other sections. Clause 28 (3), which prescribes the date when the provisions applying to the taxation of visitors, will become operative, reads -
The amendments effected by paragraph (b) of section five and by section ten of this Act shall apply to all assessments for the financial year beginning on the first day of July. One thousand nine hundred and forty-two and all subsequent years, and, for the purposes of that application, the amendment effected by paragraph (b) of section five of this Act shall be deemed to have come into operation on the first day of July, One thousand nine hundred and forty-one.
I submit that the Attorney-General (Dr. Evatt) shows a curious regard for honesty and frankness when he endeavours to cover up the general intention and purpose of the bill in that manner. It is high time that the Attorney-General, who was once a member of the High Court bench, had more regard for honesty and frankness than he appears to have.
– At the outset, I should like to say that I do not claim to be either a wizard with figures or a taxation expert. However, I have always worked on the principle that applied intelligence will enable one to solve most problems. Since the introduction of this measure was mooted, I have heard quite a lot of involved argument about it; and whenever any one with a legal training happened to be in a group with whom I discussed the matter, I found that the argument became more and more involved. In fact the only man who, I believe, genuinely did not understand the purpose of this measure, was a member of the legal profession. He seemed to have a most obtuse mind. Whilst I do not claim to be a taxation expert, I am rather observant. When Senator McBride rose to speak I expected to hear him make a plea, not for the poor and unfortunate general run of taxpayers, but for the wealthy non-employed taxpayer. My expectations were fulfilled. Almost the first remark uttered by the honorable senator was that the Treasurer was receiving an additional £15,000,000 from one section of the community in the next financial year, and £7,000,000 a year for the next three years from the wealthy non-employed taxpayers. By interjection I sought to correct him by saying 8$ per cent., and he replied, “ No, I know that it is alleged to be 84 per cent., but the amount is £7,000,000”; and he inferred that this was class legislation. It has been stated in the House of Representatives that an additional £15,000,000 will be raised from taxpayers who are wageearners and £15,000,000 from the professional or non-employed classes. The honorable senator’s claim that an additional £7,000,000 will be paid by the latter section is not correct. I can only conclude that he does not thoroughly understand the measure. At all events, he showed great concern for that section of the community. I realize that he has been sent here to represent that section of society, and is doing a very good job for it. I am’ prepared to compliment him on that. He said at the outset that he was indifferent to the question of whether or not there was a tax lag. I take it, therefore, that the only argument which he had to adduce related to the framing of the bill, but he made quite a long speech out of what was left for him to discuss. To my mind, the whole question is based on the tax lag. The honorable senator did later agree that there was a 75 per cent, forgiveness. Singularly enough, his admission is in line with the speech of the only legal gentleman whom I have heard speak on the bill in this chamber. I refer to Senator- A. J. McLachlan, who was also very frank, and gave me quite a surprise, because my experience outside has been that the most obtuse men have been those belonging to the legal profession. The honorable senator did admit that the money was earned in one year and the tax levied in another. He did not describe it as a tax lag, but that is what everybody has been describing as a tax lag. He admitted what he called a 75 per cent, tax rebate, but, in common with other honorable senators, he claimed that there had been an increase of taxation in spite of the fact that we, as a party, had undertaken not to increase taxation. I shall connect those items up to show how the opponents of the bill have tried to make a serious problem out of something that is very simple. Senator James McLachlan very trenchantly criticized my colleague Senator Arnold for having stated that the average taxpayer would not have to pay an additional tax. Nor will he in point of quantity, because if he goes on paying this tax during this tax holiday - for so it is regarded - by the end of .that period he will have paid the 25 per cent, tax lag and will start off with a clean sheet and pay as he earns. Each year he will have to forward a return, and on that return he will be assessed. Possibly, there will be some slight adjustment, in the form of a rebate, a refund or a small ex-tra amount to pay. But that is the principle upon which the tax is to be paid. When it is claimed that there is an extra tax, I turn to a very simple process of reasoning. Imagine a country storekeeper who has been supplying commodities on credit to his local customers week in and week out throughout the year. At the end of the year, it is customary to strike a balance, whereupon the purchaser pays his year’s balance and starts off the following year with a clean sheet, again accumulating a certain amount of liability with the storekeeper. The storekeeper in a leisure moment sits- down and thinks that his customer, Jones, is always behind with him, and at the end of each year always owes him a year’s bill. He never catches up with Jones, and never really handles his own money. So he tries to devise a means whereby he can cut his loss, because to him it is a loss, as Jones is doing this year after year, and ultimately when Jones dies he will have the job of extracting from Jones’s estate the money owing to him. A bright idea occurs to him. He calls Jones in and says, “ This is very unsatisfactory to me. I do not handle my money in existing circumstances. The money you owe me at the end of the year is of little use, because I have failed to use it during the year, so I will make you a proposition. Let us come to a different arrangement. Your bill is £100. Pay me £25 now and I will give you forgiveness for £75, on the understanding that when the new year begins you pay for every item as you get it “. Next year, as Jones has to pay for any commodity as he gets it, the storekeeper will have the benefit of handling his money, while Jones will have the satisfaction of knowing that he is paying his way, and will feel safer because, when he dies, his widow will not have to meet a portion or all of one year’s liability. That seems to me to explain the whole incidence of this form of taxation. I know the position by my own experience. It is only in comparatively recent years that I have paid income tax, because only recently have I become liable to pay it. Still, I knew how it operated. I put in a return year by year, and in the few years in which my taxable income exceeded the allowable deductions, I was taxed. But I was taxed for the year in which I had done the work and received the wages, and I had to pay the tax during the next year. I might fall on lean times and be out of work, but still I had to pay that debt. I claim that there is ho increase in taxation, and I assert, in defence of Senator Arnold, that this does not constitute an increase. No taxpayer is asked to pay his instalments in greater amounts than he normally would pay, because the instalments remain the same. All that happens is that he forgoes his tax holiday, and in return he finds that on the 1st July he starts off level, with a clean sheet, and as he earns so he pays. It is better for the Treasurer, as it is for the storekeeper, to handle 25 per cent, of what his debtors owe him, than to have them owe him 100 per cent, for all time. That is the position he takes up, and he is justified in doing so. Senator James McLachlan demanded to know, “Who would give the right to any government to forgive or forgo 75 per cent, of a tax ? “ A little later in his speech he answered the question himself, because he said that an all-party committee had made a strong recommendation in favour of the payasyouearn principle. I doubt whether there is any serious opposition to the measure. I believe that honorable senators realize that a great boon will be conferred on the community generally, both the trading class and the employee class, and that, as a result of the bill, we shall be able to go through our daily life feeling that, if anything should happen to us, those we leave behind will not have to pay an outstanding liability in the way of income tax out of the meagre sum that we are able to save for them. Frankly, I am of the opinion that this is one of the best measures ever introduced. Two men, one very particularly and persistently, used to say to me, “ Cannot you in your party-room suggest to your party that instead of us paying our tax as we do, a measure be introduced whereby, now that we are earning high wages, we can pay the amount that we owe as well as the tax on the amount that we are earning this year ? “ One of them said that he asked this because he was a sick man who, if he died, had little to leave behind. He said it was a source of worry to him that after he had gone his wife would have to meet his taxation assessment out of the small amount of money that he would be able to leave her. That man was persistent in urging not merely that he should pay 25 per cent. of last year’s taxation, hut also that it would be infinitely better for him to be allowed to pay the whole of two years’ taxes in one year, because his mind would be clear of worry regarding what might happen when he was laid aside. The introduction of this measure has been a boon to that man. I met him in the last few days and he said to me, “ I am pleased at what has happened; I know I am so much better off”. So also I know that I am better off. I am not a wealthy man. I am not ashamed to say that I am dependent on my parliamentary allowance. If this bill were not passed, and I found myself next year in a position where I could not earn much money, I would be expected to meet the liability on my earnings of this year in a year when my income was very meagre. I am quite satisfied that this is a good measure. I was impelled torise because I heard an attack made on my colleague Senator Arnold, who yesterday made a fine’ contribution to the debate. Having once decided to defend him, I took a few notes for myself and have expressed the opinions which I deduced from listening to those who have spoken. I feel sure that the measure will pass and confer a lasting boon on everybody.
– When the Government announced its intention to introduce a scheme of pay-as-you-earn taxation, I, with many others, rejoiced to think that we were going to have such a scheme, but now that we have seen it, I am a little dubious as to the actual effect that it is going to have on the taxpayers of Australia. There have been so many windy arguments and propaganda in regard to it, and so many misleading statements from Ministers who should know better, that I have a grave doubt as to the actualbenefits to be conferred upon the people. In 1 930, during the regime of the Scullin Government, following upon consultations with the various State Treasurers, we experienced the first edition of payasyouearn taxation in the form of the financial emergency cut of 3d. in the £1. That was a most iniquitous imposition because it was a flat rate, applicable alike to the salaries of married men with family responsibilities, and those of single men with no dependants. Then we had a hospital tax of l½d. in the £1, which also was a form of pay-as-you-earn taxation. I consider that there are nearly as many anomalies in this measure as there were in the financial emergency legislation of 1930, which I am thankful to say is no longer in operation. There is no doubt in my mind that the alleged 75 per cent. remission of taxation is something which, to use an Irishism, we shall enjoy after we are dead. Despite the statements by the Treasurer (Mr. Chifley) to the contrary, the additional 25 per cent. which the taxpayers will be called upon to pay under this bill will be a very real burden. No words can alter the fact that taxpayers will have to pay an additional 25 per cent. in return for the 75 per cent. which is to be remitted. That is the sum total of the arguments on this measure, and much of the propaganda which has accompanied its presentation. I regret that when consideration was being given to a re-organization of the income tax system of this country, the Government did not go a little further and endeavour to make some provision for taxpayers who have to meet substantial expenses for dental and optical treatment, which, after all, is essential for the health of the people. Many years ago, during the regime of the Lyons Government, and again whilst the first Menzies Government was in office, I approached the then Treasurers and urged upon them the desirability of allowing expenses incurred for dental and optical treatment to be regarded as deductions for income tax purposes.
– This Government may yet provide those services.
– I have always maintained that payments for these services, which fall most heavily upon married taxpayers, should be allowable deductions.
– Why not have the services provided by the Government instead ?
-I am not altogether in favour of that. The services which dentists and optometrists are rendering to the people of this country to-day are excellent, and I am not prepared to have these services abandoned in favour of some government scheme. However, I repeat that payments ‘for these services should be allowable as deductions for income tax purposes. School fees also should be allowable deductions. I have always advocated that, but so far I have been unable to convince various Treasurers and taxation officials. However, I am not disconcerted, and I still think that these concessions should be given as a means of reducing family expenditure.
I wish to deal also with that section of this measure which relates to the group system of collecting taxes. The industry which I have in mind in particular is the timber industry, which employs a large number of men. Many employees in that industry are either itinerant labourers or seasonal workers, and I am informed by the Sawmills Association of Perth that the introduction of the group system of collecting taxes will involve severe hardship in some cases. The association gives .reasons for that contention, and I have advised taxation officials accordingly. I trust that the Government will see its way clear to permit those engaged in the timber industry to continue with the present system of tax stamps. The group system has been tried already in this industry, and it has been found neither so easy nor so economic as the stamp system. I am pleased to note that the bill contains a provision under which the taxation authorities may give permission to those controlling industries who may suffer hardship under the group collection system to remain on the old basis.
I wish to refer also to the effect of this measure upon deceased estates. When the “ pay-as-you-earn “ scheme has been in operation for some time, the hardship caused by the deduction of tax by the executors of deceased estates will disappear, but I trust that now that there is an atmosphere of forgiveness - at least to the extent of 75 per cent. - that the Treasury will not harass the Taxation Department in regard to taxes imposed upon deceased estates. The act provides for a Relief Board which has the authority either to waive part of the tax, or the whole of the tax, in the event of payment of the tax becoming a hardship upon an estate. That, of course, refers mostly to small estates of working men and women, and I am hopeful that the Relief Board will, in this atmosphere of forgiveness, bc very lenient to the small estates, because very often payment of taxation causes severe hardship. That is especially the case in regard to the estates of small primary producers and sometimes the maintenance of a farm as an economic unit may be hindered or even prevented by a harsh attitude on the part of taxation officials. I trust that the taxation officials will grant relief from hardship, which is very essential on these smaller estates.
.- I have no intention of debating this measure at length because I realize that we are all to be “ slugged “ for an additional 25 per cent., and that we can do nothing about it. However, there are one or two matters concerning members of the fighting forces to which I should like to refer. I shall take first the pay-as-you-earn scheme. Say, for instance, John Smith earned so much per annum in civilian employment in the financial years, 1st July, 1942, to the 30th June, 1943, after which he joined the Australian Imperial Force as a private soldier. Then, having served in the Australian Imperial Force for one full year, he returned to civil life on the 30th June, 1944. During the year in the Army, because his earnings were less than £250 per annum, no taxation deductions were made from his Army pay, but he had to pay an amount .to the Taxation Department in respect of the income he earned as a civilian during the financial year 1942-43. Before the introduction of pay-as-you-earn taxation, John Smith, who became a civilian as from the 1st July, 1944, would enjoy the equivalent of a tax holiday for twelve months, because his income during the year he spent in the Army was not sufficient to be taxable, ‘but under pay-as-you-earn he becomes liable immediately for the full deduction from his weekly salary, which is again at the former rate. Honorable senators will realize that in this case a soldier will be placed at a distinct disadvantage upon discharge under the new taxation scheme. As a matter of fact, the position is even worse than it appears on the surface, because many men who joined the Army find it impossible to pay their civilian tax assessments for the period immediately prior to their enlistment. This sum they still owe to the Taxation Department, and it is understood the Taxation Department has actually requested military authorities to deduct such money owing before finalizing the soldiers’ accounts. In this case it will be seen that the newly discharged soldier has either the sum total of bis accumulated deferred pay cut down by the amount he owes to the Taxation Department, or he has to provide the amount of that overdue taxation from his present civilian pay, in addition to meeting the normal weekly tax deductions from his present pay under the pay-as-you-earn plan. On inquiring at the Taxation Department, I found that there may have been cases of outstanding tax being deducted from a soldier’s deferred pay at his own request. On the other hand, I find that the soldier’s deferred pay is not considered sacrosanct. Generally speaking, the department has been sympathetic towards soldiers, but I should like to be assured that deferred pay is sacrosanct and cannot be drawn upon to pay tax assessments, unless a soldier so desires. It would seem that the Commonwealth Government has completely overlooked the severe handicap that will be imposed upon discharged soldiers during their first year of rehabilitation by the pay-as-you-earn plan. To rectify this matter the Government should do one of two things: I t should either review a soldier’s tax arrears for the period immediately prior to enlistment or postpone the application of tax deductions under the payasyouearn plan for twelve months afterdischarge.
Another point that must be considered is the situation of a member of the Australian Imperial Force who, by reason of overseas service was hot liable to tax, even though his Army income exceeded £250 per annum. Under present conditions, upon discharge, he enjoys a taxfree holiday, depending upon the time that he was abroad, but under the payasyouearn plan, he will be compelled to pay tax immediately he returns to civilian life. I leave it to the Government to take action which will be of some advantage to the men who elected to serve overseas. Another matter, upon which I intend to submit an amendment is the necessity for restoring an exemption provision which operated during the regime of the Menzies Government. Seetion 3 of the Income Tax Assessment Act 1936-1940 gave exemption to exservicemen in respect of pay and allowances until their discharge or until hostilities ceased. When the Curtin Government came into office that provision was amended, owing no doubt to the change in the war situation as far as Australia was concerned. “When the 6th, 7th and 9 th Divisions returned to this country from the Middle East, the exemption was cancelled, and the limit of exemption, unless the member of the forces had reembarked, was three months after his return to Australia. Had the members of those divisions remained in the Middle East and retired to an area miles away from the battle zone, they would still have enjoyed the exemption, but, because they were training in Australia for an offensive against the Japanese, the exemption applied for three months only. Had any of those divisions been sent to Port Moresby to train for the forthcoming offensive, their pay and allowances would (have been totally exempted; but, as northern Queensland was a more favorable territory in which to train for jungle warfare, the exemption is restricted to three months. I consider that the exemption should remain as though the soldiers had been on active service beyond Australia. I shall refer to this matter again when the bill is in committee.
– The statements by honorable senators opposite have not convinced me that the pay-as-you-earn proposal contained in this bill will not be in the best interests of the workers generally. Senator Allan MacDonald said that he was dubious as to the effect of the proposal on the taxpayers, and that he had grave doubt whether benefit would be conferred on them. During the whole of the debate on the matter in this chamber, I have not heard any statement by honorable senators opposite to lead me to believe that the bill will not cancel 75 per cent, of the income tax payable by every taxpayer in respect of income received for the year 1943-44. Senator Allan MacDonald also said that the additional 25 per cent, impost was real, and Senator Brand declared that we all knew that we were to be “ slugged “ for an extra 25 per cent, of tax. That assertion appears to me to be based merely on supposition. I understand that under this proposal the whole of the tax liability of wage and salary earners for 1943-44 will be met from deductions made during the quarter from April to June of this year, and members of the Opposition have not yet dealt with the matter from that aspect. The tax payment which will be made in the first pay period in July by means of deductions from wages and salaries will be in respect of current income, so there must of necessity be some “ forgiveness “ under the proposal under discussion, irrespective of all that has been said to the contrary. There is no doubt that 75 per cent, of a year’s tax will be “. forgiven “, if this bill be passed. Deductions from salaries and wages will continue to be made as from the first pay in April, whether the pay-as-you-earn proposals are adopted or not. Therefore the principle of payasyouearn means that, from the 31st March, taxpayers will pay tax in respect of their current income from period to period, and there will be no subsequent payment in respect of earnings in a preceding yearly period. I do not often quote opinions expressed by a newspaper which represents interests opposed to those of the working class. The West Australian, although it does not represent the interests of the working class, seems to be right behind the Government in its desire to introduce the pay-as-you-earn principle of taxation. The following is a quotation from a leading article published in that journal on the 16th March : - “ Pay-as-you-owe “ taxation, as recommended by the Joint Select Committee which reported recently on the subject, and as adopted by tile Federal Government, is receiving throughout Australia and particularly in the eastern States a great deal of opprobrious criticism.
The Curtin Government has never been very enthusiastic about introducing this reform. It resisted many suggestions of this nature that were made to it during the closing months of the last Parliament. It went to the elections without any policy on the question, and it only consented to act on the recommendations of six out of seven members of the Joint Select Committee. The Government was entitled to expect a fair measure of grateful approval of its belated conversion. But because, in fact, it has received little but censure it would be entitled to ask itself whether the Australian people really want to receive the very substantial benefits that will accrue to them under the plan now before Parliament.
The answer is that of course the public wants income taxation put on a “ pay-as-you-owe “ basis. Some sections may want more than they would get under the present plan, but everyone who brings an ounce of realism to bear on his consideration of the problem must realize that he is being offered welcome relief from a risk that sooner or later must confront each individual taxpayer - the risk of having to meet from a diminished income the tax liability on the income received in the year before the fall.
Undoubtedly, people who last year received high incomes,, and those whose incomes in the next financial year are reduced because of reduced overtime, would of necessity have to pay tax on their earnings for the preceding year, if this bill were not passed; but under the proposed system they would have to pay tax, as from the 1st April, only on the income earned by them. I ask any honorable senator who will cease to be a member of this chamber shortly whether he flavours the principle of pay-as-you-earn taxation as it will apply to his own case, seeing that, despite a possible sudden reduction of his income, he would be in a much better position if this bill were passed than if the present system were maintained.
– I do not intend to remain silent on this measure. I welcome the bill for the simple reason that I favour the payasyouearn method of income taxation. The present system is unjust. I have always said that a prudent man should pay his income tax out of his current income, and at least the bill provides for that; but I am decidedly opposed to the 25 per cent, increase of tax which the bill imposes on salary and wage earners, and on income taxpayers who are not in receipt of salaries or wages. The Government has said that it will get an additional £15,000,000 under this method, and it also claims that it will not increase, taxes. Those statements appear to be contradictory ; they, at least, require some explanation. I shall give one instance to show how the workers will suffer under this legislation. A man told me recently that he had received his income tax assessment, which showed that his indebtedness was greater than the instalments which he had paid. I cannot vouch for his figures, but he said that his income for the year was about £290, that his tax had been assessed at about £50, and that the value of the stamps in his possession amounted to about £30. That meant that he was still about £20 in debt. That might easily be the position of a man who in the previous year received an income in excess of his present rate of income, because his assessment would be on the higher income, whereas the deductions for which he would have stamps would be based on his present income, which was lower. Had not the 25 per cent, additional impost been levied - that is to say, had the “ forgiveness “ been 100 per cent, instead of 75 per cent. - the position of that man would have been that instalments paid by him during April, May and June, 1944, would have gone towards meeting his indebtedness, so that by the 30th June next the £20 deficiency would have been reduced. However, under this bill payments by him in those months will go towards the additional 25 per cent, impost, so that on the 30th June he will find himself as much in debt as on the 31st March. There must be numerous cases of that kind. I know that some workers will be entitled to a surplus at the end of (he year, but it is poor consolation to a man who owes £20 to the department to be told that some other person has a surplus and is entitled to a refund. The Government claims that it is making a remission of 75 per cent, of one year’s tax. It may be that when a man dies his estate will benefit, but otherwise he will be subjected to an additional impost of 25 per cent., to be met by three yearly payments. In some instances difficulty will be found in raising the money. I should like to know on what basis the Government decided on a remission of 75 per cent.?
– Senator Spicer, who was a member of the committee, can explain that.
- Senator Spicer did not agree to the 75 per cent, basis. No member of the committee has. yet explained why 75 per cent, waa chosen. Surely the Government had some reason for deciding on that percentage. I should like the Minister in charge of the bill to say what prompted the Government to decide on 75 per cent. “Was a 25 per cent, impost fixed because it would give to the Treasurer a certain sum of money which he needed ? If that be the explanation, I submit that the Government has not acted fairly. It should have introduced a taxation schedule and told the Parliament that additional revenue from taxation was required. I hope that when he replies to the second-reading debate the Minister will be able to explain why 75 per cent, was decided on. Was it just a stab in the dark? It certainly is difficult to understand how £15,000,000 additional revenue is to be obtained from a tax on wages and salaries, and an extra £20,000,000 is to be extracted from other taxpayers, without the taxpayers paying anything extra. I was one of the first members of this Parliament to advocate pay-as-you-earn taxation. The Government could have achieved the change-over without all this elaborate paraphernalia by altering the date and allowing a full 100 per cent, rebate. Then, had more revenue been required, the Treasurer should have asked for it in a straightforward manner. Because of the conflicting statements that have been made, the lack of information available, and the fact that it is unjust, I shall oppose the additional 25 per cent, impost.
– It is always with some diffidence and trepidation that I approach the discussion of a taxation measure, because I confess that, as a layman, I find such legislation intricate, complicated, and difficult to understand. During the last week-end I consulted various experts, both legal and commercial, in regard to some of the clauses of this bill, the phraseology of which was beyond my understanding. I was given explanations, but they were all different. It is no wonder, therefore, that I approach the discussion on this measure with some trepidation. Honorable senators have been supplied with a good deal of information in the nature of summaries of reports, the full report of the special committee as well as statements by taxpayers associations and other bodies. The claim that the 25 per cent. impost does not represent extra taxation seems tohe so obviously incorrect as not to call for argument. If we convert it into a simple sum in addition, it means that 100 plus 25 equals 100. On the face of it, that is absurd. From April to June, 1943, wage-earners paid in advance on account of tax for the year beginning the 1st July, 1943, certain sums of money, so that by the 30th June, 1944, they will have paid tax on their income for fifteen months. I suggest that that is perfectly clear.
– The honorable senator went to the wrong experts.
– I consulted a good many experts. I did not consult the Minister for the Interior (Senator Collings). I do not know whether he claims to be an expert in taxation matters; if so, I should like to hear his views. I suggest that not all the sophistry of Ministers, or statements by the Treasurer (Mr. Chifley) about £15,000,000 being lost to the Treasury unless this bill be agreed to, will make these proposals anything but a sheer piece of chicanery, unworthy of any decent government. Why is not the Government honest; why does it not say that it is out to obtain 25 per cent. additional revenue from taxes?
– The bill does not provide for 25 per cent. additional taxation.
– The bill is an iniquitous attempt on the part of the Government to obtain 25 per cent. more revenue from taxes on the pretext that there is a tax lag.
– The honorable senator is wrong.
– In my opinion, the lag is imaginary; because taxes have always been levied and paid in and for a financial year. Commonwealth income tax was first levied in 1915; it was paid in and for the financial year which commenced on the 1st July of that year. In each successive year an act imposing taxes has been enacted in like terms. The provision that the income for the previous year - 1914-15 - should be taken as the basis of assessment for the year 1915-16 was merely the means to achieve a certain objective. As has been borne out by legal opinions, that does not represent any lag in respect of time. Under the principle of pay-as-you-earn taxation, the Government will collect relatively the same amount of taxes as if there had not been any change.
– That is not correct.
– That is the crux of the argument. If the Government could establish that there would be a loss of Commonwealth revenue as the result of the change, it would be a different matter; but that has not been shown, for the simple reason that there is not a shred of evidence to support it. The only statements that have been made by responsible Ministers have been contradictory and misleading, and they have failed to satisfy taxpayers. The Government has not even justified the impost on the ground that it requires additional revenue for the prosecution of the war. In my opinion, the Government has displayed a lack of frankness and honesty. In paragraph 85 of the report of the committee which investigated this subject, the committee stated -
The committee had regard to the fact that, of the 2,000,000 persons now liable to pay tax, approximately 1,500,000 are employees. At present the deduction year in respect of these employees ends on the 31st March, as explained in paragraphs 38 to 40. By the 30th June, 1944, they will have had deductions made from salary and wages of approximately 25 per cent. of the tax payable under the present system for the financial year 1944-45 on the income of the year ended the 30th June, 1944. The amount of the deductions made in this period will be about £15,000,000. Revenue requirements would not permit either of the refunding of this amount or of the cessation of deductions for one quarter of the year.
No amount of juggling can make 100 plus 25 equal 100. That is the crux of this matter. The Government is lacking in frankness and honesty in failing to place the facts before the taxpayers. Instead, it is trying to mislead them.
– A great variety of views have been expressed by honorable senators who have already spoken in this debate.
The Government tells the taxpayer that he has a deferred liability to the Government, that the tax paid in respect of last year was owed in respect of the preceding year. It now says that, in applying the pay-as-you-earn principle, it will forgive taxpayers 75 per cent, of that lag, but will still collect 25 per cent, of the- lag. Naturally, the .taxpayer asks whether at some period in the future he will be required to pay only 25 per cent, of his ordinary assessment. He wants to know whether at some time in the future the Government will say to him, “As we have remitted 75 per cent, of your tax in respect of one year, this year you will be obliged to pay only 25 per cent, of your ordinary assessment”. Unless at some period in the future the taxpayer is required to pay only 25 per cent, of his ordinary assessment, it will bo useless to tell him that he has been forgiven 75 per cent, of his tax in respect of any year. The taxpayer wants to know whether at some time in the future he will be forgiven 75 per cent, of his ordinary assessment in respect of a definite and not a mythical year. This year he is to be asked to pay his ordinary assessment plus 25 per cent. That is clear. Therefore, he wants to know when he will be given real remission of 75 per cent, by actually paying only 25 per cent, of his ordinary assessment in a specific year. It seems most improper that the Government should now say that it is remitting 75 per cent, of a taxpayer’s assessment in respect of any year, when we know that it is at its wits’ end to find sufficient revenue to meet its commitments. Indeed, the opposite is the case. The Government is driven by necessity to obtain additional revenue, because the country must pay its way. I ask the Minister when he is replying to the debate, to indicate in respect of which year, if any, the taxpayer will be asked to pay only’ 25 per cent, of his ordinary assessment. Oan he tell us when the remission of 75 per cent, alleged to be forgiven the taxpayer will actually be made? However, the fact of the matter is that the Government, with the object of obtaining more revenue, has simply brought to light a mythical vear and now says to tlie taxpayer, “ Ordinarily you would have paid 100 per cent, tax in respect of that year, but we have decided to remit 75 per cent, of that liability, and will ask you to pay only 25 per cent, of it “. Such an argument is, indeed, puzzling to the taxpayer when he finds that this year he will pay his ordinary assessment plus 25 per cent. What really concerns the taxpayer is, not the Government’s talk about forgiving him 75 per cent, of tax in respect of a mythical year, but the fact that this year he will pay his ordinary assessment plus 25 per cent., and in each succeeding year will continue to pay his ordinary assessment in full. That is how the taxpayers will view this proposal. Every one welcomes the principle of payasyouearn; but the question arises as to whether the first income tax assessments issued were in respect of the year preceding that in which the tax was paid, or whether the tax paid was in respect of the year in which it was paid. Did the government of the day make the first income tax retrospective to the year preceding that in which tax was first paid? Or was the year preceding the first year in which tax was levied merely used as a basis for determining the first assessments of tax? I suggest that the latter was the case. It is clear that the Government now requires additional revenue. Its liabilities in respect of social services, for instance, will be greater than was at first anticipated. The Government should have made its proposals under this measure in a straightforward manner, because the worst offence which a government can perpetrate is to mislead the public as to its financial position. The Government would have been well advised to say to the people, “ We admit that we promised that we would not increase taxes, but circumstances have now arisen, which make it necessary for us to raise an additional amount of £30,000,000 and, therefore, we must increase the rates of income tax “. The Government is acting dishonestly in setting up a mythical year in respect of which it claims that it will remit 75 per cent, of tax, whilst, at the same time, it is now imposing an increase of 25 per cent. It is simply trying to delude taxpayers.
– To paraphrase Shakespeare, to lag or not to lag is not the question, so far as I am concerned. I am very concerned about the burden of tax being imposed upon the people, because this and previous governments have really failed to understand what finance means. It has been said that “ finance , is government, and government is finance “. That is a profound truth, because notwithstanding heavy direct, and indirect, taxation no government in the past has been able to carry on without continual borrowing. When the Menzies Government brought in its £100,000,000 budget, the people gasped, because it meant that that Government had to raise £100,000,000 from the taxpayers in order to carry on the business of the country for one year. Is it any wonder that the people are squealing now when our budget has increased sixfold? This country is getting deeper and deeper into debt. When the first government war contracts were let I put forward a proposition which would have saved the country hundreds of thousands, if not millions, of .pounds. This is how my idea would work out: The Government gives a man a boot contract for £100,000. He must have an overdraft to buy his raw material and pay his wages until he gets his cheque for the completed contract. There is such a thing as reciprocity in business. The Government has given him a contract on which he is allowed to make 5 per cent, profit. I would include in every government contract a clause compelling the contractor to use the Commonwealth Bank to finance him. That would he only asking for reciprocity in business. Every contractor would get all his material as soon as he could, and a .man with a £100,000 contract would probably want an overdraft of £50,000 or £60,000. He would have to obtain it from the Commonwealth Bank, which is the people’s bank, and pay it 5 per cent, interest instead of paying interest to a private bank. When the contract was completed, he would receive from the Government a cheque drawn on the Commonwealth Bank. He must pay it into the Commonwealth Bank to “ square “ his overdraft, and the people’s bank would have received 5 per., cent, on £60,000, instead of the private banks getting it. My plan would prevent the private banks’ from building up huge credits against the Commonwealth Bank. Apply that to the millions of pounds’ worth of contracts that have been let in the last few years, and see what it means. I defy any man in this chamber to fault that plan. It is common banking, practice for banks to get all they can. If a prospective contractor had an overdraft with a private ban’k, he could tell the Government so, and the Commonwealth Bank could take it over for him. There would be nothing to stop it doing so. Why did not the Government and previous governments do as I have suggested ? I tackled two Prime Ministers on the subject and found that they were bank men. I asked the right honorable member for Kooyong (Mr. Menzies) : “ Are you prepared to raise the necessary credits to finance this war with interestfree money, obtained from the Commonwealth Bank, on lines recommended by the Royal Commission on the Monetary Banking .Systems appointed by the Lyons Government, of which you were a member?” He replied: “Yes, up to the point of safety”. I asked him : “ When will we go beyond the safety point ? “ He had no answer to that. I said : “ We cannot go beyond the safety point until we go beyond the productive capacity of this nation, which last year produced £950,000,000 worth of goods and services “.
– Did the honorable senator put that question to the present Prime Minister (Mr. Curtin) ?
– What did he say?
– The honorable senator should ask him. I have put many questions to Prime Ministers without receiving a satisfactory answer. Last week, I was twitted with holding the balance of power in this chamber, and was asked why I did not assist to defeat the Government in this chamber. I ask honorable senators: “Why did not they turn out the Government ? “ All that the Opposition had to do was to reject the first money bill that the Curtin Government submitted, but they had not the courage to do so.
– We did not want to do that.
– Why ? Because the strongest party in any parliament is the anti-election party, as sometimes honorable senators are not returned after general elections. I have had that experience myself. The Opposition did hot have the pluck to defeat the Government, because a double dissolution would have followed, and they would have had to face the electors. I should like them to listen to the following article : -
British Banks Winning the War for Themselves.
How the British people are being financially enslaved by the banks (which are all privately owned and controlled) was disclosed by the Financial Secretary to the Treasury in answer to a question in the House of Commons recently. The Financial Secretary stated that the total budget deficit from the outbreak of war to the 31st January, 1944, was £10,900,000,000. The total amount owing to the banks on Treasury deposits was £13,800,000,000. From where did the British banks get the colossal sum of £13,800,000,000 which they have lent the British Government on Treasury deposits? The British banks got this sum for nothing out of the blue by merely writing up money figures in their ledgers and debiting the British Government with the huge amounts.
How could the private banks of Great Britain provide £13,800,000,000? There is not a quarter of that money in the country. It could not be paid, any more than the national debt of Australia could be paid. For six years I have asked the members of the present Opposition to controvert any word that I have said, and they have not been able to do so. I suppose they are pleased to think that they are listening to my swan song on this occasion. When I was told that I would soon be delivering my swan song, I replied, “ No, it will be an oratorio with a full string orchestra “. I read to the Senate last week an article showing how the strongest President that the United States of America has ever had was brought to his knees by the power of money. Later one honorable senator said to me: “ You are not going to give us any more of that, are you? “ I replied : “ You will get it as long as I am here; you ought to learn something about your job “. We were told, during the debate on the bill dealing with the alterations of the
Constitution, of the giants of 40 years ago who drew up the Constitution. They may have been giants in the law courts of those days, but they knew nothing about political economy.
– Sir Otto Niemeyer was a giant.
– The Bruce-Page Government, after ten years in office, left an empty Treasury, and also left Australia in such a state that there was an adverse trade balance of £30,000,000, and also the London market closed to us, because a Labour Government had assumed office. That is what the right honorable member for Yarra (Mr. Scullin) found when he took office. It was the Bank of England that sent Sir Otto Niemeyer to Australia. That bank stopped Australia’s credit, but those controlling it did not have enough financial brains to realize that in the Commonwealth Bank we had all the credit we needed. Australia previously had been borrowing money abroad for years and paying an impost of 25 per cent. in the form of exchange. Who has been responsible for these things? Every man in every Parliament is partly responsible for the state of the world to-day, because the people place their destinies in the hands of governments, and if they cannot blame the governments for the position they are faced with, whom can they blame ? I blame incompetent corrupt governments designating themselves democratic, which they havenever been, for bringing dictators into existence. I have told the Senate about the power of money, and what it has done. I have described what happened at Versailles in 1919, when the Peace Treaty was drawn up. Two members of the New York banking firm of Kuhn, Loeb & Co. - Max and Felix Warburg - the real rulers of America, one representing President Wilson and the other representing the Kaiser of Germany, dictated the reparation terms. Germany had been blockaded for four years, and its population was starving. When Germany asked for relief from the terms, the Young Plan and the Dawes Plan were drawn up in Wall-street, New York. I said recently that when the war ends, and the men who have won it for us come back, the best thing they can do is to send a platoon to Canberra with fixed bayonets and shift the whole Parliament.
– The honorable senator would imitate Guy Fawkes!
– He did the right thing, because Parliaments never give a fair deal to the people. Who got us into all this trouble except our Parliaments?
– That is a reflection on Parliament.
– Shortly after I came here I said that the biggest business in Australia was the business of managing Australia, and that it was also the worst managed business. A great public man died in Tasmania a few months ago. I attended the funeral service in the cathedral, and noticed some school boys sitting round the altar. To a colonel in the Army, who was sitting next to me, I said : “ There are the soldiers for the next war “. He said : “I am afraid that you are right”. Who started the Russian revolution? It was Kulin, Loeb and Company. A secret communication was sent from the secret service of America to the French Go*vernment, and afterwards the two Jews I have mentioned took over the necessary money from America. As’ a reward they were allowed to finance the first, second and third Russian five-year plans. Stalin is as much under the heel of high finance as is the ruler of any other country. Hitler said that he would lift the German people out of the economic depression into which they had sunk, and he did so; unfortunately, he also lifted them into a war. I have already told honorable senators of a meeting of the directors of Vickers Limited, at which, upon the production of the balance-sheet for the year under review, the chairman was asked: “ Can you guarantee that the guns which this firm is making will not be sold to Germany?” The chairman, General Lawrence, said, “ I cannot give a direct answer to that question, but I can assure you that nothing is being done without the permission of the British Government “. In view of such happenings, can any one be blamed for attributing present world conditions to governments? Prior to the war British tanks and guns were mentioned in German newspapers, and it is well known that in the last war, on Gallipoli, Australian soldiers were killed by guns made in Britain and sold to Turkey. Unfortunately, in the past, war has been a profitable investment, and that is why we have had wars for so many years; but war to-day is a different matter. During the Napoleonic wars probably half of the people of the countries involved did not know that a state of war existed; but to-day, every man, woman and child feels the effect of war because the character of war has changed entirely. My only hopes of peace are based first on the fact that the people who are making money out of this war are probably in greater danger in the cities in which they live than are the men in the fighting fronts; and, secondly, on the fact that under our present taxation system, a large proportion of all incomes is taken by the Government to pay for the war. When asked to make a donation to a hospital, G. B. Shaw is reported to have said that he was paying 18s, 6d. in the £1 income tax, and was actually living on his capital. That state of affairs should bring would-be profiteers to their senses very quickly. If we return to the gold standard as we are pledged to do under the Atlantic Charter, the same individuals who ran us into the last war and this war, will run us into another war because governments are not the real controlling powers in the world to-day. Some months before the outbreak of this war I read in this chamber an article entitled a “ Warning to Europe “. It was written in April, 1939, and I read it to honorable senators in the following month. I was very much impressed with the reasoning of that statement, because for some time I was president of the League of Nations Union of Tasmania, and I knew what was happening in European politics. I realized that if a war started it would continue for many years, but I did not think that it would be so severe as it has been. I regard that “ Warning to Europe “ as the most important statement that I have ever read in this chamber, but not a single newspaper gave it a line of publicity. Why? Because it advocated interference with the present banking system.
Speaking in America in April, 1939. the well-known Englishman, Mr. Bertrand
Russell, predicted -that a world war would start during 1939, from which America would emerge as dictator of the world.
That is coming true. The huge quantities of gold at present in America are held not by the Government of the United States of America, but by the Federal Reserve Bank of New York. Mr. Russell also said that the conflict would reduce Germany, Italy, France and England to ruins.
What will happen after the war to the Pacific islands in which battles are now being fought ? I have no doubt that their disposal and exploitation will be controlled by business interests. As Mr. Ramsay MacDonald said’, these people “ control the power of every stream, and can stop every wheel “. I have already told honorable senators how even the great Theodore Roosevelt was brought to his knees by business interests. Are we sent to this Parliament to look after our own interests or those people whom we represent? I have stated frequently that incompetent and corrupt governments calling themselves democracies have been responsible for the state of the world to-day. When I made that statement on a previous occasion, I was asked, “ What do you mean by corrupt governments?”, and I replied any man who placed his own interests or those of his party before the interests of the nation, was corrupt. When the Bruce-Page Government altered the constitution of the Commonwealth Bank in the interests of the private banks, it was the greatest piece of corruption ever perpetrated upon the people of this nation. That action almost strangled the Commonwealth Bank, and the two amending bills introduced subsequently by Mr. R. G. Casey, when he was Treasurer of the Commonwealth, would have completed the job had they been passed. However, I travelled the length and breadth of Australia exposing the swindle, and the measures were abandoned. The object was to sell £30,000,000 worth of debentures in order to establish a mortgage bank department of the Commonwealth Bank, when all that was necessary was to utilize the Commonwealth Bank, which, at that time, had assets amounting to £15,000,000.
The only difference between a mortgage bank and an ordinary bank is that a mortgage bank can provide extended credit. In 1929, private banks in the United States of America took possession of hundreds of thousands of homes and factories by calling in mortgages. When an £S,Q00,000 loan was floated in this country some years ago, only-£4,750,000 had been subscribed when the loan closed. I asked in this chamber, how much of that money had been subscribed by the private banks, and. the answer was £3,750,000. The banks managed to do that by calling upon every client who had an overdraft to sign an application for bonds, which were held by the hank and upon which the bank drew interest. The banking system is the biggest racket on earth, and I cannot understand why any person with normal intelligence can permit it to continue. When honorable senators are first elected to this chamber they have to swear to serve their King and country. Are men who permit the perpetuation of the present banking swindle doing their duty to their country? Obviously, they are not. Unfortunately, many honorable senators represent business interests in this chamber.
– Does the honorable senator suggest that we should not support loans?
– No. . When the Second Austerity Loan was opened in Hobart, I was asked by the local loan committee to join the Treasurer (Mr. Chifley) on the platform. I was not asked to speak - no doubt they were afraid that I would speak against the loan - but I seized an opportunity to make a few remarks. I said, “ No doubt there are people in the audience who wonder why a person holding the financial ideas which I have expressed so frequently should be appearing here in support of a loan. I entirely disagree with tlie financial policy of this Government, and the method which it is employing to raise money; but those who are responsible for any human undertaking have a right to say what should be done, when it should be done, and how it should be done. That is an inherent right”.
– Why criticize previous administrations for doing things which are being done now by the Government of which the honorable senator is a supporter?
SenatorFraser. - Previous administrations of which SenatorWilson was a supporter did not introduce any measures to control private hanks.
– None whatever; in fact, they assisted the private banks in every way to the detriment of this nation. That is why some taxpayers to-day have to pay 18s. 6d. in the £1.
I do not care very much whether or not there is a tax lag; I am concerned more with the undeniable fact that the present interest bill of this nation is £60,000,000 a year. Taxes are imposed to pay the cost of government, and if the cost of government could be reduced under a certain financial system such as I have advocated, why has not that system been adopted? I contend that all war contracts should ‘be financed by the Commonwealth Bank, thus effecting a saving of many thousands of pounds by the nation, What is known as the “ money cycle “ - the lapse between the time when money is paid out of a bank and when it returns to that bank - is never more than seven or ten days. The basic wage is only designed to keep a wage-earner and his family from week to week; it does not include any provision for saving. Therefore, all the money that is paid to basic wage-earners returns to the banks within a week. On one occasion, Major Douglas was asked what capital was necessary to enable a bank to obtain a trading charter. To the amazement of his listeners, Major Douglas said that it was not necessary to have any capital to start a bank. All that was required was a building, pens, ink, stationery and staff. An excellent example of that fact is to he found in the history of the Mellon family in the United States of America. Andrew Mellon was one of the richest men in America - I believe that he made £20,000,000 out of the aluminium cartel. When he died, he left £40,000,000 to his son, who became a banker. Subsequently, the son was taxed on an income of $600,000 in one year. He denied that he had earned that sum, but he was obliged to pay tax upon it. Later, he sued the United States of America for a refund.
The case for the Government ofthe United States of America was conducted by the Attorney-General, who said to Mr. Mellon : “ I understand that all your income was obtained from your bank? “ The reply was : “ Yes”, and the next question was: “What is the paid-up capital of your hank? “ Mr. Mellon had to admit that his bank actually had no paid-up capital at all. He said: “My father’s good name was the capital of my bank “. All he had to do was to put up the sign : “ Mellon’s Bank “, and in those days Mellon was a name to be conjured. The first $1,000 invested in his bank enabled him to advance credit worth $8,000, on which he drew interest at 6 per cent. That is how he made the $600,000 upon which he was taxed. I read a statement recently in Sound Finance, the journal issued by the banks, that they can afford to expend from “ £35,000 to £40,000 a year on publicity. On one occasion when I met Professor McConnan, president of the Associated Banks in Victoria, he told me that banking was a business and that a banker sold credit just as a butcher sold beef. I denied that assertion, because a butcher buys a bullock on the hoof and has to cut it up before placing the meat on sale in his shop. Moreover, a butcher who has purchased one bullock can sell only one carcass, but if a banker, metaphorically speaking, has one bullock on his premises he can sell eight or nine of them. How long will this racket continue? After six years in Parliament I despair of ever seeing a government in office that will do all that is required with regard to the financial system. I admit that the present Government has done much in the direction of breaking down the money monopoly.
– What has it done?
– It has stopped the issue of treasury-bills to the private banks, and the payment to them of 35s. per cent. interest on such bills. During the regime of the Lyons and Menzies Governments the general manager of the Bank of New South Wales regretted that its treasury-bills in London were only 10s. per cent. When treasury-bills were offered for sale to the public they had to be sold in denominations of £1,000, but few people could invest to that amount aud therefore the public did not avail itself of the offer. I have already told honorable senators of the right given by the Bruce-Page Government to the banks to draw up to £30,000,000 in notes. By an amendment of the Commonwealth Bank Act, the Government gave to the banks what was known as the right to draw notes as required. Had they done so they would have had to pay 3£ per cent, interest, but as they did not draw any notes no interest was paid. The banks could make advances against the notes, as though they were in their vaults.
Sitting suspended from 5.J/.9 to 8 p.m.
– Political economy has been described as a science dealing with the nature of wealth, production and consumption. The only thing that justifies production is consumption. People cannot consume what is produced unless they have what is known as effective purchase money. A person who has money or its equivalent, bank credit, can accomplish almost anything. Mr. G. B. Shaw, the well-known writer, once said that political economy is the art of spending the national income in such a way as to bring happiness and prosperity to the greatest number of people. Can it be said that the greatest good has come to the greatest number as the result of parliamentary action? No parliamentary action has brought the greatest good to the least number of people. Every member of Parliament should understand political economy, otherwise how can he expect to assist to place truly democratic measures on the statute-book? The dictum of Abraham Lincoln still stands as the objective of a true democracy: “Government of the people, by the people, for the people”. When we talk of production and consumption we must realize that until we get a monetary system that will at least enable us to purchase what we produce there can be no peace and no “ new order “. Under modern conditions of production there is practically no limit to production. What is needed is sufficient money to purchase what is produced. Under the present monetary system the banks decide how much money will be in existence at any time. Under present conditions the financial system dominates the economic system. That would be admitted by all economists. We are told what will be needed in the post-war period will be a guarantee of work for every one. That is a wrong conception of what is necessary. It is not work for every one who needs it, because the work of the world can be done in half the present working hours. We must realize that we are in the machine age, and that what is needed is more leisure to develop our mental gifts in the arts and sciences, and in other directions. In to-day’s newspapers I noticed that the Leader of the Opposition in the House of Representatives (Mr. Menzies) has quoted the remarks of Mr. Walter Lippman, the American statesman who was a friend of ex-President Wilson, and was credited with being the originator of President Wilson’s fourteen points. Lippman and Baruch were two of the greatest men in the United States of America during the last war. We hear a great deal about the freedom of the press, but perhaps a more appropriate term would be freedom to suppress. I have in my hand a publication entitled Warning Europe, which was published in London on the 20th April, 1939. I have no hesitation in saying that it is the most important statement ever presented to this chamber, but when I commented on it some time ago not one line of my remarks appeared in any Australian newspaper. Dealing with the state of Europe early in 1939 this article states -
War in Europe with its consequent destruction of what remains of stable and civilized society, will not be averted unless responsible officials in the Governments of Britain, Germany, France and Italy recognize the identity of the time opposition forces of the world, . . .
T.he Great Powers of Europe in ruins, and America Dictator of the World.
– Order! I ask the honorable senator to connect his remarks with the Income Tax Assessment Bill which is now before the Senate.
– I bow to your ruling, Mr. President, but it is impossible to discuss income taxation without dealing with finance. During the suspension for dinner I inspected some war pictures, and I realized the dreadful state of the world at the present time. I am amazed that there should be so much smiling on the part of honorablesenators opposite.
– Surely the honorable senator does not want to see us all crying?
– Ishould like to see a greater sense of responsibility displayed by honorable senators generally. The parliamentary system has its weaknesses.For instance, no political party ever asks its candidates what they know of political economy, or what qualifications they have for the job they are seeking. And when a candidate is elected what do we find? The greatest trouble is a lack of responsibility on the part of many persons holding important positions. That applies to members of Parliament as much as to others. Many members do not realize the onerous nature of their work. We are here to make laws under which millions of people have to live. Those laws are either good or bad. Unfortunately, some of our laws show only too clearly a want of vision on the part of legislators, and a lack of knowledge of the importance of finance in world economy. It is for that reason that we are now the victims of high taxation. The two things most prominent in the minds of the people to-day are the £150,000,000 loan and heavy taxation. There is no need for such heavy taxation. Of the amount raised each year, £60,000,000 is required to pay interest on loans.
Honorable senators interjecting,
– I sit in my place hour after hour and listen to all that is said. If I were to interject I might miss something of what is said, and for that reason I do not interject. One morning last week the Government Whip approached me at about 1 o’clock and said that if I were tired I could recline on a couch. I said that I felt tired, but that never in my life had I given up a job because I was tired. I regard it as my duty to be in my place in this chamber, and I have established a record in that respect. Many other honorable senators spend more time out of the chamber than in it. I expect to be back in my place here in three years’ time, and I hope that when I return the seeds that I have sown will have fallen into good ground and that I shall find the apples ripe. I hope, too, that there will be no codlin moth to spoil the effect of six years’ hard work. No one can question my honesty of purpose, or my knowledge of the subjects in which I have specialized. In any business, finance plays an important part. The bigger the business, the more important is that part. This country has got further into debt as the years have passed. When the war of 1914-18 started, the national debt of Australia, a country with a population of about 6,000,000 people, was as great as the national debt of Great Britain with its 46,000,000 people. How did we get so deeply into debt? It was because politicians did not understand the principles of finance or of political economy. How can a country help getting into a mess if its leaders do not know their job? The article from which I have quoted continues -
During the war, Mr. Bernard Baruch was head of the War Industries Board. In him reposed authority over - ( 1 )The use of capital in the private business of Americans.
Over all materials.
Over all classes of men to be called to military service.
Over all industries.
Over the personnel of labour in the country.
He claimed to be the most powerful man in America. All that power was placed in the hands of one man, who was the representative of one of the biggest bankers in the United States of America.
– What has that to do with the bill?
– Until honorable senators realize the part that money plays in world economy, it is useless for me to keep on talking. It is the duty of honorable senators to understand political economy and the principles of finance. The quotation continues -
No project could he financed without his consent. And what is tlie most significant of all the considerations governing his assent was that he should fix the remuneration of the capitalist, the wages of the workers, and the process of the products - prices not only to the Government for war supplies, but prices to the civilian population.
What was the power of money represented in that one man? He was at the Peace Conference as a delegate from the United States of America with Mr. Max Warburg, the president of the Federal Reserve Bank of the United States of America, which to-day holds nearly all the gold of the world. That gold is in private hands, and when the opportunity to use it comes, it will be used remorselessly. What happened at the Treaty of Versailles? What did Mr. Lloyd George say about reparations? He said that the financiers thrust the jurists and the statesmen to one side, and laid down their terms with the arrogance of emperors. The result was that we got the Dawes plan and the Young plan, which drove the people of Germany to a rms.
– What has all this to do with the bill?
– Six months before the war started-
– I rise to order. We are discussing pay-as-you-earn taxation, but Senator Darcey has not yet mentioned that subject.
– Order ! I remind Senator Spicer that it is within my province to call an honorable senator to order should he transgress the Standing Orders. I have already reminded Senator Darcey that he must confine his remarks to the Income Tax Assessment Bill which is before the Senate. In dealing with the subject of income taxation, it is within the province of an honorable senator toexpress his views regarding the raising of money. Therefore, when Senator Darcey referred to the raising of money by means other than taxation, he was in order. However, I fear that the honorable senator has at times wandered from the bill, but I have shown him considerable leniency because he is shortly to relinquish his membership of the Senate. That sense of loss may have affected my judgment in some degree. I ask Senator Darcey to confine his remarks to the bill before the Chair.
– The increase of 25 per cent. seems to be a big impost, but it is necessary in order to enable the Government to carry on. It is immaterial whether the increase be paid in the first three months, or the last three months, of the year. Year after year we are getting hopelessly behind in our financial position. This year we must provide over £600,000,000. What does it matter by what means we raise that amount, if it has to be raised ? We shall have to obtain it ultimately by taxation. The Government’s pay-as-you-earn proposal has been alternately commended and condemned throughout the country. I have received circulars from interested parties, urging me to oppose the surcharge of 25 per cent. Only this afternoon I received an urgent telegram requesting me to move for a reduction of that surcharge. This additional money must be raised. Unfortunately, we are only in the middle of the war. I believe that our budget will increase substantially year by year. In such circumstances I again urge the Government to make the fullest possible use of the national credit. I hope that what I have said on the subject of finance in this chamber during the last six years will eventually bear fruit. I urge honorable’ senators opposite to look for the real cause of the trouble existing throughout the world to-day. Fundamentally, that trouble is traceable to incompetent and corrupt governments. Such governments have brought dictators into existence. We cannot escape the’ fact that we must pay additional taxes so long as the war lasts. Although honorable senators opposite have criticized the measure I have no doubt that they will support it. The worst managed business in Australia is the business of government. We should make up our minds now as to what we are going to doabout the future. Some months ago the Australian Institute of Political Science held its Summer School in Canberra, and the speakers included various professors who have been wrongly advising Australian governments for years. We shall not be able to plan effectively for the future until we diagnose the cause of the failure of the present order. To-day, the people are only asking for a new order, but in the not far distant future they will demand a new order. I have concentrated on the subject of finance since I was elected to this chamber six years ago, because I regard finance as a most important aspect of government. Unfortunately, it is the least understood and the most neglected of governmental activities. I sincerely hope, therefore, that when I vacate my seat in this chamber on the 30th June next, other honorable senators will carry on the work that I have started. Eventually, we must face up to this problem, so let us do it now with good grace. Not one statement which I have made on finance in this chamber has been refuted. I urge honorable senators opposite to realize their responsibility to this nation and to give closer consideration to this subject.
– Has the honorable senator made any converts?
– As the result of my advocacy on this subject, five out of the six State Parliaments have passed resolutions urging the Commonwealth Government to use the Commonwealth Bank along the lines I have advocated. The Premier of New South “Wales, Mr. McKell, agreed to introduce a similar bill into the New South Wales Parliament but he has not gone on with it. The executive of the Tasmanian branch of the Australian Labour party unanimously endorsed my advocacy on this subject. It has been said that I have been displaced in the Senate by the electors. That is incorrect. I failed to gain reelection owing to the fact that the executive of the Tasmanian branch of the Labour party placed my name fourth on the ballot-paper, so that it was almost impossible for me to retain my seat. This action was taken despite the fact that six years ago I topped the poll at the election of senators for Tasmania. However, honorable senators opposite need not be surprised if I am re-elected to this chamber three years hence. I hope that my advocacy on the subject of finance during the six years I have been a member of the Senate will not be fruitless.
– I welcome this measure, because I believe that it will be of great benefit to taxpayers as a whole. At the same time, however, I strongly oppose the imposition of a surcharge of 25 per cent. As this matter has been dealt with at length by my colleagues, I do not propose to debate it in detail. I am forced to the conclusion that the provision dealing with taxation rates savours of class distinction, because the rate of tax in respect of the higher incomes is out of all proportion to that applying to the lower incomes. For instance, a taxpayer whose income for the year ending the 30th June, 1945, amounts to £3,000 will pay £2,185 in tax, leaving him with £915. As incomes rise above that figure, the balance left to the taxpayer will decrease correspondingly. For example, the tax payable in respect of an income of £3,5P0 will be £2,725, leaving the taxpayer with £775; and the tax payable in respect of an income of £4,000 will be £3,275 leaving the taxpayer with £712. The balance left to the taxpayer is correspondingly reduced as his income rises, until it disappears completely. The Prime Minister (Mr. Curtin) in a speech which he delivered recently declared that taxation has reached saturation point. Despite that statement tax is to be increased under this measure by 25 per cent, on incomes from wages and salaries in the current year, and by 8^ per cent, per annum for the next three years on income derived from sources other than wages and salaries. This increase will be a very heavy burden on all taxpayers and especially the primary producers whose incomes are variable, and are determined to a large degree by seasonal conditions. I have received the following telegram from various primary producers’ associations in Queensland : -
All Queensland producers excepting exempt company controlled U.G. Association as council agriculture representing cane-growers wheatgrowers and all producers organized under Organization and Marketing Act also Dairymen’s Organization and Selectors Association have asked for pay-as-you-earn exemption from 25 per cent. impost. As a grazier please stress disastrous effect on war effort and loans.
That represents the opinion of many taxpayers in Queensland. It is the view of men who have a practical knowledge of their respective industries, and who realize the difficulties which they will have to meet in providing this extra amount during the next three years whilst, at the same time, they are expected to subscribe generously to war loans. The Government cannot have it both ways. If it increases income tax the amount which taxpayers will be able to invest in war loans will decrease correspondingly. Generally, honorable senators acknowledge the value of the payasyouearn principle to taxpayers. I emphasize that the advantages are not all on the side of the taxpayer. The
Treasury will benefit considerably under the new system. For instance, the increase of 25 per cent. on wages and salaries will be levied on the basis of the highest rates of tax in the history of this country, and the same applies in respect of the increase of 8 per cent. during the next three years on incomes from sources other than wages and salaries. In addition, the majority of present-day taxpayers will continue to pay tax until they retire, or die; and when, eventually, they cease to pay tax the rates then applying may be considerably less than those applying to-day.
– They will be.
– I have my doubts with respect to that point, but I am glad to have the assurance of the Minister for Trade and Customs (Senator Keane) that after the war income taxation will be reduced. Were we to continue the existing system of collecting taxes, the rates applying when the majority of presentday taxpayers retire, or die, would obviously be much less than the presentday rates. Taxpayers are now paying large sums in income tax on a very high rate, and the extra 25 per cent. surcharge they will have to pay may more than equal twelve months’ tax when they are taxpayers at a lower rate. The next point is that when death claims a person there will be no deduction under the payasyouearn system of the amount of income tax from the estate duty payable. Therefore, in the case of many incomes there will be a larger amount to be collected in death duties. The fact that there will be no bad debts will also be of great assistance to the Treasurer. The Leader of the Senate has already informed us that the bill has been brought in partially to avoid bad debts, so that the Treasurer evidently had that in mind. In previous years there has been a certain amount of tax which the department has been unable to collect, because the money has not been available. Another advantage to the Treasurer is that the tax on wages and salaries is being collected for him by employers. That will save a great deal of expense and time to the taxation officials, and the revenue will come in every week or fortnight, and the Treasurer will have it available instead of having to wait twelve months as is necessary under our present taxation methods. Moreover, there will be no evasion of tax by change of name or address. The tax will be deducted from the individual, and the Treasurer will be sure to get it. I, therefore, maintain that great advantages will be derived by the Treasurer from the proposed new method of taxation. As the Treasurer is to a large degree gaining, or at least not losing a great deal, he should be prepared to waive the extra 25 per cent. For the reasons I have given, I do not feel justified in supporting the clause under which an additional 25 per cent. is imposed, and I shall register my opposition to it.
Senator ASHLEY (New South Wales - Postmaster-General [8.34]. - I have listened attentively to the debate. Whilst almost every honorable senator who has spoken has welcomed the bill, there has been considerable confusion in the minds of Opposition senators as to the manner in which it should operate and I have arrived at the conclusion that those honorable senators who have been in conflict with their own colleagues on the Opposition benches are ill-informed as to the effects of the bill. Every honorable senator who has spoken has welcomed the bill, but Senator Spicer, who spoke for an hour yesterday in his usual lucid manner - I appreciate his ability to debate any subject - was lacking in impartiality in regard to the measure. He tried to demonstrate that there was no lag, but against that we had the conflicting opinions of Senator A. J. McLachlan and Senator McBride, who practically admitted that there was a lag.
– I said that, in my opinion, there was a lag. There was no “ practically “ about it.
– As regards the lag, as a layman, I must be guided by the decisions of the High Court. I am also fortified to a certain degree by advertisements issued on behalf of the United Australia party and the United Country party at the last general elections. Those circulated in New South
Wales referred to the unjust lag, and appealed to electors to “Vote for the Fadden Government and abolish the lag”. I have with me a copy of a similar advertisement published in Victoria to the following effect: -
Under Fadden’s plan, your taxes are paid up to date every week. Under Curtin’s taxation you are now paying tax on your income earned in the year which ended on 30th June, 1943. In other words, you are more than a year behind. You must not be ill - you will never be able to retire - you cannot afford to die - as long as Labour rules. You will be forced to go on paying income tax for a year after your wages have stopped. If you die, it is your widow and children who must- out of what you leave them - pay the same income tax as you pay while working.
That advertisement is signed on behalf of the United Australia party candidates and the United Australia party. Country party three - Beaurepaire, 1; Moss, 2; Spicer, 3. So that in the election campaign Senator Spicer allowed that advertisement to appear over his name in order to gain a political advantage, although it asserted the existence of a lag. I notice that it is signed by T. K. Maltby, 395 Collinsstreet, Melbourne. I have a recollection of meeting that gentleman at the Corio by-election, of which he was the campaign director. Possibly he was the campaign director also when Senator Spicer wasdefeated. It is strange to find this change of opinion on Senator Spicer’s part. Only a few months ago, for political advantage, he allowed his name to he attached to an advertisement asserting and confirming the lag, and yesterday afternoon in this chamber he denied its existence.
– I did nothing of the kind. I said that I would not discuss it on that basis.
– I am prepared to accept the honorable senator’s assurance. While I recognize Senator Spicer’s legal ability, and respect his opinions, I remind him that barristers just as eminent outside Parliament have expressed the opinion that there is a lag.
– What of it? It has nothing to do with this subject.
– It has everything to do with it, if the honorable senator wants to sustain the arguments which he adduced in this chamber yesterday. The honorable senator questioned the High Court’s decision. I do not want to weary the Senate by quoting the whole of the cases that have come before the High Court on this issue, but I have here the reports of two. One is Aitken’s case in the matter of the estate of A. S. Chirnside, deceased, from which I quote the following: -
A taxpayer, whose returns of income for federal income tax were made up for a calendar year accounting period, died on the 17th April, 1934. His last payment of tax was for the financial year 1933-34, based on his income for the year ended the 31st December, 1932. The Income Tax Act 1934, imposing income tax for the financial year 1934-35, did not come into operation until after the taxpayer’s death.
The Taxation Commissioner’s claim was upheld by the High Court, proving conclusively that there is a lag. I remind Senator Spicer that it is not so much the question of a lag as of the benefit that will accrue to the workers and the people of Australia generally by adopting the proposal now before the Senate.
– By paying an extra £15,000,000 !
– There is not an extra £15,000,000. It is useless for honorable senators opposite to try to cloud the issue by putting up their usual smokescreen. There are three points involved in this proposal. First, the taxpayer under the present system, who retires from industry and goes on to a lower income must in the year of retirement, although on a lower income, pay tax on the earnings of the previous year, whereas, under this system, he will not have to do so. The next point effects persons in industry who, since the war began, have been earning high wages or salaries as a result of the overtime which has been necessary. In some cases they have been receiving double wages. With production in certain lines falling off, overtime will be reduced, and they will return to normal conditions, either this year or the next. Under the present system, they would have to pay the tax on their previous year’s high earnings, but under this proposal they would have to pay on that basis only up to the end of June. After that date, there will be no deferred tax and they will be absolutely clear. The third point relates. to the case of the person who dies. Unfortunately, under the present system, his executors have to pay tax for the year in which he dies. In many instances, those who suffer are the widows and children. Some estates are not big enough to meet the tax. Executors of wealthy estates can pay, but those in the lower income class cannot. Under the proposed system, there will be no obligation on the executors of an estate to pay one penny of arrears of tax. It is ridiculous for any honorable senator opposite to say that there is no deferred tax liability under the present system. .Senator Spicer’s suggestion that the taxpayer in the lower income group could not afford to pay and therefore could be disregarded is absurd, t should not like to think that there were many people, whether wageearners or salary-earners, who would ignore their responsibility in that way. The position is that, under the present system, a taxpayer who is in receipt of a high wage will have substantial tax commitments when his wage is reduced or he becomes unemployed, whereas, under the pay-as-you-earn sys-tern, he will have no deferred liability whatever. I ask any honorable senator opposite to show me conclusively that any taxpayer will not be caught by the Taxation Department either when he leaves his employment, when he goes into retirement, or that, the estate of a deceased taxpayer will not have to meet outstanding commitments.
Much has been said in relation to the remission of 75 per cent, of a year?s tax. The position as I see it is this : If the present system be continued, taxpayers will have to pay not merely 25 per cent, of a year’s tax, but 100 per cent. There is definitely a remission of 75 per cent.
– In what year ?
– In the present year.
– Then we have to pay only 25 per cent, of a year’s tax in the current year?
– There is definitely a remission of 75 per cent., because, when the pay-as-you-earn scheme is put into operation, there will be no deferred liability. Of course, it may be argued that the entire 100 per cent, deferred liability should be wiped out instead of only 75 per cent., but I do not think thai that would be wise, nor do I imagine that such a course would have been advocated by members of the Opposition in vie w of the serious effect it would have upon the finances of this country. It is inconceivable that a government should make a gift of £30,000,000 to the taxpayers in time of. war.
– Does the PostmasterGeneral contend that no additional taxation is involved in this measure?
– There will be no extra taxation.’ Under the instalment system which was introduced not by the present Government, but by a previous administration, a taxpayer who came into the income tax field, say, in 1941-42, received an exemption certificate in respect of that year, and then, in the following year, he received an assessment of his tax based upon his earnings during his first year of employment. It was not suggested then that that taxpayer should be forgiven his tax liability in respect of the year 1941-42. Under the payasyouearn scheme at the end of June of this year, salary and wage earners will have no deferred tax liability. Honorable senators opposite may argue as long as they please as to whether or not there is a lag, and as to the merits or otherwise of the remission of 75 per cent, of ayear’s tax, but if they are honest they will admit that the pay-as-you-earn system will be of great benefit to the taxpayers of this community generally.
– In what year will the taxpayers obtain that benefit ?
– This year, because their deferred tax liability will cease at the end of June of this year, whereas, if the present system were to continue, at the end of June of this year taxpayers would s’till he liable to pay a further nine months’ tax. That, I submit, is an accurate picture of the position. During the last six months, there has been considerable discussion upon this subject and many arguments have been advanced, chiefly in the press. It is amazing that some individuals, particularly certain honorable senators opposite will, for political advantage, permit their names to be associated with newspaper articles admitting the existence of a tax lag, whilst, for propaganda purposes and to make popular appeal, they endeavour to make the people of this country believe that they, will not benefit at all from the pay-as-you-earn scheme unless the 25 per cent, liability proposed under this measure be wiped out. It is obvious that honorable senators opposite do not wish this measure to be considered in its proper perspective. I shall give another instance of the advantage of the payasyouearn system, which should appeal to some members of this chamber. At the end of June of this year, the term of office of certain honorable senators will expire, and, incidentally, whilst on this subject, I should like to say that I am sorry that any honorable senators should be leaving us, whether they be Government supporters or members of the Opposition. I am sure that the Senate will suffer by the loss of those who will cease to hold office at the end of this financial year. I trust that none of them will be out of useful employment, but if an honorable senator had that misfortune, he would, under the present system, still have to meet his tax commitments incurred whilst a member of this chamber. That is admitted by every one. Under the pay-as-you-earn scheme, at the end of June of this year there will be no liability upon any taxpayer, excepting those in certain classes who will have to pay the 25 per cent, over three years.
– Wageearners will have no liability because they are paying their tax now in weekly instalments.
– -Yes, but if the present system were continued, they would still be paying those weekly instalments, and in addition at the end of June they would have a deferred liability of nine months’ tax. Whilst- this proposal is welcomed in principle by honorable senators opposite, they have endeavoured to find fault with the method of applying it. The only person who opposed the recommendations of the committee upon majority report of which this legislation is based was Senator Spicer, and I do not think that his opposition was very vigorous. From. inquiries which I have made, the honorable senator did not offer any strong opposition to the proposals.
– Whoever told the Postmaster-General that was telling an untruth.
– In making a minority report, Senator Spicer exercised a right which is possessed by every member of a committee, and I take no exception whatever to this action. However, this measure is based upon the majority report of the committee, and I trust that the Senate will agree to it. The proposed system will be of great benefit to the people of Australia. I understand from the speeches of honorable senators opposite that they will support the second reading of the bill.
– It is a great pity that so much time has been devoted to an academic discussion of words such as “lag” and “ grab “, which after all do not matter. The real question is what will be the effect ‘of this change upon the average man and woman of Australia ? If by the word “lag” the Government means that certain individuals will gain as a result of this legislation, then I. agree that there is a lag; if by the word “ grab “ it is meant that the Government will grab money from people who otherwise would not have to pay, I agree that that will be the effect; but whether this legislation should be supported or not, either in its present form or in a modified form, depends first upon whether the Government will be able to acquire the revenue that is necessary to carry on its administration, and, secondly, whether this is a fair and equitable means to levy taxation. I shall deal first with the effect that this legislation will have upon the average man and woman of Australia. I remind honorable senators that income tax was first imposed by the Commonwealth in the financial year 1915-16. Since then every taxpayer who has been in receipt of a taxable income, has paid tax every year, and will continue to pay tax until his death, provided he continues to receive a taxable income. Therefore in that sense the talk of a lag is absolute nonsense, because it cannot be suggested that anybody owes anything. I have just paid my tax, and I do not owe the Commonwealth anything. I will not again he assessed until next year. Since the passing of the act in 1915-16, every year in which we have been liable to tax we have paid it, and so we shall continue to do until our death. The change-over from the present system to the pay-as-you-earn principle will not mean that we shall pay any money any earlier, though the incidence of the tax may be altered. In my opinion the pay-as-you-earn principle is sound. It was the policy of my party at the last general elections and it was opposed by the Labour party, but I compliment that party on the fact that it has “ seen the light “. The bill contains many features besides that new principle. It also provides for an additional tax of 25 per cent, which has been’ referred to as “ the grab “. Those who pretend that no additional tax is imposed should read the proposed new section 160ag in the bill dealing with the matter. In that section, the words “in addition” are used. Obviously, the 25 per cent, impost is an additional tax.
I shall first examine the bill from the point of view of the change-over from the present system to the new principle of pay-as-you-earn. My argument is based on the assumption that there is no 25 per cent, surcharge. I ask honorable senators to consider what will happen next year and every other year. Next year, wage-earners will pay the same amount as if the bill had not been introduced. Non-wage-earners will go on paying as before. In each year they will pay the tax for which they are assessed for that year. Who will get any benefit ? Certain benefits will accrue, and the people who will get them are the beneficiaries of certain estates. These beneficiaries will not have to pay tax on the estates of persons who die next year. That is the first gain. The second relates to persons whose incomes fall between the two years under consideration. I admit that the bill will be of great advantage to those two classes of persons, but I ask the Leader of the Senate and his supporters to let the public know who are the persons who will have to pay tax next year so that certain beneficiaries may get relief. Who will be the payers so that the beneficiaries of deceased estates may get these benefits? The payers will be the youth of the community. Eighteen years ago, 130,000 babies were born in Australia, and this year they will become eighteen years of age, less perhaps 10,000 or so who may have died. It would be a conservative estimate to say that, of those 130,000, 120,000 are now eighteen years of age, or a similar number are nineteen and twenty years of age. Under the old system, the youth of the community got complete immunity from income tax in the first year of income, but, under the pay-as-you-earn system, they will pay from the very moment they earn taxable income. I point out, therefore, that, although there will be benefits to beneficiaries of estates of deceased persons, the people who will pay the money to enable those benefits to be given are the young people who are eighteen, nineteen and twenty years of age to-day, and in their first year of taxable income. Another class of taxpayer will be made to pay so that certain beneficiaries of estates may receive benefits. Under the present taxation laws our men who have been overseas and have been fighting for the defence of Australia have fifteen months’ immunity from payment of tax after their return to Australia. Under this proposal, that immunity is being taken from them. The men of the Navy, the Army and the Air Force will start to pay tax, not fifteen months, but three months, from the date of return. By the changeover - and I am still leaving out of consideration the additional 25 per cent. - the Government would neither gain nor lose any amount of revenue. Nobody can truthfully say that the Government would lose anything by a straight-out change-over. The loss that the Government would experience in respect of deceased estates would be made up by payments by the young people and the returned men.
– Why does the honorable senator mention diminishing incomes ?
– -I did refer to them. There is another side to that. There are the increasing incomes, and those two will balance out. Just as one might have to pay a high tax in a year of low income, so one might have to pay a low tax in a year of high income.
I have mentioned that the effect of the pay-as-you-earn principle in the year immediately to come would be to make certain persons pay extra tax so that others might receive benefit. I should hesitate to support this measure at all were it not for the fact that the young people of to-day will eventually become old people, and I think that it is better for everybody to pay his debts as and when they become due. I do not believe that any respectable Australian citizen wishes to pass on a tax liability to his children. I have given careful consideration to the measure, and I am not in favour of taking money from the youth of the community so that older members of the community may receive benefits. But it is to the advantage of a youth when he is older, that his widow and children shall not suffer because in the first year of his income he is made to pay income tax. .Subject to an amendment to be proposed by Senator Brand, I shall support so much of the bill as refers to the pay-as-you-earn principle. On the straight-out change-over, the Government would not win or lose anything, but there is another part of the bil] which provides for an additional tax of 25 per cent.
– Actually, the Government says that it is 100 per cent., and that it will give back 75 per cent.-
– That is moonshine. Proposed new section . 160ag contains the words, “In addition to any income tax levied in pursuance of section 17 of this act “. We could not have clearer words than that to show that the Government will tax the community, in addition, 25 per cent, of the tax of the year in question. So far as wageearners are concerned, this extra impost is to he payable over three months, but non-wage-earners will pay it over a period of three years. There is no justification whatever by this subterfuge for proposing this additional tax. If the Government needs extra revenue it should say to the Parliament, “We need more revenue, and we must have it. We intend to increase the rates “. The Government has the power to rule the people, and it must have the money that it requires. It cannot point to any instance where the Opposition has obstructed it in any way. It should not pose as Father Christmas when, in fact, the bill itself states that the people are to be charged an extra tax of 25 per cent.
I come now to the clauses of the bill dealing with the pay and allowances of servicemen. In November, 1940, the Menzies Government introduced “ an amendment of the Income Tax Assessment Act to exempt military pay and air force pay and allowances from the date of embarkation until the cessation of hostilities or discharge, whichever was the earlier. When that act was passed on the 27th May, 1940, the 6th Division was already overseas; on the basis of that promise men were enrolled. From May, 1940, the 7th, 8th, and 9 th Divisions also were enlisted, and later they were despatched overseas. The Menzies Government was defeated in 1941, and after a short interval the Curtin Labour Government came into power. Almost the first thing that that Government did was to remove from the fighting men the immunity which had been given to them in respect of taxes on their pay and allowances.
– The Government also increased their pay, and the allowances of their dependants.
– That may be. When the bill was introduced on the 8th May, 1940, the then Treasurer, Mr. Spender, said -
The bill deals with various other matters. Clause 3 provides for the exemption of the pay and allowances received by naval, military and air force personnel enlisted for service outside Australia. The exemption does not extend to other income earned by them.
In November, 1941, the Labour Government came into office and took away that exemption. It made servicemen liable to tax on their incomes from three months after their return to the mainland of Australia. Under the present system of taxation those deductions from pay are not made until twelve months later, so that some members of the 6th and 7th Divisions, which returned to Australia early in 1942, have only recently had these deductions made from their pay-books. Several of the men belonging to those divisions have approached me, and have said that although they were promised that their pay and allowances would be free from tax that promise was being repudiated. I told them that one government was not necessarily bound by the decision of any previous government. Nevertheless, I deplore the fact that while our men were overseas and had no voice in deciding these things, a solemn promise that their pay and allowances would be free from taxation should be broken. That was done by a bill which a Labour government introduced in November, 1941. When the Assistant Treasurer (Mr. Lazzarini) introduced the Income Tax Assessment Bill 1941, there was an explanatory note as follows : -
The exemption in its present form applies to the pay and allowances earned by members enlisted in or appointed to the Forces for service outside Australia.
When a member of the Forces qualifies for the exemption, the pay and allowances earned by him during the income year preceding embarkation or service in a sea-going ship, and subsequent pay and allowances are exempted. Once the exemption becomes operative, it continues until the discharge of the member from, or the termination of his appointment with, the Forces.
Similarly, members of the Australian Imperial Force and Air Force personnel need only to embark, some time after 3rd September. 1939, for service outside Australia in order to obtain the exemption for the duration of the war.
Without consultation with the men concerned, that privilege was taken from them by a Labour government in November, 1941.
– There is still an exemption applicable to men serving overseas. Moreover, the minimum for those within Australia is fixed at £250.
– Under the amending legislation the pay and allowances of servicemen is exempted from taxation for three months after their return to Australia. Should they again embark for service outside Australia they are given a new exemption, and it will operate until three months after their subsequent return. That, however, is a different thing from the complete immunity from taxation on their pay and allowances which was promised to them at the time of their enlistment and was provided for in legislation introduced by the Menzies Government.
– When that promise was made the Menzies Government was not paying them enough to be subject to taxation.
– Under the provisions of the legislation introduced by the Menzies Government a man serving overseas was not taxed on his pay and allowances until the cessation of hostilities or his discharge from the services, whichever was the earlier, but under the amending legislation introduced by the Curtin Government those privileges were cut down, so that the serviceman became liable to pay taxes three months after his return from overseas. Moreover, as the tax was based on the income for the previous twelve months, a serviceman did not have a deduction made from his pay until fifteen months after his return, although he became liable to pay income tax three months after he came back. Under the present bill that concession is being cut down still further, because the soldier is to have deductions made from his pay three months after his return from overseas. Senator Brand has intimated that he proposes to. move in committee that the promise given to these men when they enlisted should be- fulfilled, in order that any suggestion of a promise to fighting men being repudiated should have no foundation in fact. As I am sure that the present Government does not approve of repudiation, I am confident that Ministers will give serious consideration to Senator Brand’s amendment when it is moved in committee.
– ‘Did not the honorable senator say that one government was not bound by promises made by a previous government?
– From the legal point of view, it is clear that one government can repudiate a promise made by a previous government.
– We do not do that.
– It has been done in this instance, but an opportunity to alter that state of affairs will be presented to the Government.
I wish to refer to another provision which operates harshly against servicemen. Honorable senators know that at the outbreak of hostilities Australia had few permanent soldiers. Those men, however, were skilled in military science, and without them we should have had the greatest difficulty in building up our Army. When war was declared men who were entitled to furlough were told that because of the exigencies of war, their services were required and they could not be given furlough. That state of affairs has continued for four years, and now many of these permanent officers have considerable furlough accumulated to their credit.Some of them were asked to accept pay in lieu of furlough, because their accumulated furlough had reached such limits that the Army wished to clear its ledger. In some instances they have accepted pay in lieu of furlough, and therefore their income for 1943-44 will be considerably higher than their income for the previous year.
SenatorFraser. - What is the difference between them and men whose income is increased by working overtime?
– At the moment I am dealing with soldiers. The result of their receiving a higher income this year is that they have to pay a surcharge, not of 25 per cent. but of 80 per cent. on the pay received by them in excess of that of the previous year. I am sure that that was not intended, and I do not think that the Government wants to dothem any injustice. I have mentioned this matter to the Leader of the Senate (Senator Keane), and have pointed out how harshly this provision operates against permanent men who have accepted pay in lieu of furlough. I ask the Government not to cast aside these men who have worked hard, often at night as well as in the day, and frequently seven days a. week, in the interests of their country, and have not taken the furlough due to them. Unless this anomaly is corrected, they will be penalized by having practically all their pay in lieu of furlough taken from them in taxes.
– Did they not get nine days’ holiday at Christmas?
– No. I understand that they will get one day at
Easter. I hope that the Government will give serious consideration to this matter, as the Leader of the Senate has already promised to do. I confidently expect that honorable senators opposite will support the amendment that will be moved by Senator Brand. If the Government cannot see its way clear to accept that amendment, I ask that, at least, it give some concession to members of the forces returning from overseas. They were first given immunity from tax for a period of fifteen months, but that period has now been reduced to three months from the date of their return. That period is far too short.Senator Brand has also emphasized that members of the forces on their discharge are obliged to buy civilian clothes, and, perhaps, such expensive articles as furniture. No one will say that immunity from tax for a period of three months is sufficient, when we remember that many of these men are obliged to incur considerable expenditure in rehabilitating themselves in civilian life. They have to pay high prices for everything they buy. Therefore, I ask the Government to accept Senator Brand’s amendment. Should it not be able to do so, it should grant some concession to returned soldiers by giving them sufficient time to rehabilitate themselves before they become liable for the full rate of tax.
.- This is a taxation measure, and I propose to deal with it as such. One honorable senator opposite said that members of the Opposition approved of it. That is not the case. I regard it as a thoroughly bad taxation measure. It is based on sentiment, and to describe it as a good measure is equivalent to saying that a man who has a deep-seated internal cancer is healthy. No matter from what point of view we examine the measure, the fact remains that as a result of it every taxpayer will be obliged to pay fifteen months’ tax within twelve months, or at best, tax in respect of two years and three months within two years. That fact cannot be disputed ; and, indeed, the Leader of the Senate (Senator Keane) admitted it in the course of his secondreading speech. It can hardly be said, therefore, that taxpayers will welcome the measure. Any who are inclined to that view at the moment will soon find that the Government is selling them a gold brick. I have a feeling that honorable senators opposite at one stage of the debate began to see some merit in the arguments advanced by honorable senators on this side, with the result that the Postmaster-General (Senator Ashley), who represents the Attorney-General in this chamber, was good enough to endeavour to make the measure clear. The only thing he succeeded in clarifying was his own confusion. I suppose that it was appropriate that the Minister who represents the Attorney-General in this chamber should explain in his inimitable clear fashion certain decisions of the High Court. I am sure that he understood those decisions just as clearly as we understood his explanation. His explanation of a certain advertisement, which he claimed was proof that Senator Spicer was guilty of double-crossing, was ridiculous. Yet the Postmaster-General, like the Attorney-General (Dr. Evatt), is bolstered up by opinions expressed outside this Parliament. We have the greatest respect for a professor of the Melbourne University in his capacity as a professor of that university. In that position I have no doubt he is doing good work in teaching the rudiments of law to students; but when such a gentleman becomes a “ yes “ man, and a paid servant of a Minister, he places himself in a different category altogether. When advice is given by responsible officers to Ministers, such officers should not rush to the press with that advice. They should give their advice, whether they be taxation or legal advisers, to the appropriate Minister, and the latter should say how he will use that advice. But any adviser to a Minister who rushes to the newspapers and takes part in what is a political controversy is not acting in accordance with the best traditions of the Public Service. It as been my experience, as I have said on a previous occasion, that trained public servants do not do that sort of thing; but such conduct is typical of experts who are brought in from outside. They have no respect for the traditions of the Public Service; and when they rush to the newspapers to protect their Minister they make him as well as themselves look ridiculous. So long as these gentlemen retain their proper place they are entitled to respect, but as mere “yes” men of Ministers their opinions cannot command respect. These advisers have no right to usurp the privileges and duties of members by entering into political controversies. The best of them do not do so, and the man who does so merely cheapens himself, his office and his Minister. I repeat that this is purely and simply a taxation measure, and nothing else. It is a bad taxation measure, because it increases income tax for the next three years. At the same time, supporters of the Government endeavour to hide that fact and throw dust in the eyes of the taxpayers by endeavouring to lead them to think that under it they will receive a benefit, whereas in fact they will be obliged to pay additional tax. No matter how the Government tries to hide it, the fact remains that in the next three years the taxpayers of Australia under this measure will pay additional tax amounting to £36,000,000; but the Government is not sufficiently honest to tell the taxpayers that that is the result of the bill.
– in reply - In common with other honorable senators I have given much thought to this measure. I was a member of the committee which reported on the pay-as-you-earn principle. The members of the committee constituted as good a team as could be procured in this Parliament. The members of it were Senator Spicer, the right honorable member for Yarra (Mr. Scullin), the honorable members for Richmond (Mr. Anthony), Henty (Mr. Coles) and Warringah (Mr. Spender) and myself. I do not presume to be a taxation expert, but I was amazed at the assistance given to the committee by officers of the Taxation Department. Without exception, those officers supplied the committee within a few hours with the fullest possible information on every point arising in its deliberations. The excellent report submitted by the committee reflects great credit upon its members.
This measure achieves three important objectives. It exempts from tax the estate of a taxpayer upon his or her demise. That is a very desirable advantage whether the taxpayer happens to he rich or poor. It is very desirable that when a breadwinner dies, the Government should forgo the tax payable in respect of the year in which death occurs. This advantage is emphasized when we remember that the earning power of many taxpayers will soon decline. I refer to the thousands of workers who, during the last few years, have been obliged to work overtime for long hours. I shall be glad to see all overtime eliminated. When such people suffer a decline of income they will he fully protected under this measure in respect of the tax which they will then be called upon to pay. The same protection applies in respect of taxpayers on their retirement. On the date of their retirement they will cease to earn income, and thus they will welcome this provision. Perhaps, I cannot do better than bring the matter nearer home by citing the cases of honorable senators who will retire from this chamber as from the 30th June next. Before doing so, let me mention my own case. At 8 p.m. on the 16th December, 1931, I was a member of the House of Representatives, and I was supposed to be earning £1,000 per annum. A quarter of an hour later, due to my retirement from that chamber, I was not earning anything. Later, I was presented with my taxation bill which amounted to £140. As I was not earning any income at that time, I should have welcomed legislation of this kind. Several honorable senators will retire from this chamber on the 30th J une next. During the year ended as at that date, they will have received an allowance of £1,000 per annum, and the tax on that income is approximately £360. But for this proposal those honorable senators would be required to pay tax amounting to £360 ; but under this measure they will be forgiven three-quarters of that amount, that is, £270, and will be required to pay only £91. That is clear evidence of the immediate benefits which this measure will confer upon honorable senators retiring from this chamber on the 30th June next.
– But the Minister is assuming that those honorable senators will not earn any income for some months after their retirement.
– I doubt very much whether some honorable senators will earn any income for some months after the date of their retirement from this chamber. I suggest that on our side of politics it is not so easy, because, when one of our members starts in business, he has for quite a long time to live down the fact that he belongs to a party which ordinarily does not agree very well with the big business men of this country. I have had the experience and know that what I say is correct. I can say without any flattery that Senator Spicer was an outstanding member of the committee I have mentioned. The knowledge he has shown not only in this chamber, but also in his committee work, has been a revelation to me. So was the work of the right honorable member for Yarra (Mr. Scullin), the honorable member for Warringah (Mr. Spender), the honorable member for Richmond (Mr. Anthony), and the honorable member for Henty (Mr. Coles). After all, Senator Spicer dissented from only one aspect of the long report of the committee - as to whether theforgiveness shouldbe 75 per cent. or 100 per cent. There was, therefore, not much criticism of the draft bill at the meetings of the committee. Senator Leckie has raised the general question of officers putting the Government “in the cart” by making utterances on public matters. I suggest that he referred to this legislation. Professor Bailey did make a report to the Treasurer. The release of that rather long document, of which I have a copy, was made by the Treasurer, and not Professor Bailey. I agree with the honorable senator that it would be intolerable if officers were to make statements on public matters. I have drawn attention to several things that have happened in my own department. I hold that, under our form of government, a Minister is after all responsible to the people. His officers are responsible to him, and generally they do an excellent job. The facts are that the committee was unable to submit a complete pay-as-you-earn scheme for everybody, first, because the staff was insufficient, secondly, there was no accommodation, and, thirdly, the essential machinery required to sustain the complete scheme this year was not ready. We have taken it as far as we can go at present. We are providing for practically the same system to continue for the wage-earner, in the way of weekly group deductions. With the successful application of the scheme, two things are achieved. The man working for wages pays his tax now. The average man - and I would say that the scheme is applicable to 60 per cent, of the people of this country - who has no means outside of what he earns, does not put aside money for taxation, so that we can agree that, if the tax is deducted from his earnings, it is in his interest, and it is also in the interest of the Government, to have the use of that money regularly, and to prevent the hardship cases which would inevitably happen. It can, therefore, be said that, so far as the Government can manage it, such a scheme is embraced in the bill. The employing class is catered for in a slightly different way, with a longer term to make up this alleged 25 per cent, additional tax. I say, in all sincerity, that the advantages of the scheme override any criticism that has been made of it. The main argument directed against the levy of income tax on income of the transition year is that, if tax for a financial year is levied on income of that year, there should be no additional liability in that financial year in respect of the income of the preceding year. That is quite clear and quite operable, and I am sure that we all agree on it.
– Who said that?
– I ‘ am saying it after the most careful consultation with my officers. At this stage, I wish to emphasize that the change in the basis of taxation will not involve any increase of the deductions at present being made from the salary and wages of employees. Prior to March, 1943, deductions . from wages and salaries to meet the year’s tax were spread over a period of 40 weeks. In March, 1943, the rate of taxation was increased and the period over which the tax had to be paid was extended by starting the deductions three months earlier. From April, 1943, onwards, the deductions were spread over 52 weeks. Now, it is obvious that, as the deductions for the year ending the 30th June, 1943, began on the 1st July, 1942, the liability was met in 40 weeks. When the collections commenced in April of that year, three months’ tax was paid upon current income. That brought employees three months forward in their taxation payments, and explains why they are now not a year, but nine months, in arrears. The cancellation of the nine months’ liability will bring them up to date, and place them on the pay-as-you-earn basis without any extra contribution. I suggest that that is just about as clear a statement as could be asked for by any honorable senator.
If there were no change in the basis of taxation, taxpayers would be paying full taxes upon the income of both the year ended the 30th June, 1944, and the year ended the 30th June, 1945. Under the plan only one year’s tax and a quarter of the other year’s tax is payable. It is for the purpose of enabling taxpayers conveniently to pay the quarter tax for one year, in addition to the full tax for the next year, that instalments of the quarter tax are being spread over three years. The employee is, in practice, being called upon to do no more than continue the deductions from his salary or wages at the existing scale. This should, in the great majority of cases, provide sufficient, tax to pay the 25 per cent, assessment, and the employee is then free from any further liability in respect of the income of the transition year.
I therefore say, without labouring the subject at this stage, that, as the PostmasterGeneral (Senator Ashley) said, the members of the Opposition at the recent general election urged that if the Labour party was returned the people would not get any relief from taxation. It is amazing that the three star items in ‘ the taxation programme of the United Australia party at the last elections have proved winners for us on this occasion. The anomalies then pointed out have now been rectified, not by the Opposition, but by the Government whom the people then returned to office.
Question resolved in the affirmative.
Bil] read a second time.
Clause 1 agreed to.
Clause 2 - (1.) Subject to this section, this Act shall come into operation on the day on which it receives the Royal Assent. (2.) Sections seven, eight and nine of this Act shall be deemed to have come into operation on the first day of July, One thousand nine hundred and forty-three.
– Subclause 2 has special reference to pension payments. The Government proposes to limit the payments by employers to 5 per cent. of the salary, or to a maximum of £100, for the purpose of taxation deductions. It is bad enough to include that provision, but, as I mentioned in my second-reading speech, it is made restrospective to the 1st July, 1943. I move -
That sub-clause (2.) be left out.
– I am not prepared to accept “ snap “ amendments on legislation of this nature. The amendment proposed by the Leader of the Opposition (Senator McLeay) is directed to the retrospective application of three provisions of the bill. As each of these clauses was considered by the parliamentary committee, I do not propose now to recapitulate the reasons for their retrospective operation. I emphasize the danger of any ill-considered amendment in legislation so technical as the Income Tax Assessment Act. The Government cannot accept the amendment, but I undertake on its behalf to have the matters raised in debate considered. If any amendment is found necessary, it can be made in the next budgetary session.
.- The Minister’s answer is not an answer at all. To suggest that the introduction of the amendment may affect other clauses in the bill, and that we do not know what we are doing, is simply nonsense. The only effect of this provision is to make all these clauses in regard to the pensions fund retrospective in their operation. I am opposed to altering the burden of taxation after the event, because that is what we are doing. The only reason for moving this amendment is to remove the retrospective operation which is being given to this clause.
Question put -
That sub-clause (2.) be left out (Senator McLeay’s amendment ) .
The committee divided. (The Chairman - Senator Courtice.)
Majority . . 1
Question so resolved in the negative.
Clause agreed to.
Clauses 3 and 4 agreed to.
Clause 5 -
Section twenty -three of the Principal Act is amended -
by omitting paragraph (s) and inserting in its stead the following paragraph : -
in the case of any person enlisted . . .
.- Paragraph a of clause 5 makes provision for the taxing of individuals who have come to this country to undertake developmental work, and who up to the present have been free of tax. They will not be free of tax in the future if they are free of tax, for example, in Great Britain. I have no objection to that, but under clause 28, this provision also will have retrospective operation. I agree to the passage of this clause at this stage on the understanding that when clause 28 is under discussion, we shall have an opportunity to remove the retrospective operation given to this provision.
.- I move -
That proposed paragraph (s) be left out with a view to insert in lieu thereof the following paragraph: - “ (s) in the case of any person enlisted in or appointed to the Naval, Military or Air’ Forces of the Commonwealth or any part of the King’s dominions or of any Ally of Great Britain for service outside Australia during the present war - the pay and allowances earned by him as a member of those forces during the period commencing on the third day of September, One thousand nine hundred and thirtynine or on the date of his enlistment or appointment (whichever is the later date) and terminating on the date of his discharge or the termination of his appointment:
Provided that this paragraph shall not apply to any pay or allowances so earned during the year of income by a member of the forces who does’ not at any time during the period commencing on the third day of September, One thousand nine hundred and thirty-nine and terminating one year after the close of that year of income -
in the case of a member of the Naval Forces of the Commonwealth - serve in a seagoing ship; or
in the case of a member of the Military or Air Forces of the Commonwealth - embark for service outside Australia.
For the purposes of this paragraph any person enlisted in or appointed to the Naval, Military or Air Forces of the Commonwealth or any part of the King’s dominions or of any Ally of Great Britain for service outside Australia during the present war shall be deemed to have embarked for service outside Australia if he is posted or attached as a member of the air crew of a squadron in Australia and therole of the squadron is operational involving flights out of Australia.
In this paragraph - air-crew ‘ includes photographers and members of the ground staff who regularly take part in the course of their duty in flightsout of Australia;
Australia’ does not include the Territories of Papua, Norfolk Island and New Guinea; and sea-going ship’ does not include a depot ship or a ship principally employed on or in connexion with port or harbour defence “.
In 1939 and 1940, when the Australian Imperial Force was being raised, frequent announcements were made by Ministers and others that men enlisting for overseas service would be exempt from income tax on pay and allowances for the duration of the war. The government of the day - the Menzies Government - duly honoured that promise, and a bill was passed through Parliament. However, in 1941, the Curtin Government introduced a measure which cancelled the generous provisions of the previous legislation, and inserted a new provision which reduced considerably the scope of the exemption previously assured to members of the fighting forces. As the result of that amendment, members of the Australian Imperial Force who returned from overseas were again brought under the provisions of the Income Tax Assessment Act, and, after three months in Australia, reverted to conditions similar to those applying to members of the forces who have never left the shores of Australia. Many members of the forces have become seriously embarrassed financially by these changed circumstances. They claim that they have been misled, or, in other words, that the terms of the contract under which they enlisted have been altered to their detriment. This amendment provides for the reinsertion in the principal act of the principles agreed to by the Menzies Government and, if adopted, will mean, in effect, that any member of the fighting forces who has embarked for service outside Australia, whether or not he has returned and is serving on the mainland, shall be entitled to exemption from income tax on pay and allowances for the duration of the war. The amendment proposes also to maintain the provision that the exemption shall apply to air crews and those members of the Royal Australian Air Force whose duties take them from the mainland on operational flights. I maintain that members of the forces who have been subjected to actual dangers of warfare should be exempted from income taxation in accordance with the terms of the assurance given to them upon enlistment. The 6th, 7th and 9th Divisions have now returned to Australia, and upon their return the exemption from taxation granted by the Menzies Government was cancelled, the limit of exemption now being three months after return to Australia, unless re-embarkation has taken place. Had those divisions remained in the Middle East, and, for instance, retired to an area miles from the battle zone, they would have still been exempt; but because they were in Australia training for an offensive against the Japanese, the exemption applies for only three months. Had any of those divisions been sent to Port Moresby to train for the forthcoming offensive, they would have had their pay and allowances totally exempted; but as northern Queensland was a more favorable territory in which to train for jungle warfare, the exemption was restricted to three months. I consider that that exemption should stand as if the soldiers had been on active service beyond Australia. The Government has a chance to help returned soldiers by accepting this amendment. One Minister said by way of interjection that the present Government raised the pay of fighting forces. The Government certainly raised the pay of these men ‘by ls. a day, but at the same time it took ls. 3d. a day away from them by way of income tax. That is an example of the manner in which the Government has treated the fighting men of this country. If honorable senators opposite are truly concerned with the welfare of our sailors, soldiers and airmen, they will support this amendment.
I propose to move also -
That at the end of clause 5, the following now sub-clause be inserted: - “ (2.) The paragraph inserted by paragraph (h) of the last preceding sub-section shall continue in force until twelve months after the date of the issue of a proclamation that the present war has ceased, and llC longer.”.
– I have already dealt with this matter in my second-reading speech. I appeal to honorable senators not to repudiate the promise which was given to our fighting men. There is nothing worse for morale than broken promises, and the law as it stands at present amounts to repudiation. These men were given a definite assurance that their military pay and allowances would be exempt from taxation but that exemption was cancelled by a government supported by honorable senators opposite.
.- The amendment moved by Senator Brand is to reinstate in the act the provisions of the 1940 act relating to the exemption of pay and allowances of members of the defence forces. Under this provision, the pay and allowances of a member who enlisted in or was appointed to the naval, military or air forces of the Commonwealth for service outside Australia were exempt from tax for the period commencing with the year of income immediately preceding the date of embarkation of the member for service outside Australia or in the case of naval personnel, the date of commencement of service in a sea-going ship, and terminating with the date of the member’s discharge or termination of appointment. The purpose of the 1940 legislation was to grant an exemption in respect of pay and allowances earned in Australia for a reasonable period prior to embarkation for service outside Australia, or service in a sea-going ship, .and for the period the member was on service outside Australia. The legislation did not contemplate the continuance of the exemption for an extended period in Australia if the member returned to tills country from overseas. The 1940 exemption, no doubt, was based, to a large degree, on the conditions which existed in the last war and in the first few months of the present war. The experience of the last war ; was that members of the forces remained on service outside Australia until they were due for discharge when they were returned to Australia. Usually the member received his discharge very soon after his return to this country. In 1940 the war was remote from Australia. It was expected that members of the forces who went overseas on service would remain outside Australia and that, on their return, they would, as a general rule, be discharged and resume civilian life. The necessity for preparation for war in the Pacific and southern Asia altered the disposition of forces in 1941 as compared with 1914-18. The principles on which the 1914-18 exemptions were granted were accordingly not appropriate to the altered circumstances of this war, as it developed between May, 1940, and November, 1941.
The Government, accordingly, found it necessary to review the principles of the exemption which had originally been enacted. However, apart altogether from the necessity for this review,- the experience of the application of the exemption in the first year of its operation showed that it produced serious anomalies as between members of the forces themselves and also as between members of the forces and civilians who were doing comparable work in connexion with the prosecution of the war. I ,do not propose, at this late stage, to deal with ‘all of the anomalies to be found in the 1940 legislation, but I shall furnish one or two examples of how it operates. A high-ranking land-based naval officer might serve for a day or two on a ship engaged on manoeuvres not far from a base. After this brief service he would return to and remain at the shore base, but would be entitled, under the 1940 legislation, to complete exemption from income tax on his service pay until the end of the war. He would thus be getting the same concession as personnel of the Navy who were constantly engaged in service at sea. Similarly, a military officer who had been appointed for service outside Australia, or an officer of the Royal Australian Air Force, had only to embark for service outside Australia after the 3rd September, 1939, in order to obtain the benefit of the exemption for the duration of the war. The period and nature of the officer’s duty outside Australia were quite immaterial.
The Government had the whole matter exhaustively examined by a committee of departmental officers representative of the service departments and the Treasury. Upon the recommendations of those officers, who were thoroughly conversant with the subject, the Government approached Parliament for an amendment of the law. The amendment which was made in 1941 was the subject of a complete explanation to the Parliament, and no opposition to the adoption of the proposals was raised at the time. The principal purpose of tlie 1940 amendment was to exempt pay and allowances of the members of the forces while they were serving at sea or engaged in land or air operations outside Australia. This principle was preserved in the 1941 amendment, and is preserved and extended in the bill at present before the committee. In my view, there is no breach of any under*taking given in 1940, and there is no justification for the amendment now moved by the honorable senator. If that amendment were agreed to we should revert to the anomalies that the later legislation was designed to correct. The adoption of the amendment might mean a loss of £3,000,000 in revenue. I cannot accept the amendment.
– Anomalies occur under every act, and although it is necessary to correct them it is unnecessary to take away a privilege promised to our fighting men and granted by this Parliament. The Minister in charge of the bill (Senator Keane) has said that there was no opposition to the alteration of the law in 1941, but I point out that the four divisions of the Australian Imperial Force and the members of the Royal Australian Air Force were outside Australia at that time and were fighting for their country. I am most disappointed that the Minister will not accept the amendment.
– The Government should not penalize tens of thousands of men who are doing a fighting job. Some way should be found to avoid inflicting an injustice upon them.
– A distinct contract was made with the men who went overseas with the Australian Imperial Force in 1940, and part of the bargain was that their service pay and allowances would be exempt from income taxation. Despite all the sophistry, that may be indulged in, the removal pf the exemption constituted a breach of contract. Reference has been made to anomalies, but in the case of members of the Australian Imperial Force a lieutenant is much better off financially than a captain after income tax has been deducted from his pay. Any honorable senator who recognizes the sanctity pf contracts should support the amendment.
.- I remind Senator Wilson that there are not thousands of men who will be affected by this amendment. Exemption is already provided in respect of incomes up to £250 a year, which includes members of the forces up to the rank of sergeant.
– There was a distinct contract with the men who enlisted that this concession was to be enjoyed by them. The Minister in charge of the bill (Senator Keane) has said that the matter has been investigated by officers of the Treasury.
– And of the services.
– The matter would not have been referred to Treasury officials unless the Government had in view the raising of extra revenue. Members of the services depend on this Parliament to honour the contract made with them, and I believe that the people of this country would prefer to pay additional tax so that it would be unnecessary to collect tax from those men.
– Surely the honorable senator is aware that the present concession to members of the fighting forces amounts to £18,000,000 per annum, and that they pay only about £3,000,000 per annum. It cannot be said that they are harshly treated.
– We appear to be without information as to what the proposed concession would cost the Government. It is common knowledge that some of our best men in the services are looking abroad for permanent employment after the war, and it would be regrettable if, as the result of the breach of faith referred to by Senator Brand and Senator Wilson, some of our best young men were lost to this country permanently. Their services are certainly being sought abroad. Whatever the views of the Government may be with regard to defence, one of the last things which it should do is to alienate the sympathies of those men, or go back on any pledge made to them, no matter how high the cost might be.
– In the last war both the military pay and the civil income of the serviceman was exempted from tax, and I think that the people of this country desire the Government to treat the members of the services in this war as generously as they were treated in the last war.
– Members of the services were not granted a concession, but a bargain was entered into with them. Apparently that bargain has been repudiated, and I think that the original arrangement should be adhered to.
Question put -
That the paragraph proposed to be left out (Senator Brand’s amendment) he left out.
The committee divided. (The Chairman - Senator Courtice.)
Majority . . . . 1
Question so resolved in the negative.
.- In view of the defeat of that amendment, I ask the Minister to agree to extend the period of 90 days referred to in proposed new paragraph s, subparagraph (ii) (1) to at least six months.
– The suggestion of the honorable senator willbe given consideration.
Clause agreed to.
Clause 6 agreed to.
Clause 7 (Contributions to pension funds).
– I propose to move a second amendment to this clause should my first amendment not be acceptable to the Government. This clause provides for an exemption from income tax of £100, or 5 per cent. of the salary of the employee paid to pension funds, but we have evidence that such a provision will inflict hardship on employees who have joined pensions or superannuation schemes late in life. The more that we can do to encourage employers to look after the interests of their employees by means of substantial contributions to superannuation funds the better, for such action will do much to preserve peace in industry. I agree with the Minister that when funds are established in order to evade taxation no leniency should be shown; but in an effort to reach those who attempt to evade taxation we may do an injustice to deserving employees. With a view to allowing further consideration to be given to this matter by the Government, or if thought necessary, by a special committee. I move -
That the clause be postponed.
– I am unable to accept the amendment. In explanation of my refusal, I point out that the amending provisions apply retrospectively to contributions made to funds after the 30thJune, 1943. Some criticism has been directed by the Opposition to the retrospective operation of this clause. I desire to express my complete concurrence with the long accepted principle that liability to taxation should not be imposed retrospectively. There are, however, some exceptions to this rule. One of those exceptions is where it is necessary to amend the law to correct abuses that are opposed to the spirit and intention of the legislation, although coming within its literal interpretation. The funds against which the amending legislation is directed have, so far as I am aware, been established within the last twelve months, and the retrospective operation of the clause represents the Government’s determination to ensure that no one shall benefit from this gross misuse of the liberal provisions of the income tax law.
.- The Minister’s statement as to the purpose of this clause is most interesting. He said plainly that the funds against which the amending legislation is directed have been established within the last twelve months. That being so, a great deal of the difficulty in regard to this clause can be overcome if the Minister will accept an amendment to provide that the clause shall not apply to funds which were in existence, say, in 1941, or, if desired, in 1939. The viciousness of this kind of provision is that in an attempt to get rid of abuses an injury may be done to innocent people. The clause applies to a large number of funds which have been established bona fide, and which in no way constitute an attempt to evade taxation. I believe that the Minister’s statement sets out the position correctly, namely, that the abuses which have arisen in connexion with these deductions have arisen only since the rates of tax have become high. Funds which were created before the present high rates of taxation were introduced were bona fide funds, and therefore should be allowed to continue with the right of deduction provided for in the existing act. If the Minister will act on the basis of the statement which he has just made, and will limit the operation of this provision to funds created since, say, 1941-
– What would be the position if additional payments had been made?
– Payments are not made on a voluntary basis, but are made pursuant to contracts.
– Supposing the fund was established prior to 1939?
-Cases of that kind could be covered. There is no justification whatever for applying this clause to a fund which existed before, say, 1941, and in relation to which payments are on the same basis as then.
– Supposing there has been additional payments ?
– If the Minister can make out a case for placing a limit upon payments since 1941 which are in excess of the payments made prior to 1941, a provision could be inserted to meet such cases. I appreciate the point raised by the Minister for Health (Senator Fraser). But the Leader of the
Senate (Senator Keane) has admitted that the funds which have been created as a means of evading taxation have been established within the last twelve months, and therefore it seems unnecessary that this clause should apply retrospectively to every fund that has ever existed. If the Minister will agree to the postponement of the clause in order to enable further consideration to be given to it, I shall be satisfied. Alternatively, he may accept a limitation on the application of this clause to funds which have been created since 1939, although’ I think that a more appropriate year would be 1941.
.- I think that the Minister should reconsider this matter, because in its present form the clause may prevent the creation of fresh superannuation schemes. Almost invariably it happens that when a firm establishes a superannuation scheme for its employees it has in its employ some men of mature years who have been with the firm for a number of years. It is usual in such instances for the firm to pay into the fund a certain lump sum so that the fund shall be placed on a sound actuarial basis from its commencement, thereby enabling payments to be made to employees who may retire soon after its establishment. In its present form the clause might prevent an employer from paying in a lump sum to the credit of the fund which would be beneficial to employees of advanced years. Moreover, the almost invariable practice of employing firms is to guarantee a certain rate of interest on the money to the credit of the fund. During recent years interest rates have fallen below the rates guaranteed, which may be 4 per cent, or 5 per cent. In such cases, the employing firm would have to make up the difference between the rate at . which it can invest its funds and the guaranteed rate of interest. If the Minister will go so far as to say that he will allow the Commissioner to examine these schemes and protect those concerned from excessive taxation if they are being established on a fair basis, I shall be satisfied.
– The Commissioner already has power in that direction.
– That may be,_ but not to the degree necessary. If the Minister will give an assurance that complete power will be given to the Commissioner lo accept payments in excess of those set out in the clause in cases in which he believes such payments are bona fide, T shall be satisfied. Unless a provident scheme be subsidized in some way by the employer, many elderly employees will not gain any benefit from its establishment. Employers should hot be penalized because they are setting up a worthy scheme in the interests of their employees, especially their elderly employees.
.- It is appreciated that there may be cases where the permitted maximum will be exceeded in respect of older employees. It will be necessary for them to contribute to a fund an annual amount in excess of £100 or 5 per cent, of their annual salary in order that they may receive on retirement benefits that are comparable in value with the benefits that are being provided for younger employees. In these cases, the Commissioner of Taxation has been given a discretion to increase the deduction beyond the limits specified in the amendment. In the course of the debate, the suggestion has been made that these new provisions in the law should apply to those funds only that have been established since the outbreak of the present war, that is, to funds that are gaining the advantage of freedom from the high wartime rates of taxation. The view has been advanced that funds established before the war when rates of tax were low, and there was little benefit to the employer in respect ‘ of income tax should not be affected by the new provisions. The Government has given very serious consideration to this view but it feels that there is not sufficient justification for discrimination between funds established prior to the war and those established since the outbreak of war. It is felt that as a principle, new schemes should be subject to the same advantages and limitations as those to which old schemes are subject.
Question put -
That the clause be postponed (Senator McLeay’s amendment ) .
The committee divided. (The Chairman - Senator Courtice.)
Majority . . 1
Question so resolved in the negative.
Clause agreed to.
Clause8 (Gifts and contributions).
– I should like the Minister for Trade and Customs (Senator Keane) to explain paragraph c of this clause which reads -
Section seventy-eight of the Principal Act is amended -
by omitting sub-section (3) and inserting in its stead the following subsection : - “ (3) The aggregate of the deductions allowable under this section and under the next succeeding section shall not exceed the amount of income remaining after deducting from the assessable income all other allowable deductions except the deduction of losses of previous years.”
– It means that the amount of deduction cannot exceed the amount of the net income.
Clause agreed to.
Clause 9 agreed to.
Clause 10 (Losses of previous years).
.- this is another clause which is given retrospective operation; but it is also very objectionable on another ground.
This clause is intended to catch certain people who have been purchasing shares in companies which have suffered losses over a period of years, and which, by reason of other provisions under the principal act, are entitled to take those losses into account. My objection to this provision is that whilst it is designed to catch a. few persons, it may operate very much to the detriment of a number of innocent people. For instance, 80 per cent. of the shareholding in a private company is, perhaps, held by one person, and the other part by another person. The person holding 80 per cent. of the shares is in a position to sell his shareholding without obtaining the consent of the other shareholder, and having sold his80 per cent. of the shares to some outside person, the innocent holder of 20 per cent. of the shareholding will, under this clause, be deprived of the right which he enjoys under the principal act to derive benefit from the fact that the company can have its previous losses taken into account for the purpose of calculating its tax. There can be no justification for that. I suggest that there is nothing in the information that has been given to us to justify the wide application of this provision. If a set of circumstances exists in which there is abuse, the department should deal with the persons responsible, but not by means of a clause which will act to the detriment of innocent people.
– Criticisim has been directed against the retrospective application of this clause. I agree with the principle that liability to taxation should not be made retrospective to past years. There is an exception, however, when the taxation law is misused to obtain taxation advantages that were never in contemplation when the Jaw was enacted. In these cases it is only just, particularly in war-time, to take appropriate action to ensure that no person shall gain a financial benefit by deliberately evading the law. By applying the clause retrospectively to assessments for the financial year 1942-43, avoidance of tax will he prevented in those cases where shares have been improperly acquired to obtain taxation benefits in respect of losses sustained by private companies. The Government considers that the new provision will not impose any hardship upon the minority shareholders of private companies. Its operation is to be closely observed, and should itbe found that the evasion of taxation is not being effectively prevented, further remedial measures will be taken.
Clause agreed to.
Clauses 11 to 13 agreed to.
Clause 14 (Interpretation).
.- It may be convenient to take this long clause by sections, because one may wish to comment on several of them. In fact, the clause introduces about half a dozen entirely new sections which are not necessarily dependent on one another. At this stage I oppose the clause in its present form. It is the one which imposes the new additional taxation burden of 25 per cent.
– No, it does not.
– I do not propose to move any amendment, hut if the clause is to stand in its present form I shall vote against it, and I ask the committee to support me. Perhaps that is the best way to test the position. The Minister for Aircraft Production (Senator Cameron) has just disputed my statement that there is additional taxation. I invite him to look at proposed new section 160ag, which starts off in these words -
In addition to any income tax levied in pursuanceof section 17 of this act, income tax at the rates declared by the Parliament shall be levied and paid for the financial year commencing on the first day of July, 1944, upon the taxable income derived during the year of income by any person, whether a resident or a non-resident, other than a company . . .
Section 17 of the present act in plain language authorizes the imposition of tax for every financial year. That section, without this provision at all, authorizes the collection of tax for the financial year 1944 and for the financial year 1945. That is beyond dispute. Then, over and above that, this section states that: In addition to the tax which is imposed by section 17 there shall be a new tax upon a new year’s income. In other words, what this section does first is to impose a tax, as Senator Herbert Hays said, for a mythical year. This section provides in effect that, in addition to the tax for the financial year 1944 imposed by section 17, and the tax imposed by that section for the year 1945, there shall be a tax under proposed section 160ag for another year. In other words, there will be three years’ tax, not two. Having imposed that extra year’s taxation, the Treasurer then says: “What a magnanimous fellow I am! I am going to forgive you 75 per cent. of the taxation on a mythical year “.
– The honorable senator said that yesterday.
– Unfortunately, what I said yesterday does not seem to have penetrated the mind of the Minister for Aircraft Production (Senator Cameron) and has not been answered by the Minister in charge of the bill. The actual words of the clause present me with an opportunity to point out that what is being done is to impose tax in respect of three years’ income for the purpose of collecting two years’ tax. Then, having done that, the Treasurer says : “ Well, I am a very magnanimous fellow, I will forgive you 75 per cent. of the mythical year “. I oppose the clause.
– There is no mention of a mythical year in the clause.
– I know,but it is still mythical.
– I ask the Minister in charge of the bill to explain what is meant by the following provision - (3.) In any case to which the last preceding sub-section does not apply the rebate shall, subject to this Division, be an amount equal to-
Will the Minister state whether the Government has quite definitely made up its mind that it will not take any notice of the points raised in the second-reading debate regarding the anomalies that will occur? Will he explain the responsibility placed upon the Commissioner, when the amount of income for the year 1944 is more than 20 per cent, over that of the year 1943? There has been a controversy on that point, and I know that the Government is relying on the fact that in those cases where an anomaly exists, it is to be left to the Commissioner to iron it out. Is the Minister quite definite that the Government refuses to amend the clause? I am quite satisfied that when this bill becomes law the Commissioner and his officers will be worried to death over this clause, and a number of taxpayers will be put to great inconvenience and expense in having anomalies removed. It is time that we realized that we are here to make laws for the peace, order and good government of the community. Good government means service to the people, but a tendency seems to be growing up amongst some departments, particularly in Canberra, to adopt the principle that the harder they can make it for everybody, the better. Because there is perhaps one criminal in 1,000 they propose to make the laws so rigid that the 999 other just people have to suffer very grave injustice and be put to enormous expense and inconvenience. I would prefer the bill to provide that if the Commissioner is satisfied that the taxpayer has not deliberately manipulated his returns for the year 1944 to escape taxation, no action shall be taken. That would be much easier. As the clause now stands, thousands of taxpayers whose income for 1944 will be more than 20 per cent, above that of 1943, will be put to the inconvenience, expense and delay, and the department to the worry, of examining and determining what the tax will be. Will the Minister explain the clause, and, will he state if the Government, by virtue of the fact that the caucus has made a decision, and the numbers behind the Government have to sit as “ dumb Doras “ and vote according to instructions on such an important measure, is determined not to accept any amendment?
.- As one of the “ dumb Doras “, I inform the Leader of the Opposition (Senator McLeay) that the explanation of the highly technical clause which he has read to the committee is already contained in the notes issued. He will find a full explanation of proposed new section 160ah in the notes relating to clause 14. An illustration is given there which I suggest the. Leader of the Opposition should examine. As regards his second question about the creation of anomalies, and the fact that the Commissioner will be inundated with requests for interpretations, the Commissioner has already been inundated, and official statements have had to be made in the press to prevent misunderstandings. I suggest that the same position will continue for a while, but that after a time the people will begin to realize that a little examination makes the bill easy to understand.
– There is one matter in connexion with the rebate section, to which my leader has referred, which relates to its operation in the case of private companies, to which my attention has been drawn more particularly to-day. This is a very technical matter, upon which I do not want to engage in a long discussion at this stage. It is suggested that, in applying these rebate provisions for the purpose of working out the liability of private companies in respect of undistributed profits tax, the undistributed profit of the company in 1944 may be taken into account for the purpose of, in effect, enhancing a shareholder’s income for 1944, and that, taking into account the undistributed profit for the purpose of the calculation, the Commissioner may conclude that the shareholder’s income for 1944, including the mythical amount supposed to be distributed from undistributed profits - that is, the notional income - is 20 per cent, more than the same shareholder’s income in 1943. That being so, he has to tax the company on this formula having regard to the shareholder’s income in 1943. I understand that if that is so the Commissioner’s view at the moment is that he will not take into account any notional distribution of the company’s profits in 1943 for the purpose of determining whether the 1944 income, including the notional distribution, is 20 per cent, more than the 1943 income. I have stated the matter baldly, but it will be recorded, and I think that the taxation authorities will understand what I mean. I should like to have from the Minister an assurance that that matter will be re-examined, because it appears to me that what is going to happen, if the taxation authorities adhere to this view at the present time, is’ that they will take into account the notional distribution made to a shareholder for one purpose and not for another. That seems to me to be a very unfair proposition. The private companies are much concerned about this, because they have been heavily hit in the past, and it is desirable that this proposition which is now submitted should not, perhaps unintentionally, operate unfairly upon them.
– I give the honorable senator an assurance that the matter will be re-examined.
– In order to get this matter clear, will the Minister for Trade and Customs (Senator Keane) consider postponing this clause until to-morrow?
– No. I have given an undertaking that the clause will be re-examined. That undertaking will be honoured.
– The Taxation Commissioner will be called upon to interpret the law as it is set out in this bill. Can the Minister say whether under this measure as it now stands, the law will be as has been outlined by Senator Spicer? What I should like to know is, if this bill becomes law, will it mean that the notional income in 1943 will not be taken into consideration in calculating profit in 1944? That is very important.
.- I cannot give a definite reply at this stage to such a technical point. I have already said that I will have the whole clause re-examined in the light of the representations that have been made by the Leader of the Opposition (Senator McLeay) and Senator Spicer.
– As this clause deals with the 25 per cent, tax “ grab “, and as I did not speak on the second reading of this measure, I take this opportunity to join with my colleagues in protesting against this iniquitous imposition. It is a serious blot on an otherwise good scheme. The Government had no option but to introduce the pay-as-you-earn system at this stage because of the substantial reductions of income which will be suffered by many thousands of people in this country in the near future. This plan safeguards government revenues. The people of this country have not complained about the heavy taxation which has been necessitated by the war, but I believe that had the Government introduced the pay-as-you-earn system without imposing the additional 25 percent., the moral effect upon the people would have been such that ultimately the government revenues would have benefited to a far greater degree than will be the case by the imposition of this extra burden, which in many instances taxpayers will be unable to meet. I believe that at the end of twelve months arrears of taxation will be such that many people will be unable to carry the extra burden. Pay-as-you-earn is a fair system of taxation, and the Government is to be complimented upon introducing it. However, it is a great pity that the scheme has not been introduced without the 25 per cent, tax “grab “.
.- The reply of the Minister for Trade and Customs (Senator Keane) to Senator Spicer is quite unsatisfactory to honorable senators on this side of the chamber. It is generally appreciated that the incidence of taxes on private companies has been out of all proportion to the incidence on either partnerships or public companies, and this matter has exercised the minds of the people of this country for a long time. On several occasions the Treasurer (Mr. Chifley) has said that the Government would review the position of private companies, hut so far nothing has been clone. What is the Minister’s interpretation of this, clause? Surely the Minister gave some consideration to the provisions of the measure before it came before this chamber. I ask the Minister to tell honorable senators plainly if it is the intention of the Government that in assessing the income of an individual the’ notional dividend for one year will be considered, but not for another year? It is a perfectly outrageous “proposal, and I hope that the Minister will explain the Government’s intention.
.- In support of the argument which I have advanced I shall present a concrete case. Say, for instance, there is a shareholder whose regular income is £1,000 a year, and that, as a shareholder, he is interested in £500 of the company’s income in each year. In 1943 the company does not make a distribution to the shareholder of that £500, but retains it and pays undistributed profits tax upon it. In relation to that £500, the company will pay the shareholder’s personal rate on £500. In 1944, the same set of circumstances will arise. The shareholder’s income is £1,000, and in addition he has this notional income- of £500 from the company. What I am concerned about is the incidence of this provision in relation to the company, because the company is required to pay tax on the undistributed profits on the assumption that they have been distributed. If we assume in 1944 that the £500 from the company has been distributed to the shareholder, the shareholder’s 1944 income on that basis will be £1,500. As that sum exceeds the personal income of £1,000 in 1943 by more than 20 per cent., will the company be taxed upon this undistributed income on the basis of the shareholder’s 1943 income plus 20 per cent.- that is the £1,000 plus 20 per cent.- -or will the shareholder be treated in each case, that is in 1943 and 1.944,’ as having received £500 from the company? If the latter alternative be adopted, the company will be charged the tax which it has to pay under these provisions of the act on the basis of 1944, and it will get its 75 per cent, rebate upon the basis of 1944; but if we take into account the notional distribution for one purpose, that is for 1944, and do not take into account for the other purpose, namely 1943, then the 75 per cent, rebate will be worked out not on the basis of £1,500 in 1944 but on the basis of £1,200. I should like to know which of these two views the Commissioner of Taxation will take.
.- The questions that have been raised by the honorable senator are too technical to be discussed at this stage. I can only repeat that the matter will be examined. I am not prepared to go further than that.
– This is the most insulting exhibition by a Minister that I have ever seen in this chamber. The Minister for Trade and Customs (Senator Keane) has introduced this measure on behalf of the Government and has informed honorable senators that it is too technical to be explained. In these circumstances, how can we be expected to discuss it intelligently? The least we expect is that the Minister should know what the bill contains. I ask the Minister to show a little more courtesy to members of this chamber and to endeavour to supply the information that has been sought.
– This matter is very important and I believe that an explanation should be given. Are we to understand that the taxpayer mentioned by Senator Spicer who is taxed on £1,500 in 1943 and whose taxable income is £1,500 in 1944 will, under the Government’s proposals, receive a rebate on only £1,200? That position is simply ludicrous and I ask the Minister to throw some light upon the matter.
– Permanent soldiers, to whom I referred in my second-reading speech, have rendered magnificent service to the community, but they have had no furlough. At the request of the Army authorities that has been postponed. They have now been asked to accept pay in lieu of furlough, and I desire an assurance that such pay, if it happens to have been given in 1944, will not be taken into account as increasing the income in 1943.
– I have discussed this matter with the taxation officials. The question whether furlough pay should be regarded as “windfall” income will be examined again by the Commissioner of Taxation.
– Are we to understand that the Minister in charge of the bill (Senator Keane) refuses to give an answer to the question addressed to him by Senator Spicer? His statement that the matter was too technical to be discussed in this chamber was an insult to every honorable senator. If the Minister does not intend to reply to the question, I shall place on record my protest that this Government is endeavouring to bludgeon through this chamber a bill which neither Ministers nor their supporters know anything about, and the effect of which they refused to reveal to the Opposition That is a travesty of parliamentary procedure.
– A good deal of discussion has arisen on the subject of the forgiveness of tax, but on the first occasion when a member of the committee has asked what the forgiveness amounts to, no answer is forthcoming. It is useless for honorable senators on the Government side to tell the people that they are to he the unfortunate victims of additional tax of 25 per cent., and that there is to be a forgiveness of 75 per cent., if we do not know how much the forgiveness represents. The Opposition has made a complete exposure of the fraud thathas been perpetrated on the taxpayers.
Question put -
That the clause stand as printed.
The committee divided. (The Chairman -Senator Courtice.)
Majority . . . . 1
Question so resolved in the affirmative.
Clause agreed to.
Clauses 15 to 20 agreed to.
Clause 21 (Group employers).
– A person employing ten or more people must change over from the use of stamp books to the group system and register as a group employer. Representations have been made to honorable senators that this alteration will impose a great deal of additional clerical work upon many employers. Lists of employees, showing their full names, the taxation file numbers, &c., have to be prepared, and the tax must be recorded and the total sum ascertained in respect of each employee. Monthly returns are to be required by the Taxation Department, and many details are to be supplied. The explanatory notes give no reasons for the group requirements, but the report of the committee indicates that the main reason is to prevent an employee from applying stamps deducted from the current year’s wages in payment of a balance owing on an assessment for the previous years. An obvious remedy would be to overprint the stamps with the year of issue. If this suggestion were adopted the only persons at a disadvantage would be employers who normally hold a supply of stamps to meet requirements where employees leave on other than regular pay days; but this difficulty would be readily met by an arrangement under which employers could present to the department such stamps on hand on the 30th June, and obtain replacement of them by stamps of the next financial year. The Government seems determined to pass the bill in its present form. Can the Minister explain the reason for this change-over, which would impose an enormous amount of work on some employers? Will the Government endeavour to reduce the volume of that work?
.- At present taxes on salaries or wages of employees are met by means of stamps or by deductions under group schemes. With few exceptions the formation of groups is at present on a voluntary basis, but many employers, particularly those who employ a large number of persons, prefer to operate under groups than use stamps. The number of group employers has steadily increased, until to-day almost half of the employees from whom deductions are made from salary or wages are working under group schemes. In order that tax deductions may be readily identified with the income from which the deductions are made, the committee recommended that under the new plan the formation of groups should be compulsory, and this recommendation is embodied in the bill.
The committee’s report is dated the 10th February, 1944, and received wide publicity. Representations are now made that this recommendation should be departed from. Apparently these representations arise from an invitation recently issued by the Commissioner of Taxation to representative bodies of employers to comment upon a further proposal whereby employers who purchase tax stamps would not be required to deliver them to their employees each pay day, but would affix them to a wages record for each employee.
The representations now made will be considered in conjunction with representations received from all representative bodies of employers when consideration is being given to the projected new scheme.
Clause agreed to.
Clauses 22 to 27 agreed to.
Clause 28 (Application of amendments).
.- I had proposed to move an amendment to this clause, which gives retrospective operation to clause 5, but I have come to the conclusion that that would be a waste of time.
– The honorable senator is not in order.
– I submit that there has been a tremendous waste of time. The Government has been dealing with a bill which it does not understand.
– The honorable senator is not in order in reflecting on the committee.
– I am not reflecting on the committee, but on the conduct of business by the Government. I am endeavouring to give reasons why I think that it would be a waste of time to propose any further amendments. In view of what has occurred, I enter an emphatic protest against the provisions of clause 28, which applies the provisions of clause 5 retrospectively. As has been pointed out, the effect of this provision is to make liable to tax the income of certain people who have come to this country to work in connexion with its defence, and who were not liable to tax on that income when it was earned. It is now proposed that such income shall be taxed. This clause will make taxable income which by the law of this land was not taxable when it was earned. There can be no justification for that. On several occasions tonight the Leader of the Senate (Senator Keane) has attempted to excuse retrospective legislation on the ground that it was necessary to catch the tax dodger. That term cannot be applied to these people, who came to Australia on the basis that their incomes would not be liable to tax. I shall be interested to hear what excuse the Minister will put forward for this retrospective provision.
– The honorable senator does not want these people to pay tax either in Australia or in the countries from which they came.
– That interjection is not only inane, but also untrue. I have no objection at all to these people being taxed here if they are not taxed in their own country, so long as we start to tax them to-day, and will apply the new law to income earned by them in the future; but I have the strongest objection to making this provision apply to income which, at the time it was earned, was free of tax under the law of this land.
.- The honorable senator is in error in assuming that this tax is to commence from the date this act becomes operative. In anticipation of the approval of this Parliament to this amendment, instalment deductions from the salary and wages of these visitors were commenced in May, 1943, so that each of the visitors has accumulated amounts equivalent to the deductions which have been made up to the present which will be applied in payment of the tax on the remuneration earned during the year ended 30th June, 1943, that is, the first year in which the remuneration becomes taxable for Commonwealth purposes. It is therefore proposed that the exemption provided for visiting civilians assisting in the defence of Australia shall be limited to those cases where the remuneration is subject to income tax in the country in which the taxpayer ordinarily resides. This proposal is given specific expression in sub-clause 5 (Z>). A .further proposal is that the amendment shall apply in respect of remuneration derived on and from the 1st July, 1942. Exemptions already granted will continue in respect of income derived up to the 30th June, 1942, but not to income derived subsequent to that date. There “ is no retrospective liability in respect of income tax imposed by this amendment. Under the provision as it stands, that is, before this amendment is made, the Treasurer is vested with a discretionary power to grant exemption or to withhold exemption. Exercising his discretion, the Treasurer has allowed the exemption in respect of remuneration earned up to the 30th June, 1942. Remuneration after that date has, at the Treasurer’s discretion, become assessable income. All visitors who had enjoyed exemption to 30th June, 1942, have been informed of the withdrawal of the exemption, and starting from May, 1943, instalment deductions have been made from, the amounts of remuneration that they have received in Australia. These instalment deductions have been accumulated since May of last year to pay the tax that will be assessed on the income derived during the year ended 30th June, 1943. It is a perfectly sound clause.
– We have heard a good many accusations against individuals for breaking the law, but this is the first occasion that I have known a Minister admit that taxation has been imposed unlawfully. I suggest that if there was power to collect these deductions from the salaries of these people, this clause would not now be required. Obviously the deductions were made in anticipation of power being granted. This is the first time that I have heard that it was legal to collect taxes in anticipation of the passing of an act at some time in the future. The abuses committed by individuals against the Government seem to be paralleled by the abuses committed by the Government. I hope that what I have said is not a true interpretation of what has occurred, but I believe that it is a correct interpretation of what the Minister said.
– It is both untrue and damned stupid.
.- The Minister’s statement was somewhat misleading, although I do not’ say that it was deliberately so. The impression that he conveyed to this committee was that this .was a matter within the discretion of the Treasurer, and that if the Treasurer from 1942 onwards had said, “ You are not entitled to this exemption”, he was entitled to do so. That interpretation is entirely wrong. The provision under which these people are exempt is to be found in section 23 (c) (vi) of the Income Tax Assessment Act of 1936. It applies to income derived by “ any person visiting Australia, from an occupation carried on by him while in Australia, if, in the opinion of the Treasurer, that visit and occupation are primarily and principally directed to assisting the Commonwealth Government or a State government in the settlement or development of Australia “. The only matter which the Treasurer had to consider was whether the visit of such a person to Australia was primarily and principally directed to assisting the Commonwealth Government or a State government in the direction indicated in the section. Once the Treasurer had come to a decision on that matter, these people were, by the express provisions of section 23, exempt from taxation. Although in 1942 and in 1943 they earned income which this section expressly says was free of tax, we now propose to tax that income.
– The Government has already collected tax on it.
– That is so. We are told that the Government has been taking illegally from these people an amount for taxes which they are not liable to pay under the existing act. I have not previously known a responsible Minister to be forced to admit a series of illegalities, and at the same time attempt to defend that action upon a false view of an act of Parliament.
Clause agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Thursday30, March 1944.
Motion (by Senator Keane) agreed to -
That the Senate, at its rising, adjourn to this day, at 10.30 a.m.
Royal Australian Air Force: Promotion ; Leave - Australian Army : Income Tax Paid by Personnel - Manufacture and Distributionof Utensils - Post-war Reconstruction: Statement by Dr. Coombs.
Motion (by Senator Keane) proposed -
That the Senate do now adjourn.
– Yesterday, Senator Lamp asked me (through Senator Darcey) as Minister representing the Minister for Air the following questions, upon notice : -
The Minister for Air has supplied the following answers: -
– When the Income Tax Assessment Bill was in the committee stage, tie Leader of the Senate (Senator Keane) said by interjection that the Government could not accept my amendment to clause 5, because it would involve a loss of revenue, which he estimated at £3,000,000. On information supplied to me, I was of opinion that the loss would not be more than. £250,000. I ask the Leader of the Senate to ascertain the amount of income tax collected in respect of the pay and allowances of enlisted personnel overseas for the year ending the 30th June, 1942. I also ask, what amount of tax is estimated to be collected on such incomes in respect of the year ending the 30th June, 1943?
– During the debate on my motion for the disallowance of the order under National Security Regulations governing utensils and appliances, the Leader of the Senate (Senator Keane) made a statement which I am sure was made on information supplied to him by an officer of the Department of Supply and Shipping, because it was untrue. I am confident that the Leader of the Senate would not knowingly make an untrue statement. He said that the firm of A. Simpson and Son Limited had deliberately refused to supply information to the Department of Supply and Shipping, and had not co-operated with that department. On the contrary, that firm has supplied all information for which it has been asked. On Saturday last, officers of the department visited Adelaide, and asked for permission to go over the factory. They also asked for certain information. The firm immediately placed its secretary, Mr. Loan, at the disposal of those officers at very short notice, and he spent the whole of the morning with them, and satisfied them completely in respect of every point which they raised. This firm is one of the most highly respected in Australia, and it is very jealous of its reputation. It has performed magnificent war work. If the Leader of the Senate cares to take up the matter with the representative of the Ministry of Munitions, in Adelaide, or the Deputy Director of Contracts in that city, both those officers will bear out the fact that the company has co-operated with the Government in every way in performing war contracts, and in meeting requests by the Government. I am sure that the Minister would not deliberately make an untrue statement, and that he based this statement on information supplied to him.
– in reply - I shall obtain the information asked for by Senator Brand. Senator Wilson is correct in assuming that I made the statement to which he refers on information supplied to me. I shall have further inquiries made into that matter, because so long as I am Leader of the Senate, I shall not allow any person, or organization, to be misrepresented in this chamber.
Yesterday, Senator Collett asked me, upon notice, the following questions : -
The answers to the honorable senator’s questions are as follows : -
Question resolved in the affirmative.
Senate adjourned at 12.8 a.m. (Thursday).
Cite as: Australia, Senate, Debates, 29 March 1944, viewed 22 October 2017, <http://historichansard.net/senate/1944/19440329_senate_17_178/>.